<PAGE>
As filed with the Securities and Exchange Commission on July 29, 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
Viador Inc.
(Exact Name of Registrant as Specified in its Certificate of Incorporation)
<TABLE>
<CAPTION>
Delaware 7372 94-3234636
<S> <C> <C>
(State or Other Jurisdiction
of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
167 Second Avenue
San Mateo, CA 94401
(650) 685-3000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
the Registrant's Principal Executive Offices)
STAN X. WANG
President and Chief Executive Officer
VIADOR INC.
167 Second Avenue
San Mateo, CA 94401
(650) 685-3000
(Name and Address, Including Zip Code, and Telephone Number, Including Area
Code, of Agent for Service)
Copies to:
<TABLE>
<S> <C>
CURTIS L. MO, ESQ. GREGORY K. MILLER, ESQ.
RICHARD C. LESKA, ESQ. ANDREW S. WILLIAMSON, ESQ.
J. OMAR MAHMUD, ESQ. LATHAM & WATKINS
BROBECK, PHLEGER & HARRISON LLP 505 Montgomery Street
Two Embarcadero Place Suite 1900
2200 Geng Road San Francisco, California 94111
Palo Alto, California 94303-0913 (415) 391-0600
(650) 424-0160 Fax (415) 395-8095
Fax (650) 496-2885
</TABLE>
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
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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............. $46,000,000 $12,788.00
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</TABLE>
(1) Estimated solely for the purpose of computing the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
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 that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to such 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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED , 1999
PRELIMINARY PROSPECTUS
[LOGO OF VIADOR]
Shares
Viador Inc.
Common Stock
-----------
This is an initial public offering of shares of our common stock. We are
selling all of the shares of common stock offered under this prospectus.
There is currently no public market for our shares. We intend to apply to have
our common stock approved for listing on the Nasdaq National Market under the
symbol "VIAD."
See "Risk Factors" beginning on page 5 to read about certain risks that you
should consider before buying shares of our common stock.
Neither the Securities and Exchange Commission nor any other regulatory body
has approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
-----------
<TABLE>
<CAPTION>
Per
Share Total
------ ------
<S> <C> <C>
Public offering price............................................ $ $
Underwriting discounts and commissions........................... $ $
Proceeds, before expenses, to us................................. $ $
</TABLE>
-----------
The underwriters may, under certain circumstances, purchase up to an additional
shares of common stock from us at the initial public offering price
less the underwriting discount, solely to cover over-allotments.
The underwriters are severally underwriting the shares being offered. The
underwriters expect to deliver the shares against payment in New York, New York
on or about , 1999.
-----------
Bear, Stearns & Co. Inc.
CIBC World Markets
U.S. Bancorp Piper Jaffray
The date of this prospectus is , 1999
<PAGE>
[Inside cover page]
[A graphic depicting the components of the Viador E-Portal Suite and how they
work together.]
<PAGE>
PROSPECTUS SUMMARY
This summary contains basic information about us and this offering. Because
it is a summary, it does not contain all of the information that you should
consider before investing. You should read the entire prospectus carefully,
including the section entitled "Risk Factors" and our financial statements and
the notes thereto before making an investment decision. In this prospectus,
"Viador", "we", "us", and "our" refers to Viador Inc., but not to the
underwriters listed in this prospectus.
VIADOR INC.
Our Business
We are one of the first providers of internet software that enables
businesses to create enterprise information portals. An enterprise information
portal provides users with a personalized single point of access to an
organization's electronic information. This is similar to popular consumer
internet portals that provide access to the world wide web. We believe the
Viador E-Portal Suite offers a comprehensive and integrated enterprise
information portal that gives users a quick and easy way to organize, search
for and access up-to-the-minute information from a variety of enterprise data
sources. Our software is specifically designed for the web and works with a
customer's existing hardware and software systems, without the need for
additional technology expenditures. It provides a highly adaptable platform for
the management and sharing of information on a secure and cost-effective basis
that can accommodate significant increases in the number of users and amount of
information. In addition, our software enables users to securely deliver
information over the internet to facilitate e-business. As more users
contribute increasing amounts of information to the portal, we believe our
customers and their users are able to realize greater productivity and
efficiency in their businesses. Our customers include Charles Schwab, CIBC,
Citibank, IBM, Mitsui, Sprint and Xerox.
Our Market Opportunity
In today's highly competitive environment, business decision-makers need
quick access to relevant information. However, the large and growing quantity
of information makes it difficult to identify and utilize relevant information.
In addition, there is a rapidly growing variety of technologies used for
creating, storing and organizing information. These include many different
hardware platforms--such as mainframe computers and client/server network
systems requiring the use of several access terminals and security protocols--
and different software applications--such as database, sales force automation,
client relationship management, intranet and document management systems and
enterprise resource planning software. Many of these hardware platforms and
software applications were developed independently and do not easily work
together. As a result, it is increasingly difficult and time consuming for
users to gain access to all relevant information for decision- making.
To address these problems, we have developed the Viador E-Portal Suite,
which offers the following benefits:
. Single Access Point for All Enterprise Information. Our software
provides a single access point to data from multiple sources within and
outside the company.
. Adaptable Web-Based Architecture. In contrast to existing solutions, our
software architecture is designed for the internet and can accommodate
significant increases in the number of users and amount of information.
1
<PAGE>
. Customized and Personalized Information. We address the information
overload problem by helping users locate and retrieve the most pertinent
business information. This capability increases the efficiency of
information use by our customers' employees.
. Combines Ease of Use with Sophisticated Functionality. Our browser
interface combines the ease of use of popular consumer internet portals
with a full range of sophisticated search and analysis functionality.
. Builds Upon Customers' Existing Investments in Information
Technology. Because most businesses operate in a diverse computing
environment, our products are designed to interact with and access a
broad range of software platforms and products.
. Ease of Implementation. The Viador E-Portal Suite is designed to be
implemented rapidly over the web using our customers' existing
information technology.
. Secure and Selective Access. Our security features permit customers to
become extended enterprises that share confidential information rapidly
over the internet with a large number of geographically distributed
offices, employees, customers, suppliers and partners.
Our Strategy
Our strategy is to be the leading provider of enterprise information portal
software solutions. We believe that the most effective way to achieve our goal
is to continue to improve our products and to significantly grow our direct
sales organization to expand coverage and penetration of large enterprise
opportunities. As a complement to our internal sales, marketing and development
efforts, we intend to continue to develop strategic relationships with
companies that are at the forefront of e-business technology.
----------------
We were incorporated in the State of California as Infospace, Inc. on
December 4, 1995 and changed our name to Viador Inc. on January 28, 1999. Our
principal headquarters are located at 167 Second Avenue, San Mateo, California
94401, and our telephone number is (650) 685-3000. Information contained on our
web site is not a part of this prospectus.
Viador E-Portal Suite(TM) and the Viador name and logo and the names of
products and services offered by Viador (including those referred to in
"Business") are trademarks, registered trademarks, service marks or registered
service marks of Viador. This prospectus also includes product names, trade
names and trademarks of other companies.
----------------
Unless we indicate otherwise, all information in this prospectus assumes:
. the reincorporation of Viador in Delaware at or prior to the
consummation of this offering;
. the conversion of each outstanding share of our convertible preferred
stock into common stock immediately prior to the consummation of this
offering;
. the exercise of outstanding warrants to purchase 75,001 shares of our
common stock at an exercise price of $0.72 per share, the exercise of
outstanding warrants to purchase 5,834 shares of our common stock at an
exercise price of $0.24 per share and the exercise of outstanding
warrants to purchase 9,615 shares of our Series C Preferred Stock at an
exercise price of $2.434 per share, upon the consummation of this
offering;
. no exercise of the underwriters' over-allotment option; and
. a 1 for 2.4 reverse stock split of all our outstanding shares of capital
stock to be effected immediately prior to the completion of this
offering.
2
<PAGE>
The Offering
<TABLE>
<S> <C>
Common stock being offered................. shares
Common stock outstanding after this shares
offering..................................
Use of proceeds............................ We plan to use the net proceeds from this
offering to fund operating losses, working
capital needs and capital expenditures
expected to be incurred in connection with
our operations.
Proposed Nasdaq National Market symbol..... VIAD
</TABLE>
The common stock outstanding after this offering is based on the number of
shares outstanding as of
June 30, 1999, and excludes:
. 3,287,155 shares of common stock issuable upon exercise of outstanding
options with a weighted average exercise price of $0.74 per share;
. 12,292,000 shares reserved for issuance under our 1999 Stock Incentive
Plan; and
. 300,000 shares reserved for issuance under our 1999 Employee Stock
Purchase Plan.
3
<PAGE>
SUMMARY FINANCIAL DATA
(in thousands, except per share data)
<TABLE>
<CAPTION>
Six Months
Years Ended December 31, Ended June 30,
------------------------------ ----------------
1995 1996 1997 1998 1998 1999
----- ------ ------- ------- ------- -------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Statements of Operations
Data:
Revenue...................... $ 80 $ 997 $ 1,582 $ 3,825 $ 1,754 $ 3,290
Cost of revenue.............. 10 314 903 1,387 640 874
----- ------ ------- ------- ------- -------
Gross profit................. 70 683 679 2,438 1,114 2,416
Operating expenses........... 34 847 4,089 8,586 3,381 7,793
----- ------ ------- ------- ------- -------
Operating income (loss)...... 36 (164) (3,410) (6,148) (2,267) (5,377)
Interest income (expense),
net......................... -- 10 62 (63) (2) 116
----- ------ ------- ------- ------- -------
Net income (loss)............ 36 $ (154) $(3,348) $(6,211) $(2,269) $(5,261)
===== ====== ======= ======= ======= =======
Basic and diluted net loss
per share................... $0.02 $(0.08) $ (1.34) $ (1.82) $ (0.71) $ (1.28)
===== ====== ======= ======= ======= =======
Weighted average shares used
in computing basic and
diluted net loss per share.. 1,563 1,993 2,495 3,416 3,177 4,126
</TABLE>
<TABLE>
<CAPTION>
June 30, 1999
-------------------
Pro Forma
Actual As Adjusted
------- -----------
(in thousands)
<S> <C> <C>
Balance Sheet Data:
Cash and cash equivalents................................... $14,259 $
Working capital............................................. 12,169
Total assets................................................ 18,869
Total stockholders' equity ................................. 13,284
</TABLE>
The above balance sheet data is set forth:
. on an actual basis; and
. on a pro forma as adjusted basis assuming the conversion of all
outstanding shares of convertible preferred stock into common stock and
the exercise of outstanding warrants to purchase 75,001 shares of common
stock at an exercise price of $0.72 per share, the exercise of
outstanding warrants to purchase 5,834 shares of common stock at an
exercise price of $0.24 per share and the exercise of outstanding
warrants to purchase 9,615 shares of Series C Preferred Stock at an
exercise price of $2.434 per share upon the consummation of this
offering, as adjusted to reflect the sale of shares of common
stock by Viador at an assumed initial public offering price of $
per share and after deducting the underwriting discounts and commissions
and estimated offering expenses.
4
<PAGE>
RISK FACTORS
An investment in our shares is extremely risky. This section describes some,
but not all, of the risk factors involved in purchasing our common stock. You
should carefully consider the following factors, in addition to the other
information presented in this prospectus, in evaluating us and our business.
Any of the following risks, as well as other risks we have not yet identified
or which we believe are not material, could seriously harm our business and
cause the trading price of our common stock to decline which could cause you to
lose all or part of your investment.
Risks Related to Viador
We have a short operating history, have incurred operating losses since our
inception and expect future operating losses.
We were founded in 1995, and began offering software products in the third
quarter of 1996. Our primary product, the Viador E-Portal Suite, was first
shipped in the first quarter of 1999. From inception, we have experienced
operating losses, negative cash flows from operations and net losses in each
quarterly and annual period. As of June 30, 1999, we had an accumulated deficit
of approximately $14.8 million. The revenue and income potential of our
business and market is unproven, and our limited operating history makes it
difficult to evaluate us and our prospects.
Currently, we anticipate making significant investments in our sales and
marketing programs, personnel recruitment, product development and
infrastructure. Therefore, we believe that we will continue to experience
significant losses on a quarterly and annual basis for the foreseeable future.
You must consider us and our prospects in light of the risks and difficulties
encountered by companies in the early stage of development, particularly
companies in new and rapidly evolving markets. Our ability to address these
risks depends on a number of factors which include our ability to:
. provide products and services that are reliable, cost-effective and able
to accommodate significant increases in the number of users and amount
of information;
. market our products and brand name effectively;
. continue to grow our infrastructure to accommodate new developments in
the enterprise information portal software market and increased sales;
. hire, retain and motivate qualified personnel; and
. respond to competition.
We may not be successful in meeting these challenges and addressing these
risks and uncertainties. If we are unable to do so, our business will not be
successful and your investment in our capital stock will decline in value.
Although we have experienced growth in revenue in recent periods, this
growth rate may not be indicative of future operating results. We may never be
able to achieve or sustain profitability.
We cannot accurately predict the size of our market and widespread acceptance
of our products and services is uncertain.
The market for enterprise information portal software is newly emerging and
there can be no assurance that it will grow or that, even if the market does
grow, customers will adopt our products. Accordingly, we cannot accurately
estimate the size of our market or the potential demand for our products and
services. We believe that market acceptance depends principally on our:
. marketing strategy and efforts;
5
<PAGE>
. product and service differentiation and quality;
. customer support;
. distribution and pricing strategies as compared to our competitors;
. industry reputation; and
. general economic conditions.
Some of the foregoing factors are beyond our control. If our customer base
does not expand, our business, prospects, results of operations and financial
condition will be materially adversely affected.
We rely heavily on revenue related to the Viador E-Portal Suite.
We generate much of our revenue from licenses and services related to the
products comprising the Viador E-Portal Suite. We expect that these products
will continue to account for a large portion of our revenue for the foreseeable
future. Our future financial performance will depend on the successful
development, introduction and customer acceptance of new and enhanced versions
of our products and our business could be harmed if we fail to deliver the
enhancements to our products that customers want.
Our services consist of maintenance, support, consulting and implementation.
Service revenue represented 47% and 40% of total revenue for 1997 and 1998,
respectively, and 35% of total revenue for the six months ended June 30, 1998
and June 30, 1999. We anticipate that service revenue will continue to
represent a significant percentage of total revenue. To a large degree, the
level of service revenue is dependent upon sales of the Viador E-Portal Suite,
the renewal of maintenance contracts by our installed customer base and the use
of our consulting services by clients. If service revenue is less than
anticipated, our operating results could be materially adversely affected. Our
ability to increase our service revenue will depend in large part on our
ability to increase the scale of our service organization, including our
ability to recruit and train a sufficient number of qualified service
representatives. There can be no assurance that we will be able to successfully
expand our service organization, which could materially adversely affect our
business, prospects, operating results and financial condition.
There are many factors beyond our control which may cause fluctuations in our
quarterly operating results.
We expect to experience significant fluctuations in our future results of
operations due to a variety of factors, many of which are outside of our
control, including:
. demand for and market acceptance of our products and services;
. expansion into international markets;
. introduction of products and services or enhancements by us and our
competitors;
. competitive factors that affect our pricing;
. the timing of customer installations;
. the mix of products and services we sell;
. the timing and magnitude of capital expenditures, including costs
relating to the expansion of operations;
. the size of customer orders, some of which account for more than 10% of
total revenue during a particular quarter;
. the hiring and retention of key personnel;
. conditions specific to the internet industry and other general economic
factors; and
. new government legislation or regulation.
6
<PAGE>
We typically receive a substantial portion of our orders in the last two
weeks of each fiscal quarter because our customers often delay purchases of
products to the end of the quarter. Because a substantial portion of our costs
are relatively fixed and based on anticipated revenue, a failure to book an
expected order in a given quarter will likely not be offset by a corresponding
reduction in costs and, therefore, could adversely affect our operating
results.
In addition, we plan to significantly increase our operating expenses to
expand our sales and marketing operations and consulting and training programs,
broaden our customer support capabilities, and fund greater levels of research
and development. Our operating expenses, which include research and
development, sales and marketing, and general and administrative expenses, are
based on our expectations of future revenues and are relatively fixed in the
short term. If revenue falls below our expectations in any quarter and we are
not able to quickly reduce our spending in response, our operating results will
be adversely affected and our stock price may fall.
Because our customers' orders vary substantially in size, our quarterly
operating results are difficult to forecast and may fluctuate.
Customer orders during a particular quarter typically vary considerably in
size, from as low as several thousand dollars to over $500,000. For example,
during the quarter ended June 30, 1999, we recognized 18.5% of our revenue for
the quarter from a single customer. Similarly, for each of the quarters ended
September 30, 1998 and December 31, 1998, we had a single customer that
accounted for over 20% of our revenue for that quarter. In addition, we expect
to recognize revenue from one or more customers during the quarter ending
September 30, 1999 that exceeds 10% of our total revenue for the quarter.
Because of the large size of some individual customer orders relative to total
orders during a quarter, our revenue may fluctuate significantly from one
quarter to the next. If a customer who placed a large order were to cancel or
reduce the magnitude of the order, or if we were unable to fulfill the order in
a timely fashion or were otherwise unable to recognize revenue for the order in
the quarter it was anticipated, it could result in increased volatility in our
revenue and stock price and may materially affect our business, prospects,
operating results and financial condition.
Our sales cycle is long, unpredictable and subject to seasonal fluctuations, so
it is difficult to forecast our revenue.
Any delay in sales of our products or services could cause our quarterly
revenue and operating results to fluctuate. The typical sales cycle of our
products is long and unpredictable and requires both a significant capital
investment decision by our customers and our education of potential customers
regarding the use and benefits of our products. Our sales cycle is generally
between three and nine months. A successful sales cycle typically includes
presentations to both business and technical decision makers, as well as a
limited pilot program to establish technical fit. Our products are typically
purchased as part of a significant enhancement to a customer's information
technology system. The implementation of our products involves a significant
commitment of resources by prospective customers. Accordingly, a purchase
decision for a potential customer typically requires the approval of several
senior decision makers. Our sales cycle is affected by the business conditions
of each prospective customer. Due to the relative importance of many of our
individual product sales, a lost or delayed sale could adversely affect our
quarterly operating results. Our sales cycle is affected by seasonal
fluctuations as a result of our customers' fiscal year budgeting cycles and
slow summer purchasing patterns overseas. Also, we expect revenue to be higher
in the fourth quarter than in other quarters of the year.
Our business will suffer if we do not retain and expand our customer base.
Our success depends on the continued growth of our customer base and the
retention of our customers. Our ability to attract new customers depends on a
variety of factors, including:
. the willingness of businesses to adopt enterprise information portal
solutions;
. the reliability and cost-effectiveness of our products and services; and
. our ability to effectively market our products and services.
7
<PAGE>
To attract new customers we intend to significantly increase our sales and
marketing expenditures. However, our efforts might not result in more sales as
a result of the following factors:
. we may be unsuccessful in implementing our marketing strategies;
. we may be unsuccessful in hiring a sufficient number of qualified sales
and marketing personnel; and
. any implemented strategies might not result in increased sales.
Software defects, service delays or security breaches could diminish demand for
our products or lead to product-related liabilities.
Complex software products like ours frequently contain defects or errors
that may be detected only when the product is in use. Further, we often render
implementation, consulting and other technical services, the performance of
which typically involves working with sophisticated software, computing and
networking systems, and we could fail to meet project milestones in a timely
manner or to meet customer expectations as a result of any defects or errors.
Our products are designed to facilitate the secure transmission of sensitive
business information to specified parties outside the business over the
internet. As such, the reputation of our software products for providing good
security is vital to their acceptance by customers. Our products may be
vulnerable to break-ins, theft or other improper activity that could jeopardize
the security of information for which we are responsible. Problems caused by
product defects, failure to meet project milestones for services or security
breaches could result in loss of or delay in revenue, loss of market share,
failure to achieve market acceptance, diversion of development resources, harm
to our reputation, increased insurance costs or increased service and warranty
costs. To address these problems, we may need to expend significant capital and
resources that may not have been budgeted.
Our license agreements with customers typically contain provisions designed
to limit our exposure to potential product liability claims. All domestic and
international jurisdictions may not enforce these limitations. Although we have
not experienced any product liability claims to date, we may encounter this
type of claim in the future. Product liability claims brought against us,
whether or not successful, could divert the attention of our management and key
personnel and could be expensive to defend.
We may be unable to maintain or grow our international operations.
During 1996, 1997 and 1998, we derived 0%, 14% and 12% of our total revenue
from sales outside the United States. We intend to expand our international
operations and anticipate that in the foreseeable future a significant portion
of our revenue may be derived from sources outside the United States.
We also expect to commit additional resources to customizing our products
for selected international markets and developing international sales and
support organizations. In addition, even if our international operations are
successfully expanded and our products are successfully customized, there can
be no assurance that we will be able to maintain or increase international
market demand for our products.
Our international operations are subject to a number of risks, including:
. costs of customizing products for foreign countries;
. protectionist laws and business practices favoring local competition;
. dependence on the performance of local resellers and other strategic
partners;
. adoption of general internet technologies in each international market;
. compliance with multiple, conflicting and changing governmental laws and
regulations;
. longer sales and payment cycles;
. import and export restrictions and tariffs;
8
<PAGE>
. difficulties in staffing and managing international operations;
. greater difficulty or delay in accounts receivable collection;
. foreign currency exchange rate fluctuations;
. multiple and conflicting tax laws and regulations; and
. political and economic instability.
Our growth is dependent upon the successful development of our direct sales
model.
We sell our products primarily through our domestic direct sales
organization and we support our customers with our technical and customer
support staff in several field offices. Our ability to achieve revenue growth
in the future will depend on our ability to recruit and train sufficient
technical, customer and direct sales personnel, particularly additional sales
personnel focusing on the new vertical market segments that we target. We have
in the past and may in the future experience difficulty in recruiting qualified
sales, technical and support personnel. Our inability to rapidly and
effectively expand our direct sales force and our technical and support staff
could materially adversely affect our business, prospects, results of
operations and financial condition.
Year 2000 considerations among our customers and potential customers may reduce
our revenue.
We may experience reduced revenue from sales of products and services as
customers and potential customers put a priority on correcting year 2000
problems and therefore defer purchases of our products and services until later
in 2000. Accordingly, demand for our products and services may be particularly
volatile and unpredictable for the remainder of 1999 and early 2000.
We rely on third-party software that may be difficult to replace.
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, or at all. The loss or inability to maintain any of these
technology licenses could result in delays in the sale of our products and
services until equivalent technology, if available, is identified, licensed and
integrated, which could harm our business.
We will require additional capital in the future and may not be able to obtain
adequate financing on terms acceptable to us.
The expansion and development of our business will require significant
capital to fund our operating losses, working capital needs and capital
expenditures. Our principal capital expenditures and lease payments include
those for desktop workstations for new employees, servers for engineering
product development, telephone equipment for all employees and facility tenant
improvements. Our working capital is primarily comprised of accounts
receivable, accounts payable and accrued expenses. The timing and amount of our
future capital requirements may vary significantly depending on numerous
factors, including regulatory, technological, competitive and other
developments in our industry. During the next twelve months, we expect to meet
our cash requirements with existing cash and cash equivalents and short-term
investments, the net proceeds from this offering, cash flow from sales of our
services and proceeds from existing and future working capital lines of credit
and other borrowings. Our failure to generate sufficient cash flows from sales
of services or to raise sufficient funds may require us to delay or abandon
some or all of our development and expansion plans or otherwise forego market
opportunities. Due to the uncertainty of these factors, our actual revenue and
costs may vary from expected amounts, possibly to a material degree, and these
variations are likely to affect our future capital requirements.
Future equity or debt financing may not be available to us on favorable
terms or at all. In addition, our credit agreements contain certain covenants
restricting our ability to incur further indebtedness and we have
9
<PAGE>
pledged some of our assets as security for any borrowings thereunder. Future
borrowing instruments such as credit facilities and lease agreements are also
likely to contain similar or more restrictive covenants and will likely require
us to pledge assets as security for borrowings under those future arrangements.
Our inability to obtain additional capital on satisfactory terms may delay or
prevent the expansion of our business which could cause our business and
prospects to suffer.
Our plan to sell products as an internet-based application service provider may
fail.
In addition to licensing our software applications, we plan to offer them as
an internet-based enterprise service provider. We would price solutions on a
per-transaction basis or on a subscription basis to companies seeking to
outsource their employee-facing business applications. This business model is
unproven and represents a significant departure from the strategies
traditionally employed by us and other enterprise software vendors. We have no
experience selling products or services as an application service provider, and
our efforts to develop this application service provider business may take
significant management time and attention which may adversely impact revenue.
In connection with our planned application service provider business model, we
will engage third-party service providers to perform many of the necessary
services as independent contractors, and we will be responsible for monitoring
their performance. We have limited experience outsourcing services or other
important business functions in the past, and independent contractors may not
perform those services adequately. If any service provider delivers inadequate
support or service to our customers, our reputation could be harmed. In
addition, we plan to use resellers to market enterprise service products. We
have no experience utilizing resellers and we may not be successful in this
effort.
If customers determine that our products are not able to accommodate
significant increases in the number of users and amount of information, do not
provide adequate security for the dissemination of information over the
internet, or are otherwise inadequate for internet-based use, or if for any
other reason customers fail to accept our products for use on the internet or
on a per-transaction or subscription basis, our business will be harmed. As an
outsourced application service provider, we may regularly receive large amounts
of confidential information, including credit card and other financial and
accounting data through the internet or extranets, and there can be no
assurance that this information will not be subject to computer break-ins,
theft and other improper activity that could jeopardize the security of
information for which we are responsible. Even if our strategy of offering
products to customers over the internet is successful, some of those internet
customers may be ones that otherwise might have bought our software and
services through our traditional licensing arrangements. Any shift in potential
license revenues to the application service provider model, which is unproven
and potentially less profitable, could harm our business.
Our failure to manage growth could adversely affect us.
The planned expansion of our operations will place a significant strain on
our management, financial controls, operations systems, personnel and other
resources. Our ability to manage our future growth, should it occur, will
depend in large part upon a number of factors including our ability to:
. control costs;
. maintain effective quality controls;
. significantly expand our internal management and financial control
systems; and
. attract, assimilate and retain qualified personnel.
We hired our Chief Financial Officer, Raja H. Venkatesh, in June 1999. We do
not currently have a corporate controller. While we have commenced a search for
a controller and additional financial and accounting personnel, these people
will need time to familiarize themselves with Viador and our accounting and
sales practices. In addition, we anticipate switching from our current
accounting software to a more sophisticated accounting and financial
information software system in the near future. If we are unable to
10
<PAGE>
successfully hire and integrate additional financial and accounting personnel
or successfully transition to new accounting software, our business and
prospects will suffer.
We also plan to hire additional personnel to establish and implement
corporate security processes and policies in light of our planned expansion of
our operations. If we are unable to implement these measures in advance of our
planned future growth, our business and prospects could suffer.
We expect that our customers increasingly will demand additional information
and reports with respect to the services we provide. To do so, we must develop
and implement an automated customer service system to handle these demands and
enable future sales growth. In addition, if we are successful in implementing
our marketing strategy, we also expect the demands on our technical support
resources to grow rapidly, and we may experience difficulties responding to
customer demand for our services and providing technical support in accordance
with our customers' expectations. We expect that these demands will require not
only the addition of new management personnel, but also the development of
additional expertise by existing management personnel and the establishment of
long-term relationships with third-party service vendors. We may not be able to
keep pace with any growth, successfully implement and maintain our operational
and financial systems or successfully obtain, integrate and utilize the
employees, facilities, third-party vendors and equipment, or management,
operational and financial resources necessary to manage a developing and
expanding business in our evolving and increasingly competitive industry. If we
are unable to address these customer demands in connection with our growth, our
business and prospects will suffer.
We may not be able to recruit and retain the personnel we need to succeed.
We have recently hired a number of key employees and officers, including our
Chief Financial Officer, who has been with us for less than two months. The
integration of new personnel has resulted and will continue to result in some
disruption to our ongoing operations. Our failure to complete this integration
in an efficient manner could harm our business and prospects.
We are highly dependent on certain members of our management and engineering
staff, including, without limitation, our Chief Executive Officer, our Senior
Vice President of North American Operations and our Chief Financial Officer.
The loss of one or more of these officers might impede the achievement of our
business objectives. Furthermore, recruiting and retaining qualified financial
and technical personnel is critical to our success. If our business grows, we
will also need to recruit a significant number of management, technical and
other personnel for our business. Competition for employees in our industry is
intense. We may not be able to continue to attract and retain skilled and
experienced personnel on acceptable terms.
Our failure to adequately protect our proprietary rights may adversely affect
us.
We believe that proprietary rights are important to our business. We
principally rely upon a combination of patent, copyright, trademark and trade
secret laws as well as contractual restrictions to protect our proprietary
technology.
Patents. We have been awarded U.S. patents on two inventions. However, none
of our technology is patented abroad, nor do we have any international patent
applications pending. Moreover, it is possible that:
. any patents issued to us could be successfully challenged by third
parties, which could result in our loss of the right to prevent others
from exploiting the inventions claimed in those patents;
. current or future competitors may develop similar technology, duplicate
our products or design around any patents that may be issued to us;
. effective patent protection may not be available in every country in
which we do business; and
. any patents issued to us may not provide significant proprietary
protection or commercial advantage to us.
11
<PAGE>
Trademarks, copyrights and trade secrets. We also rely upon a combination of
copyright, trademark and trade secret laws, and contractual restrictions to
protect our proprietary technology. In addition to those protections, we also
rely upon know-how, continuing technological innovations and licensing
opportunities to develop and maintain our competitive position. There can be no
assurance that others will not independently develop substantially equivalent
proprietary information or otherwise gain access to or disclose our proprietary
information. It is our policy to require our employees, certain contractors,
consultants, directors, customers, prospective customers and corporate partners
to execute non-disclosure agreements upon the commencement of those sort of
relationships with us. These agreements may be breached, and they may not
provide meaningful protection of our trade secrets or adequate remedies in the
event of unauthorized use or disclosure of that information, and our trade
secrets may become known or be independently discovered by our competitors.
Our commercial success will also depend in part on our not infringing the
proprietary rights of others and not breaching technology licenses that cover
technology used in our products. It is uncertain whether any third party
proprietary rights will require us to develop alternative technology or to
alter our products or processes, obtain licenses or cease certain activities.
If any licenses of that type are required, we may not be able to obtain those
licenses on commercially favorable terms, if at all. Our failure to obtain a
license to any technology that we may require to commercialize our products and
services could cause our business and prospects to suffer. Litigation, which
could result in substantial cost to us, may also be necessary to enforce any
patents issued or licensed to us or to determine the scope and validity of
third party proprietary rights.
Potential year 2000 problems with our products or internal systems may involve
significant time and expense.
Many currently installed computer systems and software products store dates
using only the last two digits of the calendar year. As a result, those systems
may not be able to distinguish whether "00" means 1900 or 2000, which may cause
those systems to fail or produce erroneous results. Year 2000 problems could
subject us to liability claims or disrupt our business, either of which could
harm our business.
Based upon our assessment to date, we believe that our software products are
capable of adequately distinguishing 21st century dates from 20th century
dates. However, our products operate in complex network environments and
directly or indirectly interact with a number or other hardware and software
systems that we cannot adequately evaluate for year 2000 compliance. We may
face claims based upon year 2000 problems in other companies' products, or
issues arising from the integration of multiple products into an overall
system. 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
those proceedings, or to negotiate resolutions of claims based upon year 2000
issues. Defending and resolving year 2000 disputes, regardless of the merits of
those disputes, and any liability we have for year 2000-related damages,
including consequential damages, could be expensive to us.
We also need to ensure the year 2000 compliance of our internal computer and
other systems, to continue testing our software products, to audit the year
2000 compliance status of our suppliers and business partners, and to conduct a
legal audit. We have not completed our year 2000 compliance investigation and
overall compliance initiative, nor have we developed a contingency plan for
handling year 2000 problems that are not detected and corrected prior to their
occurrence. Moreover, we have a limited number of personnel who are technically
experienced with our year 2000 compliance procedures and, in the event our
systems were to fail as a result of year 2000 problems, these employees would
likely be unable to timely comply with several customers' requests for year
2000 remediation. Any such delay could impair our business or prospects or
relationships with those customers. The total cost of year 2000 compliance and
remediation may be material and may harm our business.
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<PAGE>
If important strategic relationships are discontinued for any reason, there may
be a material adverse effect on our business, results of operations and
financial condition.
Although our strategic relationships are a key factor in our overall
business strategy, our strategic partners may not view their relationship with
us as significant to their own business. There is a risk that parties with whom
we have strategic alliance agreements may not perform their obligations as
agreed. Our arrangements with strategic partners generally do not establish
minimum performance requirements but instead rely on the voluntary efforts of
our partners. In addition, most of our agreements with strategic partners may
be terminated by either party with little notice. If important strategic
relationships are discontinued for any reason, our business, prospects, results
of operations and financial condition may be adversely affected.
Risks Related to Our Industry
We may not be able to successfully compete against our current and future
competitors, which could adversely affect our business.
The existing enterprise information portal software market is intensely
competitive. There are few substantial barriers to entry and we expect that
this market will face additional competition from existing competitors in the
future. Moreover, if our approach is successful, it is likely that additional
competitors will enter the market. Some of these additional competitors may
have significantly more resources than we have, and could devote the resources
necessary to independently develop technology which provides equivalent or
superior functionality compared to our products. For example, we also compete
against larger companies providing a suite of products targeting business
internet applications, including Microsoft and Oracle, who we expect may
provide products as part of their suite that compete with ours. To date, we
have faced competition and sales resistance from potential customers that have
developed or may develop in-house systems that may substitute for those we
offer. We expect that in-house systems will continue to be a principal source
of competition for the foreseeable future. In particular, we have had
difficulties making sales to organizations whose internal development groups
have already progressed significantly toward completion of systems that our
products might replace, or where the underlying technologies used by those
groups differ fundamentally from ours. In addition, we compete against
providers of decision support software, data warehousing software and
enterprise resource planning software. We also compete with portal software
companies in the area of document management. Companies in each of these areas
may expand their technologies or acquire companies to support greater
functionality and capability, particularly in the areas of query response time
and ability to support large numbers of users.
We seek to provide products that are complementary to the services offered
by systems integrators and professional service organizations, such as CSC and
IBM Global Services, and to work together with these firms to provide
integration solutions. However, we cannot assure you that those firms will
utilize our products in their integration efforts, and unless and until they do
so, they will continue to offer competitive solutions to customers' integration
needs. We also seek to work closely with enterprise application vendors so that
we can provide integration among products offered by different vendors. Many of
these vendors, however, have other initiatives under way to facilitate these
integrations independently. We can not assure the extent to which enterprise
application vendors will adopt or continue to support our integration approach.
Increased competition is likely to result in price reductions, decreased sales
levels, reduced gross margins and loss of market share, any of which could
materially adversely affect our business, prospects, operating results and
financial condition. We can not assure you that we will be able to successfully
compete against current and future competitors, or that competitive pressures
we face will not materially adversely affect our business, prospects, operating
results and financial condition. See "Business--Competition."
We depend upon the growth of the emerging market for enterprise information
portal software.
We expect much of our revenue growth, if any, in the foreseeable future will
be derived from sales of enterprise information portal software products and
services. The market for enterprise information portal
13
<PAGE>
software is relatively new and emerging. Our future financial performance will
largely depend on continued growth in the number of organizations demanding
software and services for enterprise information and outside vendors to
develop, manage and maintain the networking software used for those
organizations' critical applications. Many potential customers for third-party
enterprise portal software have made significant investments in internally
developed integration systems, and are highly dependent upon the continued use
of those internally developed systems. Organizations' dependence on internally
developed systems coupled with the significant costs required to shift to
third-party products may substantially inhibit future demand for third-party
enterprise portal software products, such as those we offer. We can not assure
you that the market for enterprise portal software products and services will
continue to grow. If the enterprise portal market fails to grow or grows more
slowly than we currently anticipate, our business, operating results and
financial condition would be materially adversely affected.
We intend to continue to expend considerable resources educating potential
customers about enterprise portal software. Even if a sizable market for third-
party enterprise portal software continues to develop, there can be no
assurance that those expenditures or any other marketing efforts will enable
our products to achieve or sustain any significant degree of market acceptance.
If we are unable to establish broad market acceptance for our current and
future products, our future growth, financial condition and results of
operations will be materially adversely affected. The timing and degree of our
success largely depends on the timely adoption of our products by users in the
commercial market.
Our market changes rapidly due to changing technology and evolving industry
standards, and our future success will depend on our ability to effectively
respond to these changes.
The market for our services is characterized by rapidly changing technology,
evolving industry standards, frequent new service and product introductions and
changes in customer demands. Our future success will depend to a substantial
degree on our ability to offer products and services that incorporate leading
technology, and respond to technological advances and emerging industry
standards and practices on a timely and cost-effective basis. You should be
aware that:
. our technology or systems may become obsolete upon the introduction of
alternative technologies;
. the technological life cycles of our products are difficult to estimate,
and may vary across vertical market segments;
. we may not have sufficient resources to develop or acquire new
technologies or to introduce new services capable of competing with
future technologies or service offerings; and
. the price of the services provided by us is expected to decline as
rapidly as the cost of any competitive alternatives.
We may not be able to effectively respond to the technological requirements
of the changing market. To the extent we determine that new technologies and
equipment are required to remain competitive, the development, acquisition and
implementation of those technologies and equipment are likely to continue to
require significant capital investment by us. Sufficient capital may not be
available for this purpose in the future, and even if it is available,
investments in new technologies may not result in commercially viable
technological processes and there may not be commercial applications for those
technologies. However, if we do not develop and introduce new products and
services and achieve market acceptance in a timely manner, our business,
financial condition and results of operations may be materially adversely
affected.
Our future success will depend on our ability to meet the sophisticated needs
of our customers, including the need to support several platforms.
We currently serve, and intend to continue to serve, a customer base with a
wide variety of hardware, software, database and networking platforms. To gain
broad market acceptance, we believe that we must support an increased number of
platforms in the future. We currently develop our products on Microsoft
14
<PAGE>
Windows NT. Therefore, we experience a delay when we adapt our products to be
installed on other major platforms. For example, we are contractually obligated
to provide a version of our software that operates on the Unix platform in the
third fiscal quarter of 1999. A delay in this or any other rollout of our
product onto a new platform could adversely affect our revenues and operating
results. There can be no assurance that we will adequately expand our database
and platform coverage to service potential customers, or that the expansion
will be sufficiently rapid to meet or exceed the platform and database coverage
of our competitors.
The success of our products will depend on various factors, including the
ability to integrate our products with customer platforms as compared to
competitive offerings, the portability of our products, particularly the number
of hardware platforms, operating systems and databases that our products can
source or target, the integration of additional software modules under
development with existing products, and our management of software development
being performed by third-party developers. We can not assure you that we will
successfully develop and market product enhancements or new products that
respond to these technological changes, shifting customer tastes, or evolving
industry standards, or that we will not experience difficulties that could
delay or prevent the successful development, introduction and marketing of
these products. If we are unable to develop and introduce new products or
enhancements of existing products in a timely manner or if we experience delays
in the commencement of commercial shipments of new products and enhancements,
our business, operating results and financial condition would be materially
adversely affected.
Risks Related to Our Offering
Our stock will likely be subject to substantial price and volume fluctuations
due to a number of factors, some of which are beyond our control.
Stock prices and trading volumes for many internet related companies
fluctuate widely for a number of reasons, including some reasons which may be
unrelated to their businesses or results of operations. This market volatility,
as well as general domestic or international economic, market and political
conditions, could materially adversely affect the price of our common stock
without regard to our operating performance. In addition, our operating results
may be below the expectations of public market analysts and investors. If this
were to occur, the market price of our common stock would likely decrease
significantly.
After this offering, our officers, directors, and their affiliates, in the
aggregate, will control % of our voting stock.
Some of our stockholders own a large enough stake in us to have an influence
on the matters presented to stockholders. As a result, these stockholders may
be able to control all matters requiring stockholder approval, including the
election and removal of directors, the approval of significant corporate
transactions, such as any merger, consolidation or sale of all or substantially
all of our assets, and the control of our management and affairs. Accordingly,
that concentration of ownership may delay, defer or prevent a change in control
of Viador, impede a merger, consolidation, takeover or other business
combination involving Viador or discourage a potential acquirer from making a
tender offer or otherwise attempting to obtain control of Viador, any of which
could have a material adverse effect on the market price of our common stock.
The sale of shares eligible for future sale in the open market could depress
our stock price.
Sales of substantial amounts of our common stock, including shares issued
upon the exercise of outstanding options and warrants, in the public market
after this offering could adversely affect the market price of our common
stock. Those sales also might make it more difficult for us to sell equity-
related securities in the future at a time and price that we deem appropriate.
In addition to the shares of common stock offered hereby, assuming no
exercise of the underwriters' over-allotment option, as of June 30, 1999, there
were 4,915,433 shares of common stock outstanding, all of which are restricted
shares under the Securities Act of 1933, as amended. These restricted shares
will not be immediately eligible for sale in the public market.
15
<PAGE>
However, following the expiration of the 180-day lock-up agreements with the
representatives of the underwriters, restricted shares will be
available for sale in the public market and the remaining restricted shares
will be eligible for sale from time to time thereafter upon expiration of
applicable holding periods under Rule 144, 144(k) or 701 promulgated under the
Securities Act of 1933, as amended. In addition, as of June 30, 1999, there
were options and warrants outstanding to purchase 3,287,155 shares of common
stock, all of which warrants are expected to be exercised on or before the
closing of this offering. However, the shares of common stock underlying such
options and warrants will not be immediately eligible for sale in the public
market since they are subject to a 180-day lock-up period. Bear, Stearns & Co.
Inc. may, in its sole discretion and at any time without notice, release all or
any portion of the securities subject to lock-up agreements. In addition, the
holders of 16,326,863 restricted shares and warrants to purchase 9,615 shares
of our Series C Preferred Stock are entitled to certain rights with respect to
registration of those shares for sale in the public market. If those holders
sell in the public market, those sales could have a material adverse effect on
the market price of our common stock.
Our management will have broad discretion in allocating proceeds from this
offering.
Our net proceeds from this offering, after deducting underwriting
commissions and expenses payable by us, are estimated to be approximately
$ million. The primary purposes of this offering are to fund capital
expenditures, working capital and operating losses expected to be incurred in
connection with the execution of our business plan, including the expansion of
our operations. A portion of the net proceeds may also be used to repay
currently outstanding or future indebtedness, or to acquire or invest in
complementary businesses or products. Accordingly, our management will retain
broad discretion as to the allocation of most of the proceeds of this offering.
The failure of management to apply these funds effectively could have a
material adverse effect on our business, results of operations and financial
condition.
There is no current market for our common stock.
Prior to this offering, there has been no public market for our common
stock. An active public market may not develop or be sustained after this
offering and investors may not be able to sell our common stock should they
desire to do so. The initial public offering price will be determined by
negotiations between us and the representatives of the underwriters and may
bear no relationship to the price at which the common stock will trade upon
completion of this offering. See "Underwriting" for a discussion of the factors
to be considered in determining the initial public offering price.
We have certain anti-takeover defenses that could delay or prevent an
acquisition of our business.
Certain provisions of our certificate of incorporation and bylaws and the
provisions of Delaware law could have the effect of delaying, deferring or
preventing an acquisition of our business. For example, our board of directors
is divided into three classes to serve staggered three-year terms, we may
authorize the issuance of up to 10,000,000 shares of "blank check" preferred
stock, our stockholders may not take actions by written consent and our
stockholders are limited in their ability to make proposals at stockholder
meetings. See "Description of Capital Stock" for a further discussion of these
provisions.
You will incur immediate and substantial dilution.
We expect the initial public offering price to be substantially higher than
the net tangible book value per share of common stock. Therefore, you will
incur immediate dilution in net tangible book value of $ per share,
assuming an initial public offering price of $ per share. You may incur
additional dilution if holders of stock options, whether currently outstanding
or subsequently granted, exercise their options or if warrantholders exercise
their warrants to purchase common stock. See "Dilution" on page .
16
<PAGE>
Relying on forward-looking statements in this prospectus could cause you to
incorrectly assess the risks and uncertainties of investing in our stock
because our actual results may differ materially from what was anticipated in
those statements.
Some of the matters discussed under the captions "Prospectus Summary," "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business" and elsewhere in this prospectus include
forward-looking statements. We have based these forward-looking statements on
our current expectations and projections about future events, including, among
other things,
. implementing our business strategy;
. obtaining and expanding market acceptance of the products and services
we offer;
. forecasts of the internet and our market size and growth;
. meeting our requirements under key contracts; and
. competition in our market.
In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "potential," "continue," "expects,"
"anticipates," "intends," "plans," "believes," "estimates" and similar
expressions. These statements are based on our current beliefs, expectations
and assumptions and are subject to a number of risks and uncertainties. Actual
results and events may vary significantly from those discussed in the forward-
looking statements. A description of certain risks that could cause our results
to vary appears under the caption "Risk Factors" and elsewhere in this
prospectus. These forward-looking statements are made as of the date of this
prospectus, and we assume no obligation to update them or to explain the
reasons why actual results may differ. In light of these assumptions, risks and
uncertainties, the forward-looking events discussed in this prospectus might
not occur.
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<PAGE>
USE OF PROCEEDS
The net proceeds from this offering, at an assumed initial public offering
price of $ per share, are estimated to be $ million, after
deducting estimated underwriting discounts and commissions and expenses payable
by us. We expect to use the net proceeds from this offering to fund operating
losses and our working capital needs. Our management will retain broad
discretion in the allocation of such net proceeds. Although we may use a
portion of the net proceeds to pursue possible acquisitions of, or enter into
joint ventures with respect to, complementary businesses, technologies or
products in the future, there are no present understandings, commitments or
agreements with respect to any such acquisitions or joint ventures. Pending the
use of such net proceeds, we intend to invest these funds in short-term,
investment grade securities.
DIVIDEND POLICY
We have not declared or paid any dividends since our inception and do not
intend to pay cash dividends on our capital stock in the foreseeable future. We
anticipate that we will retain all future earnings, if any, for use in our
operations and the expansion of our business. Certain of our credit agreements
restrict our ability to declare or pay any dividends while the credit agreement
is in effect. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources."
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<PAGE>
CAPITALIZATION
The following table sets forth, as of June 30, 1999:
. Our actual capitalization;
. Our pro forma capitalization, assuming the exercise of a warrant to
purchase 9,165 shares of Series C preferred stock, the conversion of
outstanding shares of our convertible preferred stock into common stock
and the exercise of warrants to purchase 80,835 shares of our common
stock; and
. Our pro forma capitalization, as adjusted to give effect to the sale of
shares of common stock offered by us in this offering at an
assumed initial public offering price of $ per share, after
deducting the underwriting discounts and commissions and estimated
offering expenses payable by us, and the application of the estimated
net proceeds from this offering.
This information should be read in conjunction with our financial statements
and the notes related thereto appearing elsewhere in this prospectus. See "Use
of Proceeds."
<TABLE>
<CAPTION>
June 30, 1999
---------------------------------
(unaudited)
Actual Pro Forma As Adjusted
-------- ----------- -----------
(in thousands except share data)
<S> <C> <C> <C>
Long-term obligations, less current portion.. $ -- $ -- $ --
Stockholders' equity:
Convertible preferred stock, $0.001 par
value, 25,000,000 shares authorized,
16,326,863 shares issued and outstanding,
actual; shares authorized, no shares
issued and outstanding, pro forma and as
adjusted.................................. 16 -- --
Common stock $0.001 par value, 20,833,333
shares authorized, 4,915,433 shares issued
and outstanding, actual; shares
authorized, shares issued and
outstanding, pro forma, issued and
outstanding, as adjusted.................. 12 -- --
Additional paid-in capital................. 30,257 -- --
Deferred stock-based compensation.......... (2,029) -- --
Treasury stock............................. (34) -- --
Accumulated deficit........................ (14,938) --
-------- ---- ----
Total stockholders' equity............... 13,284 -- --
-------- ---- ----
Total capitalization................... $ 13,284 $ $
======== ==== ====
</TABLE>
The table excludes the following shares: 3,287,155 shares of common stock
issuable upon exercise of options outstanding at a weighted average exercise
price of $0.74 per share and 12,292,000 shares reserved for future issuance
under our Amended and Restated 1997 Stock Option/Stock Issuance Plan and 1999
Stock Incentive Plan. See "Management--Executive Compensation and Other
Information--Employee Benefit Plans" and Note 4 of the Notes to Consolidated
Financial Statements.
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DILUTION
Our pro forma net tangible book value as of June 30, 1999 was approximately
$13.4 million, or $ per share of common stock. Pro forma net tangible book
value per share is calculated by subtracting our total liabilities from our
total tangible assets, which equals total assets less intangible assets, and
dividing this amount by the number of shares of common stock outstanding as of
June 30, 1999. Assuming the sale by us of shares of common stock
offered in this offering at an assumed initial public offering price of $
per share and the application of the estimated net proceeds from this offering,
our net tangible book value as of June 30, 1999 would be $ million, or $
per share of common stock. Assuming completion of this offering, there
will be an immediate increase in the net tangible book value of $ per
share to our existing stockholders and an immediate dilution in the net
tangible book value of $ per share to new investors. 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 June 30,
1999........................................................... $
Pro forma increase attributable to new investors................ $
-----
Pro forma net tangible book value per share after the offering.... $
------
Pro forma dilution per share to new investors..................... $
======
</TABLE>
The following table summarizes the total 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, in each case based
upon the number of shares of common stock outstanding as of June 30, 1999.
<TABLE>
<CAPTION>
Shares Purchased Total Consideration
------------------ ------------------- Average Price
Number Percent Amount Percent Per Share
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders...... 11,803,134 % $ % $
New investors.............. % $ % $
---------- --- ----------- ---
Total.................... % $ %
========== === =========== ===
</TABLE>
If the underwriters' over-allotment is exercised in full, the number of
shares of common stock held by existing stockholders will be reduced to
, or % of the total number of shares of common stock to be
outstanding after this offering, and will increase the number of shares of
common stock held by the new investors to , or % of the total
number of shares of common stock to be outstanding immediately after this
offering. See "Principal Stockholders."
The tables and calculations above assume no exercise of outstanding options.
At June 30, 1999, there were 3,287,155 shares of common stock issuable upon
exercise of options outstanding with a weighted average exercise price of $0.74
per share and 12,292,000 shares reserved for future issuance under our Amended
and Restated 1997 Stock Option/Stock Issuance Plan and our 1999 Stock Incentive
Plan. To the extent that these options are exercised, there will be further
dilution to new investors. See "Management--Executive Compensation and Other
Information--Employee Benefit Plans."
20
<PAGE>
SELECTED FINANCIAL DATA
The tables that follow present portions of our financial statements and are
not complete. You should read the following selected financial data in
conjunction with our financial statements and related notes thereto and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus. The statements of operations
data for the years ended December 31, 1996, 1997 and 1998, and the balance
sheet data as of December 31, 1997 and 1998, are derived from our financial
statements that have been audited by KPMG LLP, independent auditors, which are
included elsewhere in this prospectus. The statements of operations data for
the year ended December 31, 1995 and the balance sheet data as of December 31,
1995 and 1996 are derived from audited financial statements that are not
included in this prospectus. The statements of operations data for the six
months ended June 30, 1998 and 1999 and the balance sheet date as of June 30,
1999 are derived from our unaudited financial statements included elsewhere in
this prospectus and include, in the opinion of management, all adjustments,
consisting only of normal recurring adjustments, that we consider necessary for
the fair presentation of our financial position and results of operations for
those periods. The historical results presented below are not necessarily
indicative of the results to be expected for any future fiscal year. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
<TABLE>
<CAPTION>
Six Months
Years Ended December 31, Ended June 30,
------------------------------ ----------------
1995 1996 1997 1998 1998 1999
----- ------ ------- ------- ------- -------
(unaudited)
(in thousands except per share data)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenue..................... $ 80 $ 997 $ 1,582 $ 3,825 $ 1,754 $ 3,290
Cost of revenue............. 10 314 903 1,387 640 874
----- ------ ------- ------- ------- -------
Gross profit................ 70 683 679 2,438 1,114 2,416
----- ------ ------- ------- ------- -------
Operating expenses:
Research and development.. 15 364 1,351 2,481 1,107 1,871
Sales and marketing....... 11 125 1,802 4,295 1,806 4,397
General and
administrative........... 8 358 936 1,365 374 859
Amortization of stock-
based compensation....... -- -- -- 445 94 667
----- ------ ------- ------- ------- -------
Total operating expenses.... 34 847 4,089 8,586 3,381 7,793
----- ------ ------- ------- ------- -------
Loss from operations........ 36 (164) (3,410) (6,148) (2,267) (5,377)
Interest income (expense),
net........................ -- 10 62 (63) (2) 116
----- ------ ------- ------- ------- -------
Net income (loss)........... $ 36 $ (154) $(3,348) $(6,211) $(2,269) $(5,261)
===== ====== ======= ======= ======= =======
Pro forma basic and diluted
net (loss) per share (1)... $0.02 $(0.08) $ (1.34) $ (1.82) $ (0.71) $ (1.28)
===== ====== ======= ======= ======= =======
Shares used in computing
basic and diluted net loss
per share (1).............. 1,563 1,993 2,495 3,416 3,177 4,126
</TABLE>
<TABLE>
<CAPTION>
December 31,
------------------------- June 30,
1995 1996 1997 1998 1999
---- ---- ------ ------ -----------
(unaudited)
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents............... $ 42 $290 $1,029 $4,181 $14,259
Working capital......................... 78 (5) (317) 2,771 12,169
Total assets............................ 123 530 2,918 7,185 18,869
Long-term obligations, including current
portion................................ 0 100 0 20 0
Total stockholders' equity (deficit).... 86 (67) 90 3,371 13,284
</TABLE>
- ----------
(1) See Note 2 of Notes to Financial Statements for the determination of shares
used in computing pro forma basic and diluted net loss per share.
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of
operations of Viador should be read in conjunction with the financial
statements and the related notes thereto included elsewhere in this prospectus.
This discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of various factors,
including but not limited to those discussed in "Risk Factors," "Business" and
elsewhere in this prospectus.
Overview
We are one of the first providers of internet software that enables
businesses to create enterprise information portals. An enterprise information
portal is a single point of access to an organization's electronic information
similar to popular consumer internet portals that provide access to the world
wide web. We believe the Viador E-Portal Suite offers a comprehensive and
integrated enterprise information portal that gives users a single browser-
based interface with which to quickly and easily access up-to-the-minute
information from a variety of enterprise data sources. Our software is
specifically designed for the web and works with a customer's existing hardware
and software systems, without the need for additional technology expenditures.
It provides a highly adaptable platform for the management and sharing of
information on a secure and cost-effective basis that can accommodate
significant increases in the number of users and amount of information. As more
users contribute increasing amounts of information to the portal, we believe
our customers and their users are able to realize greater productivity and
efficiency in their businesses. Since January 1, 1998 over 30 of our customers
have purchased over $50,000 of our products and services, including Charles
Schwab, CIBC, Citibank, IBM, Mitsui, Sprint and Xerox.
Historically, we have focused our selling efforts in North America and
derived a significant majority of our revenues from North America. However, we
believe that our international sales will increase. We currently have
distribution agreements with partners in Japan and Europe, and we have
delivered our products to customers in Latin America.
We were incorporated in 1995 as Infospace, Inc., changed our name to Viador,
Inc. in January 1999 and subsequently changed our name to Viador Inc. in May
1999. Since our inception, we have developed web-based products designed to
permit our customers to search, analyze and deliver relevant information to
users within and outside the enterprise. We delivered our first product, Web-
Charts, in September 1996. During the next two years, we introduced more
sophisticated web products and a proprietary web security server product. In
the first quarter of 1999, we first shipped a fully integrated web-based
product suite called the Viador E-Portal Suite, which integrated our prior
product offerings and is now our primary licensed product. Since 1997, revenue
from licenses of our software products has accounted for a majority of revenue
and we expect this trend to continue in the future.
We derive our revenue from the sale of software product licenses and from
professional consulting, maintenance and support services. In December 1997, we
adopted Statement of Position 97-2 (SOP 97-2), Software Revenue Recognition.
SOP 97-2 generally requires revenue earned on software arrangements involving
multiple elements to be allocated to each element based on its relative fair
value. We recognize product license revenue when persuasive evidence of an
agreement exists, the product has been delivered, the license fee is fixed or
determinable and collection of the fee is probable. Services revenue consists
of fees from professional services and from maintenance and support.
Professional services include integration of software, application development,
training and software installation. We bill professional services fees either
on a time and materials basis or on a fixed-price schedule. We recognize
professional services fees billed on a time and materials basis as the services
are performed. We recognize professional services fees on fixed-price service
arrangements upon the completion of specific contractual milestone events, or
based on an estimated percentage of completion as work progresses. Our clients
typically purchase maintenance agreements annually, and we
22
<PAGE>
price maintenance agreements based on a percentage of the product license fee.
We price telephone support based on differing contracted levels of support.
Customers purchasing maintenance agreements receive future product upgrades and
electronic, web-based technical support and basic ten hours per day, five days
per week telephone support. Customers can also purchase extended telephone
support, available 24 hours per day, seven days per week, for an additional
fee. We recognize revenue from maintenance and support agreements ratably over
the term of the agreement, typically one year. We record cash receipts from
customers and billed amounts due from customers in excess of revenue recognized
as deferred revenue. The timing and amount of revenue recognized from
individual contracts, some of which may represent over 10% of revenue
recognized during a particular quarter, can vary significantly and can
therefore result in significant fluctuations in revenue from one quarter to the
next. Furthermore, the timing and amount of cash receipts from customers can
vary significantly depending on specific contract terms and can therefore have
a significant impact on the amount of deferred revenue in any given period.
Our cost of revenue includes salaries and related expenses for our customer
support, implementation and training services organizations and costs of
contracting with third parties to provide consulting services to customers. Our
cost of revenue also includes 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, including the costs associated
with the electronic transmission of software to new customers and an allocation
of our facilities, communications and depreciation expenses. Cost of license
revenue has not been significant to date.
Our operating expenses are classified into four general categories: sales
and marketing, research and development, general and administrative and
amortization of deferred stock-based compensation. We classify all charges to
these operating expense categories based on the nature of the expenditures.
Although each category includes expenses that are category specific, each
category includes expenses that are common to the other two, such as salaries,
employee benefits, incentive compensation, bonuses, travel and entertainment
costs, telephone expenses, communication expenses, rent and facilities costs,
and third-party professional services fees. The sales and marketing category of
operating expenses includes expenditures specific to the marketing group, such
as sales commissions, public relations and advertising, trade shows, marketing
collateral materials and web seminars. We allocate the total costs for overhead
and facilities to each of the functional areas that use the overhead and
facilities services based on their estimated usage as measured primarily by
headcount. These allocated charges include facility rent for the corporate
office, communication charges and depreciation expense for office furniture and
equipment.
Since our inception, we have incurred substantial costs to develop our
technology and products, to recruit and train personnel for our engineering,
sales and marketing and professional services departments and to establish an
administrative organization. As a result, we have incurred net losses in each
fiscal quarter since inception and, as of June 30, 1999, had an accumulated
deficit of $14.8 million. We anticipate that our operating expenses will
increase substantially in future quarters as we increase sales and marketing
operations, develop new distribution channels, fund greater levels of research
and development, broaden professional services and support, and improve
operational and financial systems. Accordingly, we expect to incur additional
losses for the foreseeable future. In addition, our limited operating history
makes it difficult for us to predict future operating results and, accordingly,
we cannot assure you that we will achieve or sustain revenue growth or
profitability.
We had 108 full-time employees at June 30, 1999, up from 83, 61 and 17 at
December 31, 1998, 1997 and 1996, respectively. This rapid growth places a
significant demand on our management and operational resources. In order to
manage growth effectively, we must implement and improve our operational
systems, procedures and controls on a timely basis. In addition, we expect that
future expansion will continue to challenge our ability to hire, train,
motivate, and manage our employees.
In May 1997, we raised $3.5 million in private equity investment from a
group of investors led by Mitsui Ltd. who, at the same time, purchased from us
exclusive distribution rights for our products in Japan. In August 1998, we
raised an additional $8.5 million in private equity investment from a group of
investors led by
23
<PAGE>
Information Technology Ventures. In May 1999, we raised an additional $14.5
million in private equity investment from a group of investors led by CDB
Venture Management (USA) and Crosslink Technology Partners.
Results of Operations
The following table sets forth certain statement of operations data as a
percentage of total revenue for the periods indicated:
<TABLE>
<CAPTION>
Six
Months Ended
Years Ended December 31, June 30,
---------------------------- --------------
1995 1996 1997 1998 1998 1999
----- ----- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
License........................ --% 5.6% 53.0% 59.7% 65.1% 64.8%
Service........................ 100.0 94.4 47.0 40.3 34.9 35.2
----- ----- ------ ------ ------ ------
Total revenue................ 100.0 100.0 100.0 100.0 100.0 100.0
----- ----- ------ ------ ------ ------
Cost of revenue.................. 12.5 31.5 57.1 36.3 36.5 26.6
Gross profit..................... 87.5 68.5 42.9 63.7 63.5 73.4
----- ----- ------ ------ ------ ------
Operating expenses
Research and development....... 18.8 36.5 85.4 64.9 63.1 56.9
Sales and marketing............ 13.8 12.6 113.9 112.3 103.0 133.6
General and administrative..... 10.0 35.9 59.2 35.7 21.3 30.2
Amortization of stock-based
compensation.................. -- -- -- -- 5.4 16.1
----- ----- ------ ------ ------ ------
Total operating expenses..... 42.6 85.0 258.5 224.5 192.8 236.8
Operating loss................... 44.9 (16.5) (215.6) (160.8) (129.3) (159.3)
Interest income (expense),
net......................... -- 1.0 4.0 (1.6) (0.1) 3.5
Net loss......................... 44.9 (15.9) (211.6) (162.4) (129.4) (155.8)
</TABLE>
Six Months Ended June 30, 1999 and 1998
Revenue. Revenue increased to approximately $3.3 million for the six months
ended June 30, 1999 from approximately $1.8 million for the six months ended
June 30, 1998, representing an increase of approximately $1.5 million, or 88%.
The increase in revenue was due primarily to an increase in the number of new
customers and increased usage by existing customers. This increase in revenue
was attributable to a significant increase in the number of employees in sales
operations and the introduction of the Viador E-Portal Suite.
License Revenue. License revenue increased to approximately $2.1 million for
the six months ended June 30, 1999, from approximately $1.1 million for the six
months ended June 30, 1998, representing an increase of approximately 87%. The
increase in license revenue was due primarily to an increase in the number of
clients resulting from growing market acceptance of the Viador E-Portal Suite
which first shipped in the first quarter of 1999. These new large customers
were complemented by continuing sales to existing accounts and a number of
smaller new customer sales.
Services Revenue. Service revenue increased to approximately $1.2 million
for the six months ended June 30, 1999, from $612,000 for the six months ended
June 30, 1998, representing an increase of approximately $588,000, or 89%. This
increase was a result of an increase in services provided in connection with
increasing license sales. This increase included an increase of $305,000 in
consulting revenue and an increase in customer training revenue. The increase
in training revenue reflects the availability of our San Mateo training center
which opened in the second quarter of 1998.
24
<PAGE>
Cost of Revenue. Cost of revenue increased to $874,000 for the six months
ended June 30, 1999 from $640,000 for the six months ended June 30, 1998,
representing an increase of $234,000, or 37%. The increase was primarily due to
the cost of providing consulting and training services incurred in the six-
month period ended June 30, 1999. We anticipate that our cost of revenue will
grow significantly in future periods in order to accommodate planned increases
in the number of customers and greater utilization of products by existing
customers.
Research and Development. Research and development expenses consist
primarily of costs associated with new product introductions and product
improvements. Research and development expenses increased to approximately $1.9
million for the six-month period ended June 30, 1999 from approximately $1.1
million for the six-month period ended June 30, 1998, representing an increase
of approximately $800,000, or 69%. This increase was due primarily to a 24%
growth in personnel and personnel related costs, to new product introductions
and to upgrades to the latest computer platforms used by engineers and to a
move to a new facility in April 1998.
Sales and Marketing. Sales and marketing expenses increased to approximately
$4.4 million for the six months ended June 30, 1999 from approximately $1.8
million during the six months ended June 30, 1998, representing an increase of
$2.6 million, or 143%. Approximately $2.0 million dollars of this increase is
attributable to increased selling expenses, most of which were salary and
commissions paid to salespeople. Marketing expenses doubled during the six
months ended June 30, 1999 over the same period last year, reflecting
advertising campaigns launched for the Viador E-Portal Suite in the first half
of 1999.
General and Administrative. General and administrative expenses increased to
$996,000 for the six months ended June 30, 1999 from $374,000 during the six
months ended June 30, 1998, representing an increase of $622,000, or 166%. Over
half of the increase was attributable to increases in professional services
fees, primarily legal and accounting fees related to increased business
activities. The remaining expense increases were due primarily to increases in
office space.
Interest Income, Net. Interest income, net, includes interest income from
our cash and cash equivalents, and investments. Interest expense relates to our
financing obligations, including bank borrowings. Interest expense, net,
increased to $116,000 of interest income for the six months ended June 30, 1999
up from $2,000 of interest expense for the six months ended June 30, 1998,
representing an increase of $118,000. This increase was primarily due to a
higher average cash balance as a result of the proceeds from the issuance of
shares of our preferred stock in August 1998 and May 1999.
Years Ended December 31, 1998, 1997 and 1996
Revenue. Revenue was approximately $1.0 million, $1.6 million and $3.8
million in 1996, 1997 and 1998, respectively, representing increases of
$585,000, or 59%, from 1996 to 1997 and approximately $2.2 million, or 142%,
from 1997 to 1998. The increase in revenue from 1996 to 1997 consulting was due
primarily to an increase in product license sales as revenue in 1996 primarily
consisted of service revenue. The increase in revenue from 1997 to 1998 was due
primarily to growth in market acceptance of our software products.
License Revenue. License revenue was $56,000, $839,000 and approximately
$2.3 million in 1996, 1997 and 1998, respectively. Revenue in 1996 for product
sales was low as we shipped our first product only in September of that year.
License revenue increased from 1996 to 1997 in large part because we introduced
two new web-based products which accounted for the majority of the $839,000 in
revenue. License revenue increased 172% from 1997 to 1998 as our products
gained market acceptance.
Service Revenue. Service Revenue were $941,000, $743,000 and approximately
$1.5 million in 1996, 1997, and 1998, respectively. Our first full year of
operation was 1996, and much of that year was focused on providing customer
database consulting services to confirm the accuracy of the product plan and
direction. In 1997, service revenue dropped by 21% from 1996 because we shifted
our focus to developing and supporting
25
<PAGE>
our software product line. Service revenue climbed by 108% in 1998 compared to
1997 due to our expansion of the services to include customer maintenance and
support services as well as consulting in support of our licensed product
sales.
Cost of Revenue. Cost of revenue was $314,000, $903,000 and approximately
$1.4 million in 1996, 1997 and 1998, respectively, representing increases of
$589,000, or 187%, from 1996 to 1997 and $484,000, or 54%, from 1997 to 1998.
These increases were due to the additions to our support and consulting
services staff and a new training facility opened in 1998.
Research and Development. Research and development expenses were $364,000,
approximately $1.4 million and $2.5 million in 1996, 1997 and 1998,
respectively, representing increases of approximately $1.0 million, or 271%,
from 1996 to 1997 and approximately $1.1 million, or 84%, from 1997 to 1998.
These increases were primarily due to growth in personnel and personnel related
costs, to improved quality assurance programs, and to new product program
expenses, as well as a move of engineering staff to a new facility in April
1998.
Sales and Marketing. Sales and marketing expenses increased from $125,000 in
1996 to approximately $1.8 million in 1997 and approximately $4.3 million in
1998, which represent increases of over 1300% and 138%, respectively. In 1996,
selling expenses only started in the fourth quarter, and marketing was largely
related to trade shows. This trend continued in 1997, as the first commissions
were paid only late in the year, and trade show and related expenses were heavy
throughout the year. The growth in 1998 over 1997 was almost entirely
attributable to selling, commissions and sales travel expense, as marketing
trade show expenses remained constant relative to 1997.
General and Administrative. General and administrative expenses increased
from $358,000 in 1996 to $936,000 in 1997 and approximately $1.4 million in
1998, which represent year-to-year increases of 161% and 46%, respectively. In
1997, we used the proceeds of the first round of external financing to hire a
small administrative staff and to expand to a second office. Facility expenses
increased in 1998 as our San Mateo offices were consolidated, and new field
offices were opened. Professional expenses, chiefly for legal and accounting
support, increased sharply in 1998 relative to 1997. Depreciation expenses for
new office equipment and amortization of improvements to our San Mateo offices
over two-year leases largely account for the remainder of the increase.
Interest Income, Net. Interest income, net, was $10,000, $62,000 and an
expense of $63,000 in 1996, 1997 and 1998, respectively, representing an
increase of $52,000 from 1996 to 1997 and a decrease of $125,000 from 1997 to
1998. The increase from 1996 to 1997 was due to a higher average cash balance
as a result of the proceeds from the issuance of shares of our preferred stock
and the decrease from 1997 to 1998 was due to the use of cash for operations
and the payment of interest on a $2.0 million bridge loan obligation starting
in the second quarter.
26
<PAGE>
Quarterly Results of Operations
The following tables set forth certain unaudited statements of operations
data for the six quarters ended June 30, 1999, as well as the percentages of
our revenues represented by each item. This data has been derived from the
unaudited interim financial statements prepared on the same basis as the
audited financial statements contained herein and, in the opinion of
management, include all adjustments consisting only of normal recurring
adjustments that we consider necessary for a fair presentation of such
information when read in conjunction with the financial statements and notes
thereto appearing elsewhere in this prospectus. The operating results for any
quarter should not be considered indicative of results of any future period.
<TABLE>
<CAPTION>
Three months ended
--------------------------------------------------------
Mar. June Sept. Dec. Mar. June
31, 30, 30, 31, 31, 30,
1998 1998 1998 1998 1999 1999
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations (unaudited, dollars in thousands except per
Data: share data)
Revenue................. $ 725 $ 1,029 $ 669 $ 1,402 $ 1,228 $ 2,062
Cost of revenue......... 312 328 391 356 353 521
Gross profit............ 413 701 278 1,046 875 1,541
Operating expenses:
Research and
development.......... 521 586 654 720 820 1,051
Sales and marketing... 836 970 1,214 1,275 1,968 2,429
General and
administrative....... 166 208 529 462 305 691
Amortization of stock-
based compensation... -- 94 158 193 253 276
------- ------- ------- ------- ------- -------
Total operating
expenses............... 1,523 1,858 2,555 2,650 3,346 4,447
------- ------- ------- ------- ------- -------
Operating income
(loss)................. (1,110) (1,157) (2,277) (1,604) (2,471) (2,906)
Interest income
(expense), net......... (11) 10 (198) (260) 35 81
======= ======= ======= ======= ======= =======
Net income (loss)....... $(1,121) $(1,147) $(2,079) $(1,864) $(2,436) $(2,825)
======= ======= ======= ======= ======= =======
Basic and diluted net
income (loss) per
share.................. $ (0.35) $ (0.33) $ (0.56) $ (0.48) $ (0.59) $ (0.62)
======= ======= ======= ======= ======= =======
Weighted average shares
used in basic and
diluted net loss per
share.................. 3,219 3,467 3,690 3,900 4,121 4,568
======= ======= ======= ======= ======= =======
As a Percent of Total
Revenue:
Revenue................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue......... 43.0 31.9 58.4 25.4 28.7 25.3
------- ------- ------- ------- ------- -------
Gross profit............ 6.9 68.1 41.6 74.6 71.3 74.7
Operating expenses:
Research and
development.......... 71.9 5 97.8 51.4 66.8 50.9
Sales and marketing... 115.3 94.3 181.5 90.9 160.3 117.8
General and
administrative....... 22.9 20.2 79.1 32.9 24.8 33.5
Amortization of stock-
based compensation... 0.0 9.1 23.6 13.8 20.6 13.4
------- ------- ------- ------- ------- -------
Total operating
expenses............... 210.1 180.5 382.0 189.0 272.5 215.6
------- ------- ------- ------- ------- -------
Operating income
(loss)................. (153.1) (112.4) (340.4) (114.4) (201.2) (140.9)
Interest income
(expense), net......... (1.5) 1.0 (29.6) (18.5) 2.9 3.9
------- ------- ------- ------- ------- -------
Net income (loss)....... (154.5)% 111.4% (310.8)% (132.9)% (198.3)% (137.0)%
</TABLE>
We expect to experience significant fluctuations in our future results of
operations due to a variety of factors, many of which are outside of our
control, including:
. demand for and market acceptance of our products and services;
. expansion into international markets;
. introduction of products and services or enhancements by us and our
competitors;
27
<PAGE>
. competitive factors that affect our pricing;
. the timing of customer installations;
. the mix of products and services we sell;
. the timing and magnitude of capital expenditures, including costs
relating to the expansion of operations;
. the size of customer orders, some of which may account for more than 10%
of total revenue during a particular quarter;
. the hiring and retention of key personnel;
. conditions specific to the internet industry and other general economic
factors; and
. new government legislation or regulation.
In addition, a relatively large portion of our expenses are fixed in the
short-term, particularly with respect to depreciation, real estate and
personnel costs, and therefore our results of operations are particularly
sensitive to fluctuations in revenues. Due to the foregoing factors, we believe
that period-to-period comparisons of our operating results are not necessarily
meaningful and that such comparisons cannot be relied upon as indicators of
future performance.
Liquidity and Capital Resources
From inception through June 30, 1999, we financed our operations primarily
through private equity placements totaling approximately $26.6 million and
drawdowns from a revolving facility of up to $500,000. At June 30, 1999, we had
an accumulated deficit of approximately $14.8 million and cash and cash
equivalents of approximately $14.3 million.
Net cash used in our operating activities for the six months ended June 30,
1999 was approximately $3.9 million. The net cash used by operations was
primarily due to working capital requirements and net losses, offset by
increases in accounts payable and accrued expenses. Net cash used in investing
activities was $588,000 for the period ended June 30, 1999, which is comprised
of property and equipment purchases. Net cash provided by financing activities
was approximately $14.6 million and is related primarily to a private placement
of equity securities.
We have a $2.5 million line of credit with a commercial bank for the purpose
of financing working capital requirements and equipment purchases. As of June
30, 1999, no amount was outstanding thereunder. The loan contains certain
standard covenants, is based on a percentage of qualified outstanding accounts
receivables and is secured by a security interest in certain of our
intellectual property. Interest on borrowings thereunder accrues at the rate of
1% over prime rate for the revolver and 1.5% over prime rate for an equipment
note.
We believe that the estimated net proceeds from this offering, together with
our existing cash and funds available under our existing credit facilities,
will be sufficient to fund our capital expenditures, cash needs and operating
losses for at least the next 12 months. The execution of our business plan will
require substantial additional capital to fund our operating losses, sales and
marketing expenses, capital expenditures, lease payments and working capital
requirements thereafter. We intend to continue to consider our future financing
alternatives, which may include the incurrence of indebtedness, additional
public or private equity offerings or an equity investment by a strategic
partner. Actual capital requirements may vary based upon the timing and success
of the expansion of our operations. Our capital requirements may change based
upon technological and competitive developments. In addition, several factors
may affect our capital requirements, including:
. demand for our products and services or our anticipated cash flow from
operations being less than expected;
28
<PAGE>
. our development plans or projections proving to be inaccurate; or
. our engaging in acquisitions or other strategic transactions.
Other than our $2.5 million line of credit, we have no present commitments
or arrangements assuring us of any future equity or debt financing, and there
can be no assurance that any such equity or debt financing will be available to
us on favorable terms, or at all.
Deferred Stock-based Compensation
Certain options granted and common stock issued during the 18 months ended
June 30, 1999 have been considered to be compensation. Total deferred stock-
based compensation associated with such equity transactions for the year ended
December 31, 1998 and for the six months ended June 30, 1999 were approximately
$1.6 million and approximately $1.4 million, respectively. These amounts are
being amortized over the vesting periods of the options. Of the total stock
compensation expense, $445,000 was amortized in the 12 months ended December
31, 1998 and $529,000 was amortized in the six months ended June 30, 1999. We
expect amortization of approximately $1.1 million and $805,000 in the years
ended December 31, 1999 and 2000, respectively.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS No.
133 establishes accounting and reporting standards for derivative financial
instruments and hedging activities related to those instruments, as well as
other hedging activities. Because we do not currently hold any derivative
instruments and do not engage in hedging activities, we expect that the
adoption of SFAS No. 133 will not have a material impact on our financial
position, results of operations, or cash flows. We will be required to adopt
SFAS No. 133 in fiscal 2000.
In December 1998, the American Institute of Certified Public Accountants'
issued SOP 98-9, Software Revenue Recognition, with Respect to Certain
Arrangements, which requires recognition of revenue using the "residual method"
in a multiple element arrangement when fair value does not exist for one or
more of the delivered elements in the arrangement. Under the "residual method,"
the total fair value of the undelivered elements is deferred and subsequently
recognized in accordance with SOP 97-2. We did not have a material change to
our accounting for revenue as a result of the provisions of SOP 98-9.
Year 2000 Compliance
Background of Year 2000 Issues
Many currently installed computer systems and software products are unable
to distinguish between twentieth century dates and twenty-first century dates
because such systems were developed using two digits rather than four to
determine the applicable year. For example, computer programs that have date-
sensitive software may recognize a date using "00" as the year 1900 rather than
the year 2000. This error could result in system failures or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices or engage in similar normal
business activities. As a result, many companies' software and computer systems
may need to be upgraded or replaced to comply with these year 2000
requirements.
State of Readiness
Our business is dependent on the operation of numerous systems that could
potentially be affected by year 2000-related problems. Those systems include,
among others:
. hardware and software systems used by us to deliver products and
services to customers, including our proprietary software systems as
well as software supplied by third parties;
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. communications networks such as the internet and private intranets;
. the internal systems of our customers and suppliers;
. software products sold to customers;
. the hardware and software systems used internally by us in the
management of our business; and
. non-information technology systems and services, such as power,
telephone systems and building systems.
We have established steering committees composed of senior executives and a
year 2000 compliance task force composed of representatives from various
functional areas, including our product, management and information systems
departments. This task force also included outside consultants with expertise
in addressing year 2000 issues. The task force has been charged with the
responsibility of formulating and implementing our year 2000 readiness and is
applying a phased approach to analyzing our operations and relationships as
they relate to the year 2000 problem. The phases of our year 2000 program are
as follows:
. establishment of a year 2000 steering committee and task force;
. assignment of responsibility for external issues, such as products
licensed by us, internal issues, such as hardware, facilities,
equipment, and software;
. inventory of all aspects of our operations and third party relationships
subject to the year 2000 problem;
. comprehensive analysis, including impact analysis and cost analysis, of
our year 2000 readiness; and
. remediation, testing and contingency planning.
We have completed the first two phases of the program, and expect that the
final three phases will be completed for our mission-critical systems by
September 30, 1999 and for all of our systems by October 31, 1999. Because our
plan is still in progress, we have not yet identified and remediated all year
2000 business risks. We estimate that we will spend approximately an additional
$100,000 to complete our year 2000 program.
Risks Related to Year 2000 Issues
Based on our assessment to date, we believe the current versions of our
software products are "year 2000 compliant." We have performed various testing
processes to confirm that our products do not have identifiable year 2000
problems. However, we continue to formally retest and document the processes we
have completed and the results thereof. We expect this product retesting and
documentation to be completed by September 30, 1999. We continue to evaluate
the year 2000 compliance of our vendors, and it may be necessary to take
precautions to make sure that our services will continue to function
efficiently. Furthermore, we are also subject to external forces that might
generally affect industry and commerce, such as extended power outages or
widespread failures across the internet, which would create disruptions that
would take time to repair. The time required to make such repairs would depend
on the severity of the power outages or widespread failures. The costs
associated with any such external forces could be material.
Our products are generally used with sophisticated hardware and complex
software products which may not be year 2000 compliant. The accuracy of the
information generated by our products is inherently dependent on the quality of
the source data from these other hardware and software products. Therefore, to
the extent that the underlying source data is inaccurate or corrupted, or to
the extent that the hardware or software products that generate or store that
data are not year 2000 compliant or are otherwise flawed, the information
generated by our products may be similarly inaccurate or corrupted. Success of
our year 2000 compliance efforts may depend on the success of our customers in
dealing with their year 2000 issues. We sell our products to companies in a
variety of industries, each of which is experiencing different year 2000
compliance issues. Customer difficulties with year 2000 issues might require us
to devote additional resources to resolve underlying problems.
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Although we have not been a party to any litigation or arbitration
proceeding to date involving our products or services and related to year 2000
compliance issues, there can be no assurance that we will not in the future be
required to defend our products or services in such 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
such disputes, and any liability for year 2000-related damages, including
consequential
damages, may have a material adverse effect on our business, results of
operations and financial condition. In addition, we believe that 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 or defer additional software
purchases until after 2000. As a result, some customers and potential customers
may have more limited budgets available to purchase software products such as
those offered by us, and others may choose to refrain from changes in their
information technology environment until after 2000. To the extent year 2000
issues cause significant delay in, or cancellation of, decisions to purchase
our products or services, our business would be materially adversely affected.
We are also reviewing our internal management information and other systems
in order to identify any products, services or systems that are not year 2000
compliant, in order to take corrective action. To date, we have not encountered
any material year 2000 problems with our computer systems or any other
equipment that might be subject to such problems. We continue to formally
document the results of our review. We expect that our review will be completed
and fully documented before year end.
Our plan for the year 2000 calls for compliance verification of external
vendors supplying software and information systems to us and communication with
significant suppliers to determine the readiness of third parties' remediation
of their own year 2000 issues. As part of our assessment, we are evaluating the
level of validation we will require of third parties to ensure their year 2000
compliance. We could also experience material adverse effects on our business
if we fail to identify all year 2000 dependencies in our systems and in the
systems of our suppliers, customers and financial institutions. We will
identify mission critical business operations and develop contingency plans for
those operations. We presently do not have a contingency plan for handling year
2000 problems that are not detected and corrected prior to their occurrence.
There can be no assurance that the total cost of year 2000 compliance will not
be material to our business. We may not identify and remediate all significant
year 2000 problems on a timely basis, remediation efforts may involve
significant time and expense, and unremediated problems may have a material
adverse effect on our business. See "Risk Factors--Potential year 2000 problems
with our products or internal systems may involve significant time and expense"
and "--Year 2000 considerations among our customers and potential customers may
reduce our sales revenue."
Qualitative and Quantitative Disclosures about Market Risk
We develop products in the United States and market our products in North
America, Europe and the Asia-Pacific region. 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. As all of our sales are
currently made 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 no material risk
exposure. Therefore, no quantitative tabular disclosures are required.
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BUSINESS
The following description contains forward-looking statements that involve
risks and uncertainties. Our actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that may cause the
results to differ include those discussed in "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Overview
We are one of the first providers of internet software that enables
businesses to create enterprise information portals. An enterprise information
portal is a single point of access to an organization's electronic information
similar to popular consumer internet portals that provide access to the world
wide web. We believe the Viador E-Portal Suite offers a comprehensive and
integrated enterprise information portal that gives users a single browser-
based interface with which to quickly and easily access up-to-the-minute
information from a variety of enterprise data sources. Our software is
specifically designed for the web and works with a customer's existing hardware
and software systems, without the need for additional technology expenditures.
It provides a highly adaptable platform for the management and sharing of
information on a secure and cost-effective basis that can accommodate
significant increases in the number of users and amount of information. As more
users contribute increasing amounts of information to the portal, we believe
our customers and their users are able to realize greater productivity and
efficiency in their businesses. Since January 1, 1998, over 30 of our customers
have purchased more than $50,000 of our products and services, including
Charles Schwab, CIBC, Citibank, IBM, Mitsui, Sprint and Xerox.
Industry Background
In today's highly competitive environment, businesses are focused on
improving their efficiency, effectiveness and ability to meet customer demands.
Providing diverse internal decision-makers with relevant, accurate and timely
information is a key strategic priority for business and an important element
of achieving competitive advantage. Similarly, sharing information with
customers and suppliers is essential to succeed as an e-business.
Abundance of Information
Business decision-makers need quick access to relevant information from a
variety of sources, including the internet, corporate intranets, e-mail,
databases, business applications and other software programs. However, the
large and growing quantity of information, coupled with the lack of effective
solutions for efficiently accessing it and organizing it, make it difficult to
identify and utilize relevant information. Due to this information overload,
businesses need to be able to quickly identify and obtain relevant information
in order to make timely and informed decisions.
The Proliferation of Disparate Information Technology Formats
There is a rapidly growing variety of technologies used for creating,
storing and organizing information. These include many different hardware
platforms--such as mainframe computers and client/server network systems, which
may involve using different access terminals and fulfilling multiple access and
security protocols--and different software applications--such as database,
sales force automation, client relationship management, intranet and document
management systems and enterprise resource planning software. However, many of
these hardware platforms and software applications were developed independently
to be operated on a stand-alone basis or without a view to being operated with
other hardware platforms and software applications. As a result of these
different hardware and software formats, it is increasingly difficult and time
consuming to gain access to all relevant information. For example, some
relevant information may only be accessed through a human resources application
using a client/server system, while other relevant information may only be
available from a database on a central mainframe computer. In order to access
all this information, users may
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need to open separate software applications, complete separate security
protocols, and perhaps even use different terminals. As the amount of formats
and information grows, it becomes increasingly difficult and time consuming to
navigate around these technological obstacles to obtain relevant information.
Emergence of the Internet as the Universal Information Infrastructure
The internet continues to experience rapid growth and expansion as an
important global medium for communications and business due to its cost
effectiveness, extensive reach and ability to handle tremendous growth. The
internet provides a powerful medium for enterprises and their customers,
suppliers and strategic partners to share business information efficiently. We
expect that the ability to share information efficiently over the internet will
become increasingly enhanced and lead growing numbers of enterprises to adopt
web-based information and communication solutions.
Growth of E-Business
The internet continues to transform the way that business is conducted. It
can help businesses improve customer satisfaction, reduce cost structures,
globalize operations, foster innovation and accelerate speed to market. E-
business is the use of the internet and emerging technologies to replace or
supplement traditional business channels and practices. As the number of
internet users has grown, enterprises have increasingly viewed the internet as
an opportunity to interact rapidly with a larger number of geographically
distributed offices, employees, customers, suppliers and partners. In many
cases, the adoption of a web-based marketing, communication or financial model
provides enterprises with strategic competitive advantages and can prevent the
loss of market share to aggressive e-business innovators.
Need for a Comprehensive Solution
The above factors suggest the need for a solution that facilitates the
organization, access and use of enterprise information by those who require it,
regardless of whether they are users inside the business or outside partners.
However, current solutions generally do not enable companies to use multiple
hardware and software technologies and to organize and securely access
enterprise information through a single interface regardless of its format.
Although software companies have started to provide internet access to
information stored in their own format, they generally do not provide access to
information stored in other formats. For example, enterprise resource planning
companies have established portals that permit access over the internet to the
structured data contained in their particular products. However, these portals
do not provide access to other sources of structured data, nor do they provide
access to unstructured or event data. Structured data is information from
databases, data marts, data warehouses or enterprise resource planning systems.
Unstructured data is contained in company intranets, on the internet, in
groupware such as Lotus Notes, in document management systems or existing
business intelligence applications. Event data, such as news or stock quotes,
is data which is constantly changing and which is delivered in real time. The
ideal solution would work with all of the enterprise's information technology
and provide integrated access to all enterprise information regardless of
whether the data is structured, unstructured or event data. Furthermore, given
the large amounts of electronic data being generated, the ideal solution would
help users get fast access to personalized and relevant information.
In addition, a comprehensive solution would work with existing customer
information systems, and would not require the customer to replace or upgrade
its existing technology investments. Furthermore, a comprehensive solution
would utilize the internet, so that it would work through a web browser without
any need to install additional software on users' computers. An internet-based
solution could be implemented quickly, accommodate significant increases in the
number of users and amount of information, and adapt to changes in the
customer's business model. In contrast, we believe that any solution that does
not utilize the internet would have significant difficulty accommodating
substantial increases in the number of users and amount of information.
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The Viador E-Portal Suite
We provide a suite of enterprise software products that enables
organizations to build enterprise information portals which permit quick, easy
access to all enterprise information, facilitates the provision of customized
and personalized information, and permits the secure sharing of enterprise
information both within the enterprise and with outside partners.
Single Access Point for All Enterprise Information. Our software provides a
single access point to structured, unstructured and event data from multiple
sources within and outside the company. We provide a comprehensive and
integrated enterprise information portal solution which provides access to
customized, up-to-the-minute information quickly and easily.
Adaptable Web-Based Architecture. In contrast to existing solutions, our
software architecture can accommodate significant increases in the number of
users and amount of information. Our software architecture is designed for the
internet, which means that it:
. works through a user's existing web browser,
. does not require the installation of any additional software on the
user's desktop, and
. can be quickly rolled-out to thousands of additional users.
Our solution provides a platform for building and enhancing over time the
methods by which our customers organize, retrieve and distribute information.
The open and highly adaptable architecture of our software gives our customers
the flexibility to customize and extend their enterprise portal framework as
their needs evolve. The Viador E-Portal Suite is centralized on the customer's
servers, which makes it cost-effective to deploy and easy to manage a large
number of users. Our information portal platform provides greater benefits to
the enterprise the more users it reaches and the more broadly our software is
deployed.
Customized and Personalized Information. We address the information overload
problem by helping users locate and retrieve the most pertinent business
information. This capability increases the efficiency of information use by our
customers' employees. Our software allows the organization to focus information
by subject, by user, by department, by role within the organization and
according to other criteria. Its capabilities permit the location of and access
desired information from structured, unstructured and event data sources. In
addition, our software permits each user to customize his or her portal
interface to access and display information in accordance with that user's
needs and preferences. We expect that future versions of our products will be
able to automatically track users' information retrieval patterns over time in
order to further personalize the information provided to each user.
Combines Ease of Use with Sophisticated Functionality. The Viador E-Portal
Suite provides browser-based searchable access to the entire range of an
organization's enterprise information assets, facilitating location of and
access to information, regardless of the underlying data source. Our browser
interface combines the ease of use of popular consumer internet portals with a
full range of sophisticated search and analysis functionality. The database
access capabilities within our software are all web-based and, unlike
unintegrated database access tools, offer a uniform look and feel for
reporting, query and analytical processing.
Builds Upon Customers' Existing Investments in Information
Technology. Customers who utilize our software are able to build upon their new
and existing hardware, database applications, enterprise software applications
and other software investments. Because most businesses operate in a diverse
computing environment, our products are designed to interact with and access a
broad range of software platforms and products, including multiple operating
systems, browsers, databases, groupware, intranet sites and major enterprise
resource planning programs.
Ease of Implementation. The Viador E-Portal Suite is designed to be
implemented rapidly over the web using our customers' existing information
technology. Once installed on an organization's servers, our software
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can reach employees enterprise-wide via their existing browsers. New users can
be added in minutes on the customer's servers since no software has to be
installed on the desktop.
Secure and Selective Access. Security features are essential to permit
customers to become extended enterprises that share confidential information
rapidly over the internet with a large number of geographically distributed
offices, employees, customers, suppliers and partners. Our software allows the
organization to customize information access by individual user and category of
user. Our product's security features operate in conjunction with our
customers' existing security services--such as firewalls, encryption and proxy
servers-- to identify and authenticate users, process requests and securely
deliver sensitive information.
Viador Strategy
Our goal is to be the leading provider of enterprise information portal
software solutions. Key elements of our strategy include:
Extend Technology Leadership. We believe we are among the first companies to
provide a solution that has all of the following features:
. based on pure internet architecture;
. provides search capabilities using internet search technology;
. facilitates personalization of the information provided to each user;
. designed to accommodate significant increases in the number of users and
amount of information;
. can retrieve and deliver information from different, otherwise
incompatible sources; and
. provides multi-level security.
We intend to enhance our technology by continuing to devote significant
resources to research and development efforts and by forming strategic
relationships that will enable us to further enhance the performance and
adaptability of our software.
Expand Sales, Distribution and Marketing. We intend to significantly grow
our direct sales organization to expand coverage and penetration of large
enterprise opportunities to take advantage of our innovative technologies. We
are making significant new investments in our corporate and field marketing
capacity as well as efforts to improve awareness of Viador and the Viador E-
Portal Suite solution. In addition, we will continue to exploit and build our
network of resellers of products who also provide related services,
manufacturers who use our software in their product, system integrators who
bring together various hardware and software to solve a specific customer
problem, and distributors to expand our indirect distribution worldwide.
Increase Use by Existing Customers. The value of our software to our
customers grows as it is deployed more widely throughout the organization,
since our products and service offerings are designed to enable organizations
to deploy enterprise-scale information access and analysis. As more and more
users related to a customer contribute information to the portal, as the
customer adds more users to the portal, and as the users become accustomed to
using information in this way, the value of our software to the customer grows.
As more users contribute increasing amounts of information to the portal, we
believe our customers and their users are able to realize greater productivity
and efficiency in their businesses. For these reasons, we believe that our
success at winning and delivering deployments can be grown to enterprise-wide
adoption of our technology, which would generate significant added revenue.
Build Strategic Relationships. We have formed strategic relationships
covering marketing, engineering and sales with numerous multinational companies
that are at the forefront of e-business technology. We have an established
marketing arrangement with IBM which has significantly improved our
distribution capabilities and resulted in additional sales. In addition, our
technology is used in IBM's Net.Commerce initiative for
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e-commerce storefronts and we are delivering our technology onto the IBM CS/390
enterprise server. Our products are currently distributed in Japan by Mitsui,
who assisted us in adapting our products for Japan and other international
markets. In addition, we have partnered with Infoseek for joint marketing
purposes and to incorporate into our software Infoseek's technologies for
searching and indexing information available on the internet and on our
customers' intranets. We also intend to develop new strategic relationships
with other large hardware, software and e-commerce companies.
Create Standardized Business Portal Solutions. We are creating a series of
standardized portal formats for specific business uses. These portal formats
provide a turn-key solution by meeting the specific information requirements of
customers with similar business needs. For example, we have developed an e-
commerce portal format to assist e-commerce companies to understand information
regarding shopping behavior of those using their web sites. This contrasts with
the format requirements of a supply chain portal. Our standardized business
portals are designed to significantly reduce the time required to implement the
Viador E-Portal Suite in a tailored format that satisfies a significant portion
of the customer's information needs. Furthermore, these standardized formats
can be customized over time to better suit the information needs of a specific
customer. These standardized portal formats complement our broader sales
strategy by facilitating initial deployments at new customers, so that our
relationship with these customers can develop over time resulting in broader
deployments of our software.
Build World Class Service and Support Operations. Superior customer service,
training and support is necessary to build long-term customer relationships
that enable enterprise-wide deployments of our software. Our goal is to deliver
technology and services that enable our customers to rapidly implement advanced
technology business solutions throughout their organizations at the lowest
possible cost. To succeed and maintain a competitive edge, we will continue to
build on the success of our Advanced Solutions Division, which uses our core
technology to solve customers' individual problems. We intend to grow our
direct service and support organization to expand our training capabilities and
to provide reliable customer support.
Technology
We believe the Viador E-Portal Suite offers a comprehensive and integrated
enterprise information portal that gives users a single browser-based interface
with which to quickly and easily access up-to-the-minute information from a
variety of enterprise data sources. Combining this easy-to-use portal interface
with an adaptable server-based information backbone, our software provides
secure access and delivery for structured, unstructured and event data.
Adaptable Internet Architecture
The architecture of the Viador E-Portal Suite is designed for the web, which
gives it the ability to accommodate significant increases in the number of
users and the amount of information. Our Software's highly adaptable
architecture and open application programming interface give customers the
added flexibility to customize and extend their enterprise portal framework as
their needs evolve. It is Java-based, it operates on the Microsoft Windows NT
server platform, and we anticipate that it will operate on Unix server
platforms beginning in the third fiscal quarter of 1999. Our software works
with major web servers and browsers, and offers open application processing
interfaces to create custom portals.
We provide a high-performance, server-based information backbone that
provides data access, content delivery, session management and user security.
We further ensure enterprise-wide scalability through add-on options that
enable multiple servers, distributed throughout a customer's organization, to
work together in servicing user information requests.
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Comprehensive Access
Our software provides comprehensive information access for the following
categories of data:
. structured data, including data from databases, data marts, data
warehouses and enterprise resource planning systems and other software;
. unstructured data, including data contained in company intranets, on the
internet, in groupware such as Lotus Notes, in document management
systems and existing business intelligence applications; and
. event data, such as news or stock quotes, that is constantly changing
and which is delivered in real time.
Information Personalization
We address the information overload problem by helping users locate and
retrieve the most pertinent business information. This capability increases the
efficiency of information use by our customers' employees. Our software allows
the organization to focus information by subject, by user, by department, by
role within the organization and according to other criteria. Its capabilities
permit the location of and access to desired information from structured,
unstructured and event data sources. In addition, our software permits each
user to customize his or her portal interface to access and display information
in accordance with that user's needs and preferences. We expect that future
versions of our products will be able to automatically track users' information
retrieval patterns over time in order to further personalize the information
provided to each user.
Secure Information Sharing
Security features are essential to permit customers to become extended
enterprises that share their confidential information rapidly over the internet
with a large number of geographically distributed offices, employees,
customers, suppliers and partners. Our product's security features operate in
conjunction with our customers' existing security services--such as firewalls,
encryption and proxy servers--to identify and authenticate users, process
requests, and securely deliver sensitive information. These features permit the
enterprise to establish multiple levels of access rights based upon the user's
job function and organizational role.
Easy Administration
Our software facilitates the management of enterprise information in large
organizations with thousands of users, giving the system administrator an added
measure of freedom and flexibility to centrally monitor and administer the
system from virtually anywhere. User administration by the user's job function
and organizational role enables the administrator to precisely delineate access
privileges to reports and databases for individual users and groups. The server
management component of our software audits server usage and monitors user
access in real-time.
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Products and Services
Products
The following diagram briefly describes the products that comprise the
Viador E-Portal Suite:
[A graphic depicting the flow of information through the components of the
Viador E-Portal Suite and briefly describing the function of each component.]
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The Viador E-Portal Suite is comprised of the following products, which are
sold both individually and as a suite:
Viador Sage is a browser-like portal interface that gives users the ability
to search, access, analyze and share business information through a simple
interface similar to popular consumer internet portals. Both organizations and
individual users can customize the Viador Sage interface to meet their
information needs. Viador Sage provides comprehensive data access capabilities
to structured, unstructured and event data. Personalization capabilities enable
the filtering of information by time, subject and job function to improve user
productivity.
Viador Information Center is a high-performance Java server-based adaptable
information backbone that provides data access, content delivery, session
management and user security. Viador Information Center further ensures that
our software can grow with the enterprise-wide through add-on options that
provide support for additional computers and balancing the needs of multiple
users. These options enable multiple servers, distributed enterprise-wide, to
work together in servicing user information requests.
Viador Gateway allows customers to choose from a wide range of drivers to
provide access to the data sources they would like to include in the Viador
Information Center. These sources include: Oracle, Sybase, Informix, DB2,
Microsoft SQL Server, Hyperion, Essbase, Oracle Express, WhiteLight, ODBC,
Lotus Notes, Microsoft Office, intranet sites, business intelligence tools and
others.
Viador Sentinel is an integrated security server for extending secure web-
based access to partners, customers and suppliers over the internet. Sentinel
operates in conjunction with existing security services--such as firewalls,
encryption and proxy servers--to identify and authenticate users, process
requests and securely deliver sensitive information. Viador Sentinel allows
companies to exchange information with e-business customers, suppliers and
partners, thereby facilitating more efficient operations and improving customer
satisfaction.
Viador Administrator facilitates the management of large customer
information technology environments with thousands of users by giving the
system administrator an added measure of freedom and flexibility to centrally
monitor and administer the system from virtually anywhere. Administration of
users by job responsibilities and role within the organization enables the
administrator to precisely define access privileges to reports and databases
for individual users and groups. A server management feature audits server
usage and monitors user access in real-time.
In addition, we offer Viador SDK, a software development kit for creating
custom portals to meet the specific needs of an enterprise.
Services
Our Advanced Solutions Group offers architectural and technical consulting
services, customer support and training in connection with licenses of our
software. We believe that services are an important part of our success and we
continue to expand our professional services organization.
Consulting. Our pre-sale and post-sale technology implementation services
are organized into a single organization so that our assigned consulting
engagement team can work with a customer from the initial business problem
discussions through implementation of their solution. We believe that this
allows us to develop greater knowledge of the customers environment and add the
highest level of value. Our consultants are qualified and trained to perform a
wide variety of services including: architectural assessment, prototype
development, installation, configuration and testing of our software and
integration with the customer's existing databases, security and other systems.
Our consultants also help customers develop a strategy for the customers'
enterprise-wide deployment of our software. Once deployed into a customer site
on an engagement, our consultants become advisors and help us discover new
business opportunities around the company.
Customer Support. We provide product upgrades and customer support through
our customer support program. Customer support personnel are available 24 hours
a day, seven days a week. We also offer
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e-mail-based support. Customers generally purchase the first year of product
support at the time they license our software; thereafter, support may be
renewed on an annual basis. Our support engineers will immediately render
assistance to system critical problems and work with the customer to diagnose
the issue and resolve it until the customer is satisfied. Once a customer has
purchased a technical support contract, they are entitled to free upgrades for
the software they have licensed. Our support organization interfaces with our
sales force in identifying new opportunities, product uses and for maintenance
renewals.
Training. We offer a variety of training programs tailored to particular
user groups, including end users and information technology personnel. Training
classes are offered at customer sites, in various high demand cities and also
at our headquarters in San Mateo, California. We also provide training classes
for third-party service providers, such as systems integrators and
distributors. Viador also offers training for other trainers to expand our
reach to customers. Viador incorporates training early on in the sales cycle to
ensure successful implementations and even sponsors free one-day enterprise
portal training seminars in cities as an early entry into accounts.
Customers
Our customer base spans multiple industry segments including financial
services, government, healthcare, manufacturing and telecommunications. The
following is a representative list of companies that have purchased over
$50,000 of our products and services since January 1, 1998. We do not intend
the identification of these customers to imply that these customers are
actively endorsing or promoting our products.
<TABLE>
<CAPTION>
Financial Energy & Utilities High Tech/Telecom
<S> <C> <C>
. American Century . INTESA . 3Com
. Charles Schwab . Pacific Gas & Electric . Cisco Systems
. CIBC . Retail Energy Transaction Exchange . IBM
. Citibank Government/Education . Lucent Technologies
. Putnam Investments . Federal Aviation Administration . Nortel
Manufacturing . Internal Revenue Service . Sprint PCS
. Allied Signal . University of Buffalo . Sterling Software
. Raytheon . Multnomah County, Oregon . Sun Microsystems
Internet . US Department of Defense . Sybase
. Baker Healthcare . Xerox
Street Technologies
. Netcentives . Ministry Health Care
. FaceTime Communication Services
. Micromuse . Gelco Information Systems
. Mitsui
</TABLE>
The following examples, which are based on information furnished by the
companies listed below, illustrate how certain of our customers use the Viador
E-Portal Suite to perform business-critical tasks:
Sprint PCS. Sprint PCS provides digital personal communication services over
a nationwide wireless network, covering more than 280 metropolitan areas and
over 1,100 cities. Sprint was rapidly hiring employees, resulting in an
increase from a few hundred users of its information systems to thousands of
users. Sprint sought an enterprise solution that would enable it to deliver to
thousands of users and critical customers financial information from multiple
data sources that normally could only be accessed with a disparate collection
of client/server tools. Sprint knew that it would be cost prohibitive to use
client/server database access tools because the high cost of installing and
maintaining the necessary PC software on thousands of desktops. Sprint
determined that the way to scale its information technology infrastructure was
to use its existing desktop browsers and its intranet. After 90 days following
project initiation, we were able to provide Sprint with a solution that offered
hundreds of users web-based access to a wide variety of financial data sources
through the users' web browsers and the ability to significantly and easily
expand the number of users in the future. In addition to addressing the
scalability issue with the web, Viador offered Sprint a secure way to access
the data on the internet and personalize user access based on the user's job
function.
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<PAGE>
Xerox. Xerox offers a wide variety of document-related solutions, products
and services that enhance business productivity. Xerox needed an efficient
method for searching, analyzing and distributing business information from its
many different corporate data sources so that its thousands of employees
worldwide could directly access timely, customized information. Xerox required
a solution that would support thousands of users around the world, which
existing client/server solutions are not capable of efficiently doing. Thus,
Xerox conducted a comprehensive evaluation of web data access solutions, after
which Xerox selected the Viador E-Portal Suite. Xerox chose our software in
order to provide a single solution that can be used across multiple platforms
to access any corporate data source including databases, data warehouses,
desktop applications and enterprise resource planning software applications.
Viador offered Xerox comprehensive user functionality along with a 100% web
software architecture to permit Xerox to deploy the solution worldwide. The
Viador E-Portal Suite is now being used in several areas by Xerox including e-
business channel supply tracking, data warehouse access, and reporting for
customer service administration, human resources/payroll and global service.
Sales
We sell our software primarily through our domestic direct sales
organization, with sales professionals located in eight regions in the United
States including the North Atlantic, Rocky Mountain, Southeast, Eastern,
Pacific Northwest, South Central, Western and Great Lakes regions. The field
sales force is complemented by direct telesales and telemarketing
representatives based at our headquarters in San Mateo, California. As of June
30, 1999, we employed 16 commission-based sales people. Technical sales support
is provided by sales engineers located in several of the field offices. We
currently intend to add a significant number of sales representatives and sales
engineers in other domestic locations. We use distributors in the Netherlands,
Germany, United Kingdom, Canada, Hong Kong and Japan and plan to expand our
distributor channel to other international markets. See "Risk Factors--Our
growth is dependent upon the successful development of our direct sales model."
Since our products affect users throughout the customer's organization, our
sales effort involves multiple decision makers and frequently includes the
chief financial officer, vice president of finance, controller and vice
president of purchasing. While the average sales cycle varies substantially
from customer to customer, for initial sales it has generally ranged from three
to nine months. Our sales cycle is affected by seasonal fluctuations as a
result of our customers' fiscal year budgeting cycles and slow summer
purchasing patterns overseas. We typically receive a substantial portion of our
orders in the last two weeks of each fiscal quarter because our customers often
delay purchases of products to the end of the quarter. Also, we expect our
revenue to be higher in the fourth quarter than in other quarters of the year.
Implementation of additional components of our software and broader rollout to
additional users within the organization generally occur over multiyear
periods.
Marketing
Our marketing efforts are directed at promoting our enterprise information
portal product family, building a leadership position by defining the EIP
market space and increasing our market share in that market. Our marketing
programs are targeted at both mid- to executive-level information technology
professionals as well as line-of-business executives and are focused on
creating awareness of, and generating interest in, our software.
We engage in a variety of marketing activities, including developing and
executing joint marketing strategies designed to leverage our existing
strategic relationships, managing and maintaining our web site, issuing
newsletters and direct mailings, e-marketing campaigns, creating and placing
advertisements in various media, conducting aggressive public relations
campaigns, and establishing and maintaining close relationships with recognized
industry analysts. We are an active participant in technology-related
conferences and demonstrate our products at trade shows targeted at information
technology audiences. Our marketing campaigns are tightly synchronized with our
sales force to ensure appropriate follow up with sales leads.
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<PAGE>
We expect to grow our sales and marketing staff significantly. We believe
that demand is increasing, and will continue to increase, for web enterprise
information access software and services, such as those sold by us. We may not
be able to expand our sales and marketing staff, either domestically or
internationally, to take advantage of any increase in demand for web enterprise
information portals. Our failure to expand our sales and marketing organization
or other distribution channels could materially adversely affect our business.
See "Risk Factors--Our business will suffer if we do not retain and expand our
customer base."
Product Development
Our development staff is responsible for enhancing our existing products and
expanding our product line. We believe that a technically skilled, quality
oriented and highly productive software development organization will be a key
component of the continued success of our new product offerings. We expect that
we will increase our product development expenditures substantially in the
future.
Our current product development activities focus on product enhancements to
the Viador E-Portal Suite and the integration of external services and partner
technology. These development efforts may not be completed within our
anticipated schedules, and if completed, they may not have the features
necessary to make them successful in the marketplace. Delays or problems in the
development or marketing of product enhancements or new products could result
in a material adverse effect on our business. See "Risk Factors--Our market
changes rapidly due to changing technology and evolving industry standards, and
our future success will depend on our ability to effectively respond to these
changes" and "--Our plan to sell products as an internet-based application
service provider may fail."
Competition
The market for our products is intensely competitive, subject to rapid
change and significantly affected by new product introductions and other market
activities of industry participants. Our primary source of direct competition
comes from independent software vendors of corporate portal software, and from
providers of business intelligence tools that have or may be developing
business intelligence portal products. We also face indirect competition from
potential customers' internal development efforts.
Our major competitors in the corporate portal field tend to be early stage
private companies. In addition, several major business intelligence vendors
have introduced business intelligence portal products as a way to integrate
their business intelligence tools. At least one enterprise resource planning
company has introduced a portal (Peoplesoft) and we expect more will do so.
These companies may begin to sell their product along with their enterprise
resource planning application suites. We also expect to face competition from
new entrants. Most of the major enterprise resource planning providers and
larger business intelligence tools providers have a significantly installed
customer base and have the opportunity to offer additional products to those
customers as additional components of their respective enterprise resource
planning application suites or business intelligence tools.
We believe that the principal competitive factors considered in selecting
enterprise information portal solutions are comprehensive access to existing IT
infrastructure, security, scalability, personalization and filtering
capabilities and an installed referenceable base of customers. We believe that
our ability to access a wide variety of data sources is a major benefit to
existing and future customers. The corporate portals are targeted at providing
access to unstructured data in the form of websites and documents, while the
business intelligence portals are targeted at integrating and accessing
structured data, and the enterprise resource planning portals are targeted at
individual applications.
Many of our competitors in both the business intelligence and enterprise
resource planning markets have longer operating histories, significantly
greater financial, technical, marketing and other resources, significantly
greater name recognition and a larger installed base of customers. Moreover, a
number of our competitors, particularly major enterprise resource planning
vendors, have well-established relationships with our current
42
<PAGE>
and potential customers as well as with systems integrators and other vendors
and service providers. In addition, these competitors may 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.
It is also possible that new competitors, alliances among competitors or
other third parties may emerge and rapidly acquire significant market share. We
expect that competition in our markets will increase as a result of
consolidation and the formation of alliances in the industry. Increased
competition may result in price reductions, reduced gross margins and loss of
market share, any of which could materially adversely affect our business. We
may be unable to compete successfully against current or future competitors and
the competitive pressures we face may materially adversely affect our business.
See "Risk Factors--We may not be able to successfully compete against our
current and future competitors, which could adversely affect our business" and
"--If important strategic relationships are discontinued for any reason, there
may be a material adverse effect on our business, results of operations and
financial condition."
Intellectual Property Rights
Our success depends upon our proprietary technology. We rely primarily on a
combination of patent, copyright, trade secret and trademark laws,
confidentiality procedures, contractual provisions and other similar measures
to protect our proprietary information. For example, we license rather than
sell our software to customers and require licensees to enter into license
agreements that impose certain restrictions on licensees' ability to utilize
the software. We currently hold two U.S. patents, but we have no patents or
patent applications pending in any foreign countries. There can be no assurance
that any of our patents, copyrights or trademarks will not be challenged or
invalidated.
As part of our confidentiality procedures, we enter into non-disclosure
agreements with certain of our employees, directors, contractors, consultants,
corporate partners, customers and prospective customers. We also enter into
license agreements with respect to our technology, documentation and other
proprietary information. Those licenses are generally non-transferable and have
a perpetual term. Despite our best efforts to protect our proprietary rights,
unauthorized parties may attempt to copy or otherwise obtain and use our
products or technology that we consider proprietary and third parties may
attempt to develop similar technology independently. In particular, we provide
our licensees with access to object code versions of our software, and other
proprietary information underlying our licensed software. Policing unauthorized
use of our products is difficult, particularly because the global nature of the
internet makes it difficult to control the ultimate destination or security of
software or other data transmitted. While we are unable to determine the extent
to which piracy of our software exists, we expect software piracy to be a
persistent problem. In addition, effective protection of proprietary rights may
be unavailable or limited in certain countries. The laws of some foreign
countries do not protect our proprietary rights to the same extent as do the
laws of the United States. Overall, the protection of our proprietary rights
may not be adequate and our competitors may independently develop similar
technology.
We are not aware that our products, trademarks, copyrights or other
proprietary rights infringe the proprietary rights of third parties. Third
parties may assert infringement claims against us in the future with respect to
current or future products. Further, we expect that software product developers
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 different industry segments overlaps. From time to time, we hire or retain
employees or consultants who have worked for independent software vendors or
other companies developing products similar to those offered by us. Those prior
employers may claim that our products are based on their products and that we
have misappropriated their intellectual property. Any claims of that variety,
with or without merit, could cause a significant diversion of management
attention, result in costly and protracted litigation, cause product shipment
delays or require us to enter into royalty or licensing agreements. Those
43
<PAGE>
royalty or licensing agreements, if required, may not be available on terms
acceptable to us or at all, which would have a material adverse affect on our
business. See "Risk Factors--Our failure to adequately protect our proprietary
rights may adversely affect us."
Employees
As of June 30, 1999, we had a total of 108 employees, including 49 people in
sales and marketing, 32 people in engineering, 16 people in operations and 11
people in finance and administration. We believe that our future success will
depend in part on our continued ability to attract, hire and retain qualified
personnel. The competition for those personnel is intense, and there can be no
assurance that we will be able to identify, attract and retain those personnel
in the future. None of our employees is represented by a labor union, and
management believes that our employee relations are good.
Facilities
We currently lease the following facilities: our corporate headquarters in
San Mateo, California and sales offices in New York, New York, Arlington,
Virginia, League City, Texas, Huntington Beach, California, Palm Coast, Florida
and Sylvan Lake, Michigan.
Legal Proceedings
We are not a party to any material legal proceedings.
44
<PAGE>
MANAGEMENT
Executive Officers and Directors
The following table sets forth certain information regarding the executive
officers and directors of Viador as of July 20, 1999:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Stan X. Wang............ 37 Chief Executive Officer, President, Chairman of the Board of Directors
Jonathan M. Harding..... 46 Senior Vice President, North American Operations
Raja H. Venkatesh....... 38 Vice President and Chief Financial Officer and Secretary
Ben C. Connors.......... 41 Vice President, Business Development
Steven C. Dille......... 39 Vice President, Marketing
Paul C. Vilandre........ 57 Vice President
Teddy Kiang(1).......... 46 Director
Dawn G. Lepore.......... 45 Director
Chong Sup Park(2)....... 51 Director
Virginia M.
Turezyn(1)(2).......... 41 Director
</TABLE>
- ----------
(1) Member of Compensation Committee
(2) Member of Audit Committee
Each director will hold office for the term described below in "--Classified
Board" and until such director's successor is elected and qualified or until
such director's earlier resignation or removal. Each officer serves at the
discretion of the Board of Directors of Viador.
Stan X. Wang is a co-founder of Viador. Mr. Wang has served as President,
Chief Executive Officer and Chairman of the Board of Directors since Viador was
founded in December 1995. Prior to founding Viador, from January 1995 to
December 1995, Mr. Wang oversaw the data warehouse division of the RightSizing
Group, a software and services company focused on Internet, data warehouse and
large database and financial database applications where he designed and
implemented numerous large enterprise software projects. From July 1990 to
January 1995, Mr. Wang was an architect in Oracle Corporation's information
access tools group. Mr. Wang holds a B.S. in Electrical Engineering from Tsing
Hua University in China, an M.S. in Mathematics from Oregon State University
and an M.S. in Mechanical Engineering from the California Institute of
Technology.
Jonathan M. Harding has served as Senior Vice President of North American
Operations since April 1998. Prior to joining Viador, from July 1994 to April
1998, Mr. Harding was Managing Partner at Vision Unlimited, an information
technology consulting company. Mr. Harding also served as Vice President of
Professional Services at Brock Control Systems from July 1993 to July 1994.
Previously, Mr. Harding has held senior executive positions at Computer Task
Group and Knowledge Ware. Mr. Harding holds a B.S. in Economics from SUNY-
Brockport and attended the Graduate School of Industrial Administration at
Carnegie Mellon University.
Raja H. Venkatesh joined Viador as Vice President and Chief Financial
Officer and Secretary in June 1999. Prior to joining Viador, from August 1997
to June 1999, Mr. Venkatesh served as Corporate Treasurer at Maxtor
Corporation, a manufacturer of information storage products for desktop
computer systems. From April 1996 to August 1997, Mr. Venkatesh served as
Director of Corporate Strategy and Development at the Pacific Telesis Group.
Previously, Mr. Venkatesh served in various capacities in the Treasurer's
office of General Motors Corporation from July 1990 to March 1996. Mr.
Venkatesh holds a bachelor's degree in Engineering from the Regional
Engineering College in India and an M.B.A. from the Darden Graduate School of
Business Administration at the University of Virginia.
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<PAGE>
Ben C. Connors is a co-founder of Viador. Mr. Connors has served as Vice
President of Business Development since November 1998. Mr. Connors served as
Chief Operating Officer from July 1997 to November 1998 and as Vice President
of Sales and Marketing from January 1996 to July 1997. Prior to joining Viador,
from November 1995 to Jan 1996, Mr. Connors served as Chief Executive Officer
of Quadsoft, Inc., a custom software development and outsourcing company, which
he also co-founded. Mr. Connors also served as Vice President of Sales and
Marketing for The RightSizing Group from May 1994 to November 1995. Previously,
Mr. Connors held sales and marketing management positions with The ASK Group,
Oracle Corporation and Hewlett-Packard Company. Mr. Connors holds a B.S. in
Mechanical Engineering from Stanford University and a M.B.A. from Harvard
Business School.
Steven C. Dille has served as Vice President of Marketing since December
1997. Prior to joining Viador, from February 1992 to November 1997, Mr. Dille
served in the marketing division at Sybase, Inc., a global independent software
company, most recently as director of data warehousing. Previously, Mr. Dille
has held marketing and technology leadership positions at Hewlett-Packard
Company, NCR and as an independent consultant. Mr. Dille holds a B.S. in
Computer Science and Mathematics from the University of Pittsburgh and a M.B.A.
in Marketing and Finance from The University of Chicago.
Paul C. Vilandre has served as Vice President since November 1997 and
previously served as Chief Financial Officer and Secretary. Prior to joining
Viador, from January 1996 to August 1996, Mr. Vilandre served as Vice President
of Finance and Chief Financial Officer of Metra Corporation and from September
1993 to August 1995, he served as Vice President of Finance and Chief Financial
Officer of Axil Computers, Inc. Mr. Vilandre was a professor in finance at San
Jose State University before joining Viador. Previously, Mr. Vilandre held
financial management positions at Intel Corporation, Digital Equipment
Corporation and IBM Corporation. Mr. Vilandre has served as Area Vice President
and National Director for the Financial Executives Institute, an international
organization of senior financial officers. Mr. Vilandre holds a B.A. in
Accounting from Loyola College and an M.B.A. from Harvard Business School.
Teddy Kiang has served as a director since April 1997. Mr. Kiang is a
Managing Director of Crosslink Technology Partners, an early stage venture
capital firm, specializing in funding and developing healthcare, network and
information technology ventures. From July 1990 to September 1995, Mr. Kiang
was the program director and a business development executive for the Point-of-
Care Coagulation product system at Boeringer Mannheim Corporation, a
biotechnology firm. From August 1980 to July 1990, Mr. Kiang served as a
project manager in the Medical Products Group at Hewlett Packard Laboratories.
Mr. Kiang serves on the Board of Directors of two privately-held companies as
the investment representative of Standard Foods Taiwan, Ltd., a publicly traded
company in Taiwan. He also serves as a special advisor to the Chairman of
AboveNet Communications, Inc. Mr. Kiang holds an M.S. in Chemistry from
Columbia University and a Ph.D. in Chemical Physics from Stanford University.
Dawn G. Lepore has served as a director since July 1999. Ms. Lepore is
Executive Vice President and Chief Information Officer and a member of the
Management Committee of The Charles Schwab Corporation, where she has served
for over fifteen years in various capacities. Prior to her appointment as Chief
Information Officer at Schwab in 1993, Ms. Lepore served as Senior Vice
President of Information Technology at Schwab, responsible for the development
of a wide range of systems to support Schwab's growing product offerings and
client base. She also led a strategic initiative for redesigning Schwab's
entire technology platform. Prior to joining Schwab in 1983, Ms. Lepore was
employed at Informatics, an information consulting firm in San Francisco. Ms.
Lepore serves on the Board of Directors of Times Mirror Company, a publisher of
several daily news and specialty publications. Ms. Lepore holds a B.A. in Music
from Smith College.
Chong Sup Park has served as a director since March 1999. Mr. Park is
President and Chief Executive Officer of Hyundai Electronics America. Prior to
joining Hyundai, from February 1995 to August 1996, Mr. Park served as
President and Chief Executive Officer of Maxtor Corporation, a manufacturer of
information storage products for desktop computer systems. From July 1993 to
January 1995, Mr. Park served as President and Chief Executive Officer of Axil
Computers Inc. Mr. Park serves on the board of directors of several companies,
both publicly and privately held, which include Maxtor Corporation, Artecon,
Inc.,
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<PAGE>
ChipPAC, Inc. and MMC, Inc. Mr. Park holds a B.A. in Business Administration
from Yonsei University in Seoul, Korea, a M.B.A. from The University of Chicago
and a doctorate in Business Administration from Nova Southeastern University.
Virginia Turezyn has served as a director since September 1998. Ms. Turezyn
co-founded Information Technology Ventures, a venture capital firm in September
1994 and has served as a General Partner since its founding. From April 1982 to
September 1994, she served in a variety of capacities at Morgan Stanley &
Company, Inc., including most recently as Vice President in the Venture Capital
Group. Ms. Turezyn serves on the Board of Directors of several privately held
companies. Ms. Turezyn holds a B.A. in Accounting from Queens College and is a
Certified Public Accountant.
Director Compensation
Directors of Viador receive $1,000 for each board meeting attended if in
person and $500 if attended telephonically. Directors also receive $500 for
each board committee meeting attended if in person and $250 if attended
telephonically. All directors are also reimbursed for their reasonable out-of-
pocket expenses in serving on the Board of Directors or any Committee thereof.
Directors are eligible to receive equity incentives in the form of stock option
grants or direct stock issuances under our 1999 Stock Incentive Plan.
Classified Board
Our certificate of incorporation provides for a classified Board of
Directors consisting of three classes of directors, each serving staggered
three-year terms. As a result, a portion of our Board of Directors will be
elected each year. To implement the classified structure, prior to the
consummation of the offering, one of the nominees to the board will be elected
to one-year terms, two will be elected to two-year terms and two will be
elected to three-year terms. Thereafter, directors will be elected for three-
year terms. Virginia M. Turezyn has been designated a Class I director whose
term expires at the 2000 annual meeting of stockholders. Dawn G. Lepore and
Chong Sup Park have been designated Class II directors whose terms expire at
the 2001 annual meeting of stockholders. Stan X. Wang and Teddy Kiang have been
designated Class III directors whose terms expire at the 2002 annual meeting of
stockholders. See "Description of Capital Stock--Certain Anti-takeover, Limited
Liability and Indemnification Provisions."
Board Committees
The audit committee of the Board of Directors consists of Chong Sup Park and
Virginia Turezyn. The audit committee reviews our financial statements and
accounting practices, makes recommendations to the Board of Directors regarding
the selection of independent auditors and reviews the results and scope of our
annual audit and other services provided by our independent auditors.
The compensation committee of the Board of Directors consists of Teddy Kiang
and Virginia Turezyn. The compensation committee makes recommendations to the
Board of Directors concerning salaries and incentive compensation for our
officers and employees and administers our employee benefit plans.
Compensation Committee Interlocks and Insider Participation
None of the members of the compensation committee of the Board of Directors
was at any time since the formation of Viador an officer or employee of Viador.
No executive officer of Viador serves as a member of the Board of Directors or
compensation committee of any entity that has one or more executive officers
serving on our Board of Directors or our compensation committee of the Board of
Directors.
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<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table sets forth the compensation earned by our Named
Executive Officers which include our Chief Executive Officer and our four other
executive officers whose salary and bonus for services rendered to Viador for
the fiscal year ended December 31, 1998 exceeded $100,000. Since such date,
certain of these executive officers have been succeeded by new persons and we
have added additional officers. For a list of our current executive officers
and certain members of senior management, see "Management."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
1998 Annual Compensation
Compensation Awards
------------------- ------------
Number of
Securities
Underlying
Name and Principal Position(s) Salary Bonus Options(1)
- ------------------------------ -------- ------- ------------
<S> <C> <C> <C>
Stan X. Wang................................. $100,000 $20,000 898,783
President, Chief Executive Officer and
Chairman of the Board of Directors
Jonathan M. Harding(2)....................... $ 73,920(3) -- 79,167
Senior Vice President of North American
Operations
Ben Connors.................................. $105,000 $ 5,000 --
Vice President of Business Development
Steven C. Dille.............................. $115,000 $ 7,500 58,334
Vice President of Marketing
Paul C. Vilandre............................. $100,000 $15,000 96,222
Vice President of Administration and
Secretary
</TABLE>
- ----------
(1) The options listed in the table were originally granted under either our
1996 Stock Option/Stock Issuance Plan or our Amended and Restated 1997
Stock Option/Stock Issuance Plan. These options will be incorporated into
the new 1999 Stock Incentive Plan, but will continue to be governed by
their existing terms. See "--Executive Compensation and Other Information--
Employee Benefit Plans."
(2) Mr. Harding has served as Senior Vice President of North American
Operations since April 1998.
(3) Mr. Harding's annual base salary was $115,000.
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<PAGE>
Stock Options and Stock Appreciation Rights
The following table sets forth information regarding option grants to each
of the Named Executive Officers during the fiscal year ended December 31, 1998.
No stock appreciation rights were granted to the Named Executive Officers
during the 1998 fiscal year.
Stock Option Grants in Fiscal Year 1998
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed
Annual Rates of
Number of Percentage of Stock Price
Securities Total Options Exercise Appreciation for
Underlying Granted to Price Option Term
Options Employees in Per Share Expiration -----------------
Name Granted (#) 1998 ($/Sh) Date 5% 10%
---- ----------- ------------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Stan X. Wang............ -- -- -- -- -- --
Ben Connors............. -- -- -- -- -- --
Jonathan Harding........ 79,167 11.7% $0.24 4/19/08 $ 11,949 $ 30,281
Steven Dille............ -- -- -- -- -- --
Paul C. Vilandre........ -- -- -- -- -- --
</TABLE>
Aggregated Option/SAR Exercises and Fiscal Year-End Values
The following table sets forth information with respect to the Named
Executive Officers concerning their exercise of stock options during the fiscal
year ended December 31, 1998 and the number of shares subject to unexercised
stock options held by them as of the close of such fiscal year. No stock
appreciation rights were exercised during the fiscal year ended December 31,
1998, and no stock appreciation rights were outstanding at the close of such
year.
Aggregated Option Exercises in 1998 and Year-End Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options at Year-End at Year-End(1)
Acquired on Value ------------------------- -------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stan X. Wang............ -- -- 898,783 -- $3,623,893 --
Ben Connors............. -- -- -- -- -- --
Jonathan Harding........ -- -- 79,167 -- $ 304,000 --
Steven Dille............ -- -- 58,334 -- $ 224,000 --
Paul C. Vilandre........ -- -- 96,222 -- $ 369,490 --
</TABLE>
- ----------
(1) Based upon the fair market value per share at the close of the 1998 fiscal
year of $4.08 less the exercise price payable per share.
Employee Benefit Plans
1999 Stock Incentive Plan.
Introduction. The 1999 Stock Incentive Plan is intended to serve as the
successor program to both our 1996 Stock Option/Stock Issuance and 1997 Stock
Option/Stock Issuance Plans. The 1999 plan was adopted by the board on July 20,
1999 and has not yet been approved by our stockholders. The 1999 plan will
become effective when the underwriting agreement for this offering is signed.
At that time, all outstanding options under our existing 1996 and 1997 plans
will be transferred to the 1999 plan, and no further option grants will be made
under the 1996 or 1997 plans. The transferred options will continue to be
governed by their existing terms, unless our compensation committee decides to
extend one or more features of the 1999 plan to those options. Except as
otherwise noted below, the transferred options have substantially the same
terms as will be in effect for grants made under the discretionary option grant
program of our 1999 plan.
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<PAGE>
Share Reserve. 12,292,000 shares of our common stock have been authorized
for issuance under the 1999 plan. This share reserve consists of the number of
shares we estimate will be carried over from the 1996 and 1997 plans plus an
additional increase of approximately 3,000,000 shares. The share reserve under
our 1999 plan will automatically increase on the first trading day in January
each calendar year, beginning with calendar year 2000, by an amount equal to
four percent of the total number of shares of our common stock outstanding on
the last trading day of December in the prior calendar year, but in no event
will this annual increase exceed 3,000,000 shares. In addition, no participant
in the 1999 plan may be granted stock options or direct stock issuances for
more than 1,000,000 shares of common stock in total in any calendar year.
Programs. Our 1999 plan has five separate programs:
. the discretionary option grant program, under which eligible individuals
in our employ may be granted options to purchase shares of our common
stock at an exercise price not less than the fair market value of those
shares on the grant date;
. the stock issuance program, under which eligible individuals may be
issued shares of common stock directly, upon the attainment of
performance milestones or the completion of a specified period of
service or as a bonus for past services;
. the salary investment option grant program, under which our executive
officers and other highly compensated employees may be given the
opportunity to apply a portion of their base salary each year to the
acquisition of special below market stock option grants;
. the automatic option grant program, under which option grants will
automatically be made at periodic intervals to eligible non-employee
board members to purchase shares of common stock at an exercise price
equal to the fair market value of those shares on the grant date; and
. the director fee option grant program, under which our non-employee
board members may be given the opportunity to apply a portion of any
director or retainer fee otherwise payable to them in cash each year to
the acquisition of special below-market option grants.
Eligibility. The individuals eligible to participate in our 1999 plan
include our officers and other employees, our board members and any consultants
we hire.
Administration. The discretionary option grant and stock issuance programs
will be administered by our compensation committee. This committee will
determine which eligible individuals are to receive option grants or stock
issuances under those programs, the time or times when the grants or issuances
are to be made, the number of shares subject to each grant or issuance, the
status of any granted option as either an incentive stock option or a
nonstatutory stock option under the federal tax laws, the vesting schedule to
be in effect for the option grant or stock issuance and the maximum term for
which any granted option is to remain outstanding. The compensation committee
will also have the authority to select the executive officers and other highly
compensated employees who may participate in the salary investment option grant
program in the event that program is put into effect for one or more calendar
years.
Plan Features. Our 1999 plan will include the following features:
. The exercise price for any options granted the plan may be paid in cash
or in shares of our common stock valued at fair market value on the
exercise date. The option may also be exercised through a same-day sale
program without any cash outlay by the optionee.
. The compensation committee will have the authority to cancel outstanding
options under the discretionary option grant program, including any
transferred options from our 1996 or 1997 plans, in return for the grant
of new options for the same or different number of option shares with an
exercise price per share based upon the fair market value of our common
stock on the new grant date.
. Stock appreciation rights may be issued under the discretionary option
grant program. These rights will provide the holders with the election
to surrender their outstanding options for a payment from
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us equal to the fair market value of the shares subject to the
surrendered options less the exercise price payable for those shares. We
may make the payment in cash or in shares of our common stock. None of
the options under our 1996 or 1997 plan have any stock appreciation
rights.
Change in Control. The 1999 plan will include the following change in
control provisions which may result in the accelerated vesting of outstanding
option grants and stock issuances:
. In the event that we are acquired by merger or asset sale, each
outstanding option under the discretionary option grant program which is
not to be assumed by the successor corporation will immediately become
exercisable for all the option shares, and all outstanding unvested
shares will immediately vest, except to the extent our repurchase rights
with respect to those shares are to be assigned to the successor
corporation.
. The compensation committee will have complete discretion to grant one or
more options which will become exercisable for all the option shares in
the event those options are assumed in the acquisition but the
optionee's service with us or the acquiring entity is subsequently
terminated. The vesting of any outstanding shares under our 1999 plan
may be accelerated upon similar terms and conditions.
. The compensation committee may grant options and structure repurchase
rights so that the shares subject to those options or repurchase rights
will immediately vest in connection with a successful tender offer for
more than fifty percent of our outstanding voting stock or a change in
the majority of our board through one or more contested elections. Such
accelerated vesting may occur either at the time of such transaction or
upon the subsequent termination of the individual's service.
. The options currently outstanding under our 1996 and 1997 plans will
immediately vest in the event we are acquired, unless those options are
assumed by the acquiring entity or our repurchase rights with respect to
any unvested shares subject to those options are assigned to such
entity. However, several options outstanding under the 1996 and 1997
plans contain additional acceleration provisions. Some of those options
will vest up to 50% of the unvested shares immediately upon the
acquisition, whether or not those options are assumed, and other of
those options will immediately vest upon an involuntary termination of
the optionee's employment within 18 months following an acquisition in
which those options are assumed.
Salary Investment Option Grant Program. In the event the compensation
committee decides to put this program into effect for one or more calendar
years, each of our executive officers and other highly compensated employees
may elect to reduce his or her base salary for the calendar year by an amount
not less than $10,000 nor more than $50,000. Each selected individual who makes
such an election will automatically be granted, on the first trading day in
January of the calendar year for which his or her salary reduction is to be in
effect, an option to purchase that number of shares of common stock determined
by dividing the salary reduction amount by two-thirds of the fair market value
per share of our common stock on the grant date. The option will have exercise
price per share equal to one-third of the fair market value of the option
shares on the grant date. As a result, the option will be structured so that
the fair market value of the option shares on the grant date less the exercise
price payable for those shares will be equal to the amount of the salary
reduction. The option will become exercisable in a series of twelve equal
monthly installments over the calendar year for which the salary reduction is
to be in effect.
Automatic Option Grant Program. Each individual who first becomes a non-
employee board member at any time after the effective date of this offering
will receive an option grant to purchase 15,000 shares of common stock on the
date such individual joins the board. In addition, on the date of each annual
stockholders meeting held after the effective date of this offering, each non-
employee board member who is to continue to serve as a non-employee board
member, including each of our current non-employee board members, will
automatically be granted an option to purchase 5,000 shares of common stock,
provided such individual has served on the board for at least six months.
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<PAGE>
Each automatic grant will have an exercise price per share equal to the fair
market value per share of our common stock on the grant date and will have a
term of 10 years, subject to earlier termination following the optionee's
cessation of board service. The option will be immediately exercisable for all
of the option shares; however, we may repurchase, at the exercise price paid
per share, any shares purchased under the option which are not vested at the
time of the optionee's cessation of board service. The shares subject to each
initial 15,000-share automatic option grant will vest in a series of six
successive semi-annual installments upon the optionee's completion of each six-
month of board service over the thirty-six-month period measured from the grant
date. However, the shares will immediately vest in full upon certain changes in
control or ownership or upon the optionee's death or disability while a board
member. The shares subject to each annual 5,000-share automatic grant will be
fully-vested when granted.
If the financial accounting treatment for non-employee director stock
options proposed in the March 31, 1999 Exposure Draft of the Financial
Accounting Standards Board under APB Opinion No. 25 is adopted, then following
changes shall be made to the foregoing provisions of the Automatic Option Grant
Program:
. The 15,000-share option grant shall not be made to a newly-elected or
appointed non-employee Board member until the first Annual Stockholders
Meeting held more than twelve months after the date of his or her
initial election or appointment to the Board. At that annual meeting,
the non-employee Board member shall also receive an option grant for an
additional 5,000 shares under the annual grant portion of the Automatic
Option Grant Program.
. One-third of the shares subject to the 15,000-share option grant shall
be immediately vested at the time of the option grant, and the remaining
shares shall vest in a series of four successive equal semi-annual
installments upon the Optionee's completion of each six-month period of
Board service over the twenty-four-month period measured from the grant
date.
Director Fee Option Grant Program. If this program is put into effect in the
future, then each non-employee board member may elect to apply all or a portion
of any cash retainer fee for the calendar year to the acquisition of a below-
market option grant. The option grant will automatically be made on the first
trading day in January in the calendar year for which the non-employee board
member would otherwise be paid the cash retainer fee in the absence of his or
her election. The option will have an exercise price per share equal to one-
third of the fair market value of the option shares on the grant date, and the
number of shares subject to the option will be determined by dividing the
amount of the retainer fee applied to the program by two-thirds of the fair
market value per share of our common stock on the grant date. As a result, the
option will be structured so that the fair market value of the option shares on
the grant date less the exercise price payable for those shares will be equal
to the portion of the director or retainer fee applied to that option. The
option will become exercisable in a series of twelve equal monthly installments
over the calendar year for which the election is in effect. However, the option
will become immediately exercisable for all the option shares upon the death or
disability of the optionee while serving as a board member.
Additional Program Features. Our 1999 plan will also have the following
features:
. Outstanding options under the salary investment and director fee option
grant programs will immediately vest if we are acquired by a merger or
asset sale or if there is a successful tender offer for more than 50% of
our outstanding voting stock or a change in the majority of our board
through one or more contested elections.
. Limited stock appreciation rights will automatically be included as part
of each grant made under the salary investment option grant program and
the automatic and director fee option grant programs, and these rights
may also be granted to one or more officers as part of their option
grants under the discretionary option grant program. Options with this
feature may be surrendered to us upon the successful completion of a
hostile tender offer for more than 50% of our outstanding voting stock.
In return for the surrendered option, the optionee will be entitled to a
cash distribution from us in an amount per surrendered option share
based upon the highest price per share of our common stock paid in that
tender offer.
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. The board may amend or modify the 1999 plan at any time, subject to any
required stockholder approval. The 1999 plan will terminate no later
than June 15, 2009.
1999 Employee Stock Purchase Plan.
Introduction. Our 1999 Employee Stock Purchase Plan was adopted by the board
on July 20, 1999 and has not yet been approved by our stockholders. The plan
will become effective immediately upon the signing of the underwriting
agreement for this offering. The plan is designed to allow our eligible
employees and the eligible employees our participating subsidiaries to purchase
shares of common stock, at semi-annual intervals, with their accumulated
payroll deductions.
Share Reserve. 300,000 shares of our common stock will initially be reserved
for issuance. The reserve will automatically increase on the first trading day
in January each calendar year, beginning in calendar year 2000, by an amount
equal to one percent of the total number of outstanding shares of our common
stock on the last trading day in December in the prior calendar year. In no
event will any such annual increase exceed 500,000 shares.
Offering Periods. The plan will have a series of successive offering
periods, each with a maximum duration of 24 months. The initial offering period
will start on the date the underwriting agreement for the offering covered is
signed and will end on the last business day in October 2001. The next offering
period will start on the first business day in November 2001, and subsequent
offering periods will set by our compensation committee.
Eligible Employees. Individuals scheduled to work more than 20 hours per
week for more than 5 calendar months per year may join an offering period on
the start date or any semi-annual entry date within that period. Semi-annual
entry dates will occur on the first business day of May and November each year.
Individuals who become eligible employees after the start date of an offering
period may join the plan on any subsequent semi-annual entry date within that
offering period.
Payroll Deductions. A participant may contribute up to 15% of his or her
cash earnings through payroll deductions, and the accumulated deductions will
be applied to the purchase of shares on each semi-annual purchase date. The
purchase price per share will be equal to 85% of the fair market value per
share on the participant's entry date into the offering period or, if lower,
85% of the fair market value per share on the semi-annual purchase date. Semi-
annual purchase dates will occur on the last business day of April and October
each year. However, a participant may not purchase more than 750 shares on any
purchase date, and not more than 75,000 shares may be purchased in total by all
participants on any purchase date. Our compensation committee will have the
authority to change these limitations for any subsequent offering period.
Reset Feature. If the fair market value per share of our common stock on any
purchase date is less than the fair market value per share on the start date of
the two-year offering period, then that offering period will automatically
terminate, and a new two-year offering period will begin on the next business
day. All participants in the terminated offering will be transferred to the new
offering period.
Change in Control. Should we be acquired by merger or sale of substantially
all of our assets or more than fifty percent of our voting securities, then all
outstanding purchase rights will automatically be exercised immediately prior
to the effective date of the acquisition. The purchase price will be equal to
85% of the market value per share on the participant's entry date into the
offering period in which an acquisition occurs or, if lower, 85% of the fair
market value per share immediately prior to the acquisition.
Plan Provisions. The following provisions will also be in effect under the
plan:
. The plan will terminate no later than the last business day of October
2009.
. The board may at any time amend, suspend or discontinue the plan.
However, certain amendments may require stockholder approval.
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<PAGE>
Change of Control Arrangements
A limited number of employees have stock options that will partially
accelerate upon a change of control. Typically, one half of the person's
options will vest upon a change of control.
Limitation of Liability and Indemnification
Our certificate of incorporation eliminates, to the fullest extent permitted
by Delaware law, liability of a director to Viador or our stockholders for
monetary damages for conduct as a director. Although liability for monetary
damages has been eliminated, equitable remedies such as injunctive relief or
rescission remain available. In addition, a director is not relieved of his or
her responsibilities under any other law, including the federal securities
laws.
Our certificate of incorporation requires us to indemnify our directors to
the fullest extent permitted by Delaware law. We have also entered into
indemnification agreements with each of our directors. We believe that the
limitation of liability provisions in our certificate of incorporation and
indemnification agreements may enhance our ability to attract and retain
qualified individuals to serve as directors. See "Description of
Capital Stock."
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<PAGE>
CERTAIN TRANSACTIONS
Since June 30, 1999, there has not been, nor is there currently proposed,
any transaction or series of similar transactions to which we were or are to be
a party in which the amount involved exceeded or will exceed $60,000 and in
which any director, executive officer, holder of more than 5% of our common
stock or any member of the immediate family of any of the foregoing persons had
or will have a direct or indirect material interest other than (A) compensation
agreements and other arrangements, which are described where required in
"Management" and (B) the transactions described below.
Preferred Stock Financings
Since May 23, 1997, we have issued 5,990,385 shares of our Series C
Preferred Stock at a price of $2.434 per share, 6,632,716 shares of our Series
B Preferred Stock at a price of $1.30 per share and 3,703,764 shares of our
Series A Preferred Stock at a price of $1.031 per share in a series of private
financings. We issued these securities pursuant to preferred stock purchase
agreements and an investors' rights agreement on substantially similar terms
(except for terms relating to date and price), under which we made standard
representations, warranties, and covenants, and which provided the purchasers
thereunder with registration rights, information rights, and rights of first
refusal, among other provisions standard in venture capital financings. Each
share of our preferred stock will automatically convert into 0.417 shares of
our common stock upon the completion of the offering. The purchasers of our
preferred stock included, among others, the following holders of 5% or more of
our common stock, directors, and entities associated with directors:
<TABLE>
<CAPTION>
Shares of Preferred Stock
Purchased
------------------------------
Series
Name A Series B Series C
- ---- ------- --------- ---------
<S> <C> <C> <C>
Stan X. Wang............ 11,737 -- --
Ruby McGrath............ 17,606 -- --
Y. P. Cheng............. 176,056 -- --
Teddy Kiang & Sylvia Te-
Yi Kiang............... 58,685 -- 246,508
Crosslink Semiconductor,
Inc. (Taiwan)(1)....... 586,854 -- --
Information Technology
Ventures II, L.P.(2)... -- 4,230,770(3) 1,027,116(3)
Standard Foods Taiwan,
Ltd.(4)................ -- 1,185,996 --
</TABLE>
- ----------
(1) Teddy Kiang, a director of Viador, is the investment representative of
Crosslink Semiconductor, Inc. (Taiwan).
(2) Virginia Turezyn, a director of Viador, is a principal member of ITV
Management II, LLC, the general partner of Information Technology Ventures
II, L.P.
(3) Includes shares held by ITV Affiliates Fund II, L.P., an entity affiliated
with Information Technology Ventures II, L.P.
(4) Teddy Kiang, a director of Viador, is the investment representative for
Standard Foods Taiwan, Ltd.
Amended and Restated Investors' Rights Agreement
Pursuant to the terms of an Amended and Restated Investors' Rights Agreement
dated May 21, 1999, by and among Viador and the holders of our preferred stock,
the investors acquired certain registration rights with respect to their
capital stock of Viador. At any time after three-months following our initial
public offering, holders of more than 40% of the outstanding preferred stock
may require us to effect registration under the Securities Act covering at
least 40% of the outstanding Registrable Securities (as defined in the
Investors' Rights Agreement), subject in either case to the board of directors'
right to defer such registration for a period up to 60 days; provided, however,
that Viador is obligated to effect only two such registrations. In addition, if
we propose to issue equity securities under the Securities Act for our own
account in an underwritten public offering, then any of the investors has a
right (subject to quantity limitations determined by the underwriters) to
request that Viador register such investor's Registrable Securities. All
registration expenses incurred in connection with the first two demand
registrations described above and all piggyback registrations will be
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<PAGE>
borne by Viador. The participating investors will pay for underwriting
discounts and commissions incurred in connection with any such registrations.
We have agreed to indemnify the investors against certain liabilities in
connection with any registration effected pursuant to the foregoing Investors'
Rights Agreement, including Securities Act liabilities.
Amended and Restated Right of First Refusal and Co-Sale Agreement
Pursuant to the terms of an Amended and Restated Right of First Refusal and
Co-Sale Agreement dated May 21, 1999 by and among Viador and certain investors,
such investors acquired certain first refusal and co-sale rights with respect
to their shares of preferred stock. Subject to certain customary exceptions, in
the event that any of our Management Members (defined in the Amended and
Restated Right of First Refusal and Co-Sale Agreement) or Major Shareholders
(defined in the Amended and Restated Right of First Refusal and Co-Sale
Agreement) propose to sell shares of common stock, such investor may elect to
participate pro-rata in such sale or purchase the shares being sold on the same
terms and conditions as the seller. These rights will terminate upon completion
of this offering.
Amended and Restated Voting Agreement
Pursuant to an Amended and Restated Voting Agreement dated May 21, 1999 by
and among Viador, the Common Shareholders (defined in the Amended and Restated
Voting Agreement) and the holders of our Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock, one of our directors is elected
by the holders of the common stock and the holders of our Series A Preferred
Stock and another of our directors is elected by the holders of our Series B
Preferred Stock. This agreement shall terminate upon the completion of this
offering.
Certain Business Relationships
Dawn G. Lepore, a director of Viador, also serves as Executive Vice
President and Chief Information Officer and a member of the Management
Committee of the Charles Schwab Corporation. Sales to Schwab accounted for more
than 5% of Viador's gross revenues during fiscal year 1998.
Indemnification Agreements
We have entered into indemnification agreements with each of our directors
and officers. See "Management--Executive Compensation and Other Information--
Limitation of Liability and Indemnification."
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as of June 30, 1999
(except as indicated in the footnotes below) with respect to the beneficial
ownership of our common stock by:
. each person known by us to own beneficially more than 5%, in the
aggregate, of the outstanding shares of our common stock,
. the directors and Named Executive Officers of Viador who hold securities
of Viador, and
. all executive officers and directors as a group.
Unless otherwise indicated, the address for each shareholder is c/o Viador
Inc., 167 Second Avenue, San Mateo, CA 94401. Except as indicated by footnote,
we understand that the persons named in the table below have sole voting and
investment power with respect to all shares shown as beneficially owned by
them, subject to community property laws where applicable.
Shares of common stock subject to options, which are currently exercisable
or exercisable within 60 days of June 30, 1999, are deemed outstanding for
computing the percentages of the person holding such options but are not deemed
outstanding for computing the percentages of any other person. The number of
shares reflects the number of shares of common stock in the aggregate assuming
the conversion of the preferred stock. Each share of preferred stock is
currently convertible into one share of common stock. Percentage ownership is
based on 11,803,134 shares of common stock and preferred stock, as converted,
outstanding as of June 30, 1999. See "Description of Capital Stock--Preferred
Stock." "Beneficial Ownership of Shares Before the Offering" reflects the
beneficial ownership of the common stock, assuming the conversion of the
preferred stock. "Beneficial Ownership of Shares After the Offering" reflects
the beneficial ownership of common stock, assuming the conversion of the
preferred stock and after giving effect to the Offering.
<TABLE>
<CAPTION>
Beneficial Beneficial
Ownership of Ownership of
Shares Before the Shares After the
Offering Offering
----------------- -----------------
Name of Beneficial Owner Number Percent Number Percent
------------------------ --------- ------- --------- -------
<S> <C> <C> <C> <C>
Entities affiliated with Information
Technology Ventures(1)................... 2,190,786 18.6% 2,190,786
Entities affiliated with Mitsui & Co.,
Ltd.(2).................................. 606,207 5.1% 606,207
Jia-Bao Chu(3)............................ 1,326,838 11.2% 1,326,838
Kin Liu(4)................................ 1,088,928 9.2% 1,088,928
Stan X. Wang(5)........................... 2,120,318 18.0% 2,120,318
Jonathan M. Harding(6).................... 158,334 1.3% 158,334
Raja H. Venkatesh(7)...................... 100,000 * 100,000
Ben C. Connors(8)......................... 530,735 4.5% 530,735
Steven C. Dille(9)........................ 125,001 1.1% 125,001
Paul C. Vilandre(10)...................... 96,222 * 96,222
Teddy Kiang(11)........................... 160,498 1.4% 160,498
Dawn G. Lepore(12)........................ -- -- --
Chong Sup Park(13)........................ 20,834 * 20,834
Virginia Turezyn(14)...................... -- -- --
All directors and executive officers as a
group (ten persons)(15).................. 3,311,942 28.1% 3,311,942
</TABLE>
- ----------
* Less than 1%.
(1) Stock consists of 4,075,585 shares of Series B Preferred Stock and 989,441
shares of Series C Preferred Stock held by Information Technology Ventures
II, L.P. and 155,185 shares of Series B Preferred Stock and 37,675 shares
of Series C Preferred Stock held by ITV Affiliates Fund II, L.P. Ms.
Turezyn, a director of Viador, is a principal member of ITV Management II,
LLC, the general partner of Information Technology Ventures II, L.P. and
ITV Affiliates Fund II, L.P. The address for Information Technology
Ventures is 3000 Sand Hill Road, Suite 1-280, Menlo Park, California
94025.
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<PAGE>
(2) Stock consists of 290,979 shares of Series A Preferred Stock held by
Mitsui & Co. (USA), Inc., 775,945 shares of Series A Preferred Stock held
by Mitsui & Co., Ltd., 193,986 shares of Series A Preferred Stock held by
Mitsui Comtek Corporation and 193,986 shares of Series A Preferred Stock
held by MVC Global Japan Fund I. The address for Mitsui & Co. (USA), Inc.
is 200 Park Avenue, New York, NY 10166.
(3) Stock consists of 800,094 shares of common stock held directly by Mr. Chu,
of which 130,198 shares are subject to repurchase by Viador, and 526,744
shares of common stock subject to options exercisable within 60 days of
June 30, 1999.
(4) Stock consists of 702,680 shares of common stock held directly by Mr. Liu,
of which 123,257 shares are subject to repurchase by Viador, and 386,248
shares of common stock subject to options exercisable within 60 days of
June 30, 1999.
(5) Stock consists of 1,216,644 shares of common stock held directly by Mr.
Wang, of which 173,618 shares are subject to repurchase by Viador, 11,737
shares of Series A Preferred Stock held directly by Mr. Wang and 898,783
shares of common stock subject to options exercisable within 60 days of
June 30, 1999.
(6) Stock consists of 158,324 shares of common stock subject to options
exercisable within 60 days of June 30, 1999.
(7) Stock consists of 100,000 shares of common stock subject to options
exercisable within 60 days of June 30, 1999.
(8) Stock consists of 530,735 shares of common stock held directly by Mr.
Connors of which 53,678 shares are subject to repurchase by Viador.
(9) Stock consists of 125,001 shares of common stock subject to options
exercisable within 60 days of June 30, 1999.
(10) Stock consists of 96,222 shares of common stock subject to options
exercisable within 60 days of June 30, 1999, of which 4,972 shares were
exercised by Mr. Vilandre on February 5, 1999 and 2,084 shares were
exercised by Mr Vilandre on June 11, 1999. Of these shares, 4,972 shares
are held directly by Mr. Vilandre and 2,084 shares are held by his wife
and children.
(11) Stock consists of 58,685 shares of Series A Preferred Stock and 246,508
shares of Series C Preferred Stock held directly by Mr. Kiang and his wife
and 33,334 shares of common stock subject to options exercisable within 60
days of June 30, 1999. Excludes 1,185,996 shares of Series B Preferred
Stock, as converted, and warrants to purchase 46,875 shares of common
stock at an exercise price of $0.72 per share held by Standard Foods
Taiwan, Ltd; 226,854 shares of Series A Preferred Stock, as converted,
held by Crosslink Semiconductor, Inc. (Taiwan); 120,000 shares of Series A
Preferred Stock, as converted, held by Eric S. Chen; 120,000 shares of
Series A Preferred Stock, as converted, held by Ju-Liang Chen; 120,000
shares of Series A Preferred Stock held by Paula Chen; 58,685 shares of
Series A Preferred Stock and 246,508 shares of Series C Preferred Stock
held by the Chen Living Trust dated 7/22/96; 58,685 shares of Series A
Preferred Stock and 246,508 shares of Series C Preferred Stock held by the
Cheng Living Trust dated 8/8/95; 58,685 shares of Series A Preferred
Stock, as converted, and 246,508 shares of Series C Preferred Stock held
by Ter-Fung Tsao and 58,685 shares of Series A Preferred Stock, as
converted, and 246,508 shares of Series C Preferred Stock held by Wendy
Te-Hau Wang, for all of whom Crosslink Technology Partners LLC holds a
power of attorney. Mr. Kiang, a director of Viador, is a Managing Director
of Crosslink Technology Partners LLC and the investment representative for
Standard Foods Taiwan, Ltd. and Crosslink Semiconductor, Inc. (Taiwan).
Mr. Kiang disclaims beneficial ownership of the shares of preferred and/or
common stock held by Crosslink Semiconductor, Inc. (Taiwan), Standard
Foods Taiwan, Ltd., Eric S. Chen, Ju-Liang Chen, Paula Chen, Chen Living
Trust dated 7/22/96, Cheng Living Trust dated 8/8/95, Ter Fung Tsao and
Wendy Te-Hua Wang, except to the extent of his pecuniary interest therein.
(12) As of June 30, 1999, Ms. Lepore does not own any stock or hold any options
to purchase common stock. At the meeting of our board of directors held on
July 20, 1999, Ms. Lepore was granted options to purchase 40,000 shares of
common stock.
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(13) Stock consists of 20,834 shares of common stock subject to options
exercisable within 60 days of June 30, 1999.
(14) Excludes an aggregate of 5,257,886 shares of preferred stock, as
converted, held by Information Technology Ventures II, L.P. and ITV
Affiliates Fund II, L.P. Ms. Turezyn, a director of Viador, is a principal
member of ITV Management II, LLC, the general partner of Information
Technology Ventures II, L.P. and ITV Affiliates Fund II, L.P. Ms. Turezyn
disclaims beneficial ownership of the shares held by Information
Technology Ventures II, L.P. and ITV Affiliates Fund II, L.P.
(15) See footnotes 5 through 13 above. Includes options exercisable for
1,425,450 shares of common stock within 60 days of June 1999 under the
1997 Stock Option/Stock Issuance Plan.
59
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Upon the closing of this offering, the authorized capital stock of Viador
will consist of 100,000,000 shares of common stock, $0.001 par value per share,
and 10,000,000 shares of preferred stock, $0.001 par value per share.
Common Stock
As of June 30, 1999, 4,915,433 shares of our common stock were outstanding
and held of record by 120 stockholders. After this offering,
shares will be outstanding. Concurrently with the completion of this offering,
each outstanding share of our preferred stock will be exchanged for and
converted into one share of our common stock. The following description of
rights assumes this conversion.
Holders of common stock are entitled to receive dividends as may from time
to time be declared by our Board of Directors out of funds legally available
therefor. See "Dividend Policy." Holders of common stock are entitled to one
vote per share on all matters on which the holders of common stock are entitled
to vote and do not have any cumulative voting rights. Holders of common stock
have no preemptive, conversion, redemption or sinking fund rights. In the event
of a liquidation, dissolution or winding up of Viador, holders of common stock
are entitled to share equally and ratably in the assets of Viador, if any,
remaining after the payment of all our liabilities and the liquidation
preference of any then outstanding class or series of preferred stock. The
outstanding shares of common stock are, and the shares of common stock offered
by us in this offering when issued will be, fully paid and nonassessable. The
rights, preferences and privileges of holders of common stock are subject to
any series of preferred stock that we may issue in the future, as described
below.
Preferred Stock
Our Board of Directors has the authority to issue preferred stock in one or
more series and to fix the number of shares constituting any such series and
the preferences, limitations and relative rights, including dividend rights,
dividend rate, voting rights, terms of redemption, redemption price or prices,
conversion rights and liquidation preferences of the shares constituting any
series, without any further vote or action by our stockholders. The issuance of
preferred stock by our Board of Directors could adversely affect the rights of
holders of common stock.
The potential issuance of preferred stock may have the effect of delaying or
preventing a change in control of Viador, may discourage bids for our common
stock at a premium over the market price of the common stock and may adversely
affect the market price of, and the voting and other rights of the holders of,
common stock. Immediately after this offering there will be no shares of
preferred stock outstanding, and we have no current plans to issue shares of
preferred stock.
Certain Anti-takeover, Limited Liability and Indemnification Provisions
Effect of Delaware Anti-takeover Statute. We are subject to Section 203 of
the Delaware General Corporation Law, as amended, which, subject to certain
exceptions, prohibits a Delaware corporation from engaging in any business
combination with any interested stockholder for a period of three years
following the date that such stockholder became an interested stockholder,
unless:
. prior to such date, the board of directors of the corporation approved
either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder;
. upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding for purposes of determining the
number of shares outstanding those shares owned
. by persons who are directors and also officers and
60
<PAGE>
. by employee stock plans in which employee participants do not have
the right to determine confidentially whether shares held subject to
the plan will be tendered in a tender or exchange offer; or
. on or subsequent to such date, the business combination is approved by
the board of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, 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 business combinations to include:
. any merger or consolidation involving the corporation or any majority-
owned subsidiary of the corporation and any other person or entity;
. subject to certain exceptions, any sale, transfer, pledge or other
disposition of 10% or more of the assets of the corporation or any
majority-owned subsidiary of the corporation involving the interested
stockholder;
. subject to certain exceptions, any transaction that results in the
issuance or transfer by the corporation or any majority-owned subsidiary
of the corporation of any stock of the corporation to the interested
stockholder;
. any transaction involving the corporation or any majority-owned
subsidiary of the corporation that has the effect of increasing the
proportionate share of the stock of any class or series of the
corporation or any majority-owned subsidiary 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 or any majority-owned subsidiary of the
corporation.
In general, Section 203 defines an interested stockholder as any entity or
person beneficially owning 15% or more or 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 Bylaw Provisions. Our certificate of
incorporation and bylaws include provisions that may have the effect of
discouraging, delaying or preventing a change in control of Viador or an
unsolicited acquisition proposal that a stockholder might consider favorable,
including a proposal that might result in the payment of a premium over the
market price for the shares held by stockholders. These provisions are
summarized in the following paragraphs.
Classified Board of Directors. Our certificate of incorporation and bylaws
provide for our board to be divided into three classes of directors serving
staggered, three year terms. The classification of the board has the effect of
requiring at least two annual stockholder meetings, instead of one, to replace
a majority of the members of the Board of Directors. See "Management--
Classified Board."
Supermajority Voting. Our certificate of incorporation requires the approval
of the holders of at least 66 2/3% of our combined voting power to effect
certain amendments to the certificate of incorporation or to effect any
business combination, as defined in Section 203, relating to us. Our bylaws may
be amended by either a majority of the Board of Directors, or the holders of a
majority of our voting stock, provided that certain amendments approved by
stockholders require the approval of at least 66 2/3% of our combined voting
power.
Authorized but Unissued or Undesignated Capital Stock. Our authorized
capital stock consists of 100,000,000 shares of common stock and 10,000,000
shares of preferred stock. No preferred stock will be designated upon
consummation of this offering. After this offering, we will have outstanding
shares of common stock. The authorized but unissued--and in the
case of preferred stock, undesignated--stock may be issued by the Board of
Directors in one or more transactions. In this regard, our certificate of
incorporation grants the Board of Directors broad power to establish the rights
and preferences of authorized
61
<PAGE>
and unissued preferred stock. The issuance of shares of preferred stock
pursuant to the Board of Director's authority described above could decrease
the amount of earnings and assets available for distribution to holders of
common stock and adversely affect the rights and powers, including voting
rights, of such holders and may have the effect of delaying, deferring or
preventing a change in control of Viador. The Board of Directors does not
currently intend to seek stockholder approval prior to any issuance of
preferred stock, unless otherwise required by law.
Special Meetings of Stockholders. Our bylaws provide that special meetings
of stockholders of Viador may be called only by the Board of Directors, or by
the Chairman of our Board of Directors or our President.
No Stockholder Action by Written Consent. Our certificate of incorporation
and bylaws provide that an action required or permitted to be taken at any
annual or special meeting of the stockholders of Viador may only be taken at a
duly called annual or special meeting of stockholders. This provision prevents
stockholders from initiating or effecting any action by written consent.
Notice Procedures. Our bylaws establish advance notice procedures with
regard to all stockholder proposals to be brought before meetings of
stockholders of Viador, including proposals relating to the nomination of
candidates for election as directors, the removal of directors and amendments
to our certificate of incorporation or bylaws. These procedures provide that
notice of such stockholder proposals must be timely given in writing to the
Secretary of Viador prior to the meeting. Generally, to be timely, notice must
be received by our Secretary not less than 120 days prior to the meeting. The
notice must contain certain information specified in the bylaws.
Other Anti-takeover Provisions. See "Management--Executive Compensation and
Other Information--Employee Benefit Plans" for a discussion of certain
provisions of the 1999 Stock Incentive Plan which may have the effect of
discouraging, delaying or preventing a change in control of Viador or
unsolicited acquisition proposals.
Limitation of Director Liability. Our certificate of incorporation limits
the liability of our directors (in their capacity as directors but not in their
capacity as officers) to Viador or our stockholders to the fullest extent
permitted by Delaware law. Specifically, directors of Viador will not be
personally liable for monetary damages for breach of a director's fiduciary
duty as a director, except for liability:
. for any breach of the director's duty of loyalty to Viador or our
stockholders;
. for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
. under Section 174 of the Delaware General Corporation Law, which relates
to unlawful payments of dividends or unlawful stock repurchases or
redemptions; or
. for any transaction from which the director derived an improper personal
benefit.
Indemnification Arrangements. Our bylaws provide that the directors and
officers of Viador shall be indemnified and provide for the advancement to them
of expenses in connection with actual or threatened proceedings and claims
arising out of their status as such to the fullest extent permitted by the
Delaware General Corporation Law. Prior to consummation of this offering, we
will enter into indemnification agreements with each of our directors and
executives officers that will provide them with rights to indemnification and
expense advancement to the fullest extent permitted under the Delaware General
Corporation Law.
Transfer Agent and Registrar
The transfer agent and registrar for the common stock is Boston Equiserve.
62
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has not been any public market for our common
stock. Future sales of substantial amounts of common stock in the public
market, or the prospect of such sales, could adversely affect prevailing market
prices.
Upon completion of this offering, shares of common stock will be
outstanding. Of these shares, all of the shares sold in this offering will be
freely tradable without restriction under the Securities Act, unless purchased
by an "affiliate" of Viador, as that term is defined in Rule 144. The remaining
shares outstanding after completion of this offering are "restricted
securities" as defined in Rule 144 and may be sold in the public market only if
registered under the Securities Act or if they qualify for an exemption from
registration, including an exemption pursuant to Rule 144.
Holders of approximately 98% our outstanding common stock as of the date
hereof have agreed that, subject to certain exceptions and consents, during the
period beginning from the date of this prospectus, and continuing to and
including the date 180 days after the date of this prospectus, they will not
offer, sell, contract to sell or otherwise dispose of any securities of Viador.
Upon expiration of these agreements, shares will be eligible for
immediate resale in the public market subject to the volume and other
limitations of Rule 144, and shares will be eligible for immediate
resale pursuant to Rule 144(k) without such limitations, unless they are held
by affiliates of Viador. Of such shares, approximately will be
eligible for immediate resale in the public market pursuant to Rule 144 subject
to the volume and manner of sale limitations in Rule 144 and shares
will be eligible for resale without such volume limitations.
In general under Rule 144, a person, including an "affiliate" of Viador, who
has beneficially owned restricted 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 then outstanding shares of common stock (approximately
shares immediately following this offering) or the average weekly
trading volume of the common stock during the four calendar weeks preceding
such sale. Sales under Rule 144 are subject to certain manner of sale
limitations, notice requirements and the availability of current public
information about Viador. Rule 144(k) provides that a person who is not an
"affiliate" of the issuer at any time during the three-months preceding a sale
and who has beneficially owned shares for at least two years is entitled to
sell those shares at any time without compliance with the public information,
volume limitation, manner of sale and notice provisions of Rule 144.
As of June 30, 1999, options to purchase 786,417 shares of common stock were
outstanding under the Amended and Restated 1997 Stock Option/Stock Issuance
Plan. Simultaneously with the completion of this offering, options to purchase
7,500,000 shares of common stock will be granted under the 1999 Stock Incentive
Plan. We intend to file as soon as practicable following completion of this
offering a registration statement on Form S-8 under the Securities Act covering
shares of common stock reserved for issuance under the 1999 Stock Incentive
Plan. Based on the number of options expected to be outstanding upon completion
of this offering and shares reserved for issuance under the 1999 Stock
Incentive Plan, the registration statement would cover shares. See
"Management--Executive Compensation and Other Information--Employee Benefit
Plans". The registration statement will become effective immediately upon
filing, whereupon, subject to the satisfaction of applicable exercisability
periods, Rule 144 volume limitations applicable to affiliates and, in certain
cases, the agreements with the underwriters referred to above, shares of Common
Stock to be issued upon exercise of outstanding options granted pursuant to the
1999 Stock Incentive Plan, to the extent that such shares were held by
affiliates, will be available for immediate resale in the open market.
63
<PAGE>
UNDERWRITING
The underwriters of this offering named below, for whom Bear, Stearns & Co.
Inc., CIBC World Markets Corp. and U.S. Bancorp Piper Jaffray Inc. are acting
as representatives, have severally agreed with Viador, subject to the terms and
conditions of the Underwriting Agreement (the form of which has been filed as
an exhibit to the Registration Statement on Form S-1 of which this prospectus
is a part), to purchase from Viador the aggregate number of shares of common
stock set forth opposite their respective names below:
<TABLE>
<CAPTION>
Underwriter Number of Shares
----------- ----------------
<S> <C>
Bear, Stearns & Co. Inc. ...................................
CIBC World Markets Corp. ...................................
U.S. Bancorp Piper Jaffray Inc. ............................
----
Total.....................................................
====
</TABLE>
The nature of the respective obligations of the underwriters is such that
all of the shares of common stock (other than shares of common stock covered by
the over-allotment option described below) must be purchased if any are
purchased. Those obligations are subject, however, to various conditions,
including the approval of certain matters by counsel. We have agreed to
indemnify the underwriters against certain liabilities, including liabilities
under the Securities Act, and, where such indemnification is unavailable, to
contribute to payments that the underwriters may be required to make in respect
of such liabilities.
We have been advised that the underwriters propose to offer the shares of
common stock directly to the public initially at the public offering price set
forth on the cover page of this prospectus and to certain selected dealers at
such price less a concession not to exceed $ per share, that the
underwriters may allow, and such selected dealers may reallow, a concession to
certain other dealers not to exceed $ per share and that after the
commencement of this offering, the public offering price and the concessions
may be changed.
We have granted to the underwriters an option to purchase in the aggregate
up to additional shares of common stock to be sold in this
offering solely to cover over-allotments, if any. The option may be exercised
in whole or in part at any time within 30 days after the date of this
prospectus. To the extent the option is exercised, the underwriters will be
severally committed, subject to certain conditions, including the approval of
certain matters by counsel, to purchase the additional shares of common stock
in proportion to their respective purchase commitments as indicated in the
preceding table.
The underwriters have reserved for sale at the initial public offering price
up to 5% of the number of shares of common stock offered hereby for sale to
certain directors, officers, other employees, business affiliates and related
persons of Viador who have expressed an interest in purchasing shares. The
number of shares available for sale to the general public will be reduced to
the extent any reserved shares are purchased. Any reserved shares not so
purchased will be offered by the underwriters on the same basis as the other
shares offered hereby.
Viador and our executive officers, directors and our current stockholders,
holding approximately 98% of our common stock, have agreed that, subject to
certain limited exceptions, for a period of 180 days after the date of this
prospectus, without the prior written consent of Bear, Stearns & Co. Inc., they
will not, directly or indirectly, issue, sell, offer or agree to sell or
otherwise dispose of any shares of common stock (or securities convertible
into, exchangeable for or evidencing the right to purchase shares of common
stock.)
Prior to this offering, there has been no public market for the common
stock. Consequently, the initial public offering price will be determined
through negotiations among Viador and the representatives of the underwriters.
Among the factors considered in making such determination were our financial
and operating history and condition, market valuations of other companies
engaged in activities similar to ours, our prospects and prospects for the
industry in which we do business in general, our management, prevailing equity
market conditions and the demand for securities considered comparable to those
of Viador.
64
<PAGE>
In order to facilitate this offering, certain persons participating in this
offering may engage in transactions that stabilize, maintain or otherwise
affect the price of the common stock during and after this offering.
Specifically, the underwriters may over-allot or otherwise create a short
position in the common stock for their own account by selling more shares of
common stock, than have been sold to them by Viador. The underwriters may elect
to cover any such short position by purchasing shares of common stock in the
open market or by exercising the over-allotment option granted to the
underwriters. In addition, the underwriters may stabilize or maintain the price
of the common stock by bidding for or purchasing shares of common stock in the
open market and may impose penalty bids, under which selling concessions
allowed to syndicate members or other broker-dealers participating in this
offering are reclaimed if shares of common stock previously distributed in this
offering are repurchased in connection with stabilization transactions or
otherwise. The effect of these transactions may be to stabilize or maintain the
market price of the common stock at a level above that which might otherwise
prevail in the open market. The imposition of a penalty bid may also affect the
price of the common stock to the extent that it discourages resales thereof. No
representation is made as to the magnitude or effect of any such stabilization
or other transactions. Such transactions may be effected on the Nasdaq National
Market or otherwise and, if commenced, may be discontinued at any time.
65
<PAGE>
LEGAL MATTERS
The validity of the issuance of the common stock offered in this offering
will be passed upon for us by Brobeck, Phleger & Harrison LLP, Palo Alto,
California. Brobeck, Phleger & Harrison LLP and certain attorneys currently
affiliated with Brobeck, Phleger & Harrison LLP currently hold an aggregate of
86,442 shares of our capital stock and a warrant to purchase an additional
12,500 shares of our capital stock. Certain legal matters in connection with
this offering will be passed upon for the underwriters by Latham & Watkins, San
Francisco.
EXPERTS
The Financial Statements and Schedule of Viador as of December 31, 1997 and
1998 and for each of the years in the three-year period ended December 31,
1998, have been included herein and in the registration statement in reliance
upon the report of KPMG LLP, independent auditors, appearing elsewhere herein,
and upon the authority of said firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
Viador has filed with the Securities and Exchange Commission, Washington,
D.C. 20549, a Registration Statement on Form S-1 under the Securities Act with
respect to the common stock offered in this offering. This prospectus omits
certain information set forth in the Registration Statement and the exhibits
and schedules thereto. For further information with respect to Viador and the
common stock offered in this offering, reference is made to such Registration
Statement, exhibits and schedules. Statements contained in this prospectus as
to the contents of any contract or other document referred to are not
necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. After consummation of this offering we will be subject to the
informational requirements of the Securities Exchange Act of 1934, as amended,
and in accordance therewith, will be required to file annual and quarterly
reports, proxy statements and other information with the Commission. The
Registration Statement, including the exhibits and schedules filed therewith,
as well as such reports and other information filed by us may be inspected
without charge at the public reference facilities maintained by the Securities
and Exchange Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549 and at the regional offices of the Securities and Exchange Commission
located at Seven World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such materials may be obtained from the Public Reference Section of
the Securities and Exchange Commission, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates and from the Commission's Internet
Web site at http://www.sec.gov.
66
<PAGE>
VIADOR INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Form of Independent Auditors' Report..................................... F-2
Balance Sheets as of December 31, 1997 and 1998 and June 30, 1999
(unaudited)............................................................. F-3
Statements of Operations for the years ended December 31, 1996, 1997, and
1998, and for the six months ended June 30, 1998 and 1999 (unaudited)... F-4
Statements of Stockholders' Equity (Deficit) for the years ended December
31, 1996, 1997 and 1998, and for the six months ended June 30, 1999
(unaudited)............................................................. F-5
Statements of Cash Flows for the years ended December 31, 1996, 1997, and
1998, and for the six months ended June 30, 1998 and 1999 (unaudited)... F-6
Notes to Financial Statements............................................ F-7
</TABLE>
F-1
<PAGE>
FORM OF INDEPENDENT AUDITORS' REPORT
When the events referred to in Note 8(c) to the Financial Statements have
been consummated, we will be in a position to render the following report.
/s/ KPMG LLP
The Board of Directors
Viador Inc.:
We have audited the accompanying balance sheets of Viador Inc. (the
Company), as of December 31, 1997 and 1998, and the related statements of
operations, stockholders' equity (deficit), and cash flows for each of the
years in the three-year period ended December 31, 1998. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Viador Inc., as of December
31, 1997 and 1998, and the results of its operations and its cash flows for
each of the years in the three-year period ended December 31, 1998, in
conformity with generally accepted accounting principles.
Mountain View, California
June 11, 1999, except as to note 8,
which is as of July 20, 1999
F-2
<PAGE>
VIADOR INC.
BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
December 31, June 30, 1999
---------------- -------------------
1997 1998 Actual Pro Forma
------- ------- -------- ---------
(unaudited)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............. $ 1,029 $ 4,181 $ 14,259 $
Accounts receivable, net of allowance
of $50,000, $53,000 and $90,000 in
fiscal 1997, 1998 and June 30, 1999... 1,473 2,404 3,085
Other current assets................... 9 -- 410
------- ------- -------- ----
Total current assets................. 2,511 6,585 17,754
Property and equipment, net.............. 341 577 917
Other assets............................. 66 23 198
------- ------- -------- ----
$ 2,918 $ 7,185 $ 18,869 $
======= ======= ======== ====
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable....................... $ 222 $ 542 $ 686 $
Accrued liabilities.................... 525 565 1,779
Deferred revenue....................... 2,081 2,707 3,120
------- ------- -------- ----
Total liabilities.................... 2,828 3,814 5,585
------- ------- -------- ----
Commitments
Stockholders' equity:
Convertible preferred stock, $0.001 par
value; actual--10,000,000, 12,500,000,
and 25,000,000 shares authorized as of
December 31, 1997 and 1998, and June
30, 1999, respectively; 3,703,764,
10,336,478, and 16,326,863 shares
issued and outstanding as of December
31, 1997 and 1998, and June 30, 1999,
respectively; aggregate liquidation
preference of $3,819, $12,441, and
$27,022 as of December 31, 1997 and
1998, and June 30, 1999, respectively;
pro forma-- shares authorized; no
shares issued and outstanding......... 4 10 16 --
Common stock, $0.001 par value;
actual--16,666,667, 16,666,667, and
20,833,333 shares authorized as of
December 31, 1997 and 1998, and June
30,1999 respectively; 4,612,512,
4,664,589, and 4,915,433 shares issued
and outstanding as of December 31,
1997 and 1998 and June 30, 1999,
respectively; pro forma-- shares
authorized; shares issued and
outstanding........................... 11 11 12
Additional paid-in capital............. 3,679 14,209 30,257
Deferred stock-based compensation...... -- (1,148) (2,029)
Treasury stock......................... -- (34) (34)
Notes receivable from stockholders..... (138) -- -- --
Accumulated deficit.................... (3,466) (9,677) (14,938)
------- ------- -------- ----
Total stockholders' equity........... 90 3,371 13,422
------- ------- -------- ----
$ 2,918 $ 7,185 $ 18,869 $
======= ======= ======== ====
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
VIADOR INC.
STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Six Months Ended
Years Ended December 31, June 30,
--------------------------- ------------------
1996 1997 1998 1998 1999
-------- -------- -------- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Revenue:
License.................... $ 56 $ 839 $ 2,283 $ 1,142 $ 2,131
Services................... 941 743 1,542 612 1,159
------- -------- -------- -------- --------
Total revenue............ 997 1,582 3,825 1,754 3,290
Cost of revenue.............. 314 903 1,387 640 874
------- -------- -------- -------- --------
Gross profit............. 683 679 2,438 1,114 2,416
------- -------- -------- -------- --------
Operating expenses:
Research and development... 364 1,351 2,481 1,107 1,871
Sales and marketing........ 125 1,802 4,295 1,806 4,397
General and
administrative............ 358 936 1,365 374 996
Amortization of stock-based
compensation.............. -- -- 445 94 529
------- -------- -------- -------- --------
Total operating
expenses................ 847 4,089 8,586 3,381 7,793
------- -------- -------- -------- --------
Operating loss........... (164) (3,410) (6,148) (2,267) (5,377)
Interest income.............. 10 68 134 32 116
Interest expense............. -- (6) (197) (34) --
------- -------- -------- -------- --------
Net loss................. $ (154) $(3,348) $(6,211) $(2,269) $(5,261)
======= ======== ======== ======== ========
Basic and diluted net loss
per share................... $(0.08) $ (1.34) $ (1.82) $ (0.71) $ (1.28)
======= ======== ======== ======== ========
Shares used in computing
basic and diluted net loss
per share................... 1,993 2,495 3,416 3,177 4,126
======= ======== ======== ======== ========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
VIADOR INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(In thousands, except share data)
<TABLE>
<CAPTION>
Convertible Notes Total
preferred stock Common stock Additional Deferred receivable stockholders'
----------------- ----------------- paid-in stock-based Treasury from Accumulated equity
Shares Amount Shares Amount capital compensation stock stockholders deficit (deficit)
---------- ------ --------- ------ ---------- ------------ -------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances as of
December 31,
1995............ -- $ -- 1,843,752 $ 5 $ 45 $ -- $ -- $ -- $ 36 $ 86
Issuance of
common stock to
founders for
cash........... -- -- 187,504 -- 5 -- -- -- -- 5
Issuance of
common stock to
founders for
notes.......... -- -- 2,560,422 6 117 -- -- (123) -- --
Interest on
notes
receivable from
stockholders... (4) (4)
Net loss........ -- -- -- -- -- -- -- -- (154) (154)
---------- ---- --------- ---- ------- -------- ----- ---- --------- --------
Balances as of
December 31,
1996............ -- -- 4,591,678 11 167 -- -- (127) (118) (67)
Stock options
exercised...... -- -- 20,834 -- 1 -- -- -- -- 1
Issuance of
Series A
convertible
preferred
stock.......... 3,703,764 4 -- -- 3,511 -- -- -- -- 3,515
Interest on
notes
receivable from
stockholders... -- -- -- -- -- -- -- (11) -- (11)
Net loss........ -- -- -- -- -- -- -- -- (3,348) (3,348)
---------- ---- --------- ---- ------- -------- ----- ---- --------- --------
Balances as of
December 31,
1997............ 3,703,764 4 4,612,512 11 3,679 -- -- (138) (3,466) 90
Stock options
exercised...... -- -- 78,996 -- 8 -- -- -- -- 8
Repurchase of
stock in
settlement of
notes
receivable from
founders....... -- -- (26,919) (1) -- (34) 35 -- --
Cancellation of
stockholders
notes.......... -- -- -- -- -- -- -- 103 -- 103
Issuance of
Series B
convertible
preferred stock
net of $92
issuance
costs.......... 6,632,714 6 -- -- 8,524 -- -- -- -- 8,530
Deferred stock-
based
compensation
related to
stock option
grants......... -- -- -- -- 1,593 (1,593) -- -- -- --
Amortization of
stock-based
compensation... -- -- -- -- -- 445 -- -- -- 445
Warrants for
services
performed...... -- -- -- 88 -- -- -- -- 88
Options issued
to
nonemployees... -- -- -- 188 -- -- -- -- 188
Warrants issued
in connection
with bridge
loan........... -- -- -- 130 -- -- -- -- 130
Net loss........ -- -- -- -- -- -- -- -- (6,211) (6,211)
---------- ---- --------- ---- ------- -------- ----- ---- --------- --------
Balances as of
December 31,
1998............ 10,336,478 10 4,664,589 11 14,209 (1,148) (34) -- (9,677) 3,371
Stock options
exercised
(unaudited).... -- -- 250,844 1 29 -- -- -- -- 30
Issuance of
Series C
convertible
preferred stock
net of $38
issuance costs
(unaudited).... 5,990,385 6 -- -- 14,537 -- -- -- -- 14,543
Warrants for
services
performed
(unaudited).... -- -- 37 -- -- -- -- 37
Options issued
to nonemployees
(unaudited).... -- -- -- 35 -- -- -- -- 35
Deferred stock-
based
compensation
related to
stock option
grants
(unaudited).... -- -- -- 1,410 (1,410) -- -- -- --
Amortization of
stock-based
compensation
(unaudited).... -- -- -- -- -- 529 -- -- -- 529
Net loss
(unaudited).... -- -- -- -- (5,261) (5,261)
---------- ---- --------- ---- ------- -------- ----- ---- --------- --------
Balances as of
June 30, 1999
(unaudited)..... 16,326,863 $ 16 4,915,433 $ 12 $30,257 $ (2,029) $ (34) $ -- $ (14,938) $ 13,284
========== ==== ========= ==== ======= ======== ===== ==== ========= ========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
VIADOR INC.
STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Six Months ended
Years Ended December 31, June 30,
-------------------------- ------------------
1996 1997 1998 1998 1999
---------------- -------- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operating ac-
tivities:
Net loss...................... $ (154) $(3,348) $(6,211) $(2,269) $(5,261)
Adjustments to reconcile net
loss to net cash provided by
(used in) operating
activities:
Cancellation of stockholder
notes...................... -- -- 103 -- --
Issuance of options for
services performed......... -- -- 188 -- 35
Interest on bridge loan..... -- -- 63 -- --
Interest on note receivable
from stockholders.......... 3 11 -- -- --
Warrants issued for services
performed.................. -- -- 88 -- 37
Amortization of discount on
bridge loan................ -- -- 130 -- --
Amortization of deferred
stock-based compensation... -- -- 445 93 529
Software sold in exchange
for property and
equipment.................. -- (22) -- -- --
Depreciation and
amortization............... 18 89 248 84 248
Changes in operating assets
and liabilities:
Accounts receivable........ -- (1,342) (931) 158 (681)
Other assets............... (69) (4) 52 19 (585)
Accounts payable and
accrued liabilities....... 440 261 360 75 1,358
Deferred revenue........... 11 2,020 626 (264) 413
------ -------- -------- -------- --------
Net cash provided by (used
in) operating activities.. 249 (2,335) (4,839) (2,104) (3,907)
------ -------- -------- -------- --------
Cash flows used in investing
activities--acquisition of
property and equipment........ (106) (342) (484) (218) (588)
------ -------- -------- -------- --------
Cash flows from financing
activities:
Proceeds from issuance of
common stock................. 5 1 8 3 30
Proceeds from issuance of
preferred stock, net......... -- 3,515 6,467 -- 14,543
Loan from stockholder......... 100 -- -- -- --
Proceeds from bridge loan..... -- -- 1,870 1,870 --
Proceeds from issuance of
warrants..................... -- -- 130 130 --
Borrowing under line of
credit....................... -- 100 500 500 --
Repayment under line of
credit....................... -- (100) (500) (300) --
Repayment of loan from
stockholder.................. -- (100) -- -- --
------ -------- -------- -------- --------
Net cash provided by
financing activities...... 105 3,416 8,475 2,203 14,573
------ -------- -------- -------- --------
Net increase (decrease) in cash
and cash equivalents.......... 248 739 3,152 (119) 10,078
Cash and cash equivalents,
beginning of period........... 42 290 1,029 1,029 4,181
------ -------- -------- -------- --------
Cash and cash equivalents, end
of period..................... $ 290 $ 1,029 $ 4,181 $ 910 $14,259
====== ======== ======== ======== ========
Supplemental disclosures of
cash flow information:
Cash paid during period for
interest..................... $ -- $ 6 $ 22 $ 9 $ --
====== ======== ======== ======== ========
Noncash financing activities:
Common stock issued to
founders for note
receivable.................. $ 123 $ -- $ -- $ -- $ --
====== ======== ======== ======== ========
Repurchase of common stock in
settlement of notes
receivable from
stockholders................ $ -- $ -- $ 35 $ -- $ --
====== ======== ======== ======== ========
Preferred stock issued upon
conversion of bridge loan
and accrued interest........ $ -- $ -- $ 2,063 $ -- $ --
====== ======== ======== ======== ========
Deferred stock-based
compensation................ $ -- $ -- $ 1,593 $ 1,114 $ 1,410
====== ======== ======== ======== ========
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
VIADOR INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996, 1997, and 1998
(Information for the six months ended June 30, 1998 and 1999 is unaudited)
(1) Business of the Company
Viador Inc. (the Company) was incorporated as Infospace Inc. in California
in December 1995. In January 1999, the Company changed its name to Viador Inc.
The Company develops web-based products designed to search, analyze and deliver
relevant information to users within and outside an enterprise.
(2) Summary of Significant Accounting Policies
(a) 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 expenses during the reporting period.
Actual results could differ from those estimates.
(b) Revenue Recognition
The Company has adopted Statement of Position (SOP) 97-2, Software Revenue
Recognition, as amended by SOP 98-4. SOP 97-2 as amended, generally requires
revenue earned on software arrangements involving multiple elements to be
allocated to each element based on the relative fair value of the elements. The
adoption of SOP 97-2, as amended, did not have a significant impact on the
Company's accounting for revenues.
In December 1998, the American Institute of Certified Public Accountants'
(AICPA) issued SOP 98-9, Software Revenue Recognition, with Respect to Certain
Arrangements, which requires recognition of revenue using the "residual method"
in a multiple element arrangement when fair value does not exist for one or
more of the delivered elements in the arrangement. Under the "residual method",
the total fair value of the undelivered elements is deferred and subsequently
recognized in accordance with SOP 97-2. The Company does not expect a material
change to its accounting for revenues as a result of the provisions of SOP 98-
9.
The Company licenses its products to end user customers, original equipment
manufacturers (OEM) and value added resellers (VAR). Software license revenue
from sales to end users is generally recognized upon receipt of a signed
contract or purchase order and delivery of the software, provided the related
fee is fixed and determinable and collectibility of the fee is probable. All of
the contract software revenue related to arrangements that require the Company
to deliver specified additional features or upgrades is deferred until delivery
of the feature and/or upgrade has occurred. All of the contract software
revenue related to arrangements involving consulting services that are
essential to the functionality of the software at the customer site is deferred
until the consulting services have been completed and customer acceptance has
been obtained. License revenue from OEM and VAR arrangements in which the
Company earns a royalty based on a specified percentage of OEM and VAR sales to
end users incorporating the Company's software is recognized upon delivery to
the end user. Nonrefundable prepaid royalty fees received by the Company from
OEM and VAR customers are deferred and recognized as the end user sales are
reported to the Company by the OEM or VAR, unless the Company has an
arrangement to maintain the compatability of its software products with the
software products or platforms of the OEM or VAR. In that case, due to the
Company's software compatibility obligation, the prepaid royalty fees are
recognized as the end user sales are reported to the Company by the OEM or VAR
but limited to no more than the fee that would be recognizable on a cumulative
basis if the entire fee was being recognized ratably over the term of the
arrangement.
Service revenue includes fees derived from maintenance and support,
training, installation, and consulting services. Revenue from training,
installation, and time and material consulting services are recognized when the
F-7
<PAGE>
VIADOR INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1996, 1997, and 1998
(Information for the six months ended June 30, 1998 and 1999 is unaudited)
related services are performed. Consulting revenue related to fixed price
arrangements are recognized upon completion and acceptance by the customer. The
Company recognizes maintenance revenue ratably over the term of the related
contract, generally 12 months. The Company typically invoices and collects
maintenance revenue on an annual basis at the anniversary date of the software
license. Billings in excess of recognized license and service revenue are
included in deferred revenue.
Cost of service revenue includes salaries and related expenses for
consulting services, customer support, implementation and training services
organizations, costs of contracting with third parties contracted to provide
consulting services to customers. Cost of license revenue includes 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, including the costs associated with the electronic transmission of
software to new customers and an allocation of our facilities, communications
and depreciation expenses. Costs of license revenues have not been significant
to date.
(c) Initial Public Offering and Unaudited Pro Forma Balance Sheet
In May 1999, the Board of Directors authorized the filing of a registration
statement with the Securities and Exchange Commission ("SEC") that would permit
the Company to sell shares of the Company's common stock in connection with a
proposed initial public offering ("IPO"). Following the closing of the
Company's IPO, the number of authorized shares of convertible preferred stock
and common stock will be and , respectively. If the offering is
consummated under the terms presently anticipated, all the then outstanding
shares of the Company's convertible preferred stock will automatically convert
into 0.417 shares of common stock upon the closing of the proposed IPO. The
conversion of all of the convertible preferred stock has been reflected in the
accompanying unaudited pro forma consolidated balance sheet as if it had
occurred on June 30, 1999.
(d) Cash and Cash Equivalents
Cash and cash equivalents consists of cash and highly liquid investments
such as money market funds purchased with remaining maturities of three months
or less. The Company is exposed to credit risk in the event of default by the
financial institutions or the issuers of these investments to the extent of the
amounts recorded on the balance sheet.
(e) Financial Instruments and Concentration of Credit Risk
The carrying value of the Company's financial instruments, including cash
and cash equivalents and accounts receivable approximates fair market value.
Financial instruments that subject the Company to concentrations of credit risk
consist primarily of cash and cash equivalents and trade accounts receivable.
The Company sells its products and services primarily to established
customers. Credit risk is concentrated in North America and Asia. The Company
performs ongoing credit evaluations of its customer's financial condition and,
generally, requires no collateral from its customers.
(f) Property and Equipment
Property and equipment are recorded at cost less accumulated depreciation
and amortization. Depreciation is calculated using the straight-line method
over the estimated useful lives of the respective assets generally three to
five years. Leasehold improvements are amortized on a straight line basis over
the shorter of the estimated useful lives of the assets or the lease term.
F-8
<PAGE>
VIADOR INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1996, 1997, and 1998
(Information for the six months ended June 30, 1998 and 1999 is unaudited)
(g) Software Development Costs
Development costs incurred in the research and development of software
products are expensed as incurred until technological feasibility in the form
of a working model has been established. As of June 30, 1999, technological
feasibility was established concurrent with the general release of the software
and therefore, no costs have been capitalized.
(h) Impairment of Long-Lived Assets
The Company evaluates its long-lived assets for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. Recoverability of assets to be held and used is measured by
a comparison of the carrying amount of an asset to future undiscounted net cash
flows expected to be generated by the asset. If such assets are considered to
be impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceeds the fair value of the assets. Assets
to be disposed of are reported at the lower of the carrying amount of the
assets or fair value less costs to sell.
(i) Income Taxes
The Company utilizes the asset and liability method of accounting for income
taxes. Deferred tax assets and liabilities are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amounts
expected to be recovered.
(j) Defined Contribution Plan
The Company has a defined contribution retirement plan under Section 401(k)
of the Internal Revenue Code which covers substantially all employees. Eligible
employees may contribute amounts to the plan, via payroll withholding, subject
to certain limitations. Under the 401(k) plan, employees may elect to reduce
their current compensation by up to the statutorily prescribed annual limit and
to have the amount of such reduction contributed to the 401(k) plan. The 401(k)
plan permits, but does not require, additional matching contributions to the
401(k) plan by the Company on behalf of all participants in the 401(k) plan. To
date, the Company has not made any matching contributions to the 401(k) plan.
(k) Stock-Based Compensation
The Company uses the intrinsic-value method to account for all of its
employee stock-based compensation plans. Expense associated with stock-based
compensation is being amortized on an accelerated basis over the vesting period
of the individual award consistent with the method described in Financial
Accounting Standards Board (FASB) Interpretation No. 28.
(l) Advertising Expense
The cost of advertising is generally expensed as incurred. Such costs are
included in selling and marketing expense and totalled approximately $10,000,
$114,000, $273,000, $132,000, and $400,000, for the years ended December 31,
1996, 1997 and 1998, and for the six months ended June 30, 1998 and 1999,
respectively.
F-9
<PAGE>
VIADOR INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1996, 1997, and 1998
(Information for the six months ended June 30, 1998 and 1999 is unaudited)
(m) Comprehensive Income
The Company has no material components of other comprehensive income (loss)
for all periods presented.
(n) Unaudited Interim Financial Statements
The accompanying unaudited interim financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. In the opinion of management, the accompanying
unaudited financial statements have been prepared on the same basis as the
audited financial statements and include all adjustments, consisting only of
normal recurring adjustments, for the fair statement of the Company's
financial condition as of June 30, 1999 and its results of operations and cash
flows for the six months ended June 30, 1998 and 1999.
(o) Net Loss Per Share
Basic net loss per share is computed using the weighted-average number of
outstanding shares of common stock excluding shares of restricted stock
subject to repurchase summarized below. Diluted net loss per share is computed
using the weighted-average number of shares of common stock outstanding
excluding shares of restricted stock subject to repurchase and, when dilutive,
potential common shares from restricted stock options and warrants to purchase
common stock using the treasury stock method and from convertible securities
using the "as if converted" basis. The following potential common shares have
been excluded from the computation of diluted net loss per share for all
periods presented because the effect would have been antidilutive (in
thousands):
<TABLE>
<CAPTION>
Six Months
Year Ended Ended June
December 31, 30,
------------------ ------------
1996 1997 1998 1998 1999
----- ----- ------ ----- ------
<S> <C> <C> <C> <C> <C>
Shares issuable under stock options........... 2,365 2,823 3,045 3,315 3,287
Shares of restricted stock subject to
repurchase................................... 2,560 1,636 765 1,209 348
Shares issuable pursuant to warrants to
purchase common and convertible preferred
stock........................................ -- -- 90 63 102
Shares of convertible preferred stock on an
"as if converted" basis...................... -- 3,704 10,336 3,704 16,327
</TABLE>
The weighted-average exercise price of stock options was $0.05, $0.05 and
$0.12 for the years ended December 31, 1996, 1997, and 1998 and $0.10 and
$0.74 for the six months ended June 30, 1998 and 1999, respectively. The
weighted-average purchase price of restricted stock was $0.02 for all periods
presented. The weighted-average exercise price of the warrants was $0.70,
$0.72, and $0.89 for the year ended December 31, 1998 and for the six months
ended June 30, 1998 and 1999.
(q) Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS
No. 133 establishes accounting and reporting standards for derivative
financial instruments and hedging activities related to those instruments, as
well as other hedging activities. Because the Company does not currently hold
any derivative instruments and does not engage in hedging activities, the
Company expects that the adoption of SFAS No. 133 will not have a material
impact on its financial position, results of operations, or cash flows. The
Company will be required to adopt SFAS No. 133 in fiscal 2001.
F-10
<PAGE>
VIADOR INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1996, 1997, and 1998
(Information for the six months ended June 30, 1998 and 1999 is unaudited)
(3) Property and Equipment
A summary of property and equipment consisted of the following (in
thousands):
<TABLE>
<CAPTION>
December 31,
------------- June 30,
1997 1998 1999
------ ------ --------
<S> <C> <C> <C>
Computers and software............................... $ 387 $ 608 $1,046
Furniture and fixtures............................... 61 120 260
Leasehold improvements............................... -- 204 214
------ ------ ------
448 932 1,520
Less accumulated depreciation and amortization....... 107 355 603
------ ------ ------
$ 341 $ 577 $ 959
====== ====== ======
</TABLE>
(4) Stockholders' Equity
(a) Convertible Preferred Stock
Convertible preferred stock outstanding as of June 30, 1999 is as follows
(in thousands):
<TABLE>
<CAPTION>
Shares Issued and
Designated Outstanding
---------- -----------
<S> <C> <C>
Series A............................................ 3,704 3,704
Series B............................................ 8,000 6,633
Series C............................................ 6,000 5,990
------ ------
17,704 16,327
====== ======
</TABLE>
The rights, preferences, privileges, and restrictions of Series A and B
convertible preferred stock are as follows:
. Each share of Series A and B convertible preferred stock is convertible
at the option of the holder, at any time after the date of issuance,
into 0.417 shares of common stock, subject to adjustment for certain
dilutive events. Each share has voting rights equal to the common stock
on an "as-if-converted" basis.
. Conversion into common stock is automatic upon the closing of a public
offering of the Company's common stock at a purchase price of not less
than $7.42 and $12.00 per share and at an aggregate offering price of
not less than $7,500,000 and $15,000,000 for Series A and B convertible
preferred stock, respectively.
. Series A and B convertible preferred stockholders are entitled to
noncumulative dividends of $0.10 and $0.13 per share per annum,
respectively, when and if declared by the Company's Board of Directors.
As of June 30, 1999, no dividends have been declared.
. Each share of Series A and B convertible preferred stock has a
liquidation preference of $1.031 and $1.30 per share, respectively, plus
any declared but unpaid dividends over holders of common stock.
In the event of liquidation of the Company, after payment has been made
to the holders of Series A and B convertible preferred stock of the full
preferential amounts, any remaining assets would be distributed ratably
amongst the common and convertible preferred stockholders in proportion
to their common ownership on an "as if converted" basis up to a maximum
of three times the initial preferred investment. Thereafter common
shareholders equally divide the remaining assets.
F-11
<PAGE>
VIADOR INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1996, 1997, and 1998
(Information for the six months ended June 30, 1998 and 1999 is unaudited)
In April 1998, the Company issued $2,000,000 in convertible bridge notes,
bearing 9% interest, payable to certain preferred stockholders. The full amount
of the notes plus accrued interest payable of $63,000 was converted into
2,350,559 shares of Series B preferred stock in August 1998. In conjunction
with the issuance of the convertible notes, the Company issued warrants to
purchase 62,500 common stock at an exercise price of $0.30 per share. The
$130,000 fair value assigned to the warrants and related discount on the notes
was determined using the Black-Scholes option pricing model using the following
assumptions: no dividends; contractual life of 5 years; risk-free interest rate
of 6.9%; and expected volatility of 65%. The discount on the notes payable was
amortized to interest expense over the period the notes were outstanding. The
warrants expire in April 2003 or upon the closing of an IPO, whichever occurs
first.
On May 14, 1999, the Company issued 5,990,385 shares of Series C convertible
preferred stock for $2.434 per share resulting in gross proceeds to the Company
of approximately $14,581,000. The rights, preferences, and privileges of the
holders of Series C preferred stock are the same as the holders of Series A and
B convertible preferred stock discussed above, except that the dividend rate is
$0.15 per share, and the liquidation preference is $2.434 per share.
(b) Stock Plan
The Company has reserved 4,047,326 shares of common stock for issuance under
its 1997 stock option plan (the Plan). The Plan provides for the issuance of
stock purchase rights, incentive stock options, or nonstatutory stock options.
The stock purchase rights are subject to a restricted stock purchase
agreement whereby the Company has the right to repurchase the stock upon the
voluntary or involuntary termination of the purchaser's employment with the
Company at the original issuance cost. The Company's repurchase right lapses
generally over a three year period. Through June 30, 1999, the Company has
issued 2,560,417 shares under restricted stock purchase agreements of which
347,695 are subject to repurchase at a weighted average price of $0.05 per
share. These restricted shares were issued to officers of the Company for full
recourse promissory notes with an interest rate of 9% and a term of three
years.
The incentive stock options under the Plan can be exercised at a price of at
least 85% of the stock's fair market value on the date of grant for employees
owning less than 10% of the voting power of all classes of stock, and at least
110% of the fair market value on the date of grant for employees owning more
than 10% of the voting power of all classes of stock.
Under the Plan, options generally expire in 10 years. However, the term of
the options may be limited to 5 years if the optionee owns stock representing
more than 10% of the voting power of all classes of stock. Vesting periods are
determined by the Company's Board of Directors and generally provide for shares
to vest ratably over a 3 to 4 year period.
In August 1998, the Company repurchased 26,920 shares of common stock at
prices ranging from $.113 to $1.44 per share in settlement of $35,000 notes
receivable from two stockholders and forgave notes receivable from five other
stockholders totaling $103,000 for the return of 181,414 unvested stock
options. The Company recorded a $103,000 compensation charge for the
forgiveness of the notes.
The Company issued options to purchase 94,783 shares of common stock at
exercise prices ranging from $0.05 to $0.24 to non-employees for services
performed. The fair value of the options at the vesting date was
F-12
<PAGE>
VIADOR INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1996, 1997, and 1998
(Information for the six months ended June 30, 1998 and 1999 is unaudited)
determined to be $188,000 using the Black-Scholes option pricing model using
the following assumptions: no dividends; contractual life of 10 years; risk-
free interest rate of 6.9%; and expected volatility of 65%. The fair value of
the options was charged to expense in 1998 as the related services were
performed.
In the first six months of 1999, the Company issued options to purchase
9,358 shares of common stock at exercise prices ranging from $0.62 to $5.28 to
non-employees for services performed. The fair value of the options at the
vesting date was determined to be $35,000 using the Black-Scholes option
pricing model using the following assumptions: no dividends; contractual life
of 10 years; risk-free interest rate of 5.6%; and expected volatility of 65%.
The fair value of the options was charged to expense in 1999 as the related
services were performed.
As of December 31, 1998, there were 396,481 additional stock options
available for grant under the Plan.
(c) Warrants
In 1998, the Company issued warrants to purchase 12,500 shares of common
stock at an exercise price of $0.72 per share in exchange for services. These
warrants expire upon the earlier of August 2003, or upon an IPO of the
Company's common stock. The $39,000 fair value of the warrants was determined
using the Black-Scholes option pricing model, using the following assumptions:
no dividends; contractual life of 5 years; risk-free interest rate of 6.5%;
and expected volatility of 65%. The fair value of the warrants was charged to
expense in 1998 as the related services were performed.
In 1998, the Company issued warrants to purchase 14,760 shares of common
stock at prices ranging from $0.24 to $0.26 per share in exchange for
services. These warrants expire upon the earlier of five years from the grant
date, or upon an IPO of the Company's common stock. The $49,000 fair value of
the warrants was determined using the Black-Scholes option pricing model using
the following assumptions: no dividends; contractual life of 5 years; risk-
free interest rate of 6.5%; and expected volatility of 65%. The fair value of
the warrants was charged to expense in 1998 as the related services were
performed.
In May 1999, the Company issued warrants to purchase 9,615 shares of Series
C preferred stock at a price of $2.434 per share in exchange for services.
These warrants expire upon the earlier of May 2003, or upon an IPO of the
Company's common stock. The $15,000 fair value of the warrants was determined
using the Black-Scholes option pricing model using the following assumptions:
no dividends; contractual life of 5 years; risk-free interest rate of 5.6%;
and expected volatility of 65%. The fair value of the warrants was charged to
expense in 1999 as the related services were performed.
In the first six months of fiscal 1999, the Company issued 3,479 warrants
to purchase common stock at a price of $0.62 per share in exchange for
services. These warrants expire upon the earlier of five years from the grant
date, or upon an IPO of the Company's common stock. The $22,000 fair value of
the warrants was determined using the Black-Scholes option pricing model using
the following assumptions: no dividends; contractual life of 5 years; risk-
free interest rate of 5.6%; and expected volatility of 65%. The fair value of
the warrants was charged to expense in 1999 as the related services were
performed.
(d) Stock-Based Compensation
The Company uses the intrinsic-value method in accounting for its employee
stock-based compensation plans. Accordingly, no compensation cost has been
recognized for any of its stock options granted or restricted
F-13
<PAGE>
VIADOR INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1996, 1997, and 1998
(Information for the six months ended June 30, 1998 and 1999 is unaudited)
stock sold because the exercise price of each option or purchase price of each
share of restricted stock equaled or exceeded the fair value of the underlying
common stock as of the grant date for each stock option or purchase date of
each restricted stock share, except for stock options granted and restricted
stock sold from September 1998 through June 1999. With respect to the stock
options granted and restricted stock sold from September 1998 to June 1999, the
Company recorded deferred stock compensation of $3,003,000 for the difference
at the grant or issuance date between the exercise price of each stock option
granted or purchase price of each restricted share sold and the fair value of
the underlying common stock. This amount is being amortized on an accelerated
basis over the vesting period, generally 48 months. Had compensation costs been
determined in accordance with SFAS No. 123 for all of the Company's stock-based
compensation plans, net loss and basic and diluted net loss per share would
have been as follows (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Net loss:
As reported.................................. $ (154) $ (3,348) $ (6,211)
Pro forma.................................... (154) (3,366) (6,389)
Basic and diluted net loss per share:
As reported.................................. $ (0.08) $ (1.34) $ (1.82)
Pro forma.................................... (0.08) (1.35) (1.87)
</TABLE>
The fair value of each option was estimated on the date of grant using the
minimum value method with the following weighted-average assumptions: no
dividends, risk-free interest rate of 6.6%, 6.5%, and 5.6% for fiscal 1996,
1997, and 1998, respectively, and expected life of 4.3, 4.6 and 4.1 years for
1996, 1997 and 1998, respectively.
F-14
<PAGE>
VIADOR INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1996, 1997, and 1998
(Information for the six months ended June 30, 1998 and 1999 is unaudited)
A summary of the status of the Company's options under the Plan is as
follows:
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------------------------------
1996 1997 1998
------------------- -------------------- --------------------
Weighted- Weighted- Weighted-
average average average
exercise exercise exercise
Shares price Shares price Shares price
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of period.............. -- $ -- 2,364,583 $0.05 2,822,481 $0.05
Granted................. 2,364,583 0.05 570,580 0.10 723,736 0.26
Exercised............... -- -- (20,833) 0.05 (78,990) 0.10
Canceled................ -- -- (91,849) 0.05 (421,865) 0.05
--------- --------- ---------
Outstanding at end of
period................. 2,364,583 0.05 2,822,481 0.05 3,045,362 0.12
========= ========= =========
Options vested and
exercisable at end of
period................. -- -- 854,941 0.05 1,781,060 0.07
========= ========= =========
Weighted-average fair
value of options
granted during the
period with exercise
prices equal to fair
value at date of
grant.................. $0.02 $0.02 $ --
Weighted-average fair
value of options
granted during the
period with exercise
prices less than fair
value at date of
grant.................. $ -- $ -- $1.73
</TABLE>
As of December 31, 1998, the range of exercise prices and weighted-average
remaining contractual life of outstanding options were as follows:
<TABLE>
<CAPTION>
Options outstanding Options exercisable
---------------------------------- ---------------------
Weighted-
average Weighted- Weighted-
remaining average average
Exercise Number contractual exercise Number exercise
prices outstanding life (years) price exercisable price
-------- ----------- ------------ --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
$0.05.............. 2,207,628 7.74 $0.05 1,559,203 0.05
0.24.............. 778,985 9.29 0.24 221,023 0.24
0.62.............. 58,750 9.88 0.62 -- --
--------- ---------
3,045,363 8.18 0.12 1,780,226 0.72
========= =========
</TABLE>
F-15
<PAGE>
VIADOR INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1996, 1997, and 1998
(Information for the six months ended June 30, 1998 and 1999 is unaudited)
(5) Income Taxes
The differences between the income tax benefit computed at the federal
statutory rate and the Company's tax provision for all periods presented
primarily relate to net operating losses not benefited.
The types of temporary differences that give rise to significant portions of
the Company's deferred tax assets and liabilities as of December 31, 1996,
1997, and 1998 are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1997 1998
---- ------- -------
<S> <C> <C> <C>
Deferred tax assets:
Reserves and accruals..... $ 54 116 523
Net operating loss and tax
credit carryforwards..... 32 1,366 3,266
---- ------- -------
Gross deferred tax
assets................... 86 1,482 3,789
Less valuation allowance.. (83) (1,474) (3,788)
---- ------- -------
Total deferred tax
assets................. 3 8 1
Deferred tax liabilities--
property and equipment... (3) (8) (1)
---- ------- -------
Net deferred tax
assets................. $ -- $ -- $ --
==== ======= =======
</TABLE>
In light of the Company's recent history of operating losses, the Company
has provided a valuation allowance for its net deferred tax assets as it is
presently unable to conclude that it is more likely than not that the deferred
tax assets will be realized. The net change in the total valuation allowance
for the year ended December 31, 1998, was $2,314,000.
As of December 31, 1998, the Company has net operating loss carryforwards
for federal and state income tax purposes of approximately $6,700,000 available
to reduce future income subject to income taxes. The federal net operating loss
carryforwards expire between 2012 and 2019. The state net operating loss
carryforwards expire beginning in 2004.
As of December 31, 1998, the Company also has research credit carryforwards
for federal and state income tax purposes of approximately $210,000 and
$169,000, respectively, available to reduce future income taxes. The federal
research credit carryfoward expire beginning in 2011 through 2019. The research
credit carryforwards for state purposes carry forward indefinitely until
utilized. The Company has a foreign tax credit carryforward for federal tax
purposes in the amount of $20,000. The foreign tax credit carryforward expires
in 2002.
Federal and state tax laws impose substantial restrictions on the
utilization of net operating loss carryforwards in the event of an "ownership
change" as defined in Section 382 of the Internal Revenue Code. If the Company
has an ownership change, utilization of the above mentioned carryforwards could
be reduced significantly.
F-16
<PAGE>
VIADOR INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1996, 1997, and 1998
(Information for the six months ended June 30, 1998 and 1999 is unaudited)
(6) Geographic, Segment and Significant Customer Information
In 1998, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 131, Disclosures about Segments of an Enterprise and Related
Information. SFAS No. 131 establishes standards for the manner in which public
companies report information about operating segments in annual and interim
financial statements. It also establishes standards for related disclosures
about products and services, geographic areas, and major customers. The method
for determining what information to report is based on the way management
organizes the operating segments within the Company for making operating
decisions and assessing financial performance.
The Company's chief operating decision-maker is considered to be the chief
executive officer (CEO). The CEO reviews financial information presented on an
entity level basis accompanied by disaggregated information about revenues by
product type and certain information about geographic regions for purposes of
making operating decisions and assessing financial performance. The entity
level financial information is identical to the information presented in the
accompanying statements of operations. Therefore, the Company has determined
that it operates in a single operating segment: Enterprise information portal
systems. The disaggregated information reviewed on a product basis by the CEO
is as follows (in thousands):
<TABLE>
<CAPTION>
Six Months
Years Ended Ended June
December 31, 30,
---------------- -----------
1996 1997 1998 1998 1999
---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Revenue
License....................................... 56 839 2,283 1,142 2,131
Services
Consulting................................... 940 638 1,112 518 823
Maintenance.................................. 1 105 430 94 336
--- ----- ----- ----- -----
997 1,582 3,825 1,754 3,290
=== ===== ===== ===== =====
</TABLE>
Significant customer information is as follows:
<TABLE>
<CAPTION>
% of Total Accounts
% of Total Revenue Receivable
------------------------------------------- ---------------------
Six Months
Ended
Year Ended December 31, June 30,
--------------------------- ------------- December 31, June 30,
1996 1997 1998 1998 1999 1998 1999
------- ------- ------- ----- ----- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Customer A.............. 23% -- -- -- -- -- --
Customer B.............. 1% 10% 11% 6% 4% 14% 6%
Customer C.............. -- -- -- -- 12% 17% 1%
Customer D.............. 43% -- -- -- -- -- --
Customer E.............. -- 2% 5% 12% -- 1% --
Customer F.............. -- 5% 15% 17% 3% 6% --
Customer G.............. 18% 8% -- -- -- -- --
Customer H.............. -- -- 6% 10% 1% 4% 1%
</TABLE>
Revenues aggregating 4% and 6% of total revenues for the year ended December
31, 1998 and for the six months ended June 30, 1998, respectively, were
generated from customers who are also stockholders of the Company, and whose
ownership percentages ranged from 5% to 10% as of June 30, 1999.
F-17
<PAGE>
VIADOR INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1996, 1997, and 1998
(Information for the six months ended June 30, 1998 and 1999 is unaudited)
The Company markets its products from its operations in North America.
International sales are primarily to customers in Europe and Asia Pacific.
Revenues derived from International sales were 14% and 12% for the years ended
December 31, 1997 and 1998 and 8% and 14% for the six months ended June 30,
1998 and 1999. Sales did not exceed 4% for any one country outside of North
America in any period presented.
(7) Bank Borrowing, Commitments and Contingencies
In 1998 the Company had a $1.5 million line of credit. The contractual rate
of interest under this line of credit was 9.5%. The Company had no balances
outstanding under this line of credit at December 31, 1998.
On March 17, 1999, the Company entered into a $2,000,000 bank line of
credit. Borrowings under the agreement bear interest of prime plus 1%. On March
17, 1999 the Company also entered into a revolving equipment loan in the amount
of $500,000. This loan bears interest at prime plus 1.5%. As of June 30, 1999,
the Company had no balances outstanding under the line of credit or the
equipment loan. The loans are based on a percentage of qualified outstanding
accounts receivable and is secured by a security interest in certain of the
Company's intellectual property.
The Company leases its facilities and certain equipment under noncancelable
operating lease agreements expiring in the year 2000. Rent expense was
approximately $38,000, $103,000 and $312,000 for the years ended December 31,
1996, 1997 and 1998, respectively. Future minimum lease payments under
noncancelable operating leases are approximately $391,000 and $200,000 for
fiscal years 1999 and 2000, respectively.
On April 1, 1999 the Company entered into a software marketing and
distribution agreement with a distributor located in Germany. The agreement
includes a buyout obligation that can be exercised by the distributor following
the third anniversary of the agreement if minimum sales quotas and certain
conditions have been met. As of June 30, 1999, no sales have been reported by
the distributor.
In 1999, a third party advised the Company of objections to an advertising
campaign the Company undertook in connection with its name change. The third
party filed a complaint in California state court alleging that the Company
violated their right of publicity, the Lanham Act and unfair competition law
because of the advertising campaign. The complaint seeks an injunction against
further advertising that uses the third parties name or likeness, compensatory
damages, the Company's profits resulting from the advertising, punitive
damages, attorneys' fees and costs and interest. The Company estimates this
matter will result in a settlement of approximately $138,000 which has been
accrued as of June 30, 1999 and is reflected in the accompanying statements of
operations for the six months then ended.
(8) Subsequent Events
(a) Employee Stock Purchase Plan
The Company's Board of Directors adopted the Employee Stock Purchase Plan
(the Purchase Plan) on July 20, 1999 under which 300,000 shares have been
reserved for issuance. The Purchase Plan is pending approval by the
stockholders. The number of shares reserved under the Purchase Plan will
automatically increase beginning on January 1 of each year by the lesser of an
amount equal to 1% of the total number of outstanding shares, or 500,000
shares. Under the Purchase Plan, eligible employees may purchase common stock
in an amount not to exceed 15% of an employee's cash compensation. The purchase
price per share will be 85% of the common stock fair value at the lower of
certain plan defined dates.
F-18
<PAGE>
VIADOR INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1996, 1997, and 1998
(Information for the six months ended June 30, 1999 and 1999 is unaudited)
(b) 1999 Stock Incentive Plan
The Company's Board of Directors adopted the 1999 Stock Incentive Plan (the
Incentive Plan) on July 20, 1999 under which 12,292,000 shares have been
reserved for issuance. The Directors Plan is pending approval by the
stockholders. The number of shares reserved under the Incentive Plan will
automatically increase beginning on January 1 of each year by the lessor of 4%
of the total number of shares outstanding or 3,000,000 shares. The Incentive
Plan has five separate programs which allows non-employee board members,
executive officers and other highly compensated employees to purchase shares
using a portion of their salary or retainer fee. The Incentive Plan allows
eligible employee to be issued shares of common stock directly, upon the
attainment of performance milestones or the completion of services. The
Incentive Plan also allows automatic option grants at periodic intervals to
eligible non-employee board members to purchase shares of common stock.
(c) Reverse Stock Split and Reincorporation
On July 28, 1999, the Board of Directors approved a 1 for 2.4 reverse stock
split of the Company's convertible preferred stock and common stock and a
reincorporation in the state of Delaware to be completed prior to the
effectiveness of the Company's IPO. The accompanying financial statements have
been retroactively restated to give effect to the reverse stock split and the
reincorporation in Delaware.
F-19
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Prospective investors may rely only on the information contained in this pro-
spectus. Neither Viador Inc. nor any underwriter has authorized anyone to pro-
vide prospective investors with different or additional information. This pro-
spectus is not an offer to sell nor is it seeking an offer to buy these securi-
ties in any jurisdiction where the offer or sale is not permitted. The informa-
tion contained in this prospectus is correct only as of the date of this pro-
spectus, regardless of the time of the delivery of this prospectus or any sale
of these securities.
--------------------
TABLE OF CONTENTS
--------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 1
The Offering............................................................. 3
Risk Factors............................................................. 5
Use of Proceeds.......................................................... 18
Dividend Policy.......................................................... 18
Capitalization........................................................... 19
Dilution................................................................. 20
Selected Financial Data.................................................. 21
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 22
Business................................................................. 32
Management............................................................... 45
Certain Transactions..................................................... 55
Principal Stockholders................................................... 57
Description of Capital Stock............................................. 60
Shares Eligible for Future Sale.......................................... 63
Underwriting............................................................. 64
Legal Matters............................................................ 66
Experts.................................................................. 66
Additional Information................................................... 66
</TABLE>
---------------
Until , 1999 (25 days after the date of this prospectus), all dealers that
effect transactions in these securities, whether or not participating in this
offering, may be required to deliver a prospectus. This is in addition to the
dealers' obligation to deliver a prospectus when acting as underwriters and
with respect to their unsold allotments or subscriptions.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares
[LOGO OF VIADOR]
Viador Inc.
Common Stock
-------------------------
PRELIMINARY PROSPECTUS
-------------------------
Bear, Stearns & Co. Inc.
CIBC World Markets
U.S. Bancorp Piper Jaffray
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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, payable by the Registrant in connection with the offer
and sale of the common stock being registered. All amounts are estimates
except the registration fee, the NASD filing fee and the Nasdaq National
Market entry and application fee.
<TABLE>
<S> <C>
Registration fee.................................................... $12,788
NASD filing fee..................................................... 5,100
Blue Sky/NASD fees and expenses (including legal fees).............. *
Nasdaq National Market entry and application fee.................... *
Accounting fees and expenses........................................ *
Other legal fees and expenses....................................... *
Transfer agent and registrar fee.................................... *
Printing and engraving.............................................. *
Miscellaneous....................................................... *
-------
Total............................................................. $ *
=======
</TABLE>
* To be supplied by amendment.
Item 14. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law authorizes a court to
award or a corporation's Board of Directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Securities Act"). Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. Article VII, Section
6, of the Registrant's Bylaws provides for mandatory indemnification of its
directors and officers and permissible indemnification of employees and other
agents to the maximum extent permitted by the Delaware General Corporation
Law. The Registrant's Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") provides that, pursuant to Delaware law, its
directors shall not be liable for monetary damages for breach of the
directors' fiduciary duty as directors to the Company or its stockholders.
This provision in the Certificate of Incorporation does not eliminate the
directors' fiduciary duty, and in appropriate circumstances equitable remedies
such as injunctive or other forms of non-monetary relief will remain available
under Delaware law. In addition, each director will continue to be subject to
liability for breach of the director's duty of loyalty to the Company for acts
or omissions not in good faith or involving intentional misconduct, for
knowing violations of law, for actions leading to improper personal benefit to
the director, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other law, such as the federal
securities laws or state or federal environmental laws. The Registrant has
entered into Indemnity Agreements with its officers and directors, a form of
which is attached as Exhibit 10.4 hereto and incorporated herein by reference.
The Indemnification Agreements provide the Registrant's officers and directors
with further indemnification to the maximum extent permitted by the Delaware
General Corporation Law. The Registrant maintains directors and officers
liabilities insurance. Reference is made to Section 8 of the Underwriting
Agreement contained in Exhibit 1.1 hereto, indemnifying officers and directors
of the Registrant against certain liabilities.
II-1
<PAGE>
Item 15. Recent Sales of Unregistered Securities
Since July 1996, we have issued and sold the following securities:
(a) We issued and sold 2,560,417 shares of our common stock to founders
for an aggregate purchase price of $122,900 pursuant to direct stock
issuances and we issued approximately 350,000 shares of common stock for
consideration of approximately $39,000 upon the exercise of options under
our Amended and Restated 1997 Stock Option/Stock Issuance Plan.
(b) We issued options to purchase 3,287,155 shares of common stock with
a weighted average exercise price of $0.744 per share.
(c) In May 1998, we issued a warrant which currently permits the holder
to purchase up to 46,875 shares of our common stock, at an exercise price
of $0.72 per share (subject to adjustment), to Standard Foods Taiwan, Ltd.
and two of its affiliated entities.
(d) In August 1998, we issued a warrant which currently permits the
holder to purchase up to 12,500 shares of our common stock, at an exercise
price of $0.72 per share (subject to adjustment), to Brobeck, Phleger &
Harrison LLP.
(e) In November 1998, we issued a warrant which currently permits the
holder to purchase up to 5,834 shares of our common stock, at an exercise
price of $0.24 per share (subject to adjustment), to Outcast
Communications, Inc.
(f) In July 1998, we issued 46,000 shares of Series B preferred stock to
Mr. Robert Santoni pursuant to settlement agreement entered into between
Health Point Ltd., Mr. Santoni and us. We also issued an option to purchase
18,334 shares of common stock, at an exercise price of $0.24 per share
(subject to adjustment) to Mr. Santoni pursuant to such settlement
agreement.
(g) In July 1999, we issued a warrant to purchase 9,615 shares of Series
C preferred stock, at an exercise price of $2.434 per share (subject to
adjustment), to a commercial bank.
(h) In May 1997, we issued and sold an aggregate of 3,703,764 shares of
Series A preferred stock to several investors for an aggregate purchase
price of $3,818,581.
(i) In August 1998, we issued and sold an aggregate of 6,586,716 shares
of Series B preferred stock to several investors for an aggregate purchase
price of $8,561,743.
(j) In May 1999, we issued and sold an aggregate of 5,990,385 shares of
Series C preferred stock to several investors for an aggregate purchase
price of $14,580,597.
None of the foregoing transactions involved any underwriters, underwriting
discounts or commissions, or any public offering, and we believe that each
transaction was exempt from the registration requirements of the Securities
Act by virtue of Section 4(2) thereof, Regulation D promulgated thereunder or
Rule 701 pursuant to compensatory benefit plans and contracts relating to
compensation as provided under such Rule 701. The recipients in such
transaction represented their intention to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof, and appropriate legends were affixed to the share
certificates and instruments issued in such transactions. All recipients had
adequate access, through their relationships with us, to information about us.
II-2
<PAGE>
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<C> <S>
1.1* Form of Underwriting Agreement
2.1 Form of Agreement and Plan of Merger of Viador Inc., a Delaware
corporation, and Viador, Inc., a California Corporation
3.1 Second Amended and Restated Certificate of Incorporation
3.2 Amended and Restated Bylaws
4.1 Reference is made to Exhibit 3.1
4.2* Specimen Common Stock Certificate
4.3 Amended and Restated Investors' Rights Agreement, among the registrant
and the parties listed on Schedule A thereto dated May 21, 1999, as
amended on July 23, 1999
5.1* Opinion of Brobeck, Phleger & Harrison LLP
10.1 Form of Amended and Restated 1997 Stock Option/Stock Issuance Plan
10.2 Form of 1999 Stock Incentive Plan
10.3 Form of 1999 Employee Stock Purchase Plan
10.4 Form of Indemnification Agreement for Officers and Directors
10.5 Assignment of Lease, by and between the Registrant and Valley of
California, Inc., and Consent to Assignment, dated as of December 16,
1997 and related office leases
10.6 Collateral Assignment, Patent Mortgage and Security Agreement, by and
between the Registrant and Comerica Bank--California, dated March 4,
1997
10.7 Revolving Credit Loan and Security Agreement, by and between the
Registrant and Comerica Bank--California, dated March 17, 1999
23.1 Consent of KPMG LLP, independent auditors
23.2* Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
27.1 Financial Data Schedule
</TABLE>
- ----------
*To be filed by amendment.
(b) Financial Statement Schedules not listed above have been omitted
because the information required to be set forth therein is not applicable or
is shown in the financial statements.
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 14, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of such
issue. The undersigned Registrant hereby undertakes to provide to the
Underwriters at the closing specified in the Underwriting Agreement
certificates in such denominations and registered in such names as required by
the Underwriters to permit prompt delivery to each purchaser. The undersigned
Registrant hereby undertakes 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 the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared effective
and (2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-1 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Palo Alto, State of California, on
this 29th day of July, 1999.
VIADOR INC.
/s/ Stan X. Wang
By: _________________________________
Stan X. Wang
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints, jointly and severally, Stan X. Wang
and Raja H. Venkatesh, and each one of them, his true and lawful attorneys-in-
fact and agents, each with full power of substitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to sign any registration statement for the same offering
covered by this Registration Statement that is to be effective upon filing
pursuant to Rule 462(b) promulgated under the Securities Act of 1933, as
amended, and all post-effective amendments thereto, and to file the same, with
all exhibits thereto and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming that each of said attorneys-in-fact
and agents or any of them, or his or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the persons whose signatures
appear below, which persons have signed such Registration Statement in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Stan X. Wang Chief Executive Officer, President July 29, 1999
______________________________________ and Director (Principal Executive
Stan X. Wang Officer)
/s/ Raja H. Venkatesh Chief Financial Officer (Principal July 29, 1999
______________________________________ Financial Officer and Principal
Raja H. Venkatesh Accounting Officer)
/s/ Teddy Kiang Director July 29, 1999
______________________________________
Teddy Kiang
/s/ Dawn G. Lepore Director July 29, 1999
______________________________________
Dawn G. Lepore
/s/ Chong Sup Park Director July 29, 1999
______________________________________
Chong Sup Park
/s/ Virginia M. Turezyn Director July 29, 1999
______________________________________
Virginia M. Turezyn
</TABLE>
II-4
<PAGE>
VIADOR INC.
VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
Balance at Charged to Balance at
beginning of cost and Charged to end of
the year expenses other accounts Deductions the year
------------ ---------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year ended December 31,
1998
Allowance for doubtful
accounts............... $50,000 $112,575 $-- $109,575 $53,000
Year ended December 31,
1997
Allowance for doubtful
accounts............... $20,000 $ 43,000 $ 13,000 $50,000
Year ended December 31,
1996
Allowance for doubtful
accounts............... $ -- $ 20,000 $-- $ -- $20,000
</TABLE>
S-1
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Exhibit Name
------- ------------
<C> <S>
1.1* Form of Underwriting Agreement
2.1 Form of Agreement and Plan of Merger of Viador Inc., a Delaware
corporation, and Viador, Inc., a California Corporation
3.1 Second Amended and Restated Certificate of Incorporation
3.2 Amended and Restated Bylaws
4.1 Reference is made to Exhibit 3.1
4.2* Specimen Common Stock Certificate
4.3 Amended and Restated Investors' Rights Agreement, among the registrant
and the parties listed on Schedule A thereto dated May 21, 1999, as
amended on July 23, 1999
5.1* Opinion of Brobeck, Phleger & Harrison LLP
10.1 Form of Amended and Restated 1997 Stock Option/Stock Issuance Plan
10.2 Form of 1999 Stock Incentive Plan
10.3 Form of 1999 Employee Stock Purchase Plan
10.4 Form of Indemnification Agreement for Officers and Directors
10.5 Assignment of Lease, by and between the Registrant and Valley of
California, Inc., and Consent to Assignment, dated as of December 16,
1997 and related office leases
10.6 Collateral Assignment, Patent Mortgage and Security Agreement, by and
between the Registrant and Comerica Bank--California, dated March 4,
1997
10.7 Revolving Credit Loan and Security Agreement, by and between the
Registrant and Comerica Bank--California, dated March 17, 1999
23.1 Consent of KPMG LLP, independent auditors
23.2* Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
27.1 Financial Data Schedule
</TABLE>
- ----------
*To be filed by amendment.
<PAGE>
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER OF VIADOR INC.,
A DELAWARE CORPORATION
AND
VIADOR INC.,
A CALIFORNIA CORPORATION
THIS AGREEMENT AND PLAN OF MERGER dated as of this __ day of June,
1999 (the "Agreement"), is between Viador Inc., a Delaware corporation ("Viador-
Delaware"), and Viador Inc., a California corporation ("Viador-California").
Viador-Delaware and Viador-California are sometimes referred to herein as the
"Constituent Corporations."
RECITALS
--------
A. Viador-Delaware is a corporation duly organized and existing under
the laws of the State of Delaware and has a total authorized capital stock of
Seventy-Five Million (75,000,000 ) shares. The number of shares of Preferred
Stock of Viador-Delaware authorized to be issued is Twenty-Five Million
(25,000,000), par value $0.001, of which Three Million Seven Hundred Three
Thousand Seven Hundred Sixty-Four (3,703,764) shares have been designated Series
A Preferred Stock (the "Series A Preferred Stock"), Eight Million (8,000,000)
shares have been designated Series B Preferred Stock (the "Series B Preferred
Stock"), Six Million (6,000,000) shares have been designated Series C Preferred
Stock (the "Series C Preferred Stock"). No shares of Preferred Stock were
outstanding as of the date hereof and prior to giving effect to the transactions
contemplated hereby. The number of shares of Common Stock authorized to be
issued is Fifty Million (50,000,000), par value $0.001. As of the date hereof,
and before giving effect to the transactions contemplated hereby, One Thousand
(1,000) shares of Common Stock were issued and outstanding, all of which were
held by Viador-California.
B. Viador-California is a corporation duly organized and existing
under the laws of the State of California and has a total authorized capital
stock of Seventy-Five Million (75,000,000 ) shares. The number of shares of
Preferred Stock of Viador-California authorized to be issued is Twenty-Five
Million (25,000,000), par value $0.001, of which Three Million Seven Hundred
Three Thousand, Seven Hundred Sixty Four (3,703,764) shares have been designated
Series A Preferred Stock (the "Series A Preferred Stock"), Eight Million
(8,000,000) shares have been designated Series B Preferred Stock (the "Series B
Preferred Stock"), Six Million (6,000,000) shares have been designated Series C
Preferred Stock (the "Series C Preferred Stock"). The number of shares of Common
Stock authorized to be issued is Fifty Million (50,000,000), par value $0.001.
As of the date hereof, and before giving effect to the transactions contemplated
hereby, three million seven hundred three thousand seven hundred sixty four
(3,703,764) shares of Series A Preferred Stock were issued and outstanding, six
million five hundred eighty-six thousand seven hundred fourteen (6,586,714)
shares of Series B Preferred Stock were issued and outstanding, five million
five hundred thirty-two thousand seven hundred eighty-seven (5,532,787) shares
of Series C Preferred Stock were issued and outstanding, and eleven million one
hundred thirty-six thousand eighty-five (11,136,085) shares of Common Stock were
issued and outstanding.
C. The Board of Directors of Viador-California has determined that,
for the purpose of effecting the reincorporation of Viador-California in the
State of Delaware, it is
1
<PAGE>
advisable and in the best interests of Viador-California that Viador-California
merge with and into Viador-Delaware upon the terms and conditions herein
provided.
D. The respective Boards of Directors and Shareholders of Viador-
Delaware and Viador-California have approved this Agreement and have directed
that this Agreement be executed by the undersigned officers.
NOW, THEREFORE, in consideration of the mutual agreements and
covenants set forth herein, Viador-Delaware and Viador-California hereby agree,
subject to the terms and conditions hereinafter set forth, as follows:
I. MERGER
1.1 Merger. In accordance with the provisions of this Agreement, the
------
General Corporation Law of the State of Delaware and the General Corporation Law
of the State of California, Viador-California shall be merged with and into
Viador-Delaware (the "Merger"), the separate existence of Viador-California
shall cease and Viador-Delaware shall be, and is herein sometimes referred to
as, the "Surviving Corporation," and the name of the Surviving Corporation shall
be Viador Inc.
1.2 Filing and Effectiveness. The Merger shall become effective when
------------------------
the following actions shall have been completed:
(a) An executed Certificate of Merger or an executed counterpart
of this Agreement meeting the requirements of the General Corporation Law of the
State of Delaware shall have been filed with the Secretary of State of the State
of Delaware; and
(b) An executed counterpart of the Certificate of Merger, an
executed counterpart of this Agreement or any other document filed with the
Secretary of State of the State of Delaware pursuant to section (a) above, shall
have been filed with the Secretary of State of the State of California.
The date and time when the Merger shall become effective, as
aforesaid, is herein called the "Effective Date of the Merger."
1.3 Effect of the Merger. Upon the Effective Date of the Merger, the
--------------------
separate existence of Viador-California shall cease and Viador-Delaware, as the
Surviving Corporation, (i) shall continue to possess all of its assets, rights,
powers and property as constituted immediately prior to the Effective Date of
the Merger, (ii) shall be subject to all actions previously taken by its and
Viador-California's Board of Directors, (iii) shall succeed, without other
transfer, to all of the assets, rights, powers and property of Viador-California
in the manner more fully set forth in Section 259 of the General Corporation Law
of the State of Delaware, (iv) shall continue to be subject to all of the debts,
liabilities and obligations of Viador-Delaware as constituted immediately prior
to the Effective Date of the Merger, and (v) shall succeed, without other
transfer, to all of the debts, liabilities and obligations of Viador-California
in the same manner as if Viador-Delaware had itself incurred them, all as more
fully provided under the applicable provisions of the General Corporation Law of
the State of Delaware and the General Corporation Law of the State of
California.
2
<PAGE>
II. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1 Certificate of Incorporation. The Amended and Restated
----------------------------
Certificate of Incorporation of Viador-Delaware as in effect immediately prior
to the Effective Date of the Merger (the "Certificate of Incorporation") shall
continue in full force and effect as the Certificate of Incorporation of the
Surviving Corporation until duly amended in accordance with the provisions
thereof and applicable law.
2.2 Bylaws. The Bylaws of Viador-Delaware as in effect immediately
------
prior to the Effective Date of the Merger shall continue in full force and
effect as the Bylaws of the Surviving Corporation until duly amended in
accordance with the provisions thereof and applicable law.
2.3 Directors and Officers. The directors and officers of Viador-
----------------------
Delaware immediately prior to the Effective Date of the Merger shall be the
directors and officers of the Surviving Corporation until their successors shall
have been duly elected and qualified or until as otherwise provided by law, the
Certificate of Incorporation of the Surviving Corporation or the Bylaws of the
Surviving Corporation.
III. MANNER OF CONVERSION OF STOCK
3.1 Viador-California Common Shares. Upon the Effective Date of the
-------------------------------
Merger, each share of Viador-California Common Stock, no par value, issued and
outstanding immediately prior thereto shall by virtue of the Merger and without
any action by the Constituent Corporations, the holder of such shares or any
other person, be converted into and exchanged for two thirds (2/3) of one (1)
fully paid and nonassessable share of Common Stock, par value $0.001 per share,
of the Surviving Corporation. No fractional share interests of the Surviving
Corporation Common Stock shall be issued but shall, instead, be paid in cash by
Viador-Delaware to the holder of such shares.
3.2 Viador-California Preferred Shares.
(a) Series A Preferred Stock. Upon the Effective Date of the
------------------------
Merger, each share of Series A Preferred Stock of Viador-California, no par
value, issued and outstanding immediately prior to the Merger, which shares are
convertible into such number of shares of Viador-California Common Stock as set
forth in the Articles of Incorporation of Viador-California, as amended, shall
by virtue of the Merger and without any action by the Constituent Corporations,
the holder of such shares or any other person, be converted into or exchanged
for two thirds (2/3) of one (1) fully paid and nonassessable share of Series A
Preferred Stock of the Surviving Corporation, par value $0.001 per share, having
such rights, preferences and privileges as set forth in the Certificate of
Incorporation of the Surviving Corporation.
(b) Series B Preferred Stock. Upon the Effective Date of the
------------------------
Merger, each share of Series B Preferred Stock of Viador-California, no par
value, issued and outstanding immediately prior to the Merger, which shares are
convertible into such number of shares of Viador-California Common Stock as set
forth in the Articles of Incorporation of Viador-California, as amended, shall,
by virtue of the Merger and without any action by the Constituent Corporations,
the holder of such shares or any other person, be converted into or exchanged
for
3
<PAGE>
two thirds (2/3) of one (1) fully paid and nonassessable share of Series B
Preferred Stock of the Surviving Corporation, par value $0.001 per share,
respectively, having such rights, preferences and privileges as set forth in the
Certificate of Incorporation of the Surviving Corporation.
(c) Series C Preferred Stock. Upon the Effective Date of the
------------------------
Merger, each share of Series C Preferred Stock of Viador-California, no par
value, issued and outstanding immediately prior to the Merger, which shares are
convertible into such number of shares of Viador-California Common Stock as set
forth in the Articles of Incorporation of Viador-California, as amended, shall
by virtue of the Merger and without any action by the Constituent Corporations,
the holder of such shares or any other person, be converted into or exchanged
for [two thirds (2/3) of one (1)] fully paid and nonassessable share of Series C
Preferred Stock of the Surviving Corporation, par value $0.001 per share,
respectively, having such rights, preferences and privileges as set forth in the
Certificate of Incorporation of the Surviving Corporation.
3.3 Viador-California Stock Option Plans.
------------------------------------
(a) Upon the Effective Date of the Merger, the Surviving
Corporation shall assume the obligations of Viador-California under its 1997
Stock Option/Stock Issuance Plan, 1999 Stock Incentive Plan and 1999 Employee
Stock Purchase Plan and any other stock option grants, purchase rights or plans
(collectively, the "Plans"). Each outstanding and unexercised option to purchase
Viador-California Common Stock (an "Option") under the Plans shall become,
subject to the provisions in paragraph (c) hereof, an option to purchase the
Surviving Corporation's Common Stock, on the basis of [two thirds (2/3) of one
(1)] share of the Surviving Corporation's Common Stock for each one (1) share of
Viador-California Common Stock issuable pursuant to any such option, on the same
terms and conditions and at an exercise price reflecting the [three-for-two (3
for 2)] ratio described above.
(b) [Two thirds (2/3) of one (1)] share of the Surviving
Corporation's Common Stock shall be reserved for issuance upon the exercise of
each Option to purchase one (1) share of Viador-Delaware Common Stock so
reserved immediately prior to the Effective Date of the Merger.
(c) No "additional benefits" (within the meaning of Section
424(a)(2) of the Internal Revenue Code of 1986, as amended) shall be accorded to
the Option holders pursuant to the assumption of their Options.
3.4 Warrants of Viador-California.
-----------------------------
(a) Upon the effective date of the Merger, the outstanding
warrants which prior to that time represented warrants of Viador-California (the
"Warrants") shall be deemed for all purposes to evidence ownership of and to
represent Warrants of Viador-Delaware (each Warrant of Viador-Delaware being
exercisable to purchase shares of stock of Viador-Delaware in the amount and at
the exercise price of the Warrant of Viador-California) and shall be so
registered on the books and records of Viador-Delaware or its transfer agents.
3.5 Viador-Delaware Common Stock. Upon the Effective Date of the
----------------------------
Merger, each share of Common Stock, par value $0.001 per share, of Viador-
Delaware issued and outstanding immediately prior thereto shall, by virtue of
the Merger and without any action by
4
<PAGE>
Viador-Delaware, or the holder of such shares or any other person, be cancelled
and returned to the status of authorized and unissued shares of Common Stock.
3.6 Exchange of Certificates. After the Effective Date of the
------------------------
Merger, each holder of an outstanding certificate representing shares of Viador-
California Common Stock or Preferred Stock may be asked to surrender the same
for cancellation to the Company, and each such holder shall be entitled to
receive in exchange therefor a certificate or certificates representing the
number of shares of the Surviving Corporation's Common Stock or Preferred Stock,
as the case may be, into which the surrendered shares were converted as herein
provided. Until so surrendered, each outstanding certificate theretofore
representing shares of Viador-California Common Stock or Preferred Stock shall
be deemed for all purposes to represent the number of shares of the Surviving
Corporation's Common Stock or Preferred Stock, respectively, into which such
shares of Viador-California Common Stock or Preferred Stock, as the case may be,
were converted in the Merger.
The registered owner on the books and records of the Surviving
Corporation or the Exchange Agent of any such outstanding certificate shall,
until such certificate shall have been surrendered for transfer or conversion or
otherwise accounted for to the Surviving Corporation or the Exchange Agent, have
and be entitled to exercise any voting and other rights with respect to and to
receive dividends and other distributions upon the shares of Common Stock or
Preferred Stock of the Surviving Corporation represented by such outstanding
certificate as provided above.
Each certificate representing Common Stock or Preferred Stock of the
Surviving Corporation so issued in the Merger shall bear the same legends, if
any, with respect to the restrictions on transferability as the certificates of
Viador-California so converted and given in exchange therefore, unless otherwise
determined by the Board of Directors of the Surviving Corporation in compliance
with applicable laws, or other such additional legends as agreed upon by the
holder and the Surviving Corporation.
If any certificate for shares of Viador-Delaware stock is to be issued
in a name other than that in which the certificate surrendered in exchange
therefor is registered, it shall be a condition of issuance thereof that the
certificate so surrendered shall be properly endorsed and otherwise in proper
form for transfer, that such transfer otherwise be proper and comply with
applicable securities laws and that the person requesting such transfer pay to
the Exchange Agent any transfer or other taxes payable by reason of issuance of
such new certificate in a name other than that of the registered holder of the
certificate surrendered or establish to the satisfaction of Viador-Delaware that
such tax has been paid or is not payable.
IV. GENERAL
4.1 Further Assurances. From time to time, as and when required by
------------------
Viador-Delaware or by its successors or assigns, there shall be executed and
delivered on behalf of Viador-California such deeds and other instruments, and
there shall be taken or caused to be taken by it such further and other actions
as shall be appropriate or necessary in order to vest or perfect in or conform
of record or otherwise by Viador-Delaware the title to and possession of all the
property, interests, assets, rights, privileges, immunities, powers, franchises
and authority of
5
<PAGE>
Viador-California and otherwise to carry out the purposes of this Agreement, and
the officers and directors of Viador-Delaware are fully authorized in the name
and on behalf of Viador-California or otherwise to take any and all such action
and to execute and deliver any and all such deeds and other instruments.
4.2 Abandonment. At any time before the Effective Date of the
-----------
Merger, this Agreement may be terminated and the Merger may be abandoned for any
reason whatsoever by the Board of Directors of either Viador-California or of
Viador-Delaware, or of both, notwithstanding the approval of this Agreement by
the shareholders of Viador-California or the sole stockholder of Viador-
Delaware.
4.3 Amendment. The Boards of Directors of the Constituent
---------
Corporations may amend this Agreement at any time prior to the filing of this
Agreement (or certificate in lieu thereof) with the Secretary of State of the
State of Delaware, provided that an amendment made subsequent to the adoption of
this Agreement by the stockholders of either Constituent Corporation shall not:
(1) alter or change the amount or kind of shares, securities, cash, property
and/or rights to be received in exchange for or on conversion of all or any of
the shares of any class or series thereof of such Constituent Corporation, (2)
alter or change any term of the Certificate of Incorporation of the Surviving
Corporation to be effected by the Merger, or (3) alter or change any of the
terms and conditions of this Agreement if such alteration or change would
adversely affect the holders of any class or series of capital stock of any
Constituent Corporation.
4.4 Registered Office. The registered office of the Surviving
-----------------
Corporation in the State of Delaware is 1013 Centre Road, City of Wilmington,
County of New Castle, DE 19801 and the Corporation Service Company is the
registered agent of the Surviving Corporation at such address.
4.5 Agreement. Executed copies of this Agreement will be on file at
---------
the principal place of business of the Surviving Corporation at 167 Second
Avenue, San Mateo, CA 94401, and copies thereof will be furnished to any
stockholder of either Constituent Corporation, upon request and without cost.
4.6 Governing Law. This Agreement shall in all respects be
-------------
construed, interpreted and enforced in accordance with and governed by the laws
of the State of Delaware and, so far as applicable, the merger provisions of the
General Corporation Law of the State of California.
4.7 Counterparts. In order to facilitate the filing and recording of
------------
this Agreement, the same may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
6
<PAGE>
IN WITNESS WHEREOF, this Agreement having first been approved by the
resolutions of the Board of Directors of Viador Inc., a Delaware corporation,
and Viador Inc., a California corporation, is hereby executed on behalf of each
of such two corporations and attested by their respective officers thereunto
duly authorized.
VIADOR INC.
a Delaware corporation
By:___________________________________
Stan X. Wang
President
ATTEST:
___________________________
Paul C. Vilandre
Chief Financial Officer
VIADOR INC.,
a California corporation
By:___________________________________
Stan X. Wang,
President
ATTEST:
___________________________
Paul C. Vilandre
Chief Financial Officer
7
<PAGE>
Exhibit 3.1
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
VIADOR INC.
The undersigned, Stan X. Wang and Paul C. Vilandre, hereby certify
that:
ONE: They are the duly elected, qualified and acting President and
---
Secretary, respectively, of Viador Inc., a Delaware corporation.
TWO: The Certificate of Incorporation of said corporation was
---
originally filed in the Office of the Secretary of State of the State of
Delaware on June 2, 1999 and the Amended and Restated Certificate of
Incorporation of said corporation was originally filed in such office on August
____, 1999.
THREE: The Amended and Restated Certificate of Incorporation of said
-----
corporation is amended and restated to read in its entirety as follows:
ARTICLE I
The name of this corporation is Viador Inc. (the "Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is 1013 Centre Road, City of Wilmington, County of New Castle, Delaware
19801. The name of the Corporation's registered agent at such address is the
Corporation Service Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware (the "GCL").
ARTICLE IV
The Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares that the Corporation is authorized to issue is One Hundred Ten
Million (110,000,000). One Hundred Million (100,000,000) shares shall be Common
Stock, par value $0.001 per share, and Ten Million (10,000,000) shares shall be
Preferred Stock, par value $0.001 per share.
The Preferred Stock may be issued from time to time in one or more
series, without further stockholder approval. The Board of Directors of the
Corporation is hereby
<PAGE>
authorized to fix or alter the rights, preferences, privileges and restrictions
granted to or imposed upon each series of Preferred Stock, and the number of
shares constituting any such series and the designation thereof, or of any of
them. The rights, privileges, preferences and restrictions of any such
additional series may be subordinated to, pari passu with (including, without
----------
limitation, inclusion in provisions with respect to liquidation and acquisition
preferences, redemption and/or approval of matters by vote), or senior to any of
those of any present or future class or series of Preferred Stock or Common
Stock. The Board of Directors is also authorized to increase or decrease the
number of shares of any series 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.
ARTICLE V
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, repeal, alter,
amend and rescind any or all of the Bylaws of the Corporation. In addition, the
Bylaws may be amended by the affirmative vote of holders of at least sixty-six
and two-thirds percent (66 2/3%) of the outstanding shares of voting stock of
the Corporation entitled to vote at an election of directors.
ARTICLE VI
The number of directors of the Corporation shall be determined by
resolution of the Board of Directors.
Elections of directors need not be by written ballot unless the Bylaws
of the Corporation shall so provide. Advance notice of stockholder nominations
for the election of directors and of any other business to be brought before any
meeting of the stockholders shall be given in the manner provided in the Bylaws
of this Corporation.
At each annual meeting of stockholders, directors of the Corporation
shall be elected to hold office until the expiration of the term for which they
are elected, or until their successors have been duly elected and qualified;
except that if any such election shall not be so held, such election shall take
place at a stockholders' meeting called and held in accordance with the GCL.
The directors of the Corporation shall be divided into three (3)
classes as nearly equal in size as is practicable, hereby designated Class I,
Class II and Class III. For the purposes hereof, the initial Class I, Class II
and Class III directors shall be those directors so designated by a resolution
of the Board of Directors. At the first annual meeting of stockholders
following the closing of the initial public offering of the Corporation's Common
Stock, the term of office of the Class I directors shall expire and Class I
directors shall be elected for a full term of three (3) years. At the second
annual meeting of stockholders following the closing of the initial public
offering of the Corporation's Common Stock, the term of office of the Class II
directors shall expire and Class II directors shall be elected for a full term
of three (3) years. At the third annual meeting of stockholders following the
initial public offering of the Corporation's Common
<PAGE>
Stock, the term of office of the Class III directors shall expire and Class III
directors shall be elected for a full term of three (3) years. At each
succeeding annual meeting of stockholders, directors shall be elected for a full
term of three (3) years to succeed the directors of the class whose terms expire
at such annual meeting. If the number of directors is hereafter changed, each
director then serving as such shall nevertheless continue as a director of the
Class of which he is a member until the expiration of his current term and any
newly created directorships or decrease in directorships shall be so apportioned
among the classes as to make all classes as nearly equal in number as is
practicable.
Vacancies occurring on the Board of Directors for any reason may be
filled by vote of a majority of the remaining members of the Board of Directors,
even if less than a quorum, at any meeting of the Board of Directors. A person
so elected by the Board of Directors to fill a vacancy shall hold office for the
remainder of the full term of the director for which the vacancy was created or
occurred and until such director's successor shall have been duly elected and
qualified. A director may be removed from office by the affirmative vote of the
holders of 66 2/3% of the outstanding shares of voting stock of the Corporation
entitled to vote at an election of directors, provided that such removal is for
cause.
ARTICLE VII
Stockholders of the Corporation shall take action by meetings held
pursuant to this Amended and Restated Certificate of Incorporation and the
Bylaws and shall have no right to take any action by written consent without a
meeting. Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. Special meetings of the stockholders, for
any purpose or purposes, may only be called by the Board of Directors of the
Corporation. The books of the Corporation may be kept (subject to any provision
contained in the statutes) outside the State of Delaware at such place or places
as may be designated from time to time by the Board of Directors or in the
Bylaws of the Corporation.
ARTICLE VIII
To the fullest extent permitted by applicable law, this Corporation is
authorized to provide indemnification of (and advancement of expenses to)
directors, officers, employees and agents (and any other persons to which
Delaware law permits this Corporation to provide indemnification) through Bylaw
provisions, agreements with such agents or other persons, vote of stockholders
or disinterested directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 145 of the GCL, subject only to
limits created by applicable Delaware law (statutory or non-statutory), with
respect to action for breach of duty to the Corporation, its stockholders, and
others.
No director of the Corporation shall be personally liable to the
Corporation or any stockholder for monetary damages for breach of fiduciary duty
as a director, except for any matter in respect of which such director shall be
liable under Section 174 of the GCL or any amendment thereto or shall be liable
by reason that, in addition to any and all other requirements for such
liability, such director (1) shall have breached the director's duty or loyalty
to the Corporation or its stockholders, (2) shall have acted in manner involving
intentional misconduct or a knowing violation of law or, in failing to act,
shall have acted in a manner involving
<PAGE>
intentional misconduct or a knowing violation of law, or (3) shall have derived
an improper personal benefit. If the GCL is hereafter amended to authorize the
further elimination or limitation of the liability of a director, the liability
of a director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the GCL, as so amended.
Each person who was or is made a party or is threatened to be made a
party to or is in any way involved in any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), including any appeal therefrom, by
reason of the fact that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer of the Corporation or a direct
or indirect subsidiary of the Corporation, or is or was serving at the request
of the Corporation as a director or officer of another entity or enterprise, or
was a director or officer of a foreign or domestic corporation which was
predecessor corporation of the Corporation or of another entity or enterprise at
the request of such predecessor corporation, shall be indemnified and held
harmless by the Corporation, and the Corporation shall advance all expenses
incurred by any such person in defense of any such proceeding prior to its final
determination, to the fullest extent authorized by the GCL. In any proceeding
against the Corporation to enforce these rights, such person shall be presumed
to be entitled to indemnification and the Corporation shall have the burden of
proving that such person has not met the standards of conduct for permissible
indemnification set forth in the GCL. The rights to indemnification and
advancement of expenses conferred by this Article VIII shall be presumed to have
been relied upon by the directors and officers of the Corporation in serving or
continuing to serve the Corporation and shall be enforceable as contract rights.
Said rights shall not be exclusive of any other rights to which those seeking
indemnification may otherwise be entitled. The Corporation may, upon written
demand presented by a director or officer of the Corporation or of a direct or
indirect subsidiary of the Corporation, or by a person serving at the request of
the Corporation as a director or officer of another entity or enterprise, enter
into contracts to provide such persons with specified rights to indemnification,
which contracts may confer rights and protections to the maximum extent
permitted by the GCL, as amended and in effect from time to time.
If a claim under this Article VIII is not paid in full by the
Corporation within sixty (60) days after a written claim has been received by
the Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expenses of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce the right to be advanced expenses incurred in
defending any proceeding prior to its final disposition where the required
undertaking, if any, has been tendered to the Corporation ) that the claimant
has not met the standards of conduct which make it permissible under the GCL for
the Corporation to indemnify the claimant for the amount claimed, but the
claimant shall be presumed to be entitled to indemnification and the Corporation
shall have the burden of proving that the claimant has not met the standards of
conduct for permissible indemnification set forth in the GCL.
If the GCL is hereafter amended to permit the Corporation to provide
broader indemnification rights than said law permitted the Corporation to
provide prior to such amendment, the indemnification rights conferred by this
Article VIII shall be broadened to the fullest extent permitted by the GCL, as
so amended.
<PAGE>
ARTICLE IX
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation. Notwithstanding the foregoing, the provisions set forth in
Articles V, VI, VII, VIII and IX of this Amended and Restated Certificate of
Incorporation may not be repealed or amended in any respect without the
affirmative vote of holders at least 66-2/3% of the outstanding voting stock of
the Corporation entitled to vote at election of directors.
FOUR: The foregoing amendment and restatement has been duly adopted
----
by the Corporation's Board of Directors in accordance with the applicable
provisions of Sections 242 and 245 of the General Corporation Law of the State
of Delaware.
FIFTH: The foregoing amendment and restatement was approved by the
-----
holders of the requisite number of shares of the Corporation in accordance with
Section 228 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned have executed this certificate on
August __, 1999.
__________________________________________
Stan X. Wang
President
__________________________________________
Paul C. Vilandre
Secretary
<PAGE>
Exhibit 3.2
AMENDED AND RESTATED
BYLAWS
OF
VIADOR INC.
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
---------
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places
---------
both within and without the State of Delaware as the Board of Directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
---------
directors shall be held at such place as may be fixed from time to time by the
Board of Directors, or at such other place either within or without the State of
Delaware as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting. Meetings of stockholders for any other
purpose may be held at such time and place, within or without the State of
Delaware, as shall be stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held at such date
---------
and time as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting. At each annual meeting, the stockholder
shall elect directors to succeed those whose terms expire in that year and shall
transact such other business as may properly be brought before the meeting.
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Section 3. Written notice of the annual meeting stating the place,
---------
date and hour of the meeting shall be given to each stockholder entitled to vote
at such meeting not less than ten (10) nor more than sixty (60) days before the
date of the meeting.
Section 4. The officer who has charge of the stock ledger of the
---------
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any purpose or
---------
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may only be called by the Board.
Section 6. Written notice of a special meeting stating the place,
---------
date and hour of the meeting and the purpose or purposes for which the meeting
is called, shall be given not fewer than ten (10) nor more than sixty (60) days
before the date of the meeting, to each stockholder entitled to vote at such
meeting.
Section 7. Business transacted at any special meeting of stockholders
---------
shall be limited to the purposes stated in the notice.
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Section 8. The holders of a majority of the stock issued and
---------
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted that might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
---------
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of
----------
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three (3) years from its date, unless the proxy provides for a longer
period.
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Section 11. Nominations for election to the Board of Directors must be
----------
made by the Board of Directors or by a committee appointed by the Board of
Directors for such purpose or by any stockholder of any outstanding class of
capital stock of the corporation entitled to vote for the election of directors.
Nominations by stockholders must be preceded by notification in writing received
by the secretary of the corporation not less than one-hundred twenty (120) days
prior to any meeting of stockholders called for the election of directors. Such
notification shall contain the written consent of each proposed nominee to serve
as a director if so elected and the following information as to each proposed
nominee and as to each person, acting alone or in conjunction with one or more
other persons as a partnership, limited partnership, syndicate or other group,
who participates or is expected to participate in making such nomination or in
organizing, directing or financing such nomination or solicitation of proxies to
vote for the nominee:
(a) the name, age, residence, address, and business address of
each proposed nominee and of each such person;
(b) the principal occupation or employment, the name, type of
business and address of the corporation or other organization in which such
employment is carried on of each proposed nominee and of each such person;
(c) the amount of stock of the corporation owned beneficially,
either directly or indirectly, by each proposed nominee and each such person;
and
(d) a description of any arrangement or understanding of each
proposed nominee and of each such person with each other or any other person
regarding future employment or any future transaction to which the corporation
will or may be a party.
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The presiding officer of the meeting shall have the authority to
determine and declare to the meeting that a nomination not preceded by
notification made in accordance with the foregoing procedure shall be
disregarded.
Section 12. At any meeting of the stockholders, only such business
----------
shall be conducted as shall have been brought before the meeting (a) pursuant to
the corporation's notice of meeting, (b) by or at the direction of the Board of
Directors or (c) by any stockholder of the corporation who is a stockholder of
record at the time of giving of the notice provided for in this Bylaw, who shall
be entitled to vote at such meeting and who complies with the notice procedures
set forth in this Bylaw.
For business to be properly brought before any meeting by a
stockholder pursuant to clause (c) above of this Section 12, the stockholder
must have given timely notice thereof in writing to the secretary of the
corporation. To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the corporation not less than
one hundred twenty (120) days prior to the date of the meeting. A stockholder's
notice to the secretary shall set forth as to each matter the stockholder
proposes to bring before the meeting (a) a brief description of the business
desired to be brought before the meeting and the reasons for conducting such
business at the meeting, (b) the name and address, as they appear on the
corporation's books, of the stockholder proposing such business, and the name
and address of the beneficial owner, if any, on whose behalf the proposal is
made, (c) the class and number of shares of the corporation which are owned
beneficially and of record by such stockholder of record and by the beneficial
owner, if any, on whose behalf of the proposal is made and (d) any material
interest of such stockholder of record and the beneficial owner, if any, on
whose behalf the proposal is made in such business.
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Notwithstanding anything in these Bylaws to the contrary, no business
shall be conducted at a meeting except in accordance with the procedures set
forth in this Section 12. The presiding officer of the meeting shall, if the
facts warrant, determine and declare to the meeting that business was not
properly brought before the meeting and in accordance with the procedures
prescribed by this Section 12, and if such person should so determine, such
person shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted. Notwithstanding the
foregoing provisions of this Section 12, a stockholder shall also comply with
all applicable requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder with respect to the matters set forth
in this Section 12.
Section 13. Effective upon the closing of the corporation's initial
----------
public offering of securities pursuant to a registration statement filed under
the Securities Act of 1933, as amended, the stockholders of the Corporation may
not take action by written consent without a meeting but must take any such
actions at a duly called annual or special meeting in accordance with these
Bylaws and the Certificate of Incorporation.
ARTICLE III
DIRECTORS
Section 1. The number of directors of this corporation that shall
---------
constitute the whole board shall be determined by resolution of the Board of
Directors; provided, however, that no decrease in the number of directors shall
have the effect of shortening the term of an incumbent director. The Board of
Directors shall be classified, with respect to the time for which they severally
hold office, into three classes, as nearly equal in number as possible, as
determined by the Board of Directors, one class ("Class I") to hold office
initially for a term
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<PAGE>
expiring at the annual meeting to be held in 2000, another class ("Class II") to
hold office initially for a term expiring at the annual meeting of stockholders
held in 2001 and another class ("Class III") to hold office initially for a term
expiring at the annual meeting of stockholders to be held in 2002, with the
members of each class to hold office until their successors are elected and
qualified. At each annual meeting of stockholders, the successors of the class
of directors whose term expires at that meeting shall be elected to hold office
for a term expiring at the annual meeting of stockholders held in the third year
following the year of their election.
Section 2. Vacancies and newly created directorships resulting from
---------
any increase in the authorized number of directors may be filled by a majority
of the directors then in office, though less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office until the next
election of the class for which such directors were chose and until their
successors are duly elected and qualified or until earlier resignation or
removal. If there are no directors in office, then an election of directors may
be held in the manner provided by statute.
Section 3. The business of the corporation shall be managed by or
---------
under the direction of its Board of Directors which may exercise all such powers
of the corporation and do all such lawful acts and things as are not by statute
or by the certificate of incorporation or by these bylaws directed or required
to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The Board of Directors of the corporation may hold
---------
meetings, both regular and special, either within or without the State of
Delaware.
Section 5. The first meeting of each newly elected Board of Directors
---------
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to
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<PAGE>
constitute the meeting, provided a quorum shall be present. In the event of the
failure of the stockholders to fix the time or place of such first meeting of
the newly elected Board of Directors, or in the event such meeting is not held
at the time and place so fixed by the stockholders, the meeting may be held at
such time and place as shall be specified in a notice given as hereinafter
provided for special meetings of the Board of Directors, or as shall be
specified in a written waiver signed by all of the directors.
Section 6. Regular meetings of the Board of Directors may be held
---------
without notice at such time and at such place as shall from time to time be
determined by the board.
Section 7. Special meetings of the board may be called by the
---------
president on two (2) days' notice to each director by mail or forty-eight (48)
hours notice to each director either personally, or by telephone, telegram or
facsimile; special meetings shall be called by the president or secretary in
like manner and on like notice on the written request of a majority of the Board
unless the Board consists of only one director, in which case special meetings
shall be called by the president or secretary in like manner and on like notice
on the written request of the sole director. A written waiver of notice, signed
by the person entitled thereto, whether before or after the time of the meeting
stated therein, shall be deemed equivalent to notice.
Section 8. At all meetings of the board a majority of the directors
---------
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
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<PAGE>
Section 9. Unless otherwise restricted by the certificate of
---------
incorporation of these bylaws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of
----------
incorporation or these bylaws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The Board of Directors may, by resolution passed by a
----------
majority of the whole board, designate one (1) or more committees, each
committee to consist of one (1) or more of the directors of the corporation. The
board may designate one (1) or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee.
In the absence of disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority of
the Board of Directors in
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<PAGE>
the management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers that may require it; but
no such committee shall have the power or authority in reference to amending the
certificate of incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommending to the
stockholders a dissolution of the corporation or a revocation of a dissolution,
or amending the bylaws of the corporation; and, unless the resolution or the
certificate of incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the Board of Directors.
Section 12. Each committee shall keep regular minutes of its meetings
----------
and report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
----------
incorporation or these bylaws, the Board of Directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall 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.
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<PAGE>
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of
----------
incorporation or bylaws, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
---------
certificate of incorporation or of these bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice (except as provided in Section 7 of Article III of these Bylaws), but
such notice may be given in writing, by mail, addressed to such director or
stockholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telephone, telegram or facsimile.
Section 2. Whenever any notice is required to be given under the
---------
provisions of the statutes or of the certificate of incorporation or of these
bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
---------
Board of Directors and shall be a president, a chief financial officer and a
secretary. The Board of Directors may elect from among its members a Chairman of
the Board. The Board of Directors
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<PAGE>
may also choose one or more vice-presidents, assistant secretaries and assistant
treasurers. Any number of offices may be held by the same person, unless the
certificate of incorporation or these bylaws otherwise provide.
Section 2. The Board of Directors at its first meeting after each
---------
annual meeting of stockholders shall choose a president, a chief financial
officer, and a secretary and may choose vice presidents.
Section 3. The Board of Directors may appoint such other officers and
---------
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers of the corporation shall be
---------
fixed by the Board of Directors or any committee established by the Board of
Directors for such purpose. The salaries of agents of the corporation shall,
unless fixed by the Board of Directors, be fixed by the president or any vice-
president of the corporation.
Section 5. The officers of the corporation shall hold office until
---------
their successors are chosen and qualify. Any officer elected or appointed by the
Board of Directors may be removed at any time by the affirmative vote of a
majority of the Board of Directors. Any vacancy occurring in any office of the
corporation shall be filled by the Board of Directors.
THE CHAIRMAN OF THE BOARD
Section 6. The Chairman of the Board, if any, shall preside at all
---------
meetings of the Board of Directors and of the stockholders at which he shall be
present. He/she shall have and may exercise such powers as are, from time to
time, assigned to him by the Board and as may be provided by law.
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<PAGE>
Section 7. In the absence of the Chairman of the Board, the
---------
president, shall preside at all meetings of the Board of Directors and of the
stockholders at which he shall be present. He shall have and may exercise such
powers as are, from time to time, assigned to him by the Board and as may be
provided by law.
THE PRESIDENT AND VICE-PRESIDENTS
Section 8. The president shall be the chief executive officer of the
---------
corporation; and in the absence of the Chairman of the Board he/she shall
preside at all meetings of the stockholders and the Board of Directors; he/she
shall have general and active management of the business of the corporation and
shall see that all orders and resolutions of the Board of Directors are carried
into effect.
Section 9. The president or any vice president shall execute bonds,
---------
mortgages and other contracts requiring a seal, under the seal of the
corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the corporation.
Section 10. In the absence of the president or in the event of his
----------
inability or refusal to act, the vice-president, if any, (or in the event there
be more than one vice-president, the vice-presidents in the order designated by
the directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
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<PAGE>
THE SECRETARY AND ASSISTANT SECRETARY
Section 11. The secretary shall attend all meetings of the Board of
----------
Directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He/she shall give, or cause to be given, notice of all meetings
of the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or
president, under whose supervision he/she shall be. He/she shall have custody of
the corporate seal of the corporation and he/she, or an assistant secretary,
shall have authority to affix the same to any instrument requiring it and when
so affixed, it may be attested by his signature or by the signature of such
assistant secretary. The Board of Directors may give general authority to any
other officer to affix the seal of the corporation and to attest the affixing by
his signature.
Section 12. The assistant secretary, or if there be more than one,
----------
the assistant secretaries in the order determined by the Board of Directors (or
if there be no such determination, then in the order of their election) shall,
in the absence of the secretary or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
THE CHIEF FINANCIAL OFFICER
Section 13. The chief financial officer shall be the chief financial
----------
officer and treasurer of the corporation, shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the
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<PAGE>
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by the Board of Directors.
Section 14. He/she shall disburse the funds of the corporation as may
----------
be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 15. Along with the president or any vice president, he/she
----------
shall be authorized to execute bonds, mortgages and other contracts requiring a
seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent of the corporation.
Section 16. If required by the Board of Directors, he/she shall give
----------
the corporation a bond (which shall be renewed every six years) in such sum and
with such surety or sureties as shall be satisfactory to the Board of Directors
for the faithful performance of the duties of his/her office and for the
restoration to the corporation, in case of his/her death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his/her control
belonging to the corporation.
Section 17. The assistant treasurer, or if there shall be more than
----------
one, the assistant treasurers in the order determined by the Board of Directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the chief financial officer or in the event of his
inability or refusal to act, perform the duties and exercise the powers
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<PAGE>
of the chief financial officer and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled
---------
to have a certificate, signed by, or in the name of the corporation by, the
Chairman of the Board of Directors, or the president or a vice-president and the
treasurer or an assistant treasurer, or the secretary or an assistant secretary
of the corporation, certifying the number of shares owned by him/her in the
corporation.
Certificates may be issued for partly paid shares and in such case
upon the face or back of the certificates issued to represent any such partly
paid shares, the total amount of the consideration to be paid therefor, and the
amount paid thereon shall be specified.
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate that the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating,
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optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights.
Any of or all the signatures on the certificate may be facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the corporation with the same effect as if he/she were such
officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 2. The Board of Directors may direct a new certificate or
---------
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his/her
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 3. Upon surrender to the corporation or the transfer agent of
---------
the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall be
the duty of the corporation to issue a
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<PAGE>
new certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
FIXING RECORD DATE
Section 4. In order that the corporation may determine the
---------
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting, nor more than sixty (60) days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 5. The corporation shall be entitled to recognize the
---------
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
18
<PAGE>
Section 1. Dividends upon the capital stock of the corporation,
---------
subject to the provisions of the certificate of incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out
---------
of any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purposes as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
---------
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
---------
resolution of the Board of Directors.
SEAL
Section 5. The Board of Directors may adopt a corporate seal having
---------
inscribed thereon the name of the corporation, the year of its organization and
the words "Corporate Seal, Delaware." The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
19
<PAGE>
Section 6. The corporation shall, to the fullest extent authorized
---------
under the laws of the State of Delaware, as those laws may be amended and
supplemented from time to time, indemnify any director made, or threatened to be
made, a party to an action or proceeding, whether criminal, civil,
administrative or investigative, by reason of being a director of the
corporation or a predecessor corporation or, at the corporation's request, a
director or officer of another corporation, provided, however, that the
corporation shall indemnify any such agent in connection with a proceeding
initiated by such agent only if such proceeding was authorized by the Board of
Directors of the corporation. The indemnification provided for in this Section 6
shall: (i) not be deemed exclusive of any other rights to which those
indemnified may be entitled under any bylaw, agreement or vote of stockholders
or disinterested directors or otherwise, both as to action in their official
capacities and as to action in another capacity while holding such office, (ii)
continue as to a person who has ceased to be a director, and (iii) inure to the
benefit of the heirs, executors and administrators of such a person. The
corporation's obligation to provide indemnification under this Section 6 shall
be offset to the extent of any other source of indemnification or any otherwise
applicable insurance coverage under a policy maintained by the corporation or
any other person.
Expenses incurred by a director of the corporation in defending a
civil or criminal action, suit or proceeding by reason of the fact that he is or
was a director of the corporation (or was serving at the corporation's request
as a director or officer of another corporation) shall be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the corporation as authorized by relevant sections of the
General Corporation Law of Delaware. Notwithstanding
20
<PAGE>
the foregoing, the corporation shall not be required to advance such expenses to
an agent who is a party to an action, suit or proceeding brought by the
corporation and approved by a majority of the Board of Directors of the
corporation which alleges willful misappropriation of corporate assets by such
agent, disclosure of confidential information in violation of such agent's
fiduciary or contractual obligations to the corporation or any other willful and
deliberate breach in bad faith of such agent's duty to the corporation or its
stockholders.
The foregoing provisions of this Section 6 shall be deemed to be a
contract between the corporation and each director who serves in such capacity
at any time while this bylaw is in effect, and any repeal or modification
thereof shall not affect any rights or obligations then existing with respect to
any state of facts then or theretofore existing or any action, suit or
proceeding theretofore or thereafter brought based in whole or in part upon any
such state of facts.
The Board of Directors in its discretion shall have power on behalf of
the corporation to indemnify any person, other than a director, made a party to
any action, suit or proceeding by reason of the fact that he, his testator or
intestate, is or was an officer or employee of the corporation.
To assure indemnification under this Section 6 of all directors,
officers and employees who are determined by the corporation or otherwise to be
or to have been "fiduciaries" of any employee benefit plan of the corporation
which may exist from time to time, Section 145 of the General Corporation Law of
Delaware shall, for the purposes of this Section 6, be interpreted as follows:
an "other enterprise" shall be deemed to include such an employee benefit plan,
including without limitation, any plan of the corporation which is governed by
the Act of Congress entitled "Employee Retirement Income Security Act of 1974,"
as amended from
21
<PAGE>
time to time; the corporation shall be deemed to have requested a person to
serve an employee benefit plan where the performance by such person of his
duties to the corporation also imposes duties on, or otherwise involves services
by, such person to the plan or participants or beneficiaries of the plan; excise
taxes assessed on a person with respect to an employee benefit plan pursuant to
such Act of Congress shall be deemed "fines."
ARTICLE VIII
AMENDMENTS
Section 1. These bylaws may be altered, amended or repealed or new
----------
bylaws may be adopted by the affirmative vote of holders of at least 66-2/3%
vote of the outstanding voting stock of the corporation. These bylaws may also
be altered, amended or repealed or new bylaws may be adopted by the Board of
Directors, when such power is conferred upon the Board of Directors by the
certificate of incorporation. The foregoing may occur at any regular meeting of
the stockholders or of the Board of Directors or at any special meeting of the
stockholders or of the Board of Directors if notice of such alteration,
amendment, repeal or adoption of new bylaws be contained in the notice of such
special meeting. If the power to adopt, amend or repeal bylaws is conferred upon
the Board of Directors by the certificate of incorporation it shall not divest
or limit the power of the stockholders to adopt, amend or repeal bylaws.
22
<PAGE>
CERTIFICATE OF ADOPTION BY THE
SECRETARY OF
VIADOR INC.
The undersigned, Paul C. Vilandre, hereby certifies that he is the
duly elected and acting Secretary of Digital Island, Inc., a Delaware
corporation (the "Corporation"), and that the Amended and Restated Bylaws
attached hereto constitute the Bylaws of said Corporation as duly adopted by the
Board of Directors and the Stockholders of the Corporation and as in effect on
the date hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his name
this _____ day of _____, 1999.
________________________________
Paul C. Vilandre
Secretary
23
<PAGE>
Exhibit 4.3
VIADOR, INC.
AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
May 21, 1999
<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 "Market Stand-Off" Agreement.................................. 11
1.15 Termination of Registration Rights............................ 12
1.16 Limitations on Subsequent 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.......................................... 13
3. Miscellaneous....................................................... 15
3.1 Successors and Assigns........................................ 15
3.2 Governing Law................................................. 15
3.3 Counterparts.................................................. 15
3.4 Titles and Subtitles.......................................... 15
3.5 Notices....................................................... 15
3.6 Expenses...................................................... 16
3.7 Amendments and Waivers........................................ 16
3.8 Severability.................................................. 16
3.9 Aggregation of Stock.......................................... 16
3.10 Entire Agreement............................................./. 16
</TABLE>
i
<PAGE>
AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT dated as of May 21,
1999, between VIADOR, INC., a California corporation (the "Company"), the
-------
holders of the Company's Series A Preferred Stock (the "Series A Investors"),
------------------
the holders of the Company's Series B Preferred Stock (the "Series B Investors")
------------------
and the investors listed on Schedule A attached hereto (the "Series C
---------- --------
Investors") and, collectively with the Series A Investors and the Series B
- ---------
Investors, the "Investors."
---------
RECITALS
--------
WHEREAS, the Company and the Series C Investors are parties to the
Series C Preferred Stock Purchase Agreement of even date herewith (the "Series C
--------
Purchase Agreement");
- ------------------
WHEREAS, the Series A Investors and Series B Investors possess
registration rights, information rights, rights of first offer and other rights
pursuant to the Amended and Restated Investors' Rights Agreement dated as of
August 21, 1998 between the Company and such Series A Investors and Series B
Investors (the "Prior Rights Agreement");
----------------------
WHEREAS, in order to induce the Series C Investors to enter into the
Series C Agreement and to induce the Series C Investors to invest funds in the
Company pursuant to the Series C Agreement, the Company, the Series A Investors
and Series B Investors desire to terminate the Prior Agreement in its entirety
and to accept the rights created pursuant hereto in lieu of the rights granted
to them under the Prior Agreement; and
WHEREAS, the Company wishes to sell to the Series C Investor shares of
its Series C Preferred Stock pursuant to the Series C Agreement, and in
connection therewith, desires to grant certain rights to the Investors as set
forth in this Agreement, and the Investors wish to receive such rights.
NOW, THEREFORE, THE PARTIES 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 "Act" means the Securities Act of 1933, as amended.
---
(b) The term "Form S-3" means such form under the Act as in effect on
--------
the date hereof or any registration form under the Act subsequently adopted by
the SEC which permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
1
<PAGE>
(c) The term "Holder" means any person owning or having the right to
------
acquire Registrable Securities, as defined below, or any assignee thereof in
accordance with Section 1.13 hereof.
(d) The term "1934 Act" shall mean the Securities Exchange Act of
--------
1934, as amended.
(e) The term "register", "registered," and "registration" refer to a
-------- ---------- ------------
registration effected by preparing and filing a registration statement or
similar document in compliance with the 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 Company's Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock, and (ii) any Common Stock
of the Company (the "Common Stock") 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) above, excluding in all cases,
however, any Registrable Securities sold by a person in a transaction in which
such person's rights under this Section 1 are not assigned.
(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 three (3) months
following 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)
with a per share price of $7.50 and an aggregate offering price of at least
$15,000,000, a written request from the Holders of forty percent (40%) of the
Registrable Securities then outstanding that the Company file a registration
statement under the Act covering the registration of at least forty percent
(40%) of the Registrable Securities then outstanding, then the Company shall:
(i) within ten (10) 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 Act of all
Registrable Securities which the Holders request to be registered within twenty
(20) days of the mailing of a notice by the Company in accordance with Section
3.5, subject to the limitations of subsection 1.2(b).
2
<PAGE>
(b) If the Holders initiating the registration request hereunder
("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 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 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 that propose to include their
Registrable Securities in the underwriting, 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
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 twelve-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:
(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 sixty (60) days
prior to the Company's good faith estimate of the date of filing of, and ending
on a date one hundred eighty (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 and provided that the Company may not
invoke the deferral provisions of this Section 1.2(d)(ii) more than once in any
twelve-month period; or
3
<PAGE>
(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 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, a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities which are
also being registered or a registration in connection with the initial public
offering of the Company), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given within twenty (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 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 as soon as practicable 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 one hundred twenty (120) days or until the distribution contemplated in
the Registration Statement has been completed; provided, however, that (i) 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;
and (ii) in the case of any registration of Registrable Securities on Form S-3
which are intended to be offered on a continuous or delayed basis, such 120-day
period shall be extended, if necessary, to keep the registration statement
effective until all such Registrable Securities are sold, provided that Rule
415, or any successor rule under the Act, permits an offering on a continuous or
delayed basis, and provided further that applicable rules under the Act
governing the obligation to file a post-effective amendment permit, in lieu of
filing a post-effective amendment which (I) includes any prospectus required by
Section 10(a)(3) of the Act or (II) reflects facts or events representing a
material or fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be included
in (I) and (II) above to be contained in periodic reports filed pursuant to
Section 13 or 15(d) of the 1934 Act in the registration statement.
(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
4
<PAGE>
may be necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
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.
(e) In the event of any underwritten public offering, (i) enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering, and (ii) if
requested by the underwriter, provide and include such information in the
registration statement as the underwriter may reasonably request. 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 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 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) Notify each Holder of Registrable Securities covered by such
registration statement (i) when a prospectus or any amendments or supplements
thereto have been filed and, with respect to a registration statement or post-
effective amendments thereto, when the same has become effective, (ii) of the
request by the SEC for amendments or supplements to a registration statement or
related prospectus or for additional information, and (iii) of the issuance by
the SEC (or any state agency) of any stop order (a "Stop Order") suspending the
----------
effectiveness of a registration statement.
(j) Make every commercially reasonable effort to obtain the
withdrawal of a Stop Order at the earliest possible moment.
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, 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 up to $12,500 of 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 the 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 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
up to $12,500 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 Holders 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 Holders according to the total amount of securities entitled to be
included therein owned by each selling Holder or in such other proportions as
shall mutually be agreed to by such selling Holders) but in no event shall (i)
the amount of securities of the selling Holders included in the offering be
reduced below twenty percent (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 Holders may be excluded if the
underwriters make the determination described above and no other Holder's
securities are included or (ii) notwithstanding (i) above, any shares being sold
by a Holder 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 Holder 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 Holder", and any pro-rata reduction with respect
to such "selling Holder" shall be based upon the aggregate amount of shares
carrying registration rights owned by all entities and individuals included in
such "selling Holder", 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 Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Act or the 1934 Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the Act,
the 1934 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 Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, the 1934 Act, or any state
securities law; and the Company will pay to each such Holder, underwriter or
controlling person, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement
7
<PAGE>
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 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 Act, the 1934 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, 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, that,
in no event shall any indemnity under this subsection 1.10(b) or under
subsection 1.10(d) exceed the net 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 relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.10.
8
<PAGE>
(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
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 ninety (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) take such action, including the voluntary registration of its
Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(d) 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 ninety (90) days after the effective date of the first registration
statement filed by the Company), the Act and the 1934 Act
9
<PAGE>
(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 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 $500,000.00; (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 60 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 twelve month
period; (4) if the Company has, within the six (6) month period preceding the
date of such request, already effected one registration 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, qualification, printer's and accounting fees and the
reasonable fees and disbursements of counsel for the selling Holder or Holders
and counsel for the Company, but excluding any underwriters' discounts or
commissions associated with Registrable Securities,
10
<PAGE>
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.
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 is an affiliate, parent, subsidiary or limited
partner of such Holder or who, after such assignment or transfer, holds at least
500,000 shares of Registrable Securities (subject to appropriate adjustment for
stock splits, stock dividends, combinations and other recapitalizations),
provided: (a) the Company is, within a reasonable time 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 1.14 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 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 "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 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;
(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; and
(c) such market stand-off time period shall not exceed one hundred
eighty (180) days.
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
11
<PAGE>
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 1.14 shall not apply to a registration relating solely to employee
benefit plans on Form S-l or Form S-8 or similar forms which may be promulgated
in the future, or 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.
1.15 Termination of Registration Rights.
----------------------------------
(a) No Holder shall be entitled to exercise any right provided for in
this Section 1 after five (5) years following the consummation of the sale of
securities pursuant to a registration statement filed by the Company under the
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 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 later 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 1.15(b) shall not apply
to any Holder who owns more than two percent (2%) of the Company's outstanding
stock until such time as such Holder owns less than two percent (2%) of the
outstanding stock of the Company.
1.16 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 at least two-thirds 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 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 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 one hundred twenty (120) days of the effective date of any
registration effecting pursuant to Section 1.2
2. Covenants of the Company.
------------------------
2.1 Delivery of Financial Statements. The Company shall deliver to
--------------------------------
each Major Investor (as defined in Section 2.4):
12
<PAGE>
(a) as soon as practicable, but in any event within ninety (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 shareholder's
equity as of the end of such year, and a schedule as to 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 forty-five (45)
days after the end of each of the first three (3) 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) with respect to the financial statements called for in subsection
(b) of this Section 2.1, an instrument executed by the Chief Financial Officer
or President of the Company and certifying that such financials were 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
fairly present the financial condition of the Company and its results of
operation for the period specified, subject to year-end audit adjustment;
(d) such other information relating to the financial condition,
business, prospects or corporate affairs of the Company as the Major Investor or
any assignee of the Major Investor may from time to time request, provided,
however, that the Company shall not be obligated under this subsection (d) 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.
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 the 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 subsections 2.1(c) and (d) and Section 2.2 shall
terminate as to Investors and be of no further force or effect when the sale of
securities pursuant to a registration statement filed by the Company under the
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 1934 Act, whichever event shall first occur.
2.4 Right of First Offer. Subject to the terms and conditions
--------------------
specified in this paragraph 2.4, the Company, hereby grants to each Major
Investor a right of first offer with respect to future sales of its Shares. For
purposes of this Section 2.4, a Major Investor shall mean any Series A Investor
who holds a minimum of 190,000 shares of Registrable Securities and any Series B
Investor or Series C Investor who holds a minimum of 500,000 shares of Series
13
<PAGE>
B Preferred Stock or Series C Preferred Stock, respectively. For purposes of
this Section 2.4, Investor includes any general partners and affiliates of such
Major Investor. A Major 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 the Company's
capital stock ("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 by certified mail ("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) Within 20 calendar days after receipt of the Notice, the 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 Series A Preferred Stock, Series B Preferred
Stock and/or Series C Preferred Stock then held, by such Major Investor bears to
the total number of shares of common stock issued and held, or issuable upon
conversion of the Series A Preferred Stock, Series B Preferred Stock and Series
C Preferred Stock then held, by all the Major Investors. The Company shall
promptly, in writing, inform each Major Investor which purchases all the shares
available to it ("Fully-Exercising Investor") of any other Major Investor's
-------------------------
failure to do likewise. During the ten-day period commencing after receipt of
such information, each Fully-Exercising Investor shall be entitled to obtain
that portion of the Shares 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 Series A Preferred Stock, Series B
Preferred Stock and/or Series C 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 Series A Preferred Stock, Series B
Preferred Stock and/or Series C Preferred Stock then held, by all Fully-
Exercising Investors who wish to purchase some of the unsubscribed shares.
(c) If all Shares which Major Investors are entitled to obtain
pursuant to subsection 2.4(b) 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 paragraph 2.4 shall not be
applicable (i) to the issuance or sale of shares of Common Stock (or options
therefor) to employees for the
14
<PAGE>
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 Act pursuant to a registration statement on
Form S-1, at an offering price of at least $7.50 per share (appropriately
adjusted for any stock split, dividend, combination or other recapitalization)
and $15,000,000 in the aggregate, (iii) the issuance of securities pursuant to
the conversion or exercise of convertible or exercisable securities, (iv) shares
of Common Stock issued in connection with mergers or acquisitions of stock or
assets of other corporations in transactions approved by the Board of Directors,
(v) the sale by the Company of up to an aggregate of 8,000,000 shares of Series
B Preferred Stock (including the Series B Preferred Stock issued pursuant to the
Series B Purchase Agreement) on terms and conditions no more beneficial to the
purchaser than terms contained in the Series B Purchase Agreement, (vi) the sale
by the Company up to an aggregate of 6,000,000 shares of Series C Preferred
Stock (including the Series C Preferred Stock issued pursuant to the Series C
Purchase Agreement) on terms and conditions no more beneficial to the purchaser
than terms contained in the Series C Purchase Agreement and (vii) the issuance
by the Company of Warrants to purchase up to 300,000 shares of Common Stock or
Series B Preferred Stock to consultants, lenders, executive search firms or
other professionals.
(e) The right of first offer set forth in this Section 2.4 may not be
assigned or transferred, unless such assignment or transfer is to a parent,
subsidiary or affiliate (who are not in competition with the Company).
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,
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 (i) upon
15
<PAGE>
personal delivery to the party to be notified, (ii) upon deposit with the United
States Post Office, by registered or certified mail, postage prepaid and
addressed to the party to be notified at the address indicated for such party on
the signature page hereof, or at such other address as such party may designate
by ten (10) days' advance written notice to the other parties or (iii) upon
sending by e-mail or facsimile if sent to the e-mail address or facsimile number
indicated on the signature page hereof, or at such other e-mail address or
facsimile number as such party may designate by ten (10) 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 two-thirds (2/3) of
the outstanding Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock, voting together as a class. 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 are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
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.
3.10 Entire Agreement. This Agreement contains the entire agreement of
----------------
the parties with respect to the subject matter hereof, and all prior agreements,
written or oral, are merged herein and are of no further force or effect. This
Agreement amends and restated, in its entirety, that certain Amended and
Restated Investors' Rights Agreement dated as of August 21, 1998 by and between
the Company, the Series A Investors and the Series B Investors.
16
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
VIADOR, INC.
By:_______________________________________
Stan Wang
President and Chief Executive Officer
SIGNATURE PAGE TO THE AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
<PAGE>
INVESTORS:
NORTH AMERICA VENTURE FUND, L.P.
a Cayman Islands Limited Partnership
By: CDC North America Venture Management, L.D.C.,
a Cayman Islands Limited Duration Company
Title: General Partner
By: ___________________________________
Name: Emily Chen
Title: Member
By: __________________________________
Name: Charles Lau
Title: Member
Address: c/o CDB Venture Management (U.S.A.), Inc.
3945 Freedom Circle, Suite 270
Santa Clara, CA 95054
SIGNATURE PAGE TO THE AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
<PAGE>
INVESTORS:
__________________________________________
Teddy Kiang & Sylvia Te-Yi Kiang
Address: 1587 Goldfinch Way
Sunnyvale, CA 94087
__________________________________________
Wendy Te-Hua Wang
Address: 1619 Mariani Drive
Sunnyvale, CA 94087
_________________________________________
Ter-Fung Tsao
Address: 1619 Mariani Drive
Sunnyvale, CA 94087
SIGNATURE PAGE TO THE AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
<PAGE>
INVESTORS:
CHENG LIVING TRUST, dated 8/8/95
By: ____________________________________
Tu-Ting Cheng
Trustee
By: ____________________________________
Te-Fang Cheng
Trustee
Address: 537 Loch Lomond Court
Sunnyvale, CA 94087
CHEN LIVING TRUST, dated 7/22/96
By: _____________________________________
Peter C. Chen
Trustee
By: ____________________________________
Pat Te-Hui Chen
Trustee
Address: 1619 Mariani Drive
Sunnyvale, CA 94087
SIGNATURE PAGE TO THE AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
<PAGE>
INVESTORS:
INFORMATION TECHNOLOGY VENTURES II, L.P.,
a California limited partnership
By: ITV MANAGEMENT II, LLC
a California limited liability company
Title: General Partner
By: __________________________________
Virginia M. Turezyn
Title: Managing Member
Address: 3000 Sand Hill Road
Building One, Suite 280
Menlo Park, CA 94025
ITV AFFILIATES FUND II, L.P.,
a California limited partnership
By: ITV MANAGEMENT II, LLC
a California limited liability company
Title: General Partner
By: __________________________________
Virginia M. Turezyn
Title: Managing Member
Address: 3000 Sand Hill Road
Building One, Suite 280
Menlo Park, CA 94025
SIGNATURE PAGE TO THE AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
<PAGE>
INVESTORS:
TECHNOLOGY ASSOCIATES CORPORATION
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Address: 9F, 108 Nanking East Road, Section 5
Taipei 105, Taiwan
Republic of China
TECH ALLIANCE CORPORATION
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Address: 9F, 108 Nanking East Road, Section 5
Taipei 105, Taiwan
Republic of China
SIGNATURE PAGE TO THE AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
<PAGE>
INVESTORS:
INDUSTRIAL TECHNOLOGICAL
INVESTMENT CORPORATION
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Address: 6F, 106 Ho-Ping East Road, Section 3
Taipei, Taiwan
Republic of China
ALPHA VENTURE CAPITAL FUND
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Address: 6F, 106 Ho-Ping East Road, Section 3
Taipei, Taiwan
Republic of China
SIGNATURE PAGE TO THE AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
<PAGE>
INVESTORS:
By:__________________________________________
K.B. Chandrasekhar
Address: 21591 Regnart Road
Cupertino, CA 95014
SIGNATURE PAGE TO THE AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
<PAGE>
INVESTORS:
JK&B CAPITAL, L.P.
By: JK&B Management, L.L.C.
Its: General Partner
By: ___________________________________________
Tasha Seitz, its Member
Address: JK&B Capital, L.P.
Corporate Centre/West Bay Road
Leeward 1
P.O. Box 31106 SMB
Grand Cayman, Cayman Islands
Attn: William Keunen
Copy to: JK&B Capital, L.P.
205 North Michigan Avenue, Suite 808
Chicago, IL 60601
Attn: Tasha Seitz
JK&B CAPITAL II, L.P.
By: JK&B Management, L.L.C.
Its: General Partner
By:
Tasha Seitz, its Member
Address: JK&B Capital II, L.P.
Corporate Centre/West Bay Road
Leeward 1
P.O. Box 31106 SMB
Grand Cayman, Cayman Islands
Attn: William Keunen
Copy to: JK&B Capital II, L.P.
205 North Michigan Avenue, Suite 808
Chicago, IL 60601
Attn: Tasha Seitz
SIGNATURE PAGE TO THE AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
<PAGE>
INVESTORS:
STARTOP INVESTMENTS LIMITED
By:____________________________________________
Name:__________________________________________
Title:_________________________________________
Address: 163 Flyingcloud Isle
Foster City, CA 94404
Attn: Glenn P. Tsai
SIGNATURE PAGE TO THE AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
<PAGE>
INVESTORS:
SUPERCOM, INC.
By:____________________________________________
Name:__________________________________________
Title:_________________________________________
Address: 551 Brown Road
Fremont, CA 94539
_______________________________________________
Jim Fang
Address: c/o Supercom, Inc.
551 Brown Road
Fremont, CA 94539
SIGNATURE PAGE TO THE AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
<PAGE>
INVESTORS:
BROBECK, PHLEGER & HARRISON LLP
By:______________________________________________
Curtis L. Mo
Partner
Address: Spear Street Tower
One Market
San Francisco, CA 94105
AttN; Thomas Allen, Chief Financial Officer
SIGNATURE PAGE TO THE AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
<PAGE>
INVESTORS:
________________________________________
Ted Su
Address: 431 River Rock Court
San Jose, Ca 95136
SIGNATURE PAGE TO THE AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
<PAGE>
INVESTORS:
________________________________________
Name:___________________________________
Address:________________________________
________________________________
________________________________
SIGNATURE PAGE TO THE AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
<PAGE>
HOLDER:
STANDARD FOODS TAIWAN LTD.
By: ________________________________________
Teddy Kiang
Title: ________________________________
Address: 2314 Walsh Avenue
Santa Clara, CA 95051
CROSSLINK SEMICONDUCTOR, INC. (TAIWAN)
By: ________________________________________
Teddy Kiang
Title: ________________________________
Address: 2314 Walsh Avenue
Santa Clara, CA 95051
SIGNATURE PAGE TO THE AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
<PAGE>
SCHEDULE A
SCHEDULE OF INVESTORS
<TABLE>
<CAPTION>
Investor Number of Shares Purchase Price
-------- ---------------- --------------
<S> <C> <C>
NORTH AMERICA VENTURE FUND, L.P. 1,232,539 $ 3,000,000
INFORMATION TECHNOLOGY VENTURES II, L.P. 989,441 $ 2,408,299.39
ITV AFFILIATES FUND II, L.P. 37,675 $ 91,700.95
TEDDY KIANG AND SYLVIA TE-YI KIANG 246,508 $ 600,000
WENDY TE-HUA WANG 246,508 $ 600,000
CHENG LIVING TRUST, DATED 8/8/95: 246,508 $ 600,000
TU-TING FANG, TRUSTEE AND TE-FANG CHENG, TRUSTEE
TER-FUNG TSAO 246,508 $ 600,000
PETER C. CHEN AND PAT TE-HUI CHEN 246,508 $ 600,000
AS CO-TRUSTEES OF THE CHEN LIVING
TRUST, DATED 7/22/96
TECHNOLOGY ASSOCIATES CORPORATION 205,423 $ 500,000
TECH ALLIANCE CORPORATION 205,423 $ 500,000
INDUSTRIAL TECHNOLOGY INVESTMENT CORPORATION 328,677 $ 800,000
ALPHA VENTURE CAPITAL FUND, INC. 82,169 $ 200,000
K.B. CHANDRASEKHAR 410,846 $ 1,000,000
JK&B CAPITAL, L.P. 342,372 $ 833,333.33
JK&B CAPITAL II, L.P. 171,186 416,666.67
STARTOP INVESTMENTS LIMITED 246,508 $ 600,000
TED SU 61,627 $ 150,000
TOW-MING SIOW 164,339 $ 400,000
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
GLENN P. TSAI 82,169 $ 200,000
KAMSLER BISHOP TRUST, DATED 9/22/95, 41,085 $ 100,000
J. SCOTT KAMSLER, TRUSTEE
SUPERCOM, INC. 20,542 $ 50,000
JAMES J. FANG 20,542 $ 50,000
ROBERT FREY 20,542 $ 50,000
ROBERT CERTILMAN 20,542 $ 50,000
BROBECK, PHLEGER & HARRISON LLP 16,434 $ 40,000.36
CURTIS L. MO 8,217 $ 20,000.18
PRAVEEN GUPTA 10,000 $ 24,340
CHARLES LAU 10,000 $ 24,340
YEE CHEUN CHEN YANG 8,000 $ 19,472
J. OMAR MAHMUD 2,055 $ 5,001.87
ALAN SHANKEN 10,271 $ 25,000
TOTAL: 5,981,164 $14,558,154.75
</TABLE>
<PAGE>
AMENDMENT NO. 1
to
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
This Amendment No. 1, dated as of July 23, 1999, amends that certain
Amended and Restated Investors' Rights Agreement, dated as of May 21, 1999 (the
"Agreement"), by and among Viador Inc., a California corporation (the
---------
"Company"), and the individuals or entities listed on the signature pages
-------
thereto (each a "Holder" and collectively, the "Holders"). Capitalized terms
------ -------
used herein without definition shall have the respective meanings ascribed to
them in the Agreement.
WHEREAS, the Company intends to undertake an Initial Public Offering;
and
WHEREAS, the Company and the Holders wish to amend the Agreement to
facilitate the Initial Public Offering; and
WHEREAS, the Agreement, pursuant to Section 14.8 thereof, may be
amended with the written consent of the Company and the Holders of at least 66
2/3% of the outstanding Series A Preferred, Series B Preferred, Series C
Preferred and Registrable Securities.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Section 9 of the Agreement is hereby deleted in its entirety and
the following is substituted therefor:
"Section 9
Standoff Agreement
------------------
In connection with the Company's Initial Public Offering, each Holder
agrees not to offer to sell or sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any securities of the
Company held by Holder at any time during such period (other than those included
in the Initial Public Offering, if any), directly or indirectly, without the
prior written consent of the Company or the underwriters of such Initial Public
Offering for a period of one-hundred eighty (180) days following the effective
date of the Initial Public Offering. In connection with the Company's Initial
Public Offering, each Holder further agrees to enter into the managing
underwriter's standard lockup letter. In order to enforce the foregoing, the
Company may
<PAGE>
impose stop-transfer instructions with respect to the Registrable Securities of
each Holder (and the share or securities of every other person subject to the
foregoing restrictions) until the end of such period."
2. Each of the other provisions of the Agreement shall remain in full
force and effect.
This Amendment No. 1 may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
instrument.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Amendment No. 1 as of the date first above written.
By:
------------------------------
Print Name:
----------------------
Title:
---------------------------
2
<PAGE>
EXHIBIT 10.1
VIADOR, INC.
AMENDED AND RESTATED
1997 STOCK OPTION/STOCK ISSUANCE PLAN
-------------------------------------
ARTICLE ONE
GENERAL PROVISIONS
------------------
I. PURPOSE OF THE PLAN
This 1997 Stock Option/Stock Issuance Plan is intended to promote the
interests of Viador, Inc., a California corporation, by providing eligible
persons with the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Corporation as an incentive for them
to remain in the service of the Corporation.
Capitalized terms herein shall have the meanings assigned to such
terms in the attached Appendix.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into two (2) separate equity programs:
(i) the Option Grant Program under which eligible
persons may, at the discretion of the Plan Administrator, be
granted options to purchase shares of Common Stock, and
(ii) the Stock Issuance Program under which eligible
persons may, at the discretion of the Plan Administrator, be
issued shares of Common Stock directly, either through the
immediate purchase of such shares or as a bonus for services
rendered the Corporation (or any Parent or Subsidiary).
B. The provisions of Articles One and Four shall apply to both equity
programs under the Plan and shall accordingly govern the interests of all
persons under the Plan.
III. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered by the Board. However, any or all
administrative functions otherwise exercisable by the Board may be delegated to
the Committee. Members of the Committee shall serve for such period of time as
the Board may determine and shall be subject to removal by the Board at any
time. The Board may also at any time terminate the functions of the Committee
and reassume all powers and authority previously delegated to the Committee.
B. The Plan Administrator shall have full power and authority
(subject to the provisions of the Plan) to establish such rules and regulations
as it may deem appropriate for proper administration of the Plan and to make
such determinations under, and issue such
<PAGE>
interpretations of, the Plan and any outstanding options or stock issuances
thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator shall be final and binding on all parties who have an interest in
the Plan or any option or stock issuance thereunder.
IV. ELIGIBILITY
A. The persons eligible to participate in the Plan are as follows:
(i) Employees,
(ii) non-employee members of the Board or the
non-employee members of the board of directors of any Parent
or Subsidiary, and
(iii) consultants and other independent advisors who
provide services to the Corporation (or any Parent or Subsidiary).
B. The Plan Administrator shall have full authority to determine, (i)
with respect to the grants under the Option Grant Program, which eligible
persons are to receive the option grants, the time or times when those grants
are to be made, the number of shares to be covered by each such grant, the
status of the granted option as either an Incentive Option or a Non-Statutory
Option, the time or times when each option is to become exercisable, the vesting
schedule (if any) applicable to the option shares and the maximum term for which
the option is to remain outstanding, and (ii) with respect to stock issuances
under the Stock Issuance Program, which eligible persons are to receive such
stock issuances, the time or times when those issuances are to be made, the
number of shares to be issued to each Participant, the vesting schedule (if any)
applicable to the issued shares and the consideration to be paid by the
Participant for such shares.
C. The Plan Administrator shall have the absolute discretion either
to grant options in accordance with the Option Grant Program or to effect stock
issuances in accordance with the Stock Issuance Program.
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock. The maximum number of shares of Common
Stock initially reserved for issuance over the term of the Plan shall not exceed
9,590,544 shares. Such authorized share reserve is comprised solely of the
number of shares which remain available for issuance, as of the effective date
of the Plan, under the Predecessor Plan as last approved by the Corporation's
shareholders, including the shares subject to the outstanding options to be
incorporated into the Plan and the additional shares which would otherwise be
available for future option grants.
B. Shares of Common Stock subject to outstanding options (including
options incorporated into this Plan from the Predecessor Plan) shall be
available for subsequent issuance under the Plan to the extent (i) the options
expire or terminate for any reason prior to exercise in full or (ii) the options
are cancelled in accordance with the cancellation-regrant provisions of Article
Two. Unvested shares issued under the Plan and subsequently repurchased
<PAGE>
by the Corporation, at the option exercise or direct issue price paid per share,
pursuant to the Corporation's repurchase rights under the Plan shall be added
back to the number of shares of Common Stock reserved for issuance under the
Plan and shall accordingly be available for reissuance through one or more
subsequent option grants or direct stock issuances under the Plan.
C. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and/or class of securities issuable
under the Plan and (ii) the number and/or class of securities and the exercise
price per share in effect under each outstanding option (including options
incorporated from the Predecessor Plan) in order to prevent the dilution or
enlargement of benefits thereunder. The adjustments determined by the Plan
Administrator shall be final, binding and conclusive. In no event shall any such
adjustments be made in connection with the conversion of one or more outstanding
shares of the Corporation's preferred stock into shares of Common Stock.
<PAGE>
ARTICLE TWO
OPTION GRANT PROGRAM
--------------------
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
--------
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
A. Exercise Price.
--------------
1. The exercise price per share shall be fixed by the Plan
Administrator in accordance with the following provisions:
(i) The exercise price per share shall not be less
than eighty-five percent (85%) of the Fair Market Value per share
of Common Stock on the option grant date.
(ii) If the person to whom the option is granted is a
10% Shareholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value
per share of Common Stock on the option grant date.
2. The exercise price shall become immediately due upon exercise of
the option and shall, subject to the provisions of Section I of Article Four and
the documents evidencing the option, be payable in cash or check made payable to
the Corporation. Should the Common Stock be registered under Section 12(g) of
the 1934 Act at the time the option is exercised, then the exercise price may
also be paid as follows:
(i) in shares of Common Stock held for the requisite
period necessary to avoid a charge to the Corporation's earnings
for financial reporting purposes and valued at Fair Market Value
on the Exercise Date, or
(ii) to the extent the option is exercised for vested
shares, through a special sale and remittance procedure pursuant
to which the Optionee shall concurrently provide irrevocable
instructions (A) to a Corporation-designated brokerage firm to
effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate exercise price
payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be
withheld by the Corporation by reason of such exercise and (B) to
the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the
sale.
<PAGE>
Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. Exercise and Term of Options. Each option shall be exercisable at
----------------------------
such time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option grant. However, no option shall have a term in excess of ten (10)
years measured from the option grant date.
C. Effect of Termination of Service.
--------------------------------
1. The following provisions shall govern the exercise of
any options held by the Optionee at the time of cessation of Service or death:
(i) Should the Optionee cease to remain in
Service for any reason other than death, Disability or Misconduct,
then the Optionee shall have a period of three (3) months
following the date of such cessation of Service during which to
exercise each outstanding option held by such Optionee.
(ii) Should Optionee's Service terminate by
reason of Disability, then the Optionee shall have a period of
twelve (12) months following the date of such cessation of Service
during which to exercise each outstanding option held by such
Optionee.
(iii) If the Optionee dies while holding an
outstanding option, then the personal representative of his or
her estate or the person or persons to whom the option is
transferred pursuant to the Optionee's will or the laws of
inheritance shall have a twelve (12)-month period following the
date of the Optionee's death to exercise such option.
(iv) Under no circumstances, however, shall
any such option be exercisable after the specified expiration of
the option term.
(v) During the applicable post-Service
exercise period, the option may not be exercised in the aggregate
for more than the number of vested shares for which the option is
exercisable on the date of the Optionee's cessation of Service.
Upon the expiration of the applicable exercise period or (if
earlier) upon the expiration of the option term, the option shall
terminate and cease to be outstanding for any vested shares for
which the option has not been exercised. However, the option
shall, immediately upon the Optionee's cessation of Service,
terminate and cease to be outstanding with respect to any and all
option shares for which the option is not otherwise at the time
exercisable or in which the Optionee is not otherwise at that
time vested.
(vi) Should Optionee's Service be terminated
for Misconduct, then all outstanding options held by the Optionee
shall terminate immediately and cease to remain outstanding.
<PAGE>
2. The Plan Administrator shall have the discretion, exercisable
either at the time an option is granted or at any time while the option remains
outstanding, to:
(i) extend the period of time for which the option is
to remain exercisable following Optionee's cessation of Service
or death from the limited period otherwise in effect for that
option to such greater period of time as the Plan Administrator
shall deem appropriate, but in no event beyond the expiration of
the option term, and/or
(ii) permit the option to be exercised, during the
applicable post-Service exercise period, not only with respect to
the number of vested shares of Common Stock for which such option
is exercisable at the time of the Optionee's cessation of Service
but also with respect to one or more additional installments in
which the Optionee would have vested under the option had the
Optionee continued in Service.
D. Shareholder Rights. The holder of an option shall have no
------------------
shareholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
E. Unvested Shares. The Plan Administrator shall have the discretion to
---------------
grant options which are exercisable for unvested shares of Common Stock. Should
the Optionee cease Service while holding such unvested shares, the Corporation
shall have the right to repurchase, at the exercise price paid per share, any or
all of those unvested shares. The terms upon which such repurchase right shall
be exercisable (including the period and procedure for exercise and the
appropriate vesting schedule for the purchased shares) shall be established by
the Plan Administrator and set forth in the document evidencing such repurchase
right. The Plan Administrator may not impose a vesting schedule upon the option
grant or any shares of Common Stock subject to that option which is more
restrictive than twenty percent (20%) per year vesting, with the initial vesting
to occur not later than one (1) year after the option grant date. However, such
limitation shall not be applicable to any option grants made to individuals who
are officers of the Corporation, non-employee Board members or independent
consultants.
F. First Refusal Rights. Until such time as the Common Stock is
--------------------
first registered under Section 12(g) of the 1934 Act, the Corporation shall have
the right of first refusal with respect to any proposed disposition by the
Optionee (or any successor in interest) of any shares of Common Stock issued
under the Plan. Such right of first refusal shall be exercisable in accordance
with the terms established by the Plan Administrator and set forth in the
document evidencing such right.
G. Limited Transferability of Options. During the lifetime of the
----------------------------------
Optionee, the option shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or by the laws of descent and
distribution following the Optionee's death.
H. Withholding. The Corporation's obligation to deliver shares of
-----------
Common Stock upon the exercise of any options granted under the Plan shall be
subject to the satisfaction of all applicable Federal, state and local income
and employment tax withholding requirements.
<PAGE>
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of the Plan shall be applicable to Incentive Options. Options which
are specifically designated as Non-Statutory Options shall not be subject to the
---
terms of this Section II.
A. Eligibility. Incentive Options may only be granted to Employees.
-----------
B. Exercise Price. The exercise price per share shall not be less
--------------
than one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the option grant date.
C. Dollar Limitation. The aggregate Fair Market Value of the shares
-----------------
of Common Stock (determined as of the respective date or dates of grant) for
which one or more options granted to any Employee under the Plan (or any other
option plan of the Corporation or any Parent or Subsidiary) may for the first
time become exercisable as Incentive Options during any one (1) calendar year
shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become exercisable
for the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
D. 10% Shareholder. If any Employee to whom an Incentive Option is
---------------
granted is a 10% Shareholder, then the option term shall not exceed five (5)
years measured from the option grant date.
III. CORPORATE TRANSACTION
A. The shares subject to each option outstanding under the Plan at
the time of a Corporate Transaction shall automatically vest in full so that
each such option shall, immediately prior to the effective date of the Corporate
Transaction, become fully exercisable for all of the shares of Common Stock at
the time subject to that option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock. However, the shares subject to an
outstanding option shall NOT vest on such an accelerated basis if and to the
extent: (i) such option is assumed by the successor corporation (or parent
thereof) in the Corporate Transaction and the Corporation's repurchase rights
with respect to the unvested option shares are concurrently assigned to such
successor corporation (or parent thereof) or (ii) such option is to be replaced
with a cash incentive program of the successor corporation which preserves the
spread existing on the unvested option shares at the time of the Corporate
Transaction and provides for subsequent payout in accordance with the same
vesting schedule applicable to those unvested option shares or (iii) the
acceleration of such option is subject to other limitations imposed by the Plan
Administrator at the time of the option grant.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in
<PAGE>
the event of any Corporate Transaction, except to the extent: (i) those
repurchase rights are assigned to the successor corporation (or parent thereof)
in connection with such Corporate Transaction or (ii) such accelerated vesting
is precluded by other limitations imposed by the Plan Administrator at the time
the repurchase right is issued.
C. Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).
D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction, had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan following the consummation of
such Corporate Transaction and (ii) the exercise price payable per share under
each outstanding option, provided the aggregate exercise price payable for such
--------
securities shall remain the same.
E. The Plan Administrator shall have the discretion, exercisable
either at the time the option is granted or at any time while the option remains
outstanding, to provide for the automatic acceleration (in whole or in part) of
one or more outstanding options (and the immediate termination of the
Corporation's repurchase rights with respect to the shares subject to those
options) upon the occurrence of a Corporate Transaction, whether or not those
options are to be assumed in the Corporate Transaction.
F. The Plan Administrator shall also have full power and authority,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to structure such option so that the shares subject
to that option will automatically vest on an accelerated basis should the
Optionee's Service terminate by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective
date of any Corporate Transaction in which the option is assumed and the
repurchase rights applicable to those shares do not otherwise terminate. Any
option so accelerated shall remain exercisable for the fully-vested option
shares until the earlier of (i) the expiration of the option term or (ii) the
-------
expiration of the one (1)-year period measured from the effective date of the
Involuntary Termination. In addition, the Plan Administrator may provide that
one or more of the Corporation's outstanding repurchase rights with respect to
shares held by the Optionee at the time of such Involuntary Termination shall
immediately terminate on an accelerated basis, and the shares subject to those
terminated rights shall accordingly vest at that time.
G. The portion of any Incentive Option accelerated in connection with
a Corporate Transaction shall remain exercisable as an Incentive Option only to
the extent the applicable One Hundred Thousand Dollar limitation is not
exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a Non-Statutory Option under the
Federal tax laws.
H. The grant of options under the Plan shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure
<PAGE>
or to merge, consolidate, dissolve, liquidate or sell or transfer all or any
part of its business or assets.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Plan (including
outstanding options incorporated from the Predecessor Plan) and to grant in
substitution therefor new options covering the same or different number of
shares of Common Stock but with an exercise price per share based on the Fair
Market Value per share of Common Stock on the new option grant date.
<PAGE>
ARTICLE THREE
STOCK ISSUANCE PROGRAM
----------------------
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate issuances without any intervening option grants.
Each such stock issuance shall be evidenced by a Stock Issuance Agreement which
complies with the terms specified below.
A. Purchase Price.
--------------
1. The purchase price per share shall be fixed by the Plan
Administrator but shall not be less than eighty-five percent (85%) of the Fair
Market Value per share of Common Stock on the issue date. However, the purchase
price per share of Common Stock issued to a 10% Shareholder shall not be less
than one hundred and ten percent (110%) of such Fair Market Value.
2. Subject to the provisions of Section I of Article Four,
shares of Common Stock may be issued under the Stock Issuance Program for any of
the following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:
(i) cash or check made payable to the Corporation,
or
(ii) past services rendered to the Corporation (or
any Parent or Subsidiary).
B. Vesting Provisions.
------------------
1. Shares of Common Stock issued under the Stock Issuance
Program may, in the discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over
the Participant's period of Service or upon attainment of specified performance
objectives. However, the Plan Administrator may not impose a vesting schedule
upon any stock issuance effected under the Stock Issuance Program which is more
restrictive than twenty percent (20%) per year vesting, with initial vesting to
occur not later than one (1) year after the issuance date. Such limitation shall
not apply to any Common Stock issuances made to the officers of the Corporation,
non-employee Board members or independent consultants.
2. Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to
<PAGE>
the Participant's unvested shares of Common Stock and (ii) such escrow
arrangements as the Plan Administrator shall deem appropriate.
3. The Participant shall have full shareholder rights with
respect to any shares of Common Stock issued to the Participant under the Stock
Issuance Program, whether or not the Participant's interest in those shares is
vested. Accordingly, the Participant shall have the right to vote such shares
and to receive any regular cash dividends paid on such shares.
4. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock issued under the Stock
Issuance Program or should the performance objectives not be attained with
respect to one or more such unvested shares of Common Stock, then those shares
shall be immediately surrendered to the Corporation for cancellation, and the
Participant shall have no further shareholder rights with respect to those
shares. To the extent the surrendered shares were previously issued to the
Participant for consideration paid in cash or cash equivalent (including the
Participant's purchase-money indebtedness), the Corporation shall repay to the
Participant the cash consideration paid for the surrendered shares and shall
cancel the unpaid principal balance of any outstanding purchase-money note of
the Participant attributable to such surrendered shares.
5. The Plan Administrator may in its discretion waive the
surrender and cancellation of one or more unvested shares of Common Stock (or
other assets attributable thereto) which would otherwise occur upon the non-
completion of the vesting schedule applicable to such shares. Such waiver shall
result in the immediate vesting of the Participant's interest in the shares of
Common Stock as to which the waiver applies. Such waiver may be effected at any
time, whether before or after the Participant's cessation of Service or the
attainment or non-attainment of the applicable performance objectives.
C. First Refusal Rights. Until such time as the Common Stock is
--------------------
first registered under Section 12(g) of the 1934 Act, the Corporation shall have
the right of first refusal with respect to any proposed disposition by the
Participant (or any successor in interest) of any shares of Common Stock issued
under the Stock Issuance Program. Such right of first refusal shall be
exercisable in accordance with the terms established by the Plan Administrator
and set forth in the document evidencing such right.
II. CORPORATE TRANSACTION
A. Upon the occurrence of a Corporate Transaction, all outstanding
repurchase rights under the Stock Issuance Program shall terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, except to the extent: (i) those repurchase
rights are assigned to the successor corporation (or parent thereof) in
connection with such Corporate Transaction or (ii) such accelerated vesting is
precluded by other limitations imposed by the Plan Administrator at the time the
repurchase right is issued.
B. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the unvested shares are issued or any time while
the Corporation's repurchase rights with respect to those shares remain
outstanding, to provide that those rights shall
<PAGE>
automatically terminate on an accelerated basis, and the shares of Common Stock
subject to those terminated rights shall immediately vest, in the event the
Participant's Service should subsequently terminate by reason of an Involuntary
Termination within a designated period (not to exceed eighteen (18) months)
following the effective date of any Corporate Transaction in which those
repurchase rights are assigned to the successor corporation (or parent thereof).
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion, be held
in escrow by the Corporation until the Participant's interest in such shares
vests or may be issued directly to the Participant with restrictive legends on
the certificates evidencing those unvested shares.
<PAGE>
ARTICLE FOUR
MISCELLANEOUS
-------------
I. FINANCING
The Plan Administrator may permit any Optionee or Participant to pay
the option exercise price or the purchase price for shares issued to such person
under the Plan by delivering a full-recourse, interest-bearing promissory note
payable in one or more installments and secured by the purchased shares.
However, any promissory note delivered by a consultant must be secured by
collateral in addition to the purchased shares of Common Stock. In no event
shall the maximum credit available to the Optionee or Participant exceed the sum
---
of (i) the aggregate option exercise price or purchase price payable for the
purchased shares plus (ii) any Federal, state and local income and employment
tax liability incurred by the Optionee or the Participant in connection with the
option exercise or share purchase.
II. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan became effective upon adoption by the Board on April 10,
1997, and was approved by the Corporation's shareholders on April 11, 1997. The
Plan Administrator may grant options and issue shares under the Plan at any time
on or after the effective date of the Plan and before the date fixed herein for
termination of the Plan.
B. The Plan shall serve as the successor to the Predecessor Plan,
and no further option grants or direct stock issuances shall be made under the
Predecessor Plan after the effective date of this Plan. All options outstanding
under the Predecessor Plan on the effective date of this Plan shall be
incorporated into the Plan at that time and shall be treated as outstanding
options under the Plan. However, each outstanding option so incorporated shall
continue to be governed solely by the terms of the documents evidencing such
option, and no provision of the Plan shall be deemed to affect or otherwise
modify the rights or obligations of the holders of such incorporated options
with respect to their acquisition of shares of Common Stock.
C. One or more provisions of the Plan, including (without
limitation) the option vesting/acceleration provisions of Article Two relating
to Corporate Transactions, may, in the Plan Administrator's discretion, be
extended to one or more options incorporated from the Predecessor Plan which do
not otherwise contain such provisions.
D. The Plan shall terminate upon the earliest of (i) April 9, 2007,
--------
(ii) the date on which all shares available for issuance under the Plan shall
have been issued as vested shares or (iii) the termination of all outstanding
options in connection with a Corporate Transaction. All options and unvested
stock issuances outstanding at that time under the Plan shall continue to have
full force and effect in accordance with the provisions of the documents
evidencing such options or issuances.
III. AMENDMENT OF THE PLAN
<PAGE>
A. The Board shall have complete and exclusive power and authority
to amend or modify the Plan in any or all respects. However, no such amendment
or modification shall adversely affect the rights and obligations with respect
to options or unvested stock issuances at the time outstanding under the Plan
unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require shareholder approval
pursuant to applicable laws and regulations.
B. Options may be granted under the Option Grant Program and shares
may be issued under the Stock Issuance Program which are in each instance in
excess of the number of shares of Common Stock then available for issuance under
the Plan, provided any excess shares actually issued under those programs shall
be held in escrow until there is obtained shareholder approval of an amendment
sufficiently increasing the number of shares of Common Stock available for
issuance under the Plan. If such shareholder approval is not obtained within
twelve (12) months after the date the first such excess issuances are made, then
(i) any unexercised options granted on the basis of such excess shares shall
terminate and cease to be outstanding and (ii) the Corporation shall promptly
refund to the Optionees and the Participants the exercise or purchase price paid
for any excess shares issued under the Plan and held in escrow, together with
interest (at the applicable Short Term Federal Rate) for the period the shares
were held in escrow, and such shares shall thereupon be automatically cancelled
and cease to be outstanding.
IV. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
of Common Stock under the Plan shall be used for general corporate purposes.
V. WITHHOLDING
The Corporation's obligation to deliver shares of Common Stock upon
the exercise of any options or upon the issuance or vesting of any shares issued
under the Plan shall be subject to the satisfaction of all applicable Federal,
state and local income and employment tax withholding requirements.
VI. REGULATORY APPROVALS
The implementation of the Plan, the granting of any options under the
Plan and the issuance of any shares of Common Stock (i) upon the exercise of any
option or (ii) under the Stock Issuance Program shall be subject to the
Corporation's procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the options granted under it and
the shares of Common Stock issued pursuant to it.
VII. NO EMPLOYMENT OR SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the Participant
any right to continue in Service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining such person) or of the
Optionee or the Participant, which rights are hereby expressly reserved by each,
to terminate such person's Service at any time for any reason, with or without
cause.
<PAGE>
VIII. FINANCIAL REPORTS
The Corporation shall deliver a balance sheet and an income statement
at least annually to each individual holding an outstanding option under the
Plan, unless such individual is a key Employee whose duties in connection with
the Corporation (or any Parent or Subsidiary) assure such individual access to
equivalent information.
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
-----
B. Code shall mean the Internal Revenue Code of 1986, as amended.
----
C. Committee shall mean a committee of two (2) or more Board
---------
members appointed by the Board to exercise one or more administrative functions
under the Plan.
D. Common Stock shall mean the Corporation's common stock.
------------
E. Corporate Transaction shall mean either of the following
---------------------
shareholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined
voting power of the Corporation's outstanding securities are
transferred to a person or persons different from the persons
holding those securities immediately prior to such transaction,
or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete
liquidation or dissolution of the Corporation.
F. Corporation shall mean Viador, Inc., a California corporation,
-----------
and any successor corporation to all or substantially all of the assets or
voting stock of Viador, Inc. which shall by appropriate action adopt the Plan.
G. Disability shall mean the inability of the Optionee or the
----------
Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment and shall be determined by
the Plan Administrator on the basis of such medical evidence as the Plan
Administrator deems warranted under the circumstances.
H. Employee shall mean an individual who is in the employ of the
--------
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
I. Exercise Date shall mean the date on which the Corporation
-------------
shall have received written notice of the option exercise.
J. Fair Market Value per share of Common Stock on any relevant
-----------------
date shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per
<PAGE>
share of Common Stock on the date in question, as such price is
reported by the National Association of Securities Dealers on the
Nasdaq National Market or any successor system. If there is no
closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any
Stock Exchange, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question
on the Stock Exchange determined by the Plan Administrator to be
the primary market for the Common Stock, as such price is
officially quoted in the composite tape of transactions on such
exchange. If there is no closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which
such quotation exists.
(iii) If the Common Stock is at the time neither
listed on any Stock Exchange nor traded on the Nasdaq National
Market, then the Fair Market Value shall be determined by the
Plan Administrator after taking into account such factors as the
Plan Administrator shall deem appropriate.
K. Incentive Option shall mean an option which satisfies the
----------------
requirements of Code Section 422.
L. Involuntary Termination shall mean the termination of the
-----------------------
Service of any individual which occurs by reason of:
(i) such individual's involuntary dismissal or
discharge by the Corporation for reasons other than Misconduct,
or
(ii) such individual's voluntary resignation
following (A) a change in his or her position with the
Corporation which materially reduces his or her level of
responsibility, (B) a reduction in his or her level of
compensation (including base salary, fringe benefits and target
bonuses under any corporate-performance based bonus or incentive
programs) by more than fifteen percent (15%) or (C) a relocation
of such individual's place of employment by more than fifty (50)
miles, provided and only if such change, reduction or relocation
is effected without the individual's consent.
M. Misconduct shall mean the commission of any act of fraud,
----------
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary) in a material manner. The foregoing definition
shall not be deemed to be inclusive of all the acts or omissions which the
Corporation (or any Parent or Subsidiary) may consider as grounds for the
dismissal or discharge of any Optionee, Participant or other person in the
Service of the Corporation (or any Parent or Subsidiary).
<PAGE>
N. 1934 Act shall mean the Securities Exchange Act of 1934, as
--------
amended.
O. Non-Statutory Option shall mean an option not intended to satisfy
--------------------
the requirements of Code Section 422.
P. Option Grant Program shall mean the option grant program in
--------------------
effect under the Plan.
Q. Optionee shall mean any person to whom an option is granted under
--------
the Plan.
R. Parent shall mean any corporation (other than the Corporation) in
------
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
S. Participant shall mean any person who is issued shares of Common
-----------
Stock under the Stock Issuance Program.
T. Plan shall mean the Corporation's 1997 Stock Option/Stock
----
Issuance Plan, as set forth in this document.
U. Plan Administrator shall mean either the Board or the Committee
------------------
acting in its capacity as administrator of the Plan.
V. Predecessor Plan shall mean the Corporation's pre-existing 1996
----------------
Stock Option Plan in effect immediately prior to the effective date of the Plan.
W. Service shall mean the provision of services to the Corporation
-------
(or any Parent or Subsidiary) by a person in the capacity of an Employee, a non-
employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant.
X. Stock Exchange shall mean either the American Stock Exchange or
--------------
the New York Stock Exchange.
Y. Stock Issuance Agreement shall mean the agreement entered into by
------------------------
the Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.
Z. Stock Issuance Program shall mean the stock issuance program in
----------------------
effect under the Plan.
AA. Subsidiary shall mean any corporation (other than the
----------
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock
<PAGE>
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
BB. 10% Shareholder shall mean the owner of stock (as determined
---------------
under Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
<PAGE>
EXHIBIT 10.2
VIADOR INC.
1999 STOCK INCENTIVE PLAN
-------------------------
ARTICLE ONE
GENERAL PROVISIONS
------------------
I. PURPOSE OF THE PLAN
This 1999 Stock Incentive Plan is intended to promote the interests of
Viador Inc., a Delaware corporation, by providing eligible persons in the
Corporation's service with the opportunity to acquire a proprietary interest, or
otherwise increase their proprietary interest, in the Corporation as an
incentive for them to remain in such service.
Capitalized terms shall have the meanings assigned to such terms in
the attached Appendix.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into five separate equity programs:
- the Discretionary Option Grant Program under which eligible
persons may, at the discretion of the Plan Administrator, be granted options to
purchase shares of Common Stock,
- the Salary Investment Option Grant Program under which
eligible employees may elect to have a portion of their base salary invested
each year in special option grants,
- the Stock Issuance Program under which eligible persons may,
at the discretion of the Plan Administrator, be issued shares of Common Stock
directly, either through the immediate purchase of such shares or as a bonus for
services rendered the Corporation (or any Parent or Subsidiary),
- the Automatic Option Grant Program under which eligible non-
employee Board members shall automatically receive option grants at designated
intervals over their period of continued Board service, and
- the Director Fee Option Grant Program under which non-
employee Board members may elect to have all or any portion of their annual
retainer fee otherwise payable in cash applied to a special stock option grant.
B. The provisions of Articles One and Seven shall apply to all
equity programs under the Plan and shall govern the interests of all persons
under the Plan.
<PAGE>
III. ADMINISTRATION OF THE PLAN
A. The Primary Committee shall have sole and exclusive authority to
administer the Discretionary Option Grant and Stock Issuance Programs with
respect to Section 16 Insiders. Administration of the Discretionary Option Grant
and Stock Issuance Programs with respect to all other persons eligible to
participate in those programs may, at the Board's discretion, be vested in the
Primary Committee or a Secondary Committee, or the Board may retain the power to
administer those programs with respect to all such persons. However, any
discretionary option grants or stock issuances for members of the Primary
Committee shall be made by a disinterested majority of the Board.
B. Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions of
any Secondary Committee and reassume all powers and authority previously
delegated to such committee.
C. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for proper administration of the Discretionary Option Grant and
Stock Issuance Programs and to make such determinations under, and issue such
interpretations of, the provisions of those programs and any outstanding options
or stock issuances thereunder as it may deem necessary or advisable. Decisions
of the Plan Administrator within the scope of its administrative functions under
the Plan shall be final and binding on all parties who have an interest in the
Discretionary Option Grant and Stock Issuance Programs under its jurisdiction or
any option or stock issuance thereunder.
D. The Primary Committee shall have the sole and exclusive authority
to determine which Section 16 Insiders and other highly compensated Employees
shall be eligible for participation in the Salary Investment Option Grant
Program for one or more calendar years. However, all option grants under the
Salary Investment Option Grant Program shall be made in accordance with the
express terms of that program, and the Primary Committee shall not exercise any
discretionary functions with respect to the option grants made under that
program.
E. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants or stock issuances under the
Plan.
F. Administration of the Automatic Option Grant and Director Fee
Option Grant Programs shall be self-executing in accordance with the terms of
those programs, and no Plan Administrator shall exercise any discretionary
functions with respect to any option grants or stock issuances made under those
programs.
2
<PAGE>
IV. ELIGIBILITY
A. The persons eligible to participate in the Discretionary Option
Grant and Stock Issuance Programs are as follows:
(i) Employees,
(ii) non-employee members of the Board or the board of
directors of any Parent or Subsidiary, and
(iii) consultants and other independent advisors who provide
services to the Corporation (or any Parent or Subsidiary).
B. Only Employees who are Section 16 Insiders or other highly
compensated individuals shall be eligible to participate in the Salary
Investment Option Grant Program.
C. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority to determine,
(i) with respect to the option grants under the Discretionary Option Grant
Program, which eligible persons are to receive such grants, the time or times
when those grants are to be made, the number of shares to be covered by each
such grant, the status of the granted option as either an Incentive Option or a
Non-Statutory Option, the time or times when each option is to become
exercisable, the vesting schedule (if any) applicable to the option shares and
the maximum term for which the option is to remain outstanding and (ii) with
respect to stock issuances under the Stock Issuance Program, which eligible
persons are to receive such issuances, the time or times when the issuances are
to be made, the number of shares to be issued to each Participant, the vesting
schedule (if any) applicable to the issued shares and the consideration for such
shares.
D. The Plan Administrator shall have the absolute discretion either
to grant options in accordance with the Discretionary Option Grant Program or to
effect stock issuances in accordance with the Stock Issuance Program.
E. The individuals who shall be eligible to participate in the
Automatic Option Grant Program shall be limited to (i) those individuals who
first become non-employee Board members on or after the Underwriting Date,
whether through appointment by the Board or election by the Corporation's
stockholders, and (ii) those individuals who continue to serve as non-employee
Board members at one or more Annual Stockholders Meetings held after the
Underwriting Date. A non-employee Board member who has previously been in the
employ of the Corporation (or any Parent or Subsidiary) shall not be eligible to
receive an option grant under the Automatic Option Grant Program at the time he
or she first becomes a non-employee Board member, but shall be eligible to
receive periodic option grants under the Automatic Option Grant Program while he
or she continues to serve as a non-employee Board member.
F. All non-employee Board members shall be eligible to participate
in the Director Fee Option Grant Program.
3
<PAGE>
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The number of shares of Common Stock initially
reserved for issuance over the term of the Plan shall not exceed 12,292,000
shares. Such reserve shall consist of (i) the number of shares estimated to
remain available for issuance, as of the Plan Effective Date, under the
Predecessor Plans as last approved by the Corporation's stockholders, including
the shares subject to outstanding options under those Predecessor Plans, (ii)
plus an additional increase of approximately 3,000,000 shares to be approved by
the Corporation's stockholders prior to the Underwriting Date.
B. The number of shares of Common Stock available for issuance under
the Plan shall automatically increase on the first trading day of January each
calendar year during the term of the Plan, beginning with calendar year 2000, by
an amount equal to four percent (4%) of the total number of shares of Common
Stock outstanding on the last trading day in December of the immediately
preceding calendar year, but in no event shall any such annual increase exceed
3,000,000 shares.
C. No one person participating in the Plan may receive options,
separately exercisable stock appreciation rights and direct stock issuances for
more than 1,000,000 shares of Common Stock in the aggregate per calendar year.
D. Shares of Common Stock subject to outstanding options (including
options incorporated into this Plan from the Predecessor Plans) shall be
available for subsequent issuance under the Plan to the extent (i) those options
expire or terminate for any reason prior to exercise in full or (ii) the options
are cancelled in accordance with the cancellation-regrant provisions of Article
Two. Unvested shares issued under the Plan and subsequently cancelled or
repurchased by the Corporation at the original issue price paid per share,
pursuant to the Corporation's repurchase rights under the Plan shall be added
back to the number of shares of Common Stock reserved for issuance under the
Plan and shall accordingly be available for reissuance through one or more
subsequent option grants or direct stock issuances under the Plan. However,
should the exercise price of an option under the Plan be paid with shares of
Common Stock or should shares of Common Stock otherwise issuable under the Plan
be withheld by the Corporation in satisfaction of the withholding taxes incurred
in connection with the exercise of an option or the vesting of a stock issuance
under the Plan, then the number of shares of Common Stock available for issuance
under the Plan shall be reduced by the gross number of shares for which the
option is exercised or which vest under the stock issuance, and not by the net
number of shares of Common Stock issued to the holder of such option or stock
issuance. Shares of Common Stock underlying one or more stock appreciation
rights exercised under Section IV of Article Two, Section III of Article Three,
Section 11 of Article Five or Section III of Article Six of the Plan shall not
be available for subsequent issuance under the Plan.
4
<PAGE>
E. If any change is made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made by the Plan Administrator to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the maximum number and/or class of
securities for which any one person may be granted stock options, separately
exercisable stock appreciation rights and direct stock issuances under the Plan
per calendar year, (iii) the number and/or class of securities for which grants
are subsequently to be made under the Automatic Option Grant Program to new and
continuing non-employee Board members, (iv) the number and/or class of
securities and the exercise price per share in effect under each outstanding
option under the Plan, (v) the number and/or class of securities and price per
share in effect under each outstanding option incorporated into this Plan from
the Predecessor Plans and (vi) the maximum number and/or class of securities by
which the share reserve is to increase automatically each calendar year pursuant
to the provisions of Section V.B of this Article One. Such adjustments to the
outstanding options are to be effected in a manner which shall preclude the
enlargement or dilution of rights and benefits under such options. The
adjustments determined by the Plan Administrator shall be final, binding and
conclusive.
5
<PAGE>
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
----------------------------------
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
--------
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
A. Exercise Price.
--------------
1. The exercise price per share shall be fixed by the Plan
Administrator but shall not be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the option grant date.
2. The exercise price shall become immediately due upon
exercise of the option and shall, subject to the provisions of Section I of
Article Seven and the documents evidencing the option, be payable in one or more
of the forms specified below:
(i) cash or check made payable to the Corporation,
(ii) shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date, or
(iii) to the extent the option is exercised for vested
shares, through a special sale and remittance procedure pursuant to which
the Optionee shall concurrently provide irrevocable instructions to (a) a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable
Federal, state and local income and employment taxes required to be
withheld by the Corporation by reason of such exercise and (b) the
Corporation to deliver the certificates for the purchased shares directly
to such brokerage firm in order to complete the sale.
Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. Exercise and Term of Options. Each option shall be exercisable at
----------------------------
such time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option. However, no option shall have a term in excess of ten (10) years
measured from the option grant date.
6
<PAGE>
C. Effect of Termination of Service.
--------------------------------
1. The following provisions shall govern the exercise of any
options held by the Optionee at the time of cessation of Service or death:
(i) Any option outstanding at the time of the Optionee's
cessation of Service for any reason shall remain exercisable for such
period of time thereafter as shall be determined by the Plan Administrator
and set forth in the documents evidencing the option, but no such option
shall be exercisable after the expiration of the option term.
(ii) Any option held by the Optionee at the time of death
and exercisable in whole or in part at that time may be subsequently
exercised by the personal representative of the Optionee's estate or by the
person or persons to whom the option is transferred pursuant to the
Optionee's will or the laws of inheritance or by the Optionee's designated
beneficiary or beneficiaries of that option.
(iii) Should the Optionee's Service be terminated for
Misconduct or should Optionee otherwise engage in Misconduct while one or
more of his or her options under this Article Two are outstanding, then all
those options shall terminate immediately and cease to be outstanding.
(iv) During the applicable post-Service exercise period,
the option may not be exercised in the aggregate for more than the number
of vested shares for which the option is exercisable on the date of the
Optionee's cessation of Service. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option term, the
option shall terminate and cease to be outstanding for any vested shares
for which the option has not been exercised. However, the option shall,
immediately upon the Optionee's cessation of' Service, terminate and cease
to be outstanding to the extent the option is not otherwise at that time
exercisable for vested shares.
2. The Plan Administrator shall have complete discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:
(i) extend the period of time for which the option is to
remain exercisable following the Optionee's cessation of Service from the
limited exercise period otherwise in effect for that option to such greater
period of time as the Plan Administrator shall deem appropriate, but in no
event beyond the expiration of the option term, and/or
(ii) permit the option to be exercised, during the
applicable post-Service exercise period, not only with respect to the
number of vested shares of Common Stock for which such option is
exercisable at the time of the Optionee's cessation of Service but also
with respect to one or more additional installments in which the Optionee
would have vested had the Optionee continued in Service.
7
<PAGE>
D. Stockholder Rights. The holder of an option shall have no
------------------
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
E. Repurchase Rights. The Plan Administrator shall have the
-----------------
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right.
F. Limited Transferability of Options. During the lifetime of the
----------------------------------
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of
inheritance following the Optionee's death. However, a Non-Statutory Option may,
in connection with the Optionee's estate plan, be assigned in whole or in part
during the Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established exclusively for one or more such
family members. The assigned portion may only be exercised by the person or
persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for the option immediately prior to such assignment and shall be
set forth in such documents issued to the assignee as the Plan Administrator may
deem appropriate. Notwithstanding the foregoing, the Optionee may also designate
one or more persons as the beneficiary or beneficiaries of his or her
outstanding options under this Article Two, and those options shall, in
accordance with such designation, automatically be transferred to such
beneficiary or beneficiaries upon the Optionee's death while holding those
options. Such beneficiary or beneficiaries shall take the transferred options
subject to all the terms and conditions of the applicable agreement evidencing
each such transferred option, including (without limitation) the limited time
period during which the option may be exercised following the Optionee's death.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section 11, all the
provisions of Articles One, Two and Seven shall be applicable to Incentive
Options. Options which are specifically designated as Nonstatutory Options when
issued under the Plan shall not be subject to the terms of this Section II.
A. Eligibility. Incentive Options may only be granted to Employees.
-----------
B. Dollar Limitation. The aggregate Fair Market Value of the shares
-----------------
of Common Stock (determined as of the respective date or dates of grant) for
which one or more options granted to any Employee under the Plan (or any other
option plan of the Corporation or any Parent or Subsidiary) may for the first
time become exercisable as Incentive Options during any one calendar year shall
not exceed the sum of One Hundred Thousand Dollars ($100,000).
8
<PAGE>
To the extent the Employee holds two (2) or more such options which
become exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability of such options as Incentive Options shall be
applied on the basis of the order in which such options are granted.
C. 10% Stockholder. If any Employee to whom an Incentive Option is
---------------
granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date, and the option term shall not exceed five
(5) years measured from the option grant date.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction, each outstanding
option shall automatically accelerate so that each such option shall,
immediately prior to the effective date of the Corporate Transaction, become
exercisable for all the shares of Common Stock at the time subject to such
option and may be exercised for any or all of those shares as fully vested
shares of Common Stock. However, an outstanding option shall not become
exercisable on such an accelerated basis if and to the extent: (i) such option
is, in connection with the Corporate Transaction, to be assumed by the successor
corporation (or parent thereof) or (ii) such option is to be replaced with a
cash incentive program of the successor corporation which preserves the spread
existing at the time of the Corporate Transaction on any shares for which the
option is not otherwise at that time exercisable and provides for subsequent
payout in accordance with the same exercise/vesting schedule applicable to those
option shares or (iii) the acceleration of such option is subject to other
limitations imposed by the Plan Administrator at the time of the option grant.
B. All outstanding repurchase rights shall automatically terminate,
and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Corporate Transaction, except to
the extent: (i) those repurchase rights are to be assigned to the successor
corporation (or parent thereof) in connection with such Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed by the
Plan Administrator at the time the repurchase right is issued.
C. Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).
D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments to reflect such Corporate Transaction shall also be made
to (i) the exercise price payable per share under each outstanding option,
provided the aggregate exercise price payable for such securities shall remain
the same, (ii) the maximum number and/or class of securities available for
issuance over the remaining term of the Plan and
9
<PAGE>
(iii) the maximum number and/or class of securities for which any one person may
be granted stock options, separately exercisable stock appreciation rights and
direct stock issuances under the Plan per calendar year and (iv) the maximum
number and/or class of securities by which the share reserve is to increase
automatically each calendar year.
E. The Plan Administrator shall have the discretionary authority to
structure one or more outstanding options under the Discretionary Option Grant
Program so that those options shall, immediately prior to the effect date of
such Corporate Transaction, become exercisable for all the shares of Common
Stock at the time subject to those options and may be exercised for any or all
of those shares as fully vested shares of Common Stock, whether or not those
options are to be assumed in the Corporate Transaction. In addition, the Plan
Administrator shall have the discretionary authority to structure one or more of
the Corporation's repurchase rights under the Discretionary Option Grant Program
so that those rights shall not be assignable in connection with such Corporate
Transaction and shall accordingly terminate upon the consummation of such
Corporate Transaction, and the shares subject to those terminated rights shall
thereupon vest in full.
F. The Plan Administrator shall have full power and authority to
structure one or more outstanding options under the Discretionary Option Grant
Program so that those options shall become exercisable for all the shares of
Common Stock at the time subject to those options in the event the Optionee's
Service is subsequently terminated by reason of an Involuntary Termination
within a designated period (not to exceed eighteen (18) months) following the
effective date of any Corporate Transaction in which those options are assumed
and do not otherwise accelerate. Any options so accelerated shall remain
exercisable for fully vested shares until the earlier of (i) the expiration of
the option term or (ii) the expiration of the one (1) year period measured from
the effective date of the Involuntary Termination. In addition, the Plan
Administrator may structure one or more of the Corporation's repurchase rights
so that those rights shall immediately terminate with respect to any shares held
by the Optionee at the time of his or her Involuntary Termination, and the
shares subject to those terminated repurchase rights shall accordingly vest in
full at that time.
G. The Plan Administrator shall have the discretionary authority to
structure one or more outstanding options under the Discretionary Option Grant
Program so that those options shall, immediately prior to the effect date of a
Change in Control, become exercisable for all the shares of Common Stock at the
time subject to those options and may be exercised for any or all of those
shares as fully vested shares of Common Stock. In addition, the Plan
Administrator shall have the discretionary authority to structure one or more of
the Corporation's repurchase rights under the Discretionary Option Grant Program
so that those rights shall terminate automatically upon the consummation of such
Change in Control, and the shares subject to those terminated rights shall
thereupon vest in full. Alternatively, the Plan Administrator may condition the
automatic acceleration of one or more outstanding options under the
Discretionary Option Grant Program and the termination of one or more of the
Corporation's outstanding repurchase rights under such program upon the
subsequent termination of the Optionee's Service by reason of an Involuntary
Termination within a
10
<PAGE>
designated period (not to exceed eighteen (18) months) following the effective
date of such Change in Control. Each option so accelerated shall remain
exercisable for fully vested shares until the earlier of (i) the expiration of
-------
the option term or (ii) the expiration of the one (1) year period measured from
the effective date of Optionee's cessation of Service.
H. The portion of any Incentive Option accelerated in connection
with a Corporate Transaction or Change in Control shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
($100,000) limitation is not exceeded. To the extent such dollar limitation is
exceeded, the accelerated portion of such option shall be exercisable as a
Nonstatutory Option under the Federal tax laws.
I. The outstanding options shall in no way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Discretionary Option
Grant Program (including outstanding options incorporated from the Predecessor
Plan) and to grant in substitution new options covering the same or different
number of shares of Common Stock but with an exercise price per share based on
the Fair Market Value per share of Common Stock on the new grant date.
V. STOCK APPRECIATION RIGHTS
A. The Plan Administrator shall have full power and authority to
grant to selected Optionees tandem stock appreciation rights and/or limited
stock appreciation rights.
B. The following terms shall govern the grant and exercise of tandem
stock appreciation rights:
(i) One or more Optionees may be granted the right,
exercisable upon such terms as the Plan Administrator may establish, to
elect between the exercise of the underlying option for shares of Common
Stock and the surrender of that option in exchange for a distribution from
the Corporation in an amount equal to the excess of (a) the Fair Market
Value (on the option surrender date) of the number of shares in which the
Optionee is at the time vested under the surrendered option (or surrendered
portion thereof) over (b) the aggregate exercise price payable for such
shares.
(ii) No such option surrender shall be effective unless it
is approved by the Plan Administrator, either at the time of the actual
option surrender or at any earlier time. If the surrender is so approved,
then the distribution to which the Optionee shall be entitled may be made
in shares of Common Stock valued at Fair Market Value on the option
surrender date, in cash, or partly in shares and partly in cash, as the
Plan Administrator shall in its sole discretion deem appropriate.
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<PAGE>
(iii) If the surrender of an option is not approved by the
Plan Administrator, then the Optionee shall retain whatever rights the
Optionee had under the surrendered option (or surrendered portion thereof)
on the option surrender date and may exercise such rights at any time prior
to the later of (a) five (5) business days after the receipt of the
-----
rejection notice or (b) the last day on which the option is otherwise
exercisable in accordance with the terms of the documents evidencing such
option, but in no event may such rights be exercised more than ten (10)
years after the option grant date.
C. The following terms shall govern the grant and exercise of limited
stock appreciation rights:
(i) One or more Section 16 Insiders may be granted limited
stock appreciation rights with respect to their outstanding options.
(ii) Upon the occurrence of a Hostile Take-Over, each individual
holding one or more options with such a limited stock appreciation right
shall have the unconditional right (exercisable for a thirty (30)-day
period following such Hostile Take-Over) to surrender each such option to
the Corporation. In return for the surrendered option, the Optionee shall
receive a cash distribution from the Corporation in an amount equal to the
excess of (A) the Take-Over Price of the shares of Common Stock at the time
subject to such option (whether or not the Optionee is otherwise vested in
those shares) over (B) the aggregate exercise price payable for those
shares. Such cash distribution shall be paid within five (5) days following
the option surrender date.
(iii) At the time such limited stock appreciation right is
granted, the Plan Administrator shall pre-approve any subsequent exercise
of that right in accordance with the terms of this Paragraph C.
Accordingly, no further approval of the Plan Administrator or the Board
shall be required at the time of the actual option surrender and cash
distribution.
12
<PAGE>
ARTICLE THREE
SALARY INVESTMENT OPTION GRANT PROGRAM
--------------------------------------
I. OPTION GRANTS
The Primary Committee shall have the sole and exclusive authority to
determine the calendar year or years (if any) for which the Salary Investment
Option Grant Program is to be in effect and to select the Section 16 Insiders
and other highly compensated Employees eligible to participate in the Salary
Investment Option Grant Program for such calendar year or years. Each selected
individual who elects to participate in the Salary Investment Option Grant
Program must, prior to the start of each calendar year of participation, file
with the Plan Administrator (or its designate) an irrevocable authorization
directing the Corporation to reduce his or her base salary for that calendar
year by an amount not less than Ten Thousand Dollars ($10,000.00) nor more than
Fifty Thousand Dollars ($50,000.00). Each individual who files such a timely
authorization shall automatically be granted an option under the Salary
Investment Grant Program on the first trading day in January of the calendar
year for which the salary reduction is to be in effect.
II. OPTION TERMS
Each option shall be a Non-Statutory Option evidenced by one or more
documents in the form approved by the Plan Administrator; provided, however,
that each such document shall comply with the terms specified below.
A. Exercise Price.
--------------
1. The exercise price per share shall be thirty-three and one-
third percent (33-1/3%) of the Fair Market Value per share of Common Stock on
the option grant date.
2. The exercise price shall become immediately due upon
exercise of the option and shall be payable in one or more of the alternative
forms authorized under the Discretionary Option Grant Program. Except to the
extent the sale and remittance procedure specified thereunder is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. Number of Option Shares. The number of shares of Common Stock
-----------------------
subject to the option shall be determined pursuant to the following formula
(rounded down to the nearest whole number):
X = A / (B x 66-2/3%), where
X is the number of option shares,
13
<PAGE>
A is the dollar amount of the reduction in the Optionee's base
salary for the calendar year to be in effect pursuant to this program,
and
B is the Fair Market Value per share of Common Stock on the
option grant date.
C. Exercise and Term of Options. The option shall become exercisable
----------------------------
in a series of twelve (12) successive equal monthly installments upon the
Optionee's completion of each calendar month of Service in the calendar year for
which the salary reduction is in effect. Each option shall have a maximum term
of ten (10) years measured from the option grant date.
D. Effect of Termination of Service. Should the Optionee cease
--------------------------------
Service for any reason while holding one or more options under this Article
Three, then each such option shall remain exercisable, for any or all of the
shares for which the option is exercisable at the time of such cessation of
Service, until the earlier of (i) the expiration of the ten (10)-year option
ten-n or (ii) the expiration of the three (3)-year period measured from the
date of such cessation of Service. Should the Optionee die while holding one
or more options under this Article Three, then each such option may be
exercised, for any or all of the shares for which the option is exercisable at
the time of the Optionee's cessation of Service (less any shares subsequently
purchased by Optionee prior to death), by the personal representative of the
Optionee's estate or by the person or persons to whom the option is transferred
pursuant to the Optionee's will or the laws of inheritance or by the designated
beneficiary or beneficiaries of such option. Such right of exercise shall lapse,
and the option shall terminate, upon the earlier of (i) the expiration of the
-------
ten (10) year option term or (ii) the three (3)-year period measured from the
date of the Optionee's cessation of Service. However, the option shall,
immediately upon the Optionee's cessation of Service for any reason, terminate
and cease to remain outstanding with respect to any and all shares of Common
Stock for which the option is not otherwise at that time exercisable.
III. CORPORATE TRANSACTION/ CHANGE IN CONTROL/ HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction while the Optionee
remains in Service, each outstanding option held by such Optionee under this
Salary Investment Option Grant Program shall automatically accelerate so that
each such option shall, immediately prior to the effective date of the Corporate
Transaction, become exercisable for all the shares of Common Stock at the time
subject to such option and may be exercised for any or all of those shares as
fully-vested shares of Common Stock. Each such outstanding option shall
terminate immediately following the Corporate Transaction, except to the extent
assumed by the successor corporation (or parent thereof) in such Corporate
Transaction. Any option so assumed and shall remain exercisable for the fully-
vested shares until the earlier of (i) the expiration of the ten (10)-year
option term or (ii) the expiration of the three (3)-year period measured from
the date of the Optionee's cessation of Service.
14
<PAGE>
B. In the event of a Change in Control while the Optionee remains in
Service, each outstanding option held by such Optionee under this Salary
Investment Option Grant Program shall automatically accelerate so that each such
option shall, immediately prior to the effective date of the Change in Control,
become exercisable for all the shares of Common Stock at the time subject to
such option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock.
The option shall remain so exercisable until the earliest to
occur of (i) the expiration of the ten (10)-year option term, (ii) the
expiration of the three (3)-year period measured from the date of the Optionee's
cessation of Service, (iii) the termination of the option in connection with a
Corporate Transaction or (iv) the surrender of the option in connection with a
Hostile Take-Over.
C. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each
outstanding option granted him or her under the Salary Investment Option Grant
Program. The Optionee shall in return be entitled to a cash distribution from
the Corporation in an amount equal to the excess of (i) the Take-Over Price of
the shares of Common Stock at the time subject to the surrendered option
(whether or not the option is otherwise at the time exercisable for those
shares) over (ii) the aggregate exercise price payable for such shares. Such
cash distribution shall be paid within five (5) days following the surrender of
the option to the Corporation. The Primary Committee shall, at the time the
option with such limited stock appreciation right is granted under the Salary
Investment Option Grant Program, pre-approve any subsequent exercise of that
right in accordance with the terms of this Paragraph C. Accordingly, no further
approval of the Primary Committee or the Board shall be required at the time of
the actual option surrender and cash distribution.
D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the exercise price payable per
share under each outstanding option, provided the aggregate exercise price
payable for such securities shall remain the same.
E. The grant of options under the Salary Investment Option Grant
Program shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
IV. REMAINING TERMS
The remaining terms of each option granted under the Salary Investment
Option Grant Program shall be the same as the terms in effect for option grants
made under the Discretionary Option Grant Program.
15
<PAGE>
ARTICLE FOUR
STOCK ISSUANCE PROGRAM
----------------------
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate issuances without any intervening option grants.
Each such stock issuance shall be evidenced by a Stock Issuance Agreement which
complies with the terms specified below. Shares of Common Stock may also be
issued under the Stock Issuance Program pursuant to share right awards which
entitle the recipients to receive those shares upon the attainment of designated
performance goals.
A. Purchase Price.
--------------
1. The purchase price per share shall be fixed by the Plan
Administrator, but shall not be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the issuance date.
2. Subject to the provisions of Section I of Article Seven,
shares of Common Stock may be issued under the Stock Issuance Program for any of
the following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:
(i) cash or check made payable to the Corporation, or
(ii) past services rendered to the Corporation (or any
Parent or Subsidiary).
B. Vesting Provisions.
------------------
1. Shares of Common Stock issued under the Stock Issuance
Program may, in the discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over
the Participant's period of Service or upon attainment of specified performance
objectives. The elements of the vesting schedule applicable to any unvested
shares of Common Stock issued under the Stock Issuance Program shall be
determined by the Plan Administrator and incorporated into the Stock Issuance
Agreement. Shares of Common Stock may also be issued under the Stock Issuance
Program pursuant to share right awards which entitle the recipients to receive
those shares upon the attainment of designated performance goals.
2. Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or
16
<PAGE>
other change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration shall be issued subject to (i) the same
vesting requirements applicable to the Participant's unvested shares of Common
Stock and (ii) such escrow arrangements as the Plan Administrator shall deem
appropriate.
3. The Participant shall have full stockholder rights with
respect to any shares of Common Stock issued to the Participant under the Stock
Issuance Program, whether or not the Participant's interest in those shares is
vested. Accordingly, the Participant shall have the right to vote such shares
and to receive any regular cash dividends paid on such shares.
4. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock issued under the Stock
Issuance Program or should the performance objectives not be attained with
respect to one or more such unvested shares of Common Stock, then those shares
shall be immediately surrendered to the Corporation for cancellation, and the
Participant shall have no further stockholder rights with respect to those
shares. To the extent the surrendered shares were previously issued to the
Participant for consideration paid in cash or cash equivalent (including the
Participant's purchase-money indebtedness), the Corporation shall repay to the
Participant the cash consideration paid for the surrendered shares and shall
cancel the unpaid principal balance of any outstanding purchase money note of
the Participant attributable to the surrendered shares.
5. The Plan Administrator may in its discretion waive the
surrender and cancellation of one or more unvested shares of Common Stock which
would otherwise occur upon the cessation of the Participant's Service or the
non-attainment of the performance objectives applicable to those shares. Such
waiver shall result in the immediate vesting of the Participant's interest in
the shares of Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant's cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.
6. Outstanding share right awards under the Stock Issuance
Program shall automatically terminate, and no shares of Common Stock shall
actually be issued in satisfaction of those awards, if the performance goals
established for such awards are not attained. The Plan Administrator, however,
shall have the discretionary authority to issue shares of Common Stock under one
or more outstanding share right awards as to which the designated performance
goals have not been attained.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. All of the Corporation's outstanding repurchase rights under the
Stock Issuance Program shall terminate automatically, and all the shares of
Common Stock subject to those terminated rights shall immediately vest in full,
in the event of any Corporate Transaction, except to the extent (i) those
repurchase rights are to be assigned to the successor corporation (or parent
thereof) in connection with such Corporate Transaction or (ii) such accelerated
vesting is precluded by other limitations imposed in the Stock Issuance
Agreement.
17
<PAGE>
B. The Plan Administrator shall have the discretionary authority to
structure one or more of the Corporation's repurchase rights under the Stock
Issuance Program so that those rights shall automatically terminate in whole or
in part, and the shares of Common Stock subject to those terminated rights shall
immediately vest, in the event the Participant's Service should subsequently
terminate by reason of an Involuntary Termination within a designated period
(not to exceed eighteen (18) months) following the effective date of any
Corporate Transaction in which those repurchase rights are assigned to the
successor corporation (or parent thereof).
C. The Plan Administrator shall also have the discretionary
authority to structure one or more of the Corporation's repurchase rights under
the Stock Issuance Program so that those rights shall automatically terminate in
whole or in part, and the shares of Common Stock subject to those terminated
rights shall immediately vest, in the event the Participant's Service should
subsequently terminate by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective
date of any Change in Control.
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion, be held
in escrow by the Corporation until the Participant's interest in such shares
vests or may be issued directly to the Participant with restrictive legends on
the certificates evidencing those unvested shares.
18
<PAGE>
ARTICLE FIVE
AUTOMATIC OPTION GRANT PROGRAM
------------------------------
I. OPTION TERMS
A. Grant Dates. Option grants shall be made on the dates specified
-----------
below:
1. Each individual who is first elected or appointed as a non-
employee Board member at any time on or after the Underwriting Date shall
automatically be granted, on the date of such initial election or appointment, a
Non-Statutory Option to purchase 15,000 shares of Common Stock, provided that
individual has not previously been in the employ of the Corporation or any
Parent or Subsidiary.
2. On the date of each Annual Stockholders Meeting held after
the Underwriting Date, each individual who is to continue to serve as a non-
employee Board member, whether or not that individual is standing for re-
election to the Board at that particular Annual Meeting, shall automatically be
granted a Non-Statutory Option to purchase 5,000 shares of Common Stock,
provided such individual has served as a non-employee Board member for at least
six (6) months. There shall be no limit on the number of such 5,000-share option
grants any one non-employee Board member may receive over his or her period of
Board service, and non-employee Board members who have previously been in the
employ of the Corporation (or any Parent or Subsidiary) or who have otherwise
received one or more stock option grants from the Corporation prior to the
Underwriting Date shall be eligible to receive one or more such annual option
grants over their period of continued Board service.
B. Exercise Price.
--------------
1. The exercise price per share shall be equal to one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the option
grant date.
2. The exercise price shall be payable in one or more of the
alternative forms authorized under the Discretionary Option Grant Program.
Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.
C. Option Term. Each option shall have a term of ten (10) years
-----------
measured from the option grant date.
D. Exercise and Vesting of Options. Each option shall be
-------------------------------
immediately exercisable for any or all of the option shares. However, any
unvested shares purchased under the option shall be subject to repurchase by the
Corporation, at the exercise price paid per share, upon the Optionee's cessation
of Board service prior to vesting in those shares. The shares
19
<PAGE>
subject to each initial 15,000-share grant shall vest, and the Corporation's
repurchase right shall lapse, in a series of six (6) successive equal semi-
annual installments upon the Optionee's completion of each six (6)-month period
of service as a Board member over the thirty-six (36) month period measured from
the option grant date. The shares subject to each annual 5,000-share option
grant shall be fully vested as of the grant date.
E. Limited Transferability of Options. Each option under this
----------------------------------
Article Five may, in connection with the Optionee's estate plan, be assigned in
whole or in part during the Optionee's lifetime to one or more members of the
Optionee's immediate family or to a trust established exclusively for one or
more such family members. The assigned portion may only be exercised by the
person or persons who acquire a proprietary interest in the option pursuant to
the assignment. The terms applicable to the assigned portion shall be the same
as those in effect for the option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator
may deem appropriate. The Optionee may also designate one or more persons as the
beneficiary or beneficiaries of his or her outstanding options under this
Article Five, and those options shall, in accordance with such designation,
automatically be transferred to such beneficiary or beneficiaries upon the
Optionee's death while holding those options. Such beneficiary or beneficiaries
shall take the transferred options subject to all the terms and conditions of
the applicable agreement evidencing each such transferred option, including
(without limitation) the limited time period during which the option may be
exercised following the Optionee's death.
F. Termination of Board Service. The following provisions shall
----------------------------
govern the exercise of any options held by the Optionee at the time the Optionee
ceases to serve as a Board member:
(i) The Optionee (or, in the event of Optionee's death, the
personal representative of the Optionee's estate or the person or persons
to whom the option is transferred pursuant to the Optionee's will or the
laws of inheritance or by the designated beneficiary or beneficiaries of
such option) shall have a twelve (12)-month period following the date of
such cessation of Board service in which to exercise each such option.
(ii) During the twelve (12)-month exercise period, the
option may not be exercised in the aggregate for more than the number of
vested shares of Common Stock for which the option is exercisable at the
time of the Optionee's cessation of Board service.
(iii)Should the Optionee cease to serve as a Board member by
reason of death or Permanent Disability, then all shares at the time
subject to the option shall immediately vest so that such option may,
during the twelve (12)-month exercise period following such cessation of
Board service, be exercised for all or any portion of those shares as
fully-vested shares of Common Stock.
20
<PAGE>
(iv) In no event shall the option remain exercisable after
the expiration of the option term. Upon the expiration of the twelve (12)-
month exercise period or (if earlier) upon the expiration of the option
term, the option shall terminate and cease to be outstanding for any vested
shares for which the option has not been exercised. However, the option
shall, immediately upon the Optionee's cessation of Board service for any
reason other than death or Permanent Disability, terminate and cease to be
outstanding to the extent the option is not otherwise at that time
exercisable for vested shares.
G. Special Modification. If the financial accounting treatment for
--------------------
non-employee director stock options proposed in the March 31, 1999 Exposure
Draft of the Financial Accounting Standards Board under APB Opinion No. 25 is
adopted, then following changes shall be made to the foregoing provisions of the
Automatic Option Grant Program:
. The 15,000-share option grant shall not be made to a newly-
elected or appointed non-employee Board member until the first
Annual Stockholders Meeting held more than twelve (12) months
after the date of his or her initial election or appointment to
the Board. At that annual meeting, the non-employee Board member
shall also receive an option grant for an additional 5,000 shares
under the annual grant portion of the Automatic Option Grant
Program.
. One-third of the shares subject to the 15,000-share option
grant shall be immediately vested at the time of the option
grant, and the remaining shares shall vest in a series of twenty-
four (24) successive equal monthly installments upon the
Optionee's completion of each month period of Board service over
the twenty-four (24)-month period measured from the grant date.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction, the shares of Common
Stock at the time subject to each outstanding option but not otherwise vested
shall automatically vest in full so that each such option shall, immediately
prior to the effective date of the Corporate Transaction, become exercisable for
all of the shares of Common Stock at the time subject to such option and may be
exercised for any or all of those shares as fully-vested shares of Common Stock.
Immediately following the consummation of the Corporate Transaction, each
automatic option grant shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation (or parent thereof).
B. In connection with any Change in Control, the shares of Common
Stock at the time subject to each outstanding option but not otherwise vested
shall automatically vest in full so that each such option shall, immediately
prior to the effective date of the Change in Control, become exercisable for all
of the shares of Common Stock at the time subject to such option and may be
exercised for any or all of those shares as fully-vested shares of Common Stock.
Each such option shall remain exercisable for such fully-vested option shares
until the expiration or sooner termination of the option term or the surrender
of the option in connection with a Hostile Take-Over.
21
<PAGE>
C. All outstanding repurchase rights shall automatically terminate,
and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Corporate Transaction or Change in
Control.
D. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each of
his or her outstanding automatic option grants. The Optionee shall in return be
entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to each surrendered option (whether or not the Optionee is otherwise at
the time vested in those shares) over (ii) the aggregate exercise price payable
for such shares. Such cash distribution shall be paid within five (5) days
following the surrender of the option to the Corporation. No approval or consent
of the Board or any Plan Administrator shall be required at the time of the
actual option surrender and cash distribution.
E. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the exercise price payable per
share under each outstanding option, provided the aggregate exercise price
payable for such securities shall remain the same.
F. The grant of options under the Automatic Option Grant Program
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
III. REMAINING TERMS
The remaining terms of each option granted under the Automatic Option
Grant Program shall be the same as the terms in effect for option grants made
under the Discretionary Option Grant Program.
22
<PAGE>
ARTICLE SIX
DIRECTOR FEE OPTION GRANT PROGRAM
---------------------------------
I. OPTION GRANTS
The Primary Committee shall have the sole and exclusive authority to
determine the calendar year or years for which the Director Fee Option Grant
Program is to be in effect. For each such calendar year the program is in
effect, each non-employee Board member may irrevocably elect to apply all or any
portion of the annual retainer fee otherwise payable in cash for his or her
service on the Board for that year to the acquisition of a special option grant
under this Director Fee Option Grant Program. Such election must be filed with
the Corporation's Chief Financial Officer prior to first day of the calendar
year for which the annual retainer fee which is the subject of that election is
otherwise payable. Each non-employee Board member who files such a timely
election shall automatically be granted an option under this Director Fee Option
Grant Program on the first trading day in January in the calendar year for which
the annual retainer fee which is the subject of that election would otherwise be
payable in cash.
II. OPTION TERMS
Each option shall be a Non-Statutory Option governed by the terms and
conditions specified below.
A. Exercise Price.
--------------
1. The exercise price per share shall be thirty-three and one-
third percent (33-1/3%) of the Fair Market Value per share of Common Stock on
the option grant date.
2. The exercise price shall become immediately due upon
exercise of the option and shall be payable in one or more of the alternative
forms authorized under the Discretionary Option Grant Program. Except to the
extent the sale and remittance procedure specified thereunder is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. Number of Option Shares. The number of shares of Common Stock
-----------------------
subject to the option shall be determined pursuant to the following formula
(rounded down to the nearest whole number):
X = A / (B x 66-2/3%), where
X is the number of option shares,
A is the portion of the annual retainer fee subject to the non-
employee Board member's election, and
23
<PAGE>
B is the Fair Market Value per share of Common Stock on the
option grant date.
C. Exercise and Term of Options. The option shall become exercisable
----------------------------
in a series of twelve (12) successive equal monthly installments upon the
Optionee's completion of each calendar month of Board service during the
calendar year in which the option is granted. Each option shall have a maximum
term of ten (10) years measured from the option grant date.
D. Limited Transferability of Options. Each option under this
----------------------------------
Article Six may, in connection with the Optionee's estate plan, be assigned in
whole or in part during the Optionee's lifetime to one or more members of the
Optionee's immediate family or to a trust established exclusively for one or
more such family members. The assigned portion may only be exercised by the
person or persons who acquire a proprietary interest in the option pursuant to
the assignment. The terms applicable to the assigned portion shall be the same
as those in effect for the option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator
may deem appropriate. The Optionee may also designate one or more persons as the
beneficiary or beneficiaries of his or her outstanding options under this
Article Six, and those options shall, in accordance with such designation,
automatically be transferred to such beneficiary or beneficiaries upon the
Optionee's death while holding those options. Such beneficiary or beneficiaries
shall take the transferred options subject to all the terms and conditions of
the applicable agreement evidencing each such transferred option, including
(without limitation) the limited time period during which the option may be
exercised following the Optionee's death.
E. Termination of Board Service. Should the Optionee cease Board
----------------------------
service for any reason (other than death or Permanent Disability) while holding
one or more options under this Director Fee Option Grant Program, then each such
option shall remain exercisable, for any or all of the shares for which the
option is exercisable at the time of such cessation of Board service, until the
earlier of (i) the expiration of the ten (10)-year option term or (ii) the
expiration of the three (3)-year period measured from the date of such cessation
of Board service. However, each option held by the Optionee under this Director
Fee Option Grant Program at the time of his or her cessation of Board service
shall immediately terminate and cease to remain outstanding with respect to any
and all shares of Common Stock for which the option is not otherwise at that
time exercisable.
F. Death or Permanent Disability. Should the Optionee's service as a
-----------------------------
Board member cease by reason of death or Permanent Disability, then each option
held by such Optionee under this Director Fee Option Grant Program shall
immediately become exercisable for all the shares of Common Stock at the time
subject to that option, and the option may be exercised for any or all of those
shares as fully-vested shares until the earlier of (i) the expiration of the ten
(10)-year option term or (ii) the expiration of the three (3)-year period
measured from the date of such cessation of Board service. In the event of the
Optionee's death while holding such option, the option may be exercised by the
personal representative of the Optionee's estate or by the person or persons to
whom the option is transferred pursuant to the Optionee's will or the laws of
inheritance or by the designated beneficiary or beneficiaries of such option.
24
<PAGE>
Should the Optionee die after cessation of Board service but while
holding one or more options under this Director Fee Option Grant Program, then
each such option may be exercised, for any or all of the shares for which the
option is exercisable at the time of the Optionee's cessation of Board service
(less any shares subsequently purchased by Optionee prior to death), by the
personal representative of the Optionee's estate or by the person or persons to
whom the option is transferred pursuant to the Optionee's will or the laws of
inheritance or by the designated beneficiary or beneficiaries of such option.
Such right of exercise shall lapse, and the option shall terminate, upon the
earlier of (i) the expiration of the ten (10)-year option term or (ii) the three
(3)-year period measured from the date of the Optionee's cessation of Board
service.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction while the Optionee
remains a Board member, each outstanding option held by such Optionee under this
Director Fee Option Grant Program shall automatically accelerate so that each
such option shall, immediately prior to the effective date of the Corporate
Transaction, become exercisable for all the shares of Common Stock at the time
subject to such option and may be exercised for any or all of those shares as
fully-vested shares of Common Stock. Each such outstanding option shall
terminate immediately following the Corporate Transaction, except to the extent
assumed by the successor corporation (or parent thereof) in such Corporate
Transaction. Any option so assumed and shall remain exercisable for the fully-
vested shares until the earlier of (i) the expiration of the ten (10)-year
-------
option term or (ii) the expiration of the three (3)-year period measured from
the date of the Optionee's cessation of Board service.
B. In the event of a Change in Control while the Optionee remains in
Service, each outstanding option held by such Optionee under this Director Fee
Option Grant Program shall automatically accelerate so that each such option
shall immediately become exercisable for all the shares of Common Stock at the
time subject to such option and may be exercised for any or all of those shares
as fully-vested shares of Common Stock. The option shall remain so exercisable
until the earliest to occur of (i) the expiration of the ten (10)-year option
term, (ii) the expiration of the three (3)-year period measured from the date of
the Optionee's cessation of Board service, (iii) the termination of the option
in connection with a Corporate Transaction or (iv) the surrender of the option
in connection with a Hostile Take-Over.
C. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each
outstanding option granted him or her under the Director Fee Option Grant
Program. The Optionee shall in return be entitled to a cash distribution from
the Corporation in an amount equal to the excess of (i) the Take-Over Price of
the shares of Common Stock at the time subject to each surrendered option
(whether or not the option is otherwise at the time exercisable for those
shares) over (ii) the aggregate exercise price payable for such shares. Such
cash distribution shall be paid within five (5) days following the surrender of
the option to the Corporation. No approval or consent of the Board or any Plan
Administrator shall be required at the time of the actual option surrender and
cash distribution.
25
<PAGE>
D. The grant of options under the Director Fee Option Grant Program
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
IV. REMAINING TERMS
The remaining terms of each option granted under this Director Fee
Option Grant Program shall be the same as the terms in effect for option grants
made under the Discretionary Option Grant Program.
26
<PAGE>
ARTICLE SEVEN
MISCELLANEOUS
-------------
I. FINANCING
The Plan Administrator may permit any Optionee or Participant to pay
the option exercise price under the Discretionary Option Grant Program or the
purchase price of shares issued under the Stock Issuance Program by delivering a
full-recourse, interest bearing promissory note payable in one or more
installments. The terms of any such promissory note (including the interest rate
and the terms of repayment) shall be established by the Plan Administrator in
its sole discretion. In no event may the maximum credit available to the
Optionee or Participant exceed the sum of (i) the aggregate option exercise
price or purchase price payable for the purchased shares (less the par value of
those shares) plus (ii) any Federal, state and local income and employment tax
liability incurred by the Optionee or the Participant in connection with the
option exercise or share purchase.
II. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock
upon the exercise of options or the issuance or vesting of such shares under the
Plan shall be subject to the satisfaction of all applicable Federal, state and
local income and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options or unvested shares of Common Stock under the
Plan (other than the options granted or the shares issued under the Automatic
Option Grant or Director Fee Option Grant Program) with the right to use shares
of Common Stock in satisfaction of all or part of the Withholding Taxes to which
such holders may become subject in connection with the exercise of their options
or the vesting of their shares. Such right may be provided to any such holder in
either or both of the following formats:
Stock Withholding: The election to have the Corporation withhold,
-----------------
from the shares of Common Stock otherwise issuable upon the exercise of such
Non-Statutory Option or the vesting of such shares, a portion of those shares
with an aggregate Fair Market Value equal to the percentage of the Withholding
Taxes (not to exceed one hundred percent (100%)) designated by the holder.
Stock Delivery: The election to deliver to the Corporation, at the
--------------
time the Non-Statutory Option is exercised or the shares vest, one or more
shares of Common Stock previously acquired by such holder (other than in
connection with the option exercise or share vesting triggering the Withholding
Taxes) with an aggregate Fair Market Value equal to the percentage of the
Withholding Taxes (not to exceed one hundred percent (100%)) designated by the
holder.
27
<PAGE>
III. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan shall become effective immediately on the Plan Effective
Date. However, the Salary Investment Option Grant Program and the Director Fee
Option Grant Program shall not be implemented until such time as the Primary
Committee may deem appropriate. Options may be granted under the Discretionary
Option Grant at any time on or after the Plan Effective Date, and the initial
option grants under the Automatic Option Grant Program shall also be made on the
Plan Effective Date to any non-employee Board members eligible for such grants
at that time. However, no options granted under the Plan may be exercised, and
no shares shall be issued under the Plan, until the Plan is approved by the
Corporation's stockholders. If such stockholder approval is not obtained within
twelve (12) months after the Plan Effective Date, then all options previously
granted under this Plan shall terminate and cease to be outstanding, and no
further options shall be granted and no shares shall be issued under the Plan.
B. The Plan shall serve as the successor to the two (2) Predecessor
Plans, and no further option grants or direct stock issuances shall be made
under those Predecessor Plans after the Plan Effective Date. All options
outstanding under the Predecessor Plans on the Plan Effective Date shall be
incorporated into the Plan at that time and shall be treated as outstanding
options under the Plan. However, each outstanding option so incorporated shall
continue to be governed solely by the terms of the documents evidencing such
option, and no provision of the Plan shall be deemed to affect or otherwise
modify the rights or obligations of the holders of such incorporated options
with respect to their acquisition of shares of Common Stock.
C. One or more provisions of the Plan, including (without
limitation) the option/vesting acceleration provisions of Article Two relating
to Corporate Transactions and Changes in Control, may, in the Plan
Administrator's discretion, be extended to one or more options incorporated from
the Predecessor Plans which do not otherwise contain such provisions.
D. The Plan shall terminate upon the earliest to occur of (i) June
15, 2009, (ii) the date on which all shares available for issuance under the
Plan shall have been issued as fully-vested shares or (iii) the termination of
all outstanding options in connection with a Corporate Transaction. Should the
Plan terminate on June 15, 2009, then all option grants and unvested stock
issuances outstanding at that time shall continue to have force and effect in
accordance with the provisions of the documents evidencing such grants or
issuances.
IV. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority
to amend or modify the Plan in any or all respects. However, no such amendment
or modification shall adversely affect the rights and obligations with respect
to stock options or unvested stock issuances at the time outstanding under the
Plan unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval
pursuant to applicable laws or regulations.
28
<PAGE>
B. Options to purchase shares of Common Stock may be granted under
the Discretionary Option Grant and Salary Investment Option Grant Programs and
shares of Common Stock may be issued under the Stock Issuance Program that are
in each instance in excess of the number of shares then available for issuance
under the Plan, provided any excess shares actually issued under those programs
shall be held in escrow until there is obtained stockholder approval of an
amendment sufficiently increasing the number of shares of Common Stock available
for issuance under the Plan. If such stockholder approval is not obtained within
twelve (12) months after the date the first such excess issuances are made, then
(i) any unexercised options granted on the basis of such excess shares shall
terminate and cease to be outstanding and (ii) the Corporation shall promptly
refund to the Optionees and the Participants the exercise or purchase price paid
for any excess shares issued under the Plan and held in escrow, together with
interest (at the applicable Short Term Federal Rate) for the period the shares
were held in escrow, and such shares shall thereupon be automatically cancelled
and cease to be outstanding.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
of Common Stock under the Plan shall be used for general corporate purposes.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any stock option
under the Plan and the issuance of any shares of Common Stock (i) upon the
exercise of any granted option or (ii) under the Stock Issuance Program shall be
subject to the Corporation's procurement of all approvals and permits required
by regulatory authorities having jurisdiction over the Plan, the stock options
granted under it and the shares of Common Stock issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the Participant
any right to continue in Service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining such person) or of the
Optionee or the Participant, which rights are hereby expressly reserved by each,
to terminate such person's Service at any time for any reason, with or without
cause.
29
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Plan:
A. Automatic Option Grant Program shall mean the automatic option
------------------------------
grant program in effect under Article Five of the Plan.
B. Board shall mean the Corporation's Board of Directors.
-----
C. Change in Control shall mean a change in ownership or control of
-----------------
the Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly by any person
or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation), of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly
to the Corporation's stockholders, or
(ii) a change in the composition of the Board over a period
of thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A) who
were still in office at the time the Board approved such election or
nomination.
D. Code shall mean the Internal Revenue Code of 1986, as amended.
----
E. Common Stock shall mean the Corporation's common stock.
------------
F. Corporate Transaction shall mean either of the following
---------------------
stockholder approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting power
of the Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
A-1
<PAGE>
G. Corporation shall mean Viador inc., a Delaware corporation, and
-----------
any corporate successor to all or substantially all of the assets or voting
stock of Viador inc. which shall by appropriate action adopt the Plan.
H. Director Fee Option Grant Program shall mean the special stock
---------------------------------
option grant in effect for non-employee Board members under Article Six of the
Plan.
I. Discretionary Option Grant Program shall mean the discretionary
----------------------------------
option grant program in effect under Article Two of the Plan.
J. Eligible Director mean a non-employee Board member eligible to
-----------------
participate in the Automatic Option Grant Program in accordance with the
eligibility provisions of Articles One and Five.
K. Employee shall mean an individual who is in the employ of the
--------
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
L. Exercise Date shall mean the date on which the Corporation shall
-------------
have received written notice of the option exercise.
M. Fair Market Value per share of Common Stock on any relevant date
-----------------
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as such price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market. If there is no closing selling price for the Common Stock
on the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for the
Common Stock on the date in question, then the Fair Market Value shall be
the closing selling price on the last preceding date for which such
quotation exists.
(iii)For purposes of any option grants made on the
Underwriting Date, the Fair Market Value shall be deemed to be equal to the
price per share at which the Common Stock is to be sold in the initial
public offering pursuant to the Underwriting Agreement.
A-2
<PAGE>
N. Hostile Take-Over shall mean the acquisition, directly or
-----------------
indirectly, by any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Corporation) of beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly to
the Corporation's stockholders which the Board does not recommend such
stockholders to accept.
O. Incentive Option shall mean an option which satisfies the
----------------
requirements of Code Section 422.
P. Involuntary Termination shall mean the termination of the Service
-----------------------
of any individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge by
the Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A) a
change in his or her position with the Corporation which materially reduces
his or her duties and responsibilities or the level of management to which
he or she reports, (B) a reduction in his or her level of compensation
(including base salary, fringe benefits and target bonus under any
corporate-performance based bonus or incentive programs) by more than
fifteen percent (15%) or (C) a relocation of such individual's place of
employment by more than fifty (50) miles, provided and only if such change,
reduction or relocation is effected by the Corporation without the
individual's consent.
Q. Misconduct shall mean the commission of any act of fraud,
----------
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary) in a material manner. The foregoing definition
shall not be deemed to be inclusive of all the acts or omissions which the
Corporation (or any Parent or Subsidiary) may consider as grounds for the
dismissal or discharge of any Optionee, Participant or other person in the
Service of the Corporation (or any Parent or Subsidiary).
R. 1934 Act shall mean the Securities Exchange Act of 1934, as
--------
amended.
S. Non-Statutory Option shall mean an option not intended to satisfy
--------------------
the requirements of Code Section 422.
T. Optionee shall mean any person to whom an option is granted under
--------
the Discretionary Option Grant, Salary Investment Option Grant, Automatic Option
Grant or Director Fee Option Grant Program.
A-3
<PAGE>
U. Parent shall mean any corporation (other than the Corporation) in
------
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
V. Participant shall mean any person who is issued shares of Common
-----------
Stock under the Stock Issuance Program.
W. Permanent Disability or Permanently Disabled shall mean the
--------------------------------------------
inability of the Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of twelve
(12) months or more. However, solely for purposes of the Automatic Option Grant
and Director Fee Option Grant Programs, Permanent Disability or Permanently
Disabled shall mean the inability of the non-employee Board member to perform
his or her usual duties as a Board member by reason of any medically
determinable physical or mental impairment expected to result in death or to be
of continuous duration of twelve (12) months or more.
X. Plan shall mean the Corporation's 1999 Stock Incentive Plan, as
----
set forth in this document.
Y. Plan Administrator shall mean the particular entity, whether the
------------------
Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant and Stock Issuance Programs with
respect to one or more classes of eligible persons, to the extent such entity is
carrying out its administrative functions under those programs with respect to
the persons under its jurisdiction.
Z. Plan Effective Date shall mean the date the Plan shall become
-------------------
effective and shall be coincident with the Underwriting Date.
AA. Predecessor Plans shall mean the Corporation's (i) 1996 Stock
-----------------
Option/Stock Issuance Plan, as in effect immediately prior to the Plan Effective
Date hereunder, and (ii) 1997 Stock Option/Stock Issuance Plan, as in effect
immediately prior to the Plan Effective Date hereunder.
BB. Primary Committee shall mean the committee of two (2) or more
-----------------
nonemployee Board members appointed by the Board to administer the Discretionary
Option Grant and Stock Issuance Programs with respect to Section 16 Insiders and
to administer the Salary Investment Option Grant Program solely with respect to
the selection of the eligible individuals who may participate in such program.
CC. Salary Investment Option Grant Program shall mean the salary
--------------------------------------
investment option grant program in effect under Article Three of the Plan.
A-4
<PAGE>
DD. Secondary Committee shall mean a committee of one or more Board
-------------------
members appointed by the Board to administer the Discretionary Option Grant and
Stock Issuance Programs with respect to eligible persons other than Section 16
Insiders.
EE. Section 16 Insider shall mean an officer or director of the
------------------
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.
FF. Service shall mean the performance of services for the Corporation
-------
(or any Parent or Subsidiary) by a person in the capacity of an Employee, a non-
employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant or stock issuance.
GG. Stock Exchange shall mean either the American Stock Exchange or
--------------
the New York Stock Exchange.
HH. Stock Issuance Program shall mean the agreement entered into by
----------------------
the Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.
II. Stock Issuance Program shall mean the stock issuance program in
----------------------
effect under Article Four of the Plan.
JJ. Subsidiary shall mean any corporation (other than the
----------
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
KK. Take-Over Price shall mean the greater of (i) the Fair Market
---------------
Value per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price per share of Common Stock paid by the tender offeror in effecting such
Hostile Take-Over. However, if the surrendered option is an Incentive Option,
the Take-Over Price shall not exceed the clause (i) price per share.
LL. 10% Stockholder shall mean the owner of stock (as determined
---------------
under Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
MM. Underwriting Agreement shall mean the agreement between the
----------------------
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.
NN. Underwriting Date shall mean the date on which the Underwriting
----------------------
Agreement is executed and priced in connection with an initial public offering
of the Common Stock.
A-5
<PAGE>
OO. Withholding Taxes shall mean the Federal, state and local income
-----------------
and employment withholding taxes to which the holder of Non-Statutory Options or
unvested shares of Common Stock may become subject in connection with the
exercise of those options or the vesting of those shares.
A-6
<PAGE>
EXHIBIT 10.3
VIADOR INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
---------------------------------
I. PURPOSE OF THE PLAN
This Employee Stock Purchase Plan is intended to promote the interests
of Viador Inc., a Delaware corporation, by providing eligible employees with
the opportunity to acquire a proprietary interest in the Corporation through
participation in a payroll-deduction based employee stock purchase plan designed
to qualify under Section 423 of the Code.
Capitalized terms herein shall have the meanings assigned to such
terms in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret and
construe any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock, including shares of Common Stock
purchased on the open market. The number of shares of Common Stock initially
reserved for issuance over the term of the Plan shall be limited to 300,000
shares.
B. The number of shares of Common Stock available for issuance under
the Plan shall automatically increase on the first trading day of January each
calendar year during the term of the Plan, beginning with calendar year 2000, by
an amount equal to one percent (1%) of the total number of shares of Common
Stock outstanding on the last trading day in December of the immediately
preceding calendar year, but in no event shall any such annual increase exceed
500,000 shares.
C. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and class of securities issuable under
the Plan, (ii) the maximum number and class of securities purchasable per
Participant on any one Purchase Date, (iii) the maximum number and class of
securities purchasable in total by all Participants on any one Purchase Date,
(iv) the maximum
<PAGE>
number and/or class of securities by which the share reserve is to increase
automatically each calendar year pursuant to the provisions of Section III.B of
this Article One and (v) the number and class of securities and the price per
share in effect under each outstanding purchase right in order to prevent the
dilution or enlargement of benefits thereunder.
IV. OFFERING PERIODS
A. Shares of Common Stock shall be offered for purchase under the
Plan through a series of successive offering periods until such time as (i) the
maximum number of shares of Common Stock available for issuance under the Plan
shall have been purchased or (ii) the Plan shall have been sooner terminated.
B. Each offering period shall be of such duration (not to exceed
twenty-four (24) months) as determined by the Plan Administrator prior to the
start date of such offering period. However, the initial offering period shall
commence at the Effective Time and terminate on the last business day in October
2001. The next offering period shall commence on the first business day in
November 2001, and subsequent offering periods shall commence as designated by
the Plan Administrator.
C. Each offering period shall be comprised of a series of one or more
successive Purchase Intervals. Purchase Intervals shall run from the first
business day in May to the last business day in October each year and from the
first business day in November each year to the last business day in April in
the following year. However, the first Purchase Interval in effect under the
initial offering period shall commence at the Effective Time and terminate on
April 28, 2000.
D. Should the Fair Market Value per share of Common Stock on any
Purchase Date within an offering period be less than the Fair Market Value per
share of Common Stock on the start date of that offering period, then that
offering period shall automatically terminate immediately after the purchase of
shares of Common Stock on such Purchase Date, and a new offering period shall
commence on the next business day following such Purchase Date. The new
offering period shall have a duration of twenty (24) months, unless a shorter
duration is established by the Plan Administrator within five (5) business days
following the start date of that offering period.
V. ELIGIBILITY
A. Each individual who is an Eligible Employee on the start date of
any offering period under the Plan may enter that offering period on such start
date or on any subsequent Semi-Annual Entry Date within that offering period,
provided he or she remains an Eligible Employee.
B. Each individual who first becomes an Eligible Employee after the
start date of an offering period may enter that offering period on any
subsequent Semi-Annual Entry Date within that offering period on which he or she
is an Eligible Employee.
2.
<PAGE>
C. The date an individual enters an offering period shall be
designated his or her Entry Date for purposes of that offering period.
D. To participate in the Plan for a particular offering period, the
Eligible Employee must complete the enrollment forms prescribed by the Plan
Administrator (including a stock purchase agreement and a payroll deduction
authorization) and file such forms with the Plan Administrator (or its
designate) on or before his or her scheduled Entry Date.
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized by the Participant for purposes
of acquiring shares of Common Stock during an offering period may be any
multiple of one percent (1%) of the Cash Earnings paid to the Participant during
each Purchase Interval within that offering period, up to a maximum of fifteen
percent (15%). The deduction rate so authorized shall continue in effect
throughout the offering period, except to the extent such rate is changed in
accordance with the following guidelines:
(i) The Participant may, at any time during the offering
period, reduce his or her rate of payroll deduction to become effective as
soon as possible after filing the appropriate form with the Plan
Administrator. The Participant may not, however, effect more than one (1)
such reduction per Purchase Interval.
(ii) The Participant may, prior to the commencement of any
new Purchase Interval within the offering period, increase the rate of his
or her payroll deduction by filing the appropriate form with the Plan
Administrator. The new rate (which may not exceed the fifteen percent (15%)
maximum) shall become effective on the start date of the first Purchase
Interval following the filing of such form.
B. Payroll deductions shall begin on the first pay day
administratively feasible following the Participant's Entry Date into the
offering period and shall (unless sooner terminated by the Participant) continue
through the pay day ending with or immediately prior to the last day of that
offering period. The amounts so collected shall be credited to the
Participant's book account under the Plan, but no interest shall be paid on the
balance from time to time outstanding in such account. The amounts collected
from the Participant shall not be required to be held in any segregated account
or trust fund and may be commingled with the general assets of the Corporation
and used for general corporate purposes.
C. Payroll deductions shall automatically cease upon the termination
of the Participant's purchase right in accordance with the provisions of the
Plan.
D. The Participant's acquisition of Common Stock under the Plan on
any Purchase Date shall neither limit nor require the Participant's acquisition
of Common Stock on any subsequent Purchase Date, whether within the same or a
different offering period.
3.
<PAGE>
VII. PURCHASE RIGHTS
A. Grant of Purchase Right. A Participant shall be granted a
-----------------------
separate purchase right for each offering period in which he or she
participates. The purchase right shall be granted on the Participant's Entry
Date into the offering period and shall provide the Participant with the right
to purchase shares of Common Stock, in a series of successive installments over
the remainder of such offering period, upon the terms set forth below. The
Participant shall execute a stock purchase agreement embodying such terms and
such other provisions (not inconsistent with the Plan) as the Plan Administrator
may deem advisable.
Under no circumstances shall purchase rights be granted under the Plan
to any Eligible Employee if such individual would, immediately after the grant,
own (within the meaning of Code Section 424(d)) or hold outstanding options or
other rights to purchase, stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Corporation
or any Corporate Affiliate.
B. Exercise of the Purchase Right. Each purchase right shall be
------------------------------
automatically exercised in installments on each successive Purchase Date within
the offering period, and shares of Common Stock shall accordingly be purchased
on behalf of each Participant on each such Purchase Date. The purchase shall be
effected by applying the Participant's payroll deductions for the Purchase
Interval ending on such Purchase Date to the purchase of whole shares of Common
Stock at the purchase price in effect for the Participant for that Purchase
Date.
C. Purchase Price. The purchase price per share at which Common
--------------
Stock will be purchased on the Participant's behalf on each Purchase Date within
the offering period shall be equal to eighty-five percent (85%) of the lower of
-----
(i) the Fair Market Value per share of Common Stock on the Participant's Entry
Date into that offering period or (ii) the Fair Market Value per share of Common
Stock on that Purchase Date.
D. Number of Purchasable Shares. The number of shares of Common
----------------------------
Stock purchasable by a Participant on each Purchase Date during the offering
period shall be the number of whole shares obtained by dividing the amount
collected from the Participant through payroll deductions during the Purchase
Interval ending with that Purchase Date by the purchase price in effect for the
Participant for that Purchase Date. However, the maximum number of shares of
Common Stock purchasable per Participant on any one Purchase Date shall not
exceed 750 shares, subject to periodic adjustments in the event of certain
changes in the Corporation's capitalization. In addition, the maximum number of
shares of Common Stock purchasable in total by all Participants on any one
Purchase Date shall not exceed 75,000 shares, subject to periodic adjustments in
the event of certain changes in the Corporation's capitalization. However, the
Plan Administrator shall have the discretionary authority, exercisable prior to
the start of any offering period under the Plan, to increase or decrease the
limitations to be in effect for the number of shares purchasable per Participant
and in total by all Participants on each Purchase Date during that offering
period.
4.
<PAGE>
E. Excess Payroll Deductions. Any payroll deductions not applied to
-------------------------
the purchase of shares of Common Stock on any Purchase Date because they are
not sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitations on the maximum number of shares purchasable per Participant or in
total by all Participants on the Purchase Date shall be promptly refunded.
F. Termination of Purchase Right. The following provisions shall
-----------------------------
govern the termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the next
scheduled Purchase Date in the offering period, terminate his or her
outstanding purchase right by filing the appropriate form with the Plan
Administrator (or its designate), and no further payroll deductions shall
be collected from the Participant with respect to the terminated purchase
right. Any payroll deductions collected during the Purchase Interval in
which such termination occurs shall, at the Participant's election, be
immediately refunded or held for the purchase of shares on the next
Purchase Date. If no such election is made at the time such purchase right
is terminated, then the payroll deductions collected with respect to the
terminated right shall be refunded as soon as possible.
(ii) The termination of such purchase right shall be
irrevocable, and the Participant may not subsequently rejoin the offering
period for which the terminated purchase right was granted. In order to
resume participation in any subsequent offering period, such individual
must re-enroll in the Plan (by making a timely filing of the prescribed
enrollment forms) on or before his or her scheduled Entry Date into that
offering period.
(iii) Should the Participant cease to remain an Eligible
Employee for any reason (including death, disability or change in status)
while his or her purchase right remains outstanding, then that purchase
right shall immediately terminate, and all of the Participant's payroll
deductions for the Purchase Interval in which the purchase right so
terminates shall be immediately refunded. However, should the Participant
cease to remain in active service by reason of an approved unpaid leave of
absence, then the Participant shall have the right, exercisable until the
last business day of the Purchase Interval in which such leave commences,
to (a) withdraw all the payroll deductions collected to date on his or her
behalf for that Purchase Interval or (b) have such funds held for the
purchase of shares on his or her behalf on the next scheduled Purchase
Date. In no event, however, shall any further payroll deductions be
collected on the Participant's behalf during such leave. Upon the
Participant's return to active service (x) within ninety (90) days
following the commencement of such leave or (y) prior to the expiration of
any longer period for which such Participant's right to reemployment with
the Corporation is guaranteed by statute or contract, his or her payroll
deductions under the Plan shall automatically resume at the rate in
5.
<PAGE>
effect at the time the leave began, unless the Participant withdraws from
the Plan prior to his or her return. An individual who returns to active
employment following a leave of absence which exceeds in duration the
applicable (x) or (y) time period will be treated as a new Employee for
purposes of subsequent participation in the Plan and must accordingly re-
enroll in the Plan (by making a timely filing of the prescribed enrollment
forms) on or before his or her scheduled Entry Date into the offering
period.
G. Change in Control. Each outstanding purchase right shall
-----------------
automatically be exercised, immediately prior to the effective date of any
Change in Control, by applying the payroll deductions of each Participant for
the Purchase Interval in which such Change in Control occurs to the purchase of
whole shares of Common Stock at a purchase price per share equal to eighty-five
percent (85%) of the lower of (i) the Fair Market Value per share of Common
-----
Stock on the Participant's Entry Date into the offering period in which such
Change in Control occurs or (ii) the Fair Market Value per share of Common Stock
immediately prior to the effective date of such Change in Control. However, the
applicable limitation on the number of shares of Common Stock purchasable per
Participant shall continue to apply to any such purchase, but not the limitation
applicable to the maximum number of shares of Common Stock purchasable in total
by all Participants.
The Corporation shall use its best efforts to provide at least ten
(10)-days prior written notice of the occurrence of any Change in Control, and
Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Change in Control.
H. Proration of Purchase Rights. Should the total number of shares
----------------------------
of Common Stock to be purchased pursuant to outstanding purchase rights on any
particular date exceed the number of shares then available for issuance under
the Plan, the Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate
purchase price payable for the Common Stock pro-rated to such individual, shall
be refunded.
I. Assignability. The purchase right shall be exercisable only by
-------------
the Participant and shall not be assignable or transferable by the Participant.
J. Stockholder Rights. A Participant shall have no stockholder
------------------
rights with respect to the shares subject to his or her outstanding purchase
right until the shares are purchased on the Participant's behalf in accordance
with the provisions of the Plan and the Participant has become a holder of
record of the purchased shares.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire
Common Stock pursuant to any purchase right outstanding under this Plan if and
to the extent such accrual, when aggregated with (i) rights to purchase Common
Stock accrued under any other purchase right granted under this Plan and (ii)
similar rights accrued under other employee stock purchase plans
6.
<PAGE>
(within the meaning of Code Section 423) of the Corporation or any Corporate
Affiliate, would otherwise permit such Participant to purchase more than Twenty-
Five Thousand Dollars ($25,000.00) worth of stock of the Corporation or any
Corporate Affiliate (determined on the basis of the Fair Market Value per share
on the date or dates such rights are granted) for each calendar year such rights
are at any time outstanding.
B. For purposes of applying such accrual limitations to the purchase
rights granted under the Plan, the following provisions shall be in effect:
(i) The right to acquire Common Stock under each outstanding
purchase right shall accrue in a series of installments on each successive
Purchase Date during the offering period on which such right remains
outstanding.
(ii) No right to acquire Common Stock under any outstanding
purchase right shall accrue to the extent the Participant has already
accrued in the same calendar year the right to acquire Common Stock under
one or more other purchase rights at a rate equal to Twenty-Five Thousand
Dollars ($25,000.00) worth of Common Stock (determined on the basis of the
Fair Market Value per share on the date or dates of grant) for each
calendar year such rights were at any time outstanding.
C. If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular Purchase Interval, then the payroll
deductions which the Participant made during that Purchase Interval with respect
to such purchase right shall be promptly refunded.
D. In the event there is any conflict between the provisions of this
Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on _____________, 1999 and shall
become effective at the Effective Time, provided no purchase rights granted
--------
under the Plan shall be exercised, and no shares of Common Stock shall be issued
hereunder, until (i) the Plan shall have been approved by the stockholders of
the Corporation and (ii) the Corporation shall have complied with all applicable
requirements of the 1933 Act (including the registration of the shares of Common
Stock issuable under the Plan on a Form S-8 registration statement filed with
the Securities and Exchange Commission), all applicable listing requirements of
any stock exchange (or the Nasdaq National Market, if applicable) on which the
Common Stock is listed for trading and all other applicable requirements
established by law or regulation. In the event such stockholder approval is not
obtained, or such compliance is not effected, within twelve (12) months after
the date on which the Plan is adopted by the Board, the Plan shall terminate and
have no further force or effect, and all sums collected from Participants during
the initial offering period hereunder shall be refunded.
7.
<PAGE>
B. Unless sooner terminated by the Board, the Plan shall terminate
upon the earliest of (i) the last business day in October 2009, (ii) the date on
--------
which all shares available for issuance under the Plan shall have been sold
pursuant to purchase rights exercised under the Plan or (iii) the date on which
all purchase rights are exercised in connection with a Corporate Transaction.
No further purchase rights shall be granted or exercised, and no further payroll
deductions shall be collected, under the Plan following such termination.
X. AMENDMENT OF THE PLAN
A. The Board may alter, amend, suspend or terminate the Plan at any
time to become effective immediately following the close of any Purchase
Interval. However, the Plan may be amended or terminated immediately upon Board
action, if and to the extent necessary to assure that the Corporation will not
recognize, for financial reporting purposes, any compensation expense in
connection with the shares of Common Stock offered for purchase under the Plan,
should the financial accounting rules applicable to the Plan at the Effective
Time be subsequently revised so as to require the Corporation to recognize
compensation expense in the absence of such amendment or termination.
B. In no event may the Board effect any of the following amendments
or revisions to the Plan without the approval of the Corporation's stockholders:
(i) increase the number of shares of Common Stock issuable under the Plan,
except for permissible adjustments in the event of certain changes in the
Corporation's capitalization, (ii) alter the purchase price formula so as to
reduce the purchase price payable for the shares of Common Stock purchasable
under the Plan or (iii) modify the eligibility requirements for participation in
the Plan.
XI. GENERAL PROVISIONS
A. All costs and expenses incurred in the administration of the Plan
shall be paid by the Corporation; however, each Plan Participant shall bear all
costs and expenses incurred by such individual in the sale or other disposition
of any shares purchased under the Plan.
B. Nothing in the Plan shall confer upon the Participant any right to
continue in the employ of the Corporation or any Corporate Affiliate for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Corporate Affiliate employing such person)
or of the Participant, which rights are hereby expressly reserved by each, to
terminate such person's employment at any time for any reason, with or without
cause.
C. The provisions of the Plan shall be governed by the laws of the
State of California without resort to that State's conflict-of-laws rules.
8.
<PAGE>
Schedule A
----------
Corporations Participating in
Employee Stock Purchase Plan
As of the Effective Time
------------------------
Viador Inc.
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
-----
B. Cash Earnings shall mean the (i) regular base salary paid to a
-------------
Participant by one or more Participating Companies during such individual's
period of participation in one or more offering periods under the Plan plus (ii)
all overtime payments, bonuses, commissions, profit-sharing distributions and
other incentive-type payments received during such period. Such Cash Earnings
shall be calculated before deduction of (A) any income or employment tax
withholdings or (B) any and all contributions made by the Participant to any
Code Section 401(k) salary deferral plan or Code Section 125 cafeteria benefit
program now or hereafter established by the Corporation or any Corporate
Affiliate. However, Cash Earnings shall not include any contributions made on
the Participant's behalf by the Corporation or any Corporate Affiliate to any
employee benefit or welfare plan now or hereafter established (other than Code
Section 401(k) or Code Section 125 contributions deducted from such Cash
Earnings).
C. Change in Control shall mean a change in ownership of the
-----------------
Corporation pursuant to any of the following transactions:
(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to
such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in complete liquidation
or dissolution of the Corporation, or
(iii) the acquisition, directly or indirectly by an person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by or is under common
control with the Corporation) of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly
to the Corporation's stockholders.
C. Code shall mean the Internal Revenue Code of 1986, as amended.
----
D. Common Stock shall mean the Corporation's common stock.
------------
A-1.
<PAGE>
E. Corporate Affiliate shall mean any parent or subsidiary
-------------------
corporation of the Corporation (as determined in accordance with Code Section
424), whether now existing or subsequently established.
G. Corporation shall mean Viador Inc., a Delaware corporation, and
-----------
any corporate successor to all or substantially all of the assets or voting
stock of Viador Inc., which shall by appropriate action adopt the Plan.
H. Effective Time shall mean the time at which the Underwriting
--------------
Agreement is executed and the Common Stock priced for the initial public
offering of the Common Stock. Any Corporate Affiliate which becomes a
Participating Corporation after such Effective Time shall designate a subsequent
Effective Time with respect to its employee-Participants.
I. Eligible Employee shall mean any person who is employed by a
-----------------
Participating Corporation on a basis under which he or she is regularly expected
to render more than twenty (20) hours of service per week for more than five (5)
months per calendar year for earnings considered wages under Code Section
3401(a).
J. Entry Date shall mean the date an Eligible Employee first
----------
commences participation in the offering period in effect under the Plan. The
earliest Entry Date under the Plan shall be the Effective Time.
K. Fair Market Value per share of Common Stock on any relevant date
-----------------
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as such price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market. If there is no closing selling price for the Common Stock
on the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
(iii) For purposes of the initial offering period which begins
at the Effective Time, the Fair Market Value shall be deemed to be equal to
the price per share at which the Common Stock is sold in the initial public
offering pursuant to the Underwriting Agreement.
A-2.
<PAGE>
L. 1933 Act shall mean the Securities Act of 1933, as amended.
--------
M. Participant shall mean any Eligible Employee of a Participating
-----------
Corporation who is actively participating in the Plan.
N. Participating Corporation shall mean the Corporation and such
-------------------------
Corporate Affiliate or Affiliates as may be authorized from time to time by the
Board to extend the benefits of the Plan to their Eligible Employees. The
Participating Corporations in the Plan are listed in attached Schedule A.
O. Plan shall mean the Corporation's 1999 Employee Stock Purchase
----
Plan, as set forth in this document.
P. Plan Administrator shall mean the committee of two (2) or more
------------------
Board members appointed by the Board to administer the Plan.
Q. Purchase Date shall mean the last business day of each Purchase
-------------
Interval. The initial Purchase Date shall be April 28, 2000.
R. Purchase Interval shall mean each successive six (6)-month period
-----------------
within the offering period at the end of which there shall be purchased shares
of Common Stock on behalf of each Participant.
S. Semi-Annual Entry Date shall mean the first business day in May
----------------------
and November each year on which an Eligible Employee may first enter an offering
period.
T. Stock Exchange shall mean either the American Stock Exchange or
--------------
the New York Stock Exchange.
U. Underwriting Agreement shall mean the agreement between the
----------------------
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.
A-3.
<PAGE>
Exhibit 10.4
VIADOR, INC.
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into this ___ day of _____, 1999, between Viador, Inc., a Delaware corporation
(the "Company"), and _________________ ("Indemnitee").
WHEREAS, Indemnitee, a member of the Board of Directors or an officer,
employee or agent of the Company, performs a valuable service in such capacity
for the Company;
WHEREAS, the stockholders of the Company have adopted Bylaws (the
"Bylaws") providing for the indemnification of the officers, directors,
employees and agents of the Company to the maximum extent authorized by Section
145 of the Delaware General Corporation Law, as amended (the "Code");
WHEREAS, the Bylaws and the Code, by their non-exclusive nature,
permit contracts between the Company and the members of its Board of Directors,
officers, employees or agents with respect to indemnification of such directors,
officers, employees or agents;
WHEREAS, in accordance with the authorization as provided by the Code,
the Company either has purchased and presently maintains or intends to purchase
and maintain a policy or policies of Directors and Officers Liability Insurance
("D & O Insurance") covering certain liabilities which may be incurred by its
directors and officers in the performance of their duties as directors and
officers of the Company;
WHEREAS, as a result of developments affecting the terms, scope and
availability of D & O Insurance there exists general uncertainty as to the
extent of protection afforded members of the Board of Directors or officers,
employees or agents by such D & O Insurance and by statutory and bylaw
indemnification provisions; and
WHEREAS, in order to induce Indemnitee to continue to serve as a
member of the Board of Directors, officer, employee or agent of the Company, the
Company has determined and agreed to enter into this contract with Indemnitee.
NOW, THEREFORE, in consideration of Indemnitee's continued service as
a director, officer, employee or agent after the date hereof, and for other good
and valid consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
<PAGE>
1. Indemnification of Indemnitee. The Company hereby agrees to hold
-----------------------------
harmless and indemnify Indemnitee to the fullest extent authorized or permitted
by the provisions of the Code, as may be amended from time to time.
2. Additional Indemnity. Subject only to the exclusions set forth in
--------------------
Sections 3 and 6(c) hereof, the Company hereby further agrees to hold harmless
and indemnify Indemnitee:
(a) against any and all expenses (including attorneys' fees),
witness fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by Indemnitee in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of the Company) to which
Indemnitee is, was or at any time becomes a party, or is threatened to be made a
party, by reason of the fact that Indemnitee is, was or at any time becomes a
director, officer, employee or agent of the Company or any subsidiary of the
Company, or is or was serving or at any time serves at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise;
and
(b) otherwise to the fullest extent as may be provided to
Indemnitee by the Company under the non-exclusivity provisions of Article VII,
Section 6 of the Bylaws of the Company and the Code.
3. Limitations on Additional Indemnity.
-----------------------------------
(a) No indemnity pursuant to Section 2 hereof shall be paid by
the Company:
i) in respect to remuneration paid to Indemnitee if it
shall be determined by a final judgment or other final adjudication that such
remuneration was in violation of law;
ii) on account of any suit in which judgment is rendered
against Indemnitee for an accounting of profits made from the purchase or sale
by Indemnitee of securities of the Company pursuant to the provisions of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state or local statutory law;
iii) on account of Indemnitee's conduct which is finally
adjudged to have been knowingly fraudulent or deliberately dishonest or to
constitute willful misconduct;
iv) on account of Indemnitee's conduct which is the
subject of an action, suit or proceeding described in Section 6(c)(ii) hereof;
2
<PAGE>
v) on account of any action, claim or proceeding (other
than a proceeding referred to in Section 7(b) hereof) initiated by the
Indemnitee unless such action, claim or proceeding was authorized in the
specific case by action of the Board of Directors;
vi) if a final decision by a Court having jurisdiction in
the matter shall determine that such indemnification is not lawful (and, in this
respect, both the Company and Indemnitee have been advised that the Securities
and Exchange Commission believes that indemnification for liabilities arising
under the federal securities laws is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication); and
vii) except to the extent the aggregate of losses to be
indemnified thereunder exceeds the sum of (a) such losses for which the
Indemnitee is indemnified pursuant to Section 1 hereof and (b) any additional
amount paid to the Indemnitee pursuant to any D & O Insurance purchased and
maintained by the Company.
(b) No indemnity pursuant to Section 1 or 2 hereof shall be
paid by the Company if the action, suit or proceeding with respect to which a
claim for indemnity hereunder is made arose from or is based upon any of the
following:
i) Any solicitation of proxies by Indemnitee, or by a
group of which he was or became a member consisting of two or more persons that
had agreed (whether formally or informally and whether or not in writing) to act
together for the purpose of soliciting proxies, in opposition to any
solicitation of proxies approved by the Board of Directors.
ii) Any activities by Indemnitee that constitute a breach
of or default under any agreement between Indemnitee and the Company.
4. Contribution. If the indemnification provided in Sections 1 and 2
------------
is unavailable by reason of a Court decision described in Section 3(a)(vi)
hereof based on grounds other than any of those set forth in paragraphs (i)
through (v) of Section 3 (a) hereof, then in respect of any threatened, pending
or completed action, suit or proceeding in which the Company is jointly liable
with Indemnitee (or would be if joined in such action, suit or proceeding), the
Company shall contribute to the amount of expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
and paid or payable by Indemnitee in such proportion as is appropriate to
reflect (i) the relative benefits received by the Company on the one hand and
Indemnitee on the other hand from the transaction from which such action, suit
or proceeding arose, and (ii) the relative fault of the Company on the one hand
and of Indemnitee on the other in connection with the events which resulted in
such expenses, judgments, fines or settlement amounts, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and of Indemnitee on the other shall be determined by reference to, among
other things, the parties' relative intent, knowledge, access to information and
opportunity to correct
3
<PAGE>
or prevent the circumstances resulting in such expenses, judgments, fines or
settlement amounts. The Company agrees that it would not be just and equitable
if contribution pursuant to this Section 4 were determined by pro rata
allocation or any other method of allocation which does not take account of the
foregoing equitable considerations.
5. Notification and Defense of Claim. Not later than thirty (30)
---------------------------------
days after receipt by Indemnitee of notice of the commencement of any action,
suit or proceeding, Indemnitee shall, if a claim in respect thereof is to be
made against the Company under this Agreement, notify the Company of the
commencement thereof; but Indemnitee's omission so to notify the Company will
not relieve the Company from any liability which it may have to Indemnitee
otherwise than under this Agreement. With respect to any such action, suit or
proceeding as to which Indemnitee notifies the Company of the commencement
thereof:
(a) The Company will be entitled to participate therein at its
own expense.
(b) Except as otherwise provided below, to the extent that it may
wish, the Company shall, jointly with any other indemnifying party similarly
notified, be entitled to assume the defense thereof, with counsel reasonably
satisfactory to Indemnitee. After notice from the Company to Indemnitee of its
election to assume the defense thereof, the Company will not be liable to
Indemnitee under this Agreement for any legal or other expenses subsequently
incurred by Indemnitee in connection with the defense thereof, other than
reasonable costs of investigation or as otherwise provided below. Indemnitee
shall have the right to employ its own counsel in such action, suit or
proceeding, but the fees and expenses of such counsel incurred after notice from
the Company of the Company's assumption of the defense thereof shall be at the
expense of Indemnitee unless (i) the employment of counsel by Indemnitee has
been authorized by the Company; (ii) Indemnitee shall have reasonably concluded
that there may be a conflict of interest between the Company and Indemnitee in
the conduct of the defense of such action; or (iii) the Company shall not in
fact have employed counsel to assume the defense of such action; in each of
which cases the fees and expenses of Indemnitee's separate counsel shall be paid
by the Company. The Company shall not be entitled to assume the defense of any
action, suit or proceeding brought by or on behalf of the Company or as to which
Indemnitee shall have made the conclusion provided for in (ii) above.
(c) The Company shall not be liable to indemnify Indemnitee under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall be permitted to settle
any action except that it shall not settle any action or claim in any manner
which would impose any penalty or limitation on Indemnitee without Indemnitee's
written consent. Neither the Company nor Indemnitee will unreasonably withhold
its consent to any proposed settlement.
4
<PAGE>
6. Advancement and Repayment of Expenses.
-------------------------------------
(a) In the event that Indemnitee employs his or her own counsel
pursuant to Sections 5(b)(i) through (iii) above, the Company shall advance to
Indemnitee, prior to any final disposition of any threatened or pending action,
suit or proceeding, whether civil, criminal, administrative or investigative,
any and all reasonable expenses (including legal fees and expenses) incurred in
investigating or defending any such action, suit or proceeding within ten (10)
days after receiving from Indemnitee copies of invoices presented to Indemnitee
for such expenses.
(b) Indemnitee agrees that Indemnitee will reimburse the
Company for all reasonable expenses paid by the Company in investigating or
defending any civil or criminal action, suit or proceeding against Indemnitee in
the event and only to the extent it shall be ultimately determined by a final
judicial decision (from which there is no right of appeal) that Indemnitee is
not entitled, under the provisions of the Code, the Bylaws, this Agreement or
otherwise, to be indemnified by the Company for such expenses.
(c) Notwithstanding the foregoing, the Company shall not be
required to advance such expenses to Indemnitee in respect of any action arising
from or based upon any of the matters set forth in subsection (b) of Section 3
or if Indemnitee (i) commences any action, suit or proceeding as a plaintiff
unless such advance is specifically approved by a majority of the Board of
Directors or (ii) is a party to an action, suit or proceeding brought by the
Company and approved by a majority of the Board which alleges willful
misappropriation of corporate assets by Indemnitee, disclosure of confidential
information in violation of Indemnitee's fiduciary or contractual obligations to
the Company, or any other willful and deliberate breach in bad faith of
Indemnitee's duty to the Company or its shareholders.
7. Enforcement.
-----------
(a) The Company expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on the Company
hereby in order to induce Indemnitee to continue as a director, officer,
employee or other agent of the Company, and acknowledges that Indemnitee is
relying upon this Agreement in continuing in such capacity.
(b) In the event Indemnitee is required to bring any action to
enforce rights or to collect moneys due under this Agreement and is successful
in such action, the Company shall reimburse Indemnitee for all Indemnitee's
reasonable fees and expenses, including attorney's fees, in bringing and
pursuing such action.
8. Subrogation. In the event of payment under this agreement, the
-----------
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be
5
<PAGE>
necessary to secure such rights and to enable the Company effectively to bring
suit to enforce such rights.
9. Continuation of Obligations. All agreements and obligations of
---------------------------
the Company contained herein shall commence upon the date that Indemnitee first
became a member of the Board of Directors or an officer, employee or agent of
the Company, as the case may be, and shall continue during the period Indemnitee
is a director, officer, employee or agent of the Company (or is or was serving
at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise) and shall continue thereafter so long as Indemnitee shall be
subject to any possible claim or threatened, pending or completed action, suit
or proceeding, whether civil, criminal or investigative, by reason of the fact
that Indemnitee was a director, officer, employee or agent of the Company or
serving in any other capacity referred to herein.
10. Survival of Rights. The rights conferred on Indemnitee by this
------------------
Agreement shall continue after Indemnitee has ceased to be a director, officer,
employee or other agent of the Company and shall inure to the benefit of
Indemnitee's heirs, executors and administrators.
11. Non-Exclusivity of Rights. The rights conferred on Indemnitee by
-------------------------
this Agreement shall not be exclusive of any other right which Indemnitee may
have or hereafter acquire under any statute, provision of the Company's
Certificate of Incorporation or Bylaws, agreement, vote of stockholders or
directors, or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office; provided, however, that this
Agreement shall supersede and replace any prior indemnification agreements
entered into by and between the Company and Indemnitee and that any such prior
indemnification agreement shall be terminated upon the execution of this
Agreement.
12. Separability. Each of the provisions of this Agreement is a
------------
separate and distinct agreement and independent of the others, so that if any or
all of the provisions hereof shall be held to be invalid or unenforceable for
any reason, such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof or the obligation of the Company
to indemnify the Indemnitee to the full extent provided by the Bylaws or the
Code.
13. Governing Law. This Agreement shall be interpreted and enforced
-------------
in accordance with the laws of the State of Delaware.
14. Binding Effect. This Agreement shall be binding upon Indemnitee
--------------
and upon the Company, its successors and assigns, and shall inure to the benefit
of Indemnitee, his or her heirs, personal representatives and assigns and to the
benefit of the Company, its successors and assigns.
6
<PAGE>
15. Amendment and Termination. No amendment, modification,
-------------------------
termination or cancellation of this Agreement shall be effective unless it is in
writing and is signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
VIADOR, INC.
a Delaware corporation
By: ___________________________
Paul Vilandre, Secretary
INDEMNITEE
By: ________________________
Name: ________________________
Address: ________________________
________________________
________________________
7
<PAGE>
EXHIBIT 10.5
ASSIGNMENT OF LEASE
-------------------
and
---
CONSENT TO ASSIGNMENT
---------------------
THIS ASSIGNMENT OF LEASE is made this 16th day of December, 1997, by and
---- -------------
between VALLEY OF CALIFORNIA, INC., a California coporation dba, COLDWELL BANKER
------------------------------------------------------------------------
RESIDENTIAL REAL ESTATE SERVICES OF NORTHERN CALIFORNIA, a California
- ---------------------------------------------------------------------
corporation, ("Assignor or "Tenant") and INFO SPACE, INC., a California
- ----------- ------------------------------
corporation, ("Assignee"), who agree as follows:
- -----------
WHEREAS, ROSJAN LIMITED PARTNERSHIP, a California limited partnership,
-------------------------------------------------------------
as landlord ("Landlord") and Assignor, as tenant by assignment, entered into a
written Lease dated May 26, 1995 ("Lease", attached as Exhibit A hereto), in
------------
which Landlord leased to Assignor, and Assignor leased from Landlord,
approximately 7,37O square feet, on the ground floor of that certain building
------
with a street address of 167 Second Avenue, San Mateo, CA 94401 (the
--------------------------------------
expiration date of the current term of which Lease is June 30, 2000);
------------
WHEREAS, Assignor desires to assign all of its right, title and interest in
the leasehold premises to Assignee, and Assignee desires to accept the
assignment thereof, subject to Landlord consenting to this assignment,
NOW, THEREFORE, the parties agree as follows:
1. Upon condition that Landlord consents to this assignment, this
assignment shall be effective as of February 1, 1998 (the "Effective Date").
---------------
2. Assignor assigns and transfers to Assignee all of its right, title and
interest in the Lease, including any security deposit, and Assignee accepts the
assignment and assumes and agrees to perform, from the Effective Date, as a
direct obligation to Landlord, all of the provisions of the Lease to be
performed by Assignor.
3. Assignor hereby indemnities, and agrees to defend and save Assignee
harmless from and against any loss, damage, cost or expense which Assignee may
sustain or incur in connection with the Lease or the demised premises where the
cause of action or basis of the claim arose prior to the Effective Date.
4. Assignee hereby indemnifies, and agrees to defend and save Assignor
harmless from and against any loss, damage, cost or expense which Assignor may
sustain or incur in connection with the Lease or the demised premises where the
cause of action or basis of the claim arose subsequent to the Effective Date.
-1-
<PAGE>
5. Subject to Landlord's consent, to the degree such consent is required
under the Lease, Assignee may install exterior building signs in conformance
with local sign ordinances. Assignee reserves the right to remove said signs at
the end of the tease term.
6. All notices required or desired to be given hereunder shall be in
writing and shall be delivered in person or by commercial overnight delivery
service or by certified mail, postage prepaid, return receipt requested, and
addressed to the pa4rties at the respective addresses set forth below, unless by
such notice a different address shall have been designated:
To Landlord: Rosian Limited Partnership
--------------------------
c/o Kennedy-Wilson, Inc.
------------------------
181 Second Avenue, #688
-----------------------
San Mateo, CA 94401
--------------------
Attn: Marie Purisma
--------------------
To Assignor: Coldwell Banker Residential Brokerage
-------------------------------------
27271 Las Ramblas
-----------------
Mission Viejo, CA 92691
------------------------
Attn: Coporate Real Estate Dept.
---------------------------------
To Assignee: Info Space, Inc.
----------------
131 Second Avenue #218
----------------------
San Mateo, CA 94401
--------------------
Attn: Paul Vilandre
--------------------
All notices property sent as aforesaid shall be deemed given (a) if
personally served upon such service, (b) if sent by commercial overnight
delivery service, upon the next business day following such sending, or (c) if
mailed, forty-eight (48) hours following the first attempt of the postal service
to deliver same.
7. Except for that certain Estoppel Certificate between Landlord and
Assignor/Tenant, executed contemporaneously herewith, this Assignment of Lease
and Consent to Assignment, and the attached Lease referred to herein, constitute
the entire agreement between the parties pertaining to the subject matter hereof
and supersede all prior agreements and understandings of the parties in
connection herewith.
-2-
<PAGE>
8. Assignor acknowledges that, notwithstanding this assignment or any
----------------------------------------------------------------------
further assignments, Assignor continues to be bound by the Lease and liable for
- ---------------------------------------------------------------------------
the performance of each and every term and provision of the Lease to be kept,
- ------------------------------------------------------------------------
performed, and fulfilled by the Tenant thereunder.
- -------------------------------------------------
EXECUTED, the day and date above first written,
VALLEY OF CALIFORNIA, INC.
--------------------------
A California Corporation dba
----------------------------
COLDWELL BANKER RESIDENTIAL
---------------------------
REAL ESTATE SERVICES
--------------------
OF NORTHERN CALIFORNIA
----------------------
By: /s/ Richard J. Faendin
---------------------------
Richard J. Faendin
Vice President
Director of Corporate Real Estate
"Assignor"
INFO SPACE, INC.
a California Corporation
By: /s/ Paul Vilandre
---------------------------
Paul Vilandre
Corporate Financial Officer
"Assignee"
-3-
<PAGE>
CONSENT OF ASSIGNMENT OF LEASE
------------------------------
As Landlord under the Lease, Rosjan Limited Partnership hereby consents to
---------------------------------------------------------------------------
the foregoing assignment without waiver of the restrictions in the Lease
- ------------------------------------------------------------------------
concerning further assignment and without waiver of any of rights or remedies
- -----------------------------------------------------------------------------
under the Lease as to Assignor or Assignee, and this consent shall not in any
- -----------------------------------------------------------------------------
respect release, relieve, or discharge Assignor from performance of any of
- --------------------------------------------------------------------------
Assignor's responsibilities, liabilities, obligations, or covenants under Lease.
- -------------------------------------------------------------------------------
ROSJAN LIMITED PARTNERSHIP
--------------------------
A California Limited Partnership
--------------------------------
By: Kennedy-Wilson Management Group,
Its Managing Agent
By: ??????????????????
--------------------------------
Title: DIR. OF PROP. MGT.
------------------------------
"Landlord"
-4-
<PAGE>
STANDARD INDUSTRIAL LEASE - NET
1. Parties. This Lease, dated, for reference purposes only May 26, 1995, is
made by and between Rosjan Limited Partnership (herein called "Lessor") and
Norcal Realty Partners, L.P., by the General Partner, RMNorcal Realty, a
California Corporation. d/b/a/ The Prudential California Realty, or as successor
to whom Tenant assigns in compliance with (8) of Lease Addendum attached.
(herein called "Lessee").
2. Premises. Lessor hereby leases to Lessee and Lessee leases from Lessor for
the term, at the rental, and upon all of the conditions set herein, that certain
real property situated in the County of San Mateo State of California, commonly
known as 167 Second Avenue, San Mateo, CA 94401 and described as approximately
7370 square feet of ground floor space, a portion of a project ("Building") own
by Landlord.
Said real property including the land and all improvements therein, is herein
called "the Premises".
3. Term
3.1 Term. The term of this Lease shall be for 5-year (five years)
commencing on 1st July, 1995 and ending on 30th June 2000. unless sooner
terminated pursuant to any provision hereof.
3.2 Delay in Possession. Notwithstanding said commencement date, if
for any reason Lessor cannot deliver possession of the Premises to Lessee on
said date, Lessor shall not be subject to any liability therefor, nor shall such
failure affect the validity of this Lease or the obligations of Lessee hereunder
or extend the term hereof but in such case Lessee shall not be obligated to pay
rent until possession of the Premises is tendered to Lessee; provided, however,
that if Lessor shall not have delivered possession of the Premises within sixty
(60) days from said commencement date, Lessee may, at Lessee's option, by notice
in writing to Lessor within ten (10) days thereafter, cancel this Lease, in
which event the parties shall be discharged from all obligations hereunder;
provided, further, however, that if such written notice of Lessee is not
received by Lessor within said ten (10) day period, Lessee's right to cancel
this Lease hereunder shall terminate and be of no further force or effect.
4. Rent. Lessee shall pay to Lessor as rent for the Premises, monthly payments
of $12,529.00, in advance, on the 1st of each month of the term hereof. Lessee
shall pay Lessor upon the execution hereof $12,529.00 $_______) rent for first
month. Rent Adjustment for Year 2 to 5 see (6) of Lease Addendum attached.
Rent for any period during the term hereof which is for less than one month
shall be a pro rata portion of the monthly installment. Rent shall be payable in
lawful money of the United States to Lessor at the address stated herein or to
such other person or at such other places as Lessor may designate in writing.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof
$ (9) of Lease Addendum attached as security for Lessee's faithful performance
of Lessee's obligations hereunder. If Lessee fails to pay rent or other charges
due hereunder, or otherwise defaults with respect to any provision of this
Lease, Lessor may use, apply or retain all or any portion of said deposit for
the payment of any rent or other charge in default for any payment of any other
sum to which Lessor may become obligated by reason of Lessee's default, or to
compensate Lessor for any loss or damages which Lessor may suffer thereby. If
Lessor so uses or applies all or any portion of said deposit, Lessee shall
within ten (10) days after written demand therefor deposit cash with Lessor in
an amount sufficient to restore said deposit to the full amount hereinabove
stated and Lessee's failure to do so shall be a material breach of this Lease.
Lessor shall not be required to keep said deposit separate from its general
account. If Lessee performs all of Lessee's obligations hereunder, said deposit,
or so much thereof as has not theretofore been applied by Lessor, shall be
returned, without payment of interest or other increment for its use, to Lessee
(or, at Lessor's option, to the last assignee, if any of Lessee's interest
hereunder) at the expiration of the term hereof, and after Lessee has vacated
the Premises. No trust relationship is created hereunder between Lessor and
Lessee with respect to said Security Deposit.
6. Use.
6.1 Use. The Premises shall be used and occupied only for (8) of Lease
Addendum attached, or any other use which is reasonably comparable and for no
other purpose.
6.2 Compliance with Law.
(a) Lessor warrants to Lessee that the Premises, in its existing
state, but without regard to the use for which Lessee will use the Premises
does not violate any applicable building code regulation or ordinance at the
time that this Lease is executed. In the event that it is determined that this
warranty has been violated, then it shall be the obligation of the Lessor, after
written notice from Lessee to promptly, at Lessor's sole cost and expense, to
rectify any such violation. In the event that Lessee does not give to Lessor
written notice of the violation of this warranty within one (1) year from the
commencement of the term of this Lease, it shall be conclusively deemed that
such violation did not exist and the correction of the same shall be the
obligation of the Lessee.
(b) Except as provided in Paragraph 6.2(a), Lessee shall, at
Lessee's expense, comply promptly with all applicable statutes, ordinances,
rules, regulations, orders, covenants and restrictions of record, and
requirements in effect during the term or any part of the term hereof,
regulating the use by Lessee of the Premises. Lessee shall not use nor permit
the use of the Premises in any manner that will tend to create waste or a
nuisance or, if there shall be more than one tenant in the building containing
the Premises, shall tend to disturb other tenants.
6.3 Condition of Premises
(a) Lessor shall deliver the Premises to Lessee clean and free of
debris on Lease commencement date (unless Lessee is already in possession) and
Lessor further warrants to Lessee that the plumbing, lighting, air conditioning,
heating, and loading doors in the Premises shall be in good operating condition
on the Lease commencement date. In the event that it is determined that this
warranty has been violated, then it shall be the obligation of Lessor, after
receipt of written notice from Lessee setting forth with specifically the nature
of the violation, to promptly at Lessor's sole cost, rectify such violation.
Lessee's failure to give such notice to Lessor within thirty (30) days after the
Lease commencement shall cause the conclusive presumption that Lessor has
complied with all of Lessor's obligations hereunder. The warranty contained in
this Paragraph 6.3(a) shall be of no force or effect if prior to the date of
this Lease, Lessee was the owner or occupant of the Premises.
7. Maintenance, Repairs and Alterations
7.1 Lessee's Obligations. Lessee shall keep in good order, condition
and repair the Premises and every part thereof, structural and nonstructural,
(whether or not such portion of the Premises requiring repair, or the means of
repairing the same are reasonably or readily accessible to Lessee, and whether
or not the need for such repairs occurs as a result of Lessee's use, any prior
use, the elements or the age of such portion of the Premises) including, without
limiting the generality of the foregoing, all plumbing, heating, air
conditioning, ventilating, electrical lighting, facilities and equipment within
the Premises, fixtures, wall (interior and exterior) foundations, ceilings,
roofs, (interior and exterior) floors, windows, doors, plate glass and skylights
located within the Premises, and all landscaping, driveways, parking lots,
fences and signs located on the Premises and sidewalks and parkways adjacent to
the Premises.
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7.2 Surrender. On the last day of the term hereof, or on any soon
termination, Lessee shall surrender the Premises to Lessor in the same condition
as when received, ordinary wear and tear excepted, clean and free of debris.
Lessee shall repair any damage to the Premises occasioned by the installation or
removal of Lessee's trade fixtures, furnishings and equipment pursuant to
Paragraph 7.5(d) which repair shall include the patching and filling of holes
and repair of structural damage.
7.3 Lessor's Rights. If Lessee fails to perform Lessee's obligations
under this Paragraph 7, Lessor may at its option (but shall not be required to)
enter upon the Premises after ten (10) days prior written notice to Lessee and
put the same in good order, condition and repair and the cost thereof together
with interest thereon at the rate of ten percent (10%) per annum shall become
due and payable as additional rental to Lessor together with Lessee's next
rental installment.
7.4 Lessor's Obligations. Except for the obligations of Lessor under
Paragraph 6.2(a) (relating to Lessor's warranty), Paragraph 9 (relating to
destruction of the Premises) and Under Paragraph 14 (relating to condemnation of
the Premises) it is intended by the parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair and maintain the Premises nor
the building located thereon nor the equipment therein, whether structural or
nonstructural, all of which obligations are intended to be that of the Lessee
under Paragraph 7.1 hereof. Lessee expressly waives the benefit of any statute
now or hereinafter in effect which would otherwise afford Lessee the right to
make repairs at Lessor's expense or to terminate this Lease because of Lessor's
failure to keep the Premises in good order, condition and repair.
7.5 Alterations and Additions
(a) Lessee shall not, without Lessor's prior written consent make any
alterations, improvements, additions, or Utility Installations in, on or about
the Premises, except for nonstructural alterations not exceeding $1,000 in cost.
As used in this Paragraph 7.5 the term "Utility Installation" shall mean bus
ducting, power panels, wiring, fluorescent fixtures, space heaters, conduits,
air conditioning equipment and plumbing. Lessor may require Lessee to provide
Lessor, at Lessee's sole cost and expense, a lien and completion bond in an
amount equal to one and one-half times the estimated cost of such improvements,
to insure Lessor against any liability for mechanic's and materialmen's liens
and to insure completion of the work. Should Lessee make any alterations,
improvements, additions or Utility Installations without the prior approval of
Lessor, Lessee may require that Lessee remove any or all of the same.
(b) Any alterations, improvements, additions or Utility Installations
in, or about the Premises, that Lessee shall desire to make and which requires
the consent of the Lessor shall be presented to Lessor in written form, with
proposed detailed plans. If Lessor shall give its consent, the consent shall be
deemed conditioned upon Lessee acquiring a permit to do so from appropriate
governmental agencies, the furnishing of a copy thereof to the commencement of
the work and the compliance by Lessee of all conditions of said permit in a
prompt and expeditious manner.
(c) Lessee shall pay, when due, all claims for labor materials
furnished or alleged to have been furnished to or for Lessee at or for use in
the Premises, which claims are or may be secured by any mechanics' or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work in the Premises, and Lessor shall have the right to post notices of non-
responsibility in or on the Premises as provided by law. If Lessee shall, in
good faith, contest the validity of any such lien, claim or demand, then Lessee
shall, at its sole expense defend itself and Lessor against the same and shall
pay and satisfy any such adverse judgment that may be rendered thereon before
the enforcement thereof against the Lessor or the Premises, upon the condition
that if Lessor shall require, Lessee shall furnish a surety bond satisfactory to
Lessor in an amount equal to such contested lien claim or demand indemnifying
Lessor against liability for the same and holding the Premises free from the
effect of such lien or claim. In addition, Lessor may require Lessee to pay
Lessor's attorneys fees and costs in participating in such action if Lessor
shall decide it is to its best interest to do so.
(d) All alterations, improvements, additions and Utility
Installations (whether or not such Utility Installations constitute trade
fixtures of Lessee), which may be made on the Premises, shall become the
property of Lessor and remain upon and be surrendered with the Premises at the
expiration of the term. Notwithstanding the provisions of this Paragraph
7.5(d). Lessee's machinery and equipment, other than that which is affixed to
the Premises so that it cannot be removed without material damage to the
Premises, shall remain the property of Lessee and may be removed by Lessee
subject to the provisions of Paragraph 7.2.
8. Insurance Indemnity
8.1 Insuring Party. As used in Paragraph 8, the term "insuring party"
shall mean the party who has the obligation to obtain the Property Insurance
required hereunder. The insuring party shall be designated in Paragraph 16.26
hereof. Whether the insuring party is the Lessor or the Lessee, Lessee shall as
additional rent for the Premises pay the cost of all insurance required
hereunder. If Lessor is the insuring party, Lessee shall within ten (10) days
following demand by Lessor reimburse Lessor for the cost of the insurance so
obtained.
8.2 Liability Insurance. Lessee shall, at Lessee's expense obtain and
keep in force during the term of this Lease a policy of Combined Single Limit,
Bodily Injury and Property Damage insurance insuring Lessor and Lessee against
any liability arising out of the ownership, use, occupancy, or maintenance of
the Premises and all areas appurtenant thereto. Such insurance shall be combined
single limit policy in an amount not less than $1M million per occurrence. The
policy shall contain cross liability endorsements and shall insure performance
by Lessee of the indemnity provisions of this Paragraph 8. The limits of said
insurance shall not, however, limit the liability of Lessee hereunder. In the
event that the Premises constitute a part of a larger property said insurance
shall have a Lessor's Protective Liability endorsement attached thereto. If
Lessee shall fail to procure and maintain said insurance Lessor may but shall
not be required to procure and maintain the same, but at the expense of Lessee.
Not more frequently than each three (3) years if in the reasonable opinion of
Lessor the amount of liability insurance required hereunder is not adequate.
Lessee shall increase said insurance coverage as required by Lessor. Provided,
however, that in no event shall the amount of the liability insurance increase
be more than fifty percent (50%) greater than the amount thereof during the
preceding five (5) years of the term of this Lease. However, the failure of
Lessor to require any additional insurance coverage shall not be deemed to
????? Lessee from any obligations under this Lease. Said policy shall name
Landlord as an additional insured.
8.3 Property Insurance
(a) The insuring party shall obtain and keep in force during the term
of this Lease a policy or policies of insurance covering loss or damage to the
Premises, in the amount of the full replacement value thereof, as the same may
exist from time to time, but in no event less than the total amount of
promissory notes secured by liens on the Premises against all perils included
within the classification of fire, extended coverage, vandalism, malicious
mischief, special extended perils ("all risk") and sprinkler leakage. said
insurance shall provide for payment of loss thereunder to Lessor or to the
holders of mortgages or deeds of trust on the Premises. The insuring party
shall, in addition, obtain and keep in force during the term of this Lease a
policy of rental income insurance covering a period of six (6) months, with loss
payable to Lessor, which insurance shall also cover all real estate taxes and
insurance costs for said period. If the insuring party shall fail to procure
and maintain said insurance the other party may, but shall not be required to,
procure and maintain the same, but at the expense of Lessee. If such insurance
coverage has a deductible clause, Lessee shall be liable for the deductible
amount.
(b) If the Premises are part of a larger building, or if the Premises are
part of a group of building owned by Lessor which are adjacent to the Premises,
then Lessee shall pay for any increase any property insurance of such other
building or buildings if said increase is caused by Lessee's acts, omissions,
use or occupancy of the Premises.
(c) If the Lessor is the insuring party the Lessor will not insure
Lessee's fixtures, equipment or tenant improvements unless the tenant
improvements have become a part of the Premises under Paragraph 7, hereof. But
if Lessee is the insuring party the Lessee shall insure its fixtures, equipment
and tenant improvements.
(d) Not more frequently than each three (3) years, if in the opinion of
Lessor, the amount of property insurance required hereunder is not adequate, the
insuring party shall increase said insurance coverage as required by Lessor.
However, such increase may be more frequent than each three (3) years if
required by the insurance carrier in order to maintain insurance for the full
replacement value of the Premises.
8.4 Insurance Policies. Insurance required hereunder shall be in
companies holding a "General Policyholders Rating" of a B plus, or better as set
forth in the most current issue of "Best's Insurance Guide". The insuring party
shall deliver to the other party copies of policies of such insurance or
certificates evidencing the existence and amounts of such policies, furnish
Lessor with renewals or "binders" thereof, or Lessor may order such insurance
and charge the cost thereof to Lessee, which amount shall be payable by Lessee
upon demand. Lessee shall not do or permit to be done anything which shall
invalidate the insurance policies referred to in Paragraph 8.3. If Lessee does
or permits to be done anything which shall increase the cost of the insurance
policies referred to in Paragraph 8.3, then Lessee shall forthwith upon Lessor's
demand reimburse Lessor for any additional premiums attributable to any act or
omission or operation of Lessee causing such increase in the cost of insurance.
If Lessor is the insuring party and if the insurance policies maintained
hereunder cover other improvements in addition to the Premises. Lessor shall
deliver to Lessee a written statement setting forth the amount of any such
insurance cost increase and showing in reasonable detail the manner in which it
has been computed.
8.5 Waiver of Subrogation. Lessee and Lessor each hereby release and
relieve the other, or against the officers, employees, agents and
representatives of the other for loss of or damage to such waiving party or its
property or the property of others under its control to the extent that such
loss or damage is insured against under any insurance policy in force at the
time of such loss or damages. The insuring party shall, upon obtaining the
policies of insurance required hereunder, give notice to the insurance carrier
or carriers that the foregoing mutual waiver of subrogation is contained in this
Lease.
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8.6 Indemnity. Lessee shall defend and hold harmless Lessor from and
against any and all claims arising from Lessee's use of the Premises or from the
conduct of Lessee's business or from any activity, work or things done,
permitted or suffered by Lessee or about the Premises or elsewhere and shall
further indemnify and hold harmless Lessor from and against any and all claims
arising from any breach or default in the performance of any obligation on
Lessee's part to be performed under the terms of this Lease, or arising from any
negligence by the Lessee, or any of Lessee's agents, contractors, or employees,
and from and against all costs, attorneys fees, expenses and liabilities
incurred in the defense of any such claim or any action or proceeding brought
thereon; and in case any action or proceeding be brought thereon and in case any
action or proceeding be brought against Lessor by reason of any such claim,
Lessee upon notice from Lessor shall defend the Lessor at Lessee's expense by
counsel satisfactory to Lessor. Lessee, as a material part of the consideration
to Lessor, hereby assumes all risk and damage to property or injury to persons,
in, upon or about the Premises arising from any cause and Lessee hereby waives
all claims in respect thereof against Lessor.
8.7 Exemption of Lessor from Liability. Lessee hereby agrees that Lessor
shall not be liable for injury to Lessee's business or any loss of income
therefrom or for damage to the goods, wares, merchandise or other property of
Lessee. Lessee's employees, invitees, customers or any other person in or about
the Premises, nor shall Lessor be liable for injury to the person of Lessee,
Lessee's employees, agents, contractors, whether such damage or injury is caused
by or results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause, whether the sold damage or injury results from conditions arising upon
the Premises or upon other portions of the building of which the Premises are
a part, or from other sources or places and regardless of whether the cause of
such damage or injury or the means of repairing the same are inaccessible to
Lessee. Lessor shall not be liable for any damages arising from any act or
neglect of any other tenant, if any, of the building in which the Premises are
located.
9. Damage, Destruction, Obligation to Rebuild, Rent Abatement.
9.1. Partial Damage - Insured. Subject to the provisions of Paragraphs
9.3. and 9.4, if the Premises are damaged and such damage was caused by a
casualty covered under an insurance policy required to be maintained pursuant to
Paragraph 8.3, Lessor shall at Lessor's expense repair such damage but not
Lessee's fixtures, equipment or tenant improvements unless the same have become
a part of the Premises pursuant to Paragraph 7.5 hereof as soon as possible and
this Lease shall continue in full force and effect. Notwithstanding the above,
if the Lessee is the insuring party, and if the insurance proceeds received by
Lessor are not sufficient to effect such repair, Lessor shall give notice to
Lessee of the amount required in addition to the insurance proceeds to effect
such repair. Lessee shall contribute the required amount to Lessor within ten
(10) days after Lessee has received notice from Lessor of the shortage in the
insurance. When Lessee shall contribute such amount to Lessor, Lessor shall make
such repairs as soon as reasonably possible and this Lease shall continue in
full force and effect. Lessee shall in no event have any right to reimbursement
for any such amount so contributed.
9.2 Partial Damage - Uninsured. Subject to the provisions of Paragraphs
9.3 and 9.4, if at any time during the term hereof the Premises are damaged,
except by a negligent or willful act of Lessee, (in which event Lessee shall
make the repairs at its expense) and such damage was caused by a casualty not
covered under an insurance policy required to be maintained pursuant to
Paragraph 8.3, Lessor may at Lessor's option either (i) repair such damage as
soon as reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect or (ii) give written notice to Lessee within
thirty (30) days after the date of the occurrence of such damage of Lessor's
intention to cancel and terminate this Lease. Lessee shall have the right within
ten (10) days after the receipt of such notice to give written notice to Lessor
of Lessee's intention to repair such damage at Lessee's expense, without
reimbursement from Lessor, in which event this Lease shall continue in full
force and effect and Lessee shall proceed to make such repairs as soon as
reasonably possible. If Lessee does not give such notice within such ten (10)
day period, this Lease shall be cancelled and terminated as of the date of the
occurrence of such damage.
9.3 Total Destruction. If at any time during the term hereof the Premises
are totally destroyed from any cause whether or not covered by the insurance
required to be maintained pursuant to Paragraph 8.3 (including any total
destruction required by any authorized public authority) this Lease shall
automatically terminate as of the date of such total destruction/such damage.
9.4 Damage Near End of Term. If the Premises are partially destroyed or
damaged during the last six months of the term of this Lease, Lessor may at
Lessor's option cancel and terminate this Lease as of the date of occurrence of
such damage by giving written notice to Lessee of Lessor's election to do so
within thirty (30) days after the date of occurrence of such damage.
9.5 Abatement of Rent; Lessee's Remedies.
(a) If the Premises are partially destroyed or damaged and Lessor or
Lessee repairs or restores them pursuant to the provisions of this Paragraph 9,
the rent payable hereunder for the period during which such damage, repair or
restoration continues shall be abated in proportion to the degree to which
Lessee's use of the Premises is impaired; provided, however, that the aggregate
amount of abatement hereunder shall not exceed the total of rent payable under
Paragraph 4 for a period of six months. Except for abatement of rent, if any,
Lessee shall have no claim against Lessor for any damage suffered by reason of
any such damage, destruction, repair or restoration.
(b) If Lessor shall be obligated to repair or restore the Premises under
the provisions of this Paragraph 9, and shall not commence such repair or
restoration within ninety (90) days after such obligation shall accrue. Lessee
may at Lessee's option cancel and terminate this Lease by giving Lessor written
notice of Lessee's election to do so at any time prior to the commencement of
such repair or restoration. In such event this Lease shall terminate as of the
date of such notice.
9.6 Termination - Advance Payments. Upon termination of this Lease
pursuant to this Paragraph 9, an equitable adjustment shall be made concerning
advance rent and any advance payments made by Lessee to Lessor. Lessor shall,
in addition, return to Lessee so much of Lessee's security deposit as has not
theretofore been applied by Lessor.
10. Real Property Taxes.
10.1 Payment of Taxes. Lessee shall pay the real property taxes
applicable to the Premises during the term of this Lease. All such payments
shall be made at least ten (10) days prior to the delinquency date of such
payment. Lessee shall promptly furnish Lessor with satisfactory evidence that
such taxes have been paid. If any such taxes paid by Lessee shall cover any
period of time prior to or after the expiration of the term hereof, Lessee's
share of such taxes shall be equitably prorated to cover only the period of time
within the tax fiscal year during which this Lease shall be in effect, and
Lessor shall reimburse Lessee to the extend required. If Lessee shall fail to
pay any such taxes, Lessor shall have the right to pay the same, in which case
Lessee shall repay such amount to Lessor with Lessee's next rent installment
together with interest at rate of ten percent (10%) per annum.
10.2 Definition of "Real Property Tax". As used herein, the term "real
property tax" shall include any form of assessment, license fee, commercial
rental tax, levy, penalty or tax (other than inheritance or estate taxes)
imposed by any authority having the direct or indirect power to tax, including
any city, county, state or federal government, or any school, agricultural,
lighting, drainage or other improvement district thereof, as against any legal
or equitable interest of Lessor in the Premises or in the real property of which
the Premises are a part as against Lessor's right to rent or other income
therefrom, or as against Lessor's business of leasing the Premises or any tax
imposed in substitution partially or totally of any tax previously included
within the definition of real property tax, or any additional tax the nature of
which was previously included within the definition of real property tax.
10.3 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the real property taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be determined by Lessor from the respective valuations
assigned in the assessor's work sheets or such other information as may be
reasonably available. Lessor's reasonable determination thereof, in good faith,
shall be conclusive.
10.4 Personal Property Taxes
(a) Lessee shall pay prior to delinquency all taxes assessed against
and levied upon trade fixtures, furnishings, equipment and all other personal
property of Lessee contained in the Premises or elsewhere. When possible,
Lessee shall cause said trade fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the real property of
Lessor.
(b) If any of Lessee's said personal property shall be assessed with
Lessor's real property, Lessee shall pay Lessor the taxes attributable to Lessee
within 10 days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.
11. Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities and services supplied to the Premises, together
with any taxes thereon. If any such services are not separately metered to
Lessee, Lessee shall pay a reasonable proportion to be determined by Lessor of
all changes jointly metered with other premises.
12. Assignment and Subletting.
12.1 Lessor's Consent Required. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Lessee's interest in this Lease or in the Premises
without Lessor's prior written consent, which Lessor shall not unreasonably
withhold. Any attempted assignment, transfer, mortgage, encumbrance or
subletting without such consent shall be void, and shall constitute a breach of
this Lease.
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thereof, without Lessor's consent, to any corporation which controls, is
controlled by or is under common control with Lessee, or to any corporation
resulting from the merger or consolidation with Lessee, or to any person or
entity which acquires all the assets of Lessee as a going concern of the
business that is being conducted on the Premises, provided that said assignee
assumes, in full, the obligations of Lessee under this Lease. Any such
assignment shall not, in any way, affect or limit the liability of Lessee
under the terms of this Lease even if after such assignment, or subletting the
terms of this Lease are materially changed or altered without the consent of
Lessee, the consent of whom shall not be necessary.
12.3 No Release of Lessee. Regardless of Lessor's consent, no subletting
or assignment shall release Lessee of Lessee's obligation or as the primary
liability of Lessee to pay the rent and to perform all other obligations to be
performed by Lessee hereunder. The acceptance of a sublet or assignment by
Lessor from any other person shall not be deemed to be a waiver by Lessor of
any provision hereof. Consent in one assignment or subletting shall not be
deemed consent to any subsequent assignment or subletting. In the event of
default by any assignee of Lessee or any successors of Lessor in the
performance of any of the terms hereof. Lessor may proceed directly against
Lessee without the necessity of exhausting remedies against said assignee.
Lessor may consent to subsequent assignments or subletting of this Lease or
amendments or modifications to this Lease with assignees of Lessee, without
notifying Lessee, or any successor of Lessee, and without obtaining its or
their consent thereto and such action shall not relieve Lessee of liability
under this Lease.
12.4 Attorney's Fees. In the event Lessee shall assign or sublet the
Premises or request the consent of Lessor to any assignment subletting or if
Lessee shall request the consent of Lessor for any act that Lessee proposes to
do then Lessee shall pay Lessor's reasonable attorney's fees incurred in
connection therewith, such attorney's fees not to exceed $250.00 for each such
request.
13. Defaults; Remedies.
13.1 Defaults. The occurrence of any one or more of the following
events shall constitute a material default and breach of this Lease by Lessee.
(a) The vacating or abandonment of the Premises by Lessee, but only
if Lessee is in monetary or other substantial default in its obligations in
accordance with this Lease. Lessee abandoning or vacating the Premises while
otherwise maintaining its obligations under this Lease shall not constitute
default.
(b) The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder as and when due where such
failure shall continue for a period of three (3) days after written notice
thereof from Lessor to Lessee.
(c) The failure by Lessee to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or performed by
Lessee other than described in Paragraph (b) above, where such failure shall
continue for a period of thirty (30) days after written notice hereunder from
Lessor to Lessee; provided, however, that if the nature of Lessee's default is
such that more than thirty (30) days are reasonably required for its cure, then
Lessee shall not be deemed to be in default if Lessee commenced such cure within
thirty (30) day period and thereafter diligently pursues such current
completion.
(d) (i) The making by Lessee of any general assignment, or general
arrangement for the benefit of creditors, (ii) the filing by or against Lessee
of a petition to have Lessee adjudged a bankrupt or a petition for
reorganization or arrangement under any law relating to bankruptcy (unless in
the case of a petition filed against Lessee, the same is dismissed within sixty
(60) days, (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where possession is not restored to Lessee within thirty
(30) days, or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease where such seizure is not discharged within thirty (30)
days.
(e) The discovery by Lessor that any financial statement given to
Lessor by Lessee, any assignee of Lessee, any subtenant of Lessee, any successor
in interest of Lessee or any guarantor of Lessee's obligations hereunder and any
of them, was materially false.
13.2 Remedies. In the event of any such material default or breach by
Lessee, Lessor may at any time thereafter with or without notice, demand and
without limiting Lessor in the exercise of any right or remedy which Lessor may
have by reason of such default or breach.
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession of the Premises to Lessor. In such event
Lessor shall be entitled to recover from Lessee all damages incurred by Lessor
by reason of Lessee's default including, but not limited to, the cost of
recovering possession of the Premises, expenses for reletting, including
necessary renovation and alteration of the Premises, reasonable attorneys fees,
and any real estate commission actually incurred, the worth at the time of
award by the court having jurisdiction thereof of the amount by which the
unpaid rent for the balance of the term after the time of such award exceeds
the amount of such rental loss for the same period that Lessee proves could be
reasonably avoided, that portion of the leasing commission paid by Lessor
pursuant to Paragraph 15 applicable to the unexpired term of this Lease.
(b) Maintain Lessee's right to possession in which case this Lease
shall continue in effect whether or not Lessee shall have abandoned the
Premises. In such event Lessor shall be entitled to enforce all of Lessor's
rights and remedies under this Lease, including the right to recover the rent as
it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the State in which the Premises are
located.
13.3 Default by Lessor. Lessor shall not be in default unless Lessor
fails to perform obligations required of Lessor within a reasonable time, but in
no event later than thirty (30) days after written notice by Lessee to Lessor
and to the holder of any first mortgage or deed of trust covering the Premises
whose name and address shall have theretofore been furnished to Lessee in
writing, specifying wherein Lessor has failed to perform such obligations,
provided, however, that if the nature of Lessor's obligation is such that more
than thirty (30) days are required to performance then Lessor shall not be
in default if Lessor commences performance within such thirty (30) day period
and thereafter diligently prosecutes the same to completion.
13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee
to Lessor of rent and other sums due hereunder will cause Lessor to incur cost
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 Premises. Accordingly, if any
installment of rent 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.
Lessee shall pay to Lessor a late charge equal to 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.
14. Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain, or sold under the threat of the exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession whichever first occurs. If more than ten percent (10%) of the floor
area of the improvements on the Premises or more than twenty-five percent (25%)
of the land area of the Premises which is not occupied by any improvements is
taken by condemnation, Lessee may, at Lessee's option, to be exercised in
writing only within ten (10) days after Lessor shall have Lessee written
notice of such taking (or in the absence of such notice, within ten (10) days
after the condemning authority shall have taken possession) terminate this Lease
as of the date the condemning authority takes such possession. If Lessor does
not terminate this Lease in accordance with the foregoing this Lease shall
remain in full force and effect as to the portion of the remaining except
that the rent shall be reduced in the proportion that the floor area taken bears
to the total floor area of the building situated on the Premises. Any award for
the taking of all or any part of the Premises under the power of eminent domain
or any payment made under threat of the exercise of such power shall be the
property of Lessor, whether such award shall be made as compensation for
diminution in value of the leasehold or for the taking of the fee or as
severance damages, provided, however, that Lessee shall be entitled to any award
for loss of or damage to Lessee's trade fixtures and removable personal
property. In the event that this Lease is not terminated by reason of such
condemnation Lessor shall to the extent of severance damages received by Lessor
in connection with such condemnation, repair any damage to the Premises caused
by such condemnation except to the extend that Lessee has been reimbursed
therefor by the condemning authority. Lessee shall pay any amount in excess of
such severance damages required to complete such repair.
15. Broker's Fee. Upon execution of this Lease by both parties, Lessor shall
pay to see (10) of Lease Addendum attached.
4
<PAGE>
16. General Provisions
16.1 Estoppel Certificate
(a) Lessee shall at any time upon not less than ten (10) days prior
written notice from Lessor execute, acknowledge and deliver to Lessor a
statement in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and the
date to which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to Lessee's knowledge, any uncured defaults on
the part of Lessor hereunder, or specifying such defaults if any are claimed.
Any such statement may be conclusively relied upon by any prospective purchaser
or encumbrancer of the Premises.
(b) Lessee's failure to deliver such statement within such time
shall be conclusive upon Lessee (i) that this Lease is in full force and effect
without modification except as may be represented by Lessor (ii) that there is
no uncured defaults in Lessor's performance and (iii) that not more than one
month's rent has been paid in advance or such failure may be considered by
Lessor as a default by Lessee under this Lease.
(c) If Lessor desires to finance or refinance the Premises, or any
part thereof, Lessee hereby agrees to deliver any lender designated by Lessor
such financial statements of Lessee as may be reasonably required by such
lender. Such statements shall include the past three (3) years' financial
statements of Lessee. All such financial statements shall be received in
confidence and shall be used only for the purposes herein set forth.
16.2 Lessor's Liability. The term "Lessor" as used herein shall mean only
the owner or owner's at the time in question of the fee title or a lessee's
interest in a ground lease of the Premises and except as expressly provided in
Paragraph 15. In the event of any transfer of such title or interest, Lessor
herein named (and in case of any subsequent transfers the then grantor) shall be
relieved from and after the date of such transfer of all liability as respects
Lessor's obligations thereafter to be performed provided that any funds in the
hands of Lessor or the then grantor at the time of such transfer in which Lessee
has an interest, shall be delivered to the grantee. The obligations contained in
this Lease to be performed by Lessor shall subject as aforesaid be binding on
Lessor's successor and assigns only during their respective periods of
ownership.
16.3 Severability. The invalidity of an provision of this Lease as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
16.4 Interest on Past Due Obligations. Except as expressly herein
provided, any amount due Lessor not paid when due shall bear interest at ten
percent (10%) per annum from the date due. Payment of such interest shall not
excuse or cure any default by Lessee under this Lease, provided, however, that
interest shall not be payable on late charges incurred by Lessee nor on any
amounts upon which late charges are paid by Lessee.
16.5 Time of Essence. Time is of the essence.
16.6 Captions. Article and paragraph captions are not a part hereof.
16.7 Incorporation of Prior Agreements; Amendments. This Lease contains
all agreements of the parties with respect to any matter mentioned herein. No
prior agreement or understanding pertaining to any such matter shall be
effective. This Lease may be modified in writing only, signed by the parties in
interest at the time of the modification. Except as otherwise stated in this
Lease, Lessee hereby acknowledges that neither the real estate broker listed in
Paragraph 15 hereof nor any cooperating broker on this transaction nor the
Lessor or any employees or agents of any of said persons has made any oral or
written warranties or representations to Lessee relative to the condition or use
by Lessee of said Premises and Lessee acknowledges that Lessee assumes all
responsibility regarding the Occupational Safety Health Act or the legal use of
adaptability of the Premises and the compliance thereof to all applicable laws
and regulations enforced during the term of this Lease except as otherwise
specifically stated in this Lease.
16.8 Notices. Any notice required or permitted to be given hereunder shall
be in writing and may be given by certified mail, and shall be deemed
sufficiently given if addressed to Lessee or to Lessor at the address noted
below the signature of the respective parties as the case may be. Either party
may by notice to the other specify a different address for notice purposes. 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 notice to Lessee.
16.9 Waivers. No waiver by Lessor of any provision hereof shall be deemed
a waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. Lessor's consent to or approval of any act
shall not be deemed to render unnecessary the obtaining of Lessor's consent to
or approval of any subsequent act by Lessee. The acceptance of rent hereunder by
Lessor shall not be a waiver of any preceding breach by lessee of any provision
hereof, other than the failure of Lessee to pay the particular rent so accepted,
regardless of Lessor's knowledge of such preceding breach at the time of
Lessor's knowledge of such preceding breach at the time of acceptance of such
rent.
16.10 Recording. Lessee shall not record this Lease without Lessor's prior
written consent and such recordation shall, at the option of Lessor constitute a
non-curable default of Lessee hereunder. Either party shall, upon request of the
other, execute, acknowledge and deliver to the other a "short form" memorandum
of this Lease for recording purposes.
16.11 Holding Over. If Lessee remains in possession of the Premises or any
part thereof after the expiration of the term hereof without the express written
consent of Lessor, such occupancy shall be a tenancy from month to month at a
rental in the amount of the last monthly rental plus 50% of monthly rent.
16.12 Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
16.13 Covenants and Conditions. Each provision of this Lease performable
by Lessee shall be deemed both a covenant and a condition.
16.14 Binding Effect; Choice of Law. Subject to any provisions hereof
restricting assignment or subletting by Lessee and subject to the provisions of
Paragraph 16.2 this Lease shall bind the parties, their personal
representatives, successors and assigns. This Lease shall be governed by the
laws of the State in which the Premises are located.
16.15 Subordination.
(a) This Lease, at Lessor's option, shall be subordinate to any
ground lease, mortgage, deed of trust, or any other hypothecation for security
now or hereafter placed upon the real property of which the Premises are a part
and to any and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements and extensions thereof.
Notwithstanding such subordination, Lessee's right to quiet possession to the
Premises shall not be disturbed if Lessee is not in default and so long as the
Lessee shall pay the rent and observe and perform all of the provisions of this
Lease unless this Lease is otherwise terminated pursuant to its terms. If any
mortgagee, trustee or ground lessor shall elect to have this Lease prior to the
lien of its mortgage, deed of trust or ground lease, and shall give written
notice thereof to Lessee, this Lease shall be deemed prior to such mortgage,
deed of trust or ground lease, whether this Lease is dated prior or subsequent
to the date of said mortgage, deed of trust or ground lease or the date of
recording thereof.
(b) Lessee agrees to execute any documents required to effectuate
such subordination or to make this Lease prior to the lien of any mortgage, deed
of trust or ground lease, as the case may be, and failing to do so within ten
(10) days after written demand, does hereby make constitute and irrevocably
appoint Lessor as Lessee's attorney in fact and in Lessee's name, place and
stead, to do so.
16.16 Attorney's Fees. If either party or the broker named herein brings an
action to enforce the terms hereof or declare rights hereunder, the prevailing
party in any such action, on trial or appeal, shall be entitled to his
reasonable attorney's fees to be paid by the losing party as fixed by the court.
The provisions of this paragraph shall inure to the benefit of the broker named
herein who seeks to enforce a right hereunder.
16.17 Lessor's Access. Lessor and Lessor's agents shall have the right to
enter the Premises at reasonable times for the purpose of inspecting the same,
showing the same to prospective purchasers, or lenders, or lessees, and making
such alterations, repairs, improvements or additions to the Premises or to the
building of which they are a part as Lessor may deem necessary or desirable.
Lessor may at any time place on or about the Premises any ordinary "For Sale"
signs and Lessor may at any time during the last 120 days of the term hereof
place on or about the Premises any ordinary "For Lease" signs, all without
rebate of rent or liability to Lessee.
16.18 Signs and Auctions. Lessee shall not place any sign upon the Premises
or conduct any auction thereon without Lessor's prior written consent except
that Lessee shall have the right, without the prior permission of Lessor to
place ordinary and usual for rent or sublet signs thereon.
16.19 Merger. The voluntary or other surrender of this Lease by Lessee, or
a mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor terminate all or any existing
subtenancies or may, at the option of Lessor, operate an assignment to Lessor of
any or all of such subtenancies.
16.20 Corporate Authority. If Lessee is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of said
corporation, in accordance with a duly adopted resolution of the Board of
Directors of said corporation or in accordance with the Bylaws of said
corporation, and that this Lease is binding upon said corporation in accordance
with its terms. If Lessee is a corporation Lessee, shall within thirty (30) days
after execution of this Lease, deliver to Lessor a certified copy of a
resolution of the Board of Directors of said corporation authorizing or
ratifying the execution of this Lease.
5
<PAGE>
16.21 Consent not to be unreasonably withheld. If the consent of one party
is required to permit any action of the other party such consent shall not be
unreasonably withheld.
16.22 Guarantor. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under Paragraphs 16.1 and
16.20 of this Lease.
16.23 Quiet Possession. Upon Lessee paying the fixed rent reserved
hereunder and observing and performing all of the covenants, conditions and
provisions on Lessee's part to be observed and performed hereunder, Lessee shall
have quiet possession of the Premises for the entire term hereof subject to all
of the provisions of this Lease.
16.24 Options. In the event that the Lessee under the terms of this Lease,
has any option to extend the term of this Lease, or any option to purchase the
Premises or any right of first refusal to purchase the Premises or other
property of Lessor, then each of such options and rights are personal to Lessee
and may not be exercised or be assigned, voluntarily or involuntarily, by or to
any one other than Lessee except to the extent that they may be exercised by
or assigned to any of the entities described in Paragraph 12.2 hereof for whom
Lessee does not need the consent of Lessor to assign this Lease. In the event
that Lessee hereunder has any multiple options to extend this Lease a later
option to extend the Lease or any further option may be exercised unless the
prior option has been so exercised.
16.25 Multiple Tenant Building Rules and Regulations. In the event that the
Premises are part of a larger building or group of buildings, then Lessee agrees
that it will abide by, keep and observe all reasonable rules and regulations
which Lessor may make from time to time with respect to the management,
safety, care and cleanliness of the building and grounds, the parking of
vehicles and the preservation of good order thereof as well as for the
convenience of other occupants and tenants of the building. Further, Lessee
will promptly pay its prorata share as reasonably determined by Lessor, of any
maintenance or repair of such portion of the Premises or such portion of the
property of which the Premises are a part which are common areas or used by
Lessee and other occupants thereof. The violations of any such rules and
regulations or the failure to pay such pro rata share of costs, shall be
deemed a material breach of this Lease by Lessee.
16.26 Insuring Party. The insuring party under this Lease shall be the
Lessor & Lessee will reimburse Lessee's proportionate share to Lessor, except
for Lessee's liability insurance and personal property insurance, to be
obtained, paid for and maintained by Lessee, in accordance with term of this
Lease.
16.27 Additional Provisions. If there are not additional provisions draw a
line from this point to the next printed word after the space left here if there
are additional provisions place the same here.
Four pages of Lease Addendum attached.
The parties hereto have executed this Lease at the place and on the dates
specified immediately adjacent to their respective signatures.
THIS HAS BEEN PREPARED FOR SUBMISSION TO YOUR ATTORNEY FOR APPROVAL. NO
REPRESENTATION OR RECOMMENDATION IS MADE BY TRI COMMERCIAL REAL ESTATE SERVICES,
BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT OR
TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING THERETO. THE PARTIES
SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND
TAX CONSEQUENCES OF THIS LEASE.
Executed at San Mateo, California /s/ [SIGNATURE]
---------------------------- --------------------------------
On June 16, 1995 By Building Manager
-------------------------------------- -----------------------------
Address 181 Second Avenue #688 By _____________________________
--------------------------------
San Mateo, CA 94401 "LESSOR" (Corporate Seal)
--------------------------------
Executed at San Francisco, CA NorCal Realty Partners, L.P.
---------------------------- --------------------------------
On June 12, 1995 By RMNorCal Realty, Inc.
------------------------------------- -----------------------------
Address 100 Pine Street, Suite 2300 By /s/ George H. Rathman
-------------------------------- -----------------------------
San Francisco, CA 94111 George H. Rathman
"LESSEE" (Corporate Seal)
Its Chairman and CEO
6
<PAGE>
ADDENDUM TO THE LEASE for 167 SECOND AVENUE, SAN MATEO
(1) Property: Approximately 7,370 square feet of rentable space, a portion
of the ground floor (plus mezzanine) of a commercial project
("Project") bearing the street address indicated above, with
parking privileges, use of all common areas, and signage
rights as hereinafter described.
(2) Term: Term for the ground floor space shall be for a period of
five (5) years. Tenant shall have the right to extend the
lease for an additional period equal to the initial term
commencing at termination of the previous term at then fair
market value. However, Tenant must give Landlord one hundred
& eighty (180) days notice of intent to extend or intention
to vacate at the end of this Lease.
(3) Commencement: July 1, 1995.
(4) Rent: Base Rent upon inception shall be $150,348.00 per annum,
$1.70 per square foot, NNN. Tenant shall be responsible for
their own utilities if separately metered to premises,
janitorial service, and shall, at all times, keep those non-
structural interior portions of the Premises not part of
building systems, in good and sanitary condition and repair.
Notwithstanding anything contained in Sec. 7, and,
particularly Sec.7.4. of the Lease to the contrary,
Landlord shall maintain and repair the structural elements
and the public and common areas of the Building, as same may
exist from time to time, in good and sanitary condition and
repair, providing utilities and services to same at all
appropriate times. The cost of such care, maintenance and
services shall be considered building operating costs;
Tenant, in accordance with "(5)" herein, shall be
responsible for its proportionate share of such costs.
(5) Building Tenant shall be responsible for its proportionate share of
Operating building operating costs except with certain special
Costs: concerns as to Real Property Taxes hereinafter provided, to
be passed through to the Tenant. However, no increase in
Operating Expenses, inclusive of any Real Property Tax
adjustments, shall increase the rent payable by Tenant by
more than 5% over the previous year's Base Rent excluding
Base Rent Adjustment as hereinafter described.
<PAGE>
(6) Base Rent On each anniversary of the inception date of the lease-term,
Adjustment: the Base Rent shall increase by an amount equal to 3.5% of
the Base Rent excluding Operating Costs, paid in the
previous lease-year, i.e.:
Year 1: $1.70/sf = $12,529.00 per month
Year 2: $1.76/sf = $12,971.20 per month
Year 3: $1.82/sf = $13,413.40 per month
Year 4: $1.88/sf = $13,855.60 per month
Year 5: $1.95/sf = $14,371.50 per month
(7) Allowance Landlord shall provide an allowance for Tenant's
for Tenant Improvements equal to $15.00 per square foot of leasable
Improvements: space to be occupied by the tenant to a maximum total of
$110,550.00 all in accordance with Tenant's plans for
improvements of the space, including all floor treatments,
window treatments, built-in fixtures, redesign and
restructuring of the HVAC system to accommodate Tenant's
plans, all interior partition walls, electrical and/or
telephone systems as may be required, but solely for
improvements permanently affixed to the realty and NOT for
"any non-fixture objects that Tenant can take away after
lease termination", all to code limits, and all subject to
first obtained consent of Landlord not unreasonably or
untimely withheld. TI plan should not touch structural
members and not to affect building outlook. Solely for any
changes or improvements made to the property through the
term of the Lease or any extension thereforeof without the
prior consent of the Landlord obtained in writing, Tenant
shall be responsible for reinstatement of space to its
original state if Landlord so desires, upon termination of
lease. Tenant shall be solely responsible for design and
construction of all Tenant Improvements contemplated by this
Lease. Tenant shall obtain all necessary licenses and
construction permits and hire contractors and sub-
contractors. Tenant shall furnish Landlord with copies of
all work progress reports and invoices received in
connection with construction of Tenant Improvements, and
Landlord will pay against invoices as they are presented and
within 7 (seven) business days of receipt thereof by
delivery to Landlord or to Landlord's designated
representative.
<PAGE>
Tenant shall obtain all necessary performance bonds from
contractors and subcontractors and hold Landlord harmless
from any loss, cost or expense incurred in connection with,
or as a result of, construction of the Tenant Improvements.
Should such costs exceed $15.00 per square foot, Tenant
shall be solely responsible for such excess costs.
(8) Use: Premises shall be used as a real estate office and training
center along with other real estate usages, and/or general
office use. Tenant shall have right to sublease solely on
condition that Tenant remains in primary position of
liability for lease obligation and one half of any excess
rent received from any subtenant not directly affiliated
with Tenant is payable to Landlord and may, without
Landlord's consent, assign lease to any division, subsidiary
or successor into which Tenant may be merged, consolidated,
or acquired, providing successor shall fully assume all
Tenant's liability under terms of the lease.
(9) Security Payment of first month's rent due in accordance
Deposit: with terms of this Lease shall be made concurrently with
Tenant's delivery of Tenant-executed copies of this Lease,
and Landlord shall continue to hold a Security Deposit
previously in Landlord's possession in the amount of
$11,055.00 held subject to terms of this Lease.
(10) Brokers Broker's commission for this transaction to
Commission: Jerold M. Lamensdorf, Consulting Realtor, shall equal Three
Percent (3%) of gross value of the Lease for initial term
therefore. No commission due to "option" period or any
future expansion or extension.
(11) Signage: Tenant shall have the right to retain all existing signage
as well as to install additional facade or monument signage
satisfactory to Tenant, to the maximum, size and design
permitted by local codes and ordinances, with reasonable
consent of Landlord and approval of the City of San Mateo as
well as other ground floor tenants.
(12) Parking: As currently enjoyed by Tenant, at the same current monthly
payment of $870 per month on top of the rent. (Currently,
Tenant pays $500 with rent and $370 separately). Any
additional parking will be extra.
<PAGE>
Tenant shall obtain all necessary performance bonds from
contractors and sub-contractors and hold Landlord harmless
from any loss, cost or expense incurred in connection with,
or as a result of, construction of the Tenant Improvements.
Should such costs exceed $15.00 per square foot, Tenant
shall be solely responsible for such excess costs.
(8) Use: Premises shall be used as a real estate office and training
center along with other real estate usages, and/or general office
use. Tenant shall have right to sublease solely on condition that
Tenant remains in primary position of liability for lease
obligation and one half of any excess rent received from any
subtenant not directly affiliated with Tenant is payable to
Landlord and may, without Landlord's consent, assign lease to any
division, subsidiary or successor into which Tenant may be
merged, consolidated, or acquired, providing successor shall
fully assume all Tenant's liability under terms of the lease.
(9) Security Payment of first month's rent due in accordance with terms of
Deposit this Lease shall be made concurrently with Tenant's delivery of
Tenant-executed copies of this Lease, and Landlord shall continue
to hold a Security Deposit previously in Landlord's possession in
the amount of $11,055.00 held subject to terms of this Lease.
(10) Brokers Broker's commission for this transaction to Jerold M.
Commission: Lamensdorf, Consulting Realtor, shall equal Three Percent
(3%) of gross value of the Lease for initial term therefore.
No commission due to "option" period or any future expansion
or extension.
(11) Signage: Tenant shall have the right to retain all existing signage as
well as to install additional facade or monument signage
satisfactory to Tenant, to the maximum, size and design permitted
by local codes and ordinances, with reasonable consent of
Landlord and approval of the City of San Mateo as well as other
ground floor tenants.
(12) Parking: As currently enjoyed by Tenant, at the same current monthly
payment of $870 per month on top of the rent. (Currently, Tenant
pays $500 with rent and $370 separately). Any additional parking
will be extra.
<PAGE>
(13) HVAC: Landlord shall provide HVAC to Tenant during the business
hours of 8:00 am to 6:00 pm, Monday to Friday except Public
Holidays.
(14) Percentage of Tenant's share of Property Tax Increases and Direct
Expenses increases is 11.53%.
(15) Option period for Suite 211 currently occupied by Prudential will expire
September 30, 1995.
(16) Upon inception and commencement of this Lease, an extension of a previous
lease and the document representating that extension shall be cancelled
and of no further force or effect.
(17) Notwithstanding anything contained in Section 10 of this Lease to the
contrary, that amount which may be passed through and charged to Tenant as
an increase pursuant to any tax-reassessment as a consequence of transfer
of title or refinancing of the Building shall be limited to a percentage
of increase no greater than otherwise hereinabove "(5)", provided;
depreciable improvements to the Building in which tax benefit accrues to
Landlord or such improvement(s) is amortized over a term shall be passed
through to Tenant over that amortization period and on the same percentage
basis. Tenant shall be responsible for any increase in taxes resulting
from Tenant Improvements within the Premises.
(18) As used in this Lease, the terms "Landlord" and Lessor", and the terms
"Tenant" and "Lessee" shall be inter-changeable and no significance shall
attach to the arbitrary use of these terms.
Executed at: San Mateo /s/ [SIGNATURE]
---------------------------- ----------------------------------
on June 16, 1995 By Building Manager
-------------------------------------- --------------------------------
Address: 181 Second Avenue #688 By
------------------------------- --------------------------------
San Mateo, CA 94401 LESSOR
-------------------------------
Executed at: San Francisco, CA NorCal Realty Partners, L.P.
--------------------------- ----------------------------------
on June 12, 1995 By RMNorCal Realty, Inc.
-------------------------------------- --------------------------------
Address: 100 Pine Street, Suite 2300 By /s/ George H. Rathman
-------------------------------- --------------------------------
San Francisco, CA 94111 George H. Rathman
--------------------------------
LESSEE Its Chairman and CEO
<PAGE>
OFFICE LEASE
PARTIES. This lease, made this 15th day of February between ROSJAN LIMITED
PARTNERSHIP and Infospace, Inc., Tenant.
WITNESSETH:
1. PREMISES. Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord those certain Premises (hereinafter called "Premises") outlined in red
on Exhibit A attached hereto and by this reference made a part hereof, said
Premises being situated on the 2nd floor, Suite 218 and 222 of that certain
building (hereinafter called "Building") known as 181 Second Avenue, San Mateo,
-----------------------------
California.
- -----------
Said letting and hiring is upon and subject to the terms, covenants and
conditions herein set forth and Tenant covenants as a material part of the
consideration for this Lease to keep and perform each and all of said terms,
covenants and conditions by it to be kept and performed and that this Lease is
made upon the condition of such performance.
2. PURPOSE. The Premises shall be used for general office purposes and for no
other use or purpose without the prior written consent of Landlord.
3. TERM. The term of this Lease shall be for twenty-eight (28) months and
fourteen (14) days commencing on the 15th day of February, 1998, (the "Lease
Term"), ending on the 30th day of June, 2000.
4. POSSESSION. If Landlord, for any reason whatsoever, cannot deliver
possession of the said Premises to Tenant at the commencement of the term
hereof, this Lease shall be void or voidable, nor shall Landlord be liable for
any loss or damage resulting therefrom, but in that event there shall be
proportionate reduction of rent covering the period between the commencement of
the said term and the time when Landlord can deliver possession. If possession
of the Premises is not delivered to Tenant within six months from the scheduled
commencement date, this Lease will terminate. Should Landlord tender possession
of the Premises to Tenant prior to the date specified for the commencement of
the term, and Tenant accepts such prior tender, such prior occupancy shall be
subject to all terms, covenants and conditions of this Lease, including the
payment of rent.
5. RENT. On or before the first day of each calendar month during the term
hereof, Tenant shall pay to Landlord, as minimum monthly rent for the Premises,
the sum of $6,980.05. The minimum monthly rent for any partial month shall be
--------
pro-rated at the rate of 1/30 of the minimum monthly rent per day. Said rent
- -----------------------------------------------------------------
shall be paid by Tenant to Landlord, in advance, without deduction or offset, in
lawful money of the United States of America at 181 Second Avenue, Suite 688,
-----------------------------
San Mateo, California, or to such other person or at such place as Landlord may
- ----------------------
from time to time designate in writing. The minimum monthly rent for the
premises shall increase as stated below:
February 15, 1998 through June 30, 1999- $6,980.05 per month
July 1, 1999 through June 30, 2000- $7,168.70 per month
1
<PAGE>
6. RENTAL ADJUSTMENT.
(A) In addition to the monthly rent provided for in Paragraph 5 hereof, Tenant
shall pay to Landlord the sums set forth in the following subparagraphs.
Tenant's percentage share as set forth below has been calculated by dividing the
number of square feet of rentable area in the Premises by the number of square
feet rentable in the building. In the event the rentable area of the building is
changed, the Tenant's percentage share shall be appropriately adjusted. Rentable
area shall be based upon the Building Owners and Managers Association
International (BOMAI) standard method of floor measurement for office buildings.
Tenant hereby approves and accepts Landlord's calculation of Tenant's current
percentage share as set forth below.
(B) Tax Increases and Assessments. Tenant shall pay to Landlord an amount equal
to 4.95% of any increase in real property taxes and assessments or other fees or
charges of whatsoever kind or character imposed by a governmental agency which
may be levied on the land and building of which the Premises are a part and
personal property taxes levied on personal property of Landlord used in the
operation of said land and building above the amount of such taxes levied and
assessed for the fiscal tax year ending 1998, either by way of increase in the
rate or in the assessed valuation of said land and building or by imposition of
any such charges by ordinance or statute of any authority having jurisdiction.
For the purposes of the subparagraph (A), real and personal property taxes shall
include, without limitation, taxes of every kind and nature levied and assessed
in lieu of or in substitution for existing or additional real or personal
property taxes on said land and building as well as any form of assessment,
license, fee, levy, penalty, or tax (other than inheritance or state taxes),
imposed by any authority having the direct or indirect power to tax, including
any city, county, state, or federal government, or any school, Agricultural,
lighting, drainage, or other improvement district, as against any legal or
equitable interest of Landlord in the Premises or in the real property of which
the Premises are a part, or as against Landlord's right to rent or other income
therefrom, or as against Landlord's business of leasing the Premises, and
including any and all charges which may be charged by the environmental
protection agency or other similar governmental regulatory agency or authority.
In addition, Tenant shall pay one hundred percent (100%) of any increase in
taxes or assessments of whatsoever kind and nature (including, without
limitation, all personal property taxes) caused by improvements or installations
made by Tenant to the Premises at any time during the term hereof. The total
amounts due hereunder shall be paid to Landlord on or before the date full
payment of such taxes or assessments or, if payable in installments, the date
payment of the first installment of such taxes or assessments shall become due.
In the event said taxes or assessments are charged to or paid or payable by
Landlord, Tenant forthwith upon demand therefore, shall reimburse Landlord for
all amounts of such taxes or assessments chargeable against Tenant pursuant to
this subparagraph (B) and paid by Landlord.
(C) Operating Expense Increases. Tenant shall pay to Landlord, at the times
hereinafter set forth, an amount equal to 4.95% of any increase in direct
expenses paid or incurred by Landlord on account of the operation or maintenance
of the building above such direct expenses paid or incurred by Landlord during
the Base Year. "Base Year" as used in this subparagraph (c) shall mean the
calendar year 1998. "Direct expenses" as used herein shall include all direct
costs of operation and maintenance as determined by standard accounting
practices as set forth in the Building Owners and Managers Association
International (BOMAI) chart of accounts from time to time (excluding, however,
any and all taxes of the nature set forth in subparagraph (B)
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above) and shall include the following by way of illustration but not
limitation: the cost of contesting by appropriate proceeding the amount or the
validity of any of the aforementioned taxes or fees; water and sewer charges;
insurance premiums; license, permit and inspection fees; charges for heat,
light, power and steam; janitorial services; labor; supplies; materials,
equipment and tools; and management fees. "Direct expenses" as used herein shall
not include depreciation on the building or equipment therein, interest, or real
estate broker's commissions.
Statements of the amount of direct expenses for the preceding calendar year and
the amount of such increase payable by Tenant shall be determined or estimated
by Landlord shall be given to Tenant on such date as Landlord shall from time to
time determine. All amounts payable by Tenant as shown on said statement shall
be paid by Tenant within the time required by said statement. If during any such
year Landlord shall revise its estimate of Tenant's share of said expenses for
said year, Landlord shall advise Tenant and commencing on the next date payment
of additional charges are due, Tenant shall pay all additional charges based on
such revised estimate for the portion of the year already elapsed and shall
commence paying the additional charges based on such revised estimate for the
remainder of such year.
7. SECURITY. Simultaneously with the execution of this Lease, Tenant shall
deposit with Landlord the sum of $10,470.08 of which sum $3,490.03 shall be
payment of the February 1998 rent and the balance thereof, namely $6,980.05
shall be held by Landlord as security for the faithful performance by Tenant of
all the terms, covenants and conditions of this lease. Provided that at the end
of the term Tenant shall have delivered up the Premises to Landlord, broom
clean, and in the same condition as at the commencement date, reasonable wear
excepted, said sum held as security shall be returned to Tenant. No interest
shall be payable thereon and Landlord shall not be required to keep said sum in
a separate account. No security or guaranty which may now or hereafter be
furnished Landlord for the payment of the rent herein reserved or for
performance by Tenant of the other covenants or conditions of this Lease shall
in any way be a 6; or defense to any action in unlawful detainer, or for the
recovery of the Premises, or to any action which Landlord may at any time
commence for a breach of any of the covenants or conditions of this Lease.
8. USES PROHIBITED. Tenant shall not do or permit anything to be done in or
about the Premises nor bring or keep anything therein which will in any way
increase the rate of or affect any fire or other insurance upon the building or
any of its contents or cause a cancellation of any insurance policy covering
said building or contents. Tenant shall not do or permit anything to be done in
or about the Premises which will in any way obstruct or interfere with the
rights of other Tenants or occupants of the building or injure or annoy them, or
use or allow the Premises to be used for any residential, immoral, unlawful, or
objectionable purpose, nor shall Tenant cause, maintain, or permit any nuisance
in, on or about the Premises. No cooking devices or other odor-causing devices,
loudspeakers or other similar device, system or apparatus which can be heard or
experienced outside the Premises shall, without the prior written approval of
Landlord, be used in or at the Premises. Tenant shall not commit or suffer to be
committed any waste in or upon the Premises.
9. COMPLIANCE WITH LAW. Tenant shall not use or permit anything to be done in
or about the Premises which will in any way conflict with any law, statute,
ordinance or governmental rule, regulation or requirement now in force or which
may hereafter be enacted or promulgated. Tenant, at its sole cost and expense,
shall promptly comply with all laws, statutes, ordinances
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and governmental rules, regulations or requirements now in force or which may
hereafter be in force and with the requirements of any board of fire
underwriters or other similar body now or hereafter constituted relating to or
affecting the condition, use of occupancy of the Premises, excluding structural
changes not related to or affected by Tenant's improvements or acts. The
judgment of any court of competent jurisdiction or the admission of Tenant in an
action against Tenant, whether Landlord be a party thereto or not, that Tenant
has violated any law, statute, ordinance or governmental rule, regulation or
requirement shall be conclusive of that fact as between Landlord and Tenant.
10. ALTERATIONS. Tenant shall not make or suffer to be made any alterations,
additions or improvements to or of the Premises or any part thereof without the
written consent of Landlord first had and obtained. Any alterations, additions,
or improvements to or of said Premises, including without limitation any
partitions, movable or otherwise, and all carpeting, shall at once become a part
of the-realty and belong to Landlord. Movable furniture, equipment and trade
fixtures shall remain the property of Tenant. If Landlord consents to the making
of any alterations, additions or improvements to the Premises by Tenant, the
same shall be made by Tenant at Tenant's sole cost and expense and any
contractor or person selected by Tenant to make the same must first be approved
of in writing by Landlord. Upon the expiration or sooner termination of the term
Tenant, upon demand by Landlord, at Tenant's sole cost and expense, forthwith
and with all due diligence shall remove any alterations, additions or
improvements made by Tenant designated by Landlord to be removed, and Tenant,
forthwith and with all due diligence, at its sole cost and expense, shall repair
any damage to the Premises caused by such removal.
12. ABANDONMENT. Tenant shall not vacate or abandon the Premises at any time
during the term hereof, and if Tenant shall abandon, vacate or surrender the
Premises or be dispossessed by process of law, or otherwise, any personal
property belonging to Tenant and left on the Premises shall be deemed to be
abandoned, at the option of Landlord.
13. LIENS. Tenant shall keep the Premises and the building and the land upon
which the building is situated free from any liens arising out of any work
performed, materials furnished or obligations incurred by Tenant. Tenant shall,
in the event of the filing of any such lien, post any bond required to release
the Premises therefrom.
14. ASSIGNMENT AND SUBLETTING.
(A) Tenant shall not mortgage, pledge, hypothecate or encumber this Lease or
any interest therein. Tenant shall not assign this Lease or sublet or suffer any
other person (the agents and servants of Tenant excepted) to occupy or use the
Premises, or any part thereof, or any right or privilege appurtenant thereto
without the prior written consent of Landlord first had and obtained, which
consent shall not be unreasonably withheld. Landlord's consent to one
assignment, subleasing or occupancy shall not be deemed to be a consent to any
subsequent assignment, subleasing or occupancy.
(B) Provided further and notwithstanding anything therein before set forth: In
the event that at any time or from time to time during the term of this Lease,
Tenant desires to sublet all or any part of the Premises, Tenant shall notify
Landlord in writing (the "Sublet Notice") of the terms of the proposed
subletting, and the area so proposed to be sublet and shall give Landlord the
right to sublet from Tenant such space (the "Sublet Space") on the same terms as
those
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contained in the Sublet Notice. Such option shall be exercisable by Landlord in
writing for a period of thirty (30) days after receipt of the Sublet Notice.
If Landlord fails to exercise its option and Tenant desires to complete the
proposed sublease, Tenant shall deliver an executed copy of such sublease to
Landlord in order to obtain its consent as required in paragraph 14(A) above. If
Landlord consents to a sublease, then such sublease shall be subject to and made
upon the following terms:
(A) Any such sublease shall be subject to the terms of this Lease and the term
thereof may not extend beyond the expiration of the term of this Lease;
(B) No subtenant shall have a right to further sublease its Premises. If
Landlord fails to exercise such option, and Tenant fails to consummate a
sublease with a third party within sixty (60) days after the expiration of
Landlord's option period on the same terms and conditions contained in the
Sublet Notice, Tenant shall be required to deliver a new Sublet Notice to
Landlord and comply with the terms and conditions set forth above before any
further subletting shall be permitted.
(C) Regardless of Landlord's consent, no subletting nor assignment shall
release Tenant of Tenant's obligation or alter the primary liability of Tenant
to pay rent and perform other obligations of Tenant under this lease.
(D) In no event shall Tenant assign this Lease or sublet the Premises or any
portion thereof to any then, existing, or prospective Tenant of said
building.
(E) Tenant shall pay Landlord's reasonable costs incurred in connection with
Tenant's request to assign this lease or sublet the Premises, regardless of
whether or not the Landlord consents to the proposed transfer.
15. INDEMNIFICATION OF LANDLORD. Landlord shall not be liable to Tenant and
Tenant hereby waives all claims against Landlord for any injury or damage to any
person or property in or about the Premises by or from any cause whatsoever and,
without limiting the generality of the foregoing, whether caused by water
leakage of any character from the roof, walls, basement or other portion of the
Premises of said building or any part thereof.
Tenant shall hold Landlord harmless from and indemnify and defend Landlord
against any and all claims or liability for any injury or damage to any person
or property whatsoever: (1) occurring in, on or about the Premises or any part
thereof, and (2) occurring in, on or about any facilities (including without
prejudice to the generality of the term "facilities" elevators, stairways,
passageways or hallways), the use of which Tenant may have in common with other
Tenants of the building, when such injury or damage shall be caused in part or
in whole by the act, neglect, default or omission of any duty with respect to
the same by Tenant, its agents, employees or invitees.
16. INSURANCE. Tenant agrees to keep in force during the term hereof, at
Tenant's expense, public liability and property damage insurance with combined
single limits in the amount of not less than $1,000,000.00 (one million
dollars). Said policy shall name Landlord as an additional insured, and shall
insure Landlord's contingent liability as respects acts, or omissions of Tenant,
shall be issued by an insurance company licensed to do business in the state
where the
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Premises are located, and shall provide that said insurance shall not be
canceled or amended unless thirty (30) days prior written notice to Landlord is
first given. Said policy or a certificate thereof shall be delivered to Landlord
by Tenant prior to the commencement of the term and each renewal of such
insurance. Tenant hereby waives all rights of subrogation against Landlord to
which any insurance carrier may at any time become entitled under any policy of
insurance carried by Tenant.
17. UTILITIES. Landlord shall furnish to the Premises, during reasonable hours
of generally recognized business days, to be determined by Landlord, and subject
to the rules and regulations of the building, water and electricity suitable for
the use of the Premises for general office purposes and heat required in
Landlord's judgment for the comfortable use and occupation of the Premises for
such purposes, janitorial service, and elevator service. Landlord shall not be
liable for, and Tenant shall not be entitled to any abatement or reduction of
rent by reason if, Landlord's failure to furnish any of the foregoing when such
failure or delay is caused by accident, breakage, repairs, strikes, lockouts or
other labor disturbances or labor disputes of any character, or is caused
directly or indirectly by the limitation, curtailment, rationing or restrictions
on use of water, electricity, gas or any other form of energy serving the
Premises or the building, or by any other cause, similar or dissimilar, beyond
the reasonable control of Landlord. Landlord shall not be liable under any
circumstances for loss of business or injury to property, however occurring,
through or in connection with or incidental to failure to furnish any of the
foregoing. Tenant shall pay and provide for all services and utilities not
furnished by Landlord.
Tenant will not, without the written consent of Landlord, use any apparatus or
device in the Premises which will in any way increase the amount of electricity,
cooling capacity or water usually furnished or supplied for use of the Premises
for general office purposes or connect with electric current, except through
existing electrical outlets in the Premises, or water pipes, any apparatus or
device for the purpose of using electric current or water. If Tenant shall
require water or electric current in excess of that customarily furnished or
supplied to other Tenants of the building for use of their Premises for general
office purposes, Tenant shall first procure the consent of Landlord, which
Landlord may refuse, to the use thereof and Landlord may cause an electric
current or water meter to be installed in the Premises so as to measure the
amount of excess electric current or water consumed by Tenant. The cost of any
such meter and of the installation, maintenance and repair thereof shall be paid
by Tenant and Tenant agrees to pay to Landlord promptly upon demand thereof the
cost of all such excess water and electric current consumed, as shown by said
meters, at the rates charged for such services by the local public utility
furnishing the same, plus any additional expense incurred in keeping account of
the excess electric current or water so consumed.
18. PERSONAL PROPERTY AND OTHER TAXES. Tenant shall pay, before delinquency,
any and all taxes levied or assessed and which become payable during the term
hereof upon Tenant's equipment, furniture, fixtures and other personal property
located in the Premises, including carpeting installed by Tenant even though
said carpeting has become a part of the leased Premises; and any and all taxes
or increases therein levied or assessed on Landlord or Tenant by virtue of
alterations, additions or improvements to the Premises made by Tenant or
Landlord at Tenant's request. In the event said taxes are charged to or paid or
payable by Landlord, Tenant, forthwith upon demand therefore, shall reimburse
Landlord for all of such taxes paid by Landlord.
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19. RULES AND REGULATIONS. Tenant shall faithfully observe and comply with the
rules and regulations printed on or annexed to this Lease and all modifications
of and additions thereto applicable to all Tenants of the building from time to
time put into effect by Landlord of which Tenant shall have notice. Landlord
shall not be responsible to Tenant for the nonperformance by any other Tenant or
occupant of the building of any of said rules and regulations.
20. HOLDING OVER. If Tenant holds possession of the Premises after the term of
this Lease, Tenant shall, (at option of Landlord to be exercised by Landlord's
giving written notice to Tenant and not otherwise) become a Tenant from month to
month upon the terms and conditions herein specified, so far as applicable, at a
monthly rental of 1.15 x the last month's rent payable in advance, in lawful
money, and shall continue to be such Tenant until thirty (30) days after Tenant
shall have given to Landlord or Landlord shall have given to Tenant a written
notice of intent to terminate such monthly tenancy. Unless Landlord shall
exercise the option hereby given him Tenant shall be a Tenant at sufferance
only, whether or not Landlord shall accept any rent from Tenant is so holding
over.
21. SUBORDINATION. This Lease shall be subject and subordinate at all times to
all ground or underlying leases which may now exist or hereafter be executed
affecting the building and/or the land upon which the building is situated and
to the lien of any mortgages or deeds of trust in any amount or amounts
whatsoever now or hereafter placed on or against said building and/or land or on
or against the Landlord's interest or estate therein or on or against any ground
or underlying lease without the necessity of having further instruments on the
part of Tenant to effectuate such subordination. Notwithstanding the foregoing,
Tenant covenants and agrees to execute and deliver, upon demand, such further
instruments evidencing such subordination of this Lease to such ground or
underlying leases and to the lien of any such mortgages or deeds of trust as may
be required by Landlord. Tenant hereby irrevocably appoints Landlord the
attorney in fact of Tenant to execute and deliver any such instrument or
instruments for or in the name of Tenant. In the event of termination of any
ground or underlying lease, or in the event of foreclosure or exercise of any
power of sale under any mortgage or deed of trust superior to this Lease or to
which this Lease is subject or subordinate, upon Tenant's attornment to the
lessor under such ground or underlying lease or to the purchaser at any
foreclosure sale or sale pursuant to the exercise of any power of sale under any
mortgage or deed of trust, this Lease shall not terminate and Tenant shall
automatically be and become the Tenant of said Lessor under such ground or
underlying lease or to said purchaser, whichever shall make demand therefore.
22. ENTRY BY LANDLORD. Landlord reserves and shall at any and all reasonable
times have the right to enter the Premises to inspect the same, to supply
janitor service and any other service to be provided by Landlord to Tenant
hereunder, to submit the Premises to prospective purchasers or Tenants, to post
notices of nonresponsibility, and to alter, improve or repair the Premises and
any portion of the building without abatement of rent and may for that purpose
erect scaffolding and other necessary structures where reasonably required by
the character of the work to be performed, always providing the entrance to the
Premises shall not be blocked thereby and further providing that the business of
Tenant shall not be interfered with unreasonably. Tenant hereby waives any claim
for damages for any injury or inconvenience to or interference with Tenant's
business, any loss occasioned by such entry. For each of the aforesaid purposes,
Landlord shall at all times have and retain a key with which to unlock all of
the doors, in, upon and about the Premises excluding Tenant's vaults and safes,
and Landlord
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shall have the right to use any and all means which Landlord may deem proper to
open said doors in an emergency in order to obtain entry to the Premises, and
any entry to the Premises obtained by Landlord by any of said means, or
otherwise, shall not under any circumstances be construed or deemed to be a
forcible or unlawful entry into or a detainer of the Premises or an eviction of
Tenant from the Premises or any portion thereof.
23. INSOLVENCY OR BANKRUPTCY. Either (a) the appointment of a receiver to take
possession of all or substantially all of the assets of Tenant, (b) an
assignment by Tenant for the benefit of creditors, or (c) any action taken or
suffered by Tenant under any insolvency, bankruptcy or reorganization act shall
constitute a breach of this Lease by Tenant. Upon the happening of any such
event, this Lease shall terminate five (5) days after written notice of
termination from Landlord to Tenant. In no event shall this Lease be assigned or
assignable by reason of voluntary or involuntary bankruptcy proceedings nor
shall any rights or privileges hereunder be an asset of Tenant in any
bankruptcy, insolvency or reorganization proceedings.
24. DEFAULT. In the event of any breach or default of Lease by Tenant, then
Landlord, besides any other rights and remedies of Landlord at law or equity,
shall have the right either to terminate Tenant's right to possession of the
Premises and thereby terminate this Lease or to have this Lease continue in full
force and effect with Tenant at all times having the right to possession of the
Premises. Should Landlord elect to terminate Tenant's right to possession of the
Premises and terminate this Lease, Landlord shall have the immediate right of
entry and may remove all persons and property from the Premises. Such property
so removed may be stored in a public warehouse or elsewhere at the cost and for
the account of Tenant. Upon such termination, Landlord, in addition to any other
rights and remedies (including rights and remedies under Subparagraphs (1), (2)
and (4) of Subdivision (a) of Section 1951.2 of the California Civil Code or any
amendment thereto), shall be entitled to recover from Tenant the worth at the
time of award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of such rental loss that the Tenant
proves could be reasonably avoided. The worth at the time of award of the amount
referred to in subparagraphs (1) and (2) of Subdivision (a) of Section 1951.2 of
the California Civil Code shall be computed by allowing interest at the maximum
rate allowed by law. The worth at the time of the award of the amount referred
to in subparagraph (3) of Subdivision 1951.2 of the California Civil Code shall
be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of the award plus 1%.
Any proof by Tenant of the amount of rental loss that could reasonably be
avoided shall be made in the following manner: Landlord and Tenant shall each
select a licensed real estate broker in the business of renting property of the
same type and use as the Premises and in the same geographic vicinity and such
two real estate brokers shall select a third licensed real estate broker and the
three licensed real estate brokers so selected shall determine the amount of
rental loss that could reasonably be avoided for the balance of the term of this
Lease after the time of award. The decision of the majority of said licensed
real estate brokers shall be final and binding upon the parties hereto. Should
Landlord, following any breach or default of this Lease by Tenant, elect to keep
this Lease in full force and effect, with Tenant retaining the right to
possession of the Premises (notwithstanding the fact that Tenant may have
abandoned the leased Premises), then Landlord, besides the rights and remedies
specified in Section 1951.4 of the California Civil Code and all other rights
and remedies Landlord may have at law or equity, shall have the right to enforce
all of Landlord's rights and remedies under this Lease, including but not
limited to the right to recover the installments of rent as they become due
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under this Lease. Notwithstanding any such election to have this Lease remain in
full force and effect, Landlord may at any time thereafter elect to terminate
Tenant's right to possession of said Premises and thereby terminate this Lease
for any previous breach or default which remains uncured, or for any subsequent
breach or default.
25. DAMAGE BY FIRE, ETC. If the Premises are or the building is damaged by
fire or other casualty which is covered by insurance, Landlord shall forthwith
repair the same, provided such repairs can be made within sixty (60) working
days from the date of such damage under the laws and regulations of the state,
federal, county and municipal authorities having jurisdiction thereof, and
this Lease shall remain in full force and effect during the making of such
repairs, except that Tenant shall be entitled to a proportionate reduction of
rent while such repairs are being made if the damage was not attributable to
Tenant's negligent or willful act, such proportionate reduction to be based upon
the full extent to which the making of such repairs shall interfere with the
business carried on by Tenant in the Premises. If such repairs are not covered
by insurance or cannot be made within sixty (60) working days from the date of
such damage, Landlord shall have the option either (1) to repair or restore such
damage, this Lease continuing in full force and effect, but the rent to be
proportionately reduced as herein above in this paragraph provided, or (2) to
give notice to Tenant at any time within thirty (30) working days after the date
of such damage terminating this Lease as of a date to be specified in such
notice, which date shall not be less than thirty (30) nor more than sixty (60)
working days after the giving of such notice. In the event of the giving of such
notice of termination by either Landlord or Tenant, this Lease and all interest
of Tenant in the Premises shall terminate on the date so specified in such
notice, and the rent, reduced by any proportionate reduction based upon the
extent, if any, to which said damage interfered with the business carried on by
Tenant in the Premises, shall be paid up to date of such termination. Landlord
shall not be liable for or be required to repair any injury or damage by fire or
other cause to the property of Tenant, or to make repairs or replacements of any
paneling, decorations, railings, floor coverings or any equipment or
improvements installed on the Premises by Tenant. Tenant hereby waives any
provisions of law automatically terminating this Lease or otherwise contrary to
the provisions of this paragraph in the event of damage to or destruction of the
Premises.
26. EMINENT DOMAIN. If all or any part of the Premises shall be taken or
appropriated by any public or quasi-public authority under the power of eminent
domain, and such taking will substantially impair Tenant's use of the Premises
for more than ninety (90) days, either party hereto shall have the right, at its
option, to terminate this Lease. If all or any part of the building of which the
Premises are a part shall be taken or appropriated by any public or quasi-public
authority under any power of eminent domain, Landlord may terminate this Lease.
In either of such events, Landlord shall be entitled to and Tenant upon demand
of Landlord shall assign to Landlord any rights of Tenant to any and all income,
rent, award, or any interest therein whatsoever which may be paid or made in
connection with such public or quasi-public use or purpose, and Tenant shall
have no claim against Landlord or the condemner for the value of any unexpired
term of this Lease. If a part of the Premises shall be so taken or appropriated
and neither party shall elect to terminate this Lease, the rent thereafter to be
paid shall be equitably reduced.
27. FLATS AND RIDERS. Clauses, plats and riders, if any, signed by Landlord
and Tenant and endorsed on or affixed to this Lease are a part hereof, and in
the event of variation or discrepancy the duplicate original hereof, including
such clauses, plats and riders, if any, held by Landlord shall control.
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28. SALE BY LANDLORD. In the event of a sale or conveyance by Landlord of the
building, 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 of Landlord in and to this Lease. If
any security be given by Tenant to secure the faithful performance of all or any
of the covenants of this Lease on the part of Tenant, Landlord may transfer
and/or deliver the security to the successor in interest or Landlord, and
thereupon Landlord shall be discharged from any further liability in reference
thereto. Except as set forth in this Paragraph 28, this Lease shall not be
affected by any such sale or conveyance.
29. ESTOPPEL CERTIFICATES. At any time and from time to time, upon not more
than ten (10) days prior to request by Landlord, Tenant shall execute,
acknowledge and deliver to Landlord a statement certifying the date of
commencement of this Lease, stating that this Lease is unmodified and in full
force and effect (or if there have been modifications, that this Lease is in
full force and effect as modified and the date and nature of such modifications)
and the dates to which the rent has been paid, and setting forth such other
matters as may reasonably be requested by Landlord. Landlord and Tenant intend
that any such statement delivered pursuant to this paragraph may be relied upon
by any mortgagee or the beneficiary of any Deed of Trust or by any purchaser or
prospective purchaser of the building.
30. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to be kept or
performed by Tenant under any of the terms of this lease shall be performed by
Tenant at Tenant's sole cost and expense and without any abatement of rent. If
Tenant shall fail to pay any sum of money, other than rent, required to be paid
by it hereunder or shall fail to perform any other act on its part to be
performed hereunder, and such failure shall continue for ten (10) days after
notice thereof by Landlord, Landlord may, but shall not be obligated to, and
without waiving any default of Tenant or releasing Tenant from any obligations
of Tenant hereunder, make any such payment or perform any such other act on
Tenant's part to be made or performed as in this Lease provided. All sums so
paid by the Landlord and all necessary incidental costs, together with interest
thereon at the rate of ten percent (10%) per annum from the date of such payment
by the Landlord, shall be paid to Landlord forthwith on demand, and Landlord
shall have (in addition to any other right or remedy of Landlord) the same
rights and remedies in the event of nonpayment thereof by Tenant as in the case
of default in payment of rent.
31. ATTORNEY FEES. If either Landlord or Tenant shall obtain legal counsel or
bring an action against the other by reason of the breach of any covenant or
warranty hereof, or otherwise arising out of this lease, the unsuccessful party
shall pay to the prevailing party reasonable attorney's fees, which shall be
payable whether or not any action is prosecuted to judgment. The term
"prevailing party" shall include, without limitation, a party who obtains legal
counsel or brings an action against the other by reason of the other's breach or
default and obtains substantially the relief sought, whether by compromise,
settlement or judgment.
32. SURRENDER OF PREMISES. The voluntary or other surrender of this Lease by
Tenant or mutual cancellation thereof shall not work a merger and, at the option
of Landlord, shall terminate all or any existing subleases or subtenancies, or
at the option of Landlord, may operate as an assignment to Landlord of any or
all such subleases or subtenancies.
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33. WAIVER. The waiver by Landlord or Tenant of performance of any term,
covenant or condition herein contained shall not be deemed to be a waiver of
such term, covenant or condition or any subsequent breach of the same or any
other term, covenant or condition herein contained. The subsequent acceptance of
rent hereunder by Landlord shall not be deemed to be a waiver of any preceding
breach by Tenant of any term, covenant or condition of this Lease, other than
the failure of Tenant to pay the particular rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
rent.
34. NOTICES. All notices and demands which may or are required to be given by
either party to the other hereunder shall be in writing. All notices and demands
by Landlord to Tenant shall be delivered personally or sent by United States
certified or registered mail, postage prepaid, addressed to Tenant at the
Premises, or to such other such place as Tenant may from time to time by like
notice designate. All notices and demands by Tenant to Landlord shall be sent by
United States certified or registered mail, postage prepaid, addressed to
Landlord at 181 Second Avenue, Suite 688, San Mateo, California, 94401 or to
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other such place as Landlord may from time to time by like notice designate.
35. NOTICE OF SURRENDER. At least ninety (90) days before the last day of the
term hereof, Tenant shall give to Landlord a written notice of intention to
surrender the Premises on that date, but nothing contained herein or any failure
to give such notice shall be construed as an extension of the term hereof or as
consent of Landlord to any holding over by Tenant.
36. DEFINED TERMS AND MARGINAL HEADINGS. The words "Landlord" and "Tenant" as
used herein shall include the plural as well as the singular. Words used in
masculine gender include the feminine and neuter. If there be more than one
Tenant, the obligations hereunder imposed upon Tenant shall be joint and
several. The marginal headings and titles to the paragraphs of the Lease are not
a part of this Lease and shall have no effect upon the construction or
interpretation of any part hereof.
37. TIME AND APPLICABLE LAW. Time is of the essence of this Lease and each and
all of its provisions. This Lease shall in all respects be governed by the laws
of the state in which the Premises are located.
38. SUCCESSORS. Subject to the provisions of Paragraph 14 hereof, the
covenants and conditions herein contained shall be binding upon and inure to the
benefits of the heirs, successors, executors, administrators and assigns of the
parties hereto.
39. ENTIRE AGREEMENT. This Lease constitutes the entire agreement between
Landlord and Tenant and no promises or representations, express or implied,
either written or oral, not herein set forth shall be binding upon or inure to
the benefit of Landlord or Tenant. This Lease shall not be modified by any oral
agreement, either express or implied, and all modifications hereof shall be in
writing and signed by both Landlord and Tenant.
40. LATE CHARGE. In the event Tenant shall fail to pay any rents or sums due
hereunder on or before the due date herein provided, then and in that event the
amount so due and unpaid shall bear a late charge equal to five percent (5%) of
the amount due together with interest accruing from the date due at the maximum
interest rate permitted by law, which late charge and interest shall be payable
forthwith upon demand. (The foregoing shall be in addition to any other right or
remedy of Landlord.)
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41. ADDITIONAL PROVISIONS. The exhibits and addenda listed below are
incorporated by reference in this Lease:
Exhibit A and Rules and Regulations
42. Tenant will take the space "as is".
IN WITNESS WHEREOF Landlord and Tenant have executed this lease the day and year
first above written.
"Landlord" "Tenant"
ROSJAN LIMITED PARTNERSHIP INFOSPACE, INC.
By: Kennedy-Wilson Management Group By: /s/ Paul C. Vilandre
------------------------
Its Managing Agent Paul C. Vilandre
By:_____________________________ Its: VP FINANCE
Eric M. Bender
Date: 3/1/98
Its:____________________________
Date:___________________________
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RULES AND REGULATIONS FOR THE BUILDING
ATTACHED TO AND MADE A PART OF THIS LEASE
1. Except as provided or required by Landlord in accordance with building
standards, no sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed, printed, painted or affixed by Tenant on or to any part of
the building or exterior of the Premises leased to Tenants or to the door or
doors thereof without the written consent of Landlord first obtained and
Landlord shall have the right to remove any such sign, placard, picture,
advertisement, name or notice without notice to and at the expense of Tenant.
2. Except as provided or required by Landlord in accordance with building
standards, no draperies, curtains, blinds, shades, screens or other devices
shall be hung at or used in connection with any window or exterior door of the
Premises.
3. The bulletin board or directory of the building shall be used primarily for
display of the name and location of Tenants and Landlord reserves the right to
exclude any other names therefrom, to limit the number of names associated with
Tenants to be placed thereon and to charge for names associated with Tenants to
be placed thereon at rates applicable to Tenants.
4. The sidewalks, halls, passages, exits, entrances, elevators and stairways of
the building shall not be obstructed by Tenants or used by them for any purpose
other than for ingress to and egress from their respective Premises. The halls,
passages, exits, entrances, elevators, stairways, balconies and roof of the
building are not for the use of the general public and Landlord in all cases
reserves the right to control the same and prevent access thereto by all persons
whose presence, in the judgment of the Landlord, is or may be prejudicial to the
safety, character, reputation or interests of the building and its Tenants;
provided however, that Landlord shall not prevent such access to persons with
whom Tenants deal in the ordinary course of business unless such persons are
engaged in illegal activities. No person shall go upon the roof of the building
unless expressly so authorized by Landlord.
5. Tenants shall not alter any lock nor install any new or additional locks or
any bolts on any interior or exterior door of any Premises leased to Tenant.
6. The doors, windows, light fixtures and any lights or skylights that reflect
or admit light into halls or other places of the building shall not be covered
or obstructed. The toilet rooms, toilets, urinals, wash bowls and other
apparatus shall not be used for any purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be thrown or
placed therein. The expense of any breakage, stoppage or damage resulting from
the violation of this rule shall be borne by the Tenant who, or whose employees
or invitees, cause such expense.
7. Tenants shall not mark, drive nails, screw or drill into the walls, woodwork
or plaster or in any way deface the building or any Premises leased except for
supporting partitions, pictures, paintings, and other similar solely decorative
items.
8. Furniture, freight or equipment of every kind shall be moved into or out of
the building only at such times and in such manner as Landlord shall designate.
Landlord may prescribe and limit the weight, size and position of all equipment
to be used by Tenants, other than standard office desks, chairs and tables and
portable office machines. Safes and other heavy equipment
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shall, if considered necessary by Landlord, stand on wood strips of such
thickness as Landlord deems necessary to distribute properly the weight thereof.
All damage to the building or Premises occupied by Tenants caused by moving or
maintaining any property of a Tenant shall be repaired at the expense of such
Tenant.
9. No Tenant shall employ any person, other than the janitor provided by
Landlord, for the purposes of cleaning the Premises occupied by such Tenant
unless otherwise agreed to by Landlord. Except with the written consent of
Landlord, no person shall be permitted to enter the building for the purpose of
cleaning the same. Tenants shall not cause any unnecessary labor by carelessness
or indifference in the preservation of good order and cleanliness. Landlord
shall not be responsible to any Tenant for loss of property on the Premises,
however occurring, or for any damage to the property of any Tenant caused by the
employees or independent contractors of Landlord or by any other person. Janitor
service will not be furnished when rooms are occupied during the regular hours
when janitor service is provided. Window cleaning shall be done only at the
regular and customary times determined by Landlord for such services.
10. No Tenant shall sweep or throw or permit to be swept or thrown any dirt or
other substance into any of the corridors, halls or elevators or out of the
doors or stairways of the building; use or keep or permit to be used or kept any
foul or noxious gas or substance; permit or suffer the Premises occupied by such
Tenant to be occupied or used in a manner offensive or objectionable to Landlord
or other Tenants by reason of noise, odors or vibrations; interfere in any way
with other Tenants or persons having business in the building; or bring or keep
or permit to be brought or kept in the building any animal life form, other than
human, except seeing eye dogs when in the company of their masters.
11. No cooking shall be done or permitted by Tenants in their respective
Premises except making coffee and microwave cooking, nor shall Premises occupied
by Tenants be used for the storage of merchandise, washing clothes, lodging, or
any improper, objectionable or immoral purposes.
12. No Tenant shall use or keep in the building any kerosene, gasoline or
inflammable or combustible fluid or material or use any method of heating or
air-conditioning other than such as be supplied by Landlord.
13. No boring or cutting for telephone or electric wires shall be allowed
without the consent of Landlord and any such wires permitted shall be introduced
at the place and in the manner described by Landlord. The location of
telephones, speakers, fire extinguisher and all other office equipment affixed
to Premises occupied by Tenants shall be subject to the approval of Landlord.
Each Tenant shall pay all expenses incurred in connection with the installation
of its equipment, including any telephone and electricity distribution
equipment.
14. Upon termination of occupancy of the building, each Tenant shall deliver to
Landlord all keys furnished by Landlord, and any reproductions thereof made by
or at the direction of such Tenant, and in the event of loss of any keys
furnished shall pay Landlord therefore.
15. No Tenant shall affix any floor covering in any manner except as approved
by Landlord. The expense of repairing any damage caused by removal of any such
floor covering shall be borne by the Tenant by whom or by whose contractors,
employees or invitees, the damage
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shall have been caused.
16. On Sundays and legal holidays and between the hours of 6:00 p.m. and 8:00
a.m., access to the building may be refused unless the person seeking access is
known to the person charged with responsibility for the safety and protection of
the building and has a pass or is properly identified. In no case shall Landlord
be liable for any loss or damage for any error with respect to the admission to
or exclusion from the building of any person. In case of invasion, mob, riot,
public excitement or other commotion and at such times as Landlord deems
necessary for the safety and protection of the building, its Tenants and all
property located therein, Landlord may prohibit and prevent access to the
building by all persons by any means Landlord deems appropriate.
17. Each Tenant shall see that the exterior doors of its Premises are closed
and securely locked on Sundays and legal holidays and not later than 6:00 p.m.
of each other day. Each Tenant shall exercise extraordinary care and caution
that all water faucets or water apparatus are entirely shut off each day before
its Premises are left unoccupied and that all electricity or gas shall likewise
be carefully shut off so as to prevent waste or damage to Landlord or to other
Tenants of the building.
18. Landlord may exclude or expel from the building any person who, in the
judgment of Landlord, is intoxicated or under the influence of liquor or drugs,
or who shall in any manner do any act in violation of any of the rules and
regulations of the building.
19. The requirements of Tenants will be attended to only upon application to
Landlord at the office of the building. Employees of Landlord shall not perform
any work outside of their regular duties unless under special instructions from
Landlord, and no employee of Landlord shall be required to admit any person
(Tenant or otherwise) to any Premises in the building.
20. No vending or food or beverage dispensing machine or machines of any
description shall be installed, maintained or operated upon any premise in the
building without the written permission of the Landlord.
21. Landlord, without notice and without liability to any Tenant, at any time
may change the name or the street address of the building.
22. The word "building" as used in these rules and regulations means the
building of which a part of the Premises are leased pursuant to the Lease to
which these rules and regulations are attached. Each Tenant shall be liable to
Landlord and to each other Tenant of the building for any loss, cost, expense,
damage or liability, including attorneys' fees, caused or occasioned by the
failure of such first named Tenant to comply with these rules, but Landlord
shall have no liability for such failure of for failing or being unable to
enforce compliance therewith by any Tenant and such failure by Landlord or non-
compliance by any other Tenant shall not be a ground for termination of the
lease to which these rules and regulations are attached by the Tenant
thereunder.
23. Carpet protector pads shall be used by all desk stations.
24. The HVAC is in operation from 8:00 a.m. to 6:00 p.m. Monday to Friday
except public Holidays.
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[FLOOR PLAN APPEARS HERE]
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OFFICE LEASE
PARTIES. This lease, made this 10th day of March between ROSJAN LIMITED
PARTNERSHIP and Infospace, Inc., Tenant.
WITNESSETH:
1. PREMISES. Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord those certain Premises (hereinafter called "Premises") outlined in red
on Exhibit A attached hereto and by this reference made a part hereof, said
Premises being situated on the ground floor, Suite 163 of that certain building
(hereinafter called "Building") known as 181 Second Avenue, San Mateo,
-----------------------------
California.
- -----------
Said letting and hiring is upon and subject to the terms, covenants and
conditions herein set forth and Tenant covenants as a material part of the
consideration for, this Lease to keep and perform each and all of said terms,
covenants and conditions by it to be kept and performed and that this Lease is
made upon the condition of such performance.
2. PURPOSE. The Premises shall be used for general office purposes and for no
other use or purpose without the prior written consent of Landlord.
3. TERM. The term of this Lease shall be for twenty-eight (28) months
commencing on the 1st day of March, 1998, (the "Lease Term"), ending on the 30th
day of June, 2000.
4. POSSESSION. If Landlord, for any reason whatsoever, cannot deliver
possession of the said Premises to Tenant at the commencement of the term
hereof, this Lease shall be void or voidable, nor shall Landlord be liable for
any loss or damage resulting therefrom, but in that event there shall be
proportionate reduction of rent covering the period between the commencement of
the said term and the time when Landlord can deliver possession. If possession
of the Premises is not delivered to Tenant within six months from the scheduled
commencement date, this Lease will terminate. Should Landlord tender possession
of the Premises to Tenant prior to the date specified for the commencement of
the term, and Tenant accepts such prior tender, such prior occupancy shall be
subject to all terms, covenants and conditions of this Lease, including the
payment of rent.
5. RENT. On or before the first day of each calendar month during the term
hereof, Tenant shall pay to Landlord, as minimum monthly rent for the Premises,
the sum of $1,579.90. The minimum monthly rent for any partial month shall be
pro-rated at the rate of 1/30 of the minimum monthly rent per day. Said rent
shall be paid by Tenant to Landlord, in advance, without deduction or offset, in
lawful money of the United States of America at 181 Second Avenue, Suite 688,
-----------------------------
San Mateo, California, or to such other person or at such place as Landlord may
- ----------------------
from time to time designate writing. The minimum monthly rent for the
premises shall increase as stated below:
March 1, 1998 through June 30, 1999 - $1,579.90 per month
July 1, 1999 through June 30, 2000 - $1,622.60 per month
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6. RENTAL ADJUSTMENT.
(A) In addition to the monthly rent provided for in Paragraph 5 hereof, Tenant
shall pay to Landlord the sums set forth in the following subparagraphs.
Tenant's percentage share as set forth below has been calculated by dividing the
number of square feet of rentable area in the Premises by the number of square
feet rentable in the building. In the event the rentable area of the building is
changed, the Tenant's percentage share shall be appropriately adjusted. Rentable
area shall be based upon the Building Owners and Managers Association
International (BOMAI) standard method of floor measurement for office buildings.
Tenant hereby approves and accepts Landlord's calculation of Tenant's current
percentage share as set forth below.
(B) Tax Increases and Assessments. Tenant shall pay to Landlord an amount equal
to 1.21% of any increase in real property taxes and assessments or other fees or
charges of whatsoever kind or character imposed by a governmental agency which
may be levied on the land and building of which the Premises are a part and
personal property taxes levied on personal property of Landlord used in the
operation of said land and building above the amount of such taxes levied and
assessed for the fiscal tax year ending 1998, either by way of increase in the
rate or in the assessed valuation of said land and building or by imposition of
any such charges by ordinance or statute of any authority having jurisdiction.
For the purposes of the Subparagraph (A), real and personal property taxes shall
include, without limitation, taxes of every kind and nature levied and assessed
in lieu of or in substitution for existing or additional real or personal
property taxes on said land and building as well as any form of assessment,
license, fee, levy, penalty, or tax (other than inheritance or state taxes),
imposed by any authority having the direct or indirect power to tax, including
any city, county, state, or federal government, or any school, Agricultural,
lighting, drainage, or other improvement district, as against any legal or
equitable interest of Landlord in the Premises or in the real property of which
the Premises are a part, or as against Landlord's right to rent or other income
therefrom, or as against Landlord's business of leasing the Premises, and
including any and all charges which may be charged by the environmental
protection agency or other similar governmental regulatory agency or authority.
In addition, Tenant shall pay one hundred percent (100%) of any increase in
taxes or assessments of whatsoever kind and nature (including, without
limitation, all personal property taxes) caused by improvements or installations
made by Tenant to the Premises at any time during the term hereof. The total
amounts due hereunder shall be paid to Landlord on or before the date full
payment of such taxes or assessments or, if payable in installments, the date
payment of the first installment of such taxes or assessments shall become due.
In the event said taxes or assessments are charged to or paid or payable by
Landlord, Tenant forthwith upon demand therefore, shall reimburse Landlord for
all amounts of such taxes or assessments chargeable against Tenant pursuant to
this subparagraph (B) and paid by Landlord.
(C) Operating Expense Increases. Tenant shall pay to Landlord, at the times
hereinafter set forth, an amount equal to 1.21% of any increase in direct
expenses paid or incurred by Landlord on account of the operation or maintenance
of the building above such direct expenses paid or incurred by Landlord during
the Base Year. "Base Year" as used in this subparagraph (c) shall mean the
calendar year 1998. "Direct expenses" as used herein shall include all direct
costs of operation and maintenance as determined by standard accounting
practices as set forth in the Building Owners and Managers Association
International (BOMAI) chart of accounts from time to time (excluding, however,
any and all taxes of the nature set forth in subparagraph (B)
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above) and shall include the following by way of illustration but not
limitation; the cost of contesting by appropriate proceeding the amount or the
validity of any of the aforementioned taxes or fees; water and sewer charges;
insurance premiums; license, permit and inspection fees; charges for heat,
light, power and steam; janitorial services; labor; supplies; materials,
equipment and tools; and management fees. "Direct expenses" as used herein shall
not include depreciation on the building or equipment therein, interest, or real
estate broker's commissions.
Statements of the amount of direct expenses for the preceding calendar year and
the amount of such increase payable by Tenant shall be determined or estimated
by Landlord shall be given to Tenant on such date as Landlord shall from time to
time determine. All amounts payable by Tenant as shown on said statement shall
be paid by Tenant within the time required by said statement. If during any such
year Landlord shall revise its estimate of Tenant's share of said expenses for
said year, Landlord shall advise Tenant and commencing on the next date payment
of additional charges are due, Tenant shall pay all additional charges based on
such revised estimate for the portion of the year already elapsed and shall
commence paying the additional charges based on such revised estimate for the
remainder of such year.
7. SECURITY. Simultaneously with the execution of this Lease, Tenant shall
deposit with Landlord the sum of $3,159.80 of which sum $1,579.90 shall be
payment of the March 1998 rent and the balance thereof, namely $1,579.90 shall
be held by Landlord as security for the faithful performance by Tenant of all
the terms, covenants and conditions of this lease. Provided that at the end of
the term Tenant shall have delivered up the Premises to Landlord, broom clean,
and in the same condition as at the commencement date, reasonable wear excepted,
said sum held as security shall be returned to Tenant. No interest shall be
payable thereon and Landlord shall not be required to keep said sum in a
separate account. No security or guaranty which may now or hereafter be
furnished Landlord for the payment of the rent herein reserved or for
performance by Tenant of the other covenants or conditions of this Lease shall
in any way be a 6; or defense to any action in unlawful detainer, or for the
recovery of the Premises, or to any action which Landlord may at any time
commence for a breach of any of the covenants or conditions of this Lease.
8. USES PROHIBITED. Tenant shall not do or permit anything to be done in or
about the Premises nor bring or keep anything therein which will in any way
increase the rate of or affect any fire or other insurance upon the building or
any of its contents or cause a cancellation of any insurance policy covering
said building or contents. Tenant shall not do or permit anything to be done in
or about the Premises which will in any way obstruct or interfere with the
rights of other Tenants or occupants of the building or injure or annoy them, or
use or allow the Premises to be used for any residential, immoral, unlawful, or
objectionable purpose, nor shall Tenant cause, maintain, or permit any nuisance
in, on or about the Premises. No cooking devices or other odor-causing devices,
loudspeakers or other similar device, system or apparatus which can be heard or
experienced outside the Premises shall, without the prior written approval of
Landlord, be used in or at the Premises. Tenant shall not commit or suffer to be
committed any waste in or upon the Premises.
9. COMPLIANCE WITH LAW. Tenant shall not use or permit anything to be done in
or about the Premises which will in any way conflict with any law, statute,
ordinance or governmental rule, regulation or requirement now in force or which
may hereafter be enacted or promulgated. Tenant, at its sole cost and expense,
shall promptly comply with all laws, statutes, ordinances
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and governmental rules, regulations or requirements now in force or which may
hereafterbe in force and with the requirements of any board of fire
underwriters or other similar body now or hereafter constituted relating to or
affecting the condition, use of occupancy of the Premises, excluding structural
changes not related to or affected by Tenant's improvements or acts. The
judgment of any court of competent jurisdiction or the admission of Tenant in an
action against Tenant, whether Landlord be a party thereto or not, that Tenant
has violated any law, statute, ordinance or governmental rule, regulation or
requirement shall be conclusive of that fact as between Landlord and Tenant.
10. ALTERATIONS. Tenant shall not make or suffer to be made any alterations,
additions or improvements to or of the Premises or any part thereof without the
written consent of Landlord first had and obtained. Any alterations, additions,
or improvements to or of said Premises, including without limitation any
partitions, movable or otherwise, and all carpeting, shall at once become a part
of the realty and belong to Landlord. Movable furniture, equipment and trade
fixtures shall remain the property of Tenant. If Landlord consents to the making
of any alterations, additions or improvements to the Premises by Tenant, the
same shall be made by Tenant at Tenant's sole cost and expense and any
contractor or person selected by Tenant to make the same must first be approved
of in writing by Landlord. Upon the expiration or sooner termination of the term
Tenant, upon demand by Landlord, at Tenant's sole cost and expense, forthwith
and with all due diligence shall remove any alterations, additions or
improvements made by Tenant designated by Landlord to be removed, and Tenant,
forthwith and with all due diligence, at its sole cost and expense, shall repair
any damage to the Premises caused by such removal.
12. ABANDONMENT. Tenant shall not vacate or abandon the Premises at any time
during the term hereof, and if Tenant shall abandon, vacate or surrender the
Premises or be dispossessed by process of law, or otherwise, any personal
property belonging to Tenant and left on the Premises shall be deemed to be
abandoned, at the option of Landlord.
13. LIENS. Tenant shall keep the Premises and the building and the land upon
which the building is situated free from any liens arising out of any work
performed, materials furnished or obligations incurred by Tenant. Tenant shall,
in the event of the filing of any such lien, post any bond required to release
the Premises therefrom.
14. ASSIGNMENT AND SUBLETTING.
(A) Tenant shall not mortgage, pledge, hypothecate or encumber this Lease or
any interest therein. Tenant shall not assign this Lease or sublet or suffer any
other person (the agents and servants of Tenant excepted) to occupy or use the
Premises, or any part thereof, or any right or privilege appurtenant thereto
without the prior written consent of Landlord first had and obtained, which
consent shall not be unreasonably withheld. Landlord's consent to one
assignment, subleasing or occupancy shall not be deemed to be a consent to any
subsequent assignment, subleasing or occupancy.
(B) Provided further and notwithstanding anything therein before set forth: In
the event that at any time or from time to time during the term of this Lease,
Tenant desires to sublet all or any part of the Premises, Tenant shall notify
Landlord in writing (the "Sublet Notice") of the terms of the proposed
subletting, and the area so proposed to be sublet and shall give Landlord the
right to sublet from Tenant such space (the "Sublet Space") on the same terms as
those
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contained in the Sublet Notice. Such option shall be exercisable by Landlord in
writing for a period of thirty (30) days after receipt of the Sublet Notice.
If Landlord fails to exercise its option and Tenant desires to complete the
proposed sublease, Tenant shall deliver an executed copy of such sublease to
Landlord in order to obtain its consent as required in paragraph 14(A) above. If
Landlord consents to a sublease, then such sublease shall be subject to and made
upon the following terms:
(A) Any such sublease shall be subject to the terms of this Lease and the term
thereof may not extend beyond the expiration of the term of this Lease;
(B) No subtenant shall have a right to further sublease its Premises. If
Landlord fails to exercise such option, and Tenant fails to consummate a
sublease with a third party within sixty (60) days after the expiration of
Landlord's option period on the same terms and conditions contained in the
Sublet Notice, Tenant shall be required to deliver a new Sublet Notice to
Landlord and comply with the terms and conditions set forth above before any
further subletting shall be permitted.
(C) Regardless of Landlord's consent, no subletting nor assignment shall
release Tenant of Tenant's obligation or alter the primary liability of Tenant
to pay rent and perform other obligations of Tenant under this lease.
(D) In no event shall Tenant assign this Lease or sublet the Premises or any
portion thereof to any then, existing, or prospective Tenant of said building.
(E) Tenant shall pay Landlord's reasonable costs incurred in connection with
Tenant's request to assign this lease or sublet the Premises, regardless of
whether or not the Landlord consents to the proposed transfer.
15. INDEMNIFICATION OF LANDLORD. Landlord shall not be liable to Tenant and
Tenant hereby waives all claims against Landlord for any injury or damage to any
person or property in or about the Premises by or from any cause whatsoever and,
without limiting the generality of the foregoing, whether caused by water
leakage of any character from the roof, walls, basement or other portion of the
Premises of said building or any part thereof.
Tenant shall hold Landlord harmless from and indemnify and defend Landlord
against any and all claims or liability for any injury or damage to any person
or property whatsoever: (1) occurring in, on or about the Premises or any part
thereof, and (2) occurring in, on or about any facilities (including without
prejudice to the generality of the term "facilities" elevators, stairways,
passageways or hallways), the use of which Tenant may have in common with other
Tenants of the building, when such injury or damage shall be caused in part or
in whole by the act, neglect, default or omission of any duty with respect to
the same by Tenant, its agents, employees or invitees.
16. INSURANCE. Tenant agrees to keep in force during the term hereof, at
Tenant's expense, public liability and property damage insurance with combined
single limits in the amount of not less than $1,000,000.00 (one million
dollars). Said policy shall name Landlord as an additional insured, and shall
insure Landlord's contingent liability as respects acts, or omissions of Tenant,
shall be issued by an insurance company licensed to do business in the state
where the
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Premises are located, and shall provide that said insurance shall not be
canceled or amended unless thirty (30) days prior written notice to Landlord is
first given. Said policy or a certificate thereof shall be delivered to Landlord
by Tenant prior to the commencement of the term and each renewal of such
insurance. Tenant hereby waives all rights of subrogation against Landlord to
which any insurance carrier may at any time become entitled under any policy of
insurance carried by Tenant.
17. MAINTENANCE AND UTILITIES. Tenant shall keep in good order and repair the
Premises and every part thereof, structural and non-structural, (whether or not
such portion of the premises requiring repair, or the mean for repairing the
same are reasonably or readily accessible to Tenant, and whether or not the need
for such repairs occurs as a result of the Tenant's use, any prior use, the
elements or the age of such portion of the Premises) including, without limiting
the generality of the foregoing, all plumbing, heating, air conditioning,
ventilating, electrical lighting facilities and equipment, telecommunications
equipment within the Premises, fixtures, walls (interior and exterior)
foundations, ceilings, roofs (interior and exterior) floors, windows, doors,
plate glass and skylights located within the Premises, and all landscaping,
driveways, parking lots, fences and signs located on the premises and sidewalks
and parkways adjacent to the Premises. Tenant will be responsible costs for
utilities to include electricity, gas and water and janitorial service for the
Premises, installing meters if required. Landlord shall not be liable for, and
Tenant shall not be entitled to any abatement or reduction of rent by reason if,
Landlord's failure to furnish any of the foregoing when such failure or delay is
caused by accident, breakage, repairs, strikes, lockouts or other labor
disturbances or labor disputes of any character, or is caused directly or
indirectly by the limitation, curtailment, rationing or restrictions on use of
water, electricity, gas or any other form of energy serving the Premises or the
building, or by any other cause, similar or dissimilar, beyond the reasonable
control of Landlord. Landlord shall not be liable under any circumstances for
loss of business or injury to property, however occurring, through or in
connection with or incidental to failure to furnish any of the foregoing. Tenant
shall pay and provide for all services and utilities not furnished by Landlord.
Tenant will not, without the written consent of Landlord, use any apparatus or
device in the Premises which will in any way increase the amount of electricity,
cooling capacity or water usually furnished or supplied for use of the Premises
for general office purposes or connect with electric current, except through
existing electrical outlets in the Premises, or water pipes, any apparatus or
device for the purpose of using electric current or water. If Tenant shall
require water or electric current in excess of that customarily furnished or
supplied to other Tenants of the building for use of their Premises for general
office purposes, Tenant shall first procure the consent of Landlord, which
Landlord may refuse, to the use thereof and Landlord may cause an electric
current or water meter to be installed in the Premises so as to measure the
amount of excess electric current or water consumed by Tenant. The cost of any
such meter and of the installation, maintenance and repair thereof shall be paid
by Tenant and Tenant agrees to pay to Landlord promptly upon demand thereof the
cost of all such excess water and electric current consumed, as shown by said
meters, at the rates charged for such services by the local public utility
furnishing the same, plus any additional expense incurred in keeping account of
the excess electric current or water so consumed.
18. PERSONAL PROPERTY AND OTHER TAXES. Tenant shall pay, before delinquency,
any and all taxes levied or assessed and which become payable during the term
hereof upon Tenant's equipment, furniture, fixtures and other personal property
located in the Premises,
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including carpeting installed by Tenant even though said carpeting has become a
part of the leased Premises; and any and all taxes or increases therein levied
or assessed on Landlord or Tenant by virtue of alterations, additions or
improvements to the Premises made by Tenant or Landlord at Tenant's request. In
the event said taxes are charged to or paid or payable by Landlord, Tenant,
forthwith upon demand therefore, shall reimburse Landlord for all of such taxes
paid by Landlord.
19. RULES AND REGULATIONS. Tenant shall faithfully observe and comply with the
rules and regulations printed on or annexed to this Lease and all modifications
of and additions thereto applicable to all Tenants of the building from time to
time put into effect by Landlord of which Tenant shall have notice. Landlord
shall not be responsible to Tenant for the nonperformance by any other Tenant or
occupant of the building of any of said rules and regulations.
20. HOLDING OVER. If Tenant holds possession of the Premises after the term of
this Lease, Tenant shall, (at option of Landlord to be exercised by Landlord's
giving written notice to Tenant and not otherwise) become a Tenant from month
to month upon the terms and conditions herein specified, so far as applicable,
at a monthly rental of 1.15 x the last month's rent payable in advance, in
lawful money, and shall continue to be such Tenant until thirty (30) days after
Tenant shall have given to Landlord or Landlord shall have given to Tenant a
written notice of intent to terminate such monthly tenancy. Unless Landlord
shall exercise the option hereby given him Tenant shall be a Tenant at
sufferance only, whether or not Landlord shall accept any rent from Tenant is so
holding over.
21. SUBORDINATION. This Lease shall be subject and subordinate at all times to
all ground or underlying leases which may now exist or hereafter be executed
affecting the building and/or the land upon which the building is situated and
to the lien of any mortgages or deeds of trust in any amount or amounts
whatsoever now or hereafter placed on or against said building and/or land or on
or against the Landlord's interest or estate therein or on or against any ground
or underlying lease without the necessity of having further instruments on the
part of Tenant to effectuate such subordination. Notwithstanding the foregoing,
Tenant covenants and agrees to execute and deliver, upon demand, such further
instruments evidencing such subordination of this Lease to such ground or
underlying leases and to the lien of any such mortgages or deeds of trust as may
be required by Landlord. Tenant hereby irrevocably appoints Landlord the
attorney in fact of Tenant to execute and deliver any such instrument or
instruments for or in the name of Tenant. In the event of termination of any
ground or underlying lease, or in the event of foreclosure or exercise of any
power of sale under any mortgage or deed of trust superior to this Lease or to
which this Lease is subject or subordinate, upon Tenant's attornment to the
lessor under such ground or underlying lease or to the purchaser at any
foreclosure sale or sale pursuant to the exercise of any power of sale under any
mortgage or deed of trust, this Lease shall not terminate and Tenant shall
automatically be and become the Tenant of said Lessor under such ground or
underlying lease or to said purchaser, whichever shall make demand therefore.
22. ENTRY BY LANDLORD. Landlord reserves and shall at any and all reasonable
times have the right to enter the Premises to inspect the same, to supply
janitor service and any other service to be provided by Landlord to Tenant
hereunder, to submit the Premises to prospective purchasers or Tenants, to post
notices of nonresponsibility, and to alter, improve or repair the Premises and
any portion of the building without abatement of rent and may for that purpose
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erect scaffolding and other necessary structures where reasonably required by
the character of the work to be performed, always providing the entrance to the
Premises shall not be blocked thereby and further providing that the business of
Tenant shall not be interfered with unreasonably. Tenant hereby waives any claim
for damages for any injury or inconvenience to or interference with Tenant's
business, any loss occasioned by such entry. For each of the aforesaid purposes,
Landlord shall at all times have and retain a key with which to unlock all of
the doors, in, upon and about the Premises excluding Tenant's vaults and safes,
and Landlord shall have the right to use any and all means which Landlord may
deem proper to open said doors in an emergency in order to obtain entry to the
Premises, and any entry to the Premises obtained by Landlord by any of said
means, or otherwise, shall not under any circumstances be construed or deemed to
be a forcible or unlawful entry into or a detainer of the Premises or an
eviction of Tenant from the Premises or any portion thereof.
23. INSOLVENCY OR BANKRUPTCY. Either (a) the appointment of a receiver to take
possession of all or substantially all of the assets of Tenant, (b) an
assignment by Tenant for the benefit of creditors, or (c) any action taken or
suffered by Tenant under any insolvency, bankruptcy or reorganization act shall
constitute a breach of this Lease by Tenant. Upon the happening of any such
event, this Lease shall terminate five (5) days after written notice of
termination from Landlord to Tenant. In no event shall this Lease be assigned or
assignable by reason of voluntary or involuntary bankruptcy proceedings nor
shall any rights or privileges hereunder be an asset of Tenant in any
bankruptcy, insolvency or reorganization proceedings.
24. DEFAULT. In the event of any breach or default of Lease by Tenant, then
Landlord, besides any other rights and remedies of Landlord at law or equity,
shall have the right either to terminate Tenant's right to possession of the
Premises and thereby terminate this Lease or to have this Lease continue in full
force and effect with Tenant at all times having the right to possession of the
Premises. Should Landlord elect to terminate Tenant's right to possession of the
Premises and terminate this Lease, Landlord shall have the immediate right of
entry and may remove all persons and property from the Premises. Such property
so removed may be stored in a public warehouse or elsewhere at the cost and for
the account of Tenant. Upon such termination, Landlord, in addition to any other
rights and remedies (including rights and remedies under Subparagraphs (1), (2)
and (4) of Subdivision (a) of Section 1951.2 of the California Civil Code or any
amendment thereto), shall be entitled to recover from Tenant the worth at the
time of award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of such rental loss that the Tenant
proves could be reasonably avoided. The worth at the time of award of the amount
referred to in subparagraphs (1) and (2) of Subdivision (a) of Section 1951.2 of
the California Civil Code shall be computed by allowing interest at the maximum
rate allowed by law. The worth at the time of the award of the amount referred
to in subparagraph (3) of Subdivision 1951.2 of the California Civil Code shall
be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of the award plus 1%.
Any proof by Tenant of the amount of rental loss that could reasonably be
avoided shall be made in the following manner: Landlord and Tenant shall each
select a licensed real estate broker in the business of renting property of the
same type and use as the Premises and in the same geographic vicinity and such
two real estate brokers shall select a third licensed real estate broker and the
three licensed real estate brokers so selected shall determine the amount of
rental loss that could reasonably be avoided for the balance of the term of this
Lease after the time of award. The decision of the majority of said licensed
real estate brokers shall be final
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and binding upon the parties hereto. Should Landlord, following any breach or
default of this Lease by Tenant, elect to keep this Lease in full force and
effect, with Tenant retaining the right to possession of the Premises
(notwithstanding the fact that Tenant may have abandoned the leased Premises),
then Landlord, besides the rights and remedies specified in Section 1951.4 of
the California Civil Code and all other rights and remedies Landlord may have at
law or equity, shall have the right to enforce all of Landlord's rights and
remedies under this Lease, including but not limited to the right to recover the
installments of rent as they become due under this Lease. Notwithstanding any
such election to have this Lease remain in full force and effect, Landlord may
at any time thereafter elect to terminate Tenant's right to possession of said
Premises and thereby terminate this Lease for any previous breach or default
which remains uncured, or for any subsequent breach or default.
25. DAMAGE BY FIRE, ETC. If the Premises are or the building is damaged by fire
or other casualty which is covered by insurance, Landlord shall forthwith repair
the same, provided such repairs can be made within sixty (60) working days from
the date of such damage under the laws and regulations of the state, federal,
county and municipal authorities having jurisdiction thereof, and this Lease
shall remain in full force and effect during the making of such repairs, except
that Tenant shall be entitled to a proportionate reduction of rent while such
repairs are being made if the damage was not attributable to Tenant's negligent
or willful act, such proportionate reduction to be based upon the full extent to
which the making of such repairs shall interfere with the business carried on by
Tenant in the Premises. If such repairs are not covered by insurance or cannot
be made within sixty (60) working days from the date of such damage, Landlord
shall have the option either (1) to repair or restore such damage, this Lease
continuing in full force and effect, but the rent to be proportionately reduced
as herein above in this paragraph provided, or (2) to give notice to Tenant at
any time within thirty (30) working days after the date of such damage
terminating this Lease as of a date to be specified in such notice, which date
shall not be less than thirty (30) nor more than sixty (60) working days after
the giving of such notice. In the event of the giving of such notice of
termination by either Landlord or Tenant, this Lease and all interest of Tenant
in the Premises shall terminate on the date so specified in such notice, and the
rent, reduced by any proportionate reduction based upon the extent, if any, to
which said damage interfered with the business carried on by Tenant in the
Premises, shall be paid up to date of such termination. Landlord shall not be
liable for or be required to repair any injury or damage by fire or other cause
to the property of Tenant, or to make repairs or replacements of any paneling,
decorations, railings, floor coverings or any equipment or improvements
installed on the Premises by Tenant. Tenant hereby waives any provisions of law
automatically terminating this Lease or otherwise contrary to the provisions of
this paragraph in the event of damage to or destruction of the Premises.
26. EMINENT DOMAIN. If all or any part of the Premises shall be taken or
appropriated by any public or quasi-public authority under the power of eminent
domain, and such taking will substantially impair Tenant's use of the Premises
for more than ninety (90) days, either party hereto shall have the right, at its
option, to terminate this Lease. If all or any part of the building of which the
Premises are a part shall be taken or appropriated by any public or quasi-public
authority under any power of eminent domain, Landlord may terminate this Lease.
In either of such events, Landlord shall be entitled to and Tenant upon demand
of Landlord shall assign to Landlord any rights of Tenant to any and all income,
rent, award, or any interest therein whatsoever which may be paid or made in
connection with such public or quasi-public use or purpose, and Tenant shall
have no claim against Landlord or the condemner for the value of any unexpired
term of this Lease. If a part of the Premises shall be so taken or appropriated
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and neither party shall elect to terminate this Lease, the rent thereafter to be
paid shall be equitably reduced.
27. FLATS AND RIDERS. Clauses, plats and riders, if any, signed by Landlord
and Tenant and endorsed on or affixed to this Lease are a part hereof, and in
the event of variation or discrepancy the duplicate original hereof, including
such clauses, plats and riders, if any, held by Landlord shall control.
28. SALE BY LANDLORD. In the event of a sale or conveyance by Landlord of the
building, 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 of Landlord in and to this Lease. If
any security be given by Tenant to secure the faithful performance of all or any
of the covenants of this Lease on the part of Tenant, Landlord may transfer
and/or deliver the security to the successor in interest of Landlord, and
thereupon Landlord shall be discharged from any further liability in reference
thereto. Except as set forth in this Paragraph 28, this Lease shall not be
affected by any such sale or conveyance.
29. ESTOPPEL CERTIFICATES. At any time and from time to time, upon not more
than ten (10) days prior to request by Landlord, Tenant shall execute,
acknowledge and deliver to Landlord a statement certifying the date of
commencement of this Lease, stating that this Lease is unmodified and in full
force and effect (or if there have been modifications, that this Lease is in
full force and effect as modified and the date and nature of such modifications)
and the dates to which the rent has been paid, and setting forth such other
matters as may reasonably be requested by Landlord. Landlord and Tenant intend
that any such statement delivered pursuant to this paragraph may be relied upon
by any mortgagee or the beneficiary of any Deed of Trust or by any purchaser or
prospective purchaser of the building.
30. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to be kept or
performed by Tenant under any of the terms of this lease shall be performed by
Tenant at Tenant's sole cost and expense and without any abatement of rent. If
Tenant shall fail to pay any sum of money, other than rent, required to be paid
by it hereunder or shall fail to perform any other act on its part to be
performed hereunder, and such failure shall continue for ten (10) days after
notice thereof by Landlord, Landlord may, but shall not be obligated to, and
without waiving any default of Tenant or releasing Tenant from any obligations
of Tenant hereunder, make any such payment or perform any such other act on
Tenant's part to be made or performed as in this Lease provided. All sums so
paid by the Landlord and all necessary incidental costs, together with interest
thereon at the rate of ten percent (10%) per annum from the date of such payment
by the Landlord, shall be paid to Landlord forthwith on demand, and Landlord
shall have (in addition to any other right or remedy of Landlord) the same
rights and remedies in the event of nonpayment thereof by Tenant as in the case
of default in payment of rent.
31. ATTORNEY FEES. If either Landlord or Tenant shall obtain legal counsel or
bring an action against the other by reason of the breach of any covenant or
warranty hereof, or otherwise arising out of this lease, the unsuccessful party
shall pay to the prevailing party reasonable attorney's fees, which shall be
payable whether or not any action is prosecuted to judgment. The term
"prevailing party" shall include, without limitation, a party who obtains legal
counsel or brings an action against the other by reason of the other's breach or
default and
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obtains substantially the relief sought, whether by compromise, settlement or
judgment.
32. SURRENDER OF PREMISES. The voluntary or other surrender of this Lease by
Tenant or mutual cancellation thereof shall not work a merger and, at the option
of Landlord, shall terminate all or any existing subleases or subtenancies, or
at the option of Landlord, may operate as an assignment to Landlord of any or
all such subleases or subtenancies.
33. WAIVER. The waiver by Landlord or Tenant of performance of any term,
covenant or condition herein contained shall not be deemed to be a waiver of
such term, covenant or condition or any subsequent breach of the same or any
other term, covenant or condition herein contained. The subsequent acceptance of
rent hereunder by Landlord shall not be deemed to be a waiver of any preceding
breach by Tenant of any term, covenant or condition of this Lease, other than
the failure of Tenant to pay the particular rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
rent.
34. NOTICES. All notices and demands which may or are required to be given by
either party to the other hereunder shall be in writing. All notices and demands
by Landlord to Tenant shall be delivered personally or sent by United States
certified or registered mail, postage prepaid, addressed to Tenant at the
Premises, or to such other such place as Tenant may from time to time by like
notice designate. All notices and demands by Tenant to Landlord shall be sent by
United States certified or registered mail, postage prepaid, addressed to
Landlord at 181 Second Avenue, Suite 688, San Mateo, California, 94401 or to
----------------------------------------------------------
other such place as Landlord may from time to time by like notice designate.
35. NOTICE OF SURRENDER. At least ninety (90) days before the last day of the
term hereof, Tenant shall give to Landlord a written notice of intention to
surrender the Premises on that date, but nothing contained herein or any failure
to give such notice shall be construed as an extension of the term hereof or as
consent of Landlord to any holding over by Tenant.
36. DEFINED TERMS AND MARGINAL HEADINGS. The words "Landlord" and "Tenant" as
used herein shall include the plural as well as the singular. Words used in
masculine gender include the feminine and neuter. If there be more than one
Tenant, the obligations hereunder imposed upon Tenant shall be joint and
several. The marginal headings and titles to the paragraphs of the Lease are not
a part of this Lease and shall have no effect upon the construction or
interpretation of any part hereof.
37. TIME AND APPLICABLE LAW. Time is of the essence of this Lease and each and
all of its provisions. This Lease shall in all respects be governed by the laws
of the state in which the Premises are located.
38. SUCCESSORS. Subject to the provisions of Paragraph 14 hereof, the
covenants and conditions herein contained shall be binding upon and inure to the
benefits of the heirs, successors, executors, administrators and assigns of the
parties hereto.
39. ENTIRE AGREEMENT. This Lease constitutes the entire agreement between
Landlord and Tenant and no promises or representations, express or implied,
either written or oral, not herein set forth shall be binding upon or inure to
the benefit of Landlord or Tenant. This Lease shall not be modified by any oral
agreement, either express or implied, and all modifications hereof shall be in
writing and signed by both Landlord and Tenant.
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40. LATE CHARGE. In the event Tenant shall fail to pay any rents or sums due
hereunder on or before the due date herein provided, then and in that event the
amount so due and unpaid shall bear a late charge equal to five percent (5%) of
the amount due together with interest accruing from the date due at the maximum
interest rate permitted by law, which late charge and interest shall be payable
forthwith upon demand. (The foregoing shall be in addition to any other right or
remedy of Landlord.)
41. ADDITIONAL PROVISIONS. The exhibits and addenda listed below are
incorporated by reference in this Lease:
Exhibit A and Rules and Regulations
42. Tenant will take the space "as is".
IN WITNESS WHEREOF Landlord and Tenant have executed this lease the day and year
first above written.
"Landlord" "Tenant"
ROSJAN LIMITED PARTNERSHIP INFOSPACE, INC.
By: Kennedy-Wilson Management Group By: /s/ Paul C. Vilandre
Its Managing Agent -------------------------
Paul C. Vilandre
By: /s/ Eric M. Bender Its: Vice President Finance
-------------------------------- ------------------------
Eric M. Bender
Date: 3/12/98
Its: Dir. Prop. Mgt. -----------------------
-------------------------------
Date: 3/20/98
------------------------------
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RULES AND REGULATIONS FOR THE BUILDING
ATTACHED TO AND MADE A PART OF THIS LEASE
1. Except as provided or required by Landlord in accordance with building
standards, no sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed, printed, painted or affixed by Tenant on or to any part of
the building or exterior of the Premises leased to Tenants or to the door or
doors thereof without the written consent of Landlord first obtained and
Landlord shall have the right to remove any such sign, placard, picture,
advertisement, name or notice without notice to and at the expense of Tenant.
2. Except as provided or required by Landlord in accordance with building
standards, no draperies, curtains, blinds, shades, screens or other devices
shall be hung at or used in connection with any window or exterior door of the
Premises.
3. The bulletin board or directory of the building shall be used primarily for
display of the name and location of Tenants and Landlord reserves the right to
exclude any other names therefrom, to limit the number of names associated with
Tenants to be placed thereon and to charge for names associated with Tenants to
be placed thereon at rates applicable to Tenants.
4. The sidewalks, halls, passages, exits, entrances, elevators and stairways of
the building shall not be obstructed by Tenants or used by them for any purpose
other than for ingress to and egress from their respective Premises. The halls,
passages, exits, entrances, elevators, stairways, balconies and roof of the
building are not for the use of the general public and Landlord in all cases
reserves the right to control the same and prevent access thereto by all persons
whose presence, in the judgment of the Landlord, is or may be prejudicial to the
safety, character, reputation or interests of the building and its Tenants;
provided however, that Landlord shall not prevent such access to persons with
whom Tenants deal in the ordinary course of business unless such persons are
engaged in illegal activities. No person shall go upon the roof of the building
unless expressly so authorized by Landlord.
5. Tenants shall not alter any lock nor install any new or additional locks or
any bolts on any interior or exterior door of any Premises leased to Tenant.
6. The doors, windows, light fixtures and any lights or skylights that reflect
or admit light into halls or other places of the building shall not be covered
or obstructed. The toilet rooms, toilets, urinals, wash bowls and other
apparatus shall not be used for any purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be thrown or
placed therein. The expense of any breakage, stoppage or damage resulting from
the violation of this rule shall be borne by the Tenant who, or whose employees
or invitees, cause such expense.
7. Tenants shall not mark, drive nails, screw or drill into the walls, woodwork
or plaster or in any way deface the building or any Premises leased except for
supporting partitions, pictures, paintings, and other similar solely decorative
items.
8. Furniture, freight or equipment of every kind shall be moved into or out of
the building only at such times and in such manner as Landlord shall designate.
Landlord may prescribe and limit the weight, size and position of all equipment
to be used by Tenants, other than standard office desks, chairs and tables and
portable office machines. Safes and other heavy equipment
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shall, if considered necessary by Landlord, stand on wood strips of such
thickness as Landlord deems necessary to distribute properly the weight thereof.
All damage to the building or Premises occupied by Tenants caused by moving or
maintaining any property of a Tenant shall be repaired at the expense of such
Tenant.
9. No Tenant shall employ any person, other than the janitor provided by
Landlord, for the purposes of cleaning the Premises occupied by such Tenant
unless otherwise agreed to by Landlord. Except with the written consent of
Landlord, no person shall be permitted to enter the building for the purpose of
cleaning the same. Tenants shall not cause any unnecessary labor by carelessness
or indifference in the preservation of good order and cleanliness. Landlord
shall not be responsible to any Tenant for loss of property on the Premises,
however occurring, or for any damage to the property of any Tenant caused by the
employees or independent contractors of Landlord or by any other person. Janitor
service will not be furnished when rooms are occupied during the regular hours
when janitor service is provided. Window cleaning shall be done only at the
regular and customary times determined by Landlord for such services.
10. No Tenant shall sweep or throw or permit to be swept or thrown any dirt or
other substance into any of the corridors, halls or elevators or out of the
doors or stairways of the building; use or keep or permit to be used or kept any
foul or noxious gas or substance; permit or suffer the Premises occupied by such
Tenant to be occupied or used in a manner offensive or objectionable to Landlord
or other Tenants by reason of noise, odors or vibrations; interfere in any way
with other Tenants or persons having business in the building; or bring or keep
or permit to be brought or kept in the building any animal life form, other than
human, except seeing eye dogs when in the company of their masters.
11. No cooking shall be done or permitted by Tenants in their respective
Premises except making coffee and microwave cooking, nor shall Premises occupied
by Tenants be used for the storage of merchandise, washing clothes, lodging, or
any improper, objectionable or immoral purposes.
12. No Tenant shall use or keep in the building any kerosene, gasoline or
inflammable or combustible fluid or material or use any method of heating or
air-conditioning other than such as be supplied by Landlord.
13. No boring or cutting for telephone or electric wires shall be allowed
without the consent of Landlord and any such wires permitted shall be introduced
at the place and in the manner described by Landlord. The location of
telephones, speakers, fire extinguisher and all other office equipment affixed
to Premises occupied by Tenants shall be subject to the approval of Landlord.
Each Tenant shall pay all expenses incurred in connection with the installation
of its equipment, including any telephone and electricity distribution
equipment.
14. Upon termination of occupancy of the building, each Tenant shall deliver to
Landlord all keys furnished by Landlord, and any reproductions thereof made by
or at the direction of such Tenant, and in the event of loss of any keys
furnished shall pay Landlord therefore.
15. No Tenant shall affix any floor covering in any manner except as approved
by Landlord. The expense of repairing any damage caused by removal of any such
floor covering shall be borne by the Tenant by whom or by whose contractors,
employees or invitees, the damage
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shall have been caused.
16. On Sundays and legal holidays and between the hours of 6:00 p.m. and 8:00
a.m., access to the building may be refused unless the person seeking access is
known to the person charged with responsibility for the safety and protection of
the building and has a pass or is properly identified. In no case shall Landlord
be liable for any loss or damage for any error with respect to the admission to
or exclusion from the building of any person. In case of invasion, mob, riot,
public excitement or other commotion and at such times as Landlord deems
necessary for the safety and protection of the building, its Tenants and all
property located therein, Landlord may prohibit and prevent access to the
building by all persons by any means Landlord deems appropriate.
17. Each Tenant shall see that the exterior doors of its Premises are closed
and securely locked on Sundays and legal holidays and not later than 6:00 p.m.
of each other day. Each Tenant shall exercise extraordinary care and caution
that all water faucets or water apparatus are entirely shut off each day before
its Premises are left unoccupied and that all electricity or gas shall likewise
be carefully shut off so as to prevent waste or damage to Landlord or to other
Tenants of the building.
18. Landlord may exclude or expel from the building any person who, in the
judgment of Landlord, is intoxicated or under the influence of liquor or drugs,
or who shall in any manner do any act in violation of any of the rules and
regulations of the building.
19. The requirements of Tenants will be attended to only upon application to
Landlord at the office of the building. Employees of Landlord shall not perform
any work outside of their regular duties unless under special instructions from
Landlord, and no employee of Landlord shall be required to admit any person
(Tenant or otherwise) to any Premises in the building.
20. No vending or food or beverage dispensing machine or machines of any
description shall be installed, maintained or operated upon any premise in the
building without the written permission of the Landlord.
21. Landlord, without notice and without liability to any Tenant, at any time
may change the name or the street address of the building.
22. The word "building" as used in these rules and regulations means the
building of which a part of the Premises are leased pursuant to the Lease to
which these rules and regulations are attached. Each Tenant shall be liable to
Landlord and to each other Tenant of the building for any loss, cost, expense,
damage or liability, including attorneys' fees, caused or occasioned by the
failure of such first named Tenant to comply with these rules, but Landlord
shall have no liability for such failure of for failing or being unable to
enforce compliance therewith by any Tenant and such failure by Landlord or non-
compliance by any other Tenant shall not be a ground for termination of the
lease to which these rules and regulations are attached by the Tenant
thereunder.
23. Carpet protector pads shall be used by all desk stations.
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FIRST AMENDMENT TO LEASE
This First Amendment to Lease ("First Amendment") is entered as of this twenty-
fourth day of June, 1998, by and between Rosjan Limited Partnership, A
California Limited Partnership ("Landlord"), and Infospace, Inc., ("Tenant").
The Parties enter this First Amendment on the basis of the following facts,
intentions and understandings:
A. Landlord and Tenant have entered into that certain Office Lease dated 10th of
March, 1998, pursuant to which Landlord leased to Tenant Suite 443/445
("Premises") for the permitted uses listed therein, the Premises being
located in the City and County of San Mateo, State of California, as
indicated on the Building Floor Plan attached as Exhibit A to the Lease.
B. Landlord agrees and Tenant now desires to expand the Premises and amend the
Lease in other respects as hereinafter provided.
C. In the event of any conflict between the covenants and agreements of the
Lease and this First Amendment, the covenants and agreements of this First
Amendment shall prevail.
Now, therefore, In Consideration of the mutual covenants and promises of
parties, the parties hereto agree as follows:
1. Additional Premises: The additional premises, consists of approximately 422
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rentable square feet (previously a part of suite 459).
2. Term: The Term of the Lease will be for 24 months, commencing July 1, 1998
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and terminating on June 30, 2000.
3. Base Rent: Effective July 1, 1998, the Base Rent for the Additional Premises
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shall be as follows (to be paid in addition to the base rent for Suite
443/445):
Additional Premises Premises Combined Premises
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7/1/98 - 6/30/99 $780.70 $2,665.85 $3,446.55
7/1/99 - 6/30/00 $801.80 $2,737.90 $3,539.70
4. Security Deposit: The Security Deposit for the Additional Premises shall be
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equal to Seven Hundred Eighty and 70/100 dollars ($780.70). Upon execution of
this First Amendment of Lease, the Tenant shall pay to the Landlord Seven
Hundred Eighty and 70/100 dollars ($780.70) as Security deposit together with
the first month's rent ($780.70 + $780.70 = $1,561.40).
5. Property Tax, Insurance and Operating Expense Increases for Additional
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Premises: Tenant shall pay to landlord and amount equal to .59% of any
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increase in property taxes, insurance premiums and operating expenses paid or
incurred by Landlord above such paid or incurred by Landlord during the Base
Year. "Base Year" shall mean the calendar year 1998. (Total share for
combined Premises is 2.63%.)
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6. Obligations: Except as otherwise provided herewith the Lease shall remain in
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full force.
7. The Additional Premises shall be "as is".
In Witness Whereof, the parties hereto have executed the First Amendment to
Lease as of the date first above written.
"Landlord": "Tenant"
Rosjan Limited Partnership Infospace, Inc.
By: Kennedy-Wilson Management Group By: /s/ Paul Vilandre
Its Management Agent -----------------------------
Paul Vilandre
By:_____________________________ Its: Chief Financial Officer
Eric M. Bender
Its: Director of Property Management By: /s/ Stan Wang
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Stan Wang
Date:___________________________
Its President & CEO
Date:___________________________
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OFFICE LEASE
PARTIES. This lease, made this 10th day of March between ROSJAN LIMITED
PARTNERSHIP and Infospace, Inc., Tenant.
WITNESSETH:
1. PREMISES. Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord those certain Premises (hereinafter called "Premises") outlined in red
on Exhibit A attached hereto and by this reference made a part hereof, said
Premises being situated on the 4th floor, Suite 443 of that certain building
(hereinafter called "Building") known as 181 Second Avenue, San Mateo,
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California.
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Said letting and hiring is upon and subject to the terms, covenants, and
conditions herein set forth and Tenant covenants as a material part of the
consideration for this Lease to keep and perform each and all of said terms,
covenants and conditions by it to be kept and performed and that this Lease is
made upon the condition of such performance.
2. PURPOSE. The Premises shall be used for general office purposes and for no
other use or purpose without the prior written consent of Landlord.
3. TERM. The term of this Lease shall be for twenty-seven (27) months
commencing on the 1st day of April, 1998, (the "Lease Term"), ending on the
30th day of June, 2000.
4. POSSESSION. If Landlord, for any reason whatsoever, cannot deliver possession
of the said Premises to Tenant at the commencement of the term hereof, this
Lease shall be void or voidable, nor shall Landlord be liable for any loss or
damage resulting therefrom, but in that event there shall be proportionate
reduction of rent covering the period between the commencement of the said term
and the time when Landlord can deliver possession. If possession of the Premises
is not delivered to Tenant within six months from the scheduled commencement
date, this Lease will terminate. Should Landlord tender possession of the
Premises to Tenant prior to the date specified for the commencement of the term,
and Tenant accepts such prior tender, such prior occupancy shall be subject to
all terms, covenants and conditions of this Lease, including the payment of
rent.
5. RENT. On or before the first day of each calendar month during the term
hereof, Tenant shall pay to Landlord, as minimum monthly rent for the Premises,
the sum of $2,665.85. The minimum monthly rent for any partial month shall be
pro-rated at the rate of 1/30 of the minimum monthly rent per day. Said rent
shall be paid by Tenant to Landlord, in advance, without deduction or offset, in
lawful money of the United States of America at 181 Second Avenue. Suite 688,
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San Mateo, California, or to such other person or at such place as Landlord may
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from time to time designate in writing. The minimum monthly rent for the
premises shall increase as stated below:
April 1, 1998 through June 30, 1999 - $2,665.85 per month
July 1, 1999 through June 30, 2000 - $2,737.90 per month
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6. RENTAL ADJUSTMENT.
(A) In addition to the monthly rent provided for in Paragraph 5 hereof, Tenant
shall pay to Landlord the sums set forth in the following subparagraphs.
Tenant's percentage share as set forth below has been calculated by dividing the
number of square feet of rentable area in the Premises by the number of square
feet rentable in the building. In the event the rentable area of the building is
changed, the Tenant's percentage share shall be appropriately adjusted. Rentable
area shall be based upon the Building Owners and Managers Association
International (BOMAI) standard method of floor measurement for office buildings.
Tenant hereby approves and accepts Landlord's calculation of Tenant's current
percentage share as set forth below.
(B) Tax Increases and Assessments. Tenant shall pay to Landlord an amount equal
to 2.04% of any increase in real property taxes and assessments or other fees or
charges of whatsoever kind or character imposed by a governmental agency which
may be levied on the land and building of which the Premises are a part and
personal property taxes levied on personal property of Landlord used in the
operation of said land and building above the amount of such taxes levied and
assessed for the fiscal tax year ending 1998, either by way of increase in the
rate or in the assessed valuation of said land and building or by imposition of
any such charges by ordinance or statute of any authority having jurisdiction.
For the purposes of the subparagraph (A), real and personal property taxes shall
include, without limitation, taxes of every kind and nature levied and assessed
in lieu of or in substitution for existing or additional real or personal
property taxes on said land and building as well as any form of assessment,
license, fee, levy, penalty, or tax (other than inheritance or state taxes),
imposed by any authority having the direct or indirect power to tax, including
any city, county, state, or federal government, or any school, Agricultural,
lighting, drainage, or other improvement district, as against any legal or
equitable interest of Landlord in the Premises or in the real property of which
the Premises are a part, or as against Landlord's right to rent or other income
therefrom, or as against Landlord's business of leasing the Premises, and
including any and all charges which may be charged by the environmental
protection agency or other similar governmental regulatory agency or authority.
In addition, Tenant shall pay one hundred percent (100%) of any increase in
taxes or assessments of whatsoever kind and nature (including, without
limitation, all personal property taxes) caused by improvements or installations
made by Tenant to the Premises at any time during the term hereof. The total
amounts due hereunder shall be paid to Landlord on or before the date full
payment of such taxes or assessments or, if payable in installments, the date
payment of the first installment of such taxes or assessments shall become due.
In the event said taxes or assessments are charged to or paid or payable by
Landlord, Tenant forthwith upon demand therefore, shall reimburse Landlord for
all amounts of such taxes or assessments chargeable against Tenant pursuant to
this subparagraph (B) and paid by Landlord.
(C) Operating Expense Increases. Tenant shall pay to Landlord, at the times
hereinafter set forth, an amount equal to 2.04% of any increase in direct
expenses paid or incurred by Landlord on account of the operation or maintenance
of the building above such direct expenses paid or incurred by Landlord during
the Base Year. "Base Year" as used in this subparagraph (c) shall mean the
calendar year 1998. "Direct expenses" as used herein shall include all direct
costs of operation and maintenance as determined by standard accounting
practices as set forth in the Building Owners and Managers Association
International (BOMAI) chart of accounts from time to time (excluding, however,
any and all taxes of the nature set forth in subparagraph (B)
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above) and shall include the following by way of illustration but not
limitation: the cost of contesting by appropriate proceeding the amount or the
validity of any of the aforementioned taxes or fees; water and sewer charges;
insurance premiums; license, permit and inspection fees; charges for heat,
light, power and steam; janitorial services; labor; supplies; materials,
equipment and tools; and management fees. "Direct expenses" as used herein shall
not include depreciation on the building or equipment therein, interest, or real
estate broker's commissions.
Statements of the amount of direct expenses for the preceding calendar year and
the amount of such increase payable by Tenant shall be determined or estimated
by Landlord shall be given to Tenant on such date as Landlord shall from time to
time determine. All amounts payable by Tenant as shown on said statement shall
be paid by Tenant within the time required by said statement. If during any such
year Landlord shall revise its estimate of Tenant's share of said expenses for
said year, Landlord shall advise Tenant and commencing on the next date payment
of additional charges are due, Tenant shall pay all additional charges based on
such revised estimate for the portion of the year already elapsed and shall
commence paying the additional charges based on such revised estimate for the
remainder of such year.
7. SECURITY. Simultaneously with the execution of this Lease, Tenant shall
deposit with Landlord the sum of $5,331.70 of which sum $2,665.85 shall be
payment of the April 1998 rent and the balance thereof, namely $2,665.85 shall
be held by Landlord as security for the faithful performance by Tenant of all
the terms, covenants and conditions of this lease. Provided that at the end of
the term Tenant shall have delivered up the Premises to Landlord, broom clean,
and in the same condition as at the commencement date, reasonable wear excepted,
said sum held as security shall be returned to Tenant. No interest shall be
payable thereon and Landlord shall not be required to keep said sum in a
separate account. No security or guaranty which may now or hereafter be
furnished Landlord for the payment of the rent herein reserved or for
performance by Tenant of the other covenants or conditions of this Lease shall
in any way be a 6; or defense to any action in unlawful detainer, or for the
recovery of the Premises, or to any action which Landlord may at any time
commence for a breach of any of the covenants or conditions of this Lease.
8. USES PROHIBITED. Tenant shall not do or permit anything to be done in or
about the Premises nor bring or keep anything therein which will in any way
increase the rate of or affect any fire or other insurance upon the building or
any of its contents or cause a cancellation of any insurance policy covering
said building or contents. Tenant shall not do or permit anything to be done in
or about the Premises which will in any way obstruct or interfere with the
rights of other Tenants or occupants of the building or injure or annoy them, or
use or allow the Premises to be used for any residential, immoral, unlawful, or
objectionable purpose, nor shall Tenant cause, maintain, or permit any nuisance
in, on or about the Premises. No cooking devices or other odor-causing devices,
loudspeakers or other similar device, system or apparatus which can be heard or
experienced outside the Premises shall, without the prior written approval of
Landlord, be used in or at the Premises. Tenant shall not commit or suffer to be
committed any waste in or upon the Premises.
9. COMPLIANCE WITH LAW. Tenant shall not use or permit anything to be done in or
about the Premises which will in any way conflict with any law, statute,
ordinance or governmental rule, regulation or requirement now in force or which
may hereafter be enacted or promulgated. Tenant, at its sole cost and expense,
shall promptly comply with all laws, statutes, ordinances
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and governmental rules, regulations or requirements now in force or which may
hereafter be in force and with the requirements of any board of fire
underwriters or other similar body now or hereafter constituted relating to or
affecting the condition, use of occupancy of the Premises, excluding structural
changes not related to or affected by Tenant's improvements or acts. The
judgment of any court of competent jurisdiction or the admission of Tenant in an
action against Tenant, whether Landlord be a party thereto or not, that Tenant
has violated any law, statute, ordinance or governmental rule, regulation or
requirement shall be conclusive of that fact as between Landlord and Tenant.
10. ALTERATIONS. Tenant shall not make or suffer to be made any alterations,
additions or improvements to or of the Premises or any part thereof without the
written consent of Landlord first had and obtained. Any alterations, additions,
or improvements to or of said Premises, including without limitation any
partitions, movable or otherwise, and all carpeting, shall at once become a part
of the-realty and belong to Landlord. Movable furniture, equipment and trade
fixtures shall remain the property of Tenant. If Landlord consents to the making
of any alterations, additions or improvements to the Premises by Tenant, the
same shall be made by Tenant at Tenant's sole cost and expense and any
contractor or person selected by Tenant to make the same must first be approved
of in writing by Landlord. Upon the expiration or sooner termination of the term
Tenant, upon demand by Landlord, at Tenant's sole cost and expense, forthwith
and with all due diligence shall remove any alterations, additions or
improvements made by Tenant designated by Landlord to be removed, and Tenant,
forthwith and with all due diligence, at its sole cost and expense, shall repair
any damage to the Premises caused by such removal.
12. ABANDONMENT. Tenant shall not vacate or abandon the Premises at any time
during the term hereof, and if Tenant shall abandon, vacate or surrender the
Premises or be dispossessed by process of law, or otherwise, any personal
property belonging to Tenant and left on the Premises shall be deemed to be
abandoned, at the option of Landlord.
13. LIENS. Tenant shall keep the Premises and the building and the land upon
which the building is situated free from any liens arising out of any work
performed, materials furnished or obligations incurred by Tenant. Tenant shall,
in the event of the filing of any such lien, post any bond required to release
the Premises therefrom.
14. ASSIGNMENT AND SUBLETTING.
(A) Tenant shall not mortgage, pledge, hypothecate or encumber this Lease or any
interest therein. Tenant shall not assign this Lease or sublet or suffer any
other person (the agents and servants of Tenant excepted) to occupy or use the
Premises, or any part thereof, or any right or privilege appurtenant thereto
without the prior written consent of Landlord first had and obtained, which
consent shall not be unreasonably withheld. Landlord's consent to one
assignment, subleasing or occupancy shall not be deemed to be a consent to any
subsequent assignment, subleasing or occupancy.
(B) Provided further and notwithstanding anything therein before set forth: In
the event that at any time or from time to time during the term of this Lease,
Tenant desires to sublet all or any part of the Premises, Tenant shall notify
Landlord in writing (the "Sublet Notice") of the terms of the proposed
subletting, and the area so proposed to be sublet and shall give Landlord the
right to sublet from Tenant such space (the "Sublet Space") on the same terms as
those
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contained in the Sublet Notice. Such option shall be exercisable by Landlord in
writing for a period of thirty (30) days after receipt of the Sublet Notice.
If Landlord fails to exercise its option and Tenant desires to complete the
proposed sublease, Tenant shall deliver an executed copy of such sublease to
Landlord in order to obtain its consent as required in paragraph 14(A) above. If
Landlord consents to a sublease, then such sublease shall be subject to and made
upon the following terms:
(A) Any such sublease shall be subject to the terms of this Lease and the term
thereof may not extend beyond the expiration of the term of this Lease;
(B) No subtenant shall have a right to further sublease its Premises. If
Landlord fails to exercise such option, and Tenant fails to consummate a
sublease with a third party within sixty (60) days after the expiration of
Landlord's option period on the same terms and conditions contained in the
Sublet Notice, Tenant shall be required to deliver a new Sublet Notice to
Landlord and comply with the terms and conditions set forth above before any
further subletting shall be permitted.
(C) Regardless of Landlord's consent, no subletting nor assignment shall release
Tenant of Tenant's obligation or alter the primary liability of Tenant to pay
rent and perform other obligations of Tenant under this lease.
(D) In no event shall Tenant assign this Lease or sublet the Premises or any
portion thereof to any then, existing, or prospective Tenant of said building.
(E) Tenant shall pay Landlord's reasonable costs incurred in connection with
Tenant's request to assign this lease or sublet the Premises, regardless of
whether or not the Landlord consents to the proposed transfer.
15. INDEMNIFICATION OF LANDLORD. Landlord shall not be liable to Tenant and
Tenant hereby waives all claims against Landlord for any injury or damage to any
person or property in or about the Premises by or from any cause whatsoever and,
without limiting the generality of the foregoing, whether caused by water
leakage of any character from the roof, walls, basement or other portion of the
Premises of said building or any part thereof.
Tenant shall hold Landlord harmless from and indemnify and defend Landlord
against any and all claims or liability for any injury or damage to any person
or property whatsoever: (1) occurring in, on or about the Premises or any part
thereof, and (2) occurring in, on or about any facilities (including without
prejudice to the generality of the term "facilities" elevators, stairways,
passageways or hallways), the use of which Tenant may have in common with other
Tenants of the building, when such injury or damage shall be caused in part or
in whole by the act, neglect, default or omission of any duty with respect to
the same by Tenant, its agents, employees or invitees.
16. INSURANCE. Tenant agrees to keep in force during the term hereof, at
Tenant's expense, public liability and property damage insurance with combined
single limits in the amount of not less than $1,000,000.00 (one million
dollars). Said policy shall name Landlord as an additional insured, and shall
insure Landlord's contingent liability as respects acts, or omissions of Tenant,
shall be issued by an insurance company licensed to do business in the state
where the
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Premises are located, and shall provide that said insurance shall not be
canceled or amended unless thirty (30) days prior written notice to Landlord is
first given. Said policy or a certificate thereof shall be delivered to Landlord
by Tenant prior to the commencement of the term and each renewal of such
insurance. Tenant hereby waives all rights of subrogation against Landlord to
which any insurance carrier may at any time become entitled under any policy of
insurance carried by Tenant.
17. UTILITIES. Landlord shall furnish to the Premises, during reasonable hours
of generally recognized business days, to be determined by Landlord, and subject
to the rules and regulations of the building, water and electricity suitable for
the use of the Premises for general office purposes and heat required in
Landlord's judgment for the comfortable use and occupation of the Premises for
such purposes, janitorial service, and elevator service. Landlord shall not be
liable for, and Tenant shall not be entitled to any abatement or reduction of
rent by reason if, Landlord's failure to furnish any of the foregoing when such
failure or delay is caused by accident, breakage, repairs, strikes, lockouts or
other labor disturbances or labor disputes of any character, or is caused
directly or indirectly by the limitation, curtailment, rationing or
restrictions on use of water, electricity, gas or any other form of energy
serving the Premises or the building, or by any other cause, similar or
dissimilar, beyond the reasonable control of Landlord. Landlord shall not be
liable under any circumstances for loss of business or injury to property,
however occurring, through or in connection with or incidental to failure to
furnish any of the foregoing. Tenant shall pay and provide for all services and
utilities not furnished by Landlord.
Tenant will not, without the written consent of Landlord, use any apparatus or
device' in the Premises which will in any way increase the amount of
electricity, cooling capacity or water usually furnished or supplied for use of
the Premises for general office purposes or connect with electric current,
except through existing electrical outlets in the Premises, or water pipes, any
apparatus or device for the purpose of using electric current or water. If
Tenant shall require water or electric current in excess of that customarily
furnished or supplied to other Tenants of the building for use of their Premises
for general office purposes, Tenant shall first procure the consent of Landlord,
which Landlord may refuse, to the use thereof and Landlord may cause an electric
current or water meter to be installed in the Premises so as to measure the
amount of excess electric current or water consumed by Tenant. The cost of any
such meter and of the installation, maintenance and repair thereof shall be paid
by Tenant and Tenant agrees to pay to Landlord promptly upon demand thereof the
cost of all such excess water and electric current consumed, as shown by said
meters, at the rates charged for such services by the local public utility
furnishing the same, plus any additional expense incurred in keeping account of
the excess electric current or water so consumed.
18. PERSONAL PROPERTY AND OTHER TAXES. Tenant shall pay, before delinquency, any
and all taxes levied or assessed and which become payable during the term hereof
upon Tenant's equipment, furniture, fixtures and other personal property located
in the Premises, including carpeting installed by Tenant even though said
carpeting has become a part of the leased Premises; and any and all taxes or
increases therein levied or assessed on Landlord or Tenant by virtue of
alterations, additions or improvements to the Premises made by Tenant or
Landlord at Tenant's request. In the event said taxes are charged to or paid or
payable by Landlord, Tenant, forthwith upon demand therefore, shall reimburse
Landlord for all of such taxes paid by Landlord.
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19. RULES AND REGULATIONS. Tenant shall faithfully observe and comply with the
rules and regulations printed on or annexed to this Lease and all modifications
of and additions thereto applicable to all Tenants of the building from time to
time put into effect by Landlord of which Tenant shall have notice. Landlord
shall not be responsible to Tenant for the nonperformance by any other Tenant or
occupant of the building of any of said rules and regulations.
20. HOLDING OVER. If Tenant holds possession of the Premises after the term of
this Lease, Tenant shall, (at option of Landlord to be exercised by Landlord's
giving written notice to Tenant and not otherwise) become a Tenant from month to
month upon the terms and conditions herein specified, so far as applicable, at a
monthly rental of 1.15 x the last month's rent payable in advance, in lawful
money, and shall continue to be such Tenant until thirty (30) days after Tenant
shall have given to Landlord or Landlord shall have given to Tenant a written
notice of intent to terminate such monthly tenancy. Unless Landlord shall
exercise the option hereby given him Tenant shall be a Tenant at sufferance
only, whether or not Landlord shall accept any rent from Tenant is so holding
over.
21. SUBORDINATION. This Lease shall be subject and subordinate at all times to
all ground or underlying leases which may now exist or hereafter be executed
affecting the building and/or the land upon which the building is situated and
to the lien of any mortgages or deeds of trust in any amount or amounts
whatsoever now or hereafter placed on or against said building and/or land or on
or against the Landlord's interest or estate therein or on or against any ground
or underlying lease without the necessity of having further instruments on the
part of Tenant to effectuate such subordination. Notwithstanding the foregoing,
Tenant covenants and agrees to execute and deliver, upon demand, such further
instruments evidencing such subordination of this Lease to such ground or
underlying leases and to the lien of any such mortgages or deeds of trust as may
be required by Landlord. Tenant hereby irrevocably appoints Landlord the
attorney in fact of Tenant to execute and deliver any such instrument or
instruments for or in the name of Tenant. In the event of termination of any
ground or underlying lease, or in the event of foreclosure or exercise of any
power of sale under any mortgage or deed of trust superior to this Lease or to
which this Lease is subject or subordinate, upon Tenant's attornment to the
lessor under such ground or underlying lease or to the purchaser at any
foreclosure sale or sale pursuant to the exercise of any power of sale under any
mortgage or deed of trust, this Lease shall not terminate and Tenant shall
automatically be and become the Tenant of said Lessor under such ground or
underlying lease or to said purchaser, whichever shall make demand therefore.
22. ENTRY BY LANDLORD. Landlord reserves and shall at any and all reasonable
times have the right to enter the Premises to inspect the same, to supply
janitor service and any other service to be provided by Landlord to Tenant
hereunder, to submit the Premises to prospective purchasers or Tenants, to post
notices of nonresponsibility, and to alter, improve or repair the Premises and
any portion of the building without abatement of rent and may for that purpose
erect scaffolding and other necessary structures where reasonably required by
the character of the work to be performed, always providing the entrance to the
Premises shall not be blocked thereby and further providing that the business of
Tenant shall not be interfered with unreasonably. Tenant hereby waives any claim
for damages for any injury or inconvenience to or interference with Tenant's
business, any loss occasioned by such entry. For each of the aforesaid purposes,
Landlord shall at all times have and retain a key with which to unlock all of
the doors, in, upon and about the Premises excluding Tenant's vaults and safes,
and Landlord
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shall have the right to use any and all means which Landlord may deem proper to
open said doors in an emergency in order to obtain entry to the Premises, and
any entry to the Premises obtained by Landlord by any of said means, or
otherwise, shall not under any circumstances be construed or deemed to be a
forcible or unlawful entry into or a detainer of the Premises or an eviction of
Tenant from the Premises or any portion thereof.
23. INSOLVENCY OR BANKRUPTCY. Either (a) the appointment of a receiver to take
possession of all or substantially all of the assets of Tenant, (b) an
assignment by Tenant for the benefit of creditors, or (c) any action taken or
suffered by Tenant under any insolvency, bankruptcy or reorganization act shall
constitute a breach of this Lease by Tenant. Upon the happening of any such
event, this Lease shall terminate five (5) days after written notice of
termination from Landlord to Tenant. In no event shall this Lease be assigned or
assignable by reason of voluntary or involuntary bankruptcy proceedings nor
shall any rights or privileges hereunder be an asset of Tenant in any
bankruptcy, insolvency or reorganization proceedings.
24. DEFAULT. In the event of any breach or default of Lease by Tenant, then
Landlord, besides any other rights and remedies of Landlord at law or equity,
shall have the right either to terminate Tenant's right to possession of the
Premises and thereby terminate this Lease or to have this Lease continue in full
force and effect with Tenant at all times having the right to possession of the
Premises. Should Landlord elect to terminate Tenant's right to possession of the
Premises and terminate this Lease, Landlord shall have the immediate right of
entry and may remove all persons and property from the Premises. Such property
so removed may be stored in a public warehouse or elsewhere at the cost and for
the account of Tenant. Upon such termination, Landlord, in addition to any other
rights and remedies (including rights and remedies under Subparagraphs (1), (2)
and (4) of Subdivision (a) of Section 1951.2 of the California Civil Code or any
amendment thereto), shall be entitled to recover from Tenant the worth at the
time of award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of such rental loss that the Tenant
proves could be reasonably avoided. The worth at the time of award of the amount
referred to in subparagraphs (1) and (2) of Subdivision (a) of Section 1951.2 of
the California Civil Code shall be computed by allowing interest at the maximum
rate allowed by law. The worth at the time of the award of the amount referred
to in subparagraph (3) of Subdivision 1951.2 of the California Civil Code shall
be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of the award plus 1%.
Any proof by Tenant of the amount of rental loss that could reasonably be
avoided shall be made in the following manner: Landlord and Tenant shall each
select a licensed real estate broker in the business of renting property of the
same type and use as the Premises and in the same geographic vicinity and such
two real estate brokers shall select a third licensed real estate broker and the
three licensed real estate brokers so selected shall determine the amount of
rental loss that could reasonably be avoided for the balance of the term of this
Lease after the time of award. The decision of the majority of said licensed
real estate brokers shall be final and binding upon the parties hereto. Should
Landlord, following any breach or default of this Lease by Tenant, elect to keep
this Lease in full force and effect, with Tenant retaining the right to
possession of the Premises (notwithstanding the fact that Tenant may have
abandoned the leased Premises), then Landlord, besides the rights and remedies
specified in Section 1951.4 of the California Civil Code and all other rights
and remedies Landlord may have at law or equity, shall have the right to enforce
all of Landlord's rights and remedies under this Lease, including but not
limited to the right to recover the installments of rent as they become due
8
<PAGE>
under this Lease. Notwithstanding any such election to have this Lease remain in
full force and effect, Landlord may at any time thereafter elect to terminate
Tenant's right to possession of said Premises and thereby terminate this Lease
for any previous breach or default which remains uncured, or for any subsequent
breach or default.
25. DAMAGE BY FIRE, ETC. If the Premises are or the building is damaged by fire
or other casualty which is covered by insurance, Landlord shall forthwith repair
the same, provided such repairs can be made within sixty (60) working days from
the date of such damage under the laws and regulations of the state, federal,
county and municipal authorities having jurisdiction thereof, and this Lease
shall remain in full force and effect during the making of such repairs, except
that Tenant shall be entitled to a proportionate reduction of rent while such
repairs are being made if the damage was not attributable to Tenant's negligent
or willful act, such proportionate reduction to be based upon the full extent to
which the making of such repairs shall interfere with the business carried on by
Tenant in the Premises. If such repairs are not covered by insurance or cannot
be made within sixty (60) working days from the date of such damage, Landlord
shall have the option either (1) to repair or restore such damage, this Lease
continuing in full force and effect, but the rent to be proportionately reduced
as herein above in this paragraph provided, or (2) to give notice to Tenant at
any time within thirty (30) working days after the date of such damage
terminating this Lease as of a date to be specified in such notice which date
shall not be less than thirty (30) nor more than sixty (60) working days after
the giving of such notice. In the event of the giving of such notice of
termination by either Landlord or Tenant, this Lease and all interest of Tenant
in the Premises shall terminate on the date so specified in such notice, and the
rent, reduced by any proportionate reduction based upon the extent, if any, to
which said damage interfered with the business carried on by Tenant in the
Premises, shall be paid up to date of such termination. Landlord shall not be
liable for or be required to repair any injury or damage by fire or other cause
to the property of Tenant, or to make repairs or replacements of any paneling,
decorations, railings, floor coverings or any equipment or improvements
installed on the Premises by Tenant. Tenant hereby waives any provisions of law
automatically terminating this Lease or otherwise contrary to the provisions of
this paragraph in the event of damage to or destruction of the Premises.
26. EMINENT DOMAIN. If all or any part of the Premises shall be taken or
appropriated by any public or quasi-public authority under the power of eminent
domain, and such taking will substantially impair Tenant's use of the Premises
for more than ninety (90) days, either party hereto shall have the right, at its
option, to terminate this Lease. If all or any part of the building of which the
Premises are a part shall be taken or appropriated by any public or quasi-public
authority under any power of eminent domain, Landlord may terminate this Lease.
In either of such events, Landlord shall be entitled to and Tenant upon demand
of Landlord shall assign to Landlord any rights of Tenant to any and all income,
rent, award, or any interest therein whatsoever which may be paid or made in
connection with such public or quasi-public use or purpose, and Tenant shall
have no claim against Landlord or the condemner for the value of any unexpired
term of this Lease. If a part of the Premises shall be so taken or appropriated
and neither party shall elect to terminate this Lease, the rent thereafter to be
paid shall be equitably reduced.
27. FLATS AND RIDERS. Clauses, plats and riders, if any, signed by Landlord and
Tenant and endorsed on or affixed to this Lease are a part hereof, and in the
event of variation or discrepancy the duplicate original hereof, including such
clauses, plats and riders, if any, held by Landlord shall control.
9
<PAGE>
28. SALE BY LANDLORD. In the event of a sale or conveyance by Landlord of the
building, 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 of Landlord in and to this Lease. If
any security be given by Tenant to secure the faithful performance of all or any
of the covenants of this Lease on the part of Tenant, Landlord may transfer
and/or deliver the security to the successor in interest or Landlord, and
thereupon Landlord shall be discharged from any further liability in reference
thereto. Except as set forth in this Paragraph 28, this Lease shall not be
affected by any such sale or conveyance.
29. ESTOPPEL CERTIFICATES. At any time and from time to time, upon not more than
ten (10) days prior to request by Landlord, Tenant shall execute, acknowledge
and deliver to Landlord a statement certifying the date of commencement of this
Lease; stating that this Lease is unmodified and in full force and effect (or if
there have been modifications, that this Lease is in full force and effect as
modified and the date and nature of such modifications) and the dates to which
the rent has been paid, and setting forth such other matters as may reasonably
be requested by Landlord. Landlord and Tenant intend that any such statement
delivered pursuant to this paragraph may be relied upon by any mortgagee or the
beneficiary of any Deed of Trust or by any purchaser or prospective purchaser of
the building.
30. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to be kept or
performed by Tenant under any of the terms of this lease shall be performed by
Tenant at Tenant's sole cost and expense and without any abatement of rent. If
Tenant shall fail to pay any sum of money, other than rent, required to be paid
by it hereunder or shall fail to perform any other act on its part to be
performed hereunder, and such failure shall continue for ten (10) days after
notice thereof by Landlord, Landlord may, but shall not be obligated to, and
without waiving any default of Tenant or releasing Tenant from any obligations
of Tenant hereunder, make any such payment or perform any such other act on
Tenant's part to be made or performed as in this Lease provided. All sums so
paid by the Landlord and all necessary incidental costs, together with interest
thereon at the rate of ten percent (10%) per annum from the date of such payment
by the Landlord, shall be paid to Landlord forthwith on demand, and Landlord
shall have (in addition to any other right or remedy of Landlord) the same
rights and remedies in the event of nonpayment thereof by Tenant as in the case
of default in payment of rent.
31. ATTORNEY FEES. If either Landlord or Tenant shall obtain legal counsel or
bring an action against the other by reason of the breach of any covenant or
warranty hereof, or otherwise arising out of this lease, the unsuccessful party
shall pay to the prevailing party reasonable attorney's fees, which shall be
payable whether or not any action is prosecuted to judgment. The term
"prevailing party" shall include, without limitation, a party who obtains legal
counsel or brings an action against the other by reason of the other's breach or
default and obtains substantially the relief sought, whether by compromise,
settlement or judgment.
32. SURRENDER OF PREMISES. The voluntary or other surrender of this Lease by
Tenant or mutual cancellation thereof shall not work a merger and, at the option
of Landlord, shall terminate all or any existing subleases or subtenancies, or
at the option of Landlord, may operate as an assignment to Landlord of any or
all such subleases or subtenancies.
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33. WAIVER. The waiver by Landlord or Tenant of performance of any term,
covenant or condition herein contained shall not be deemed to be a waiver of
such term, covenant or condition or any subsequent breach of the same or any
other term, covenant or condition herein contained. The subsequent acceptance of
rent hereunder by Landlord shall not be deemed to be a waiver of any preceding
breach by Tenant of any term, covenant or condition of this Lease, other than
the failure of Tenant to pay the particular rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
rent.
34. NOTICES. All notices and demands which may or are required to be given by
either party to the other hereunder shall be in writing. All notices and demands
by Landlord to Tenant shall be delivered personally or sent by United States
certified or registered mail, postage prepaid, addressed to Tenant at the
Premises, or to such other such place as Tenant may from time to time by like
notice designate. All notices and demands by Tenant to Landlord shall be sent by
United States certified or registered mail, postage prepaid, addressed to
Landlord at 181 Second Avenue, Suite 688, San Mateo, California. 94401 or to
----------------------------------------------------------
other such place as Landlord may from time to time by like notice designate.
35. NOTICE OF SURRENDER. At least ninety (90) days before the last day of the
term hereof, Tenant shall give to Landlord a written notice of intention to
surrender the Premises on that date, but nothing contained herein or any failure
to give such notice shall be construed as an extension of the term hereof or as
consent of Landlord to any holding over by Tenant.
36. DEFINED TERMS AND MARGINAL HEADINGS. The words "Landlord" and "Tenant" as
used herein shall include the plural as well as the singular. Words used in
masculine gender include the feminine and neuter. If there be more than one
Tenant, the obligations hereunder imposed upon Tenant shall be joint and
several. The marginal headings and titles to the paragraphs of the Lease are not
a part of this Lease and shall have no effect upon the construction or
interpretation of any part hereof.
37. TIME AND APPLICABLE LAW. Time is of the essence of this Lease and each and
all of its provisions. This Lease shall in all respects be governed by the laws
of the state in which the Premises are located.
38. SUCCESSORS. Subject to the provisions of Paragraph 14 hereof, the covenants
and conditions herein contained shall be binding upon and inure to the benefits
of the heirs, successors, executors, administrators and assigns of the parties
hereto.
39. ENTIRE AGREEMENT. This Lease constitutes the entire agreement between
Landlord and Tenant and no promises or representations, express or implied,
either written or oral, not herein set forth shall be binding upon or inure to
the benefit of Landlord or Tenant. This Lease shall not be modified by any oral
agreement, either express or implied, and all modifications hereof shall be in
writing and signed by both Landlord and Tenant.
40. LATE CHARGE. In the event Tenant shall fail to pay any rents or sums due
hereunder on or before the due date herein provided, then and in that event the
amount so due and unpaid shall bear a late charge equal to five percent (5%) of
the amount due together with interest accruing from the date due at the maximum
interest rate permitted by law, which late charge and interest shall be payable
forthwith upon demand. (The foregoing shall be in addition to any other right or
remedy of Landlord.)
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41. ADDITIONAL PROVISIONS. The exhibits and addenda listed below are
incorporated by reference in this Lease:
Exhibit A and Rules and Regulations
42. Tenant will take the space "as is".
IN WITNESS WHEREOF Landlord and Tenant have executed this lease the day and year
first above written.
"Landlord" "Tenant"
ROSJAN LIMITED PARTNERSHIP INFOSPACE, INC.
By: Kennedy-Wilson Management Group By: /s/ Paul C. Vilandre
-------------------------
Its Managing Group Paul C. Vilandre
By: /s/ Eric M. Bender Its: VP Finance
--------------------------- ------------------------
Eric M. Bender
Date: 3-18-98
Its: DIR. PROD. MGT. -----------------------
--------------------------
Date: 3/20/98
-------------------------
12
<PAGE>
RULES AND REGULATIONS FOR THE BUILDING
ATTACHED TO AND MADE A PART OF THIS LEASE
1. Except as provided or required by Landlord in accordance with building
standards, no sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed, printed, painted or affixed by Tenant on or to any part of
the building or exterior of the Premises leased to Tenants or to the door or
doors thereof without the written consent of Landlord first obtained and
Landlord shall have the right to remove any such sign, placard, picture,
advertisement, name or notice without notice to and at the expense of Tenant.
2. Except as provided or required by Landlord in accordance with building
standards, no draperies, curtains, blinds, shades, screens or other devices
shall be hung at or used in connection with any window or exterior door of the
Premises.
3. The bulletin board or directory of the building shall be used primarily for
display of the name and location of Tenants and Landlord reserves the right to
exclude any other names therefrom, to limit the number of names associated with
Tenants to be placed thereon and to charge for names associated with Tenants to
be placed thereon at rates applicable to Tenants.
4. The sidewalks, halls, passages, exits, entrances, elevators and stairways of
the building shall not be obstructed by Tenants or used by them for any purpose
other than for ingress to and egress from their respective Premises. The halls,
passages, exits, entrances, elevators, stairways, balconies and roof of the
building are not for the use of the general public and Landlord in all cases
reserves the right to control the same and prevent access thereto by all persons
whose presence, in the judgment of the Landlord, is or may be prejudicial to the
safety, character, reputation or interests of the building and its Tenants;
provided however, that Landlord shall not prevent such access to persons with
whom Tenants deal in the ordinary course of business unless such persons are
engaged in illegal activities. No person shall go upon the roof of the building
unless expressly so authorized by Landlord.
5. Tenants shall not alter any lock nor install any new or additional locks or
any bolts on any interior or exterior door of any Premises leased to Tenant.
6. The doors, windows, light fixtures and any lights or skylights that reflect
or admit light into halls or other places of the building shall not be covered
or obstructed. The toilet rooms, toilets, urinals, wash bowls and other
apparatus shall not be used for any purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be thrown or
placed therein. The expense of any breakage, stoppage or damage resulting from
the violation of this rule shall be borne by the Tenant who, or whose employees
or invitees, cause such expense.
7. Tenants shall not mark, drive nails, screw or drill into the walls, woodwork
or plaster or in any way deface the building or any Premises leased except for
supporting partitions, pictures, paintings, and other similar solely decorative
items.
8. Furniture, freight or equipment of every kind shall be moved into or out of
the building only at such times and in such manner as Landlord shall designate.
Landlord may prescribe and limit the weight, size and position of all equipment
to be used by Tenants, other than standard office desks, chairs and tables and
portable office machines. Safes and other heavy equipment
13
<PAGE>
shall, if considered necessary by Landlord, stand on wood strips of such
thickness as Landlord deems necessary to distribute properly the weight thereof.
All damage to the building or Premises occupied by Tenants caused by moving or
maintaining any property of a Tenant shall be repaired at the expense of such
Tenant.
9. No Tenant shall employ any person, other than the janitor provided by
Landlord, for the purposes of cleaning the Premises occupied by such Tenant
unless otherwise agreed to by Landlord. Except with the written consent of
Landlord, no person shall be permitted to enter the building for the purpose of
cleaning the same. Tenants shall not cause any unnecessary labor by carelessness
or indifference in the preservation of good order and cleanliness. Landlord
shall not be responsible to any Tenant for loss of property on the Premises,
however occurring, or for any damage to the property of any Tenant caused by the
employees or independent contractors of Landlord or by any other person. Janitor
service will not be furnished when rooms are occupied during the regular hours
when janitor service is provided. Window cleaning shall be done only at the
regular and customary times determined by Landlord for such services.
10. No Tenant shall sweep or throw or permit to be swept or thrown any dirt or
other substance into any of the corridors, halls or elevators or out of the
doors or stairways of the building; use or keep or permit to be used or kept
any-foul or noxious gas or substance; permit or suffer the Premises occupied by
such Tenant to be occupied or used in a manner offensive or objectionable to
Landlord or other Tenants by reason of noise, odors or vibrations; interfere in
any way with other Tenants or persons having business in the building; or bring
or keep or permit to be brought or kept in the building any animal life form,
other than human, except seeing eye dogs when in the company of their masters.
11. No cooking shall be done or permitted by Tenants in their respective
Premises except making coffee and microwave cooking, nor shall Premises occupied
by Tenants be used for the storage of merchandise, washing clothes, lodging, or
any improper, objectionable or immoral purposes.
12. No Tenant shall use or keep in the building any kerosene, gasoline or
inflammable or combustible fluid or material or use any method of heating or
air-conditioning other than such as be supplied by Landlord.
13. No boring or cutting for telephone or electric wires shall be allowed
without the consent of Landlord and any such wires permitted shall be introduced
at the place and in the manner described by Landlord. The location of
telephones, speakers, fire extinguisher and all other office equipment affixed
to Premises occupied by Tenants shall be subject to the approval of Landlord.
Each Tenant shall pay all expenses incurred in connection with the installation
of its equipment, including any telephone and electricity distribution
equipment.
14. Upon termination of occupancy of the building, each Tenant shall deliver to
Landlord all keys furnished by Landlord, and any reproductions thereof made by
or at the direction of such Tenant, and in the event of loss of any keys
furnished shall pay Landlord therefore.
15. No Tenant shall affix any floor covering in any manner except as approved by
Landlord. The expense of repairing any damage caused by removal of any such
floor covering shall be borne by the Tenant by whom or by whose contractors,
employees or invitees, the damage
14
<PAGE>
shall have been caused.
16. On Sundays and legal holidays and between the hours of 6:00 p.m. and 8:00
a.m., access to the building may be refused unless the person seeking access is
known to the person charged with responsibility for the safety and protection of
the building and has a pass or is properly identified. In no case shall Landlord
be liable for any loss or damage for any error with respect to the admission to
or exclusion from the building of any person. In case of invasion,
mob, riot, public excitement or other commotion and at such times as Landlord
deems necessary for the safety and protection of the building, its Tenants and
all property located therein, Landlord may prohibit and prevent access to the
building by all persons by any means Landlord deems appropriate.
17. Each Tenant shall see that the exterior doors of its Premises are closed
and securely locked on Sundays and legal holidays and not later than 6:00 p.m.
of each other day. Each Tenant shall exercise extraordinary care and caution
that all water faucets or water apparatus are entirely shut off each day before
its Premises are left unoccupied and that all electricity or gas shall likewise
be carefully shut off so as to prevent waste or damage to Landlord or to other
Tenants of the building.
18. Landlord may exclude or expel from the building any person who, in the
judgment of Landlord, is intoxicated or under the influence of liquor or drugs,
or who shall in any manner do any act in violation of any of the rules and
regulations of the building.
19. The requirements of Tenants will be attended to only upon application to
Landlord at the office of the building. Employees of Landlord shall not perform
any work outside of their regular duties unless under special instructions from
Landlord, and no employee of Landlord shall be required to admit any person
(Tenant or otherwise) to any Premises in the building.
20. No vending or food or beverage dispensing machine or machines of any
description shall be installed, maintained or operated upon any premise in the
building without the written permission of the Landlord.
21. Landlord, without notice and without liability to any Tenant, at any time
may change the name or the street address of the building.
22. The word "building" as used in these rules and regulations means the
building of which a part of the Premises are leased pursuant to the Lease to
which these rules and regulations are attached. Each Tenant shall be liable to
Landlord and to each other Tenant of the building for any loss, cost, expense,
damage or liability, including attorneys' fees, caused or occasioned by the
failure of such first named Tenant to comply with these rules, but Landlord
shall have no liability for such failure of for failing or being unable to
enforce compliance therewith by any Tenant and such failure by Landlord or non-
compliance by any other Tenant shall not be a ground for termination of the
lease to which these rules and regulations are attached by the Tenant
thereunder.
23. Carpet protector pads shall be used by all desk stations.
24. The HVAC is in operation from 8:00 a.m. to 6:00 p.m. Monday to Friday except
public Holidays.
15
<PAGE>
OFFICE SPACE LEASE
BETWEEN
Rosjan Limited Partnership
a California partnership
AND
Infospace, Inc.
a California Corporation
<PAGE>
INDEX TO LEASE
<TABLE>
<S> <C>
ARTICLE I. BASIC LEASE PROVISIONS.................................................. 1.
ARTICLE II. PREMISES............................................................... 3.
SECTION 2.1 LEASED PREMISES............................................... 3.
SECTION 2.2 ACCEPTANCE OF PREMISES........................................ 3.
ARTICLE III. TERM................................................................. 3.
SECTION 3.1 GENERAL....................................................... 3.
SECTION 3.2 DELAY IN POSSESSION........................................... 3.
ARTICLE IV. RENT AND OPERATING EXPENSES............................................ 3.
SECTION 4.1 BASIC RENT.................................................... 3.
SECTION 4.2 OPERATING EXPENSE INCREASE.................................... 4.
SECTION 4.3 INTENTIONALLY OMITTED......................................... 5.
SECTION 4.4 SECURITY DEPOSIT.............................................. 5.
ARTICLE V. USES.................................................................... 5.
SECTION 5.1 USE........................................................... 5.
SECTION 5.2 SIGNS......................................................... 6.
ARTICLE VI. LANDLORD SERVICES...................................................... 6.
SECTION 6.1 UTILITIES AND SERVICES........................................ 6.
SECTION 6.2 OPERATION AND MAINTENANCE OF COMMON FACILITIES................ 6.
SECTION 6.3 USE OF COMMON FACILITIES...................................... 6.
SECTION 6.4 CHANGES AND ADDITIONS BY LANDLORD............................. 7.
ARTICLE VII. MAINTAINING THE PREMISES.............................................. 7.
SECTION 7.1 TENANT'S MAINTENANCE AND REPAIR............................... 7.
SECTION 7.2 LANDLORD'S MAINTENANCE AND REPAIR............................. 7.
SECTION 7.3 ALTERATIONS................................................... 7.
SECTION 7.4 MECHANIC'S LIENS.............................................. 8.
SECTION 7.5 ENTRY AND INSPECTION.......................................... 8.
SECTION 7.6 SPACE PLANNING AND SUBSTITUTION............................... 9.
ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PREMISES........................... 8.
ARTICLE IX. ASSIGNMENT AND SUBLETTING.............................................. 9.
SECTION 9.1 RIGHTS OF PARTIES............................................. 9.
SECTION 9.2 EFFECT OF TRANSFER............................................ 10.
SECTION 9.3 SUBLEASE REQUIREMENTS......................................... 10.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE X. INSURANCE AND INDEMNITY............................................... 11.
SECTION 10.1 TENANT'S INSURANCE................................. 11.
SECTION 10.2 LANDLORD'S INSURANCE............................... 11.
SECTION 10.3 TENANT'S INDEMNITY................................. 11.
SECTION 10.4 LANDLORD'S NONLIABILITY............................ 11.
ARTICLE XI. DAMAGE OR DESTRUCTION................................................ 12.
SECTION 11.1 RESTORATION........................................ 12.
SECTION 11.2 LEASE GOVERNS...................................... 12.
ARTICLE XII. EMINENT DOMAIN.................................................... 12.
SECTION 12.1 TOTAL OR PARTIAL TAKING............................ 12.
SECTION 12.2 TEMPORARY TAKING................................... 13.
ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE................................ 13.
SECTION 13.1 SUBORDINATION...................................... 13.
SECTION 13.2 ESTOPPEL CERTIFICATE............................... 13.
ARTICLE XIV. DEFAULTS AND REMEDIES............................................... 13.
SECTION 14.1 TENANT'S DEFAULTS.................................. 13.
SECTION 14.2 LANDLORD'S REMEDIES................................ 14.
SECTION 14.3 LATE PAYMENTS...................................... 16.
SECTION 14.4 RIGHT OF LANDLORD TO PERFORM....................... 16.
SECTION 14.5 DEFAULT BY LANDLORD................................ 16.
SECTION 14.6 EXPENSES AND LEGAL FEES............................ 17.
SECTION 14.7 WAIVER OF JURY TRIAL............................... 17.
ARTICLE XV. END OF TERM.......................................................... 17.
SECTION 15.1 HOLDING OVER....................................... 17.
SECTION 15.2 MERGER ON TERMINATION.............................. 17.
SECTION 15.3 SURRENDER OF PREMISES; REMOVAL OF PROPERTY......... 17.
ARTICLE XVI. PAYMENTS AND NOTICES.............................................. 18.
ARTICLE XVII. RULES AND REGULATIONS............................................. 18.
ARTICLE XVIII. BROKER'S COMMISSION............................................... 18.
ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST................................... 18.
ARTICLE XX. INTERPRETATION.................................................... 19.
SECTION 20.1 GENDER AND NUMBER.................................. 19.
SECTION 20.2 HEADINGS........................................... 19.
SECTION 20.3 JOINT AND SEVERAL LIABILITY........................ 19.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SECTION 20.4 SUCCESSORS..................................... 19.
SECTION 20.5 TIME OF ESSENCE................................ 19.
SECTION 20.6 CONTROLLING LAW................................ 19.
SECTION 20.7 SEVERABILITY................................... 19.
SECTION 20.8 WAIVER AND CUMULATIVE REMEDIES................. 19.
SECTION 20.9 INABILITY TO PERFORM........................... 19.
SECTION 20.10 ENTIRE AGREEMENT............................... 19.
SECTION 20.11 QUIET ENJOYMENT................................ 20.
SECTION 20.12 SURVIVAL....................................... 20.
ARTICLE XXI. EXECUTION AND RECORDING......................................... 20.
SECTION 21.1 COUNTERPARTS................................... 20.
SECTION 21.2 CORPORATE AND PARTNERSHIP AUTHORITY............ 20.
SECTION 21.3 EXECUTION OF LEASE; NO OPTION OR OFFER......... 20.
SECTION 21.4 RECORDING...................................... 20.
SECTION 21.5 AMENDMENTS..................................... 20.
ARTICLE XXII. MISCELLANEOUS................................................... 20.
SECTION 22.1 NONDISCLOSURE OF LEASE TERMS................... 20.
SECTION 22.2 REPRESENTATIONS BY TENANT...................... 20.
SECTION 22.3 CHANGES REQUESTED BY LENDER.................... 21.
SECTION 22.4 MORTGAGEE PROTECTION........................... 21.
SECTION 22.5 COVENANTS AND CONDITIONS....................... 21.
SECTION 22.6 TENANT SERVICES................................ 21.
EXHIBIT A
PREMISES..................................................... Exhibit A - 1
EXHIBIT B
UTILITIES AND SERVICES....................................... Exhibit B - 1
EXHIBIT C
TENANT'S INSURANCE........................................... Exhibit C - 1
EXHIBIT D
RULES AND REGULATIONS........................................ Exhibit D - 1
EXHIBIT E
WORK LETTER.................................................. Exhibit H - 1
</TABLE>
<PAGE>
OFFICE SPACE LEASE
THIS LEASE is made as of the 10th day of August, 1998, by and between
Rosjan Limited Partnership, a California partnership, hereinafter called
"Landlord," and Infospace, Inc., a California Corporation, herein after called
"Tenant."
ARTICLE I. BASIC LEASE PROVISIONS
Each reference in this Lease to the "Basic Lease Provisions" shall mean and
refer to the following collective terms, the application of which shall be
governed by the provisions in the remaining Articles of this Lease.
1. Tenant's Name and Trade Name: Infospace, Inc.
2. Premises: Suite No. 360 (the Premises more
particularly described in Section 2.1).
Address of Office Building: 181 Second Avenue
San Mateo, California 94401
3. Use of Premises: General Business and Office Use
4. Estimated Commencement Date: September 1, 1998
5. Lease Term: 22 months, plus such additional days as may
be required to cause this Lease to
terminate on the final day of the calendar
month in which the lease term ends.
6. Basic Rent: Months 1 - 2: $1,144.22 per month.
Months 3 - 4: $1,144.23 per month.
Months 5 - 10: $2,288.45 per month.
Months 11 - 24: $2,350.35 per month.
Other Rental Adjustments: None
7. Operating Expense
Base Year: 1998
Expense Recovery Period: Every calendar year during the Term (or
portion thereof for the first and last
Lease years) commencing January 1 and
ending December 31.
8. Floor Area of Premises: Approximately rentable square feet.
9. Security Deposit: $2,350.35
10. Broker(s): N/A
11. Tenant Improvements: Tenant shall accept Premises in as-is
condition and shall construct all required
tenant improvements at Tenant's expense in
accordance with requirements of Article VII
and any other applicable provisions of this
Lease.
12. Address for Payments and
Notices:
1
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LANDLORD: TENANT:
Rosjan Limited Partnership Prior to the Commencement Date:
181 Second Avenue, Suite 688 Infospace, Inc
San Mateo, California 94401 181 Second Avenue, Suite 218
Attn: Marie N. Purisima San Mateo, California 94401
Telephone: (650)343-3888 Attn: Paul C. Vilandre
Facsimile: (650)343-6888 Telephone: (650)685-3024
Facsimile: (650)685-3001
With a copy to:
After the Commencement Date:
Kennedy-Wilson Management Same As Above
Group
700 Wilshire Boulevard,
7/th/ Floor
Los Angeles, California 90017
Attention: Director of Property
Management
12. Tenant's Construction Representative: Paul C. Vilandre
13. Landlord's Construction Representative: Marie Purisima (650)343-3888
14. Tenant's Percentage: 1.74%
2.
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ARTICLE II. PREMISES
SECTION 2.1 LEASED PREMISES. Landlord leases to Tenant and Tenant rents
from Landlord the premises shown in Exhibit A (the Premises) containing the
floor area set forth in Item 8 of the Basic Lease Provisions and known by the
suite number identified In Item 2 of the Basic Lease Provisions. The Premises
are located in the office building identified in Item 2 of the Basic Lease
Provisions (which together with the underlying real property is called the
Office Building). The rentable square footage of the Premises as described
above is conclusive as between the parties.
SECTION 2.2 ACCEPTANCE OF PREMISES. Tenant acknowledges that neither
Landlord nor any representative of Landlord has made any representation or
warranty with respect to the Premises or the Office Building or the suitability
or fitness of either for any purpose except as set forth in this Lease. The
taking of possession or use of the Premises by Tenant for any purpose other than
construction shall conclusively establish that the Premises and the Office
Building were in satisfactory condition and in conformity with the provisions of
this Lease in all respects except for those matters which Tenant shall have
brought to Landlord's attention on a written punch list delivered to Landlord.
The list shall be limited to any items required to be accomplished by Landlord
under the Work Letter (if any) attached as Exhibit E and shall be delivered to
Landlord within ten (10) days after the term (Term) of this Lease commences as
provided in Article III below. If there is no Work Letter, or if no items are
required of Landlord under the Work Letter, by taking possession of the Premises
Tenant accepts the Improvements in their existing condition and waives any right
or claim against Landlord arising out of the condition of the Premises. Nothing
contained in this Section shall affect the commencement of the Term or the
obligation of Tenant to pay rent. Landlord shall diligently complete all punch
list items of which it is notified as provided above for which it is liable.
ARTICLE III. TERM
SECTION 3.1 GENERAL. The term of this Lease ("Term") shall be for the
period shown in Item 5 of the Basic Lease Provisions. The Term shall commence
(Commencement Date) on the earlier of (a) subject to the provisions of Section
3.2, the Estimated Commencement Date as set forth in Item 4 of the Basic Lease
Provisions or (b) the date Tenant acquires possession or commences use of the
Premises for any purpose other than construction. Within ten (10) days after the
Commencement Date, the parties shall memorialize on a form provided by Landlord
the actual Commencement Date and the expiration date (Expiration Date) of this
Lease. Tenant's failure to execute that form shall not affect the validity of
Landlord's determination of those dates. If Tenant fails to timely execute such
form, then Landlord shall be deemed appointed as Tenant's attorney in fact with
power of attorney to execute such for in the name and on behalf of Tenant and
Tenant shall be conclusively bound to all of the information set forth in such
form as though executed by Tenant.
SECTION 3.2 DELAY IN POSSESSION. If Landlord, for any reason whatsoever,
cannot deliver possession of the Premises to Tenant on or before the Estimated
Commencement Date, this Lease shall not be void or voidable nor shall Landlord
be liable to Tenant for any resulting loss or damage. However, Tenant shall not
be liable for any rent and the Commencement Date shall not occur until Landlord
delivers possession of the Premises and the Premises are in fact ready for
occupancy as defined below, except that if Landlord's failure to so deliver
possession on the Estimated Commencement Date is attributable to any action or
in-action by Tenant (including without limitation any Tenant Delay described in
the Work Letter, if any, attached to this Lease), then the Commencement Date
shall not be advanced to the date on which possession of the Premises is
tendered to Tenant, and Landlord shall be entitled to full performance by Tenant
(including the payment of rent) from the date Landlord would have been able to
deliver the Premises to Tenant but for Tenant's delay(s).
ARTICLE IV. RENT AND OPERATING EXPENSES
SECTION 4.1 BASIC RENT. From and after the Commencement Date, Tenant shall
pay to Landlord without deduction or offset the Basic Rent for the Premises in
the total amount shown (including subsequent
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adjustments, if any) in Item 6 of the Basic Lease Provisions. Any rental
adjustment shown in Item 6 shall be deemed to occur on the specified monthly
anniversary of the Commencement Date whether or not that date occurs at the end
of a calendar month. The rent shall be due and payable in advance commencing on
the Commencement Date (as prorated for any partial month) and continuing
thereafter on the first day of each successive calendar month of the Term. No
demand notice or invoice shall be required. An installment of rent in the amount
of one (1) full month's Basic Rent at the initial rate specified in Item 6 of
the Basic Lease Provisions shall be delivered to Landlord concurrently with
Tenant's execution of this Lease and shall be applied against the Basic Rent
first due hereunder.
SECTION 4.2 OPERATING EXPENSE INCREASE
(a) Tenant shall reimburse Landlord as additional rent for Tenant's
Percentage of Operating Expenses, for each year after the Operating Expense Base
Year, incurred by Landlord in the operation of the Office Building. Tenant
acknowledges Landlord's rights to make changes or additions to the Office
Building from time to time pursuant to Section 6.5 below, in which event the
total rentable square footage within the Office Building may be adjusted.
(b) Commencing prior to the start of the first full Expense Recovery
Period of the Lease (as set forth in Item 7 of the Basic Lease Provisions), and
prior to the start of each full or partial Expense Recovery Period thereafter,
Landlord shall give Tenant a written estimate of the amount of Tenant's
proportionate share of Operating Expenses for the Expense Recovery Period or
portion thereof. Tenant shall pay the estimated amount to Landlord in equal
monthly installments in advance with Basic Rent. If Landlord has not furnished
its written estimate for any Expense Recovery Period by the time set forth
above, Tenant shall continue to pay cost reimbursements at the rates established
for the prior Expense Recovery Period, if any; provided that when the new
estimate is delivered to Tenant, Tenant shall, at the next monthly payment date,
pay any accrued cost reimbursements based upon the new estimate.
(c) Within one hundred twenty (120) days after the end of each Expense
Recovery Period, Landlord shall endeavor to furnish to Tenant a statement
showing in reasonable detail the actual or prorated Operating Expenses incurred
by Landlord during the period and the parties shall, within thirty (30) days
thereafter, make any payment or allowance necessary to adjust Tenant's estimated
payments, if any, to Tenant's actual proportionate share as shown by the annual
statement. Any amount due Tenant shall be credited against installments next
coming due under this Section 4.2, and any deficiency shall be paid by Tenant
together with the next installment. If Tenant has not made estimated payments
during the Expense Recovery Period, any amount owing by Tenant pursuant to
subsection (a) above shall be paid to Landlord in accordance with Article XVI.
Should Tenant fail to object in writing to Landlord's determination of actual
Operating Expenses within sixty (60) days following delivery of Landlord's
expense statement, Landlord's determination of actual Operating Expenses for the
applicable Expense Recovery Period shall be conclusive and binding on the
parties within thirty days following delivery of Landlord's expense statement.
(d) Even though the Lease has terminated and the Tenant has vacated the
Premises when the final determination is made of Tenant's share of Operating
Expenses for the Expense Recovery Period in which the Lease terminates, Tenant
shall, upon notice, pay the entire increase due over the estimated expenses
paid. Conversely, any overpayment made in the event expenses decrease shall be
rebated by Landlord to Tenant.
(e) If, at any time during any Expense Recovery Period, any one or more of
the Operating Expenses are increased to a rate(s) or amount(s) in excess of the
rate(s) or amount(s) used in calculating the estimated expenses for the year,
then Tenant's estimated share of Operating Expenses shall be increased for the
month in which the increase becomes effective and for all succeeding months by
an amount equal to Tenant's proportionate share of the increase. Landlord shall
give Tenant written notice of the amount or estimated amount of the increase,
the month in which the increase will become effective, Tenant's monthly share
thereof, and the months for which the payments are due. Tenant shall pay the
increase to Landlord as a part of Tenant's monthly payments of estimated
expenses, as provided in paragraph (b) above, commencing with the month in which
effective.
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(f) The term Operating Expenses shall include all expenses of operation
and maintenance of the Office Building, together with all appurtenant Common
Facilities (as defined in Section 6.2), and shall include the following charges
by way of illustration but not limitation: water and sewer charges; taxes;
insurance premiums or reasonable premium equivalents, should Landlord elect to
self-insure any risk that Landlord is authorized to insure hereunder; license
permit and inspection fees; heat; light; power; janitorial services; air
conditioning; supplies; materials; equipment; tools; programs instituted to
comply with transportation management requirements; tenant services;
amortization of capital investments reasonably intended to produce a reduction
in operating charges or energy conservation; amortization of capital investments
necessary to bring the Office Building into compliance with applicable laws and
building codes enacted subsequent to the completion of construction of the
Office Building; labor, reasonably allocated wages and salaries fringe benefits
and payroll taxes for administrative and other personnel directly applicable to
the Office Building, including both Landlord's personnel and outside personnel
but exclusive of personnel above the level of building manager; any expense
incurred pursuant to Sections 6.1, 6.2, 6.4, 7.2 and 10.2 and Exhibits B and C
below; and a reasonable overhead/management fee. It is understood that Operating
Expenses shall include competitive charges for direct services provided by any
subsidiary or division of Landlord. The term "taxes," as used herein shall
include the following: (i) all real estate taxes or personal property taxes, as
such property taxes may be reassessed from time to time; (ii) other taxes,
documentary transfer fees, charges and assessments which are levied with respect
to this Lease or to the Office Building, and any improvements, fixtures and
equipment and other property of Landlord located in the Office Building except
that general net income and franchise taxes imposed against Landlord shall be
excluded; (iii) any tax surcharge or assessment which shall be levied in
addition to or in lieu of real estate or personal property taxes other than
taxes covered by Article VIII; and (iv) costs and expenses incurred in
contesting the amount or validity of any tax by appropriate proceedings. A copy
of Landlord's unaudited statement of expenses shall be made available to Tenant
upon request.
SECTION 4.3 INTENTIONALLY OMITTED.
SECTION 4.4 SECURITY DEPOSIT. Concurrently with Tenant's delivery of this
Lease, Tenant shall deposit with Landlord the sum, if any, stated in Item 9 of
the Basic Lease Provisions to be held by Landlord as security for the full and
faithful performance of Tenant's obligations under this Lease (the Security
Deposit). Upon any default by Tenant, including specifically Tenant's failure
to pay rent or to abide by its obligations under Sections 7.1 and 15.3 below,
Landlord may apply all or part of the Security Deposit as full or partial
compensation for that default. If any portion of the Security Deposit is so
applied, Tenant shall, within five (5) days after written demand by Landlord,
deposit cash with Landlord in an amount sufficient to restore the Security
Deposit to its original amount. Landlord shall not be required to keep this
Security Deposit separate from its general funds and Tenant shall not be
entitled to interest on the Security Deposit. If Tenant fully performs its
obligations under this Lease, the Security Deposit or any balance thereof shall
be returned to Tenant (or at Landlord's option to the last assignee of Tenant's
interest in this Lease) after the expiration of the Term, provided that Landlord
may retain the Security Deposit until such time as all amounts due from Tenant
in accordance with this Lease have been determined and paid in full.
ARTICLE V. USES
SECTION 5.1 USE. Tenant shall use the Premises only for the purposes
stated in Item 3 of the Basic Lease Provisions. The parties agree that any
contrary use shall be deemed to cause material and irreparable harm to Landlord
and shall entitle Landlord to injunctive relief, in addition to any other
available remedy. Tenant shall not do nor permit anything to be done in or about
the Premises which will in any way interfere with the rights of other occupants
of the Office Building or use, or allow the Premises to be used for any
improper, immoral, unlawful or objectionable purpose, nor shall Tenant permit
any nuisance or commit any waste in the Premises. Tenant shall not do or permit
to be done anything which will invalidate or increase the cost of any insurance
policy(ies) covering the Office Building, and/or their contents, and shall
comply with all applicable insurance underwriters' rules and the requirements of
the Pacific Fire Rating Bureau or any other organization performing a similar
function. Tenant shall comply, at its expense, with all present and future laws,
ordinances, and requirements of all governmental authorities that pertain to
Tenant or its use of the Premises, including without limitation, all federal and
state occupational, health and safety requirements and all
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recorded covenants, conditions and restrictions affecting the Office Building
whether or not Tenant's compliance will necessitate expenditures or interfere
with its use and enjoyment of the Premises. Tenant shall not generate, handle,
store or dispose of hazardous or toxic materials, as such materials may be
identified in any federal state or local law or regulation, in the Premises or
the Office Building without the prior written consent of Landlord, which consent
may be refused or conditioned by Landlord in its discretion. Tenant agrees that
it shall promptly complete and deliver to Landlord any disclosure form regarding
hazardous materials that may be required by any governmental agency. Tenant
shall promptly, upon demand, reimburse Landlord for any additional insurance
premium charged by reason of Tenant's failure to comply with the provisions of
this Section and shall indemnify Landlord from any liability and/or expense
resulting from Tenant's noncompliance. Tenant acknowledges that: (a) the Office
Building does not comply in certain respects with the requirements of the
Americans with Disabilities Act; and (b) certain portions of the Office Building
contain asbestos containing materials. Landlord has been advised that these
materials are non-friable and do not represent a health risk. Tenant is invited
to review reports concerning these matters on file at the office of the Office
Building.
SECTION 5.2 SIGNS. Tenant, upon obtaining the approval of Landlord in
writing, may affix a sign (restricted solely to Tenant's name as set forth In
Item 1 of the Basic Lease Provisions or such other name as Landlord may consent
to in writing) adjacent to the entry door of the Premises and shall maintain the
sign in good condition and repair during the Term. The sign shall conform to the
criteria for signs established by Landlord and shall be ordered through Landlord
at Tenant's expense. Tenant shall not place or allow to be placed any other
sign, decoration or advertising matter of any kind that is visible from the
exterior of the Premises. Any violating sign or decoration may be immediately
removed by Landlord at Tenant's expense without notice and without the removal
constituting a breach of this Lease or entitling Tenant to claim damages.
ARTICLE VI. LANDLORD SERVICES
SECTION 6.1 UTILITIES AND SERVICES. Landlord shall furnish to the Premises
the utilities and services described in Exhibit B subject to the conditions and
payment obligations and standards set forth in this Lease. Landlord shall not be
liable for any failure to furnish any services or utilities when the failure is
the result of any accident or other cause beyond Landlord's reasonable control,
nor shall Landlord be liable for damage to Tenant's equipment resulting from
power surges. Landlord's failure to furnish any services or utilities shall not
entitle Tenant to any damages, relieve Tenant of the obligation to pay rent, or
constitute a constructive or other eviction of Tenant, except that Landlord
shall diligently attempt to restore the service or utility promptly. Tenant
shall comply with all rules and regulations which Landlord may reasonably
establish for the provision of services and utilities and shall cooperate with
all reasonable conservation practices established by Landlord. Landlord shall,
at all reasonable times, have free access to all electrical and mechanical
installations of Landlord.
SECTION 6.2 OPERATION AND MAINTENANCE OF COMMON FACILITIES. During the
Term, Landlord shall operate all Common Facilities within the Office Building.
The term "Common Facilities" shall mean all areas within the exterior boundaries
of the Office Building which are not held for exclusive use by persons entitled
to occupy space, and all other appurtenant areas and improvements provided by
Landlord for the common use of Landlord and tenants and their respective
employees and invitees, including without limitation, parking areas and
structures, driveways, sidewalks, landscaped and planted areas, hallways and
interior stairwells not located within the premises of any tenant, common
entrances and lobbies, elevators and restrooms not located within the premises
of any tenant.
SECTION 6.3 USE OF COMMON FACILITIES. The occupancy by Tenant of the
Premises shall include the use of the Common Facilities in common with Landlord
and with all others for whose convenience and use the Common Facilities may be
provided by Landlord, subject, however, to compliance with all rules and
regulations as are prescribed from time to time by Landlord. Landlord shall
operate and maintain the Common Facilities in the manner Landlord may determine
to be appropriate. Landlord shall, at all times during the Term, have exclusive
control of the Common Facilities and may restrain any use or occupancy, except
as authorized by Landlord's rules and regulations. Tenant shall keep the Common
Facilities clear of any obstruction or unauthorized use related to Tenant's
operations.
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Nothing in this Lease shall be deemed to impose liability upon Landlord for any
damage to or loss of the property of, or for any injury to Tenant, its invitees
or employees. Landlord may temporarily close any portion of the Common
Facilities for repairs, remodeling and/or alterations to prevent a public
dedication or the accrual of prescriptive rights or for any other reason deemed
sufficient by Landlord.
SECTION 6.4 CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the right
to make alterations or additions to the Office Building or to the attendant
fixtures, equipment and Common Facilities. Landlord may, at any time, relocate
or remove any of the various buildings, parking areas and other Common
Facilities, and may add buildings and areas from time to time. No change shall
entitle Tenant to any abatement of rent or other claim against Landlord,
provided that the change does not deprive Tenant of reasonable access to or use
of the Premises.
ARTICLE VII. MAINTAINING THE PREMISES
SECTION 7.1 TENANT'S MAINTENANCE AND REPAIR. When and if needed or
whenever requested by Landlord, Tenant, at its sole expense, shall make all
repairs and replacements necessary to keep the Premises in the condition as
existed on the Commencement Date (or on any later date that the improvements may
have been installed), excepting ordinary wear and tear. All repairs and
replacements shall be at least equal in quality to the original work, shall be
made only by a licensed bonded contractor approved in writing in advance by
Landlord, and shall be made only at the time or times approved by Landlord. Any
contractor utilized by Tenant shall be subject to Landlord's standard
requirements for contractors, as modified from time to time. Landlord may impose
reasonable restrictions and requirements with respect to repairs, as provided in
Section 7.3, and the provisions of Section 7.4 shall apply to all repairs.
Alternatively, Landlord may elect to make any such repair on behalf of Tenant
and at Tenants expense, and Tenant shall promptly reimburse Landlord for all
costs incurred upon submission of an invoice.
SECTION 7.2 LANDLORD'S MAINTENANCE AND REPAIR
(a) Subject to Section 7.1 and Article XI, Landlord shall provide service,
maintenance and repair with respect to any air conditioning, ventilating or
heating equipment which serves the Premises and shall maintain in good repair
the roof, foundations, footings, the exterior surfaces of the exterior walls of
the Office Building, and the structural, electrical and mechanical systems,
except that Tenant, at its expense, shall make all repairs which Landlord deems
reasonably necessary as a result of the act or negligence of Tenant, its agents,
employees, invitees, subtenants or contractors. Landlord shall have the right to
employ or designate any reputable person or firm, including any employee or
agent of Landlord or any of Landlord's affiliates or divisions, to perform any
service, repair or maintenance function. Landlord need not make any other
improvements or repairs, except as specifically required under this Lease, and
nothing contained in this Section shall limit Landlord's right to reimbursement
from Tenant for maintenance, repair costs and replacement costs as provided
elsewhere in this Lease. Tenant understands that it shall not make repairs at
Landlord's expense or by rental offset.
(b) Except as provided in Sections 11.1 and 12.1 below, there shall be no
abatement of rent and no liability of Landlord by reason of any injury to or
interference with Tenant's business arising from the making of any repairs,
alterations or improvements to any portion of the Office Building, including
repairs to the Premises, nor shall any related activity by Landlord constitute
an actual or constructive eviction; provided, however, that in making repairs,
alterations or improvements, Landlord shall interfere as little as reasonably
practicable with the conduct of Tenants business in the Premises.
SECTION 7.3 ALTERATIONS. Tenant shall make no alterations, additions or
improvements to the Premises without the prior written consent of Landlord,
which consent shall not be unreasonably withheld. If any such improvement
requires approval by or notice to the lessor of a superior lease or the holder
of a mortgage, no work shall proceed until such approval has been received or
such notice has been given. Landlord may impose, as a condition to its consent;
any requirements that Landlord, in its discretion, may deem reasonable or
desirable, including but not limited to a requirement that all work be covered
by a lien and completion bond satisfactory to Landlord and
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requirements as to the manner, time and contractor for performance of the work.
Landlord may require that Tenant enter into an agreement with Landlord for the
work to be performed by Landlord's contractor, in which event Tenant shall pay
to Landlord, in advance as additional rent, the cost of construction as
estimated by Landlord with, a final reconciliation payment to be made by the
appropriate party upon completion of the work. Should Landlord authorize Tenant
to perform the work with a contractor approved by Landlord, Tenant shall obtain
all required permits for the work and shall perform the work in compliance with
all applicable laws, regulations and ordinances. Under no circumstances shall
Tenant make any improvement which incorporates asbestos-containing construction
materials into the Premises. Any request for Landlord's consent shall be made in
writing and shall contain architectural plans describing the work in detail
reasonably satisfactory to Landlord. Unless Landlord otherwise agrees in
writing, all alterations, additions or improvements affixed to the Premises
(excluding moveable trade fixtures and furniture) shall become the property of
Landlord and shall be surrendered with the Premises at the end of the Term,
except that Landlord may, by notice to Tenant given at the time of Landlord's
consent to the alteration or improvement, require Tenant to remove by the
Expiration Date or sooner termination date of this Lease all or any alterations,
decorations, fixtures, additions, improvements and the like installed either by
Tenant or by Landlord at Tenant's request, and to repair any damage to the
Premises arising from that removal. Landlord may require Tenant to remove an
improvement provided as part of the initial build-out pursuant to Exhibit E, if
any, if and only if the improvement is a non-building standard item and Tenant
is notified of the requirement prior to the build-out. Within thirty (30) days
after completion of Tenant's alterations requiring the submission of plans to
Landlord, Tenant shall furnish to Landlord a complete set of "as-built" plans
and specifications.
SECTION 7.4 MECHANIC'S LIENS. Tenant shall keep the Premises free from any
liens arising out of any work performed, materials furnished or obligations
incurred by or for Tenant. Upon request by Landlord, Tenant shall promptly cause
any such lien to be released by posting a bond in accordance with California
Civil Code Section 3143 or any successor statute. In the event that Tenant shall
not, within thirty (30) days following the imposition of any lien, cause the
lien to be released of record by payment or posting of a proper bond, Landlord
shall have, in addition to all other available remedies, the right to cause the
lien to be released by any means it deems proper, including payment of or
defense against the claim giving rise to the lien. All expenses so incurred by
Landlord, including Landlord's attorneys' fees, shall be reimbursed by Tenant
promptly following Landlord's demand, together with interest from the date of
payment by landlord at the maximum rate permitted by law until paid. Tenant
shall give Landlord no less than twenty (20) days prior notice in writing before
commencing construction of any kind on the Premises so that Landlord may post
and maintain notices of nonresponsibility on the Premises.
SECTION 7.5 ENTRY AND INSPECTION. Landlord shall at all times have the
right to enter the Premises to inspect them, to supply services in accordance
with this Lease, to protect the interests of Landlord in the Premises, and to
submit the Premises to prospective or actual purchasers or encumbrance holders
or to prospective tenants, all without being deemed to have caused an eviction
of Tenant and without abatement of rent, except as provided elsewhere in this
Lease. Landlord shall at all times have and retain a key which unlocks all of
the doors in the Premises, excluding Tenant's vaults and safes, and Landlord
shall have the right to use any and all means which Landlord may deem proper to
open the doors in an emergency in order to obtain entry to the Premises, and any
entry to the Premises obtained by Landlord shall not, under any circumstances,
be deemed to be a forcible or unlawful entry into or a detainer of the Premises
or any eviction of Tenant from the Premises.
SECTION 7.6 SPACE PLANNING AND SUBSTITUTION. Landlord shall have the
right, upon providing Tenant sixty (60) days written notice, to move Tenant to
other comparable space in the Office Building. The new space shall be
approximately the same size as the Premises and provided with comparable
improvements. Landlord shall pay all of Tenant's reasonable moving expenses
following receipt of invoices from Tenant. If Landlord exercises this right,
this Lease shall remain in effect and be deemed applicable to the new space
except that the Lease shall be appropriately amended to reflect the new space.
ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PREMISES
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Tenant shall be liable for and shall pay, at least ten (10) days before
delinquency, all taxes and assessments levied against all personal property of
Tenant located in the Premises. If any taxes on Tenant's personal property are
levied against Landlord or Landlord's property, and if Landlord pays the same or
if the assessed value of Landlord's property is increased by the inclusion of a
value placed upon the personal property of Tenant, and if Landlord pays the
taxes based upon the increased assessment, Tenant shall pay to Landlord the
taxes so levied against Landlord or the proportion of the taxes resulting from
the increase in the assessment. In calculating what portion of any tax bill
which is assessed against Landlord separately or Landlord and Tenant Jointly is
attributable to Tenant's fixtures and personal property, Landlord's reasonable
determination shall be conclusive.
ARTICLE IX. ASSIGNMENT AND SUBLETTING
SECTION 9.1 RIGHTS OF PARTIES.
(a) Notwithstanding any provision of this Lease to the contrary, Tenant
will neither voluntarily nor by operation of law assign, sublet, encumber or
otherwise transfer all or any part of Tenant's interest in this Lease or permit
the Premises to be occupied by anyone other than Tenant without Landlord's prior
written consent, which consent shall not unreasonably be withheld in accordance
with the provisions of Section 9.1. (c). No assignment (whether voluntary,
involuntary or by operation of law) and no subletting shall be valid or
effective without Landlord's prior written consent and at Landlord's election
shall constitute a material default of this Lease. Landlord shall not be deemed
to have given its consent to any assignment or subletting by any other course of
action, including its acceptance of any name for listing in the Office Building
directory. To the extent not prohibited by provisions of the Bankruptcy Code 11
U.S.C. Section 101 et seq. (the Bankruptcy Code), including Section 365(f)(1),
Tenant, on behalf of itself and its creditors, administrators and assigns,
waives the applicability of Section 365(e) of the Bankruptcy Code, unless the
proposed assignee of the Trustee for the estate of the bankrupt meets Landlord's
standard for consent, as set forth in Section 9.1(c) of this Lease. If this
Lease is assigned to any person or entity pursuant to the provisions of the
Bankruptcy Code, any and all monies or other considerations to be delivered in
connection with the assignment, shall be delivered to Landlord, shall be and
remain the exclusive property of Landlord, and shall not constitute property of
Tenant or of the estate of Tenant within the meaning of the Bankruptcy Code. Any
person or entity to which this Lease is assigned pursuant to the provisions of
the Bankruptcy Code shall be deemed to have assumed all of the obligations
arising under this Lease on and after the date of the assignment and shall, upon
demand, execute and deliver to Landlord an instrument confirming that
assumption.
(b) If Tenant or any guarantor of Tenant ("Tenant's Guarantor") is a
corporation or is an unincorporated association or partnership, the transfer of
any stock or interest in the corporation, association or partnership, which
results in a change in the voting control of Tenant or Tenant's Guarantor, if
any, shall be deemed an assignment within the meaning and provisions of this
Article. In addition, any change in the status of the entity, such as but not
limited to the withdrawal of a general partner, shall be deemed an assignment
within the meaning of this Article.
(c) If Tenant desires to transfer an interest in this Lease, it shall
first notify Landlord of its desire and shall submit in writing to Landlord: (i)
the name and address of the proposed transferee; (ii) the nature of any proposed
subtenant's or assignee's business to be carried on in the Premises; (iii) the
terms and provisions of any proposed sublease or assignment; and (iv) any other
information requested by Landlord and reasonably related to the transfer. Except
as provided in Subsection (d) of this Section, Landlord shall not unreasonably
withhold its consent provided: (1) the use of the Premises will be consistent
with the provisions of this Lease and with Landlord's commitment to other
tenants of the Office Building; (2) any profit received by the Tenant from the
assignment or subletting, whether during or after the Term of this Lease, shall
be paid to Landlord when received; (3) at Landlord's election, insurance
requirements shall be brought into conformity with Landlord's then current
leasing practice; (4) any proposed subtenant or assignee demonstrates that it is
financially responsible by submission to Landlord of all reasonable information
as Landlord may request concerning the proposed subtenant or assignee, including
but not limited to a balance sheet of the proposed subtenant or assignee as of a
date within ninety (90) days of the request for Landlord's consent and
statements of income or profit and loss of the proposed subtenant or assignee
for the two-year period preceding the
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request for Landlord's consent; (5) any proposed subtenant or assignee
demonstrates to Landlord's reasonable satisfaction a record of successful
experience in business; (6) the proposed assignee or subtenant is not an
existing tenant of the Office Building; and (7) the proposed transfer will not
impose additional burdens or adverse tax effects on Landlord. If Landlord
consents to the proposed transfer, Tenant may, within ninety (90) days after the
date of the consent, effect the transfer upon the terms described in the
information furnished to Landlord; provided that any material change in the
terms shall be subject to Landlord's consent as set forth in this Section.
Landlord shall approve or disapprove any requested transfer within thirty (30)
days following receipt of Tenant's written request and the information set forth
above.
(d) Notwithstanding the provisions of Subsection (c) above, in lieu of
consenting to a proposed assignment or subletting, Landlord may elect to (i)
sublease the Premises (or the portion proposed to be subleased) or take an
assignment of Tenant's interest in this Lease upon the same terms as offered to
the proposed subtenant or assignee (excluding terms relating to the purchase of
personal property the use of Tenant's name or the continuation of Tenant's
business); or (ii) terminate this Lease as to the portion of the Premises
proposed to be subleased or assigned with a proportionate abatement in the rent
payable under this Lease, effective on the date that the proposed sublease or
assignment would have become effective. Landlord may, thereafter, at its option,
assign or re-let any space so recaptured to any third party, including without
limitation the proposed transferee of Tenant.
(e) Tenant shall pay to Landlord a transfer fee of Five Hundred Dollars
($500.00) if and when any transfer requested by Tenant is approved. In addition,
should Landlord or its agents procure for Tenant a subtenant, assignee or new
tenant for all or part of the Premises; then Tenant shall pay to Landlord,
concurrently with the execution of the conveyancing documents, a leasing fee of
six percent (6%) of the remaining future gross rentals under this Lease.
SECTION 9.2 EFFECT OF TRANSFER. No subletting or assignment, even with the
consent of Landlord, shall relieve Tenant of its obligation to pay rent and to
perform all its other obligations under this Lease. Each assignee, other than
Landlord, shall be deemed to assume all obligations of Tenant under this Lease
and shall be liable, jointly and severally, with Tenant for the payment of all
rent and for the due performance of all of Tenant's obligations under this
Lease. No transfer shall be binding on Landlord unless any document
memorializing the transfer is delivered to Landlord and both the
assignee/subtenant and Tenant deliver to Landlord an executed consent to
transfer instrument prepared by Landlord and consistent with the requirements of
this Article. The acceptance by Landlord of any payment due under this Lease
from any other person shall not be deemed to be a waiver by Landlord of any
provision of this Lease or to be a consent to any transfer. Consent by Landlord
to one or more transfers shall not operate as a waiver or estoppel to the future
enforcement by Landlord of its rights under this Lease.
SECTION 9.3 SUBLEASE REQUIREMENTS. The following terms and conditions
shall apply to any subletting by Tenant of all or any part of the Premises and
shall be included in each sublease:
(a) Tenant hereby irrevocably assigns to Landlord all of Tenant's interest
in all rentals and income arising from any sublease of the Premises and Landlord
may collect such rent and income and apply same toward Tenant's obligations
under this Lease; provided, however, that until a default occurs in the
performance of Tenant's obligations under this Lease, Tenant shall have the
right to receive and collect the sublease rentals. Landlord shall not, by reason
of this assignment or the collection of sublease rentals, be deemed liable to
the subtenant for the performance of any of Tenant's obligations under the
sublease. Tenant hereby irrevocably authorizes and directs any subtenant, upon
receipt of a written notice from Landlord stating that an uncured default exists
in the performance of Tenant's obligations under this Lease, to pay to Landlord
all sums then and thereafter due under the sublease. Tenant agrees that the
subtenant may rely on that notice without any duty of further inquiry and
notwithstanding any notice or claim by Tenant to the contrary. Tenant shall have
no right or claim against the subtenant or Landlord for any rentals so paid to
Landlord.
(b) In the event of the termination of this Lease, Landlord may, at its
sole option, take over Tenant's entire interest in any sublease and, upon notice
from Landlord, the subtenant shall attorn to Landlord. In no event, however,
shall Landlord be liable for any previous act or omission by Tenant under the
sublease or for the return of any advance
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rental payments or deposits under the sublease that have not been actually
delivered to Landlord, nor shall Landlord be bound by any sublease modification
executed without Landlord's consent or for any advance rental payment by the
subtenant in excess of one months rent. The general provisions of this Lease,
including without limitation those pertaining to insurance and indemnification,
shall be deemed incorporated by reference into the sublease despite the
termination of this Lease.
(c) Tenant agrees that Landlord may, at its sole option, authorize a
subtenant of the Premises to cure a default by Tenant under this Lease. Should
Landlord accept such cure, the subtenant shall have a right of reimbursement and
offset from and against Tenant under the applicable sublease.
ARTICLE X. INSURANCE AND INDEMNITY
SECTION 10.1 TENANT'S INSURANCE. Tenant, at its sole cost and expense,
shall provide and maintain in effect the insurance described in Exhibit C.
Evidence of that insurance must be delivered to Landlord prior to the
Commencement Date.
SECTION 10.2 LANDLORD'S INSURANCE. Landlord may, at its election, provide
any or all of the following types of insurance with or without deductible and in
amounts and coverages as may be determined by Landlord in its discretion: all
risk property insurance subject to standard exclusions covering the Office
Building, and such other risks as Landlord or its mortgagees may from time to
time deem appropriate, including leasehold improvements made by Landlord and
comprehensive public liability coverage. Landlord shall not be required to
carry insurance of any kind on Tenant's property, including leasehold
improvements, trade fixtures, furnishings, equipment plate glass, signs and all
other items of personal property, and shall not be obligated to repair or
replace that property should damage occur. All proceeds of insurance maintained
by Landlord upon the Office Building shall be the property of Landlord, whether
or not Landlord is obligated to or elects to make any repairs.
SECTION 10.3 TENANT'S INDEMNITY. To the fullest extent permitted by law,
Tenant shall defend, indemnify and hold harmless Landlord, its agents and any
and all affiliates of Landlord, including without limitation any corporations or
other entities controlling, controlled by or under common control with Landlord,
from and against any and all claims, liabilities, costs or expenses arising
either before or after the Commencement Date from Tenant's use or occupancy of
the Premises, the Office Building or the Common Facilities, or from the conduct
of its business or from any activity, work or thing done, permitted or suffered
by Tenant or its agents, employees, invitees or licensees in or about the
Premises, the Office Building or the Common Facilities, or from any default in
the performance of any obligation on Tenant's part to be performed under this
Lease, or from any act or negligence of Tenant or its agents, employees,
visitors, patrons, guests, invitees or licensees. Landlord may, at its option,
require Tenant to assume Landlord's defense in any action covered by this
Section through counsel satisfactory to Landlord.
SECTION 10.4 LANDLORD'S NONLIABILITY. Landlord shall not be liable to
Tenant, its employees, agents and invitees, and Tenant hereby assumes the risk
of and waives all claims against Landlord for loss of or damage to any property
or any injury to any person or loss or interruption of business or income
resulting from, but not limited, to fire, explosion, falling plaster, steam,
gas, electricity, water or rain which may leak or flow from or into any part of
the Premises or from the breakage, leakage, obstruction or other defects of the
pipes, sprinklers, wires, appliances, plumbing, air conditioning, electrical
works, heating and ventilation systems, mechanical equipment, lighting or other
fixtures in the Office Building whether the damage or injury results from
conditions arising in the Premises or in other portions of the Office Building.
It is understood that any such condition may require the temporary evacuation or
closure of all or a portion of the Office Building. Neither Landlord nor its
agents shall be liable for interference with light or other similar intangible
interests. The liability of Landlord to Tenant for any default by Landlord under
this Lease or arising in connection herewith or with Landlord's operation,
management, leasing, repair, renovation, alteration or any other matter relating
to the Property or the Premises shall be limited to the interest of Landlord in
the Office Building and the rental proceeds thereof and Tenant agrees to look
solely to Landlord's interest in the Property for the recovery of judgment
against Landlord, and Landlord shall not be personally liable for any such
judgment or deficiency after
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execution thereon. Under no circumstances shall Landlord ever be liable for
consequential or punitive damages, including damages for lost profits or for
business interruption.
ARTICLE XI. DAMAGE OR DESTRUCTION
SECTION 11.1 RESTORATION.
(a) If the Office Building of which the Premises are a part is damaged,
Landlord shall repair that damage as soon as reasonably possible at its expense
unless: (I) the damage is not covered by Landlord's fire and extended coverage
insurance; or (ii) Landlord reasonably determines that the cost of repair would
exceed twenty-five percent (25%) of the full replacement cost of the Office
Building (Replacement Cost); or (iii) Landlord reasonably determines that the
cost of repair would exceed ten percent (10%) of the Replacement Cost and the
damage occurs during the final twelve (12) months of the Term. Should Landlord
elect not to repair the damage for one of the preceding reasons, Landlord shall
so notify Tenant in writing within sixty (60) days after the damage occurs, and
this Lease shall terminate as of the date of this notice;
(b) Unless Landlord elects to terminate this Lease in accordance with
subsection (a) above, this Lease shall continue in effect for the remainder of
the Term; provided that if the damage is so extensive as to reasonably prevent
Tenants substantial use and enjoyment of the Premises for more than nine (9)
months, then Tenant may elect to terminate this Lease by written notice to
Landlord within the sixty-(60)-day period stated in subsection (a).
(c) Commencing on the date of any damage to the Office Building and ending
on the sooner of the date the damage is repaired or the date this Lease is
terminated, the rental to be paid under this Lease shall be abated in the same
proportion that the floor area of the Premises that is rendered unusable by the
damage from time to time bears to the total floor area of the Premises.
(d) Notwithstanding the provisions of subsections (a) (b) and (c) of this
Section, the cost of any repairs shall be borne by Tenant and Tenant shall not
be entitled to rental abatement or termination rights if the damage is due to
the fault or neglect of Tenant or its employees, subtenants, invitees or
representatives. In addition, the provisions of this Section shall not be deemed
to require Landlord to repair any improvements or fixtures that Tenant is
obligated to repair or insure pursuant to any other provision of this Lease.
SECTION 11.2 LEASE GOVERNS. Tenant agrees that the provisions of this
Lease, including without limitation Section 11.1, shall govern any damage or
destruction and shall accordingly, supersede any contrary statute or rule of
law. Tenant irrevocably waives and releases Tenant's rights under California
Civil Code Sections 1932(2), 1933(4) and 1942 as the same may be modified or
replaced hereafter.
ARTICLE XII. EMINENT DOMAIN
SECTION 12.1 TOTAL OR PARTIAL TAKING. If all or a material portion of the
Premises is taken by any lawful authority by exercise of the right of eminent
domain or sold to prevent a taking, either Tenant or Landlord may terminate this
Lease effective as of the date possession is required to be surrendered to the
authority. In the event title to a portion of the Office Building, other than
the Premises, is taken or sold in lieu of taking, and if Landlord elects to
restore the Office Building in such a way as to alter the Premises materially,
either party may terminate this Lease by written notice to the other party
effective on the date of vesting of title. In the event neither party has
elected to terminate this Lease as provided above, then Landlord shall promptly,
after receipt of a sufficient condemnation award, proceed to restore the
Premises to substantially their condition prior to the taking and a
proportionate allowance shall be made to Tenant for the rent corresponding to
the time during which and to the part of the Premises of which Tenant is
deprived on account of the taking and restoration. In the event of a taking,
Landlord shall be entitled to the entire amount of the condemnation award
without deduction for any estate or interest of Tenant; provided that nothing in
this Section shall be deemed to give Landlord any interest in or prevent Tenant
from seeking any award against the taking
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authority for the taking of personal property and fixtures belonging to Tenant
or for relocation or business interruption expenses recoverable from the taking
authority.
SECTION 12.2 TEMPORARY TAKING. No temporary taking of the Premises shall
terminate this Lease or give Tenant any right to abatement of rent, and any
award specifically attributable to a temporary taking of the Premises shall
belong entirely to Tenant. A temporary taking shall be deemed to be a taking of
the use or occupancy of the Premises for a period not to exceed ninety (90)
days.
ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE
SECTION 13.1 SUBORDINATION
(a) At the option of Landlord this Lease shall be either superior or
subordinate to all ground or underlying leases, mortgages and deeds of trust, if
any, which may hereafter affect the Office Building, and to all renewals,
modifications, consolidations, replacements and extensions thereof; provided
that so long as Tenant is not in default under this Lease, this Lease shall not
be terminated or Tenant's quiet enjoyment of the Premises disturbed in the event
of termination of any such ground or underlying lease or the foreclosure of any
such mortgage or deed of trust to which Tenant has subordinated this Lease
pursuant to this Section. In the event of a termination or foreclosure,
Tenant shall become a tenant of and attorn to the successor-in-interest to
Landlord upon the same terms and conditions as are contained in this Lease and
shall execute any instrument reasonably required by Landlord's successor for
that purpose. Tenant shall also, upon written request of Landlord, execute and
deliver all instruments as may be required from time to time to subordinate the
rights of Tenant under this Lease to any ground or underlying lease or to the
lien of any mortgage or deed of trust or, if requested by Landlord, to
subordinate in whole or in part any ground or underlying lease or the lien of
any mortgage or deed of trust to this Lease.
(b) Failure of Tenant to execute any statements or instruments necessary
or desirable to effectuate the provisions of this Article within ten (10) days
after written request by Landlord, in any form that Landlord may reasonably
require (including one substantially in the form of Exhibit E hereto), shall
constitute a material default under this Lease. In that event, Landlord, in
addition to any other rights or remedies it might have, shall have the right by
written notice to Tenant to terminate this Lease as of a date not less than
twenty (20) days after the date of Landlord's notice. Landlord's election to
terminate shall not relieve Tenant of any liability for its default.
SECTION 13.2 ESTOPPEL CERTIFICATE
(a) Tenant shall, at any time upon not less than ten (10) days prior
written notice from Landlord, execute, acknowledge and deliver to Landlord, in
any form that Landlord may reasonably require a statement in writing (I)
certifying that this Lease is unmodified and in full force and effect (or if
modified stating the nature of the modification and certifying that this Lease
as modified is in full force and effect), and the dates to which the rental,
additional rent and other charges have been paid in advance, if any, and (ii)
acknowledging that to Tenant's knowledge there are no uncured defaults on the
part of Landlord or specifying each default, if any, are claimed; and (iii)
setting forth all further information that Landlord may reasonably require.
Tenant's statement may be relied upon by any prospective purchaser or
encumbrancer of all or any portion of the Office Building.
(b) Tenant's failure to deliver any estoppel statement within the provided
time shall constitute a default under this Lease and shall be conclusive upon
Tenant that (I) this Lease is in full force and effect without modification,
except as may be represented by Landlord; (ii) there are no uncured defaults in
Landlord's performance; and (iii) not more than one month's rental has been paid
in advance.
ARTICLE XIV. DEFAULTS AND REMEDIES
SECTION 14.1 TENANT'S DEFAULTS. In addition to any other event of default
set forth in this Lease.
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the occurrence of any one or more of the following events shall constitute a
default by Tenant:
(a) The failure by Tenant to make any payment of rent or additional rent
required to be made by Tenant, as and when due. For purposes of these default
and remedy provisions, the term additional rent shall be deemed to include all
amounts of any type whatsoever other than Basic Rent to be paid by Tenant
pursuant to the terms of this Lease.
(b) Assignment, sublease, encumbrance or other transfer of the Lease by
Tenant, either voluntarily or by operation of law, whether by judgment,
execution, transfer by intestacy or testacy, or other means without the prior
written consent of Landlord.
(c) The discovery by Landlord that any financial statement provided by
Tenant or by any affiliate, successor or guarantor of Tenant was materially
false.
(d) The failure or inability by Tenant to observe or perform any of the
express or implied covenants or provisions of this Lease to be observed or
performed by Tenant, other than as specified in any other subsection of this
Section, where the failure continues for a period of thirty (30) days after
written notice from Landlord to Tenant; provided, however, that any such notice
shall be in lieu of and not in addition to any notice required under California
Code of Civil Procedure Sections 1161 and 1161(a), as amended. However, if the
nature of the failure 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 commences the cure within thirty (30) days and thereafter diligently
pursues the cure to completion.
(e) (i) The making by Tenant of any general assignment for the benefit of
creditors; (ii) the filing by or against Tenant of a petition to have Tenant
adjudged a Chapter 7 debtor under the Bankruptcy Code or to have debts
discharged or a petition for reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of a petition filed against Tenant,
the same is dismissed within sixty [60] days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, if possession is
not restored to Tenant within thirty (30) days; (iv) the attachment, execution
or other judicial seizure of substantially all of Tenants assets located at the
Premises or of Tenant's interest in this Lease where the seizure is not
discharged within thirty (30) days; or (v) Tenant's convening of a meeting of
its creditors for the purpose of effecting a moratorium upon or composition of
its debts. Landlord shall not be deemed to have knowledge of any event described
in this subsection unless notification in writing is received by Landlord, nor
shall there be any presumption attributable to Landlord of Tenant's insolvency.
In the event that any provision of this subsection is contrary to applicable
law, the provision shall be of no force or effect.
(f) The Tenant's failure to take possession of the Premises or to occupy
same within sixty days after the Commencement Date.
SECTION 14.2 LANDLORD'S REMEDIES.
(a) In the event of any default by Tenant or in the event of the
abandonment of the Premises by Tenant, then, in addition to any other remedies
available to Landlord, Landlord may exercise the following remedies:
(i) Landlord may terminate Tenant's right to possession of the
Premises by any lawful means in which case this Lease shall terminate and Tenant
shall immediately surrender possession of the Premises to Landlord. Such
termination shall not affect any accrued obligations of Tenant under this Lease.
Upon termination, Landlord shall have the right to reenter the Premises and
remove all persons and property. Landlord shall also be entitled to recover from
Tenant:
(1) The worth at the time of award of the unpaid rent and
additional rent which had been earned at the time of termination;
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(2) The worth at the time of award of the amount by which the
unpaid rent and additional rent, which would have been earned after termination
until the time of award, exceeds the amount of such loss that Tenant proves
could have been reasonably avoided;
(3) The worth at the time of award of the amount by which the
unpaid rent and additional rent for the balance of the Term after the time of
award exceeds the amount of such loss that Tenant proves could be reasonably
avoided;
(4) Any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which, in the ordinary course of things, would be likely to
result from Tenant's default, including but not limited to the cost of
recovering possession of the Premises, commissions and other expenses of
reletting, including necessary repair, renovation, improvement and alteration of
the Premises for a new tenant, the unamortized portion of any tenant
improvements and brokerage commissions funded by Landlord in connection with
this Lease, the value of any free rent or other rental and monetary concessions
made or extended for or on behalf of Tenant (including, without limitation,
moving allowances and lease termination payments), reasonable attorneys' fees
and any other reasonable costs; and
(5) At Landlord's election all other amounts in addition to or
in lieu of the foregoing as may be permitted by law. The term rent, as used in
this Lease, shall be deemed to mean the Basic Rent and all other sums required
to be paid by Tenant to Landlord pursuant to the terms of this Lease. Any sum
other than Basic Rent shall be computed on the basis of the average monthly
amount accruing during the twenty-four (24) month period immediately prior to
default, except that if it becomes necessary to compute such rental before the
twenty-four (24) month period has occurred, then the computation shall be on the
basis of the average monthly amount during the shorter period. As used in
subparagraphs (1) and (2) above, the worth at the time of award shall be
computed by allowing interest at the rate of ten percent (10%) per annum. As
used in subparagraph (3) above, the worth at the time of award shall be
computed by discounting the amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%).
(ii) Landlord may elect not to terminate Tenant's right to possession
of the Premises in which event Landlord may continue to enforce all of its
rights and remedies under this Lease, including the right to collect all rent as
it becomes due. Efforts by the Landlord to maintain, preserve or relet the
Premises, or the appointment of a receiver to protect the Landlord's interests
under this Lease, shall not constitute a termination of the Tenant's right to
possession of the Premises. In the event that Landlord elects to avail itself of
the remedy provided by this subsection (ii), Landlord shall not unreasonably
withhold its consent to an assignment or subletting of the Premises subject to
the reasonable standards for Landlord's consent as are contained in this Lease.
(b) Landlord shall be under no obligation to observe or perform any
covenant of this Lease on its part to be observed or performed which accrues
after the date of any default by Tenant unless and until the default is cured by
Tenant. The various rights and remedies reserved to Landlord in this Lease or
otherwise shall be cumulative and, except as otherwise provided by California
law, Landlord may pursue any or all of its rights and remedies at the same time.
(c) No delay or omission of Landlord to exercise any right or remedy shall
be construed as a waiver of the right or remedy or of any default by Tenant.
The acceptance by Landlord of rent shall not be a (i) waiver of any preceding
breach or default by Tenant of any provision of this Lease, other than the
failure of Tenant to pay the particular rent accepted regardless of Landlord's
knowledge of the preceding breach or default at the time of acceptance of rent;
or (ii) a waiver of Landlord's right to exercise any remedy available to
Landlord by virtue of the breach or default. The acceptance of any payment from
a debtor-in-possession, a trustee, a receiver or any other person acting on
behalf of Tenant or Tenant's estate, shall not waive or cure a default under
Section 14.1. No payment by Tenant or receipt by Landlord of a lesser amount
than the rent required by this Lease shall be deemed to be other than a partial
payment on account of the earliest due stipulated rent, nor shall any
endorsement or Statement on any check or letter be deemed an accord and
satisfaction, and Landlord shall accept the check or payment without prejudice
to Landlord's
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judgment from any other asset of Landlord under any circumstances. Tenant
acknowledges that this limitation on Landlord's liability has been separately
bargained for and that Landlord would not enter into this Lease in the absence
of this provision.
SECTION 14.6 EXPENSES AND LEGAL FEES. Should either Landlord or Tenant
bring any action in connection with this Lease, the prevailing party shall be
entitled to recover, as a part of the action, its reasonable attorneys' fees and
all other costs. The prevailing party, for the purpose of this paragraph, shall
be determined by the trier of the facts.
SECTION 14.7 WAIVER OF JURY TRIAL. LANDLORD AND TENANT EACH ACKNOWLEDGES
THAT IT IS AWARE OF AND HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT
TO ITS RIGHTS TO TRIAL BY JURY AND EACH PARTY DOES HEREBY EXPRESSLY AND
KNOWINGLY WAIVE AND RELEASE ALL SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER ON
ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE,
TENANT'S USE OR OCCUPANCY OF THE PREMISES AND/OR ANY CLAIM OF INJURY OR DAMAGE.
LANDLORD TENANT
---- /s/ [SIGNATURE ILLEGIBLE]^^
---------------------------
ARTICLE XV. END OF TERM
SECTION 15.1 HOLDING OVER. This Lease shall terminate without further
notice upon the expiration of the Term, and any holding over by Tenant after the
expiration shall not constitute a renewal or extension of this Lease or give
Tenant any rights under this Lease, except when in writing signed by both
parties. If Tenant holds over for any period after the expiration (or earlier
termination) of the Term, Landlord may, at its option, treat Tenant as a tenant
at sufferance only commencing on the first (1st) day following the termination
of this Lease and subject to all of the terms of this Lease, except that the
monthly rental shall be the greater of (a) one hundred fifty percent (150%) of
the total monthly rental for the month immediately preceding the date of
termination, or (b) the then currently-scheduled rent for comparable space in
the Office Building. If Tenant fails to surrender the Premises upon the
expiration of this Lease, despite demand to do so by Landlord, Tenant shall
indemnify and hold Landlord harmless from all loss or liability, including
without limitation any claims made by any succeeding tenant relating to such
failure to surrender. Acceptance by Landlord of rent after the termination shall
not constitute a consent to a holdover or result in a renewal of this Lease. The
foregoing provisions of this Section are in addition to and do not affect
Landlord's right of re-entry or any other rights of Landlord under this Lease or
at law.
SECTION 15.2 MERGER ON TERMINATION. The voluntary or other surrender of
this Lease by Tenant or a mutual termination of this Lease shall terminate any
or all existing subleases unless Landlord, at its option, elects in writing to
treat the surrender or termination as an assignment to it of any or all
subleases affecting the Premises.
SECTION 15.3 SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Upon the
Expiration Date or upon any earlier termination of this Lease, Tenant shall quit
and surrender possession of the Premises to Landlord in as good order, condition
and repair as when received or as hereafter may be improved by Landlord or
Tenant, reasonable wear and tear and repairs which are Landlord's obligation
excepted, and shall, without expense to Landlord, remove or cause to be removed
from the Premises all personal property and debris, except for any items that
Landlord may by written authorization allow to remain. Tenant shall repair all
damage to the Premises resulting from the removal, which repair shall include
the patching and filling of holes and repair of structural damage, provided that
Landlord may instead elect to repair any structural damage at Tenant's expense.
If Tenant shall fail to comply with the provisions of this Section, Landlord may
effect the removal and/or make any repairs, and the cost to Landlord shall be
additional rent payable by Tenant upon demand. If requested by Landlord, Tenant
shall execute, acknowledge and deliver to Landlord
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an instrument in writing releasing and quitclaiming to Landlord all right, title
and interest of Tenant in the Premises.
ARTICLE XVI. PAYMENTS AND NOTICES
All sums payable by Tenant to Landlord shall be paid without deduction or
offset in lawful money of the United States to Landlord at its address set forth
in Item 12 of the Basic Lease Provisions or at any other place as Landlord may
designate in writing. Unless this Lease expressly provides otherwise, as for
example in the payment of rent pursuant to Section 4.1, all payments shall be
due and payable within five (5) days after demand. All payments requiring
proration shall be prorated on the basis of a thirty-(30)-day month and a three
hundred sixty-(360)-day year. Any notice, election, demand, consent, approval,
or other communication to be given or other document to be delivered by either
party to the other may be delivered in person or by courier to the other party
or may be deposited in the United States mail, duly registered or certified
postage prepaid return receipt requested, and addressed to the other party at
the address set forth in Item 12 of the Basic Lease Provisions, or if to Tenant
at that address or from and after the Commencement Date at the Premises (whether
or not Tenant has departed from abandoned or vacated the Premises). Either party
may, by written notice to the other served in the manner provided in this
Article, designate a different address. If any notice or other document is sent
by mail it shall be deemed served or delivered twenty-four (24) hours after
mailing. If more than one person or entity is named as Tenant under this Lease
service of any notice upon any one of them shall be deemed as service upon all
of them.
ARTICLE XVII. RULES AND REGULATIONS
Tenant agrees to observe faithfully and comply strictly with the Rules and
Regulations, attached as Exhibit D, and any reasonable and nondiscriminatory
amendments, modifications and/or additions as may be adopted and published by
written notice to tenants by Landlord for the safety, care, security, good order
or cleanliness of the Premises, Office Building, and Common Facilities. Landlord
shall not be liable to Tenant for any violation of the Rules and Regulations or
the breach of any covenant or condition in any lease by any other tenant. One or
more waivers by Landlord of any breach of the Rules and Regulations by Tenant or
by any other tenant(s) shall not be a waiver of any subsequent breach of that
rule or any other. Tenant's failure to keep and observe the Rules and
Regulations shall constitute a default under this Lease. In the case of any
conflict between the Rules and Regulations and this Lease, this Lease shall be
controlling.
ARTICLE XVIII. BROKER'S COMMISSION
The parties recognize as the broker(s) who negotiated this Lease the
firm(s), if any, whose name(s) is (are) stated in Item 10 of the Basic Lease
Provisions and agree that Landlord shall be responsible for the payment of
brokerage commissions to those broker(s). Tenant warrants that it has had no
dealings with any other real estate broker or agent in connection with the
negotiation of this Lease and Tenant agrees to indemnify and hold Landlord
harmless from any cost expense or liability (including reasonable attorneys'
fees) for any compensation, commissions or charges claimed by any other real
estate broker or agent employed or claiming to represent or to have been
employed by Tenant in connection with the negotiation of this Lease. The
foregoing agreement shall survive the termination of this Lease.
ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST
In the event of any transfer of Landlord's Interest in the Premises, the
transferor shall be automatically relieved of all obligations on the part of
landlord accruing under this Lease from and after the date of the transfer,
provided that any funds held by the transferor, in which Tenant has an interest,
shall be turned over, subject to that interest to the transferee, and Tenant is
notified of the transfer as required by law. No holder of a mortgage and/or deed
of trust to which this Lease is or may be subordinate, and no landlord under a
so-called sale-leaseback, shall be responsible in connection with the Security
Deposit unless the mortgagee or holder of the deed of trust or the landlord
actually receives the Security Deposit. It is intended that the covenants and
obligations contained in this Lease on the part of Landlord shall subject to the
foregoing, be binding on Landlord, its successors and assigns only during and in
respect to their respective successive periods of ownership.
18.
<PAGE>
ARTICLE XX. INTERPRETATION
SECTION 20.1 GENDER AND NUMBER. Whenever the context of this Lease
requires, the words "Landlord" and "Tenant" shall include the plural as well as
the singular, and words used in neuter, masculine or feminine genders shall
include the others.
SECTION 20.2 HEADINGS. The captions and headings of the articles and
sections of this Lease are for convenience only are not a part of this Lease and
shall have no effect upon its construction or interpretation.
SECTION 20.3 JOINT AND SEVERAL LIABILITY. If more than one person or
entity is named as Tenant, the obligations imposed upon each shall be joint and
several, and the act of or notice from or notice or refund to or the signature
of any one or more of them shall be binding on all of them with respect to the
tenancy of this Lease, including but not limited to any renewal extension,
termination or modification of this Lease.
SECTION 20.4 SUCCESSORS. Subject to Articles IX and XIX, all rights and
liabilities given to or imposed upon Landlord and Tenant shall extend to and
bind their respective heirs, executors, administrators, successors and assigns.
Nothing contained in this Section is intended or shall be construed to grant to
any person other than Landlord and Tenant and their successors and assigns any
rights or remedies under this Lease.
SECTION 20.5 TIME OF ESSENCE. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor.
SECTION 20.6 CONTROLLING LAW. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California.
SECTION 20.7 SEVERABILITY. If any term or provision of this Lease, the
deletion of which would not adversely affect the receipt of any material benefit
by either party or the deletion of which is consented to by the party adversely
affected, shall be held invalid or unenforceable to any extent, the remainder of
this Lease shall not be affected and each term and provision of this Lease shall
be valid and enforceable to the fullest extent permitted by law.
SECTION 20.8 WAIVER AND CUMULATIVE REMEDIES. One or more waivers by
Landlord or Tenant of any breach of any term, covenant or condition contained in
this Lease shall not be a waiver of any subsequent breach of the same or any
other term, covenant or condition. Consent to any act by one of the parties
shall not be deemed to render unnecessary the obtaining of that party's consent
to any subsequent act. No breach by Tenant of this Lease shall be deemed to have
been waived by Landlord unless the waiver is in a writing signed by Landlord.
The rights and remedies of Landlord under this Lease shall be cumulative and in
addition to any and all other rights and remedies which Landlord may have.
SECTION 20.9 INABILITY TO PERFORM. In the event that either party shall
be delayed or hindered in or prevented from the performance of any work or in
performing any act required under this Lease by reason of any cause beyond the
reasonable control of that party, then the performance of the work or the doing
of the act shall be excused for the period of the delay and the time for
performance shall be extended for a period equivalent to the period of the
delay. The provisions of this Section shall not operate to excuse Tenant from
the prompt payment of rent or from the timely performance of any other
obligation under this Lease within Tenants reasonable control.
SECTION 20.10 ENTIRE AGREEMENT. This Lease, and its exhibits and other
attachments, cover in full each and every agreement of every kind between the
parties concerning the Premises, the Office Building,, and all preliminary
negotiations, oral agreements, understandings and/or practices, except those
contained in this Lease, are superseded and of no further effect. Tenant waives
its rights to rely on any representations or promises made by Landlord or others
which are not contained in this Lease. No verbal agreement or implied covenant
shall be held to modify the provisions of this Lease, any statute, law or custom
to the contrary notwithstanding.
19.
<PAGE>
ARTICLE XX. INTERPRETATION
SECTION 20.1 GENDER AND NUMBER. Whenever the context of this Lease
requires, the words "Landlord" and "Tenant" shall include the plural as well as
the singular, and words used in neuter, masculine or feminine genders shall
include the others.
SECTION 20.2 HEADINGS. The captions and headings of the articles and
sections of this Lease are for convenience only are not a part of this Lease and
shall have no effect upon its construction or interpretation.
SECTION 20.3 JOINT AND SEVERAL LIABILITY. If more than one person or
entity is named as Tenant, the obligations imposed upon each shall be joint and
several, and the act of or notice from or notice or refund to or the signature
of any one or more of them shall be binding on all of them with respect to the
tenancy of this Lease, including but not limited to any renewal extension,
termination or modification of this Lease.
SECTION 20.4 SUCCESSORS. Subject to Articles IX and XIX, all rights and
liabilities given to or imposed upon Landlord and Tenant shall extend to and
bind their respective heirs, executors, administrators, successors and assigns.
Nothing contained in this Section is intended or shall be construed to grant to
any person other than Landlord and Tenant and their successors and assigns any
rights or remedies under this Lease.
SECTION 20.5 TIME OF ESSENCE. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor.
SECTION 20.6 CONTROLLING LAW. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California.
SECTION 20.7 SEVERABILITY. If any term or provision of this Lease, the
deletion of which would not adversely affect the receipt of any material benefit
by either party or the deletion of which is consented to by the party adversely
affected, shall be held invalid or unenforceable to any extent, the remainder of
this Lease shall not be affected and each term and provision of this Lease shall
be valid and enforceable to the fullest extent permitted by law.
SECTION 20.8 WAIVER AND CUMULATIVE REMEDIES. One or more waivers by
Landlord or Tenant of any breach of any term, covenant or condition contained in
this Lease shall not be a waiver of any subsequent breach of the same or any
other term, covenant or condition. Consent to any act by one of the parties
shall not be deemed to render unnecessary the obtaining of that party's consent
to any subsequent act. No breach by Tenant of this Lease shall be deemed to have
been waived by Landlord unless the waiver is in a writing signed by Landlord.
The rights and remedies of Landlord under this Lease shall be cumulative and in
addition in any and all other rights and remedies which Landlord may have.
SECTION 20.9 INABILITY TO PERFORM. In the event that either party shall
be delayed or hindered in or prevented from the performance of any work or in
performing any act required under this Lease by reason of any cause beyond the
reasonable control of that party, then the performance of the work or the doing
of the act shall be excused for the period of the delay and the time for
performance shall be extended for a period equivalent to the period of the
delay. The provisions of this Section shall not operate to excuse Tenant from
the prompt payment of rent or from the timely performance of any other
obligation under this Lease within Tenant's reasonable control.
SECTION 20.10 ENTIRE AGREEMENT. This Lease, and its exhibits and other
attachments, cover in full each and every agreement of every kind between the
parties concerning the Premises, the Office Building,, and all preliminary
negotiations, oral agreements, understandings and/or practices, except those
contained in this Lease, are superseded and of no further effect. Tenant waives
its rights to rely on any representations or promises made by Landlord or others
which are not contained in this Lease. No verbal agreement or implied covenant
shall be held to modify the provisions of this Lease, any statute, law or custom
to the contrary notwithstanding.
19.
<PAGE>
SECTION 20.11 QUIET ENJOYMENT. Upon the observance and performance of all
the covenants, terms and conditions on Tenant's part to be observed and
performed and subject to the other provisions of this Lease, Tenant shall
peaceably and quietly hold and enjoy the Premises for the Term without hindrance
or interruption by Landlord or any other person claiming by or through Landlord.
SECTION 20.12 SURVIVAL. All covenants of Landlord or Tenant which
reasonably would be intended to survive the expiration or sooner termination of
this Lease, including without limitation any warranty or indemnity hereunder,
shall so survive and continue to be binding upon and inure to the benefit of the
respective parties and their successors and assigns.
ARTICLE XXI. EXECUTION AND RECORDING
SECTION 21.1 COUNTERPARTS. This Lease may be executed in one or more
counterparts each of which shall constitute an original and all of which shall
be one and the same agreement.
SECTION 21.2 CORPORATE AND PARTNERSHIP AUTHORITY. If Tenant is a
corporation or partnership, each individual executing this Lease on behalf of
the corporation or partnership represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of the corporation or
partnership and that this Lease is binding upon the corporation or partnership
in accordance with its terms. Tenant, shall at Landlord's request, deliver a
certified copy of its board of directors' resolution or partnership agreement or
certificate authorizing or evidencing the execution of this Lease.
SECTION 21.3 EXECUTION OF LEASE; NO OPTION OR OFFER. The submission of
this Lease to Tenant shall be for examination purposes only and shall not
constitute an offer to or option for Tenant to lease the Premises. Execution of
this Lease by Tenant and its return to Landlord shall not be binding upon
Landlord, notwithstanding any time interval, until Landlord has, in fact,
executed and delivered this Lease to Tenant, it being intended that this Lease
shall only become effective upon execution by Landlord and delivery of a fully
executed counterpart to Tenant.
SECTION 21.4 RECORDING. Tenant shall not record this Lease without the
prior written consent of Landlord. Tenant, upon the request of Landlord, shall
execute and acknowledge a short form memorandum of this Lease for recording
purposes.
SECTION 21.5 AMENDMENTS. No amendment or termination of this Lease shall
be effective unless in writing signed by authorized signatories of Tenant and
Landlord, or by their respective successors-in-interest. No actions, policies,
oral or informal arrangements, business dealings or other course of conduct by
or between the parties shall be deemed to modify this Lease in any respect.
ARTICLE XXII. MISCELLANEOUS
SECTION 22.1 NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges and agrees
that the terms of this Lease are confidential and constitute proprietary
information of Landlord. Disclosure of the terms could adversely affect the
ability of Landlord to negotiate other leases and impair Landlord's relationship
with other tenants. Accordingly, Tenant agrees that it and its partners,
officers, directors, employees and attorneys shall not intentionally and
voluntarily disclose the terms and conditions of this Lease to any other tenant
or apparent prospective tenant of the Office Building, either directly or
indirectly, without the prior written consent of Landlord; provided, however,
that Tenant may disclose the terms to prospective subtenants or assignees under
this Lease.
SECTION 22.2 REPRESENTATIONS BY TENANT. The application, financial
statements, and tax returns, if any, submitted and certified to by Tenant as an
accurate representation of its financial condition have been prepared, certified
and submitted to Landlord as an inducement and consideration to Landlord to
enter into this Lease. The
20.
<PAGE>
EXHIBIT A
SAN MATEO BUSINESS CENTER
Suite 360
[FLOOR PLAN]
Exhibit A-1
<PAGE>
EXHIBIT B
UTILITIES AND SERVICES
The following standards for utilities and sentences shall be in effect at
the Office Building. Landlord reserves the right to adopt nondiscriminatory
modifications and additions to these standards. In the case of any conflict
between these standards and the Lease, the Lease shall be controlling. Subject
to all of the provisions of the Lease, including but not limited to the
restrictions contained in Section 6.1, the following shall apply:
1. Landlord shall furnish to the Premises during the hours of 8:00 a.m.
to 6:00 p.m., Monday through Friday and 8:00 a.m. to 2:00 p.m., Saturday,
generally recognized national holidays, and Sundays excepted, reasonable air
conditioning, heating and ventilation services. Subject to the provisions set
forth below, Landlord shall also furnish the Office Building with elevator
service (if applicable), reasonable amounts of electric current for normal
lighting by Landlord's standard, overhead fluorescent and incandescent fixtures
and for fractional horsepower office machines, and water for lavatory and
drinking purposes. Tenant will not, without the prior written consent of
Landlord, consume electricity in the Premises at a level in excess of 3 watts
per square foot or otherwise increase the amount of electricity, gas or water
usually furnished or supplied for use of the Premises as general office space;
nor shall Tenant connect any apparatus machine or device with water pipes or
electric current (except through existing electrical outlets in the Premises)
for the purpose of using electric current or water. This paragraph shall, at all
times, be subject to applicable governmental regulations.
2. Upon written request from Tenant delivered to Landlord at least 72
hours prior to the period for which service is requested, but during normal
business hours, Landlord will provide any of the foregoing building services to
Tenant at such time when such services are not otherwise available. Tenant
agrees to pay Landlord for those after-hour services at rates that Landlord may
establish from time to time. In addition, Landlord may impose a reasonable
charge for any excessive use of any utilities or services or for any substantial
recurrent use of the Premises at any time other than generally recognized
business hours of generally recognized business days. If Tenant requires
electric current in excess of that which Landlord is obligated to furnish under
this Exhibit B, Tenant shall first obtain the consent of Landlord and Landlord
may cause an electric current meter to be installed in the Premises to measure
the amount of electric current consumed. The cost of installation, maintenance
and repair of the meter shall be paid for by Tenant, and Tenant shall reimburse
Landlord promptly upon demand for all electric current consumed for any special
power use as shown by the meter. The reimbursement shall be at the rates charged
for electrical power by the local public utility furnishing the current plus any
additional expense incurred in keeping account of the electric current consumed.
3. If any lights, machines or equipment (including without limitation
electronic data processing machines) are used by Tenant in the Premises which
materially affect the temperature otherwise maintained by the air conditioning
system or generate substantially more heat in the Premises than would be
generated by the building standard lights and usual fractional horsepower office
equipment, Landlord shall have the right, at its election, to install or modify
any machinery and equipment to the extent Landlord reasonably deems necessary to
restore temperature balance. The cost of installation and any additional cost of
operation and maintenance shall be paid by Tenant to Landlord promptly upon
demand.
4. Landlord shall furnish water for drinking, personal hygiene, and
lavatory purposes only. If Tenant requires or uses water for any purposes in
addition to ordinary drinking, cleaning and lavatory purposes, Landlord may, in
its discretion, install a water meter to measure Tenant's water consumption.
Tenant shall pay Landlord for the cost of the meter and the cost of its
installation and for consumption throughout the duration of Tenant's occupancy.
Tenant shall keep the meter and installed equipment in good working order and
repair at Tenant's own cost and expense, in default of which Landlord may cause
the meter to be replaced or repaired at Tenant's expense. Tenant agrees to pay
for water consumed as shown on the meter and when bills are rendered, and on
Tenant's default in making that payment, Landlord may pay the charges on behalf
of Tenant. Any costs or expenses or payments made by Landlord for any of the
reasons or purposes stated above shall be deemed to be additional rent payable
by Tenant to Landlord upon demand.
Exhibit B-1
<PAGE>
5. In the event that any utility service to the Premises is separately
metered or billed to Tenant, Tenant shall pay all charges for that utility
service to the Premises and the cost of furnishing the utility to tenant suites
shall be excluded from the Operating Expenses as to which reimbursement from
Tenant is required in the Lease. If any utility charges are not paid when due
Landlord may pay them, and any amounts paid by Landlord shall immediately become
due to Landlord from Tenant as additional rent. If Landlord elects to furnish
any utility service to the Premises, Tenant shall purchase its requirements of
that utility from Landlord as long as the rates charged by Landlord do not
exceed those which Tenant would be required to pay if the utility service were
furnished it directly by a public utility.
6. Landlord shall provide janitorial services Monday through Friday,
generally recognized national holidays excepted equivalent to that furnished in
comparable office buildings and window washing as reasonably required; provided,
however, that Tenant shall pay for any additional or unusual janitorial services
required by reason of any nonstandard improvements in the Premises, including
without limitation wall coverings and floor coverings installed by or for Tenant
or by reason of any use of Premises other than exclusively as offices. The
cleaning services provided by Landlord shall also exclude refrigerators, eating
utensils (plates, drinking containers, and silverware) and interior glass
partitions. Tenant shall pay to Landlord the cost of removal of any of Tenant's
refuse and rubbish to the extent that they exceed the refuse and rubbish usually
attendant with general office usage.
7. Tenant shall have access to the Office Building 24 hours per day 7
days per week 52 weeks per year; provided that Landlord may install access
control systems as it deems advisable for the Office Building. Such systems may,
but need not, include full or part-time lobby supervision, the use of a sign-
in/sign-out log, a card identification access system, building parking and
access pass system, closing hours procedures, access control stations, fire
stairwell exit door alarm system, electronic guard system, mobile paging system,
elevator control system, or any other access controls. In the event that
Landlord elects to provide any or all of those services, Landlord may
discontinue providing them at any time with or without notice. Landlord may
impose a reasonable charge for access control cards and/or keys issued to
Tenant. Landlord shall have no liability to Tenant for the provision by Landlord
of improper access control services for any breakdown in service or for the
failure by Landlord to provide access control services. Tenant further
acknowledges that Landlord's access systems may be temporarily inoperative
during building emergency and system repair periods. Tenant agrees to assume
responsibility for compliance by its employees with any regulations established
by Landlord with respect to any card key access or any other system of building
access as Landlord may establish. Tenant shall be liable to Landlord for any
loss or damage resulting from its or its employees use/misuse of any access
system.
Exhibit B-2
<PAGE>
EXHIBIT C
TENANT'S INSURANCE
The following standards for Tenant's insurance shall be in effect at the
Office Building. Landlord reserves the right to adopt reasonable,
nondiscriminatory modifications and additions to those standards. Tenant agrees
to obtain and present evidence to Landlord that it has fully complied with the
insurance requirements.
1. Tenant shall, at its sole cost and expense commencing on the date
Tenant is given access to the Premises for any purpose and during the entire
Term procure, pay for and keep in full force and effect: (i) comprehensive
general liability insurance with respect to the Premises and the operations of
or on behalf of Tenant in on or about the Premises, including but not limited to
personal injury, non-owned automobile, blanket contractual, independent
contractors, broad form property damage, fire legal liability, products
liability (if a product is sold from the Premises), liquor law liability (if
alcoholic beverages are sold served or consumed within the Premises), and cross
liability and severability of interest clauses, which policy(ies) shall be
written on an occurrence basis and for not less than $1,000,000 combined single
limit (with a $50,000 minimum limit on fire legal liability) per occurrence for
bodily injury, death and property damage liability, or the current limit of
liability carried by Tenant, whichever is greater, and subject to such increases
in amount as Landlord may determine from time to time; (ii) workers compensation
insurance coverage as required by law, together with employers liability,
insurance coverage; (iii) with respect to improvements, alterations and the like
required or permitted to be made by Tenant under this Lease builder's all-risk
insurance in amounts satisfactory to Landlord; (iv) insurance against fire,
vandalism, malicious mischief, and such other-additional perils, as may be
included in a standard all risk form in general use in San Mateo County,
California insuring Tenants leasehold improvements, trade fixtures, furnishings,
equipment and items of personal property of Tenant located in the Premises in an
amount equal to not less than ninety percent (90%) of their actual replacement
cost (with replacement cost endorsement); and (v) business interruption
insurance in amounts satisfactory to Landlord. In no event shall the limits of
any policy be considered as limiting the liability of Tenant under this Lease.
2. All policies of insurance required to be carried by Tenant pursuant to
this Exhibit C shall be written by responsible insurance companies authorized to
do business in the State of California and with a Best's policyholder rating of
not less than "A" subject to final acceptance and approval by Landlord. Any
insurance required of Tenant may be furnished by Tenant under any blanket policy
carried by it or under a separate policy. A true and exact copy of each paid up
policy evidencing the insurance (appropriately authenticated by the insurer), or
a certificate of insurance certifying that the policy has been issued, provides
the coverage required by this Exhibit C, and contains the required provisions
shall be delivered to Landlord prior to the date Tenant is given the of
possession of the Premises. Proper evidence of the renewal of any insurance
coverage shall also be delivered to Landlord not less than thirty (30) days
prior to the expiration of the coverage. Landlord may, at any time, and from
time to time, inspect and/or copy any and all insurance policies required by
this Lease.
3. Each policy evidencing insurance required to be carried by Tenant,
pursuant to this Exhibit C, shall contain the following provisions and/or
clauses satisfactory to Landlord (i) a provision that the policy and the
coverage provided shall be primary and that any coverage carried by Landlord
shall be noncontributory with respect to any policies carried by Tenant; (ii) a
provision including Landlord and any other parties in interest designated by
Landlord as an additional insured, except as to workers compensation insurance;
(iii) a waiver by the insurer of any right to subrogation against Landlord, its
agents, employees, contractors, and representatives which arises or might arise
by reason of any payment trader the policy or by reason of any act or omission
of Landlord, its agents, employees, contractors or representatives; and (iv) a
provision that the insurer will not cancel or change the coverage provided by
the policy without first giving Landlord thirty (30) days prior written notice.
4. In the event that Tenant fails to procure, maintain and/or pay for, at
the times and for the durations specified in this Exhibit C, any insurance
required by this Exhibit C or fails to carry insurance required by any
governmental authority, Landlord may at its election procure that insurance and
pay the premiums in which event
Exhibit C-1
<PAGE>
FIRST AMENDMENT TO LEASE
This First Amendment to Lease is entered as of this 17th day of December, 1998,
by and between ROSJAN LIMITED PARTNERSHIP, a California Limited Partnership
("Landlord"), and INFOSPACE, INC. ("Tenant").
The parties enter this First Amendment to Lease on the basis of the following
facts, intentions, and understandings:
A. Landlord and Tenant have entered into that certain Office Space Lease dated
the 10th day of August 1998, pursuant to which Landlord leased to tenant
Suite 360 consisting of approximately 1,237 rentable square feet of office
space ("Premises"), for the permitted uses listed therein, the Premises being
located at 181 Second Avenue in the City and County of San Mateo, California,
as indicated on the Building Floor Plan attached as Exhibit A to the Lease.
B. Landlord agrees and Tenant now desires to lease an additional Suite #555 (the
"Additional Premises").
C. In the event of any conflict between the covenants and agreements of the
Lease and this First Amendment, the covenants and agreements of this First
Amendment prevail.
Now, therefore, in consideration of the mutual covenants and promises of the
parties, the parties agree as follows:
1. Additional Premises: The Additional Premises, Suite 555, consists of
-------------------
approximately 1,816 rentable square feet.
2. Term: The term of the lease will be for 18 months, commencing on January 1,
----
1999, and terminating on June 30, 2000.
3. Base Rent: Commencing January 1, 1999, the rent for the Additional Premises
---------
shall be as follows:
1/1/99 through 2/28/99 = $1,679.80 per month
3/1/99 through 6/30/99 = $3,359.60 per month
7/1/99 through 6/30/00 = $3,450.40 per month
4. Security Deposit: The Security Deposit for the Additional Premises shall be
----------------
equal to Three thousand four hundred fifty dollars and forty cents
($3,450.40). Upon execution of this First Amendment of Lease, the Tenant
shall pay to the Landlord $3,450.40 as Security Deposit, together with the
first month's rent ($3,450.40 + $1,679.80 = $5,130.20).
5. Share of Expenses: For the Additional Premises, Tenant shall pay to the
-----------------
Landlord and amount equal to 2.385% of any increase in property taxes,
insurance and operating expenses paid or incurred by Landlord above such paid
or incurred by landlord during the Base Year. "Base Year" shall mean the
calendar year 1998.
<PAGE>
Infospace, Inc
First Amendment to Lease
Page Two
6. The Additional Premises shall be "as is".
7. Obligations: Except as otherwise provided herein, the Lease shall remain in
-----------
full force and effect.
In Witness Whereof, the parties hereto have executed the First Amendment to
Lease as of the date first above written.
"Landlord" "Tenant"
Rosjan Limited Partnership Infospace, Inc.
By: Kennedy-Wilson Management Group By: /s/ Paul C. Vilandre
Its Managing Agent ------------------------------
Paul C. Vilandre
By: /s/ Eric M. Bender Its V.P. of Finance & CFO
-------------------------------
Eric M. Bender By: /s/ Stan Wang
Its Director of Property Management ------------------------------
Stan Wang
Date: 1/7/99 Its President and CEO
-----------------------------
Date: 12-28-98
----------------------------
<PAGE>
EXHIBIT 10.6
COLLATERAL ASSIGNMENT, PATENT MORTGAGE
--------------------------------------
AND SECURITY AGREEMENT
----------------------
This Collateral Assignment, Patent Mortgage and Security Agreement is made
as of March 4, 1997, by and between INFOSPACE, INC. ("Assignor"), and COMERICA
BANK-CALIFORNIA ("Assignee").
RECITALS
--------
A. Assignee has agreed to lend to Assignor certain funds (the "Loan"), and
Assignor desires to borrow such funds from Assignee. The Loan will be evidenced
by one or more promissory notes of even date herewith (a "Note" or,
collectively, the "Notes") and will be secured in part pursuant to the terms of
a load and Security Agreement of even date herewith (the "Loan Agreement").
B. In order to induce Assignee to make the Loan, Assignor has agreed to
assign certain intangible property to Assignee for purposes o securing the
obligations of Assignor to Assignee.
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. Assignment, Patent Mortgage and Grant of Security Interest. As
----------------------------------------------------------
collateral security for the prompt and complete payment and performance of all
of Assignor's present and future indebtedness, obligations and liabilities to
Assignee, Assignor hereby assigns, transfers, conveys and grants a security
interest and mortgage to Assignee, as security, Assignor's entire right, title
and interest in, to and under the following (all of which shall collectively be
called the "Collateral"):
(a) Any and all copyright rights, copyright applications, copyright
registrations and like protections in each work or authorship and derivative
work thereof, whether published or unpublished and whether or not the same also
constitutes a trade secret, now or hereafter existing, created, acquired or
held, including without limitation those set forth on Exhibit A attached hereto
---------
(collectively. the "Copyrights"):
(b) Any arid all trade secrets, and any and all intellectual property
rights in computer software and computer software products now or hereafter
existing, created, acquired or held:
(c) Any and all design rights which may be available to Assignor now
or hereafter existing, created, acquired or held;
(d) All patents, patent applications and like protections including,
without limitation, improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same, including without limitation
the patents and patent applications set forth on Exhibit B attached hereto
---------
(collectively, the "Patents");
(e) Any trademark and servicemark rights, whether registered or not,
applications to register and registrations of the same and like protections, and
the entire goodwill of the business or Assignor connected with and symbolized by
such trademarks, including without limitation those set forth on Exhibit C
---------
attached hereto (collectively, the "Trademarks"):
(f) Any and all claims for damages by way of past, present and future
infringement of any of the rights included above, with the right, but not the
obligation, to sue for and collect such damages for said use or infringement of
the intellectual property rights identified above:
1
<PAGE>
(g) All licenses or other rights to use any of the Copyrights, Patents
or Trademarks, and all license fees and royalties arising from such use; and
(h) All amendments, extensions, renewals and extensions of any of the
Copyrights, Trademarks or Patents; and
(i) All proceeds and products of the foregoing, including without
limitation all payments under insurance or any indemnity or warranty payable in
respect of any of the foregoing.
THE INTEREST IN THE COLLATERAL BEING ASSIGNED HEREUNDER SHALL NOT BE
CONSTRUED AS A CURRENT ASSIGNMENT. BUT AS A CONTINGENT ASSIGNMENT TO SECURE
ASSIGNOR'S OBLIGATIONS TO ASSIGNEE UNDER THE NOTE AND SECURITY AGREEMENT.
2. Authorization and Request. Assignor authorizes and requests that tile
-------------------------
Register of Copyrights and the Commissioner of Patents and Trademarks record
this conditional assignment.
3. Covenants and Warranties. Assignor represents, warrants, covenants and
------------------------
agrees as follows:'
(a) Assignor is now the sole owner of the Collateral, except for non-
exclusive licenses granted by Assignor to its customers in the ordinary course
of business and except for liens, encumbrances or security interests described
in Schedule 3 attached hereto:
----------
(b) Performance of this Assignment does not conflict with or result in
a breach of any agreement to which Assignor is party or by which Assignor is
bound:
(c) During the term of this Assignment. Assignor will not transfer or
otherwise encumber any interest in the. Collateral. except for non-exclusive
licenses granted by Assignor in the ordinary course of business;
(d) Each of the Patents is valid and enforceable, and no part of the
Collateral has been judged invalid or unenforceable, in whole or in part, and no
claim has been made that any part of the Collateral violates the. rights of any
third party:
(e) Assignor shall promptly advise Assignee of any material change in
the composition of the Collateral, including but not including but not limited
to any subsequent ownership right of the Assignor in or to any Trademark, Patent
or Copyright not specified in this Assignment;
(f) Assignor shall (i) protect. defend and maintain the validity and
enforceability of the Trademarks, Patents and Copyrights,.. (ii) use its best
efforts to detect infringements of the Trademarks, Patents and Copyrights and
promptly advise Assignee in writing of material infringements detected and (iii)
not allow any Trademarks, Patents or Copyrights to be abandoned, forfeited or
dedicated to the public without the written consent of Assignee, which shall not
be unreasonably withheld;
(g) Assignor shall promptly register the most recent version of any of
Assignor's Copyrights, if not so already registered, and shall, from time to
time, execute and file such other instruments, and take such further actions as
Assignee may request from time to time to perfect or continue the perfection of
Assignee's interest in the Collateral to perfect or continue the perfection of
Assignee's interests in the Collateral at Assignor's sole expense.
--------------------------
(h) This Assignment creates, and in the case of after acquired
Collateral, this Assignment will create at the time Assignor first has rights
in such after acquired Collateral, in favor of Assignee a valid and perfected
first priority security interest in the Collateral in the United States securing
the payment and performance of the obligations evidenced by the Note upon making
the filings referred to in clause (i) below:
(i) Except for, and upon, the filing with the United States Patent and
Trademark office with respect to the Patents and Trademarks and the Register of
Copyrights with respect to the Copyrights necessary to
2
<PAGE>
perfect the security interests and assignment created hereunder, and, except as
has been already made or obtained, no authorization, approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required either (I) for the grant by Assignor of the security interest
granted hereby or for the execution, delivery or performance of this Assignment
by Assignor or (ii) for the perfection in the United States or the exercise by
Assignee of its rights and remedies hereunder:
(j) All information heretofore, herein or hereafter supplied to
Assignee by or on behalf of Assignor with respect to the Collateral is accurate
and complete in all material respects.
(k) Assignor shall not enter into any agreement that would materially
impair or conflict with Assignor's obligations hereunder without Assignee's
prior written consent. Assignor shall not permit the inclusion in any contract
to which it becomes a party of any provisions that could or might in any way
impair or prevent the creation of a security interest in Assignor's rights an
interests in any property included within the definition of the Collateral
acquired under such contracts.
(l) Upon any officer of Assignor obtaining knowledge hereof, Assignor
will promptly notify Assignee in writing of any event that materially adversely
affects the value of any of the Collateral, the ability of Assignor or Assignee
to dispose of any of the Collateral or the rights and remedies of Assignee in
relation thereto, including the levy of any legal process against any of the
Collateral.
4. Assignee's Rights. Assignee shall have the right, but not the
-----------------
obligation, to take, at Assignor's sole expense, any actions that Assignor is
required under this Assignment to take but which Assignor fails to take, after
five (5) days' notice to Assignor. Assignor shall reimburse and indemnify
Assignee for all costs and expenses incurred in the reasonable exercise of its
rights under this section 4.
5. Inspection Rights. Assignor hereby grants to Assignee and its
-----------------
employees, representatives and agents the right to visit, during reasonable
hours upon prior reasonable notice to Assignor, and any of Assignor's and its
subcontractors' plants and facilities that manufacture, install or store
products (or that have done so during the prior six-month period) that are sold
under any of the Collateral, and to inspect the products and quality control
records relating thereto upon reasonable notice to Assignor and as often as may
be reasonably requested; provided, however, nothing herein shall entitle
Assignee access to Assignor's trade secrets and other proprietary information.
6. Further Assurances; Attorney in Fact.
------------------------------------
(a) On a continuing basis, Assignor will, subject to any prior
licenses, encumbrances and restrictions and prospective licenses, make, execute,
acknowledge and deliver, and file and record in the proper filing and recording
places in the United States, all such instruments, including, appropriate
financing and continuation statements and collateral agreements and filings with
the United States Patent and Trademark Office and the Register of Copyrights,
and take all such action as may reasonably be deemed necessary or advisable, or
as requested by Assignee, to perfect Assignee's security interest in all
Copyrights, Patents and Trademarks and otherwise to carry out the intent and
purposes of this Collateral Assignment, or for assuring and confirming to
Assignee the grant or perfection of a security interest in all Collateral.
(b) Assignor hereby irrevocably appoints Assignee as Assignor's
attorney-in-fact, with full authority in the place and stead of Assignor and in
the name of Assignor, Assignee or otherwise, from time to time in Assignee's
discretion, to take any action and to execute any instrument which Assignee may
deem necessary or advisable to accomplish the purposes of this Collateral
Assignment, including:
(i) To modify, in its sole discretion, this Collateral Assignment
without first obtaining Assignor's approval of or signature to such modification
by amending Exhibit A, Exhibit B and Exhibit C, thereof, as appropriate, to
include reference to any right, title or interest in any Copyrights, Patents or
Trademarks acquired by Assignor after the execution hereof or to delete any
reference to any right, title or interest in any Copyrights, Patents or
Trademarks in which Assignor no longer has or claims any right, title or
interest; and
3
<PAGE>
(ii) To file, in its sole discretion, one or more financing or
continuation statements and amendments thereto, relative to any of the
Collateral without the signature of Assignor where permitted by law.
7. Events of Default. The occurrence of any of the following shall
-----------------
constitute an Event of Default under the Assignment:
(a) An Event of Default occurs under the Loan Agreement or any Note;
or
(b) Assignor breaches any warranty or agreement made by Assignor in
this Agreement.
8. Remedies. Upon the occurrence of an Event of Default, Assignee shall
--------
have the right to exercise all remedies of a secured party under the California
Uniform Commercial Code, including without limitation the right to require
Assignor to assemble the Collateral and any tangible property in which Assignee
has a security interest and to make it available to Assignee at a place
designated by Assignee. Assignee shall have a nonexclusive, royalty free
license to use the Copyrights, Patents and Trademarks to the extent reasonably
necessary to permit Assignee to exercise its rights and remedies upon the
occurrence of an Event of default, Assignor will pay any expenses (including
attorney's fees) incurred by Assignee in connection with the exercise of any of
Assignee's rights hereunder, including without limitation any expense incurred
in disposing of the Collateral. All of Assignee's rights and remedies with
respect to the Collateral shall be cumulative.
9. Indemnity. Assignor agrees to defend, indemnify and hold harmless
---------
Assignee and its officers, employees, and agents against: (a) all obligations,
demands, claims, and liabilities claimed or asserted by any other party in
connection with the transactions contemplated by this Agreement, and (b) all
loses or expenses in any way suffered, incurred, or paid by Assignee as a result
of or in any way arising out of, following or consequential to transactions
between Assignee and Assignor, whether under this Assignment or otherwise
(including without limitation attorneys fees and expenses), except for losses
arising from or out of Assignee's gross negligence or willful misconduct.
10. Reassignment. At such time as Assignor shall completely satisfy all of
------------
the obligation secured hereunder, Assignee shall execute and deliver to Assignor
all deeds, assignments and other instruments as may be necessary or proper to
revest in Assignor full title to the property assigned hereunder, subject to any
disposition thereof which may have been made by Assignee pursuant hereto.
11. Course of Dealing. No course of dealing, nor any failure to exercise,
-----------------
nor any delay in exercising any right, power or privilege hereunder shall
operate as a waiver thereof.
12. Attorneys Fees. If any action relating to this Assignment is brought
--------------
by either party hereto against the other party, the prevailing party shall be
entitled to recover reasonable attorneys fees, costs and disbursements.
13. Amendments. This Assignment may be amended only by a written
----------
instrument signed by both parties hereto.
14. Counterparts. This Assignment may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute the same instrument.
15. California Law and Jurisdiction. This Assignment shall be governed by
-------------------------------
the laws of the State of California, without regard for choice of law
provisions. Assignor and Assignee consent to the nonexclusive jurisdiction of
any state or federal court located in Santa Clara County, California.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Assignment on the
day and year first above written
Address of Assignor ASSIGNOR: INFOSPACE, INC.
3130 LA SELVA, #300
SAN MATEO, CA 94403
By: /s/ [Signature Illegable]
------------------------------
Title: Vice President
--------------------------
By: /s/ [Signature Illegable]
------------------------------
Title: CFO
------------------------
Address of Assignee: ASSIGNEE: COMERICA BANK-CALIFORNIA
333 WEST SANTA CLARA ST
SAN JOSE, CA 95113. By: Mary Beth Suhr
------------------------------
Mary Beth Suhr
Vice President
5
<PAGE>
EXHIBIT A
---------
List of Copyrights
------------------
6
<PAGE>
EXHIBIT B
---------
List of Patents
---------------
7
<PAGE>
EXHIBIT C
---------
List of Trademarks
------------------
8
<PAGE>
EXHIBIT 10.7
[LOGO APPEARS HERE]
REVOLVING CREDIT LOAN & SECURITY
AGREEMENT
(ACCOUNTS AND INVENTORY)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
OBLIGOR # NOTE # AGREEMENT DATE
March 17, 1999
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CREDIT LIMIT INTEREST RATE OFFICER NO./INITIALS
$2,000,000.00 Base Rate+ 1.000% 48703, Mary Beth Suhr
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
THIS AGREEMENT is entered into on March 17, 1999, between Comerica Bank-
California ("Bank") as secured party, whose Headquarter Office is 333 West Santa
Clara Street, San Jose, CA and Viador, Inc. ("Borrower"), a 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
181 Second Avenue Suite 218, San Mateo, 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)
Eighty percent (80.000%) 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.
1.6 "Cash Flow" as used in this Agreement means, for any applicable
period of determination, the Net Income (after deduction for income taxes
and other taxes of such person determined by reference to income or profits
of such person) for such period, plus, to the extent deducted in
computation of such Net Income, the amount of depreciation and amortization
expense and the amount of deferred tax liability during such period, all as
determined in accordance with GAAP. The applicable period of determination
will be N/A, beginning with the period from ________________to___________
_____________.
1.7 "Collateral" as used in this Agreement means and includes each and
all of the following: the Receivables; the Intangibles; the negotiable
collateral, the Inventory; all money, deposit accounts and all other assets
of Borrower in which Bank receives a security Interest or which hereafter
come into the possession, custody or control of Bank; and the proceeds of
any of the foregoing, including, but not limited to, proceeds of insurance
covering the collateral and any and all Receivables, Intangibles,
negotiable collateral, Inventory, equipment, money, deposit accounts or
other tangible and intangible property of borrower resulting from the sale
or other disposition of the collateral, and the proceeds thereof.
Notwithstanding anything to the contrary contained herein, collateral shall
not include any waste or other materials which have been or may be
designated as toxic or hazardous by Bank.
1.8 "Credit" as used in this Agreement means all Obligations, except
those obligations arising pursuant to any other separate contract,
instrument, note, or other separate agreement which, by its terms, provides
for a specified interest rate and term.
1.
<PAGE>
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 (I) 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 lease, 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 or preparing for
the shipping of Inventory, and any and all other Items hereafter acquired by
Borrower by way of substitution,
2.
<PAGE>
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.
3.
<PAGE>
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.
2. LOAN AND TERMS OF PAYMENT
-------------------------
For value received, Borrower promises to pay to the order of Bank such
amount, as provided for 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 Two Million
and no/100 ($2,000,000.00), 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 (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 Seven and 75/100
(7.750%) 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. A late payment charge equal to 5% of
each late payment may be charged on any payment not received by the Bank
within 10 calendar days after the payment due date, but acceptance of
payment of this charge shall not waive any Default under this 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 May 15,
2000, or until terminated by notice by Borrower. Notice of such termination
by Borrower shall be effectuated by mailing of a registered or certified
letter not less than thirty (30) days prior to the effective date of such
termination, addressed to the Bank at the address set forth herein and the
termination shall be effective as of the date so fixed in such notice.
Notwithstanding the foregoing, should Borrower be in default of one or more
of the provisions of this Agreement, Bank may terminate this Agreement at
any time without notice. Notwithstanding the foregoing, should either Bank
or Borrower become insolvent or unable to meet its debts as they mature, or
fail, suspend, or go out of business, the other party shall have the right
to terminate this Agreement at any time without notice. On the date of
termination all Obligations shall become immediately due and payable
without notice or demand; no notice of termination by Borrower shall be
effective until Borrower shall have paid all Obligations to Bank In full.
Notwithstanding termination, until all Obligations have been fully
satisfied, Bank shall retain its security interest in all existing
Collateral and Collateral arising thereafter, and Borrower shall continue
to perform all of its Obligations.
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 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 affect or limit Bank's security interest and other
rights in and to the Receivables. Together with each schedule,
4.
<PAGE>
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;
5.
<PAGE>
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 an 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>
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 Borrowers
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>
m. Make loans, 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 percent (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 this 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 existing 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 or
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>
(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, instrument 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
----------- ------------------
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>
c. In addition to the financial statements requested above, the Borrower
agrees to provide Bank with the following schedules:
<TABLE>
<S> <C> <C>
xx Accounts Receivable Agings on a Monthly basis;
- ---------------------- ------------------------
xx Accounts Payable Agings on a Monthly basis;
- ---------------------- ------------------------
Job Progress Reports on a basis;
- ---------------------- ------------------------
xx Borrowing Base Certificate on a Monthly basis; and
- ---------------------- -------------------------- ------------------------
xx Covenant Compliance Certificate. All reports due within 15 days of month end.
</TABLE>
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 $ 1000000.00
-------------
Effective Tangible Net Worth floor to increase by 75% of quarterly net
----------------------------------------------------------------------
profits after tax and 50% of new equity raised + subordinated debt. TNW to
--------------------------------------------------------------------------
increase to $2,500,000.00 by 9/30/99.
--------------------------------------------------------------------------
c. a ratio of cash plus securities plus Receivable to Current Liabilities
of not less than N/A
---------------------------------------------------------
--------------------------------------------------------------------------
d. a quick ratio of cash plus securities plus Receivables to Current
Liabilities of not less than 1.50:1.00. Quick Ratio excludes deferred
----------------------------------------
revenues.
--------------------------------------------------------------------------
e. a ratio of Total Liabilities (less debt subordinated to Bank) to
Tangible Effective Net Worth of less than N/A
--------------------------------
--------------------------------------------------------------------------
f. a ratio of Cash Flow to Fixed Charges of not less than N/A
-------------
--------------------------------------------------------------------------
g. Net Income after taxes of N/A
-------------------------------------------
--------------------------------------------------------------------------
h. Borrower shall not without Bank's prior written consent acquire or
expend for or commit itself to acquire or expend for fixed assets by lease,
purchase or otherwise in an aggregate amount that exceeds Five Hundred
--------------
Thousand and no/100 Dollars ($ 500,000.00 ) in any fiscal
------------------------------- ---------------
year and
i. Minimum Debt Service Coverage ratio of 1.50:1.00, measures quarterly
--------------------------------------------------------------------
beginning with the quarter ending 6/30/00. Debt Service Coverage is
------------------------------------------------------------------------
determined as follows: NPAT+Dep.+Amort. (annualized) divided by Current
-----------------------------------------------------------------------
Portion Long Term Debt.
j. Semi-annual A/R audits.
k. Borrower to maintain primary operating accounts with Lender.
l. Out-of-pocket costs, including Legal Fees & A/R Audits, to be paid by
Borrower.
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's 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 of 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
investigation 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>
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 the 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 Dollars ($ N/A )
_________________________ ------------
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:
____________________________, __________________________, ____________________,
an aggregate of N/A Dollars ($ N/A )
-------------------------------- -----------------
per N/A .
-------------------------------
6.27 Borrower shall perform all acts reasonably necessary to ensure that:
(i) Borrower and any business in which Borrower holds a substantial Interest,
and (ii) all customers, suppliers and vendors that are material to Borrower's
business, become Year 2000 Compliant in a timely manner. Such acts shall
include, without limitation, performing a comprehensive review and assessment of
all of Borrower's systems and adopting a detailed plan, with itemized budget,
for the remediation, monitoring and testing of such systems, As used in this
paragraph, "Year 2000 Compliant" shall mean, in regard to any entity, that all
software, hardware, firmware, equipment, goods or systems utilized by or
material to the business operations or financial condition of such entity, will
properly perform date sensitive function before, during and after the year 2000.
Borrower shall, immediately upon request, provide to Bank such certifications or
other evidence of Borrower's compliance with terms of this paragraph as Bank may
from time to time require.
7. EVENTS OF DEFAULT
-----------------
Any one or more of the following events shall constitute a default by
Borrower under this 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 entities 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 judgment 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 of 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 falls 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;
11.
<PAGE>
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;
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 ( N/A %) 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 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 licenses 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>
(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 9.505 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 9105 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 this 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 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>
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 assigns 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>
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: Viador, Inc.
______________________________________ By: /s/ [SIGNATURE ILLEGIBLE]^^
--------------------------------
Signature of
Accepted and effective as of Title: VP FINANCE AND CFO AND
March 17, 1999 at Bank's SECRETARY
- --------------
Headquarter Office
By: ________________________________
Signature of
(Bank) Comerica Bank-California Title: _____________________________
By: Mary Beth Suhr By: ________________________________
----------------------------------
Signature of Mary Beth Suhr Signature of
Title: Vice President Title: ____________________________
-------------------------------
By: ________________________________
Signature of
Title:______________________________
15.
<PAGE>
Exhibit 23.1
REPORT ON SCHEDULE AND CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Viador Inc.
The audits referred to in our report dated June 11, 1999, except as to note 8,
which is as of July 20, 1999, included the related financial statement schedule
as of December 31, 1998, and for each of the years in the three-year period
ended December 31, 1998, included in the registration statement. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement schedule
based on our audits. In our opinion, such financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We consent to the use of our form of report included herein and to the
references to our firm under the headings "Selected Financial Data" and
"Experts" in the prospectus.
/s/ KPMG LLP
Mountain View, California
July 29, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM VIADOR
INC.'S JUNE 30, 1999 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 14,259
<SECURITIES> 0
<RECEIVABLES> 3,175
<ALLOWANCES> (90)
<INVENTORY> 0
<CURRENT-ASSETS> 17,754
<PP&E> 917
<DEPRECIATION> 603
<TOTAL-ASSETS> 18,869
<CURRENT-LIABILITIES> 5,447
<BONDS> 0
0
16
<COMMON> 12
<OTHER-SE> 13,394
<TOTAL-LIABILITY-AND-EQUITY> 18,869
<SALES> 3,290
<TOTAL-REVENUES> 3,290
<CGS> 874
<TOTAL-COSTS> 7,655
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 116
<INCOME-PRETAX> (5,123)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,123)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,123)
<EPS-BASIC> (0.52)
<EPS-DILUTED> (0.52)
</TABLE>
