<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 25, 2000
REGISTRATION NO. 333-30174
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
GARAGE.COM INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 6211 94-3285969
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER)
</TABLE>
420 FLORENCE AVENUE
PALO ALTO, CALIFORNIA 94301
(650) 470-0950
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
GUY KAWASAKI
CHIEF EXECUTIVE OFFICER
GARAGE.COM INC.
420 FLORENCE AVENUE
PALO ALTO, CALIFORNIA 94301
(650) 470-0950
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
ALAN K. AUSTIN KEVIN P. KENNEDY
JAMES C. CREIGH SHEARMAN & STERLING
DAVID A. HSU 1550 EL CAMINO REAL, SUITE 100
WILSON SONSINI GOODRICH & ROSATI MENLO PARK, CALIFORNIA 94025
650 PAGE MILL ROAD (650) 330-2200
PALO ALTO, CALIFORNIA 94304
(650) 493-9300
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act") check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
- ---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration 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>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED OFFERING PRICE(1) AMOUNT OF REGISTRATION FEE(2)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $0.001 par value per share................... $68,425,000 $18,065
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purposes of determining the registration fee
pursuant to Rule 457(o) promulgated under the Securities Act.
(2) Previously paid.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
EXPLANATORY NOTE
This Amendment No. 1 to the Registrant's Registration Statement on Form S-1
(File No. 333-30174) is being filed solely for the purpose of filing exhibits.
<PAGE> 3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses to be paid by the Registrant,
other than the underwriting discounts and commissions payable by the Registrant
in connection with the sale of the common stock being registered. All amounts
shown are estimates except for the registration fee and the NASD filing fee.
<TABLE>
<CAPTION>
AMOUNT TO BE
PAID
------------
<S> <C>
SEC Registration fee........................................ $ 18,065
NASD filing fee............................................. 7,343
Nasdaq National Market listing fee.......................... *
Blue sky qualification fees and expenses.................... 5,000
Printing and engraving expenses............................. 150,000
Legal fees and expenses..................................... 550,000
Accounting fees and expenses................................ 250,000
Director and officer liability insurance.................... *
Transfer agent and registrar fees........................... 10,000
Miscellaneous expenses...................................... *
--------
Total............................................. $ *
========
</TABLE>
- ---------------
* To be supplied by amendment.
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware General Corporation Law permits indemnification
of officers, directors and other corporate agents under certain circumstances
and subject to certain limitations. The Registrant's Certificate of
Incorporation and Bylaws provide that the Registrant shall indemnify its
directors, officers, employees and agents to the full extent permitted by
Delaware General Corporation Law, including in circumstances in which
indemnification is otherwise discretionary under Delaware law. In addition, the
Registrant intends to enter into separate indemnification agreements with its
directors, officers and certain employees which would require the Registrant,
among other things, to indemnify them against certain liabilities which may
arise by reason of their status or service (other than liabilities arising from
willful misconduct of a culpable nature). The Registrant also intends to
maintain director and officer liability insurance, if available on reasonable
terms.
These indemnification provisions and the indemnification agreement to be
entered into between the Registrant and its officers and directors may be
sufficiently broad to permit indemnification of the Registrant's officers and
directors for liabilities (including reimbursement of expenses incurred) arising
under the Securities Act.
The Registrant intends to obtain in conjunction with the effectiveness of
the Registration Statement a policy of directors' and officers' liability
insurance that insures the Registrant's directors and officers against the cost
of defense, settlement or payment of a judgment under certain circumstances.
The underwriting agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the underwriters of the Registrant and
its officers and directors for certain liabilities arising under the Securities
Act, or otherwise.
II-1
<PAGE> 4
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since its inception, the Registrant has issued and sold the following
unregistered securities:
(1) Between October 31, 1997 and April 27, 1999, the Registrant sold
9,700,000 shares of common stock at prices ranging from $0.0005 to $0.05
per share to employees, directors and consultants. Such sales were made in
reliance on Section 4(2) or Rule 701 of the Securities Act.
(2) Between March 11, 1998 and September 30, 1998, the Registrant sold
1,800,000 shares of its Series A preferred stock to (a) two funds
affiliated with Advanced Technology Ventures, (b) Silicon Valley Bancshares
and (c) George Gilder for an aggregate purchase price of $600,030. Such
sales were made in reliance on Section 4(2) of the Securities Act.
(3) Between March 11, 1998 and January 8, 1999, the Registrant sold
7,300,000 shares of its Series B preferred stock to a total of 37
investors, including Chong-Moon Lee, Sanford R. Robertson and two funds
affiliated with Advanced Technology Ventures, for an aggregate purchase
price of $3,650,000. Such sales were made in reliance on Section 4(2) of
the Securities Act.
(4) Between May 19, 1999 and February 10, 2000, the Registrant granted
options to purchase 2,665,741 shares of common stock at prices ranging from
$0.50 to $7.00 to employees, directors and consultants pursuant to its 1999
Stock Plan. Such grants were made in reliance on Section 4(2) or Rule 701
of the Securities Act.
(5) Between August 27, 1999 and November 24, 1999, the Registrant sold
4,800,000 shares of its Series C preferred stock to a total of 37
investors, led by E*TRADE Group and funds affiliated with Advanced
Technology Ventures, Mayfield Fund, Credit Suisse First Boston Corporation,
and Draper Fisher Jurvetson Partners, for an aggregate purchase price of
$12,000,000. Such sales were made in reliance on Section 4(2) of the
Securities Act.
(6) On December 31, 1999 and January 12, 2000, the Registrant issued
560,212 shares of Series D preferred stock to a total of 106 investors in
exchange for their units of Garage.com Startups, LLC for an aggregate
purchase price of $2,801,060. Such sales were made in reliance on Rule 506
under the Securities Act.
(7) On February 8, 2000, the Registrant sold 2,989,917 shares of its
Series E preferred stock to a total of 54 investors, led by Sequoia
Capital, Safeguard Scientifics, Goldman Sachs, E*TRADE Group, Mayfield
Fund, Advanced Technology Ventures, 3i Corporation, Hikari Tsushin, DBV
Investments and Highland Capital for an aggregate purchase price of
$26,909,253. Such sales were made in reliance on Rule 506 under the
Securities Act.
Share numbers in the foregoing table for shares issued prior to August 16,
1999 have been adjusted to account for a two-for-one stock split distributed on
August 16, 1999.
II-2
<PAGE> 5
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
1.1* Form of Underwriting Agreement
3.1 Certificate of Incorporation of Garage.com Inc.
3.2 Form of Amended and Restated Certificate of Incorporation of
Garage.com Inc. to be filed immediately after the closing
of the offering
3.3 Bylaws of Garage.com Inc.
4.1* Specimen Common Stock Certificate
5.1* Opinion of Wilson Sonsini Goodrich & Rosati
10.1 Amended and Restated 1999 Stock Plan and forms of agreements
thereunder
10.2 2000 Director Option Plan
10.3 2000 Employee Stock Purchase Plan
10.4 Form of Indemnification Agreement
10.5 Sponsorship Agreement, dated as of March 11, 1998, between
Garage.com and Advanced Technology Ventures IV, L.P.
10.6 Sponsorship Agreement, dated as of July 21, 1998, between
Garage.com and Credit Suisse First Boston Corporation
10.7 Sponsorship Agreement, dated as of March 11, 1998, between
Garage.com and Silicon Valley Bank
10.8 Sponsorship Agreement, dated as of July 9, 1998, between
Garage.com and Heidrick & Struggles
10.9 Sponsorship Agreement, dated as of May 7, 1998, between
Garage.com and Coopers & Lybrand LLP
10.10 Sponsorship Agreement, dated as of May 8, 1998, between
Garage.com and Venture Law Group
10.11 Sponsorship Agreement, dated as of September 30, 1998,
between Garage.com and Alburger Basso de Grosz Insurance
Services, Inc., DBA abd Insurance and Financial Services
10.12* Sponsorship Agreement, dated as of January 19, 1999, between
Garage.com and Microsoft Corporation
10.13 Lease, dated as of March 10, 1998, between 505 Hamilton
Partners and Garage.com
10.14 Amendment to Lease, dated as of November 11, 1999, between
505 Hamilton Partners and Garage.com
11.1* Statements of Computation of Pro Forma Common Shares and
Equivalents
21.1 List of Subsidiaries
23.1** Consent of Ernst & Young LLP
23.2* Consent of Wilson Sonsini Goodrich & Rosati (included in
Exhibit 5.1)
24.1** Power of Attorney
</TABLE>
- ---------------
* To be filed by amendment.
** Previously filed.
II-3
<PAGE> 6
(B) FINANCIAL STATEMENT SCHEDULES.
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
ITEM 17. UNDERTAKINGS
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.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referenced in Item 14 of
this Registration Statement or otherwise, the Registrant has been advised that
in the opinion of the 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 hereunder, 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 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 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-4
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of Palo
Alto, County of Santa Clara, State of California, on the 25th day of February
2000.
GARAGE.COM
By: /s/ GUY KAWASAKI
-----------------------------------
Guy Kawasaki
Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act, this Amendment No. 1 to
the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ GUY KAWASAKI Chairman of the Board, February 25, 2000
- --------------------------------------------------- Chief Executive Officer and
Guy Kawasaki Director
(Principal Executive Officer)
/s/ MARY ANN CUSENZA Vice President of Finance February 25, 2000
- --------------------------------------------------- and Chief Financial Officer
Mary Ann Cusenza (Principal Financial and
Accounting Officer)
WILLIAM M. REICHERT* President and Director February 25, 2000
- ---------------------------------------------------
William M. Reichert
THOMAS BEVILACQUA* Director February 25, 2000
- ---------------------------------------------------
Thomas Bevilacqua
JOHN DEAN* Director February 25, 2000
- ---------------------------------------------------
John Dean
JOSEPH GRUNDFEST* Director February 25, 2000
- ---------------------------------------------------
Joseph Grundfest
JOS HENKENS* Director February 25, 2000
- ---------------------------------------------------
Jos Henkens
</TABLE>
II-5
<PAGE> 8
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
CRAIG JOHNSON* Director February 25, 2000
- ---------------------------------------------------
Craig Johnson
RICHARD KARLGAARD* Director February 25, 2000
- ---------------------------------------------------
Richard P. Karlgaard
CHONG-MOON LEE* Director February 25, 2000
- ---------------------------------------------------
Chong-Moon Lee
*Power of Attorney
By: /s/ MARY ANN CUSENZA
----------------------------------------
Mary Ann Cusenza
Attorney-in-fact
</TABLE>
II-6
<PAGE> 9
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
1.1* Form of Underwriting Agreement
3.1 Certificate of Incorporation of Garage.com Inc.
3.2 Form of Amended and Restated Certificate of Incorporation of
Garage.com Inc. to be filed immediately after the closing
of the offering
3.3 Bylaws of Garage.com Inc.
4.1* Specimen Common Stock Certificate
5.1* Opinion of Wilson Sonsini Goodrich & Rosati
10.1 Amended and Restated 1999 Stock Plan and forms of agreements
thereunder
10.2 2000 Director Option Plan
10.3 2000 Employee Stock Purchase Plan
10.4 Form of Indemnification Agreement
10.5 Sponsorship Agreement, dated as of March 11, 1998, between
Garage.com and Advanced Technology Ventures IV, L.P.
10.6 Sponsorship Agreement, dated as of July 21, 1998, between
Garage.com and Credit Suisse First Boston Corporation
10.7 Sponsorship Agreement, dated as of March 11, 1998, between
Garage.com and Silicon Valley Bank
10.8 Sponsorship Agreement, dated as of July 9, 1998, between
Garage.com and Heidrick & Struggles
10.9 Sponsorship Agreement, dated as of May 7, 1998, between
Garage.com and Coopers & Lybrand LLP
10.10 Sponsorship Agreement, dated as of May 8, 1998, between
Garage.com and Venture Law Group
10.11 Sponsorship Agreement, dated as of September 30, 1998,
between Garage.com and Alburger Basso de Grosz Insurance
Services, Inc., DBA abd Insurance and Financial Services
10.12* Sponsorship Agreement, dated as of January 19, 1999, between
Garage.com and Microsoft Corporation
10.13 Lease, dated as of March 10, 1998, between 505 Hamilton
Partners and Garage.com
10.14 Amendment to Lease, dated as of November 11, 1999, between
505 Hamilton Partners and Garage.com
11.1* Statements of Computation of Pro Forma Common Shares and
Equivalents
21.1 List of Subsidiaries
23.1** Consent of Ernst & Young LLP
23.2* Consent of Wilson Sonsini Goodrich & Rosati (included in
Exhibit 5.1)
24.1** Power of Attorney
</TABLE>
- ---------------
* To be filed by amendment.
** Previously filed.
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
GARAGE.COM INC.
FIRST: The name of the corporation is Garage.com Inc. (the
"Corporation").
SECOND: The address of the Corporation's registered office in the State
of Delaware is 1209 Orange Street, in the City of Wilmington, County of New
Castle, Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation 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.
FOURTH:
(A) CLASSES OF STOCK. The Corporation is authorized to issue two classes of
stock to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares which the Corporation is authorized
to issue is fifty six million five hundred thousand (56,500,000) shares,
each with a par value of $0.001 per share. Thirty eight million seven
hundred thousand (38,700,000) shares shall be Common Stock and seventeen
million eight hundred thousand (17,800,000) shares shall be Preferred
Stock.
(B) RIGHTS, PREFERENCES AND RESTRICTIONS OF PREFERRED STOCK. The Preferred
Stock may be divided into such number of series as the Board of
Directors may determine. The first series of Preferred Stock shall be
designated "Series A Preferred Stock" and shall consist of one million
eight hundred thousand (1,800,000) shares. The second series of
Preferred Stock shall be designated "Series B Preferred Stock" and shall
consist of seven million three hundred thousand (7,300,000) shares. The
third series of Preferred Stock shall be designated "Series C Preferred
Stock" and shall consist of four million eight hundred thousand
(4,800,000) shares. The fourth series of Preferred Stock shall be
designated "Series D Preferred Stock" and shall consist of six hundred
thousand (600,000) shares. The fifth Series of Preferred Stock shall be
designated "Series E Preferred Stock" and shall consist of three million
three hundred thousand (3,300,000) shares. The rights, preferences,
privileges, and restrictions granted to and imposed on the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred
Stock, the Series D Preferred Stock and the Series E Preferred Stock are
as set forth below in this Article Fourth(B).
1. DIVIDEND PROVISIONS. The holders of shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series
D Preferred Stock and Series E Preferred Stock shall be entitled
to receive dividends, out of any assets legally available
therefor, prior and in preference to any declaration or payment
of any dividend (payable other than in Common Stock or other
securities and rights
<PAGE> 2
convertible into or entitling the holder thereof to receive,
directly or indirectly, additional shares of Common Stock of the
Corporation) on the Common Stock of the Corporation, at the rate
of $0.02 per share per annum on each outstanding share of Series
A Preferred Stock, $0.03 per share per annum on each outstanding
share of Series B Preferred Stock, $0.15 per share per annum on
each outstanding share of Series C Preferred Stock, $0.30 per
share per annum on each outstanding share of Series D Preferred
Stock and $0.54 per share per annum on each outstanding share of
Series E Preferred Stock, payable quarterly when, as and if
declared by the Board of Directors. Such dividends shall not be
cumulative.
2. LIQUIDATION.
(a) PREFERENCE. In the event of any liquidation, dissolution
or winding up of the Corporation, either voluntary or
involuntary, the holders of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series
D Preferred Stock and Series E Preferred Stock shall be
entitled to receive, prior and in preference to any
distribution of any of the assets of the Corporation to
the holders of Common Stock by reason of their ownership
thereof, (i) an amount equal to $0.3333 for each share of
Series A Preferred Stock then held by them, plus declared
but unpaid dividends, if any, (ii) an amount equal to
$0.50 for each share of Series B Preferred Stock then held
by them, plus declared but unpaid dividends, if any, (iii)
an amount equal to $2.50 for each share of Series C
Preferred Stock then held by them, plus declared but
unpaid dividends, if any, (iv) an amount equal to $5.00
for each share of Series D Preferred Stock then held by
them, plus declared but unpaid dividends, if any and (v)
an amount equal to $9.00 for each share of Series E
Preferred Stock then held by them, plus declared but
unpaid dividends, if any. If, upon the occurrence of such
event, the assets and funds thus distributed among the
holders of the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock shall be
insufficient to permit the payment to such holders of the
full aforesaid preferential amount, then the entire assets
and funds of the Corporation legally available for
distribution shall be distributed ratably among the
holders of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock
and Series E Preferred Stock in proportion to the
preferential amount each such holder is otherwise entitled
to receive.
(b) REMAINING ASSETS. Upon a liquidation, dissolution or
winding up of the Corporation, and after payment to the
holders of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock
and Series E Preferred Stock the amounts to which they are
entitled pursuant to Section 2(a), all assets and funds of
the Corporation that remain legally available for
distribution to shareholders by reason of their ownership
of stock
-2-
<PAGE> 3
of the Corporation shall be distributed ratably among the
holders of Common Stock in proportion to the number of
shares of Common Stock held by them.
(c) CERTAIN ACQUISITIONS.
(i) DEEMED LIQUIDATION. For purposes of this Section 2,
a liquidation, dissolution or winding up of the
Corporation shall be deemed to be occasioned by, or
to include, (A) the acquisition of the Corporation
by another person or entity by means of any
transaction or series of related transactions
(including, without limitation, any reorganization,
merger or consolidation, but excluding any merger
effected exclusively for the purpose of changing
the domicile of the Corporation); or (B) a sale of
all or substantially all of the assets of the
Corporation, unless in the case of either (A) or
(B) the Corporation's shareholders of record as
constituted immediately prior to such acquisition
or sale will, immediately after such acquisition or
sale (by virtue of securities issued as
consideration for the Corporation's acquisition or
sale or otherwise) hold at least 50% of the voting
power of the surviving or acquiring entity in
approximately the same relative percentages after
such acquisition or sale as before such acquisition
or sale.
(ii) VALUATION OF CONSIDERATION. In the event of a
deemed liquidation as described in Section 2(c)(i),
if the consideration received by the Corporation is
other than cash, its value will be deemed its fair
market value. Any securities shall be valued as
follows:
(A) Securities not subject to investment letter or
other similar restrictions on free marketability:
(1) If traded on a securities exchange
or the Nasdaq National Market, the
value shall be deemed to be the
average of the closing prices of the
securities on such exchange over the
thirty-day period ending three (3)
days prior to the closing;
(2) If actively traded over-the-counter,
the value shall be deemed to be the
average of the closing bid or sale
prices (whichever is applicable)
over the thirty-day period ending
three (3) days prior to the closing;
and
(3) If there is no active public market,
the value shall be the fair market
value thereof, as determined (y) by
a recognized independent investment
banker selected by
-3-
<PAGE> 4
the Board of Directors or (z) in
good faith by the Board of
Directors, acting unanimously.
(B) The method of valuation of securities subject
to investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a shareholder's status as an affiliate
or a former affiliate) shall be to make an appropriate discount from the market
value determined as above in Section 2(c)(ii)(A) to reflect the approximate fair
market value thereof, as determined (y) by a recognized independent investment
banker selected by the Board of Directors or (z) in good faith by the Board of
Directors, acting unanimously.
(iii) NOTICE OF TRANSACTION. The Corporation shall give
each holder of record of Preferred Stock written notice of an impending
transaction involving a liquidation, dissolution or winding up of the
Corporation not later than twenty (20) days prior to the shareholders' meeting
called to approve such transaction, or twenty (20) days prior to the closing of
such transaction, whichever is earlier, and shall also notify such holders in
writing of the final approval of such transaction. The first of such notices
shall describe the material terms and conditions of the impending transaction
and the provisions of this Section 2, and the Corporation shall thereafter give
such holders prompt notice of any material changes. The transaction shall in no
event take place sooner than twenty (20) days after the Corporation has given
the first notice provided for herein or sooner than ten (10) days after the
Corporation has given notice of any material changes provided for herein;
provided, however, that such periods may be shortened upon the written consent
of the holders of Preferred Stock that are entitled to such notice rights or
similar notice rights and that represent at least a majority of the voting power
of all then outstanding shares of such Preferred Stock.
(iv) EFFECT OF NONCOMPLIANCE. In the event the
requirements of this Section 2(c) are not complied with, the Corporation shall
forthwith either cause the closing of the transaction to be postponed until such
requirements have been complied with, or cancel such transaction, in which event
the rights, preferences and privileges of the holders of the Preferred Stock
shall revert to and be the same as such rights, preferences and privileges
existing immediately prior to the date of the first notice referred to in
Section 2(c)(iii).
(3) REDEMPTION.
(a) SERIES A PREFERRED STOCK.
(i) RIGHT OF REDEMPTION AND PRICE. In the event
that the ownership of shares of Series A
Preferred Stock by any holder thereof shall,
in the opinion of counsel for such holder,
violate any law or regulation applicable to
such holder, such holder shall have the
right to require the Corporation to redeem,
to the extent the Corporation may lawfully
do so, any or all shares of Series A
Preferred Stock held by such holder. The
redemption price (the "Redemption Price")
shall be the price per share at
-4-
<PAGE> 5
which the Corporation has most recently sold
shares of its Preferred Stock multiplied by
the number of shares to be redeemed.
(ii) PROCEDURE. Such holder of Series A Preferred
Stock shall provide the Corporation with a
written notice (the "Redemption Notice") of
its intention to exercise its right of
redemption, which Redemption Notice shall
(A) include a detailed description of the
reason for such redemption; (B) fix a date
for such redemption (the "Redemption Date"),
which Redemption Date shall be no less than
thirty (30) days following receipt by the
Corporation of the Redemption Notice; (C)
specify the number of shares of Series A
Preferred Stock to be redeemed; and (D) be
accompanied by (1) such holder's certificate
or certificates representing the shares of
Series A Preferred Stock to be redeemed and
(2) an opinion of counsel to the effect that
such redemption is in accordance with the
requirements of this Section 3(a). The
Corporation shall redeem on the Redemption
Date, out of funds legally available
therefor, the number of shares of Series A
Preferred specified in the Redemption
Notice. In the event less than all the
shares represented by any such certificate
are redeemed, the Corporation shall issue a
new certificate representing the unredeemed
shares.
(iii) EFFECT OF REDEMPTION; INSUFFICIENT FUNDS.
From and after receipt of the Redemption
Notice, unless there shall have been a
default in payment of the Redemption Price,
all rights of such holder of Series A
Preferred Stock (except the right to receive
the applicable Redemption Price without
interest upon surrender of such holder's
certificate or certificates) shall cease
with respect to such shares, and such shares
shall not thereafter be transferred on the
books of the Corporation or be deemed to be
outstanding for any purpose whatsoever. If
the funds of the Corporation legally
available for redemption of shares of Series
A Preferred Stock on the Redemption Date are
insufficient to redeem the total number of
shares of Series A Preferred Stock to be
redeemed, those funds which are legally
available on the Redemption Date will be
used to redeem the maximum possible number
of such shares (if more than one holder has
exercised its right of redemption, the
shares shall be redeemed ratably among such
based upon the total Redemption Price
applicable to their shares of Series A
Preferred Stock which are to be redeemed).
The shares of Series A Preferred Stock not
redeemed shall remain outstanding and
entitled to all the rights
-5-
<PAGE> 6
and preferences provided herein. At any time
thereafter when additional funds of the
Corporation are legally available for the
redemption of shares of Series A Preferred
Stock, such funds will immediately be used
to redeem the balance of the shares which
the Corporation has become obliged to redeem
but which it has not redeemed.
(b) SERIES B PREFERRED STOCK. The Series B
Preferred Stock is not redeemable.
(c) SERIES C PREFERRED STOCK. The Series C
Preferred Stock is not redeemable.
(d) SERIES D PREFERRED STOCK. The Series D
Preferred Stock is not redeemable.
(e) SERIES E PREFERRED STOCK. The Series E
Preferred Stock is not redeemable; provided,
however, that the Corporation may redeem
shares of Series E Preferred Stock if such
redemption is advisable to comply with the
rules of any regulatory authority,
including, without limitation, the rules of
the National Association of Securities
Dealers, Inc.
4. CONVERSION. The holders of the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock and Series E Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):
(a) RIGHT TO CONVERT. Subject to Section 4(c),
each share of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock and Series E
Preferred Stock shall be convertible, at the
option of the holder thereof, at any time
after the date of issuance of such share
and, with respect to the Series A Preferred
Stock, on or prior to the fifth day prior to
the Redemption Date fixed in any Redemption
Notice with respect to such holder's shares
of Series A Preferred Stock, at the office
of the Corporation or any transfer agent for
such stock, into such number of fully paid
and nonassessable shares of Common Stock as
is determined by dividing (x) (i) $0.3333 in
the case of Series A Preferred Stock, (ii)
$0.50 in the case of Series B Preferred
Stock, (iii) $2.50 in the case of Series C
Preferred Stock, (iv) $5.00 in the case of
Series D Preferred Stock or (v) $9.00 in the
case of Series E Preferred Stock by (y) the
Conversion Price applicable to such share,
determined as hereinafter provided, in
-6-
<PAGE> 7
effect on the date the certificate is
surrendered for conversion. The initial
Conversion Price per share of Series A
Preferred Stock shall be $0.3333. The
initial Conversion Price per share of Series
B Preferred Stock shall be $0.50. The
initial Conversion Price per share of Series
C Preferred Stock shall be $2.50. The
initial Conversion Price per share of Series
D Preferred Stock shall be $5.00. The
initial Conversion Price per share of Series
E Preferred Stock shall be $9.00. Such
initial Conversion Prices shall be subject
to adjustment as set forth in Section 4(d).
(b) AUTOMATIC CONVERSION.
(i) Each share of Series B Preferred
Stock shall automatically be
converted into shares of Common
Stock at the Conversion Price at the
time in effect for such share
immediately on the date specified by
written consent or agreement of the
holders of a majority of the then
outstanding shares of Series B
Preferred Stock. Each share of
Series C Preferred Stock shall
automatically be converted into
shares of Common Stock at the
Conversion Price at the time in
effect for such share immediately on
the date specified by written
consent or agreement of the holders
of a majority of the then
outstanding shares of Series C
Preferred Stock. Each share of
Series D Preferred Stock shall
automatically be converted into
shares of Common Stock at the
Conversion Price at the time in
effect for such share immediately on
the date specified by written
consent or agreement of the holders
of a majority of the then
outstanding shares of Series D
Preferred Stock. Each share of
Series E Preferred Stock shall
automatically be converted into
shares of Common Stock at the
Conversion Price at the time in
effect for such share immediately on
the date specified by written
consent or agreement of the holders
of a majority of the then
outstanding shares of Series E
Preferred Stock.
(ii) Each share of Preferred Stock shall
automatically be converted into
shares of Common Stock at the
Conversion Price at the time in
effect for such share immediately
upon the closing of the sale of the
Corporation's Common Stock in a firm
commitment, underwritten public
offering registered under the
-7-
<PAGE> 8
Securities Act of 1933, as amended,
other than a registration relating
solely to a transaction under Rule
145 under such Act (or any successor
thereto) or to an employee benefit
plan of the Corporation, at a public
offering price (prior to
underwriters' discounts and
expenses) equal to $2.00 per share
of Common Stock (as adjusted for any
stock dividends, combinations or
splits with respect to such shares)
and aggregate proceeds to the
Corporation and/or any selling
shareholders (after deduction for
underwriters' discounts and expenses
relating to the issuance, including
without limitation fees of the
Corporation's counsel) of which
exceed $10,000,000.
(c) MECHANICS OF CONVERSION. Before any holder
of Preferred Stock shall be entitled to
convert the same into shares of Common
Stock, such holder shall surrender the
certificate or certificates therefor, duly
endorsed, at the office of the Corporation
or of any transfer agent for the Preferred
Stock, and shall give written notice to the
Corporation at its principal corporate
office, of the election to convert the same
and shall state therein the name or names in
which the certificate or certificates for
shares of Common Stock are to be issued. The
Corporation shall, as soon as practicable
thereafter, issue and deliver at such office
to such holder of Preferred Stock, or to the
nominee or nominees of such holder, a
certificate or certificates for the number
of shares of Common Stock to which such
holder shall be entitled as aforesaid. Such
conversion shall be deemed to have been made
immediately prior to the close of business
on the date of such surrender of the shares
of Preferred Stock to be converted, and the
person or persons entitled to receive the
shares of Common Stock issuable upon such
conversion shall be treated for all purposes
as the record holder or holders of such
shares of Common Stock as of such date.
(d) CONVERSION PRICE ADJUSTMENTS OF PREFERRED
STOCK FOR CERTAIN DILUTIVE ISSUANCES, SPLITS
AND COMBINATIONS. The Conversion Prices of
the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred
Stock, the Series D Preferred Stock and the
Series E Preferred Stock shall be subject to
adjustment from time to time as follows:
-8-
<PAGE> 9
(i) DILUTIVE ISSUANCES. If the
Corporation shall issue, after the
date upon which any shares of Series
E Preferred Stock were first issued
(the "Purchase Date"), any
Additional Stock (as defined below)
without consideration or for a
consideration per share less than
the Conversion Price for any series
of Preferred Stock in effect
immediately prior to the issuance of
such Additional Stock, the
Conversion Price for such series in
effect immediately prior to each
such issuance shall automatically be
adjusted as set forth in this
Section 4(d)(i), unless otherwise
provided in this Section 4(d)(i).
(A) ADJUSTMENT FORMULA. Whenever
the Conversion Price for a
particular series is adjusted
pursuant to this Section
(4)(d)(i), the new Conversion
Price for such series shall
be determined by multiplying
the Conversion Price then in
effect for such series by a
fraction, (x) the numerator
of which shall be the number
of shares of Common Stock
outstanding immediately prior
to such issuance (the
"Outstanding Common") plus
the number of shares of
Common Stock that the
aggregate consideration
received by the Corporation
for such issuance would
purchase at such Conversion
Price; and (y) the
denominator of which shall be
the number of shares of
Outstanding Common plus the
number of shares of such
Additional Stock. For
purposes of the foregoing
calculation, the term
"Outstanding Common" shall
include shares of Common
Stock deemed issued pursuant
to Section 4(d)(i)(E) below.
(B) ADDITIONAL STOCK. "Additional
Stock" shall mean any shares
of Common Stock issued (or
deemed to have been issued
pursuant to Section
4(d)(i)(E)) by the
Corporation after the
Purchase Date other than
(1) Shares of Common Stock
issued or deemed to
have been issued
pursuant to
-9-
<PAGE> 10
a transaction
described in Section
4(d)(ii);
(2) Up to 4,000,000 shares
of Common Stock issued
or deemed to have been
issued to employees,
consultants or
directors of the
Corporation directly
or pursuant to a stock
option plan,
restricted stock plan,
stock purchase
agreement or other
stock incentive
arrangement approved
by the Board of
Directors of the
Corporation;
(3) Shares of Common Stock
issued or deemed to
have been issued to
financial institutions
or lessors in
connection with
commercial credit
arrangements,
equipment financings
or similar
transactions approved
by the Board of
Directors;
(4) Shares of Common Stock
issued or deemed to
have been issued upon
the issuance of Series
A Preferred Stock or
Series B Preferred
Stock pursuant to the
Series A and Series B
Preferred Stock
Purchase Agreement
dated as of March 11,
1998;
(5) Shares of Series C
Preferred Stock
pursuant to the Series
C Preferred Stock
Purchase Agreement
dated as of August 10,
1999;
(6) Shares of Series D
Preferred Stock
pursuant to the
Contribution Agreement
dated as of December
15, 1999;
(7) Shares of Series E
Preferred Stock
pursuant to the Series
E Preferred Stock
Purchase Agreement
dated as of January
10, 2000; and
-10-
<PAGE> 11
(8) Shares of Common Stock
issued or deemed to
have been issued upon
conversion of Series A
Preferred Stock,
Series B Preferred
Stock, Series C
Preferred Stock,
Series D Preferred
Stock or Series E
Preferred Stock.
(C) FRACTIONAL ADJUSTMENTS. No
adjustment of the Conversion
Price for the Series A
Preferred Stock, Series B
Preferred Stock, Series C
Preferred Stock, Series D
Preferred Stock or Series E
Preferred Stock shall be made
in an amount less than one
one-hundredth cent per share,
provided that any adjustments
which are not required to be
made by reason of this
sentence shall be carried
forward and shall be either
taken into account in any
subsequent adjustment made
prior to three years from the
date of the event giving rise
to the adjustment being
carried forward, or shall be
made at the end of three
years from the date of the
event giving rise to the
adjustment being carried
forward.
(D) DETERMINATION OF
CONSIDERATION. In the case of
the issuance of Common Stock
for cash, the consideration
shall be deemed to be the
amount of cash paid therefor
before deducting any
reasonable discounts,
commissions or other expenses
allowed, paid or incurred by
the Corporation for any
underwriting or otherwise in
connection with the issuance
and sale thereof. In the case
of the issuance of the Common
Stock for a consideration in
whole or in part other than
cash, the consideration other
than cash shall be deemed to
be the fair value thereof as
determined by the Board of
Directors irrespective of any
accounting treatment.
(E) DEEMED ISSUANCES. In the case
of the issuance (whether
before, on or after the
applicable Purchase Date) of
options to purchase or rights
to subscribe for Common
Stock, securities by their
terms convertible into or
exchangeable for
-11-
<PAGE> 12
Common Stock or options to
purchase or rights to
subscribe for such
convertible or exchangeable
securities, the following
provisions shall apply for
all purposes of this Section
4(d)(i):
(1) The aggregate maximum
number of shares of
Common Stock
deliverable upon
exercise (assuming the
satisfaction of any
conditions to
exercisability,
including without
limitation, the
passage of time, but
without taking into
account potential
antidilution
adjustments) of such
options to purchase or
rights to subscribe
for Common Stock shall
be deemed to have been
issued at the time
such options or rights
were issued and for a
consideration equal to
the consideration
(determined in the
manner provided in
Section 4(d)(i)(D)),
if any, received by
the Corporation upon
the issuance of such
options or rights plus
the minimum exercise
price provided in such
options or rights
(without taking into
account potential
antidilution
adjustments) for the
Common Stock covered
thereby.
(2) The aggregate maximum
number of shares of
Common Stock
deliverable upon
conversion of or in
exchange (assuming the
satisfaction of any
conditions to
convertibility or
exchangeability,
including, without
limitation, the
passage of time, but
without taking into
account potential
antidilution
adjustments) for any
such convertible or
exchangeable
securities or upon the
exercise of options to
purchase or rights to
subscribe for such
convertible or
exchangeable
securities and
subsequent conversion
or exchange thereof
shall be deemed to
have been issued at
the time such
securities were
-12-
<PAGE> 13
issued or such options
or rights were issued
and for a
consideration equal to
the consideration, if
any, received by the
Corporation for any
such securities and
related options or
rights (excluding any
cash received on
account of accrued
interest or accrued
dividends), plus the
minimum additional
consideration, if any,
to be received by the
Corporation (without
taking into account
potential antidilution
adjustments) upon the
conversion or exchange
of such securities or
the exercise of any
related options or
rights (the
consideration in each
case to be determined
in the manner provided
in Section
4(d)(i)(D)).
(3) In the event of any
change in the number
of shares of Common
Stock deliverable or
in the consideration
payable to the
Corporation upon
exercise of such
options or rights or
upon conversion of or
in exchange for such
convertible or
exchangeable
securities, including,
but not limited to, a
change resulting from
the antidilution
provisions thereof,
the Conversion Prices
of the Series A
Preferred Stock, the
Series B Preferred
Stock, the Series C
Preferred Stock, the
Series D Preferred
Stock and the Series E
Preferred Stock, to
the extent in any way
affected by or
computed using such
options, rights or
securities, shall be
recomputed to reflect
such change, but no
further adjustment
shall be made for the
actual issuance of
Common Stock or any
payment of such
consideration upon the
exercise of any such
options or rights or
the conversion or
exchange of such
securities.
(4) Upon the expiration of
any such options or
rights, the
termination of any
such rights to convert
or exchange or the
-13-
<PAGE> 14
expiration of any
options or rights
related to such
convertible or
exchangeable
securities, the
Conversion Prices of
the Series A Preferred
Stock, the Series B
Preferred Stock, the
Series C Preferred
Stock, the Series D
Preferred Stock and
the Series E Preferred
Stock, to the extent
in any way affected by
or computed using such
options, rights or
securities or options
or rights related to
such securities, shall
be recomputed, to
reflect the issuance
of only the number of
shares of Common Stock
(and convertible or
exchangeable
securities which
remain in effect)
actually issued upon
the exercise of such
options or rights,
upon the conversion or
exchange of such
securities or upon the
exercise of the
options or rights
related to such
securities.
(5) The number of shares
of Common Stock deemed
issued and the
consideration deemed
paid therefor pursuant
to Sections
4(d)(i)(E)(1) and (2)
shall be appropriately
adjusted to reflect
any change,
termination or
expiration of the type
described in either
Section 4(d)(i)(E)(3)
or (4).
(F) NO INCREASED CONVERSION PRICE.
Except to the limited extent provided for in Sections 4(d)(i)(E)(3) and
4(d)(i)(E)(4), no adjustment of such Conversion Price pursuant to this Section
4(d)(i) shall have the effect of increasing the Conversion Price above the
Conversion Price in effect immediately prior to such adjustment.
(ii) STOCK SPLITS AND DIVIDENDS. In the
event the Corporation should at any
time or from time to time after the
Purchase Date fix a record date for
the effectuation of a split or
subdivision of the outstanding
shares of Common Stock or the
determination of holders of Common
Stock entitled to receive a dividend
or other distribution payable in
additional shares of Common Stock or
other securities or rights
convertible into, or entitling the
holder thereof to receive directly
or
-14-
<PAGE> 15
indirectly, additional shares of
Common Stock (hereinafter referred
to as "Common Stock Equivalents")
without payment of any consideration
by such holder for the additional
shares of Common Stock or the Common
Stock Equivalents (including the
additional shares of Common Stock
issuable upon conversion or exercise
thereof), then, as of such record
date (or the date of such dividend
distribution, split or subdivision
if no record date is fixed), the
Conversion Prices of the Series A
Preferred Stock, the Series B
Preferred Stock, the Series C
Preferred Stock, the Series D
Preferred Stock and the Series E
Preferred Stock shall be
appropriately decreased so that the
number of shares of Common Stock
issuable on conversion of each share
of Series A Preferred Stock, the
Series B Preferred Stock, the Series
C Preferred Stock, the Series D
Preferred Stock and the Series E
Preferred Stock shall be increased
in proportion to such increase of
the aggregate of shares of Common
Stock outstanding and those issuable
with respect to such Common Stock
Equivalents with the number of
shares issuable with respect to
Common Stock Equivalents determined
from time to time in the manner
provided for deemed issuances in
Section 4(d)(i)(E).
(iii) REVERSE STOCK SPLITS. If the number
of shares of Common Stock
outstanding at any time after the
Purchase Date is decreased by a
combination of the outstanding
shares of Common Stock, then,
following the record date of such
combination, the Conversion Prices
for the Series A Preferred Stock,
the Series B Preferred Stock, the
Series C Preferred Stock, the Series
D Preferred Stock and the Series E
Preferred Stock shall be
appropriately increased so that the
number of shares of Common Stock
issuable on conversion of each share
of such series shall be decreased in
proportion to such decrease in
outstanding shares.
(e) OTHER DISTRIBUTIONS. In the event the
Corporation shall declare a distribution
payable in securities of other persons,
evidences of indebtedness issued by the
Corporation or other persons, assets
(excluding cash dividends) or options or
rights not referred to in Section 4(d)(ii),
then, in each such case for the purpose of
this Section 4(e), the holders of Preferred
Stock
-15-
<PAGE> 16
shall be entitled to a proportionate share
of any such distribution as though they were
the holders of the number of shares of
Common Stock of the Corporation into which
their shares of Preferred Stock are
convertible as of the record date fixed for
the determination of the holders of Common
Stock of the Corporation entitled to receive
such distribution.
(f) RECAPITALIZATIONS. If at any time or from
time to time there shall be a
recapitalization of the Common Stock (other
than a subdivision, combination or merger or
sale of assets transaction provided for
elsewhere in this Section 4 or Section 2)
provision shall be made so that the holders
of the Preferred Stock shall thereafter be
entitled to receive upon conversion of the
Preferred Stock the number of shares of
stock or other securities or property of the
Corporation or otherwise, to which a holder
of Common Stock deliverable upon conversion
would have been entitled on such
recapitalization. In any such case,
appropriate adjustment shall be made in the
application of the provisions of this
Section 4 with respect to the rights of the
holders of the Preferred Stock after the
recapitalization to the end that the
provisions of this Section 4 (including
adjustment of the Conversion Price then in
effect and the number of shares purchasable
upon conversion of the Preferred Stock)
shall be applicable after that event and be
as nearly equivalent as practicable.
(g) NO IMPAIRMENT. The Corporation will not, by
amendment of its Certificate of
Incorporation or through any reorganization,
recapitalization, transfer of assets,
consolidation, merger, dissolution, issue or
sale of securities or any other voluntary
action, avoid or seek to avoid the
observance or performance of any of the
terms to be observed or performed hereunder
by the Corporation, but will at all times in
good faith assist in the carrying out of all
the provisions of this Section 4 and in the
taking of all such action as may be
necessary or appropriate in order to protect
the Conversion Rights of the holders of
Preferred Stock against impairment.
(h) NO FRACTIONAL SHARES AND CERTIFICATE AS TO
ADJUSTMENTS.
(1) No fractional shares shall be issued
upon the conversion of any share or
shares of Preferred Stock or
Preferred Stock, and the number of
shares of Common Stock to be issued
shall be rounded to the nearest
whole share.
-16-
<PAGE> 17
Whether or not fractional shares are
issuable upon such conversion shall
be determined on the basis of the
total number of shares of Preferred
Stock the holder is at the time
converting into Common Stock and the
number of shares of Common Stock
issuable upon such aggregate
conversion.
(2) Upon the occurrence of each
adjustment or readjustment of the
Conversion Price of any series of
Preferred Stock pursuant to this
Section 4, the Corporation, at its
expense, shall promptly compute such
adjustment or readjustment in
accordance with the terms hereof and
prepare and furnish to each holder
of Preferred Stock a certificate
setting forth such adjustment or
readjustment and showing in detail
the facts upon which such adjustment
or readjustment is based. The
Corporation shall, upon the written
request at any time of any holder of
Preferred Stock, furnish or cause to
be furnished to such holder a like
certificate setting forth (A) such
adjustment and readjustment, (B) the
Conversion Price for each series of
Preferred Stock at the time in
effect, and (C) the number of shares
of Common Stock and the amount, if
any, of other property which at the
time would be received upon the
conversion of a share of each series
of Preferred Stock.
(i) NOTICES OF RECORD DATE. In the event of any
taking by the Corporation of a record of the
holders of any class of securities for the
purpose of determining the holders thereof
who are entitled to receive any dividend
(other than a cash dividend) or other
distribution, any right to subscribe for,
purchase or otherwise acquire any shares of
stock of any class or any other securities
or property, or to receive any other right,
the Corporation shall mail to each holder of
Preferred Stock, at least 20 days prior to
the date specified therein, a notice
specifying the date on which any such record
is to be taken for the purpose of such
dividend, distribution or right, and the
amount and character of such dividend,
distribution or right.
(j) RESERVATION OF STOCK ISSUABLE UPON
CONVERSION. The Corporation shall at all
times reserve and keep available out of its
authorized but unissued shares of Common
Stock, solely for the purpose of effecting
the conversion of the shares of Preferred
Stock, such number of its shares of Common
Stock
-17-
<PAGE> 18
as shall from time to time be sufficient to
effect the conversion of all outstanding
shares of Preferred Stock; and if at any
time the number of authorized but unissued
shares of Common Stock shall not be
sufficient to effect the conversion of all
then outstanding shares of Preferred Stock,
in addition to such other remedies as shall
be available to the holder of such Preferred
Stock, the Corporation will take such
corporate action as may, in the opinion of
its counsel, be necessary to increase its
authorized but unissued shares of Common
Stock to such number of shares as shall be
sufficient for such purposes, including,
without limitation, engaging in best efforts
to obtain the requisite shareholder approval
of any necessary amendment to these
articles.
5. VOTING RIGHTS.
(a) SERIES A PREFERRED STOCK. The Series A
Preferred Stock is nonvoting.
(b) SERIES B PREFERRED STOCK. The holder of each
share of Series B Preferred Stock shall have
the right to one vote for each share of
Common Stock into which such share of Series
B Preferred Stock could then be converted,
and with respect to such vote, such holder
shall have full voting rights and powers
equal to the voting rights and powers of the
holders of Common Stock, and shall be
entitled, notwithstanding any provision
hereof, to notice of any shareholders'
meeting in accordance with the bylaws of the
Corporation, and shall be entitled to vote,
together with holders of Common Stock, with
respect to any question upon which holders
of Common Stock have the right to vote.
Fractional votes shall not, however, be
permitted and any fractional voting rights
available on an as-converted basis (after
aggregating all shares into which shares of
Series B Preferred Stock held by each holder
could be converted) shall be rounded to the
nearest whole number (with one-half being
rounded upward).
(c) SERIES C PREFERRED STOCK. The holder of each
share of Series C Preferred Stock shall have
the right to one vote for each share of
Common Stock into which such share of Series
C Preferred Stock could then be converted,
and with respect to such vote, such holder
shall have full voting rights and powers
equal to the voting rights and powers of the
holders of Common Stock, and shall be
entitled, notwithstanding any
-18-
<PAGE> 19
provision hereof, to notice of any
shareholders' meeting in accordance with the
bylaws of the Corporation, and shall be
entitled to vote, together with holders of
Common Stock, with respect to any question
upon which holders of Common Stock have the
right to vote. Fractional votes shall not,
however, be permitted and any fractional
voting rights available on an as-converted
basis (after aggregating all shares into
which shares of Series C Preferred Stock
held by each holder could be converted)
shall be rounded to the nearest whole number
(with one-half being rounded upward). The
holders of the Series C Preferred Stock,
voting together as a single class, shall be
entitled to elect one (1) director. In the
case of a vacancy in an office of a director
elected by the holders of Series C Preferred
Stock, the holders of Series C Preferred
Stock may elect a successor to hold office
for the unexpired term of the director whose
place shall be vacant. Any director who
shall have been elected by the holders of
Series C Preferred Stock may be removed
during the aforesaid term of office, whether
with or without cause, only with the
approval of the holders of Series C
Preferred Stock.
(d) SERIES D PREFERRED STOCK. The holder of each
share of Series D Preferred Stock shall have
the right to one vote for each share of
Common Stock into which such share of Series
D Preferred Stock could then be converted,
and with respect to such vote, such holder
shall have full voting rights and powers
equal to the voting rights and powers of the
holders of Common Stock, and shall be
entitled, notwithstanding any provision
hereof, to notice of any shareholders'
meeting in accordance with the bylaws of the
Corporation, and shall be entitled to vote,
together with holders of Common Stock, with
respect to any question upon which holders
of Common Stock have the right to vote.
Fractional votes shall not, however, be
permitted and any fractional voting rights
available on an as-converted basis (after
aggregating all shares into which shares of
Series D Preferred Stock held by each holder
could be converted) shall be rounded to the
nearest whole number (with one-half being
rounded upward).
(e) SERIES E PREFERRED STOCK. The holder of each
share of Series E Preferred Stock shall have
the right to one vote for each share of
Common Stock into which such share of Series
E Preferred Stock could then be converted,
and with respect to such vote, such holder
shall have full voting rights and powers
equal to the voting rights and powers
-19-
<PAGE> 20
of the holders of Common Stock, and shall be
entitled, notwithstanding any provision
hereof, to notice of any shareholders'
meeting in accordance with the bylaws of the
Corporation, and shall be entitled to vote,
together with holders of Common Stock, with
respect to any question upon which holders
of Common Stock have the right to vote.
Fractional votes shall not, however, be
permitted and any fractional voting rights
available on an as-converted basis (after
aggregating all shares into which shares of
Series E Preferred Stock held by each holder
could be converted) shall be rounded to the
nearest whole number (with one-half being
rounded upward).
6. PROTECTIVE PROVISIONS. So long as any shares of a
particular series of Preferred Stock are
outstanding, the Corporation shall not, without
first obtaining the approval by vote or written
consent, in the manner provided by law, of the
holders of at least a majority of the total number
of shares of such series of Preferred Stock
outstanding, voting as a separate class, (a) alter
or change the rights, preferences, privileges or
restrictions of the shares of such series so as to
affect adversely the shares of such series; or (b)
authorize or issue, or obligate itself to issue,
any other equity security, including any other
security convertible into or exercisable for any
equity security, having a preference over, or being
pari passu with, such series with respect to
voting, dividends, redemption or upon liquidation.
7. STATUS OF REDEEMED OR CONVERTED STOCK. In the event
any shares of Preferred Stock shall be redeemed
pursuant to Section 3 hereof or converted pursuant
to Section 4 hereof, the shares so redeemed or
converted shall be canceled and shall not be
issuable by the Corporation. The Certificate of
Incorporation of the Corporation shall be
appropriately amended to effect the corresponding
reduction in the Corporation's authorized capital
stock.
8. [RESERVED]
9. NOTICES. Any notice required by the provisions of
this Article Fourth(B) to be given to the holders
of shares of Preferred Stock shall be deemed given
three (3) days after deposit in the U.S. mail,
postage prepaid, or immediately upon transmission
of a facsimile (with confirmation received), in
each case addressed to each holder of record at his
address or facsimile number appearing on the books
of the Corporation.
-20-
<PAGE> 21
(C) COMMON STOCK.
1. DIVIDEND RIGHTS. Subject to the prior rights of
holders of all classes of stock at the time
outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled
to receive, when and as declared by the Board of
Directors, out of any assets of the Corporation
legally available therefor, such dividends as may
be declared from time to time by the Board of
Directors.
2. LIQUIDATION RIGHTS. Upon the liquidation,
dissolution or winding up of the Corporation, the
assets of the Corporation shall be distributed as
provided in Section 2 of Division (B) of this
Article Fourth.
3. REDEMPTION. The Common Stock is not redeemable.
4. VOTING RIGHTS. The holder of each share of Common
Stock shall have the right to one vote, and shall
be entitled to notice of any shareholders' meeting
in accordance with the bylaws of the Corporation,
and shall be entitled to vote upon such matters and
in such manner as may be provided by law.
5. RESIDUAL RIGHTS. All rights accruing to the
outstanding shares of the Corporation not expressly
provided for to the contrary herein shall be vested
in the Common Stock.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: The election of directors need not be by written ballot unless
the Bylaws of the Corporation shall so provide.
SEVENTH: In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware, the Board of Directors is expressly
authorized to adopt, alter, amend or repeal the Bylaws of the Corporation.
EIGHTH: To the fullest extent permitted by the General Corporation Law
of the State of Delaware as the same exists or may hereafter be amended, no
director of the Corporation shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
The Corporation may indemnify to the fullest extent permitted by law any
person made or threatened to be made a party to an action or proceeding, whether
criminal, civil, administrative or investigative, by reason of the fact that he,
his testator or intestate is or was a director, officer, employee or agent of
the Corporation or any predecessor of the Corporation or serves or served at any
other enterprise as a director, officer, employee or agent at the request of the
Corporation or any predecessor to the Corporation.
-21-
<PAGE> 22
Neither any amendment nor repeal of this Article, nor the adoption of
any provision of this Certificate of Incorporation inconsistent with this
Article, shall eliminate or reduce the effect of this Article, in respect of any
matter occurring, or any action or proceeding accruing or arising or that, but
for this Article, would accrue or arise, prior to such amendment, repeal or
adoption of an inconsistent provision.
NINTH: Meetings of stockholders may be held within or without the State
of Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the laws of the State of Delaware)
outside of 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.
TENTH: The number of directors which constitute the entire Board of
Directors of the Corporation shall be as specified in the Bylaws of the
Corporation. At each annual meeting of stockholders, directors of the
Corporation shall be elected to hold office until the expiration of the term of
which they are elected and 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 General Corporation Law of Delaware.
The directors of the Corporation shall be divided into three classes as
nearly equal in size as is practicable, hereby designated Class I, Class II and
Class III. The term of office of the initial Class I directors shall expire at
the annual meeting of the stockholders held in 2001, the term of office of the
initial Class II directors shall expire at the annual meeting of the
stockholders held in 2002 and the term of office of the initial Class III
directors shall expire at the annual meeting of the stockholders held in 2003.
At each annual meeting of stockholders, each of the successors elected to
replace the directors of a Class whose term shall have expired at such annual
meeting shall be elected to hold office until the third annual meeting next
succeeding his or her election and until his or her respective successor shall
have been duly elected and qualified.
If the number of directors is hereafter changed, 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,
provided that no decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
A director may be removed from office by the stockholders of the
corporation only for cause.
Vacancies occurring on the Board of Directors for any reason and newly
created directorships resulting from an increase in the authorized number of
directors may be filled only by vote of a majority of the remaining members of
the Board of Directors, although 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 or
newly created directorship shall hold office until the next election of the
Class for which such director shall have been chosen and until his or her
successor shall have been duly elected and qualified.
-22-
<PAGE> 23
ELEVENTH: Stockholders of the corporation may not take action by written
consent in lieu of a meeting but must take any actions at a duly called annual
or special meeting.
TWELFTH: Notwithstanding any other provisions of this Amended and
Restated Certificate of Incorporation or any provision of law which might
otherwise permit a lesser vote or no vote, but in addition to any affirmative
vote of the holders of the capital stock required by law or this Amended and
Restated Certificate of Incorporation, the affirmative vote of the holders of at
least two-thirds (2/3) of the combined voting power of all of the
then-outstanding shares of the corporation entitled to vote shall be required to
alter, amend or repeal Articles SIXTH, SEVENTH, EIGHTH, NINTH, TENTH, ELEVENTH
and TWELFTH.
THIRTEENTH: The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by the laws of the State of Delaware, and all
rights conferred herein are granted subject to this reservation.
-23-
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GARAGE.COM INC.
FIRST: The name of the corporation is Garage.com (the "Corporation").
SECOND: The address of the Corporation's registered office in the State
of Delaware is 1209 Orange Street, in the City of Wilmington, County of New
Castle, Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation 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.
FOURTH: The Corporation is authorized to issue two classes of stock to
be designated, respectively, Common Stock and Preferred Stock. The total number
of shares of all classes of stock which the Corporation has authority to issue
is one hundred million (100,000,000), consisting of ninety-five million
(95,000,000) shares of Common Stock, $0.001 par value per share (the "Common
Stock"), and five million (5,000,000) shares of Preferred Stock, $0.001 par
value per share (the "Preferred Stock").
The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized subject to limitations
prescribed by law, to fix by resolution or resolutions the designations, powers,
preferences and rights, and the qualifications, limitations or restrictions
thereof, of each such series of Preferred Stock, including without limitation
authority to fix by resolution or resolutions, the dividend rights, dividend
rate, conversion rights, voting rights, rights and terms of redemption
(including sinking fund provisions), redemption price or prices, and liquidation
preferences of any wholly unissued series of Preferred Stock, and the number of
shares constituting any such series and the designation thereof, or any of the
foregoing.
The Board of Directors is further authorized to increase (but not above
the total number of authorized shares of the class) or decrease (but not below
the number of shares of any such series then outstanding) the number of shares
of any series, the number of which was fixed by it, subsequent to the issue of
shares of such series then outstanding, subject to the powers, preferences
<PAGE> 2
and rights, and the qualifications, limitations and restrictions thereof stated
in the resolution of the Board of Directors originally fixing the number of
shares of such series. If the number of shares of any series is so decreased,
then 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.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: The election of directors need not be by written ballot unless
the Bylaws of the Corporation shall so provide.
SEVENTH: In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware, the Board of Directors is expressly
authorized to adopt, alter, amend or repeal the Bylaws of the Corporation.
EIGHTH: To the fullest extent permitted by the General Corporation Law
of the State of Delaware as the same exists or may hereafter be amended, no
director of the Corporation shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
The Corporation may indemnify to the fullest extent permitted by law any
person made or threatened to be made a party to an action or proceeding, whether
criminal, civil, administrative or investigative, by reason of the fact that he,
his testator or intestate is or was a director, officer, employee or agent of
the Corporation or any predecessor of the Corporation or serves or served at any
other enterprise as a director, officer, employee or agent at the request of the
Corporation or any predecessor to the Corporation.
Neither any amendment nor repeal of this Article, nor the adoption of
any provision of this Certificate of Incorporation inconsistent with this
Article, shall eliminate or reduce the effect of this Article, in respect of any
matter occurring, or any action or proceeding accruing or arising or that, but
for this Article, would accrue or arise, prior to such amendment, repeal or
adoption of an inconsistent provision.
NINTH: Meetings of stockholders may be held within or without the State
of Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the laws of the State of Delaware)
outside of 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.
TENTH: The number of directors which constitute the entire Board of
Directors of the Corporation shall be as specified in the Bylaws of the
Corporation. At each annual meeting of stockholders, directors of the
Corporation shall be elected to hold office until the expiration of the term of
which they are elected and 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 General Corporation Law of Delaware.
-2-
<PAGE> 3
The directors of the Corporation shall be divided into three classes as
nearly equal in size as is practicable, hereby designated Class I, Class II and
Class III. The term of office of the initial Class I directors shall expire at
the annual meeting of the stockholders held in 2001, the term of office of the
initial Class II directors shall expire at the annual meeting of the
stockholders held in 2002 and the term of office of the initial Class III
directors shall expire at the annual meeting of the stockholders held in 2003.
At each annual meeting of stockholders, each of the successors elected to
replace the directors of a Class whose term shall have expired at such annual
meeting shall be elected to hold office until the third annual meeting next
succeeding his or her election and until his or her respective successor shall
have been duly elected and qualified.
If the number of directors is hereafter changed, 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,
provided that no decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
A director may be removed from office by the stockholders of the
corporation only for cause.
Vacancies occurring on the Board of Directors for any reason and newly
created directorships resulting from an increase in the authorized number of
directors may be filled only by vote of a majority of the remaining members of
the Board of Directors, although 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 or
newly created directorship shall hold office until the next election of the
Class for which such director shall have been chosen and until his or her
successor shall have been duly elected and qualified.
ELEVENTH: Stockholders of the corporation may not take action by written
consent in lieu of a meeting but must take any actions at a duly called annual
or special meeting.
TWELFTH: Notwithstanding any other provisions of this Amended and
Restated Certificate of Incorporation or any provision of law which might
otherwise permit a lesser vote or no vote, but in addition to any affirmative
vote of the holders of the capital stock required by law or this Amended and
Restated Certificate of Incorporation, the affirmative vote of the holders of at
least two-thirds (2/3) of the combined voting power of all of the
then-outstanding shares of the corporation entitled to vote shall be required to
alter, amend or repeal Articles SIXTH, SEVENTH, EIGHTH, NINTH, TENTH, ELEVENTH
and TWELFTH.
THIRTEENTH: The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by the laws of the State of Delaware, and all
rights conferred herein are granted subject to this reservation.
-3-
<PAGE> 1
EXHIBIT 3.3
BYLAWS
OF
GARAGE.COM
(a Delaware corporation)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I CORPORATE OFFICES......................................................................1
1.1 REGISTERED OFFICE.................................................................1
1.2 OTHER OFFICES.....................................................................1
ARTICLE II MEETINGS OF STOCKHOLDERS..............................................................1
2.1 PLACE OF MEETINGS.................................................................1
2.2 ANNUAL MEETING....................................................................1
2.3 SPECIAL MEETING...................................................................1
2.4 NOTICE OF STOCKHOLDERS' MEETINGS..................................................2
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE......................................2
2.6 QUORUM............................................................................2
2.7 ADJOURNED MEETING; NOTICE.........................................................3
2.8 VOTING............................................................................3
2.9 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT.................................4
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING...........................4
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS.......................4
2.12 PROXIES...........................................................................5
2.13 INSPECTORS OF ELECTION............................................................5
2.14 ADVANCE NOTICE OF STOCKHOLDER BUSINESS............................................6
2.15 ADVANCE NOTICE OF DIRECTOR NOMINATIONS............................................6
ARTICLE III DIRECTORS............................................................................8
3.1 POWERS............................................................................8
3.2 NUMBER AND TERM OF OFFICE.........................................................8
3.3 RESIGNATION AND VACANCIES.........................................................8
3.4 REMOVAL...........................................................................8
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE..........................................9
3.6 REGULAR MEETINGS..................................................................9
3.7 SPECIAL MEETINGS; NOTICE..........................................................9
3.8 QUORUM............................................................................9
3.9 WAIVER OF NOTICE..................................................................10
3.10 ADJOURNMENT.......................................................................10
3.11 NOTICE OF ADJOURNMENT.............................................................10
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING.................................10
3.13 FEES AND COMPENSATION OF DIRECTORS................................................10
3.14 APPROVAL OF LOANS TO OFFICERS.....................................................10
3.15 INTERESTED DIRECTORS..............................................................11
ARTICLE IV COMMITTEES............................................................................11
4.1 COMMITTEES OF DIRECTORS...........................................................11
ARTICLE V OFFICERS...............................................................................12
5.1 OFFICERS..........................................................................12
</TABLE>
-i-
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
5.2 ELECTION OF OFFICERS..............................................................12
5.3 SUBORDINATE OFFICERS..............................................................12
5.4 REMOVAL AND RESIGNATION OF OFFICERS...............................................13
5.5 VACANCIES IN OFFICES..............................................................13
5.6 CHAIRMAN OF THE BOARD.............................................................13
5.7 CHIEF EXECUTIVE OFFICER...........................................................13
5.8 PRESIDENT.........................................................................13
5.9 VICE PRESIDENTS...................................................................13
5.10 SECRETARY.........................................................................14
5.11 CHIEF FINANCIAL OFFICER...........................................................14
ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS...................15
6.1 POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN THOSE BY
OR IN THE RIGHT OF THE CORPORATION................................................15
6.2 POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN THE RIGHT
OF THE CORPORATION................................................................15
6.3 AUTHORIZATION OF INDEMNIFICATION..................................................15
6.4 GOOD FAITH DEFINED................................................................16
6.5 INDEMNIFICATION BY A COURT........................................................16
6.6 EXPENSES PAYABLE IN ADVANCE.......................................................17
6.7 NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.....................17
6.8 INSURANCE.........................................................................17
6.9 CERTAIN DEFINITIONS...............................................................17
6.10 SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES...........................18
6.11 LIMITATION ON INDEMNIFICATION.....................................................18
6.12 INDEMNIFICATION OF EMPLOYEES AND AGENTS...........................................18
ARTICLE VII RECORDS AND REPORTS..................................................................18
7.1 MAINTENANCE AND INSPECTION OF RECORDS.............................................18
7.2 INSPECTION BY DIRECTORS...........................................................19
7.3 ANNUAL STATEMENT TO STOCKHOLDERS..................................................19
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS....................................19
ARTICLE VIII GENERAL MATTERS.....................................................................19
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING.............................19
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS.........................................20
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED.................................20
8.4 STOCK CERTIFICATES; PARTLY PAID SHARES............................................20
8.5 SPECIAL DESIGNATION ON CERTIFICATES...............................................20
8.6 LOST CERTIFICATES.................................................................21
8.7 CONSTRUCTION; DEFINITIONS.........................................................21
</TABLE>
-ii-
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE IX AMENDMENTS............................................................................21
</TABLE>
-iii-
<PAGE> 5
BYLAWS
OF
GARAGE.COM
(a Delaware corporation)
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be fixed in the
Certificate of Incorporation of the corporation.
1.2 OTHER OFFICES
The board of directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place within or outside
the State of Delaware designated from time to time by the board of directors. In
the absence of any such designation, stockholders' meetings shall be held at the
registered office of the corporation.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year on a date and
at a time designated from time to time by the board of directors. In the absence
of such designation, the annual meeting of stockholders shall be held on the
first Wednesday of May in each year at 10:00 a.m. However, if such day falls on
a legal holiday, then the meeting shall be held at the same time and place on
the next succeeding full business day. At the meeting, directors shall be
elected, and any other proper business may be transacted.
2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the
board of directors, or by the chairman of the board, by the chief executive
officer, or by the president or by one of the foregoing if so
<PAGE> 6
requested by one or more stockholders holding shares in the aggregate entitled
to cast not less than ten percent (10%) of the votes at that meeting.
If a special meeting is called by any person or persons other than the
board of directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the chairman of the board, the president, chief
executive officer, or the secretary of the corporation. No business may be
transacted at such special meeting otherwise than specified in the notice of
such special meeting delivered to stockholders (or any supplement thereto).
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings of stockholders shall be sent or otherwise given
in accordance with Section 2.5 of these bylaws not less than ten (10) nor more
than sixty (60) days before the date of the meeting. The notice shall specify
the place, date, and hour of the meeting and (i) in the case of a special
meeting, the general nature of the business to be transacted (no business other
than that specified in the notice (or in any supplement thereto) may be
transacted) or (ii) in the case of the annual meeting, those matters which the
board of directors, at the time of giving the notice, intends to present for
action by the stockholders (but any proper matter may be presented at the
meeting for such action). The notice of any meeting at which directors are to be
elected shall include the name of any nominee or nominees who, at the time of
the notice, the board intends to present for election.
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders shall be given by
first-class mail or by facsimile, telegraphic or other written communication or
in such other manner as permitted by law. Notices shall be sent charges prepaid
and shall be addressed to the stockholder at the address of that stockholder
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice. Notice shall be deemed to have been given
at the time when delivered personally or deposited in the mail or sent by
telegram or other means of written communication.
If any notice addressed to a stockholder at the address of that
stockholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the stockholder
at that address, then all future notices or reports shall be deemed to have been
duly given without further mailing if the same shall be available to the
stockholder on written demand of the stockholder at the principal executive
office of the corporation for a period of one (1) year from the date of the
giving of the notice.
An affidavit of the mailing or other means of giving any notice (or
supplement thereto) of any stockholders' meeting, executed by the secretary,
assistant secretary or any transfer agent of the corporation giving the notice,
shall be prima facie evidence of the giving of such notice (or supplement
thereto).
2.6 QUORUM
The presence in person or by proxy of the holders of a majority of the
shares entitled to vote thereat constitutes a quorum for the transaction of
business at all meetings of stockholders. The stockholders present at a duly
called or held meeting at which a quorum is present may continue to do business
for which such
-2-
<PAGE> 7
meeting is called until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
2.7 ADJOURNED MEETING; NOTICE
Any stockholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of the majority of the
shares represented at that meeting, either in person or by proxy. In the absence
of a quorum, no other business may be transacted at that meeting except as has
been transacted while a quorum was present, if any, as provided in Section 2.6
of these bylaws.
When any meeting of stockholders, either annual or special, is adjourned
to another time or place, notice need not be given of the adjourned meeting if
the time and place are announced at the meeting at which the adjournment is
taken. However, if a new record date for the adjourned meeting is fixed or if
the adjournment is for more than thirty (30) days from the date set for the
original meeting, then notice of the adjourned meeting shall be given. Notice of
any such adjourned meeting shall be given to each stockholder of record entitled
to vote at the adjourned meeting in accordance with the provisions of Sections
2.4 and 2.5 of these bylaws. At any adjourned meeting the corporation may
transact any business which might have been transacted at the original meeting.
2.8 VOTING
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Sections 217 and 218 of the General Corporation Law
of Delaware (relating to voting rights of fiduciaries, pledgors and joint
owners, and to voting trusts and other voting agreements).
Except as may be otherwise provided in the Certificate of Incorporation,
each outstanding share, regardless of class, shall be entitled to one vote on
each matter submitted to a vote of the stockholders.
If a quorum is present, the affirmative vote of the majority of the
shares represented and voting at a duly held meeting (which shares voting
affirmatively also constitute at least a majority of the required quorum) shall
be the act of the stockholders, unless the vote of a greater number or a vote by
classes is required by law, by the Certificate of Incorporation or by these
bylaws. The board of directors, in its discretion, or the officer of the
corporation presiding at a meeting of stockholders, in such officer's
discretion, may require that any votes cast at such meeting shall be cast by
written ballot.
At a stockholders' meeting at which directors are to be elected, a
stockholder shall be entitled to cumulate votes (i.e., cast for any candidate a
number of votes greater than the number of votes which such stockholder normally
is entitled to cast) if the candidates' names have been placed in nomination
prior to commencement of the voting and the stockholder has given notice prior
to commencement of the voting of the stockholder's intention to cumulate votes.
If any stockholder has given such a notice, then every stockholder entitled to
vote may cumulate votes for candidates in nomination either (i) by giving one
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which that stockholder's shares are
normally entitled or (ii) by distributing the stockholder's votes on the same
principle among any or all of the candidates, as the stockholder thinks fit. The
candidates receiving the highest number of affirmative votes, up to the number
of directors to be elected, shall be elected; votes against any candidate and
votes withheld shall have no legal effect. Notwithstanding the foregoing
provisions of this paragraph, unless otherwise provided in the Certificate of
Incorporation, a stockholder shall not be entitled to
-3-
<PAGE> 8
cumulate votes at any time following such time as the corporation files a
Registration Statement with the Securities and Exchange Commission for the
purpose of effecting the initial public offering of its common stock and such
Registration Statement is declared effective by the Commission (such time is
hereinafter referred to as the "Public Offering Date").
2.9 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT
The transactions of any meeting of stockholders, either annual or
special, however called and noticed, and wherever held, shall be as valid as
though they had been taken at a meeting duly held after regular call and notice,
if a quorum be present either in person or by proxy, and if, either before or
after the meeting, each person entitled to vote, who was not present in person
or by proxy, signs a written waiver of notice or a consent to the holding of the
meeting or an approval of the minutes thereof. The waiver of notice or consent
or approval need not specify either the business to be transacted or the purpose
of any annual or special meeting of stockholders. All such waivers, consents,
and approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver of
notice of and presence at that meeting, except when the person objects at the
beginning of the meeting to the transaction of any business because the meeting
is not lawfully called or convened. Attendance at a meeting is not a waiver of
any right to object to the consideration of matters required by law to be
included in the notice of the meeting but not so included, if that objection is
expressly made at the meeting.
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise provided in the Certificate of Incorporation, no
corporate action may be taken by the stockholders without a meeting and without
prior notice.
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. If the action which is consented to is such as
would have required the filing of a certificate under any section of the General
Corporation Law of Delaware if such action had been voted on by stockholders at
a meeting thereof, then the certificate filed under such section shall state, in
lieu of any statement required by such section concerning any vote of
stockholders, that written notice and written consent have been given as
provided in Section 228 of the General Corporation Law of Delaware.
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
For purposes of determining the stockholders entitled to notice of any
meeting or to vote thereat or entitled to give consent to corporate action
without a meeting, the board of directors may fix, in advance, a record date,
which shall not be more than sixty (60) days nor less than ten (10) days before
the date of any such meeting nor more than sixty (60) days before any such
action without a meeting, and in such event only stockholders of record on the
date so fixed are entitled to notice and to vote or to give consents, as the
case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date.
If the board of directors does not so fix a record date:
(a) the record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be at the close of business on
the business day next preceding the day on which
-4-
<PAGE> 9
notice is given, or, if notice is waived, at the close of business on the
business day next preceding the day on which the meeting is held; and
(b) the record date for determining stockholders entitled to give
consent to corporate action in writing without a meeting, (i) when no prior
action by the board has been taken, shall be the day on which the first written
consent is given as required by Section 2.10, or (ii) when prior action by the
board has been taken, shall be at the close of business on the day on which the
board adopts the resolution relating to that 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;
providing, however, that the board of directors may fix a new record date for
the adjourned meeting. The record date for any other purpose shall be as
provided in Article VIII of these bylaws.
2.12 PROXIES
Every person entitled to vote for directors, or on any other matter,
shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and filed with the secretary
of the corporation, but no such proxy shall be voted or acted upon after three
(3) years from its date, unless the proxy provides for a longer period. A proxy
shall be deemed signed if the stockholder's name is placed on the proxy (whether
by manual signature, typewriting, telegraphic transmission or otherwise) by the
stockholder or the stockholder's attorney-in-fact. The revocability of a proxy
that states on its face that it is irrevocable shall be governed by the
provisions of Section 212(e) of the General Corporation Law of Delaware.
2.13 INSPECTORS OF ELECTION
The board of directors of the corporation may adopt by resolution such
rules and regulations for the conduct of the meeting of the stockholders as it
shall deem appropriate. Except to the extent inconsistent with such rules and
regulations as adopted by the board of directors, the chairman of any meeting of
the stockholders shall have the right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the judgment of such
chairman, are appropriate for the proper conduct of the meeting. Such rules,
regulations or procedures, whether adopted by the board of directors or
prescribed by the chairman of the meeting, and such acts may include, without
limitation, the following: (i) the establishment of an agenda or order of
business for the meeting; (ii) the determination of when the polls shall open
and close for any given matter to be voted on at the meeting; (iii) rules and
procedures for maintaining order at the meeting and the safety of those present;
(iv) limitations on attendance at or participation in the meeting to
stockholders of record of the corporation, their duly authorized and constituted
proxies or such other persons as the chairman of the meeting shall determine;
(v) restrictions on entry to the meeting after the time fixed for the
commencement thereof; (vi) limitations on the time allotted to questions or
comments by participants; (vii) determination of the number of shares
outstanding and the voting power of each, the number of shares represented at
the meeting, the existence of a quorum, and the authenticity, validity, and
effect of proxies; (viii) counting and tabulation of all votes or consents; (ix)
hearing and determining all challenges and questions in any way arising in
connection with the right to vote; (x) any other acts that may be proper to
conduct the election or vote with fairness to all stockholders and (xi) the
appointment of an inspector or inspectors of election to act at the meeting or
its adjournment in respect of one or more of the foregoing matters. The board of
directors or chairman may hear and determine all challenges and questions in any
way arising in connection with the right to vote.
-5-
<PAGE> 10
2.14 ADVANCE NOTICE OF STOCKHOLDER BUSINESS
To be properly brought before an annual meeting, any business must be
(a) specified in the notice of meeting (or any supplement thereto) given by or
at the direction of the board of directors, (b) otherwise properly brought
before the meeting by or at the direction of the board of directors, or (c)
otherwise properly brought before the meeting by a stockholder (i) who is a
stockholder of record on the date of the giving of the notice provided for in
this Section 2.14 and on the record date for the determination of stockholders
entitled to vote at such annual meeting and (ii) who complies with the notice
procedures set forth in this Section 2.14. For such nominations or other
business to be considered properly brought before the meeting by a stockholder
such stockholder must, in addition to any other applicable requirements, have
given timely notice and in proper form of such stockholder's intent to bring
such business before such meeting. To be timely, such stockholder's notice must
be delivered to or mailed and received by the Secretary of the corporation at
the principal executive offices of the corporation not less than ninety (90)
days prior to the anniversary date of the immediately preceding annual meeting;
provided, however, that in the event the annual meeting is called for a date
that is not within thirty (30) days before or after such anniversary date,
notice by the stockholder to be timely must be so received not later than the
close of business on the tenth day following the day on which such notice of the
date of the meeting was mailed or such public disclosure made, whichever occurs
first. To be in proper form, a stockholder's notice to the Secretary shall set
forth:
(a) the name and record address of the stockholder who intends to
propose the business and the class or series and number of shares of capital
stock of the corporation which are owned beneficially or of record by such
stockholder;
(b) a representation that the stockholder is a holder of record of
stock of the corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting introduce the business specified in the
notice;
(c) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting; and ;
(d) any material interest of the shareholder in such business.
No business shall be conducted at the annual meeting of stockholders
except business brought before the annual meeting in accordance with the
procedures set forth in this Section; provided, however, that, once business has
been properly brought before the annual meeting in accordance with such
procedures, nothing in this Section 2.13 shall be deemed to preclude discussion
by any stockholder of any such business. The chairman of the meeting may refuse
to acknowledge the proposal of any business not made in compliance with the
foregoing procedure.
2.15 ADVANCE NOTICE OF DIRECTOR NOMINATIONS
Only persons who are nominated in accordance with the following
procedures shall be eligible for election as directors of the corporation,
except as may be otherwise provided in the Certificate of Incorporation with
respect to the right of holders of preferred stock of the corporation to
nominate and elect a specified number of directors in certain circumstances. To
be properly brought before an annual meeting, meeting of stockholders, or any
special meeting of stockholders called for the purpose of electing directors,
nominations for the election of director must be (a) specified in the notice of
meeting (or any supplement thereto), (b) made by or at the direction of the
board of directors (or any duly authorized committee thereof)
-6-
<PAGE> 11
or (c) made by any stockholder of the corporation (i) who is a stockholder of
record on the date of the giving of the notice provided for in this Section 2.15
and on the record date for the determination of stockholders entitled to vote at
such meeting and (ii) who complies with the notice procedures set forth in this
Section 2.15.
In addition to any other applicable requirements, for a nomination to be
made by a stockholder, such stockholder must have given timely notice thereof in
proper written form to the Secretary of the corporation. To be timely, a
stockholder's notice to the Secretary must be delivered to or mailed and
received at the principal executive offices of the corporation (a) in the case
of an annual meeting, not less than ninety (90) days prior to the anniversary
date of the immediately preceding annual meeting of stockholders; provided,
however, that in the event that the annual meeting is called for a date that is
not within thirty (30) days before or after such anniversary date, notice by the
stockholder in order to be timely must be so received not later than the close
of business on the tenth (10th) day following the day on which such notice of
the date of the annual meeting was mailed or such public disclosure of the date
of the annual meeting was made, whichever first occurs; and (b) in the case of a
special meeting of stockholders called for the purpose of electing directors,
not later than the close of business on the tenth (10th) day following the day
on which notice of the date of the special meeting was mailed or public
disclosure of the date of the special meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the Secretary
must set forth:
(a) as to each person whom the stockholder proposes to nominate for
election as a director (i) the name, age, business address and residence address
of the person, (ii) the principal occupation or employment of the person, (iii)
the class or series and number of shares of capital stock of the corporation
which are owned beneficially or of record by the person and (iv) any other
information relating to the person that would be required to be disclosed in a
proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder; and
(b) as to the stockholder giving the notice (i) the name and record
address of such stockholder, (ii) the class or series and number of shares of
capital stock of the corporation which are owned beneficially or of record by
such stockholder, (iii) a description of all arrangements or understandings
between such stockholder and each proposed nominee and any other person or
persons (including their names) pursuant to which the nomination(s) are to be
made by such stockholder, (iv) a representation that such stockholder intends to
appear in person or by proxy at the meeting to nominate the persons named in its
notice and (v) any other information relating to such stockholder that would be
required to be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder. Such notice must be accompanied by a written consent of
each proposed nominee to being named as a nominee and to serve as a director if
elected.
No person shall be eligible for election as a director of the
corporation unless nominated in accordance with the procedures set forth in this
Section 2.15. If the Chairman of the meeting determines that a nomination was
not made in accordance with the foregoing procedures, the Chairman shall declare
to the meeting that the nomination was defective and such defective nomination
shall be disregarded.
-7-
<PAGE> 12
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware and
to any limitations in the Certificate of Incorporation or these bylaws relating
to action required to be approved by the stockholders or by the outstanding
shares, the business and affairs of the corporation shall be managed and all
corporate powers shall be exercised by or under the direction of the board of
directors.
3.2 NUMBER AND TERM OF OFFICE
The authorized number of directors shall be nine (9). This number may be
changed by (a) a duly adopted amendment to the certificate of incorporation, (b)
an amendment to this bylaw adopted by the vote or written consent of the holders
of a majority of the stock issued and outstanding and entitled to vote or (c) an
amendment to this bylaw adopted by resolution of a majority of the board of
directors.
No reduction of the authorized number of directors shall have the effect
of removing any director before that director's term of office expires.
3.3 RESIGNATION AND VACANCIES
Any director may resign effective on giving written notice to the
chairman of the board, the president, the secretary or the board of directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a director is effective at a future time, the
board of directors (including such director whose resignation is to be effective
at a later time) may elect a successor to take office when the resignation
becomes effective.
Prior to the Public Offering Date, vacancies in the board of directors
may be filled by a majority of the remaining directors, even if less than a
quorum, or by a sole remaining director; however, a vacancy created by the
removal of a director by the vote or written consent of the stockholders or by
court order may be filled only by the affirmative vote of a majority of the
shares represented and voting at a duly held meeting at which a quorum is
present (which shares voting affirmatively also constitute a majority of the
required quorum), or by the unanimous written consent of all shares entitled to
vote thereon. Each director so elected shall hold office until the next annual
meeting of the stockholders and until a successor has been elected and
qualified. From and after the Public Offering Date, unless otherwise required by
law or the Certificate of Incorporation, vacancies arising through death,
resignation, removal, an increase in the number of directors or otherwise may be
filled only by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director. Any director elected in accordance with
the preceding sentence shall hold office for the remainder of the full term of
the class of directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been elected and
qualified, or until such director's earlier death, resignation or removal. No
decrease in the number of directors constituting the board of directors shall
shorten the term of any incumbent director.
3.4 REMOVAL
Prior to the Public Offering Date, subject to any limitations imposed by
law or the Certificate of Incorporation, the board of directors, or any
individual director, may be removed from office at any time with
-8-
<PAGE> 13
or without cause by the affirmative vote of the holders of at least a majority
of the then outstanding shares of the capital stock of the corporation entitled
to vote at an election of directors. From and after the Public Offering Date,
any director may be removed from office at any time only with cause by the
affirmative vote of the holders of at least a majority of the then outstanding
shares of the capital stock of the corporation entitled to vote at an election
of directors.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
Regular meetings of the board of directors may be held at any place
within or outside the State of Delaware that has been designated from time to
time by resolution of the board. In the absence of such a designation, regular
meetings shall be held at the principal executive office of the corporation.
Special meetings of the board may be held at any place within or outside the
State of Delaware that has been designated in the notice of the meeting or, if
not stated in the notice or if there is no notice, at the principal executive
office of the corporation.
Any meeting, regular or special, may be held by conference telephone or
similar communication equipment, so long as all directors participating in the
meeting can hear one another; and all such directors shall be deemed to be
present in person at the meeting.
3.6 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice if
the times of such meetings are fixed by the board of directors.
3.7 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, or any
two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail,
facsimile or telegram, charges prepaid, addressed to each director at that
director's address as it is shown on the records of the corporation. If the
notice is mailed, it shall be deposited in the United States mail at least four
(4) days before the time of the holding of the meeting. If the notice is
delivered personally or by telephone or by facsimile, it shall be delivered
personally or by telephone or by facsimile machine at least forty-eight (48)
hours before the time of the holding of the meeting or on such shorter notice as
the person or persons calling such meeting may deem necessary or appropriate in
the circumstances. Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director.
3.8 QUORUM
Except as otherwise required by law, a majority of the authorized number
of directors shall constitute a quorum for the transaction of business, except
to adjourn as provided in Section 3.11 of these bylaws. Every act or decision
done or made by a majority of the directors present at a duly held meeting at
which a quorum is present shall be regarded as the act of the board of
directors, subject to the provisions of the Certificate of Incorporation and
applicable law.
-9-
<PAGE> 14
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
3.9 WAIVER OF NOTICE
Notice of a meeting need not be given to any director (i) who signs a
waiver of notice or a consent to holding the meeting or an approval of the
minutes thereof, whether before or after the meeting, or (ii) who attends the
meeting without protesting, prior thereto or at its commencement, the lack of
notice to such directors. All such waivers, consents, and approvals shall be
filed with the corporate records or made part of the minutes of the meeting. A
waiver of notice need not specify the purpose of any regular or special meeting
of the board of directors.
3.10 ADJOURNMENT
A majority of the directors present, whether or not constituting a
quorum, may adjourn any meeting to another time and place.
3.11 NOTICE OF ADJOURNMENT
Notice of the time and place of holding an adjourned meeting need not be
given unless the meeting is adjourned for more than twenty-four (24) hours. If
the meeting is adjourned for more than twenty-four (24) hours, then notice of
the time and place of the adjourned meeting shall be given before the adjourned
meeting takes place, in the manner specified in Section 3.7 of these bylaws, to
the directors who were not present at the time of the adjournment.
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action required or permitted to be taken by the board of directors
may be taken without a meeting, provided that all the members of the board
individually or collectively consent in writing to that action. Such action by
written consent shall have the same force and effect as a unanimous vote of the
board of directors. Such written consent and any counterparts thereof shall be
filed with the minutes of the proceedings of the board.
3.13 FEES AND COMPENSATION OF DIRECTORS
Directors and members of committees may receive such compensation, if
any, for their services and such reimbursement of expenses as may be fixed or
determined by resolution of the board of directors. This Section 3.13 shall not
be construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee or otherwise and receiving compensation
for those services.
3.14 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing contained in this section
-10-
<PAGE> 15
shall be deemed to deny, limit or restrict the powers of guaranty or warranty of
the corporation at common law or under any statute.
3.15 INTERESTED DIRECTORS
No contract or transaction between the corporation and one or more of
its directors or officers, or between the corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the board of
directors or committee thereof which authorizes the contract or transaction, or
solely because the director or officer's vote is counted for such purpose if (i)
the material facts as to the director or officer's relationship or interest and
as to the contract or transaction are disclosed or are known to the board of
directors or the committee, and the board of directors or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; or (ii) the material facts as to the director or
officer's relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the corporation
as of the time it is authorized, approved or ratified by the board of directors,
a committee thereof or the stockholders. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the board of
directors or of a committee which authorizes the contract or transaction.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may designate one (1) or more committees, each
consisting of one (1) or more directors, to serve at the pleasure of the board.
The board may designate one (1) or more directors as alternate members of any
committee, who may replace any absent member at any meeting of the committee. In
the absence or disqualification of a member of a committee, and in the absence
of a designation by the board of directors of an alternate member to replace the
absent or disqualified member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not such member or members
constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any absent or disqualified
member. Any committee, to the extent permitted by law and provided in the
resolution establishing such committee, shall have and may exercise all the
powers and authority of the board of directors in the management of the business
and affairs of the corporation, and may authorize the seal of the corporation to
be affixed to all papers which may require it; provided, however, that no such
committee shall have the power or authority to (i) amend the Certificate of
Incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the board of directors as provided in Section 151(a) of the General
Corporation Law of Delaware, fix any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation), (ii) adopt an agreement of
merger or consolidation under Sections 251 or 252 of the General Corporation Law
of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of
all or
-11-
<PAGE> 16
substantially all of the corporation's property and assets, (iv) recommend to
the stockholders a dissolution of the corporation or a revocation of a
dissolution, or (v) amend the bylaws of the corporation; and, unless the board
resolution establishing the committee, the bylaws or the Certificate of
Incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the General
Corporation Law of Delaware. Each committee shall keep regular minutes and
report to the board of directors when required
4.2 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these bylaws, Section
3.5 (place of meetings), Section 3.6 (regular meetings), Section 3.7 (special
meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of notice),
Section 3.10 (adjournment), Section 3.11 (notice of adjournment), and Section
3.12 (action without meeting), with such changes in the context of those bylaws
as are necessary to substitute the committee and its members for the board of
directors and its members; provided, however, that the time of regular meetings
of committees may be determined either by resolution of the board of directors
or by resolution of the committee, that special meetings of committees may also
be called by resolution of the board of directors, and that notice of special
meetings of committees shall also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The board of directors
may adopt rules for the government of any committee not inconsistent with the
provisions of these bylaws.
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the corporation shall be a president, a secretary, and a
chief financial officer. The corporation may also have, at the discretion of the
board of directors, a chairman of the board, a chief executive officer, a
treasurer, one or more vice presidents, one or more assistant secretaries, one
or more assistant treasurers, and such other officers as may be appointed in
accordance with the provisions of Section 5.3 of these bylaws. Any number of
offices may be held by the same person.
5.2 ELECTION OF OFFICERS
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Section 5.3 or Section 5.5 of
these bylaws, shall be chosen by the board of directors, subject to the rights,
if any, of an officer under any contract of employment.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or may empower the president to
appoint, such other officers as the business of the corporation may require,
each of whom shall hold office for such period, have such authority, and perform
such duties as are provided in these bylaws or as the board of directors may
from time to time determine.
-12-
<PAGE> 17
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by the
board of directors at any regular or special meeting of the board or, except in
case of an officer chosen by the board of directors, by any officer upon whom
such power of removal may be conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
5.5 VACANCIES IN OFFICES
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these bylaws for regular appointments to that office.
5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these bylaws. If there is no chief
executive officer, then the chairman of the board shall also be the chief
executive officer of the corporation and shall have the powers and duties
prescribed in Section 5.7 of these bylaws.
5.7 CHIEF EXECUTIVE OFFICER
Subject to such supervisory powers, if any, as may be given by the board
of directors to the chairman of the board, if there be such an officer, the
chief executive officer shall be subject to the control of the board of
directors and have general supervision, direction and control of the business.
He or she shall preside at all meetings of the stockholders and, in the absence
or non-existence of the chairman of the board, at all meetings of the board of
directors. He or she shall have the general powers and duties of management
usually vested in the office of the chief executive officer of a corporation,
and shall have such other powers and perform such other duties as from time to
time may be prescribed by the board of directors or these bylaws.
5.8 PRESIDENT
In the absence or disability of the chief executive officer, and if
there is no chairman of the board, the president shall perform all the duties of
the chief executive officer and when so acting shall have the power of, and be
subject to all the restrictions upon, the chief executive officer. The president
shall have such other powers and perform such other duties as from time to time
may be prescribed for the president by the board of directors, these bylaws, the
chief executive officer or the chairman of the board.
5.9 VICE PRESIDENTS
In the absence or disability of the president, the vice presidents, if
any, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform all
the duties of the president and when so acting shall have all the powers of, and
be subject to all the
-13-
<PAGE> 18
restrictions upon, the president. The vice presidents shall have such other
powers and perform such other duties as from time to time may be prescribed for
them respectively by the board of directors, these bylaws, the president or the
chairman of the board.
5.10 SECRETARY
The secretary shall keep or cause to be kept, at the principal executive
office of the corporation or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of directors, committees
of directors and shareholders. The minutes shall show the time and place of each
meeting, whether regular or special (and, if special, how authorized and the
notice given), the names of those present at directors' meetings or committee
meetings, the number of shares present or represented at shareholders' meetings,
and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names of
all shareholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares, and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the shareholders and of the board of directors required to be given by law or
by these bylaws. He shall keep the seal of the corporation, if one be adopted,
in safe custody and shall have such other powers and perform such other duties
as may be prescribed by the board of directors or by these bylaws.
5.11 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all money and other valuables
in the name and to the credit of the corporation with such depositaries as may
be designated in accordance with procedures established by the board of
directors. He shall disburse the funds of the corporation as may be ordered by
the board of directors, shall render to the president and directors, whenever
they request it, an account of all of his transactions as chief financial
officer and of the financial condition of the corporation, and shall have such
other powers and perform such other duties as may be prescribed by the board of
directors or these bylaws.
-14-
<PAGE> 19
ARTICLE VI
INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES, AND OTHER AGENTS
6.1 POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN THOSE
BY OR IN THE RIGHT OF THE CORPORATION
Subject to Section 6.3 of this Article VI, the corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that such person is or was a
director or officer of the corporation, or is or was a director or officer of
the corporation serving at the request of the corporation as a director or
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe such person's conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which such
person reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that such person's con-duct was unlawful.
6.2 POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN THE
RIGHT OF THE CORPORATION
Subject to Section 6.3 of this Article VI, the corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director or officer of the corporation, or is or was a
director or officer of the corporation serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the corporation; except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
6.3 AUTHORIZATION OF INDEMNIFICATION
Any indemnification under this Article VI (unless ordered by a court)
shall be made by the corporation only as authorized in the specific case upon a
determination that indemnification of the director or officer is proper in the
circumstances because such person has met the applicable standard of conduct set
forth in Section 6.1 or Section 6.2 of this Article VI, as the case may be. Such
determination shall be made, with
-15-
<PAGE> 20
respect to a person who is a director or officer at the time of such
determination, (i) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum, or (ii) by a
committee of such directors designated by a majority vote of such directors,
even though less than a quorum, or (iii) if there are no such directors, or if
such directors so direct, by independent legal counsel in a written opinion or
(iv) by the stockholders (but only if a majority of the directors who are not
parties to such action, suit or proceeding, if they constitute a quorum of the
board of directors, presents the issue of entitlement to indemnification to the
shareholders for their determination). Such determination shall be made, with
respect to former directors and officers, by any person or persons having the
authority to act on the matter on behalf of the corporation. To the extent,
however, that a present or former director or officer of the corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding described above, or in defense of any claim, issue or matter therein,
such person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection therewith, without
the necessity of authorization in the specific case.
6.4 GOOD FAITH DEFINED
For purposes of any determination under Section 6.3 of this Article VI,
a person shall be deemed to have acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
corporation, or, with respect to any criminal action or proceeding, to have had
no reasonable cause to believe such person's conduct was unlawful, if such
person's action is based on the records or books of account of the corporation
or another enterprise, or on information supplied to such person by the officers
of the corporation or another enterprise in the course of their duties, or on
the advice of legal counsel for the corporation or another enterprise or on
information or records given or reports made to the corporation or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the corporation or another
enterprise. The term "another enterprise" as used in this Section 6.4 shall mean
any other corporation or any partnership, joint venture, trust, employee benefit
plan or other enterprise of which such person is or was serving at the request
of the corporation as a director, officer, employee or agent. The provisions of
this Section 6.4 shall not be deemed to be exclusive or to limit in any way the
circumstances in which a person may be deemed to have met the applicable
standard of conduct set forth in Section 6.1 or 6.2 of this Article VI, as the
case may be.
6.5 INDEMNIFICATION BY A COURT
Notwithstanding any contrary determination in the specific case under
Section 6.3 of this Article VI, and not withstanding the absence of any
determination thereunder, any director or officer may apply to the Court of
Chancery in the State of Delaware for indemnification to the extent otherwise
permissible under Sections 6.1 and 6.2 of this Article VI. The basis of such
indemnification by a court shall be a determination by such court that
indemnification of the director or officer is proper in the circumstances
because such person has met the applicable standards of conduct set forth in
Section 6.1 or 6.2 of this Article VI, as the case may be. Neither a contrary
determination in the specific case under Section 6.3 of this Article VI nor the
absence of any determination thereunder shall be a defense to such application
or create a presumption that the director or officer seeking indemnification has
not met any applicable standard of conduct. Notice of any application for
indemnification pursuant to this Section 5 shall be given to the corporation
promptly upon the filing of such application. If successful, in whole or in
part, the director or officer seeking indemnification shall also be entitled to
be paid the expense of prosecuting such application.
-16-
<PAGE> 21
6.6 EXPENSES PAYABLE IN ADVANCE
Expenses incurred by a director or officer in defending any civil,
criminal, administrative or investigative action, suit or proceeding 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 or
officer to repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified by the corporation as authorized in
this Article VI.
6.7 NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
The indemnification and advancement of expenses provided by or granted
pursuant to this Article VI shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled
under the Certificate of Incorporation, any Bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office, it being the policy of the corporation that indemnification of the
persons specified in Sections 6.1 and 6.2 of this Article VI shall be made to
the fullest extent permitted by law. The provisions of this Article VI shall not
be deemed to preclude the indemnification of any person who is not specified in
Section 6.1 or 6.2 of this Article VI but whom the corporation has the power or
obligation to indemnify under the provisions of the General Corporation Law of
the State of Delaware, or otherwise.
6.8 INSURANCE
The corporation may purchase and maintain insurance on behalf of any
person who is or was a director or officer of the corporation, or is or was a
director or officer of the corporation serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not the
corporation would have the power or the obligation to indemnify such person
against such liability under the provisions of this Article VI.
6.9 CERTAIN DEFINITIONS
For purposes of this Article VI, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors or officers, so that any person who is or
was a director or officer of such constituent corporation, or is or was a
director or officer of such constituent corporation serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, shall stand in the same position under the provisions of this
Article VI with respect to the resulting or surviving corporation as such person
would have with respect to such constituent corporation if its separate
existence had continued. For purposes of this Article VI, references to "fines"
shall include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the corporation "
shall include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such director or
officer with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this Article
VI.
-17-
<PAGE> 22
6.10 SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article VI shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
6.11 LIMITATION ON INDEMNIFICATION
Notwithstanding anything contained in this Article VI to the contrary,
except for proceedings to enforce rights to indemnification (which shall be
governed by Section 6.5 hereof), the corporation shall not be obligated to
indemnify any director or officer in connection with a proceeding (or part
thereof) initiated by such person unless such proceeding (or part thereof) was
authorized or consented to by the board of directors of the corporation.
6.12 INDEMNIFICATION OF EMPLOYEES AND AGENTS
The corporation may, to the extent authorized from time to time by the
board of directors, provide rights to indemnification and to the advancement of
expenses to employees and agents of the corporation similar to those conferred
in this Article VI to directors and officers of the corporation.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive office or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books and other records.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) 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 (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to
-18-
<PAGE> 23
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.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders and its other books and records for a purpose
reasonably related to his or her position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
7.3 ANNUAL STATEMENT TO STOCKHOLDERS
The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, the chief executive officer, the president or
any other person authorized by the board of directors or the chief executive
officer or president, is authorized to vote, represent, and exercise on behalf
of this corporation all rights incident to any and all shares of any other
corporation or corporations standing in the name of this corporation. The
authority herein granted may be exercised either by such person directly or by
any other person authorized to do so by proxy or power of attorney duly executed
by such person having the authority.
ARTICLE VIII
GENERAL MATTERS
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING
For purposes of determining the stockholders entitled to receive payment
of any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any other lawful
action (other than action by stockholders by written consent without a meeting),
the board of directors may fix, in advance, a record date, which shall not be
more than sixty (60) days before any such action. In that case, only
stockholders of record at the close of business on the date so fixed are
entitled to receive the dividend, distribution or allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after the record date so fixed, except as
otherwise provided by law.
If the board of directors does not so fix a record date, then the record
date for determining stockholders for any such purpose shall be at the close of
business on the day on which the board adopts the applicable resolution or the
sixtieth (60th) day before the date of that action, whichever is later.
-19-
<PAGE> 24
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED
The board of directors, except as otherwise provided in these bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.4 STOCK CERTIFICATES; PARTLY PAID SHARES
The shares of a corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to have a certificate
signed in the name of the corporation by (a) the chairman or vice-chairman of
the board of directors, or the chief executive officer, president or
vice-president, and by (b) the chief financial officer, treasurer, secretary or
an assistant secretary of the corporation representing the number of shares
registered in certificate form. Any or all of the signatures on the certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate has
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 or
she were such officer, transfer agent or registrar at the date of issue.
8.5 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, 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 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, however, 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, the designations,
the preferences, and the relative, participating, 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.
-20-
<PAGE> 25
8.6 LOST CERTIFICATES
Except as provided in this Section 8.6, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The board of
directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certificates on such terms and conditions as the board may require; the board
may require indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against any claim that
may be made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
8.7 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the General Corporation Law of Delaware shall
govern the construction of these bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.
ARTICLE IX
AMENDMENTS
These bylaws of the corporation may be altered, amended or repealed, in
whole or in part, or new bylaws may be adopted by the stockholders entitled to
vote or by the board of directors. All such amendments must be approved by
either the holders of a majority of the outstanding capital stock entitled to
vote thereon or by a majority of the board of directors then in office. The fact
that such power has been so conferred upon the board of directors shall not
divest the stockholders of the power, nor limit their power to adopt, alter,
amend or repeal bylaws.
-21-
<PAGE> 26
CERTIFICATE OF ADOPTION OF BYLAWS
OF
Garage.com
Adoption by Incorporator
The undersigned person appointed in the Certificate of Incorporation to
act as the Incorporator of Garage.com hereby adopts the foregoing Bylaws,
comprising twenty-one (21) pages, as the Bylaws of the corporation.
Executed this 2nd day of February, 2000.
/s/ James C. Creigh
------------------------------------
James C. Creigh, Incorporator
Certificate by Secretary of Adoption by Incorporator
The undersigned hereby certifies that he is the duly elected Secretary
of Garage.com and that the foregoing Bylaws, comprising twenty-one (21) pages,
were adopted as the Bylaws of the corporation on February 2, 2000, by the person
appointed in the Certificate of Incorporation to act as the Incorporator of the
corporation.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and
affixed the corporate seal this 2nd day of February, 2000.
/s/ Alan K. Austin
------------------------------------
Alan K. Austin,
Secretary
<PAGE> 1
EXHIBIT 10.1
GARAGE.COM
AMENDED AND RESTATED
1999 STOCK PLAN
1. Purposes of the Plan. The purposes of this amended and restated 1999
Stock Plan are:
- to attract and retain the best available personnel for
positions of substantial responsibility,
- to provide additional incentive to Employees, Directors
and Consultants, and
- to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a committee of Directors appointed by the
Board in accordance with Section 4 of the Plan.
(f) "Common Stock" means the common stock of the Company.
(g) "Company" means Garage.com, a Delaware corporation.
(h) "Consultant" means any person, including an advisor, engaged
by the Company or a Parent or Subsidiary to render services to such entity.
(i) "Director" means a member of the Board.
<PAGE> 2
(j) "Disability" means total and permanent disability as defined
in Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company. A
Service Provider shall not cease to be an Employee in the case of (i) any leave
of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the day three (3) months following the 91st day
of such leave, any Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to constitute "employment" by
the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the day of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the day of determination, as
reported in The Wall Street Journal or such other source as the Administrator
deems reliable; or
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.
(o) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(p) "Notice of Grant" means a written or electronic notice
evidencing certain terms and conditions of an individual Option or Stock
Purchase Right grant. The Notice of Grant is part of the Option Agreement.
-2-
<PAGE> 3
(q) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(r) "Option" means a stock option granted pursuant to the Plan.
(s) "Option Agreement" means an agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.
(t) "Option Exchange Program" means a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price.
(u) "Optioned Stock" means the Common Stock subject to an Option
or Stock Purchase Right.
(v) "Optionee" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.
(w) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(x) "Plan" means this amended and restated 1999 Stock Plan.
(y) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 11 of the Plan.
(z) "Restricted Stock Purchase Agreement" means a written
agreement between the Company and the Optionee evidencing the terms and
restrictions applying to stock purchased under a Stock Purchase Right. The
Restricted Stock Purchase Agreement is subject to the terms and conditions of
the Plan and the Notice of Grant.
(aa) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(bb) "Section 16(b) " means Section 16(b) of the Exchange Act.
(cc) "Service Provider" means an Employee, Director or
Consultant.
(dd) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(ee) "Stock Purchase Right" means the right to purchase Common
Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ff) "Subsidiary" means a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares that may be optioned and sold
under the Plan is 5,000,000
-3-
<PAGE> 4
Shares plus an annual increase to be added on the first day of the Company's
fiscal year beginning in 2001, equal to the lesser of (i) 2,000,000 shares, (ii)
5% of the outstanding shares on such date or (iii) a lesser amount determined by
the Board. The Shares may be authorized, but unissued, or reacquired Common
Stock.
If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the Plan
has terminated); provided, however, that Shares that have actually been issued
under the Plan, whether upon exercise of an Option or Right, shall not be
returned to the Plan and shall not become available for future distribution
under the Plan, except that if Shares of Restricted Stock are repurchased by the
Company at their original purchase price, such Shares shall become available for
future grant under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. Different Committees
with respect to different groups of Service Providers may administer the Plan.
(ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.
(iv) Other Administration. Other than as provided above,
the Plan shall be administered by (A) the Board or (B) a Committee, which
committee shall be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and
Stock Purchase Rights may be granted hereunder;
(iii) to determine the number of shares of Common Stock to
be covered by each Option and Stock Purchase Right granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
-4-
<PAGE> 5
(v) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Option or Stock Purchase Right
granted hereunder. Such terms and conditions include, but are not limited to,
the exercise price, the time or times when Options or Stock Purchase Rights may
be exercised (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Option or Stock Purchase Right or the shares of Common
Stock relating thereto, based in each case on such factors as the Administrator,
in its sole discretion, shall determine;
(vi) to reduce the exercise price of any Option or Stock
Purchase Right to the then current Fair Market Value if the Fair Market Value of
the Common Stock covered by such Option or Stock Purchase Right shall have
declined since the date the Option or Stock Purchase Right was granted;
(vii) to institute an Option Exchange Program;
(viii) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of satisfying applicable foreign laws;
(x) to modify or amend each Option or Stock Purchase Right
(subject to Section 15(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Options longer than is
otherwise provided for in the Plan;
(xi) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or Stock Purchase Right that number of Shares
having a Fair Market Value equal to the minimum amount required to be withheld.
The Fair Market Value of the Shares to be withheld shall be determined on the
date that the amount of tax to be withheld is to be determined. All elections by
an Optionee to have Shares withheld for this purpose shall be made in such form
and under such conditions as the Administrator may deem necessary or advisable;
(xii) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator;
(xiii) to make all other determinations deemed necessary
or advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.
5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may
be granted to Service Providers. Incentive Stock Options may be granted only to
Employees.
-5-
<PAGE> 6
6. Limitations.
(a) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they interfere in
any way with the Optionee's right or the Company's right to terminate such
relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of Options:
(i) No Service Provider shall be granted, in any fiscal
year of the Company, Options to purchase more than 1,500,000 Shares.
(ii) In connection with his or her initial service, a
Service Provider may be granted Options to purchase up to an additional
1,500,000 Shares, which shall not count against the limit set forth in
subsection (i) above.
(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 13.
(iv) If an Option is cancelled in the same fiscal year of
the Company in which it was granted (other than in connection with a transaction
described in Section 13), the cancelled Option will be counted against the
limits set forth in subsections (i) and (ii) above. For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.
7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall
become effective upon its adoption by the Board. It shall continue in effect for
a term of ten (10) years unless terminated earlier under Section 15 of the Plan.
8. Term of Option. The term of each Option shall be stated in the Option
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.
-6-
<PAGE> 7
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the Shares
to be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per
Share exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(iii) Notwithstanding the foregoing, Options may be
granted with a per Share exercise price of less than 100% of the Fair Market
Value per Share on the date of grant pursuant to a merger or other corporate
transaction.
(b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions that must be satisfied before the
Option may be exercised.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six
months on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;
(v) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;
-7-
<PAGE> 8
(vi) a reduction in the amount of any Company liability to
the Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;
(vii) any combination of the foregoing methods of payment;
or
(viii) such other consideration and method of payment for
the issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence in excess of ninety (90) days. An Option may not be exercised for a
fraction of a Share.
An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 13 of the Plan.
Exercising an Option in any manner shall decrease the
number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.
(b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
-8-
<PAGE> 9
(c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option Agreement (but in no event later than the expiration of the term
of such Option as set forth in the Notice of Grant), by the Optionee's estate or
by a person who acquires the right to exercise the Option by bequest or
inheritance, but only to the extent that the Option is vested on the date of
death. In the absence of a specified time in the Option Agreement, the Option
shall remain exercisable for twelve (12) months following the Optionee's
termination. If, at the time of death, the Optionee is not vested as to his or
her entire Option, the Shares covered by the unvested portion of the Option
shall immediately revert to the Plan. The Option may be exercised by the
executor or administrator of the Optionee's estate or, if none, by the person(s)
entitled to exercise the Option under the Optionee's will or the laws of descent
or distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing or electronically, by means of a Notice of Grant,
of the terms, conditions and restrictions related to the offer, including the
number of Shares that the offeree shall be entitled to purchase, the price to be
paid, and the time within which the offeree must accept such offer. The offer
shall be accepted by execution of a Restricted Stock Purchase Agreement in the
form determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Purchase Agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator.
(c) Other Provisions. The Restricted Stock Purchase Agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion.
-9-
<PAGE> 10
(d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 13
of the Plan.
12. Non-Transferability of Options and Stock Purchase Rights. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.
13. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, the number of shares that may
be added annually to the shares reserved under the Plan (pursuant to Section
3(a)(i))and the number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options or Stock Purchase Rights have
yet been granted or which have been returned to the Plan upon cancellation or
expiration of an Option or Stock Purchase Right, as well as the price per share
of Common Stock covered by each such outstanding Option or Stock Purchase Right,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Option or Stock Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse
as to all such Shares, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated. To the extent it has not been
previously exercised, an Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.
-10-
<PAGE> 11
(c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option and Stock Purchase Right shall be
assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the event
that the successor corporation refuses to assume or substitute for the Option or
Stock Purchase Right, the Optionee shall fully vest in and have the right to
exercise the Option or Stock Purchase Right as to all of the Optioned Stock,
including Shares as to which it would not otherwise be vested or exercisable. If
an Option or Stock Purchase Right becomes fully vested and exercisable in lieu
of assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee in writing or electronically that the
Option or Stock Purchase Right shall be fully vested and exercisable for a
period of fifteen (15) days from the date of such notice, and the Option or
Stock Purchase Right shall terminate upon the expiration of such period. For the
purposes of this paragraph, the Option or Stock Purchase Right shall be
considered assumed if, following the merger or sale of assets, the option or
right confers the right to purchase or receive, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option or Stock Purchase Right, for each Share
of Optioned Stock subject to the Option or Stock Purchase Right, to be solely
common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.
14. Date of Grant. The date of grant of an Option or Stock Purchase
Right shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such later date
as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.
15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.
-11-
<PAGE> 12
16. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such Option
or Stock Purchase Right and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of
an Option or Stock Purchase Right, the Company may require the person exercising
such Option or Stock Purchase Right to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.
17. Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
18. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
19. Shareholder Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.
-12-
<PAGE> 13
GARAGE.COM
AMENDED AND RESTATED 1999 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Grant Number ____________________________________
Date of Grant ____________________________________
Vesting Commencement Date ____________________________________
Exercise Price per Share $___________________________________
Total Number of Shares Granted ____________________________________
Total Exercise Price $___________________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: ____________________________________
Vesting Schedule:
Subject to accelerated vesting as set forth below, this Option may be
exercised, in whole or in part, in accordance with the following schedule:
25% of the Shares subject to the Option shall vest twelve months after
the Vesting Commencement Date, and 1/48 of the Shares subject to the Option
shall vest each month thereafter, subject to the Optionee continuing to be a
Service Provider on such dates.
<PAGE> 14
Termination Period:
This Option may be exercised for three (3) months after Optionee ceases
to be a Service Provider. Upon the death or Disability of the Optionee, this
Option may be exercised for twelve (12) months after Optionee ceases to be a
Service Provider. In no event shall this Option be exercised later than the
Term/Expiration Date as provided above.
II. AGREEMENT
A. Grant of Option.
The Plan Administrator of the Company hereby grants to the
Optionee named in the Notice of Grant attached as Part I of this Agreement (the
"Optionee") an option (the "Option") to purchase the number of Shares, as set
forth in the Notice of Grant, at the exercise price per share set forth in the
Notice of Grant (the "Exercise Price"), subject to the terms and conditions of
the Plan, which is incorporated herein by reference. Subject to Section 15(c) of
the Plan, in the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Option Agreement, the terms and
conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
B. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its
term in accordance with the Vesting Schedule set out in the Notice of Grant and
the applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery
of an exercise notice, in the form attached as Exhibit A (the "Exercise
Notice"), which shall state the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised (the "Exercised
Shares"), and such other representations and agreements as may be required by
the Company pursuant to the provisions of the Plan. The Exercise Notice shall be
completed by the Optionee and delivered to the Company. The Exercise Notice
shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.
No Shares shall be issued pursuant to the exercise of this
Option unless such issuance and exercise complies with Applicable Laws. Assuming
such compliance, for income tax purposes the Exercised Shares shall be
considered transferred to the Optionee on the date the Option is exercised with
respect to such Exercised Shares.
-2-
<PAGE> 15
C. Method of Payment.
Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:
1. cash; or
2. check; or
3. consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan; or
4. surrender of other Shares, which in the case of Shares
acquired from the Company, (i) have been owned by the Optionee for more than six
(6) months on the date of surrender, and (ii) have a Fair Market Value on the
date of surrender equal to the aggregate Exercise Price of the Exercised Shares;
or
5. to the extent permitted by the Administrator, delivery of
a properly executed exercise notice together with such other documentation as
the Administrator and the broker, if applicable, shall require to effect an
exercise of the Option and delivery to the Company of the sale proceeds required
to pay the Exercise Price.
D. Non-Transferability of Option.
This Option may not be transferred in any manner otherwise than
by will or by the laws of descent or distribution and may be exercised during
the lifetime of Optionee only by the Optionee. The terms of the Plan and this
Option Agreement shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
E. Term of Option.
This Option may be exercised only within the term set out in the
Notice of Grant, and may be exercised during such term only in accordance with
the Plan and the terms of this Option Agreement.
F. Tax Obligations.
1. Withholding Taxes. Optionee agrees to make appropriate
arrangements with the Company (or the Parent or Subsidiary employing or
retaining Optionee) for the satisfaction of all Federal, state, and local income
and employment tax withholding requirements applicable to the Option exercise.
Optionee acknowledges and agrees that the Company may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.
2. Notice of Disqualifying Disposition of ISO Shares. If the
Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired
-3-
<PAGE> 16
pursuant to the ISO on or before the later of (1) the date two years after the
Date of Grant, or (2) the date one year after the date of exercise, the Optionee
shall immediately notify the Company in writing of such disposition. Optionee
agrees that Optionee may be subject to income tax withholding by the Company on
the compensation income recognized by the Optionee.
G. Entire Agreement; Governing Law.
The Plan is incorporated herein by reference. The Plan and this
Option Agreement constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing signed by the Company and Optionee. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.
H. NO GUARANTEE OF CONTINUED SERVICE.
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A
SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING
HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS
OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING
PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT
OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE
PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
OPTIONEE: GARAGE.COM
- ----------------------------------- -----------------------------------
Signature By
- ----------------------------------- -----------------------------------
Print Name Title
- -----------------------------------
Residence Address
- -----------------------------------
-4-
<PAGE> 17
EXHIBIT A
GARAGE.COM
AMENDED AND RESTATED 1999 STOCK PLAN
EXERCISE NOTICE
Garage.com
420 Florence Avenue, Suite 300
Palo Alto, CA 94301
Attention: [Title]
1. Exercise of Option. Effective as of today, ________________, _____,
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Garage.com (the "Company") under and
pursuant to the Amended and Restated 1999 Stock Plan (the "Plan") and the Stock
Option Agreement dated, _____ (the "Option Agreement"). The purchase price for
the Shares shall be $_____, as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 13 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
<PAGE> 18
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.
Submitted by: Accepted by:
PURCHASER: GARAGE.COM
- ----------------------------------- -----------------------------------
Signature By
- ----------------------------------- -----------------------------------
Print Name Its
Address: Address:
Garage.com
- ----------------------------------- 420 Florence Avenue, Suite 300
Palo Alto, CA 94301
- -----------------------------------
-----------------------------------
Date Received
-2-
<PAGE> 1
EXHIBIT 10.2
Garage.com
2000 DIRECTOR OPTION PLAN
1. Purposes of the Plan. The purposes of this 2000 Director Option Plan
are to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.
All Options granted hereunder shall be nonstatutory stock
options.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" means the common stock of the Company.
(d) "Company" means Garage.com, a Delaware corporation.
(e) "Director" means a member of the Board.
(f) "Disability" means total and permanent disability as defined
in section 22(e) (3) of the Code.
(g) "Employee" means any person, including officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a Director's fee by the Company shall not be sufficient in and of
itself to constitute "employment" by the Company.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the day of determination as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on day of
<PAGE> 2
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable; or
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Board.
(j) "Inside Director" means a Director who is an Employee.
(k) "Option" means a stock option granted pursuant to the Plan.
(l) "Optioned Stock" means the Common Stock subject to an Option.
(m) "Optionee" means a Director who holds an Option.
(n) "Outside Director" means a Director who is not an Employee.
(o) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424 (e) of the Code.
(p) "Plan" means this 2000 Director Option Plan.
(q) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.
(r) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424 (f) of the Internal Revenue Code
of 1986.
3. Stock Subject to the Plan. Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 250,000 Shares (the "Pool") plus an annual increase to be
added on the first day of the Company's fiscal year beginning in 2001, equal to
the lesser of (i) 100,000 shares, (ii) 1% of the outstanding shares on such date
or (iii) a lesser amount determined by the Board.. The Shares may be authorized,
but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.
4. Administration and Grants of Options under the Plan.
(a) Procedure for Grants. All grants of Options to Outside
Directors under this Plan shall be automatic and nondiscretionary and shall be
made strictly in accordance with the following provisions:
-2-
<PAGE> 3
(i) No person shall have any discretion to select which
Outside Directors shall be granted Options or to determine the number of Shares
to be covered by Options.
(ii) Each Outside Director shall be automatically granted
an Option to purchase 20,000 Shares (the "First Option") on the date on which
the later of the following events occurs: (A) the effective date of this Plan,
as determined in accordance with Section 6 hereof, or (B) the date on which such
person first becomes an Outside Director, whether through election by the
shareholders of the Company or appointment by the Board to fill a vacancy;
provided, however, that an Inside Director who ceases to be an Inside Director
but who remains a Director shall not receive a First Option.
(iii) Each Outside Director shall be automatically granted
an Option to purchase 5,000 Shares (a "Subsequent Option") on January 1 of each
year provided he or she is then an Outside Director and if as of such date, he
or she shall have served on the Board for at least the preceding six (6) months.
(iv) Notwithstanding the provisions of subsections (ii)
and (iii) hereof, any exercise of an Option granted before the Company has
obtained shareholder approval of the Plan in accordance with Section 16 hereof
shall be conditioned upon obtaining such shareholder approval of the Plan in
accordance with Section 16 hereof.
(v) The terms of a First Option granted hereunder shall be
as follows:
(A) the term of the First Option shall be ten (10)
years.
(B) the First Option shall be exercisable only
while the Outside Director remains a Director of the Company, except as set
forth in Sections 8 and 10 hereof.
(C) the exercise price per Share shall be 100% of
the Fair Market Value per Share on the date of grant of the First Option.
(D) subject to Section 10 hereof, the First Option
shall become exercisable at a rate of 1/48th of the Shares subject to the First
Option per month, provided that the Optionee continues to serve as a Director on
such dates.
(vi) The terms of a Subsequent Option granted hereunder
shall be as follows:
(A) the term of the Subsequent Option shall be ten
(10) years.
(B) the Subsequent Option shall be exercisable only
while the Outside Director remains a Director of the Company, except as set
forth in Sections 8 and 10 hereof.
(C) the exercise price per Share shall be 100% of
the Fair Market Value per Share on the date of grant of the Subsequent Option.
-3-
<PAGE> 4
(D) subject to Section 10 hereof, the Subsequent
Option shall become exercisable at a rate of 1/48th of the Shares subject to the
Subsequent Option per month, provided that the Optionee continues to serve as a
Director on such dates.
(vii) In the event that any Option granted under the Plan
would cause the number of Shares subject to outstanding Options plus the number
of Shares previously purchased under Options to exceed the Pool, then the
remaining Shares available for Option grant shall be granted under Options to
the Outside Directors on a pro rata basis. No further grants shall be made until
such time, if any, as additional Shares become available for grant under the
Plan through action of the Board or the shareholders to increase the number of
Shares which may be issued under the Plan or through cancellation or expiration
of Options previously granted hereunder.
5. Eligibility. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof.
The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate the Director's relationship with the Company at any time.
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the shareholders of the
Company as described in Section 16 of the Plan. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 11 of the Plan.
7. Form of Consideration. The consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other Shares, provided Shares acquired
directly from the Company, (x) have been owned by the Optionee for more than six
(6) months on the date of surrender, and (y) have a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised, (iv) consideration received by the Company
under a cashless exercise program implemented by the Company in connection with
the Plan, or (v) any combination of the foregoing methods of payment.
8. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times as are set forth in Section
4 hereof; provided, however, that no Options shall be exercisable until
shareholder approval of the Plan in accordance with Section 16 hereof has been
obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Option by the person
-4-
<PAGE> 5
entitled to exercise the Option and full payment for the Shares with respect to
which the Option is exercised has been received by the Company. Full payment may
consist of any consideration and method of payment allowable under Section 7 of
the Plan. Until the issuance (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company) of the
stock certificate evidencing such Shares, no right to vote or receive dividends
or any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. A share certificate for the
number of Shares so acquired shall be issued to the Optionee as soon as
practicable after exercise of the Option. No adjustment shall be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 10 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
(b) Termination of Continuous Status as a Director. Subject to
Section 10 hereof, in the event an Optionee's status as a Director terminates
(other than upon the Optionee's death or Disability), the Optionee may exercise
his or her Option, but only within three (3) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option on the date of such termination, and to the extent that the
Optionee does not exercise such Option (to the extent otherwise so entitled)
within the time specified herein, the Option shall terminate.
(c) Disability of Optionee. In the event Optionee's status as a
Director terminates as a result of Disability, the Optionee may exercise his or
her Option, but only within twelve (12) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option on the date of termination, or if he or she does not exercise
such Option (to the extent otherwise so entitled) within the time specified
herein, the Option shall terminate.
(d) Death of Optionee. In the event of an Optionee's death, the
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of death, and only to the extent that the Optionee was
entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.
9. Non-Transferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
-5-
<PAGE> 6
10. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the number of Shares covered by each
outstanding Option, the number of Shares which have been authorized for issuance
under the Plan but as to which no Options have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option, the
number of shares that may be added annually to the shares reserved under the
Plan (pursuant to Section 3(a)(i)), as well as the price per Share covered by
each such outstanding Option, and the number of Shares issuable pursuant to the
automatic grant provisions of Section 4 hereof shall be proportionately adjusted
for any increase or decrease in the number of issued Shares resulting from a
stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued Shares effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration." Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of Shares subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation or the sale of substantially all of the assets
of the Company, outstanding Options may be assumed or equivalent options may be
substituted by the successor corporation or a Parent or Subsidiary thereof (the
"Successor Corporation"). If an Option is assumed or substituted for, the Option
or equivalent option shall continue to be exercisable as provided in Section 4
hereof for so long as the Optionee serves as a Director or a director of the
Successor Corporation. Following such assumption or substitution, if the
Optionee's status as a Director or director of the Successor Corporation, as
applicable, is terminated other than upon a voluntary resignation by the
Optionee, the Option or option shall become fully exercisable, including as to
Shares for which it would not otherwise be exercisable. Thereafter, the Option
or option shall remain exercisable in accordance with Sections 8(b) through (d)
above.
If the Successor Corporation does not assume an outstanding Option or
substitute for it an equivalent option, the Option shall become fully vested and
exercisable, including as to Shares for which it would not otherwise be
exercisable. In such event the Board shall notify the Optionee that the Option
shall be fully exercisable for a period of thirty (30) days from the date of
such notice, and upon the expiration of such period the Option shall terminate.
For the purposes of this Section 10(c), an Option shall be considered
assumed if, following the merger or sale of assets, the Option confers the right
to purchase or receive, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
-6-
<PAGE> 7
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares).
If such consideration received in the merger or sale of assets is not solely
common stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation, provide for the consideration to
be received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
11. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend, or discontinue the Plan, but no amendment, alteration,
suspension, or discontinuation shall be made which would impair the rights of
any Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with any applicable
law, regulation or stock exchange rule, the Company shall obtain shareholder
approval of any Plan amendment in such a manner and to such a degree as
required.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
12. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4 hereof.
13. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares, if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
-7-
<PAGE> 8
14. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
15. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
16. Shareholder Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the degree and manner
required under applicable state and federal law and any stock exchange rules.
-8-
<PAGE> 1
EXHIBIT 10.3
Garage.Com
2000 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 2000 Employee Stock
Purchase Plan of Garage.com.
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company or
any committee thereof designated by the Board of Directors of the Company in
accordance with Section 14 of the Plan.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" shall mean the common stock of the Company.
(d) "Company" shall mean Garage.com and any Designated Subsidiary
of the Company.
(e) "Compensation" shall mean all base straight time gross
earnings, commissions, incentive compensation and bonuses, but exclusive of
payments for overtime, profit sharing payments, shift premium payments and
incentive payments.
(f) "Designated Subsidiary" shall mean any Subsidiary that has
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(g) "Employee" shall mean any individual who is an Employee of
the Company for tax purposes whose customary employment with the Company is at
least twenty (20) hours per week and more than five (5) months in any calendar
year. For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship shall be deemed to have terminated on the
91st day of such leave.
(h) "Enrollment Date" shall mean the first Trading Day of each
Offering Period.
<PAGE> 2
(i) "Exercise Date" shall mean the first Trading Day on or after
May 15 and November 15 of each year; provided, however, the first Exercise Date
shall be the first Trading Day on or after November 15, 2000.
(j) "Fair Market Value" shall mean, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the day of determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean of the closing bid and asked prices for the
Common Stock on the date of determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable;
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Board; or
(iv) For purposes of the Enrollment Date of the first
Offering Period under the Plan, the Fair Market Value shall be the initial price
to the public as set forth in the final prospectus included within the
registration statement in Form S-1 filed with the Securities and Exchange
Commission for the initial public offering of the Company's Common Stock (the
"Registration Statement").
(k) "Offering Periods" shall mean the periods of approximately
twelve (12) months during which an option granted pursuant to the Plan may be
exercised, commencing on the first Trading Day on or after May 15 and November
15 of each year and terminating on the first Trading Day on or after the May 15
or November 15 Offering Period commencement date approximately twelve months
later; provided, however, that the first Offering Period under the Plan shall
commence with the first Trading Day on or after the date on which the Securities
and Exchange Commission declares the Company's Registration Statement effective
and end on the first Trading Day on or after May 15, 2001, and the second
Offering Period under the Plan shall commence with the first Trading Day on or
after November 15, 2000, and end on or after November 15, 2001. The duration and
timing of Offering Periods may be changed pursuant to Section 4 of this Plan.
(l) "Plan" shall mean this 2000 Employee Stock Purchase Plan.
(m) "Purchase Period" shall mean the approximately six (6) month
period commencing on one Exercise Date and ending with the next Exercise Date,
except that the first Purchase Period of any Offering Period shall commence on
the Enrollment Date and end with the next Exercise Date.
-2-
<PAGE> 3
(n) "Purchase Price" shall mean 85% of the Fair Market Value of a
share of Common Stock on the Enrollment Date or on the Exercise Date, whichever
is lower; provided, however, that the Purchase Price may be adjusted by the
Board pursuant to Section 20.
(o) "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
(p) "Subsidiary" shall mean a corporation, domestic or foreign,
of which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.
(q) "Trading Day" shall mean a day on which national stock
exchanges and the Nasdaq System are open for trading.
3. Eligibility.
(a) Any Employee who shall be employed by the Company on a given
Enrollment Date shall be eligible to participate in the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding,
no Employee shall be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Subsidiary, or (ii) to the extent that his or her rights to purchase stock
under all employee stock purchase plans of the Company and its subsidiaries
accrues at a rate which exceeds $25,000 worth of stock (determined at the fair
market value of the shares at the time such option is granted) for each calendar
year in which such option is outstanding at any time.
4. Offering Periods. The Plan shall be implemented by consecutive,
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after May 15 and November 15 each year, or on such other date
as the Board shall determine, and continuing thereafter until terminated in
accordance with Section 20 hereof; provided, however, that the first Offering
Period under the Plan shall commence with the first Trading Day on or after the
date on which the Securities and Exchange Commission declares the Company's
Registration Statement effective and end on the first Trading Day on or after
May 15, 2001, and the second Offering Period under the Plan shall commence with
the first Trading Day on or after November 15, 2000, and end on or after
November 15, 2001. The Board shall have the power to change the duration of
Offering Periods (including the commencement dates thereof) with respect to
future offerings without shareholder approval if such change is announced at
least five (5) days prior to the scheduled beginning of the first Offering
Period to be affected thereafter.
-3-
<PAGE> 4
5. Participation.
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the Company's payroll office prior
to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the
first payroll following the Enrollment Date and shall end on the last payroll in
the Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
6. Payroll Deductions.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding fifteen percent (15%) of
the Compensation which he or she receives on each pay day during the Offering
Period; provided, however, that a participant who is automatically entering a
new Offering Period or Purchase Period shall have the payroll deductions made on
the first day of the new Offering Period or Purchase Period applied to his or
her account under the new Offering Period or new Purchase Period.
(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan and shall be withheld in whole
percentages only. A participant may not make any additional payments into such
account.
(c) A participant may discontinue his or her participation in the
Plan as provided in Section 10 hereof, or may increase or decrease the rate of
his or her payroll deductions during the Offering Period by completing or filing
with the Company a new subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in rate shall
be effective with the first full payroll period following five (5) business days
after the Company's receipt of the new subscription agreement unless the Company
elects to process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a
participant's payroll deductions may be decreased to zero percent (0%) at any
time during a Purchase Period. Payroll deductions shall recommence at the rate
provided in such participant's subscription agreement at the beginning of the
first Purchase Period which is scheduled to end in the following calendar year,
unless terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part, or
at the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any
-4-
<PAGE> 5
withholding required to make available to the Company any tax deductions or
benefits attributable to sale or early disposition of Common Stock by the
Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Purchase Period more than 5,000
shares of the Company's Common Stock (subject to any adjustment pursuant to
Section 19), and provided further that such purchase shall be subject to the
limitations set forth in Sections 3(b) and 12 hereof. The Board may, for future
Offering Periods, increase or decrease, in its absolute discretion, the maximum
number of shares of the Company's Common Stock an Employee may purchase during
each Purchase Period of such Offering Period. Exercise of the option shall occur
as provided in Section 8 hereof, unless the participant has withdrawn pursuant
to Section 10 hereof. The option shall expire on the last day of the Offering
Period.
8. Exercise of Option.
(a) Unless a participant withdraws from the Plan as provided in
Section 10 hereof, his or her option for the purchase of shares shall be
exercised automatically on the Exercise Date, and the maximum number of full
shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
participant as provided in Section 10 hereof. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to purchase
shares hereunder is exercisable only by him or her.
(b) If the Board determines that, on a given Exercise Date, the
number of shares with respect to which options are to be exercised may exceed
(i) the number of shares of Common Stock that were available for sale under the
Plan on the Enrollment Date of the applicable Offering Period, or (ii) the
number of shares available for sale under the Plan on such Exercise Date, the
Board may in its sole discretion (x) provide that the Company shall make a pro
rata allocation of the shares of Common Stock available for purchase on such
Enrollment Date or Exercise Date, as applicable, in as uniform a manner as shall
be practicable and as it shall determine in its sole discretion to be equitable
among all participants exercising options to purchase Common Stock on such
Exercise Date, and continue all Offering Periods then in effect, or (y) provide
that the Company shall make a pro rata allocation of the shares available for
purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform
a manner as shall be practicable and as it shall determine in its sole
discretion to be equitable among all participants exercising options to purchase
Common Stock on such Exercise Date, and terminate any or all Offering Periods
then in effect pursuant to Section 20 hereof. The Company may make pro rata
allocation of the shares available on the Enrollment Date of any applicable
Offering Period pursuant to the preceding sentence,
-5-
<PAGE> 6
notwithstanding any authorization of additional shares for issuance under the
Plan by the Company's shareholders subsequent to such Enrollment Date.
9. Delivery. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.
10. Withdrawal.
(a) A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to exercise
his or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit B to this Plan. All of the participant's payroll
deductions credited to his or her account shall be paid to such participant
promptly after receipt of notice of withdrawal and such participant's option for
the Offering Period shall be automatically terminated, and no further payroll
deductions for the purchase of shares shall be made for such Offering Period. If
a participant withdraws from an Offering Period, payroll deductions shall not
resume at the beginning of the succeeding Offering Period unless the participant
delivers to the Company a new subscription agreement.
(b) A participant's withdrawal from an Offering Period shall not
have any effect upon his or her eligibility to participate in any similar plan
which may hereafter be adopted by the Company or in succeeding Offering Periods
which commence after the termination of the Offering Period from which the
participant withdraws.
11. Termination of Employment.
Upon a participant's ceasing to be an Employee, for any reason,
he or she shall be deemed to have elected to withdraw from the Plan and the
payroll deductions credited to such participant's account during the Offering
Period but not yet used to exercise the option shall be returned to such
participant or, in the case of his or her death, to the person or persons
entitled thereto under Section 15 hereof, and such participant's option shall be
automatically terminated. The preceding sentence notwithstanding, a participant
who receives payment in lieu of notice of termination of employment shall be
treated as continuing to be an Employee for the participant's customary number
of hours per week of employment during the period in which the participant is
subject to such payment in lieu of notice.
12. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
13. Stock.
(a) Subject to adjustment upon changes in capitalization of the
Company as provided in Section 19 hereof, the maximum number of shares of the
Company's Common Stock which shall be made available for sale under the Plan
shall be 1,000,000 shares plus an annual increase to be added on the first day
of the Company's fiscal year beginning in 2001, equal to the lesser of (i)
750,000 shares, (ii) 2% of the outstanding shares on such date or (iii) an
amount determined by the Board.
-6-
<PAGE> 7
(b) The participant shall have no interest or voting right in
shares covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan shall
be registered in the name of the participant or in the name of the participant
and his or her spouse.
14. Administration. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.
15. Designation of Beneficiary.
(a) A participant may file a written designation of a beneficiary
who is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death subsequent to an
Exercise Date on which the option is exercised but prior to delivery to such
participant of such shares and cash. In addition, a participant may file a
written designation of a beneficiary who is to receive any cash from the
participant's account under the Plan in the event of such participant's death
prior to exercise of the option. If a participant is married and the designated
beneficiary is not the spouse, spousal consent shall be required for such
designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.
16. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 15 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
17. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
18. Reports. Individual accounts shall be maintained for each
participant in the Plan. Statements of account shall be given to participating
Employees at least annually, which statements shall set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
-7-
<PAGE> 8
19. Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the Reserves, the maximum number of shares each
participant may purchase each Purchase Period (pursuant to Section 7), the
number of shares that may be added annually to the shares reserved under the
Plan (pursuant to Section 13(a)(i)), as well as the price per share and the
number of shares of Common Stock covered by each option under the Plan which has
not yet been exercised shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date"), and
shall terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Board. The New
Exercise Date shall be before the date of the Company's proposed dissolution or
liquidation. The Board shall notify each participant in writing, at least ten
(10) business days prior to the New Exercise Date, that the Exercise Date for
the participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.
(c) Merger or Asset Sale. In the event of a proposed sale of all
or substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each outstanding option shall be assumed or an
equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the option, any Purchase Periods
then in progress shall be shortened by setting a new Exercise Date (the "New
Exercise Date") and any Offering Periods then in progress shall end on the New
Exercise Date. The New Exercise Date shall be before the date of the Company's
proposed sale or merger. The Board shall notify each participant in writing, at
least ten (10) business days prior to the New Exercise Date, that the Exercise
Date for the participant's option has been changed to the New Exercise Date and
that the participant's option shall be exercised automatically on the New
Exercise Date, unless prior to such date the participant has withdrawn from the
Offering Period as provided in Section 10 hereof.
20. Amendment or Termination.
(a) The Board of Directors of the Company may at any time and for
any reason terminate or amend the Plan. Except as provided in Section 19 hereof,
no such termination can
-8-
<PAGE> 9
affect options previously granted, provided that an Offering Period may be
terminated by the Board of Directors on any Exercise Date if the Board
determines that the termination of the Offering Period or the Plan is in the
best interests of the Company and its shareholders. Except as provided in
Section 19 and this Section 20 hereof, no amendment may make any change in any
option theretofore granted which adversely affects the rights of any
participant. To the extent necessary to comply with Section 423 of the Code (or
any successor rule or provision or any other applicable law, regulation or stock
exchange rule), the Company shall obtain shareholder approval in such a manner
and to such a degree as required.
(b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
(c) In the event the Board determines that the ongoing operation
of the Plan may result in unfavorable financial accounting consequences, the
Board may, in its discretion and, to the extent necessary or desirable, modify
or amend the Plan to reduce or eliminate such accounting consequence including,
but not limited to:
(i) altering the Purchase Price for any Offering Period
including an Offering Period underway at the time of the change in Purchase
Price;
(ii) shortening any Offering Period so that Offering
Period ends on a new Exercise Date, including an Offering Period underway at the
time of the Board action; and
(iii) allocating shares.
Such modifications or amendments shall not require stockholder
approval or the consent of any Plan participants.
21. Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
22. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock
-9-
<PAGE> 10
exchange upon which the shares may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
23. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 20 hereof.
24. Automatic Transfer to Low Price Offering Period. To the extent
permitted by any applicable laws, regulations, or stock exchange rules if the
Fair Market Value of the Common Stock on any Exercise Date in an Offering Period
is lower than the Fair Market Value of the Common Stock on the Enrollment Date
of such Offering Period, then all participants in such Offering Period shall be
automatically withdrawn from such Offering Period immediately after the exercise
of their option on such Exercise Date and automatically re-enrolled in the
immediately following Offering Period.
-10-
<PAGE> 11
EXHIBIT A
GARAGE.COM
2000 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: ___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. ____________________ hereby elects to participate in the Garage.com 2000
Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") and
subscribes to purchase shares of the Company's Common Stock in
accordance with this Subscription Agreement and the Employee Stock
Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of ____% of my Compensation on each payday (from __ to 15%) during the
Offering Period in accordance with the Employee Stock Purchase Plan.
(Please note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise my
option.
4. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is
in all respects subject to the terms of the Plan. I understand that my
ability to exercise the option under this Subscription Agreement is
subject to shareholder approval of the Employee Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should be
issued in the name(s) of (Employee or Employee and Spouse only).
6. I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares) or one year after
the Exercise Date, I will be treated for federal income tax purposes as
having received ordinary income at the time of such disposition in an
amount equal to the excess of the fair market value of the shares at the
time such shares were purchased by me over the price which I paid for
the shares. I hereby agree to notify the Company in writing within 30
days after the date of any disposition of my shares and I will make
adequate provision for Federal, state or other tax withholding
obligations, if any, which arise upon the
<PAGE> 12
disposition of the Common Stock. The Company may, but will not be
obligated to, withhold from my compensation the amount necessary to meet
any applicable withholding obligation including any withholding
necessary to make available to the Company any tax deductions or
benefits attributable to sale or early disposition of Common Stock by
me. If I dispose of such shares at any time after the expiration of the
2-year and 1-year holding periods, I understand that I will be treated
for federal income tax purposes as having received income only at the
time of such disposition, and that such income will be taxed as ordinary
income only to the extent of an amount equal to the lesser of (1) the
excess of the fair market value of the shares at the time of such
disposition over the purchase price which I paid for the shares, or (2)
15% of the fair market value of the shares on the first day of the
Offering Period. The remainder of the gain, if any, recognized on such
disposition will be taxed as capital gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent upon
my eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print)___________________________________________________
(First) (Middle) (Last)
___________________________ ___________________________________
Relationship
___________________________________
(Address)
-2-
<PAGE> 13
Employee's Social
Security Number: ____________________________________
Employee's Address: ____________________________________
____________________________________
____________________________________
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:_________________________ ____________________________________
Signature of Employee
____________________________________
Spouse's Signature (If beneficiary
other than spouse)
-3-
<PAGE> 14
EXHIBIT B
GARAGE.COM
2000 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Garage.com
2000 Employee Stock Purchase Plan which began on ____________, ______ (the
"Enrollment Date") hereby notifies the Company that he or she hereby withdraws
from the Offering Period. He or she hereby directs the Company to pay to the
undersigned as promptly as practicable all the payroll deductions credited to
his or her account with respect to such Offering Period. The undersigned
understands and agrees that his or her option for such Offering Period will be
automatically terminated. The undersigned understands further that no further
payroll deductions will be made for the purchase of shares in the current
Offering Period and the undersigned shall be eligible to participate in
succeeding Offering Periods only by delivering to the Company a new Subscription
Agreement.
Name and Address of Participant:
___________________________________
___________________________________
___________________________________
Signature:
___________________________________
Date:______________________________
<PAGE> 1
EXHIBIT 10.4
GARAGE.COM
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is effective as of
____________, 2000 by and between Garage.com, a Delaware corporation (the
"Company"), and _________________ ("Indemnitee").
WHEREAS, the Company desires to attract and retain the services of
highly qualified individuals, such as Indemnitee, to serve the Company and its
related entities;
WHEREAS, in order to induce Indemnitee to continue to provide services
to the Company, the Company wishes to provide for the indemnification of, and
the advancement of expenses to, Indemnitee to the maximum extent permitted by
law;
WHEREAS, the Company and Indemnitee recognize the continued difficulty
in obtaining liability insurance for the Company's directors, officers,
employees, agents and fiduciaries, the significant increases in the cost of such
insurance and the general reductions in the coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors, officers,
employees, agents and fiduciaries to expensive litigation risks at the same time
as the availability and coverage of liability insurance has been severely
limited; and
WHEREAS, in connection with the Company's reincorporation, the Company
and Indemnitee desire to continue to have in place the additional protection
provided by an indemnification agreement to provide indemnification and
advancement of expenses to the Indemnitee to the maximum extent permitted by
Delaware law;
WHEREAS, in view of the considerations set forth above, the Company
desires that Indemnitee shall be indemnified and advanced expenses by the
Company as set forth herein;
NOW, THEREFORE, the Company and Indemnitee hereby agree as set forth
below.
1. Certain Definitions.
(a) "Change in Control" shall mean, and shall be deemed to have
occurred if, on or after the date of this Agreement, (i) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended) (the "Exchange Act"), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company acting in such
capacity or a corporation owned directly or indirectly by the stockholders of
the Company in
<PAGE> 2
substantially the same proportions as their ownership of stock of the Company,
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing more
than 50% of the total voting power represented by the Company's then outstanding
Voting Securities (as defined below), (ii) during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board of
Directors of the Company and any new director whose election by the Board of
Directors or nomination for election by the Company's stockholders was approved
by a vote of at least two thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof, (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation other than a
merger or consolidation which would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (iv) the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of (in one transaction or a series of
related transactions) all or substantially all of the Company's assets.
(b) "Claim" shall mean with respect to a Covered Event (as
defined below): any threatened, pending or completed action, suit, proceeding or
alternative dispute resolution mechanism, or any hearing, inquiry or
investigation that Indemnitee in good faith believes might lead to the
institution of any such action, suit, proceeding or alternative dispute
resolution mechanism, whether civil, criminal, administrative, investigative or
other.
(c) References to the "Company" shall include, in addition to
Garage.com, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger to which Garage.com (or any
of its wholly-owned subsidiaries) is a party which, if its separate existence
had continued, would have had power and authority to indemnify its directors,
officers, employees, agents or fiduciaries, so that if Indemnitee is or was a
director, officer, employee, agent or fiduciary of such constituent corporation,
or is or was serving at the request of such constituent corporation as a
director, officer, employee, agent or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise,
Indemnitee shall stand in the same position under the provisions of this
Agreement with respect to the resulting or surviving corporation as Indemnitee
would have with respect to such constituent corporation if its separate
existence had continued.
(d) "Covered Event" shall mean any event or occurrence related to
the fact that Indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company, or any subsidiary of the Company, or is or was serving
at the request of the Company as a director, officer, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action or inaction on the part of Indemnitee
while serving in such capacity.
2
<PAGE> 3
(e) "Expenses" shall mean any and all expenses (including
attorneys' fees and all other costs, expenses and obligations incurred in
connection with investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, to be a witness in or to
participate in, any action, suit, proceeding, alternative dispute resolution
mechanism, hearing, inquiry or investigation), judgments, fines, penalties and
amounts paid in settlement (if such settlement is approved in advance by the
Company, which approval shall not be unreasonably withheld), actually and
reasonably incurred, of any Claim and any federal, state, local or foreign taxes
imposed on the Indemnitee as a result of the actual or deemed receipt of any
payments under this Agreement.
(f) "Expense Advance" shall mean a payment to Indemnitee pursuant
to Section 3 of Expenses in advance of the settlement of or final judgement in
any action, suit, proceeding or alternative dispute resolution mechanism,
hearing, inquiry or investigation which constitutes a Claim.
(g) "Independent Legal Counsel" shall mean an attorney or firm of
attorneys, selected in accordance with the provisions of Section 2(d) hereof,
who shall not have otherwise performed services for the Company or Indemnitee
within the last three years (other than with respect to matters concerning the
rights of Indemnitee under this Agreement, or of other indemnitees under similar
indemnity agreements).
(h) References to "other enterprises" shall include employee
benefit plans; references to "fines" shall include any excise taxes assessed on
Indemnitee with respect to an employee benefit plan; and references to "serving
at the request of the Company" shall include any service as a director, officer,
employee, agent or fiduciary of the Company which imposes duties on, or involves
services by, such director, officer, employee, agent or fiduciary with respect
to an employee benefit plan, its participants or its beneficiaries; and if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan, Indemnitee shall be deemed to have acted in a manner "not opposed to the
best interests of the Company" as referred to in this Agreement.
(i) "Reviewing Party" shall mean, subject to the provisions of
Section 2(d), any person or body appointed by the Board of Directors in
accordance with applicable law to review the Company's obligations hereunder and
under applicable law, which may include a member or members of the Company's
Board of Directors, Independent Legal Counsel or any other person or body not a
party to the particular Claim for which Indemnitee is seeking indemnification.
(j) "Section" refers to a section of this Agreement unless
otherwise indicated.
(k) "Voting Securities" shall mean any securities of the Company
that vote generally in the election of directors.
3
<PAGE> 4
2. Indemnification.
(a) Indemnification of Expenses. Subject to the provisions of Section
2(b) below, the Company shall indemnify Indemnitee for Expenses to the fullest
extent permitted by law if Indemnitee was or is or becomes a party to or witness
or other participant in, or is threatened to be made a party to or witness or
other participant in, any Claim (whether by reason of or arising in part out of
a Covered Event), including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses.
(b) Review of Indemnification Obligations. Notwithstanding the
foregoing, in the event any Reviewing Party shall have determined (in a written
opinion, in any case in which Independent Legal Counsel is the Reviewing Party)
that Indemnitee is not entitled to be indemnified hereunder under applicable
law, (i) the Company shall have no further obligation under Section 2(a) to make
any payments to Indemnitee not made prior to such determination by such
Reviewing Party, and (ii) the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all Expenses
theretofore paid in indemnifying Indemnitee; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee is entitled to
be indemnified hereunder under applicable law, any determination made by any
Reviewing Party that Indemnitee is not entitled to be indemnified hereunder
under applicable law shall not be binding and Indemnitee shall not be required
to reimburse the Company for any Expenses theretofore paid in indemnifying
Indemnitee until a final judicial determination is made with respect thereto (as
to which all rights of appeal therefrom have been exhausted or lapsed).
Indemnitee's obligation to reimburse the Company for any Expenses shall be
unsecured and no interest shall be charged thereon.
(c) Indemnitee Rights on Unfavorable Determination; Binding Effect.
If any Reviewing Party determines that Indemnitee substantively is not entitled
to be indemnified hereunder in whole or in part under applicable law, Indemnitee
shall have the right to commence litigation seeking an initial determination by
the court or challenging any such determination by such Reviewing Party or any
aspect thereof, including the legal or factual bases therefor, and, subject to
the provisions of Section 14, the Company hereby consents to service of process
and to appear in any such proceeding. Absent such litigation, any determination
by any Reviewing Party shall be conclusive and binding on the Company and
Indemnitee.
(d) Selection of Reviewing Party; Change in Control. If there has not
been a Change in Control, any Reviewing Party shall be selected by the Board of
Directors, and if there has been such a Change in Control (other than a Change
in Control which has been approved by a majority of the Company's Board of
Directors who were directors immediately prior to such Change in Control), any
Reviewing Party with respect to all matters thereafter arising concerning the
rights of Indemnitee to indemnification of Expenses under this Agreement or any
other agreement or under the Company's certificate of incorporation or bylaws as
now or hereafter in effect, or under any other applicable law, if desired by
Indemnitee, shall be Independent Legal Counsel selected by Indemnitee and
approved by the Company (which approval shall not be unreasonably withheld).
Such counsel,
4
<PAGE> 5
among other things, shall render its written opinion to the Company and
Indemnitee as to whether and to what extent Indemnitee would be entitled to be
indemnified hereunder under applicable law and the Company agrees to abide by
such opinion. The Company agrees to pay the reasonable fees of the Independent
Legal Counsel referred to above and to indemnify fully such counsel against any
and all expenses (including attorneys' fees), claims, liabilities and damages
arising out of or relating to this Agreement or its engagement pursuant hereto.
Notwithstanding any other provision of this Agreement, the Company shall not be
required to pay Expenses of more than one Independent Legal Counsel in
connection with all matters concerning a single Indemnitee, and such Independent
Legal Counsel shall be the Independent Legal Counsel for any or all other
Indemnitees unless (i) the employment of separate counsel by one or more
Indemnitees has been previously authorized by the Company in writing, or (ii) an
Indemnitee shall have provided to the Company a written statement that such
Indemnitee has reasonably concluded that there may be a conflict of interest
between such Indemnitee and the other Indemnitees with respect to the matters
arising under this Agreement.
(e) Mandatory Payment of Expenses. Notwithstanding any other
provision of this Agreement other than Section 10 hereof, to the extent that
Indemnitee has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, in defense of any
Claim, Indemnitee shall be indemnified against all Expenses incurred by
Indemnitee in connection therewith.
3. Expense Advances.
(a) Obligation to Make Expense Advances. The Company shall make
Expense Advances to Indemnitee upon receipt of a written undertaking by or on
behalf of the Indemnitee to repay such amounts if it shall ultimately be
determined that the Indemnitee is not entitled to be indemnified therefore by
the Company.
(b) Form of Undertaking. Any obligation to repay any Expense Advances
hereunder pursuant to a written undertaking by the Indemnitee shall be unsecured
and no interest shall be charged thereon.
(c) Determination of Reasonable Expense Advances. The parties agree
that for the purposes of any Expense Advance for which Indemnitee has made
written demand to the Company in accordance with this Agreement, all Expenses
included in such Expense Advance that are certified by affidavit of Indemnitee's
counsel as being reasonable shall be presumed conclusively to be reasonable.
4. Procedures for Indemnification and Expense Advances.
(a) Timing of Payments. All payments of Expenses (including without
limitation Expense Advances) by the Company to the Indemnitee pursuant to this
Agreement shall be made to the fullest extent permitted by law as soon as
practicable after written demand by Indemnitee therefor is presented to the
Company, but in no event later than forty-five (45) business days after
5
<PAGE> 6
such written demand by Indemnitee is presented to the Company, except in the
case of Expense Advances, which shall be made no later than forty-five (45)
business days after such written demand by Indemnitee is presented to the
Company.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to Indemnitee's right to be indemnified or Indemnitee's
right to receive Expense Advances under this Agreement, give the Company notice
in writing as soon as practicable of any Claim made against Indemnitee for which
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to the Chief Executive Officer of the Company at the
address shown on the signature page of this Agreement (or such other address as
the Company shall designate in writing to Indemnitee). In addition, Indemnitee
shall give the Company such information and cooperation as it may reasonably
require and as shall be within Indemnitee's power.
(c) No Presumptions; Burden of Proof. For purposes of this
Agreement, the termination of any Claim by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by this
Agreement or applicable law. In addition, neither the failure of any Reviewing
Party to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by any Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under this Agreement or applicable law, shall be a defense
to Indemnitee's claim or create a presumption that Indemnitee has not met any
particular standard of conduct or did not have any particular belief. In
connection with any determination by any Reviewing Party or otherwise as to
whether the Indemnitee is entitled to be indemnified hereunder the burden of
proof shall be on the Company to establish that Indemnitee is not so entitled.
(d) Notice to Insurers. If, at the time of the receipt by the
Company of a notice of a Claim pursuant to Section 4(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such Claim in
accordance with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall be
obligated hereunder to provide indemnification for or make any Expense Advances
with respect to the Expenses of any Claim, the Company, if appropriate, shall be
entitled to assume the defense of such Claim with counsel approved by Indemnitee
(which approval shall not be unreasonably withheld) upon the delivery to
Indemnitee of written notice of the Company's election to do so. After delivery
of such notice, approval of such counsel by Indemnitee and the retention of such
counsel by the Company,
6
<PAGE> 7
the Company will not be liable to Indemnitee under this Agreement for any fees
or expenses of separate counsel subsequently retained by or on behalf of
Indemnitee with respect to the same Claim; provided, however, that, (i)
Indemnitee shall have the right to employ Indemnitee's separate counsel in any
such Claim at Indemnitee's expense and (ii) if (A) the employment of separate
counsel by Indemnitee has been previously authorized by the Company, (B)
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of any such defense,
or (C) the Company shall not continue to retain such counsel to defend such
Claim, then the fees and expenses of Indemnitee's separate counsel shall be
Expenses for which Indemnitee may receive indemnification or Expense Advances
hereunder.
5. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. The Company hereby agrees to indemnify the Indemnitee
to the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by the other provisions of this
Agreement, the Company's certificate of incorporation, the Company's bylaws or
by statute. In the event of any change after the date of this Agreement in any
applicable law, statute or rule which expands the right of a Delaware
corporation to indemnify a member of its board of directors or an officer,
employee, agent or fiduciary, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits afforded by such
change. In the event of any change in any applicable law, statute or rule which
narrows the right of a Delaware corporation to indemnify a member of its board
of directors or an officer, employee, agent or fiduciary, such change, to the
extent not otherwise required by such law, statute or rule to be applied to this
Agreement, shall have no effect on this Agreement or the parties' rights and
obligations hereunder except as set forth in Section 10(a) hereof.
(b) Nonexclusivity. The indemnification and the payment of
Expense Advances provided by this Agreement shall be in addition to any rights
to which Indemnitee may be entitled under the Company's certificate of
incorporation, its bylaws, any other agreement, any vote of stockholders or
disinterested directors, the General Corporation Law of the State of Delaware,
or otherwise. The indemnification and the payment of Expense Advances provided
under this Agreement shall continue as to Indemnitee for any action taken or not
taken while serving in an indemnified capacity even though subsequent thereto
Indemnitee may have ceased to serve in such capacity.
6. No Duplication of Payments. The Company shall not be liable under
this Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, provision of the Company's certificate of
incorporation, bylaws or otherwise) of the amounts otherwise payable hereunder.
7. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of Expenses incurred in
7
<PAGE> 8
connection with any Claim, but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the portion of
such Expenses to which Indemnitee is entitled.
8. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge
that in certain instances, federal law or applicable public policy may prohibit
the Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the Securities and Exchange Commission to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company's right under public policy to indemnify Indemnitee.
9. Liability Insurance. To the extent the Company maintains liability
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are provided to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.
10. Exceptions. Notwithstanding any other provision of this Agreement,
the Company shall not be obligated pursuant to the terms of this Agreement:
(a) Excluded Action or Omissions. To indemnify Indemnitee for
Expenses resulting from acts, omissions or transactions for which Indemnitee is
prohibited from receiving indemnification under this Agreement or applicable
law, provided however, that notwithstanding any limitation set forth in this
Section 10(a) regarding the Company's obligation to provide indemnification,
Indemnitee shall be entitled under Section 3 to receive Expense Advances
hereunder with respect to any such Claim unless and until a court having
jurisdiction over the Claim shall have made a final judicial determination (as
to which all rights of appeal therefrom have been exhausted or lapsed) that
Indemnitee has engaged in acts, omissions or transactions for which Indemnitee
is prohibited from receiving indemnification under this Agreement or applicable
law.
(b) Claims Initiated by Indemnitee. To indemnify or make Expense
Advances to Indemnitee with respect to Claims initiated or brought voluntarily
by Indemnitee and not by way of defense, counterclaim or crossclaim, except (i)
with respect to actions or proceedings brought to establish or enforce a right
to indemnification under this Agreement or any other agreement or insurance
policy or under the Company's certificate of incorporation or bylaws now or
hereafter in effect relating to Claims for Covered Events, (ii) in specific
cases if the Board of Directors has approved the initiation or bringing of such
Claim, or (iii) as otherwise required under Section 145 of the Delaware General
Corporation Law, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, or insurance recovery, as the case may be.
8
<PAGE> 9
(c) Lack of Good Faith. To indemnify Indemnitee for any Expenses
incurred by the Indemnitee with respect to any action instituted (i) by
Indemnitee to enforce or interpret this Agreement, if a court having
jurisdiction over such action determines as provided in Section 13 that each of
the material assertions made by the Indemnitee as a basis for such action was
not made in good faith or was frivolous, or (ii) by or in the name of the
Company to enforce or interpret this Agreement, if a court having jurisdiction
over such action determines as provided in Section 13 that each of the material
defenses asserted by Indemnitee in such action was made in bad faith or was
frivolous.
(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute; provided, however, that
notwithstanding any limitation set forth in this Section 10(d) regarding the
Company's obligation to provide indemnification, Indemnitee shall be entitled
under Section 3 to receive Expense Advances hereunder with respect to any such
Claim unless and until a court having jurisdiction over the Claim shall have
made a final judicial determination (as to which all rights of appeal therefrom
have been exhausted or lapsed) that Indemnitee has violated said statute.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
12. Binding Effect; Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns (including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), spouses, heirs and
personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect, and whether by purchase, merger,
consolidation or otherwise) to all, substantially all, or a substantial part, of
the business or assets of the Company, by written agreement in form and
substance satisfactory to Indemnitee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place. This Agreement
shall continue in effect regardless of whether Indemnitee continues to serve as
a director, officer, employee, agent or fiduciary (as applicable) of the Company
or of any other enterprise at the Company's request.
13. Expenses Incurred in Action Relating to Enforcement or
Interpretation. In the event that any action is instituted by Indemnitee under
this Agreement or under any liability insurance policies maintained by the
Company to enforce or interpret any of the terms hereof or thereof, Indemnitee
shall be entitled to be indemnified for all Expenses incurred by Indemnitee with
respect to such action (including without limitation attorneys' fees),
regardless of whether Indemnitee is ultimately successful in such action, unless
as a part of such action a court having jurisdiction over such action makes a
final judicial determination (as to which all rights of appeal therefrom have
been exhausted or lapsed) that each of the material assertions made by
Indemnitee as a basis for such action was not made in good faith or was
frivolous; provided, however, that until such final judicial
9
<PAGE> 10
determination is made, Indemnitee shall be entitled under Section 3 to receive
payment of Expense Advances hereunder with respect to such action. In the event
of an action instituted by or in the name of the Company under this Agreement to
enforce or interpret any of the terms of this Agreement, Indemnitee shall be
entitled to be indemnified for all Expenses incurred by Indemnitee in defense of
such action (including without limitation costs and expenses incurred with
respect to Indemnitee's counterclaims and cross-claims made in such action),
unless as a part of such action a court having jurisdiction over such action
makes a final judicial determination (as to which all rights of appeal therefrom
have been exhausted or lapsed) that each of the material defenses asserted by
Indemnitee in such action was made in bad faith or was frivolous; provided,
however, that until such final judicial determination is made, Indemnitee shall
be entitled under Section 3 to receive payment of Expense Advances hereunder
with respect to such action.
14. Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and signed for by the party addressed, on the date of such
delivery, or (ii) if mailed by domestic certified or registered mail with
postage prepaid, on the third business day after the date postmarked. Addresses
for notice to either party are as shown on the signature page of this Agreement,
or as subsequently modified by written notice.
15. Consent to Jurisdiction. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the Court of
Chancery of the State of Delaware in and for New Castle County, which shall be
the exclusive and only proper forum for adjudicating such a claim.
16. Severability. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including without limitation each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.
17. Choice of Law. This Agreement, and all rights, remedies,
liabilities, powers and duties of the parties to this Agreement, shall be
governed by and construed in accordance with the laws of the State of Delaware
without regard to principles of conflicts of laws.
18. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
10
<PAGE> 11
19. Amendment and Termination. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless it is in writing
signed by both the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed to be or shall constitute a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver.
20. Integration and Entire Agreement. This Agreement sets forth the
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations, commitments, understandings and
agreements relating to the subject matter hereof between the parties hereto.
21. No Construction as Employment Agreement. Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries or affiliated entities.
IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement as of the date first above written.
GARAGE.COM
By:
------------------------------
------------------------------
Print Name:
------------------------------
Title:
------------------------------
Address: 420 Florence Avenue
Palo Alto, California 94301
AGREED TO AND ACCEPTED
INDEMNITEE:
By:
------------------------------------------
Name:
Title:
Address:
-----------------------------------
-----------------------------------
-----------------------------------
11
<PAGE> 1
EXHIBIT 10.5
garage.com
SPONSORSHIP AGREEMENT
This Sponsorship Agreement (this "Agreement") is entered into as of March
11, 1998 between garage.com, a California corporation (the "Company"), and
Advanced Technology Ventures IV, L.P., and its affiliated and successor venture
capital funds ("Sponsor").
The Company is in the process of establishing an Internet-based service
for matching pre-screened "seed stage" technology startup investment
opportunities with high quality, pre-screened angel, corporate and venture
capital investors. Sponsor is a venture capital fund which makes investments in
technology companies. Sponsor is making an equity investment in the Company and
also desires to have its name and services prominently featured on the
Company's Website for viewing by entrepreneurs and investors, among others, on
the terms and conditions set forth below.
1. THE COMPANY. The Company will promptly establish and operate an
Internet-based service for matching pre-screened "seed stage" technology
startup opportunities with high quality, pre-screened angel, corporate and
venture capital investors ("On-Line Matchmaking"). During the term of this
Agreement, the Company shall focus its activities on On-Line Matchmaking,
obtaining related advertising, and organizing and conducting related seminars
and events.
2. SPONSORSHIP AND PROMOTIONAL ACTIVITIES.
2.1 SPONSORSHIP OF THE COMPANY.
(a) The Company shall have not more than one "founding sponsor"
in each service area related to technology start up companies (banking, law,
venture capital, accounting, investment banking, real estate brokerage,
headhunting, etc.). Sponsor shall be the sole "founding sponsor" of the Company
in the venture capital fund area. As such, Sponsor shall be the sole "founding
sponsor" of the Company in the venture capital fund area. As such, Sponsor
shall be the most prominently featured venture capital fund on the Company's
public World Wide Web site, currently located at http//www.garage.com (the
"Site"), and in marketing, advertising and promotional materials ("Marketing
Materials") distributed by or for the Company, and shall be the sole
contributor of content in content forums and expert columns on the public and
private portions of the Site relating to venture capital funds. The Company
shall prominently feature Sponsor's banners, hyperlinks, advertising materials
and content on the Site, including in both the public and private portions of
the Site, as prominently as all other "founding sponsors" of the Company and
shall identify and feature Sponsor in the Company's Marketing Materials as
prominently as all other "founding sponsors" of the Company. By way of example,
the Company shall prominently feature Sponsor's content-based venture capital
forum in the public and private portions of the Site, together with Sponsor's
designated banners and hyperlinks, and shall prominently identify Sponsor as one
of the Company's select and exclusive "founding sponsors". Sponsor shall have
the right to review and approve all content and material
<PAGE> 2
referencing Sponsor on the Site or in the Company's Marketing Materials,
provided that the Company shall retain sole editorial control over issues such
as placement, size and other elements of presentation on the Site. For purposes
of this Section 2, (i) a "founding sponsor" means Sponsor, Silicon Valley Bank,
Venture Law Group, Coopers & Lybrand LLP and other entities who enter into
agreements to become "founding sponsors" of the Company on terms and conditions
satisfactory to the Company's Board of Directors; and (ii) "venture capital
fund" means an entity whose primary business is the purchase of debt or equity
securities in privately held, early stage technology companies.
(b) Nothing in Section 2.1(a) shall limit the Company's right
(i) to run banner or other forms of advertisements on the Site or in the
Company's Marketing Materials for venture capital funds other than Sponsor; or
(ii) to feature venture capital funds other than Sponsor on the Site (including
maintaining hyperlinks to such funds' World Wide Web sites) or in the Company's
Marketing Materials or to accept other venture capital funds as "sponsors" of
the Company as long as all of the requirements of Section 2.1(a) above are
followed, including, but not limited to, the requirement that Sponsor will be
the "most prominently" featured venture capital fund on the Site and in the
company's Marketing Materials, that the Sponsor will be the only venture capital
fund to host and contribute content forums and expert columns on the Site, and
that the Sponsor will be the only venture capital fund which provides content on
the Site.
(c) Sponsor shall not sponsor or promote (in a manner similar
to this Agreement) or invest in any other service (or person or entity providing
such service) which uses the Internet to match investment opportunities in
technology startup companies with investors in a manner competitive with the
Company. The Company shall be the only such service featured on Sponsor's
Website and in its promotional or marketing materials and advertisements.
Notwithstanding the above, Sponsor shall have the right (i) to place
advertisements with any such competing service and have a link on such competing
service's Website to Sponsor's Website, and (ii) to refer persons to other such
competing services in addition to and as an alternative to the Company.
2.2 PROMOTION OF THE SITE AND COMPANY SERVICES. Sponsor shall use
reasonable efforts to promote the Site and the Company's services on its Website
and in its Marketing Materials. The exact nature and extent of such promotion
shall be left in the control and discretion of Sponsor. Sponsor shall encourage
its employees and partners to make known its sponsorship of the Company to
potential clients needing "seed stage" investment to the company in which
Sponsor decides not to invest. Nothing in this Section, however, shall require
Sponsor to refer all potential clients seeking needing "seed stage" investment
to the Company.
3. NOTICE OF INVESTMENT OPPORTUNITIES AND FUNDING. The Company shall
provide Sponsor with advance (generally three (3) business days) notice of
investment opportunities in the Company's clients and of the funding of the
Company's clients prior to the posting of such opportunities and notice of
funding on the Site in accordance with procedures applicable to all "founding
sponsors", employees, directors and advisors of the Company adopted from time
to time by the Company's Board of Directors.
-2-
<PAGE> 3
4. LICENSES. The Company and Sponsor each grants to the other party a
nonexclusive, worldwide, royalty-free license, with no right to sublicense, to
use, reproduce and distribute, in print, on-line and such other media as the
parties may agree from time to time, such party's name, logo and other
trademarks and servicemarks used with respect to such party's products and
services for the sole purpose of fulfilling the parties' respective obligations
under this Agreement. Any such use shall be in accordance with the guidelines
established by the licensing party, as in effect from time to time.
5. SPONSORSHIP FEES. There shall be no separate sponsorship fee payable
by Sponsor under this Agreement.
6. TERM. This Agreement shall have a term of three years beginning with
the date of this Agreement and shall be automatically renewed for additional
one year periods unless either party notifies the other of its desire not to
renew this Agreement at least ninety days prior to its expiration. Following
termination of this Agreement by the Company (other than pursuant to the last
sentence of this Section 6) and prior to entering into any agreement for a
"founding sponsorship" with a venture capital fund other than Sponsor, the
Company shall first provide sponsor with the opportunity, for thirty (30) days,
to renew this Agreement on terms and conditions no less favorable, in the
aggregate, than such proposed agreement in order to permit sponsor to maintain
its status as the "venture capital fund founding sponsor". Sponsor's right of
first refusal described in the preceding sentence shall terminate at such time
as the Company, after complying with the preceding sentence, enters into an
agreement for a "founding sponsorship" with a venture capital fund other than
Sponsor. Notwithstanding any of the foregoing, either party may terminate this
Agreement at any time thirty days after written notice to the other party of
such other party's breach of any of its obligations under this Agreement in any
material respect, which breach is not remedied within such thirty day period.
7. GENERAL PROVISIONS.
7.1 ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the parties with respect to Sponsor's sponsorship of the Company.
7.2 AMENDMENT AND WAIVER. No amendment to, or waiver of, any
provision of this Agreement shall be effective unless in writing and signed by
both parties.
7.3 GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California without
regard to the conflicts of laws principles thereof.
7.4 SUCCESSORS AND ASSIGNS. Neither party shall assign its rights or
obligations under this Agreement without the prior written consent of the other
party, except in connection with the merger, sale of assets or other form of
transfer of the business of a party to a third party or in connection with the
transfer of Sponsor's equity investments to an affiliated party. All terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective permitted transferees, successors and
assigns.
-3-
<PAGE> 4
7.5 PREVAILING PARTY. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of this Agreement,
the prevailing party shall be entitled reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
7.6 ARBITRATION. Any dispute between the parties arising out of or
in connection with this Agreement shall be referred for settlement to
arbitration in Santa Clara County, California in accordance with the Commercial
Rules of the American Arbitration Association. The award shall be final and
binding upon the parties and judgment of such award may be entered in any court
or tribunal having jurisdiction.
-4-
<PAGE> 5
The parties have executed this Sponsorship Agreement as of the date first
above written.
COMPANY: SPONSOR:
garage.com ADVANCED TECHNOLOGY VENTURES
IV, L.P.
By: /s/ GUY KAWASAKI By:
------------------ --------------------------
Guy Kawasaki, CEO Name: ATV ASSOCIATES IV, L.P.
Title: General Partner
<PAGE> 6
The parties have executed this Sponsorship Agreement as of the date first
above written.
COMPANY: SPONSOR:
garage.com ADVANCED TECHNOLOGY VENTURES
IV, L.P.
By: /s/ GUY KAWASAKI By: ATV ASSOCIATES IV, L.P.,
--------------------- General Partner
Guy Kawasaki, CEO
By: /S/ JOS HENKENS
----------------------------
SIGNATURE PAGE TO
ADVANCED TECHNOLOGY VENTURES IV, L.P.
SPONSORSHIP AGREEMENT
<PAGE> 1
Exhibit 10.6
GARAGE.COM
SPONSORSHIP AGREEMENT
This Sponsorship Agreement (this "Agreement") is entered into as of July
21, 1998 between garage.com, a California corporation (the "Company"), and
Credit Suisse First Boston Corporation ("Sponsor").
The Company is in the process of establishing an Internet-based service for
matching pre-screened "seed stage" technology startup investment opportunities
with high quality, pre-screened angel, corporate and venture capital investors.
Sponsor is an investment banking firm which provides investment banking,
research, merger and acquisition and financial advisory services to, among
other clients, emerging growth and technology companies. Sponsor desires to
have its name and services prominently featured on the Company's Website for
viewing by entrepreneurs and investors, on the terms and conditions set forth
below.
1. THE COMPANY. The Company will promptly establish and operate an
Internet-based service for matching pre-screened "seed stage" technology
startup opportunities with high quality, pre-screened angel, corporate and
venture capital investors ("On-Line Matchmaking"). During the term of this
Agreement, the Company shall focus its activities on On-Line Matchmaking,
obtaining related advertising, and organizing and conducting related seminars
and events.
2. SPONSORSHIP AND PROMOTIONAL ACTIVITIES.
2.1 SPONSORSHIP OF THE COMPANY.
(a) The Company shall have not more than one "founding sponsor"
in each service area related to technology start up companies (banking, law,
venture capital, accounting, investment banking, real estate brokerage,
headhunting, etc.). Sponsor shall be the sole "founding sponsor" of the
Company in the investment banking area. As such, Sponsor shall be the most
prominently featured investment banking firm on the Company's public World Wide
Web site, currently located at http//www.garage.com (the "Site"), and in
marketing, advertising and promotional materials ("Marketing Materials")
distributed by or for the Company, and shall be the sole contributor of content
in content forums and expert columns on the public and private portions of the
Site relating to investment banking issues. The Company shall prominently
feature Sponsor's banners, hyperlinks, advertising materials and content on the
Site, including in both the public and private portions of the Site as
prominently as all other "founding sponsors" of the Company and shall identify
and feature Sponsor in the Company's Marketing Materials as prominently as all
other "founding sponsors" of the Company. By way of example, the Company shall
prominently feature Sponsor's content-based investment banking forum in the
public and private portions of the Site, together with Sponsor's designated
banners and hyperlinks, and shall prominently identify Sponsor as one of the
Company's select and exclusive "founding sponsors". Sponsor shall have the
right to review and approve all content and material
<PAGE> 2
referencing Sponsor on the Site or in the Company's Marketing Materials,
provided that the Company shall retain sole editorial control over issues such
as placement, size and other elements of presentation on the Site. For purposes
of this Section 1, (i) a "founding sponsor" means Sponsor, Silicon Valley Bank,
Coopers & Lybrand, Venture Law Group, Advanced Technology Ventures and other
entities who enter into agreements to become "founding sponsors" of the Company
on terms and conditions satisfactory to the Company's Board of Directors; and
(ii) "investment banking firm" means an entity whose primary business is the
provision of investment banking services.
(b) Nothing in Section 2.1(a) shall limit the Company's right (i)
to run banner or other forms of advertisements on the Site or in the Company's
Marketing Materials for investment banking firms other than Sponsor; (ii) to
feature investment banking firms other than Sponsor on the Site (including
maintaining hyperlinks to such firms' World Wide Web sites) or in the Company's
Marketing Materials or to accept other investment banking firms as "sponsors"
of the Company as long as all of the requirements of "most prominent" featuring
of Sponsor in Section 2.1(a) above are followed, including, but not limited to,
the requirement that Sponsor will be the "most prominently" featured investment
banking firm on the Site and in the Company's Marketing Materials, that the
Sponsor will be the only investment banking firm to host and contribute content
forums and expert columns on the Site, and that the Sponsor will be the only
investment banking firm which provides content on the Site; or (iii) to have
other investment banking firms represent the Company in corporate or financing
matters.
(c) Sponsor shall not, in a manner similar to this Agreement,
sponsor or promote any other service (or entity providing such service) which
seeks to match investment opportunities in technology startup companies with
investors in a manner directly competitive with the Company. The Company shall
be the only such service featured on Sponsor's Website and in its promotional
or marketing materials and advertisements. Notwithstanding the above, Sponsor
shall have the right (i) to place advertisements with any such competing
service and have a link on such competing service's Website to Sponsor's
Website, and (ii) to refer persons to other such competing services in
addition to and as an alternative to the Company.
2.2 PROMOTION OF THE SITE AND COMPANY SERVICES. Sponsor shall use
reasonable efforts to promote the Site and the Company's services on its
Website and in its Marketing Materials. The exact nature and extent of such
promotion shall be left in the control and discretion of Sponsor. Sponsor shall
encourage its employees and directors to make known its sponsorship of the
Company to clients and potential clients needing "seed stage" investment.
2.3 ACCESS TO SPONSOR'S RESEARCH. Sponsor will use reasonable
efforts to provide access without charge by the Company's registered investors
(in the portion of the Site called "Heaven") and entrepreneurs (in the portion
of the Site call "The Garage") to a portion of Sponsor's on-line technology
research reports and services made available to Sponsor's clients which Sponsor
in its sole judgment deems reasonably useful and beneficial to the Company's
investors and entrepreneurs.
-2-
<PAGE> 3
3. NOTICE OF INVESTMENT OPPORTUNITIES. The Company shall provide Sponsor
with advance (generally three business days) notice of investment opportunities
in the Company's clients prior to the posting of such opportunities on the Site
in accordance with procedures applicable to all "founding sponsors", employees,
directors and advisors of the Company adopted from time to time by the
Company's Board of Directors.
4. LICENSES. The Company and Sponsor each grants to the other party a
nonexclusive, worldwide, royalty-free license, with no right to sublicense, to
use, reproduce and distribute, in print, on-line and such other media as the
parties may agree from time to time, such party's name, logo and other
trademarks and servicemarks used with respect to such party's products and
services for the sole purpose of fulfilling the parties' respective obligations
under this Agreement. Any such use shall be in accordance with the guidelines
established by the licensing party, as in effect from time to time.
5. SPONSORSHIP FEE. There shall be no separate cash sponsorship fee
payable by Sponsor to the Company during the first year of the term of this
Agreement. If Sponsor elects not to terminate this Agreement after the first
year of such term as described in Section 6 below, Sponsor shall pay the
Company $50,000 upon the date of each anniversary of the date of this Agreement
(with the first payment being due July 21, 1999) while this Agreement still
remains in effect. Sponsor will also purchase 50,000 shares of Series B
Preferred Stock of the Company at $1.00 per share as soon as possible following
the completion of the venture capital fund) on the same terms and conditions
applicable to other purchasers of the Company's Series B Preferred Stock.
6. TERM. Except as otherwise provided in this Section 6, this Agreement
shall have a term of three years beginning with the date of this Agreement and
shall be automatically renewed for additional one year periods unless either
party notifies the other of its desire not to renew this Agreement at least
ninety days prior to its expiration. Sponsor shall also have the right to
terminate this Agreement for convenience effective immediately prior to the
first or second anniversaries of the date of this Agreement upon written notice
to the Company. Following termination of this Agreement by the Company (other
than pursuant to the last sentence of this Section 6) and prior to entering
into any agreement for a "founding sponsorship" with an investment banking firm
other than Sponsor, the Company shall first provide Sponsor with the
opportunity, for thirty (30) days, to renew this Agreement on terms and
conditions no less favorable, in the aggregate, than such proposed agreement in
order to permit Sponsor to maintain its status as the "investment banking firm
founding sponsor". Sponsor's right of first refusal described in the preceding
sentence shall terminate at such time as the Company, after complying with the
preceding sentence, enters into an agreement for a "founding sponsorship" with
an investment banking firm other than Sponsor. Notwithstanding any of the
foregoing, either party may terminate this Agreement at any time thirty days
after written notice to the other party of such other party's breach of any of
its obligations under this Agreement in any material respect, which breach is
not remedied within such thirty day period.
-3-
<PAGE> 4
7. GENERAL PROVISIONS.
7.1 ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the parties with respect to Sponsor's sponsorship of the Company.
7.2 AMENDMENT AND WAIVER. No amendment to, or waiver of, any
provision of this Agreement shall be effective unless in writing and signed by
both parties.
7.3 GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California without
regard to the conflicts of laws principles thereof.
7.4 SUCCESSORS AND ASSIGNS. Neither party shall assign its rights or
obligations under this Agreement without the prior written consent of the other
party, except in connection with the merger, sale of assets or other form of
transfer of the business of a party to a third party. All terms and provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective permitted transferees, successors and assigns.
7.5 PREVAILING PARTY. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of this Agreement,
the prevailing party shall be entitled reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
7.6 ARBITRATION. Any dispute between the parties arising out of or in
connection with this Agreement shall be referred for settlement to arbitration
in Santa Clara County, California in accordance with the Commercial Rules of
the American Arbitration Association. The award shall be final and binding upon
the parties and judgment of such award may be entered in any court or tribunal
having jurisdiction.
The parties have executed this Sponsorship Agreement as of the date first
above written.
COMPANY: SPONSOR:
garage.com CREDIT SUISSE FIRST BOSTON
CORPORATION
By: /s/ CRAIG JOHNSON By: /s/ FRANK QUATTRONE
------------------------------- -------------------------------------
Craig Johnson, Director Frank Quattrone
Managing Director
Investment Banking - Technology
Group
-4-
<PAGE> 1
EXHIBIT 10.7
garage.com
SPONSORSHIP AGREEMENT
This Sponsorship Agreement (this "Agreement") is entered into as of March
11, 1998 between garage.com, a California corporation (the "Company"), and
Silicon Valley Bank ("Sponsor").
The Company is in the process of establishing an Internet-based service
for matching pre-screened "seed stage" technology startup investment
opportunities with high quality, pre-screened angel, corporate and venture
capital investors. Sponsor is a commercial bank which provides loans and other
financial services to technology, life science and other companies. Sponsor
through an affiliated entity is making an equity investment in the Company and
also desires to have its name and services prominently featured on the
Company's Website for viewing by entrepreneurs and investors, among others, on
the terms and conditions set forth below.
1. THE COMPANY. The Company will promptly establish and operate an
Internet-based service for matching pre-screened "seed stage" technology startup
opportunities with high quality, pre-screened angel, corporate and venture
capital investors ("On-Line Matchmaking"). During the term of this Agreement,
the Company shall focus its activities to On-Line Matchmaking, obtaining related
advertising, and organizing and conducting related seminars and events. The
Company shall not provide services similar to Sponsor's StarSource(TM) program
but may from time to time refer clients of the Company to attorneys, accountants
and other founding sponsors.
2. SPONSORSHIP AND PROMOTIONAL ACTIVITIES.
2.1 SPONSORSHIP OF THE COMPANY.
(a) The Company shall have not more than one "founding sponsor"
in each service area related to technology start up companies (banking, law,
accounting, venture capital fund, investment banking, real estate brokerage,
headhunting, etc.). Sponsor shall be the sole bank "founding sponsor" of the
Company in the banking area. As such, Sponsor shall be the most prominently
featured bank on the Company's public World Wide Web site, currently located at
http//www.garage.com (the "Site"), and in marketing, advertising and
promotional materials ("Marketing Materials") distributed by or for the
Company, and shall be the sole contributor of content in content forums and
expert columns on the public and private portions of the Site relating to
commercial and executive banking. With the exception of Sponsor, the Company
shall not have as a "founding sponsor" or "platinum sponsor" any service (or
person or entity providing such service) that identifies and makes referrals of
professional service providers and suppliers to startup and emerging growth
companies and their executives. The Company shall prominently feature Sponsor's
banners, hyperlinks, advertising material and
<PAGE> 2
content on the Site, including in both the public and private portions of the
Site, as prominently as all other "founding sponsors" of the Company and shall
identify and feature Sponsor in the Company's Marketing Materials as
prominently as all other "founding sponsors" of the Company. By way of example,
the Company shall prominently feature Sponsor's content-based bank forum in the
public and private portions of the Site, together with Sponsor's designated
banners and hyperlinks, and shall prominently identify Sponsor as one of the
Company's select and exclusive "founding sponsors." Sponsor shall have the
right to review and approve all content and material referencing Sponsor on the
Site or in the Company's Marketing Materials, provided that the Company shall
retain sole editorial control over issues such as placement, size and other
elements of presentation on the Site. For purposes of this Section 2, (i) a
"founding sponsor" means Sponsor, Venture Law Group, Coopers & Lybrand LLP,
Advanced Technology Ventures and other entities who enter into agreements to
become "founding sponsors" of the Company on terms and conditions satisfactory
to the Company's Board of Directors; (ii) a "platinum sponsor" means an entity
who has the second highest most visible presence on the Site, among other
features, and who enters into an agreement to become "platinum sponsors" on
terms and conditions satisfactory to the Company's Board of Directors; and
(iii) "bank" means commercial banks, savings and loan institutions, credit
unions, commercial leasing companies and other similar institutions but does
not include investment banks, brokerage houses, mutual fund companies and other
similar financial institutions. The Company, however, shall solicit and
consider the views and objectives of Sponsor in entering into sponsorship
agreements with a bank, investment bank, brokerage house or similar financial
institution.
(b) Nothing in Section 2.1(a) shall limit the Company's right (i) to
run banner or other forms of advertisements on the Site or in the Company's
Marketing Materials for banks other than Sponsor; or (ii) to feature banks
other than Sponsor on the Site (including maintaining hyperlinks to such banks'
World Wide Web sites) or in the Company's Marketing Materials or to accept
other banks as "sponsors" of the Company as long as all of the requirements of
Section 2.1(a) above are followed, including, but not limited to, the
requirement that Sponsor will be the "most prominently" featured bank on the
Site and in the Company's Marketing Materials, that Sponsor will be the only
bank to host and contribute content forums and expert columns on the Site, and
that the Sponsor will be the only bank which provides content on the Site.
(c) Sponsor shall not be a "founding sponsor" (in a manner similar
to this Agreement) or invest in any other service (or person or entity
providing such service) which uses the Internet to match investment
opportunities in technology startup companies with investors in a manner
competitive with the Company. The Company shall be the only such service
prominently featured on Sponsor's Website and in its promotional or marketing
materials and advertisements. Notwithstanding the above, Sponsor shall have the
right (i) to place advertisements with any such competing service and have a
link on such competing service's Website to Sponsor's Website, (ii) to refer
persons to other such competing services in addition to and as an alternative
to the Company, (iii) to establish and operate an Internet-based service for
identifying and referring professional service providers and suppliers to
startup and emerging
<PAGE> 3
growth companies and their executives, and provided related content and forums
to such companies and executives, and (iv) to have normal customer or lending
relationships with any such competing service in the ordinary course of its
business.
2.2 PROMOTION OF THE SITE AND COMPANY SERVICES. Sponsor shall use
reasonable efforts to promote the Site and the Company's services on its
Website and in its Marketing Materials. The exact nature and extent of such
promotion shall be left in the control and discretion of Sponsor. Sponsor shall
also make known its sponsorship of the Company to its lending and other
officers and arrange meetings between such persons and the Company from time to
time and shall encourage such persons to refer appropriate potential clients
needing "seed stage" investment to the Company. Nothing in this section,
however, shall require Sponsor to refer all potential clients needing "seed
stage" investment to the Company.
2.3 SPONSOR PRODUCTS AND SERVICES. The Company shall use
reasonable efforts to promote Sponsor's products and services related to
technology companies and executives and investors on the Site and in its
Marketing Materials, such as Sponsor's QuickStart(TM), StarSource(TM), and
Executive Banking programs. The Company and Sponsor shall cooperate and
coordinate the exact nature and extent of such promotion. The Company shall
also use reasonable efforts to make known its beneficial relationship with
Sponsor and shall refer appropriate persons needing bank services to Sponsor.
Nothing in this section, however, shall require the Company to refer all
appropriate persons needing bank services to Sponsor.
3. NOTICE OF INVESTMENT OPPORTUNITIES AND FUNDING. The Company shall
provide a representative of Sponsor who is designated from time to time by
Sponsor with advance (generally three (3) business days) notice of investment
opportunities in the Company's clients and of the funding of the Company's
clients prior to the posting of such opportunities and notice of such funding
on the Site in accordance with procedures applicable to all "founding
sponsors", employees, directors and advisors of the Company adopted from time
to time by the Company's Board of Directors.
4. ACCESS TO THE COMPANY'S RESTRICTED PORTION OF THE SITE FOR ANGEL,
CORPORATE AND VENTURE CAPITAL INVESTORS. During the term of this Agreement, the
Company will provide Sponsor with twenty-five (25) transferable one-year passes
each year of the term of this Agreement which provide full access to and use of
the Company's restricted portion of the Site for angel, corporate and venture
capital investors for use by persons designated from time to time by Sponsor,
provided such persons meet the qualifications and provide the requisite
information required by the Company for its angel, corporate or venture capital
investors.
5. ACCESS TO SPONSOR'S STARSOURCE(TM) PORTION OF ITS WEBSITE. During
the term of this Agreement, Sponsor shall provide each client of the Company
with a thirty (30) day pass which provides full access to and use of Sponsor's
StarSource(TM) portion of Sponsor's Website. The Company shall inform its
clients when such clients first enter the private section of the Company's
Website devoted to entrepreneurs (tentatively called "the Garage") of the
<PAGE> 4
third party. All terms and provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective permitted
transferees, successors and assigns.
9.5 REGULATED ENTITY. The Company understands that Sponsor and
its affiliates are regulated entities. Nothing in this Agreement shall require
Sponsor to take any action which in any way violates applicable laws or
regulations in the opinion of Sponsor's counsel.
9.7 PREVAILING PARTY. If any action at law or in equity
(including arbitration) is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to
which such party may be entitled.
9.8 ARBITRATION. Any dispute between the parties arising out of
or in connection with this Agreement shall be referred for settlement to
arbitration in Santa Clara County, California in accordance with the Commercial
Rules of the American Arbitration Association. The award shall be final and
binding upon the parties and judgment of such award may be entered in any court
or tribunal having jurisdiction.
COMPANY: SPONSOR:
garage.com SILICON VALLEY BANK
By: /s/ GUY KAWASAKI By: /s/ HARRY W. KELLOGG, JR.
--------------------------- ---------------------------
Guy Kawasaki, CEO Harry W. Kellogg, Jr.,
Executive Vice President
<PAGE> 5
opportunity to access Sponsor's StarSource(TM) portion of Sponsor's Website
under the terms of this section.
6. LICENSES. The Company and Sponsor each grants to the other party a
nonexclusive, worldwide, royalty-free license, with no right to sublicense, to
use, reproduce and distribute, in print, on-line and such other media as the
parties may agree from to time, such party's name,logo and other trademarks and
servicemarks used with respect to such party's products and services for the
sole purpose of fulfilling the parties' respective obligations under this
Agreement. Any such use shall be in accordance with the guidelines established
by the licensing party, as in effect from time to time.
7. SPONSORSHIP FEES. Sponsor shall pay the Company a sponsorship fee of
$25,000 on each six-month anniversary of the date of this Agreement, for a
total of $150,000 during the three-year term of this Agreement.
8. TERM. This Agreement shall have a term of three years beginning with
the date of this Agreement and shall be automatically renewed for additional
one year periods unless either party notifies the other of its desire not to
renew this Agreement at least ninety days prior to its expiration. Prior to the
expiration of the terms of this Agreement, Sponsor shall have the right of
first refusal to renew this Agreement for an additional three (3) year term and
maintain its status as the "bank founding sponsor." Notwithstanding the
foregoing, either party may terminate this Agreement at any time thirty days
after written notice to the other party of such other party's breach of any of
its obligations under this Agreement in any material respect, which breach is
not remedied within such thirty day period. In the event Sponsor terminates
this Agreement in accordance with the preceding sentence, Sponsor shall have no
obligations to make any further payment of sponsorship fees.
9. GENERAL PROVISIONS.
9.1 ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the parties with respect to Sponsor's sponsorship of the Company.
9.2 AMENDMENT AND WAIVER. No amendment to, or waiver of, any
provision of this Agreement shall be effective unless in writing and signed by
both parties.
9.3 GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California without
regard to the conflicts of laws principles thereof.
9.4 SUCCESSORS AND ASSIGNS. Neither party shall assign its rights or
obligations under this Agreement without the prior written consent of the other
party, except in connection with the merger, sale of assets or other form of
transfer of the business of a party to a
<PAGE> 1
EXHIBIT 10.8
garage.com
SPONSORSHIP AGREEMENT
This Sponsorship Agreement (this "Agreement") is entered into as of July 9,
1998 between garage.com, a California corporation (the "Company"), and Heidrick
& Struggles ("Sponsor").
The Company is in the process of establishing an Internet-based service
for matching pre-screened "seed stage" technology startup investment
opportunities with high quality, pre-screened angel, corporate and venture
capital investors. Sponsor is an executive recruiting firm which provides
executive recruiting services to, among other clients, emerging growth and
technology companies. Sponsor desires to have its name and services prominently
featured on the Company's Website for viewing by entrepreneurs and investors, on
the terms and conditions set forth below.
1. THE COMPANY. The Company will promptly establish and operate an
Internet-based service for matching pre-screened "seed stage" technology startup
opportunities with high quality, pre-screened angel, corporate and venture
capital investors ("On-Line Matchmaking"). During the term of this Agreement,
the Company shall focus its activities on On-Line Matchmaking, obtaining related
advertising, and organizing and conducting related seminars and events.
2. SPONSORSHIP AND PROMOTIONAL ACTIVITIES.
2.1 SPONSORSHIP OF THE COMPANY.
(a) The Company shall have not more than one "founding sponsor"
in each service area related to technology start up companies (banking, law,
venture capital, accounting, investment banking, real estate brokerage,
executive recruiting, etc.). Sponsor shall be the sole "founding sponsor" of the
Company in the executive recruiting area. As such, Sponsor shall be the most
prominently featured executive recruiting firm on the Company's public World
Wide Web site, currently located at http//www.garage.com (the "Site"), and in
marketing, advertising and promotional materials ("Marketing Materials")
distributed by or for the Company, and shall be the sole contributor of content
in content forums and expert columns on the public and private portions of the
Site relating to executive recruiting issues. The Company shall prominently
feature Sponsor's banners, hyperlinks, advertising materials and content on the
Site, including in both the public and private portions of the Site as
prominently as all other "founding sponsors" of the Company and shall identify
and feature Sponsor in the Company's Marketing Materials as prominently as all
other "founding sponsors" of the Company. By way of example, the Company shall
prominently feature Sponsor's content-based executive recruiting forum in the
public and private portions of the Site, together with Sponsor's designated
banners and hyperlinks, and shall prominently identify Sponsor as one of the
Company's select and exclusive "founding sponsors". Sponsor shall have the right
to review and
<PAGE> 2
approve all content and material referencing Sponsor on the Site or in the
Company's Marketing Materials, provided that the Company shall retain sole
editorial control over issues such as placement, size and other elements of
presentation on the Site. For purposes of this Section 1, (i) a "founding
sponsor" means Sponsor, Silicon Valley Bank, Coopers & Lybrand, Venture Law
Group, Advanced Technology Ventures, Deutsche Morgan Grenfell Technology Group
and other entities who enter into agreements to become "founding sponsors" of
the Company on terms and conditions satisfactory to the Company's Board of
Directors; and (ii) "executive recruiting firm" means an entity whose primary
business is the provision of executive recruiting services (i.e., recruiting for
CEO or other senior management positions) and shall not include firms providing
services for recruiting engineers and lower level managers.
(b) Nothing in Section 2.1(a) shall limit the Company's right
(i) to run banner or other forms of advertisements on the Site or in the
Company's Marketing Materials for executive recruiting firms other than Sponsor;
(ii) to feature executive recruiting firms other than Sponsor on the Site
(including maintaining hyperlinks to such firms' World Wide Web sites) or in
the Company's Marketing Materials or to accept other executive recruiting firms
as "sponsors" of the Company as long as all of the requirements of "most
prominent" featuring of Sponsor in Section 2.1(a) above are followed, including,
but not limited to, the requirement that Sponsor will be the "most prominently"
featured executive recruiting firm on the Site and in the Company's Marketing
Materials, that the Sponsor will be the only executive recruiting firm to host
and contribute content forums and expert columns on the Site, and that the
Sponsor will be the only executive recruiting firm which provides content on the
Site; or (iii) to have other executive recruiting firms represent the Company in
recruiting matters.
(c) Sponsor shall not sponsor or promote (in a manner similar to
this Agreement) or invest in any other service (or person or entity providing
such service) which seeks to match investment opportunities in technology
startup companies with investors in a manner competitive with the Company. The
Company shall be the only such service featured on Sponsor's Website and in its
promotional or marketing materials and advertisements. Notwithstanding the
above, Sponsor shall have the right (i) to place advertisements with any such
competing service and have a link on such competing service's Website to
Sponsor's Website, and (ii) to refer persons to other such competing services
in addition to and as an alternative to the Company.
2.2 PROMOTION OF THE SITE AND COMPANY SERVICES. Sponsor shall use
reasonable efforts to promote the Site and the Company's services on its
Website and in its Marketing Materials. The exact nature and extent of such
promotion shall be left in the control and discretion of Sponsor. Sponsor shall
encourage its employees and partners to make known its sponsorship of the
Company to clients and potential clients needing "seed stage" investment.
Sponsor shall also assist the Company in identifying potential investors (who
may be individuals, partnerships or corporations) who may be interested in the
Company's matchmaking services.
2.3 SPONSOR'S HOSTING OF SENIOR MANAGEMENT EMPLOYMENT SERVICE.
Sponsor shall use reasonable efforts to work with the Company to establish and
host an employment service on the public portion of the Company's Website under
Sponsor's name
-2-
<PAGE> 3
whereby persons interested in CEO or other senior management positions with
companies posted by the Company in "The Garage" portion of the Company's
Website (and possibly other companies as mutually agreed by Sponsor and the
Company) can submit their resumes through the Company's Website to Sponsor to
be held in a database accessible in a mutually defined manner by such companies
looking for management. Sponsor shall not charge the Company or the Company's
posted companies for such service, it being recognized that provision of such
service is part of the consideration for Sponsor's Founding Sponsorship. The
exact nature of such service will be mutually defined by Sponsor and the
Company and will be structured to comply with all applicable laws. It is
expected that Sponsor will assign qualified personnel to screen such resumes
for suitability prior to placement in such database but will not do the kind of
due diligence or candidate background checks it would normally perform for
retained searches.
3. NOTICE OF INVESTMENT OPPORTUNITIES. The Company shall provide Sponsor
with advance (generally three business days) notice of investment opportunities
in the Company's clients prior to the posting of such opportunities on the Site
in accordance with procedures applicable to all "founding sponsors", employees,
directors and advisors of the Company adopted from time to time by the
Company's Board of Directors.
4. LICENSES. The Company and Sponsor each grants to the other party a
nonexclusive, worldwide, royalty-free license, with no right to sublicense, to
use, reproduce and distribute, in print, on-line and such other media as the
parties may agree from time to time, such party's name, logo and other
trademarks and servicemarks used with respect to such party's products and
services for the sole purpose of fulfilling the parties' respective obligations
under this Agreement. Any such use shall be in accordance with the guidelines
established by the licensing party, as in effect from time to time.
5. SPONSORSHIP FEE. As partial consideration for Sponsor's Founding
Sponsorship, Sponsor shall pay the Company $12,500 upon the date of this
Agreement and $12,500 at the end of each three month period thereafter during
the term of this Agreement (total sponsorship fee payments of $150,000).
6. TERM. Except as otherwise provided in this Section 6, this Agreement
shall have a term of three years beginning with the date of this Agreement and
shall be automatically renewed for additional one year periods unless either
party notifies the other of its desire not to renew this Agreement at least
ninety days prior to its expiration. Sponsor shall also have the right
voluntarily to terminate this Agreement upon written notice to the Company at
any time after one year from the date of this Agreement. Following termination
of this Agreement by the Company (other than pursuant to the last sentence of
this Section 6) and prior to entering into any agreement for a "founding
sponsorship" with an executive recruiting firm other than Sponsor, the Company
shall first provide Sponsor with the opportunity, for thirty (30) days, to
renew this Agreement on terms and conditions no less favorable, in the
aggregate, than such proposed agreement in order to permit Sponsor to maintain
its status as the "executive recruiting firm founding sponsor". Sponsor's right
of first refusal described in the preceding sentence shall terminate at such
time as the Company, after complying with the preceding sentence, enters into
an agreement for a "founding sponsorship" with an executive recruiting firm
other than Sponsor.
-3-
<PAGE> 4
Notwithstanding any of the foregoing, either party may terminate this Agreement
at any time thirty days after written notice to the other party of such other
party's breach of any of its obligations under this Agreement in any material
respect, which breach is not remedied within such thirty day period.
7. GENERAL PROVISIONS.
7.1 ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties with respect to Sponsor's sponsorship of the
Company.
7.2 AMENDMENT AND WAIVER. No amendment to, or waiver of, any
provision of this Agreement shall be effective unless in writing and signed by
both parties.
7.3 GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California without
regard to the conflicts of laws principles thereof.
7.4 SUCCESSORS AND ASSIGNS. Neither party shall assign its rights
or obligations under this Agreement without the prior written consent of the
other party, except in connection with the merger, sale of assets or other form
of transfer of the business of a party to a third party. All terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective permitted transferees, successors and
assigns.
7.5 PREVAILING PARTY. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of this Agreement,
the prevailing party shall be entitled reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
7.6 ARBITRATION. Any dispute between the parties arising out of or
in connection with this Agreement shall be referred for settlement to
arbitration in Santa Clara County, California in accordance with the Commercial
Rules of the American Arbitration Association. The award shall be final and
binding upon the parties and judgment of such award may be entered in any court
or tribunal having jurisdiction.
The parties have executed this Sponsorship Agreement as of the date first
above written.
COMPANY: SPONSOR:
garage.com HEIDRICK & STRUGGLES
By: /s/ CRAIG JOHNSON By: /s/ WESLEY RICHARDS
------------------------------ ------------------------------
Craig Johnson, Director Wes Richards, Managing Partner
-4-
<PAGE> 1
EXHIBIT 10.9
garage.com
SPONSORSHIP AGREEMENT
This Sponsorship Agreement (this "Agreement") is entered into as of May 7,
1998 between garage.com, a California corporation (the "Company"), and Coopers
& Lybrand L.L.P. ("Sponsor").
The Company is in the process of establishing an Internet-based service
for matching pre-screened "seed stage" technology startup investment
opportunities with high quality, pre-screened angel, corporate and venture
capital investors. Sponsor is a worldwide accounting firm which represents,
among other clients, venture capital firms and technology companies. Sponsor
desires to have its name and services prominently featured on the Company's
Website for viewing by entrepreneurs and investors, on the terms and conditions
set forth below.
1. THE COMPANY. The Company will promptly establish and operate an
Internet-based service for matching pre-screened "seed stage" technology
startup opportunities with high quality, pre-screened angel, corporate and
venture capital investors ("On-Line Matchmaking"). During the term of this
Agreement, the Company shall focus its activities on On-Line Matchmaking,
obtaining related advertising, and organizing and conducting related seminars
and events.
2. SPONSORSHIP AND PROMOTIONAL ACTIVITIES.
2.1 SPONSORSHIP OF THE COMPANY.
(a) The Company shall have not more than one "founding sponsor"
in each service area related to technology start up companies (banking, law,
venture capital, accounting, investment banking, real estate brokerage,
headhunting, etc.). Sponsor shall be the sole "founding sponsor" of the Company
in the accounting area. As such, Sponsor shall be the most prominently featured
accounting firm on the Company's public World Wide Web site, currently located
at http//www.garage.com (the "Site"), and in marketing, advertising and
promotional materials ("Marketing Materials") distributed by or for the
Company, and shall be the sole contributor of content in content forums and
expert columns on the public and private portions of the Site relating to
accounting issues. The Company shall prominently feature Sponsor's banners,
hyperlinks, advertising materials and content on the Site, including in both
the public and private portions of the Site, as prominently as all other
"founding sponsors" of the Company and shall identify and feature Sponsor in
the Company's Marketing Materials as prominently as all other "founding
sponsors" of the Company. By way of example, the Company shall prominently
feature Sponsor's content-based accounting forum in the public and private
portions of the Site, together with Sponsor's designated banners and
hyperlinks, and shall prominently identify Sponsor as one of the Company's
select and exclusive "founding sponsors". Sponsor shall have the right to
review and approve all content and material referencing Sponsor on the Site or
in the Company's Marketing Materials, provided that the Company shall retain
sole editorial control over issues such as placement, size and other elements
of presentation on the Site. For purposes of this Section 1, (i) a "founding
sponsor" means Sponsor, Silicon Valley Bank, Venture Law Group, Advanced
Technology Ventures and other entities who enter into agreements to become
"founding sponsors" of the Company on terms and conditions satisfactory to the
Company's Board of Directors; and (ii) "accounting firm" means an entity whose
primary business is the provision of independent public accounting services.
<PAGE> 2
(b) Nothing in Section 2.1(a) shall limit the Company's right
(i) to run banner or other forms of advertisements on the Site or in the
Company's Marketing Materials for accounting firms other than Sponsor; (ii) to
feature accounting firms other than Sponsor on the Site (including maintaining
hyperlinks to such firms' World Wide Web sites) or in the Company's Marketing
Materials or to accept other accounting firms as "sponsors" of the Company as
long as all of the requirements of "most prominent" featuring of Sponsor in
Section 2.1(a) above are followed, including, but not limited to, the
requirement that Sponsor will be the "most prominently" featured accounting
firm on the Site and in the Company's Marketing Materials, that the Sponsor
will be the only accounting firm to host and contribute content forums and
expert columns on the Site, and that the Sponsor will be the only accounting
firm which provides content on the Site; or (iii) to have another accounting
firm audit the financial statements of the Company.
2.2 PROMOTION OF THE SITE AND COMPANY SERVICES. Sponsor shall use
reasonable efforts to promote the Site and such services. Sponsor shall
encourage its employees and partners to make known its sponsorship of the
Company to clients and potential clients needing "seed stage" investment. The
exact nature and extent of such promotion shall be left in the control and
discretion of Sponsor.
3. NOTICE OF INVESTMENT OPPORTUNITIES. The Company shall provide Sponsor
with advance (generally three business days) notice of investment opportunities
in the Company's clients prior to the posting of such opportunities on the Site
in accordance with procedures applicable to all "founding sponsors", employees,
directors and advisors of the Company adopted from time to time by the
Company's Board of Directors.
4. LICENSES. The Company and Sponsor each grants to the other party a
nonexclusive, worldwide, royalty-free license, with no right to sublicense, to
use, reproduce and distribute, in print, on-line and such other media as the
parties may agree in writing from time to time, such party's name, logo and
other trademarks and servicemarks used with respect to such party's products
and services for the sole purpose of fulfilling the parties' respective
obligations under this Agreement. Any such use shall be in accordance with the
guidelines established by the licensing party, as in effect from time to time.
5. SPONSORSHIP FEE. In consideration for the Company's obligations under
this Agreement, Sponsor shall make available to the Company the services of its
ECS/Marketing Group (under the direction of Steven Bengston or his successor)
to assist the Company in screening and assisting potential client investment
opportunities, up to a maximum of 2,000 hours per year. Sponsor shall
reasonably cooperate in making available at the Company's place of business
appropriate members of the ECS/Marketing Group with relevant expertise, as
requested by the Company from time to time, up to the maximum hourly limit
described above. Such persons shall remain employees of Sponsor, and Sponsor
shall retain sole responsibility for their compensation and benefits. The
Company shall not hire any of such ECS/Marketing Group employees without
Sponsor's consent.
6. TERM. This Agreement shall have a term of three years beginning with
the date of this Agreement and shall be automatically renewed for additional
one year periods unless either party notifies the other of its desire not to
renew this Agreement at least ninety days prior to its expiration. Following
termination of this Agreement by the Company (other than pursuant to the last
sentence of this Section 6) and prior to entering
<PAGE> 3
into any agreement for a "founding sponsorship" with an accounting firm other
than Sponsor, the Company shall first provide Sponsor with the opportunity, for
thirty days, to renew this Agreement on terms and conditions not less
favorable, in the aggregate, than such proposed agreement in order to permit
Sponsor to maintain its status as the "accounting firm founding sponsor".
Sponsor's right of first refusal described in the preceding sentence shall
terminate at such time as the Company, after complying with the preceding
sentence, enters into an agreement for a "founding sponsorship" with an
accounting firm other than Sponsor. Notwithstanding any of the foregoing,
either party may terminate this Agreement at any time thirty days after written
notice to the other party of such other party's breach of any of its
obligations under this Agreement in any material respect, which breach is not
remedied within such thirty day period.
7. GENERAL PROVISIONS.
7.1 ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties with respect to Sponsor's sponsorship of the
Company.
7.2 AMENDMENT AND WAIVER. No amendment to, or waiver of, any
provision of this Agreement shall be effective unless in writing and signed by
both parties.
7.3 GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California without
regard to the conflicts of laws principles thereof.
7.4 SUCCESSORS AND ASSIGNS. Neither party shall assign its rights
or obligations under this Agreement without the prior written consent of the
other party, except in connection with the merger, sale of assets or other form
of transfer of the business of a party to a third party. All terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective permitted transferees, successors and
assigns.
7.5 PREVAILING PARTY. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of this Agreement,
the prevailing party shall be entitled reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
7.6 ARBITRATION. Any dispute between the parties arising out of or
in connection with this Agreement shall be referred for settlement to
arbitration in Santa Clara County, California in accordance with the Commercial
Rules of the American Arbitration Association. The award shall be final and
binding upon the parties and judgment of such award may be entered in any court
or tribunal having jurisdiction.
The parties have executed this Sponsorship Agreement as of the date first
above written.
COMPANY: SPONSOR:
GARAGE.COM Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
By: /s/ CRAIG W JOHNSON By: /s/ JAMES ATWELL 5/7/98
------------------------- ------------------------------
Director
<PAGE> 4
Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
By: James Atwell 5/7/98
<PAGE> 1
EXHIBIT 10.10
garage.com
SPONSORSHIP AGREEMENT
This Sponsorship Agreement (this "Agreement") is entered into as of May 8,
1998 between garage.com, a California corporation (the "Company"), and Venture
Law Group, A Professional Corporation ("Sponsor").
The Company is in the process of establishing an Internet-based service
for matching pre-screened "seed stage" technology startup investment
opportunities with high quality, pre-screened angel, corporate and venture
capital investors. Sponsor is a law firm which represents, among other clients,
venture capital firms and technology companies. Sponsor desires to have its
name and services prominently featured on the Company's Website for viewing by
entrepreneurs and investors, on the terms and conditions set forth below.
1. The Company. The Company will promptly establish and operate an
Internet-based service for matching pre-screened "seed stage" technology
startup opportunities with high quality, pre-screened angel, corporate and
venture capital investors ("On-Line Matchmaking"). During the term of this
Agreement, the Company shall focus its activities on On-Line Matchmaking,
obtaining related advertising, and organizing and conducting related seminars
and events.
2. Sponsorship and Promotional Activities.
2.1 Sponsorship of the Company.
(a) The Company shall have not more than one "founding sponsor"
in each service area related to technology start up companies (banking, law,
venture capital, accounting, investment banking, real estate brokerage,
headhunting, etc.). Sponsor shall be the sole "founding sponsor" of the Company
in the law area. As such, Sponsor shall be the most prominently featured law
firm on the Company's public World Wide Web site, currently located at
http//www.garage.com (the "Site"), and in marketing, advertising and
promotional materials ("Marketing Materials") distributed by or for the
Company, and shall be the sole contributor of content in content forums and
expert columns on the public and private portions of the Site relating to legal
issues. The Company shall prominently feature Sponsor's banners, hyperlinks,
advertising materials and content on the Site, including in both the public and
private portions of the Site as prominently as all other "founding sponsors" of
the Company and shall identify and feature Sponsor in the Company's Marketing
Materials as prominently as all other "founding sponsors" of the Company. By
way of example, the Company shall prominently feature Sponsor's content-based
legal forum in the public and private portions of the Site, together with
Sponsor's designated banners and hyperlinks, and shall prominently identify
Sponsor as one of the Company's select and exclusive "founding sponsors".
Sponsor shall have the right to review and approve all content and material
referencing Sponsor on the site or in the Company's Marketing Materials,
provided that the Company shall retain sole editorial control over issues
<PAGE> 2
such placement, size and other elements of presentation on the Site. For
purposes of this Section 1, (i) a "founding sponsor" means Sponsor, Silicon
Valley Bank, Coopers & Lybrand, Advanced Technology Ventures and other entities
who enter into agreements to become "founding sponsors" of the Company on terms
and conditions satisfactory to the Company's Board of Directors; and (ii) "law
firm" means an entity whose primary business is the provision of legal services.
(b) Nothing in Section 2.1(a) shall limit the Company's right
(i) to run banner or other forms of advertisements on the Site or in the
Company's Marketing Materials for law firms other than Sponsor; (ii) to feature
law firms other than Sponsor on the Site (including maintaining hyperlinks to
such firms' World Wide Web sites) or in the Company's Marketing Materials or to
accept other law firms as "sponsors" of the Company as long as all of the
requirements of "most prominent" featuring of Sponsor in Section 2.1(a) above
are followed, including, but not limited to, the requirement that Sponsor will
be the "most prominently" featured law firm on the Site and in the Company's
Marketing Materials, that the Sponsor will be the only law firm to host and
contribute content forums and expert columns on the Site, and that the Sponsor
will be the only law firm which provides content on the Site; or (iii) to have
other law firms represent the Company in corporate and other legal matters.
(c) Sponsor shall not sponsor or promote (in a manner similar to
this Agreement) or invest in any other service (or person or entity providing
such service) which seeks to match investment opportunities in technology
startup companies with investors in a manner with the Company. The Company
shall be the only such service featured on Sponsor's Website and in its
promotional or marketing materials and advertisements. Notwithstanding the
above, Sponsor shall have the right (i) to place advertisements with any such
competing service and have a link on such competing service's Website to
Sponsor's Website, and (ii) to refer persons to other such competing services
in addition to and as an alternative to the Company.
2.2 PROMOTION OF THE SITE AND COMPANY SERVICES. Sponsor shall use
reasonable efforts to promote the Site and the Company's services on its
Website and in its Marketing Materials. The exact nature and extent of such
promotion shall be left in the control and discretion of Sponsor. Sponsor shall
encourage its employees and directors to make known is sponsorship of the
Company to clients and potential clients needing "seed stage" investment.
3. NOTICE OF INVESTMENT OPPORTUNITIES. The Company shall provide Sponsor
with advance (generally three business days) notice of investment opportunities
in the Company's clients prior to the posting of such opportunities on the Site
in accordance with procedures applicable to all "founding sponsors", employees,
directors and advisors of the Company adopted from time to time by the
Company's Board of Directors.
4. LICENSES. The Company and Sponsor each grants to the other party a
nonexclusive, worldwide, royalty-free license, with no right to sublicense, to
use, reproduce and distribute, in print, on-line and such other media as the
parties may agree from time to time, such party's name, logo and other
trademarks and servicemarks used with respect to such party's
-2-
<PAGE> 3
products and services for the sole purpose of fulfilling the parties'
respective obligations under this Agreement. Any such use shall be in
accordance with the guidelines established by the licensing party, as in effect
from time to time.
5. SPONSORSHIP FEE. There shall be no separate sponsorship fee payable
under this Agreement. The consideration for this sponsorship is Sponsor's role
in founding the Company, arranging for the other initial sponsors and providing
significant uncompensated legal services in the organization of the Company.
6. TERM. This Agreement shall have a term of three years beginning with
the date of this Agreement and shall be automatically renewed for additional
one year periods unless either party notifies the other of its desire not to
renew this Agreement at lease ninety days prior to its expiration. Following
termination of this Agreement by the Company (other than pursuant to the last
sentence of this Section 6) and prior to entering into any agreement for a
"founding sponsorship" with a law firm other than Sponsor, the Company shall
first provide Sponsor with the opportunity, for thirty (30) days, to renew this
Agreement on terms and conditions no less favorable, in the aggregate, than
such proposed agreement in order to permit Sponsor to maintain its status as
the "law firm founding sponsor". Sponsor's right of first refusal described in
the preceding sentence shall terminate at such time as the Company, after
complying with the preceding sentence, enters into an agreement for a "founding
sponsorship" with a law firm other than Sponsor. Notwithstanding any of the
foregoing, either party may terminate this Agreement at any time thirty days
after written notice to the other party of such other party's breach of any of
its obligations under this Agreement in any material respect, which breach is
not remedied within such thirty day period.
7. GENERAL PROVISIONS.
7.1 ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the parties with respect to Sponsor's sponsorship of the Company.
7.2 AMENDMENT AND WAIVER. No amendment to, or waiver of, any
provision of this Agreement shall be effective unless in writing and signed by
both parties.
7.3 GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California without
regard to the conflicts of laws principles thereof.
7.4 SUCCESSORS AND ASSIGNS. Neither party shall assign its rights or
obligations under this Agreement without the prior written consent of the other
party, except in connection with the merger, sale of assets or other form of
transfer of the business of a party to a third party. All terms and provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective permitted transferees, successors and assigns.
7.5 PREVAILING PARTY. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of this Agreement,
the prevailing party shall be
-3-
<PAGE> 4
entitled reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
7.6 ARBITRATION. Any dispute between the parties arising out of or
in connection with this Agreement shall be referred for settlement to
arbitration in Santa Clara County, California in accordance with the Commercial
Rules of the American Arbitration Association. The award shall be final and
binding upon the parties and judgment of such award may be entered in any court
or tribunal having jurisdiction.
-4-
<PAGE> 5
The parties have executed this Sponsorship Agreement as of the date first
above written.
COMPANY: SPONSOR:
garage.com VENTURE LAW GROUP,
A PROFESSIONAL CORPORATION
By: /s/ GUY KAWASAKI By: /s/ CRAIG W. JOHNSON
------------------------------ ------------------------------
Guy Kawasaki, Chairman and CEO
-5-
<PAGE> 1
EXHIBIT 10.11
garage.com
SPONSORSHIP AGREEMENT
This Sponsorship Agreement (this "Agreement") is entered into as of
September 30, 1998 between garage.com, a California corporation (the
"Company"), and Alburger Basso de Grosz Insurance Services, Inc., DBA abd
Insurance and Financial Services ("Sponsor").
The Company is in the process of establishing an Internet-based service for
matching pre-screened "seed stage" technology startup investment opportunities
with high quality, pre-screened angel, corporate and venture capital investors.
Sponsor is an insurance and benefits consulting firm which provides insurance
and benefits consulting services to, among other clients, emerging growth and
technology companies. Sponsor desires to have its name and services prominently
featured on the Company's Website for viewing by entrepreneurs and investors,
on the terms and conditions set forth below.
1. THE COMPANY. The Company will promptly establish and operate an
Internet-based service for matching pre-screened "seed stage" technology
startup opportunities with high quality, pre-screened angel, corporate and
venture capital investors ("On-Line Matchmaking"). During the term of this
Agreement, the Company shall focus its activities on On-Line Matchmaking,
obtaining related advertising, and organizing and conducting related seminars
and events.
2. SPONSORSHIP AND PROMOTIONAL ACTIVITIES.
2.1 SPONSORSHIP OF THE COMPANY.
(a) The Company shall have not more than one "founding sponsor"
in each service area related to technology start up companies (banking, law,
venture capital, accounting, investment banking, real estate brokerage,
headhunting, etc.). Sponsor shall be the sole "founding sponsor" of the Company
in the insurance and benefits consulting services area. As such, Sponsor shall
be the most prominently featured insurance and benefits consulting services
firm on the Company's public World Wide Web site, currently located at
http//www.garage.com (the "Site"), and in marketing, advertising and
promotional materials ("Marketing Materials") distributed by or for the
Company, and shall be the sole contributor of content in content forums and
expert columns on the public and private portions of the Site relating to
insurance and benefits consulting services issues. The Company shall
prominently feature Sponsor's banners, hyperlinks, advertising materials and
content on the Site, including in both the public and private portions of the
Site as prominently as all other "founding sponsors" of the Company and shall
identify and feature Sponsor in the Company's Marketing Materials as
prominently as all other "founding sponsors" of the Company. By way of example,
the Company shall prominently feature Sponsor's content-based insurance and
benefits consulting services forum in the public and private portions of the
Site, together with Sponsor's designated banners and hyperlinks, and shall
prominently identify Sponsor as one of the Company's select
<PAGE> 2
and exclusive "founding sponsors". Sponsors shall have the right to review and
approve all content and material referencing Sponsor on the Site or in the
Company's Marketing Materials, provided that the Company shall retain sole
editorial control over issues such as placement, size and other elements of
presentation on the Site. For purposes of this Section 1, (i) a "founding
sponsor" means Sponsor, Silicon Valley Bank, PricewaterhouseCoopers, Venture
Law Group, Advanced Technology Ventures, Credit Suisse First Boston, Heidrick &
Struggles and other entities who enter into agreements to become "founding
sponsors" of the Company on terms and conditions satisfactory to the Company's
Board of Directors; and (ii) "insurance and benefits consulting services firm"
means an entity whose primary business is the provision of insurance and
benefits consulting services.
(b) Nothing in Section 2.1(a) shall limit the Company's right (i)
to run banner or other forms of advertisements on the Site or in the Company's
Marketing Materials for insurance and benefits consulting services firms other
than Sponsor; (ii) to feature insurance and benefits consulting services firms
other than Sponsor on the Site (including maintaining hyperlinks to such firms'
World Wide Web sites) or in the Company's Marketing Materials or to accept other
insurance and benefits consulting services firms as "sponsors" of the Company as
long as all of the requirements of "most prominent" featuring of Sponsor in
Section 2.1(a) above are followed, including, but not limited to, the
requirement that Sponsor will be the "most prominently" featured insurance and
benefits consulting services firm on the Site and in the Company's Marketing
Materials, that the Sponsor will be the only insurance and benefits consulting
services firm to host and contribute content forums and expert columns on the
Site, and that the Sponsor will be the only insurance and benefits consulting
services firm which provides content on the Site; or (iii) to have other
insurance and benefits consulting services firms represent the Company in
insurance or benefits matters.
(c) Sponsor shall not sponsor or promote (in a manner similar to
this Agreement) or invest in any other service (or person or entity providing
such service) which seeks to match investment opportunities in technology
startup companies with investors in a manner competitive with the Company. The
Company shall be the only such service featured on Sponsor's Website and in its
promotional or marketing materials and advertisements. Notwithstanding the
above, Sponsor shall have the right (i) to place advertisements with any such
competing service and have a link on such competing service's Website to
Sponsor's Website, and (ii) to refer persons to other such competing services
in addition to and as an alternative to the Company.
2.2 PROMOTION OF THE SITE AND COMPANY SERVICES. Sponsor shall use
reasonable efforts to promote the Site and the Company's services on its
Website and in its Marketing Materials. The exact nature and extent of such
promotion shall be left in the control and discretion of Sponsor. Sponsor shall
encourage its employees and directors to make known its sponsorship of the
Company to clients and potential clients needing "seed stage" investment.
2.3 ON-LINE INSURANCE AND BENEFITS ASSISTANCE. Sponsor will use
reasonable efforts (working with the Company) to provide on-line answers
without charge to the
-2-
<PAGE> 3
Company's registered investors (in the portion of the Site called "Heaven") and
entrepreneurs (in the portion of the Site called "The Garage") concerning their
insurance and benefits questions.
3. NOTICE OF INVESTMENT OPPORTUNITIES. The Company shall provide Sponsor
with advance (generally three business days) notice of investment opportunities
in the Company's clients prior to the posting of such opportunities on the Site
in accordance with procedures applicable to all "founding sponsors", employees,
directors and advisors of the Company adopted from time to time by the Company's
Board of Directors.
4. LICENSES. The Company and Sponsor each grants to the other party a
nonexclusive, worldwide, royalty-free license, with no right to sublicense, to
use, reproduce and distribute, in print, on-line and such other media as the
parties may agree from time to time, such party's name, logo and other
trademarks and servicemarks with respect to such party's products and services
for the sole purpose of fulfilling the parties' respective obligations under
this Agreement. Any such use shall be in accordance with the guidelines
established by the licensing party, as in effect from time to time.
5. SPONSORSHIP FEE. Sponsor shall pay the Company $50,000 upon the date
of this Agreement and each of the next two anniversaries of the date of this
Agreement (a total of $150,000). Sponsor will also purchase 250,000 shares of
Series B Preferred Stock of the Company at $1.00 per share on or about the
date of this Agreement on the same terms and conditions applicable to other
purchasers of the Company's Series B Preferred Stock.
6. TERM. Except as otherwise provided in this Section 6, this Agreement
shall have a term of three years beginning with the date of this Agreement and
shall be automatically renewed for additional one year periods unless either
party notifies the other of its desire not to renew this Agreement at least
ninety days prior to its expiration. Following termination of this Agreement by
the Company (other than pursuant to the last sentence of this Section 6) and
prior to entering into any agreement for a "founding sponsorship" with an
insurance and benefits consulting firm other than Sponsor, the Company shall
first provide Sponsor with the opportunity, for thirty (30) days, to renew this
Agreement on terms and conditions no less favorable, in the aggregate, than
such proposed agreement in order to permit Sponsor to maintain its status as
the "insurance and benefits consulting firm founding sponsor". Sponsor's right
of first refusal described in the preceding sentence shall terminate at such
time as the Company, after complying with the preceding sentence, enters into
an agreement for a "founding sponsorship" with an insurance and benefits
consulting firm other than Sponsor. Notwithstanding any of the foregoing,
either party may terminate this Agreement at any time thirty days after written
notice to the other party of such other party's breach of any of its
obligations under this Agreement in any material respect, which breach is not
remedied within such thirty day period.
-3-
<PAGE> 4
7. GENERAL PROVISIONS.
7.1 ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the parties with respect to Sponsor's sponsorship of the Company.
7.2 AMENDMENT AND WAIVER. No amendment to, or waiver of, any
provision of this Agreement shall be effective unless in writing and signed by
both parties.
7.3 GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California without
regard to the conflicts of laws principles thereof.
7.4 SUCCESSORS AND ASSIGNS. Neither party shall assign its rights or
obligations under this Agreement without the prior written consent of the other
party, except in connection with the merger, sale of assets or other form of
transfer of the business of a party to a third party. All terms and provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective permitted transferees, successors and assigns.
7.4 PREVAILING PARTY. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of this Agreement,
the prevailing party shall be entitled reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
7.6 ARBITRATION. Any dispute between the parties arising out of or
in connection with this Agreement shall be referred for settlement to
arbitration in Santa Clara County, California in accordance with he Commercial
Rules of the American Arbitration Association. The award shall be final and
binding upon the parties and judgment of such award may be entered in any court
or tribunal having jurisdiction.
The parties have executed this Sponsorship Agreement as of the date first
above written.
COMPANY: SPONSOR:
garage.com ALBURGER BASSO DE GROSZ
INSURANCE SERVICES, INC., DBA abd
INSURANCE AND FINANCIAL SERVICES
By: /s/ CRAIG JOHNSON
-------------------------------
Craig Johnson, Director
By: /s/ FREDERICK J. DE GROSZ
-------------------------------------
Frederick J. de Grosz,
President and CEO
-4-
<PAGE> 1
EXHIBIT 10.13
420 FLORENCE AVENUE, PALO ALTO
LEASE SUMMARY
-------------
The information contained in this "Lease Summary" is incorporated into the terms
of the attached Lease.
1. LANDLORD: 505 Hamilton Avenue Partners, a California general partnership
2. TENANT: GARAGE.COM, a California corporation
3. DATE OF LEASE (for reference purposes only): March 10, 1998
4. PREMISES (Paragraph 1): 3,945 rentable square feet, consisting of
approximately 2,580 rentable square feet located on the third (3rd)
floor (designated Suite 300) and approximately 1,365 rentable square
feet located on the first (1st) floor of the Building (designated Suite
102) located at 420 Florence Avenue, Palo Alto, California, which
Building contains 9,051 rentable square feet.
5. TERM (Paragraph 2): Four (4) Years
COMMENCEMENT DATE. The earlier to occur of (a) completion of work to be
performed by Landlord pursuant to Exhibit B, (b) Tenant's occupancy of
any portion of the Premises for the operation of its business, or (c)
March 15, 1998.
EXPIRATION DATE: April 14, 2002
6. BASE RENT (Paragraph 3.1); Months 1-12 $3.92 per rentable
square foot per month
($15,464.44)
Months 13-24 $4.08 per rentable
square foot per month
($16,095.60)
Months 25-36 $4.24 per rentable
square foot per month
($16,726.80)
Months 37-48 $4.41 per rentable
square foot per month
($17,397.45)
i
<PAGE> 2
7. OPERATING EXPENSES AND TAX EXPENSES (Paragraph 3.2):
TENANT'S SHARE: 43.6%
BASE, YEAR: Calendar Year 1998
8. SECURITY DEPOSIT (Paragraph 3.4): $34,794.90
9. PERMITTED USE (Paragraph 4): General Office Use
10. BUSINESS HOURS (Paragraph 9): 8:00 A.M. - 7:00 P.M.,
Monday through Friday
11 ADDRESS FOR NOTICES (Paragraph 22):
LANDLORD: Joseph F. Martignetti, Jr., AIA, P.E.
Ventana Property Services
2755 Campus Drive, Suite 145
San Mateo, California 94403
With Courtesy Copy To:
Mr. Charles king
c/o King Asset Management
Pruneyard Towers II, Suite 925
Campbell, CA 95008
TENANT: Prior to Commencement Date.
c/o Venture Law Group
2800 Sand Hill Road
Menlo Park, CA 94025
Attn: Mr. Bill Reichert
Following Commencement Date: At the Premises
12. PARKING SPACES (Paragraph 32): N/A
13. BROKERS (Paragraph 33.11): Landlord: Ventana Property Services, Inc.
Tenant: BT Commercial
14. TENANT IMPROVEMENT ALLOWANCE (Exhibit B): Up to $5.00 per rentable
Square foot ($19,725.00)
ii
<PAGE> 3
EXHIBITS
Exhibit A - Premises
Exhibit B - Work Letter
Exhibit C - Building Regulations
Rider to Lease: (Includes Option to Extend for Four (4) Additional Years)
iii
<PAGE> 4
LANDLORD: TENANT:
505 HAMILTON AVENUE PARTNERS GARAGE.COM
a California general partnership a California corporation
BY: CHARLES KING AND By: /s/ GUY KAWASAKI
ASSOCIATES, -------------------------------------
a California limited partnership Its: CEO
------------------------------------
Its: General Partner By: /s/ WILLIAM M. REICHERT
-------------------------------------
Its: CEO
------------------------------------
By: The Charles King, Jr.,
Revocable Trust
Its: General Partner
By: /s/ CHARLES W. KING, JR.,
----------------------------------
Charles W. King, Jr.,
Trustee
iv
<PAGE> 5
LEASE
This Lease is made and entered into as of the "Date of Lease", by and
between "Landlord" and "Tenant", as those terms are defined in the "Lease
Summary", which Lease Summary is attached to the front of and incorporated in
and made part of this Lease.
1. Premises.
1.1 Description of Premises. Landlord leases the "Premises" (as
hereinafter defined) to Tenant, and Tenant leases the Premises from Landlord for
the Term, at the rental, and upon all of the conditions set forth herein and in
the Lease Summary. The Premises consist of the space described in the Lease
Summary, and shown on the plans attached as Exhibits A-1 and A-2. The Premises,
the Building and the land on which the Building and the Premises are located are
referred to collectively as the "Property". Tenant accepts the Premises as being
the square footage set forth in the Lease Summary.
1.2 Condition of Premises. By taking possession of the Premises,
Tenant shall be deemed to have accepted the Premises, the Building and the
Property in their condition existing as of the date of possession. Tenant waives
all rights to make repairs at the expense of Landlord as provided by any law,
rule or regulation now or hereafter in effect. It is specifically understood and
agreed that, except as specifically set forth in this Lease, Landlord has no
obligation and has made no promises to alter, remodel, improve, repair, decorate
or paint the Premises or any part thereof, and that no representations
respecting the condition of the Premises or the Building have been made by
Landlord to Tenant.
1.3 Ground Lease. This Lease is subject and subordinate to the
terms and provisions of that certain Master Lease dated as of January 21, 1994,
by and between Dale H. Denson and Nancy Steele Denson, Tommie W. Flemming and
Betty N. Flemming, and Jack R. Rominger and Mary Frances Rominger collectively,
as lessor, and 505 Hamilton Avenue Partners, as lessee.
2. Term.
2.1 Subject to the provisions of this Lease, the term of this
Lease (hereinafter referred to as the "Term") shall commence on the Commencement
Date (specified in the Lease Summary), and, unless sooner terminated pursuant
to the terms hereof or at law, shall expire on the Expiration Date (specified in
the Lease Summary).
2.2 The Premises shall be delivered to Tenant upon Substantial
Completion (as that term is defined in Exhibit B) of the Tenant Improvements (as
that term is defined in Exhibit B) to be constructed in the Premises by Landlord
pursuant to Exhibit B. If Substantial Completion of the Tenant Improvements and
delivery of possession of the Premises is delayed for any reason whatsoever,
this Lease shall not be void or voidable. Except as otherwise provided herein,
no delay in delivery of possession of the Premises to Tenant shall operate to
extend the Term or amend Tenant's obligations under this Lease. In no event
shall Landlord be liable to Tenant for any delay in completion of the Tenant
Improvements caused or occasioned by strikes, lockout, labor disputes, shortages
of material or labor, fire or other casualty, acts of God or any other cause
beyond the reasonable control of Landlord.
1
<PAGE> 6
2.3 If, at Tenant's request, Landlord permits Tenant to take
occupancy of any portion of the Premises prior to the Commencement Date provided
for in the Lease Summary, then the Commencement Date shall be the date of such
early occupancy by Tenant.
3. Rent.
3.1 Payment of Rent. Tenant shall pay to Landlord, upon execution
of this Lease Agreement, the first month's Base Rent. The Base Rent as stated in
the Lease Summary shall be payable by Tenant to Landlord, without deduction,
offset, prior notice or demand, shall be paid to Landlord in advance on the
first day of each calendar month of the Term. Rent shall be payable in lawful
money of the United States to Landlord at such place as Landlord may designate
in writing. Tenant's obligation to pay rent for any partial month shall be
prorated on the basis of a thirty (30) day month. All amounts payable by Tenant
to Landlord under this Lease, whether or not designated as "rent", shall be
"Rent" hereunder, and Landlord shall have the same remedies for the failure to
pay any such amounts that are accorded to Landlord for the failure to pay Base
Rent.
3.2 Additional Rent: Operating Expenses and Tax Expenses.
(a) Operating Expenses. Tenant shall pay to Landlord at the
times hereinafter set forth, Tenant's Share, as specified in the Lease Summary,
the amount by which Operating Expenses (as defined below) incurred by Landlord
exceed Operating Expenses incurred by Landlord during the Base Year specified in
the Lease Summary ("Base Operating Expenses"). The amounts payable under this
Paragraph 3.2(a) and Paragraph 3.2(b) below are termed "Additional Rent" herein.
(i) The term "Operating Expenses" shall mean the total
costs and expenses incurred by Landlord in connection with the management,
operation, maintenance, repair and ownership of the Property, including, without
limitation, the following costs: (1) salaries, wages, bonuses and other
compensation (including hospitalization, medical, surgical, retirement plan,
pension plan, union dues, life insurance, including group life insurance,
welfare and other fringe benefits, and vacation, holidays and other paid absence
benefits) relating to employees of Landlord or its agents engaged in the
operation, repair, or maintenance of the Building. (2) payroll, social security,
workers' compensation, unemployment and similar taxes with respect to such
employees of Landlord or its agents, and the cost of providing disability or
other benefits imposed by law or otherwise, with respect to such employees; (3)
the cost of uniforms (including the cleaning, replacement and pressing thereof)
provided to such employees; (4) premiums and other charges incurred by Landlord
with respect to fire, other casualty, rent and liability insurance, any other
insurance as is deemed necessary or advisable in the judgment of Landlord, costs
of repairing an insured casualty to the extent of the deductible amount under
the applicable insurance policy; (5) water charges and sewer rents or fees; (6)
license, permit and inspection fees; (7) sales, use and excise taxes on goods
and services purchased by Landlord in connection with the operation, maintenance
or repair of the Building and Building Systems (defined in Paragraph 7.2 below)
and equipment; (8) telephone, telegraph, postage, stationery supplies and other
expenses incurred in connection with the operation, maintenance, or repair of
the Property; (9) management fees and expenses (including a fee for property
management and general administrative expenses in the amount of four and
one-half percent (4 1/2%) of the
2
<PAGE> 7
Base Rent payable hereunder), (10) costs of repairs to and maintenance of the
Building, including Building Systems and appurtenances thereto and normal repair
and replacement of worn-out equipment, facilities and installations, but
excluding the replacement of major building systems (except to the extent
provided in (16) and (17) below); (11) fees and expenses for janitorial, window
cleaning, guard, extermination, water treatment, rubbish removal, plumbing and
other services and inspection or service contracts for elevator, electrical,
mechanical and other building equipment and systems or as may otherwise be
necessary or proper for the operation, repair or maintenance of the Building;
(12) costs of supplies, tools, materials, and equipment used in connection with
the operation, maintenance or repair of the Building or the Property; (13)
accounting, legal and other professional fees and expenses; (14) fees and
expenses for painting the exterior or the public or common areas of the Property
and the cost of maintaining sidewalks, landscaping and other common areas; (15)
costs and expenses for electricity, chilled water, air conditioning, water for
heating, gas, fuel, steam, heat, lights, power and other energy related
utilities required in connection with the operation, maintenance and repair of
the Building; (16) the cost of any capital improvements made by Landlord to the
Building or capital assets acquired by Landlord in order to comply with any
local, state or federal law, ordinance, rule, regulation, code or order of any
governmental entity or insurance requirement (collectively, "Legal
Requirements"); (17) the cost of any capital improvements made by Landlord to
the Building or capital assets acquired by Landlord for the protection of the
health and safety of the occupants of the Building or that reduce other
Operating Expenses; (18) the cost of furniture, draperies, carpeting,
landscaping and other customary and ordinary items of personal property provided
by Landlord for use in common areas of the Building or in the Building office;
(19) any expenses and costs resulting from substitution of work, labor, material
or services in lieu of any of the above itemizations, or for any additional
work, labor, services or material resulting from compliance with any laws, rule
or regulations applicable to the Building or any parts thereof; and (20)
Building office rent or rental value. With respect to the costs of items
included in Operating Expenses under (16) and (17), such costs shall be
amortized over a reasonable period, as determined by Landlord, together with
interest on the unamortized balance.
(ii) Operating Expenses shall not include the
following: (i) depreciation on the Building or equipment or systems therein;
(ii) debt service; (iii) rental under any ground lease; (iv) interest (except as
expressly provided in this Paragraph 3.2,(a)); (v) Tax Expenses (as defined in
Paragraph 3.2(b) below); (vi) attorneys' fees and expenses incurred in
connection with lease negotiations with prospective Building tenants; (vii) the
cost (including any amortization thereof) of any improvements or alterations
which would be properly classified as capital expenditures according to
generally accepted property management practices (except to the extent expressly
included in Operating Expenses pursuant to this Paragraph 3.2(a)); (viii) the
cost of decorating, improving for tenant occupancy, painting or redecorating
portions of the Building to be demised to tenants; (ix) executive salaries and
benefits; (x) advertising; or (xi) real estate broker's or other leasing
commissions,
(b) Tax Expenses. Tenant shall pay to Landlord as Additional
Rent under this Lease, at the times hereinafter set forth, Tenant's Share, as
specified in the Lease Summary, of the amount by which Tax Expenses (as defined
below) incurred by Landlord exceed Tax Expenses incurred by Landlord during the
Base Year ("Base Tax Expenses").
3
<PAGE> 8
(i) The term "Tax Expenses" shall mean all taxes,
assessments (whether general or special), excises, transit charges, housing
fund assessments or other housing charges, improvement districts, levies or
fees, ordinary or extraordinary, unforeseen as well as foreseen, of any kind,
which are assessed, levied, charged, confirmed or imposed on the Building or
the Property, on Landlord with respect to the Property, on the act of entering
into leases of space in the Property, on the use or occupancy of the Property
or any part thereof, with respect to services or utilities consumed in the use,
occupancy or operation of the Property, on any improvements, fixtures and
equipment and other personal property of Landlord located in the Property and
used in connection with the operation of the Property, or on or measured by the
rent payable under this Lease or in connection with the business of renting
space in the Property, including, without limitation, any gross income tax or
excise tax levied with respect to the receipt of such rent, by any state,
county, city or political subdivision, public corporation, district or other
political or public entity or public authority, and shall also include any
other tax, fee or other excise, however described, which may be levied or
assessed in lieu of, as a substitute (in whole or in part) for, or as an
addition to, any other Tax Expense. Tax Expenses shall include reasonable
attorneys' fees, costs and disbursements incurred in connection with
proceedings to contest, determine or reduce Tax Expenses. If it shall not be
lawful for Tenant to reimburse Landlord for any increase in Tax Expenses as
defined herein, the Rent payable to Landlord prior to the imposition of such
increases in Tax Expenses shall be increased to net Landlord the same net Rent
after imposition of such increases in Tax Expenses as would have been received
by Landlord prior to the imposition of such increases in Tax Expenses.
(ii) Tax Expenses shall not include income, franchise,
transfer, inheritance or capital stock taxes, unless, due to a change in the
method of taxation, any of such taxes is levied or assessed against Landlord in
lieu of, as a substitute (in whole or in part) for, or as an addition to, any
other charge which would otherwise constitute a Tax Expense.
(c) Adjustment for Occupancy Factor. Notwithstanding any other
provision herein to the contrary, in the event the Building is not at least one
hundred percent (100%) occupied on average during any year of the Term, an
adjustment shall be made by Landlord in computing Operating Expenses and Tax
Expenses for such year so that the Operating Expenses and Tax Expenses shall be
computed for such year as though the Building had been one hundred percent
(100%) occupied on average during such year. In addition, if any particular
work or service includable in Operating Expenses is not furnished to a tenant
who has undertaken to perform such work or service itself, Operating Expenses
shall be deemed to be increased by an amount equal to the additional Operating
Expenses which would have been incurred if Landlord had furnished such work or
service to such tenant. The parties agree that statements in this Lease to the
effect that Landlord is to perform certain of its obligations hereunder at its
own or sole cost and expense shall not be interpreted as excluding any cost
from Operating Expenses or Tax Expenses if such cost is an Operating Expense or
Tax Expense pursuant to the terms of this Lease.
(d) [INTENTIONALLY OMITTED]
(e) Notice and Payment. On or before the first day of each
calendar year following the Base Year, on as soon as practicable thereafter,
Landlord shall give to Tenant notice of Landlord's estimate of the Additional
Rent, if any, payable by Tenant pursuant to
4
<PAGE> 9
Paragraphs 3.2(a) and 3.2(b) for such calendar year. On or before the first day
of each month during each such calendar year, Tenant shall pay to Landlord
one-twelfth (1/12th) of the estimated Additional Rent; provided, however, that
if Landlord's notice is not given prior to the first day of any calendar year
Tenant shall continue to pay Additional Rent on the basis of the prior year's
estimate until the month after Landlord's notice is given. If at any time it
appears to Landlord that the Additional Rent payable under Paragraphs 3.2(a)
and/or 3.2(b) will vary from Landlord's estimate, Landlord may, by written
notice to Tenant, revise its estimate for such year, and subsequent payments by
Tenant for such year shall be based upon the revised estimate. On the first
monthly payment date after any new estimate is delivered to Tenant, Tenant shall
also pay any accrued cost increases, based on such new estimate.
(f) Annual Accounting. Within ninety (90) days after the
close of each calendar year, or as soon after such ninety (90) day period as
practicable, Landlord shall deliver to Tenant a statement of the Additional Rent
payable under Paragraphs 3.2(a) and 3.2(b) for such year. Landlord's annual
statement shall be final and binding upon Landlord and Tenant unless either
party, within thirty (30) days after Tenant's receipt thereof, shall contest any
item therein by giving written notice to the other, specifying in reasonable
detail each item contested and the reason therefor. Notwithstanding the
foregoing, the Tax Expenses included in any such annual statement may be
modified by any subsequent adjustment or retroactive application of Tax Expenses
affecting the calculation of such Tax Expenses. If the annual statement shows
that Tenant's payments of Additional Rent for such calendar year pursuant to
Paragraph 3.2(e) hereof exceeded Tenant's obligations for the calendar year,
Landlord shall at its option either (1) credit the excess to the next succeeding
installments of estimated Additional Rent or (2) pay the excess to Tenant within
thirty (30) days after delivery of such statement. If the annual statement shows
that Tenant's payments of Additional Rent for such calendar year pursuant to
Paragraph 3.2(e) hereof were less than Tenant's obligation for the calendar
year, Tenant shall pay the deficiency to Landlord within ten (10) days after
delivery of such statement.
3.3 Late Payment Charge interest. If any installment of Rent,
Additional Rent or any other sum due from Tenant is not received by Landlord,
Tenant shall pay to Landlord as liquidated damages an additional sum equal to
five percent (5%) of the amount overdue to compensate Landlord for reasonably
foreseeable processing and accounting charges, and any charges that may be
incurred by Landlord with regard to any financing secured by the Property.
Acceptance of any late charge shall not constitute a waiver by Landlord of
Tenant's default with respect to the overdue amount. In addition, any amount not
paid by Tenant shall bear interest at the lower of five percent (5%) per annum
plus the then discount rate of the Federal Reserve Bank of San Francisco, or the
highest rate then allowed by law (such lower rate is referred to herein as the
"Interest Rate"), from the date due until paid in full. Payment of such interest
shall not excuse or cure any default by Tenant.
3.4 Security Deposit. Tenant shall pay to Landlord upon execution
of this Lease the amount set forth in the Lease Summary as and for a Security
Deposit as security for the full and faithful performance by Tenant of every
term, covenant and condition of this Lease. In the event Tenant defaults in the
performance of any of its obligations hereunder, Landlord may use or apply any
portion of the Security Deposit to cure the default or to compensate Landlord
for its damages from the default, in which event Tenant shall promptly deposit
with Landlord the sum necessary to restore the Security Deposit to its original
amount. Upon
5
<PAGE> 10
termination of this Lease and performance of all of Tenant's obligations
hereunder, Landlord shall return the Security Deposit or any balance thereof to
Tenant. Tenant shall not be entitled to any interest on the Security Deposit,
and Landlord shall be entitled to commingle the Security Deposit with its
general funds.
4. Use.
4.1 Use of the Premises. The Premises shall be used only for the
use described in the Lease Summary as the "Permitted Use" and for no other
purpose. Tenant will engage in no activity on the Premises that would, in the
judgment of any insurer of the Premises, increase the premium on any of
Landlord's insurance over the amount otherwise charged therefor or cause such
insurance to be canceled. Tenant will comply with all applicable laws and
governmental regulations pertaining to its use of the Premises; provided that if
such compliance requires that Alterations (as defined in Paragraph 5) be made to
any portion of the Building or Premises, Tenant shall have no obligation to make
any such Alteration unless such Alteration is necessitated by Tenant's
particular use of the Premises. Tenant will not cause any excessive loads to be
placed upon the floor slabs or the walls of the Premises by the placement of its
furnishings or equipment or otherwise. Tenant will commit no nuisance or waste
on the Premises and will not cause any unreasonable odors, noise, smoke,
vibration, electronic emissions, or any other item to emanate from the Premises
so as to damage the Property or any other person's property.
4.2 No Exterior Uses. Except for parking areas reserved for the
use of Tenant, if any (which shall be used in common with other occupants of the
Building unless otherwise specified herein), no area outside of the Building or
the exterior of the Building is leased to or may be used by Tenant. No rubbish
containers may be stored outside of the Premises except in areas specifically
identified by Landlord. No materials may be stored outside of the Premises by
Tenant.
4.3 Hazardous Materials.
(a) Definitions.
(1) "Hazardous Materials" shall mean any substance: (A) that
now or in the future is regulated or governed by, requires investigation or
remediation under, or is defined as a hazardous waste, hazardous substance,
pollutant or contaminant under any governmental statute, code, ordinance,
regulation, rule or order, and any amendment thereto, including for example only
the Comprehensive Environmental Response Compensation and Liability Act, 42
U.S.C. Section 9601 et seq., and the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq., or (B) that is toxic, explosive, corrosive,
flammable, radioactive, carcinogenic, dangerous or otherwise hazardous,
including gasoline, diesel fuel, petroleum hydrocarbons, polychlorinated
biphenyls (PCBs), asbestos, radon and urea formaldehyde foam insulation.
(2) "Environmental Requirements" shall mean all present and
future Legal Requirements (including, without limitation, orders, permits,
licenses, approvals, authorizations and other requirements of any kind)
applicable to Hazardous Materials.
6
<PAGE> 11
(3) "Handled by Tenant" and "Handling by Tenant" shall mean
and refer to any installation, handling, generation, storage, use, disposal,
discharge, release, abatement, removal, transportation, or any other activity of
any type by Tenant or its agents, employees, contractors, licensees, assignees,
sublessees, transferees or representatives (collectively, "Representatives") or
its guests, customers, invitees, or visitors (collectively, "Visitors"), at or
about the Premises in connection with or involving Hazardous Materials.
(4) "Environmental Losses" shall mean all costs and expenses
of any kind, damages, including foreseeable and unforeseeable consequential
damages, fines and Penalties incurred in connection with any violation of and
compliance with Environmental Requirements and all losses of any kind
attributable to the diminution of value, loss of use of adverse effects on
marketability or use of any portion of the Premises or Property.
(b) Tenant's Covenants. No Hazardous Materials shall be Handled
by Tenant at or about the Premises or Property without Landlord's prior written
consent, which consent may be granted, denied, or conditioned upon compliance
with Landlord's requirements, all in Landlord's absolute discretion.
Notwithstanding the foregoing, normal quantities and use of those Hazardous
Materials customarily used in the conduct of general office activities, such as
copier fluids and cleaning supplies ("Permitted Hazardous Materials"), may be
used and stored at the Premises without Landlord's prior written consent,
provided that Tenant's activities at or about the Premises and Property and the
Handling by Tenant of all Permitted Hazardous Materials shall comply at all
times with all Environmental Requirements. At the expiration or termination of
the Term, Tenant shall promptly remove from the Premises and Property all
Hazardous Materials Handled by Tenant at the Premises or the Property. Tenant
shall keep Landlord fully and promptly informed of all Handling by Tenant of
Hazardous Materials other than Permitted Hazardous Materials. Tenant shall be
responsible and liable for the compliance with all of the provisions of this
Paragraph 4.3 by all of Tenant's Representatives and Visitors, and all of
Tenant's obligations under this Paragraph 4.3 (including its indemnification
obligations under Paragraph 4.3(e) below) shall survive the expiration or
termination of this Lease.
(c) Compliance. Tenant shall at Tenant's expense promptly take
all actions required by any governmental agency or entity in connection with or
as a result of the Handling by Tenant of Hazardous Materials at or about the
Premises or Property, including inspection and testing, performing all cleanup,
removal and remediation work required with respect to those Hazardous Materials,
complying with all closure requirements and post-closure monitoring, and filing
all required reports or plans. All of the foregoing work and all Handling by
Tenant of all Hazardous Materials shall be performed in a good, safe and
workmanlike manner by consultants qualified and licensed to undertake such work
an approved in writing in advance by Landlord and in a manner that will not
interfere with any other tenant's quiet enjoyment of the Property or Landlord's
use, operation, leasing and sale of the Property. Tenant shall deliver to
Landlord prior to delivery to any governmental agency, or promptly after receipt
from any such agency, copies of all permits, manifests, closure or remedial
action plans, notices, and all other documents relating to the Handling by
Tenant of Hazardous Materials at or about the Premises or Property. If any lien
attaches to the Premises or the Property in connection with or as a result of
the Handling by Tenant of Hazardous Materials, and Tenant does not cause the
same to be released, by payment, bonding or otherwise, within ten (10) days
after the attachment thereof, Landlord shall have the right but not the
obligation to cause the
7
<PAGE> 12
same to be released and any sums expended by Landlord in connection therewith
shall be payable by Tenant on demand.
(d) Landlord's Rights. Landlord shall have the right, but not
the obligation, to enter the Premises at any reasonable time (i) to confirm
Tenant's compliance with the provisions of this Paragraph 4.3, and (ii) to
perform Tenant's obligations under this Paragraph 4.3 if Tenant his failed to do
so after reasonable notice to Tenant. Landlord shall also have the right to
engage qualified Hazardous Materials consultants to inspect the Premises and
review the Handling by Tenant of Hazardous Materials, including review of all
permits, reports, plans, and other documents regarding same. Tenant shall pay to
Landlord on demand the costs of Landlord's consultants' fees and all costs
incurred by Landlord in performing Tenant's obligations under this Paragraph
4.3. Landlord shall use reasonable efforts to minimize any interference with
Tenant's business caused by Landlord's entry into the Premises, but Landlord
shall not be responsible for any interference caused thereby.
(e) Tenant's Indemnification. To the fullest extent allowed
under applicable law, Tenant agrees to indemnify, defend, protect and hold
harmless Landlord and its partners or members and its or their partners,
members, directors, officers, shareholders, employees and agents from all
Environmental Losses and all other claims, actions, losses, damages,
liabilities, costs and expenses of every kind, including reasonable attorneys',
experts' and consultants' fees and costs, incurred at any time and arising from
or in connection with the Handling by Tenant of Hazardous Materials at or about
the Property or Tenant's failure to comply in full with all Environmental
Requirements with respect to the Premises. The obligations of Tenant under this
Paragraph 4.3(e) shall survive the expiration or sooner termination of this
Lease.
(f) Asbestos. To Landlord's best knowledge, the Premises contain
no asbestos or asbestos containing construction materials.
4.4 Americans With Disabilities Act.
(a) Tenant, at Tenant's sole cost and expense, shall be
responsible for any alterations, modifications or improvements to the Premises
and/or the Building and the acquisition of any auxiliary aids required under the
Americans with Disabilities Act ("ADA"), including all alterations,
modifications or improvements to the Premises or Building required, directly or
indirectly: (1) as a result of Tenant (or any subtenant, assignee or
concessionaire) being a Public Accommodation (as such term is defined in the
ADA); (2) as a result of the Premises being a Commercial Facility (as said term
is defined in the ADA); (3) as a result of any leasehold improvements
(including, without limitation, the improvements to be constructed pursuant to
Exhibit B attached hereto), alterations or additions made to the Premises by or
on behalf of Tenant or any subtenant, assignee or concessionaire (whether or not
Landlord's consent to such leasehold improvements or alterations was obtained);
or, (4) as a result of the employment by Tenant (or any subtenant, assignees or
concessionaire) of any individual with a disability.
(b) With respect to the use restrictions set forth in this
Lease, and the restrictions on assignments and subletting set forth herein, it
is hereby specifically understood
8
<PAGE> 13
and agreed that Landlord shall have no obligation to consent to or permit the
use of the Premises or an assignment of this Lease or a sublease of all or a
portion of the Premises (collectively herein a ("Use Change") if such Use Change
would require the making of any alterations, modifications or improvements to
the Premises, the common areas or other portions of the Building, or the
acquisition of any auxiliary aids under the ADA, unless Tenant performs all such
acts and satisfies Landlord's requirements for financial responsibility for the
costs of such compliance, which requirements may include, by way of example,
posting of a completion bond or establishment of an escrow account.
5. Alterations and Additions.
5.1 Landlord's Consent Required. Tenant shall not make any alteration
or addition (collectively "Alterations") to the Premises without Landlord's
prior written consent which may be withheld in Landlord's sole and absolute
discretion. Notwithstanding the immediately preceding sentence, Tenant shall
have the right without Landlord's approval to make minor Alterations within the
interior of the Premises that do not affect the structure of the Building, the
Building Systems, the exterior of the Building or Landlord's ability to lease
the Premises following the expiration of the Term, provided that (i) such
Alterations do not exceed Two Thousand Five Hundred Dollars ($2,500) in cost per
project; (ii) prior to commencing such Alterations, Tenant shall give written
notice to Landlord specifying the work to be done and the area of the Premises
affected by such work; and (iii) Tenant shall obtain all necessary governmental
permits and approvals prior to commencing such work. In making any Alterations
hereunder, Tenant shall comply with all applicable building codes and other
Legal Requirements. In connection with giving its consent to a requested
Alteration, Landlord shall notify Tenant that such Alteration either (i) shall
be removed from the Premises, and all damage resulting from such removal
repaired by Tenant prior to the expiration or sooner termination of the Term, or
(ii) shall remain on the Premises at the end of the Term and become the property
of the Landlord. Tenant shall not proceed to make any Alterations until ten (10)
days after receipt of Landlord's written consent, in order that Landlord may
post on the Premises appropriate notices to avoid any liability or liens by
reason thereof.
5.2 Performance of Work. All Alterations shall be made at Tenant's
sole cost and expense (including the expense of complying with all present and
future Legal Requirements, and any other work required to be performed in other
areas within or outside the Premises by reason of the Alterations). Landlord may
elect to cause its contractor to perform the Alterations, in which case Landlord
shall be entitled to receive a fee for such work of fifteen percent (15%) of the
first $100,000 of the construction costs of such work, and five percent (5%) of
any construction costs over $100,000. If Landlord does not perform the work
pursuant to the above, Tenant shall pay Landlord on demand prior to or during
the course of such construction an amount (the "Alteration Operations Fee")
equal to ten percent (10%) of the total hard cost of the Alteration (and for
purposes of calculating the Alteration Operations Fee, such hard cost shall not
include permit fees) as compensation to Landlord for electrical energy consumed
in connection with the work, freight elevator operation, additional cleaning
expenses, additional security services, and for other miscellaneous costs
incurred by Landlord as result of the work.
9
<PAGE> 14
6. Liens. Tenant shall not permit any mechanic's, materialman's or other
liens arising out of work performed at the Premises by or on behalf of Tenant to
be filed against the fee of the Property nor against Tenant's interest in the
Premises. Landlord shall have the right to post and keep posted on the Premises
any notices which it deems necessary for protection from such liens. If any such
liens are filed, Landlord may, without waiving its rights based on such breach
by Tenant and without releasing Tenant from any obligations hereunder, pay and
satisfy the same and in such event the sums so paid by Landlord shall be due and
payable by Tenant immediately without notice or demand, with interest from the
date paid by Landlord through the date Tenant pays Landlord, at the Interest
Rate. Tenant agrees to indemnify, defend and hold Landlord harmless from and
against any claims, loss, cost, damage or liability for mechanics',
materialmen's or other liens in connection with any Alterations, repairs or any
work performed, materials furnished or obligations incurred by or for Tenant.
7. Maintenance and Repair.
7.1 Tenant's Obligations. Except for those portions of the Building
which Landlord is expressly obligated to maintain and repair pursuant to
Paragraph 7.2 below, Tenant, at its sole cost, shall maintain in first class
condition and repair the non-structural portions of the Premises and every part
thereof, including, if applicable any plate glass (other than exterior office
space windows on floors above the ground floor). If Tenant refuses or neglects
to make repairs and/or maintain the Premises, or any part thereof, in a manner
and within a time period reasonably satisfactory to Landlord, Landlord shall
have the right, upon giving Tenant reasonable written notice of its election to
do so, to make such repairs or perform such maintenance on behalf of and for the
account of Tenant. In such event the cost of such work (including a fee payable
to Landlord for the performance of such work as outlined in Paragraph 5.2 above)
shall be paid by Tenant promptly upon Landlord's presentation of reasonable
evidence of the costs actually incurred.
7.2 Landlord's Obligations. Subject to Tenant's obligations pursuant
to Paragraph 7.1, and the provisions of this Lease dealing with damage or
destruction and condemnation, Landlord shall, as part of Operating Expenses,
repair and maintain in good working order the roof, roof membrane, and all
structural portions of the Premises and the Building, the heating, ventilation,
air-conditioning, plumbing and electrical systems and other equipment serving
the Premises (but not to the extent any such system or any life systems
installed by or on behalf of Tenant exclusively serve the Premises) (the
"Building Systems"), the elevators, common areas, exterior surfaces or the
Building (except with respect to plate glass which is the responsibility of
Tenant pursuant to the terms of Paragraph 7.1 above), sidewalks, the parking lot
and landscaping for the Building. Tenant hereby waives the benefit of any
statute now or hereinafter in effect which would otherwise afford Tenant the
right to make repairs at Landlord's expense or to terminate this Lease because
of Landlord's failure to keep the Premises in good condition, order and repair.
Tenant specifically waives all rights it may have under Sections 1932(l), 1941,
and 1942 of the California Civil Code, and any similar or successor statute or
law.
8. Tenant's Personal Property Taxes. Tenant shall pay prior to
delinquency all taxes, license fees, and public charges assessed or levied
against Tenant, Tenant's estate in this
10
<PAGE> 15
Lease or Tenant's leasehold improvements, trade fixtures, furnishings, equipment
and other Personal property,
9. Utilities and Services.
9.1 Basic Services. As part of Operating Expenses (except as set
forth in Paragraph 9.2 below), and provided Tenant is not in default hereunder,
Landlord shall furnish the following utilities and services ("Basic: Services")
for the Premises:
(i) during the Business Hours specified in the Lease Summary
reasonable quantities of electricity for lighting and convenience outlets;
(ii) during Business Hours, heat and air conditioning required in
Landlord's judgment for the comfortable use and occupancy of the Premises for
ordinary general office purposes;
(iii)unheated water for the restroom(s) and drinking fountain(s)
in the public areas serving the Premises; and
(iv) janitorial services limited to emptying and removal of
general office refuse, light vacuuming as needed and window washing, all as
determined by Landlord,
Notwithstanding the foregoing, however, Tenant may use water, heat, air
conditioning, electric current, elevator and janitorial service in excess of
that provided in Basic Services ("Excess Services") which shall include without
limitation any power usage other than through existing standard 110-volt AC
outlets, electricity and/or water consumed by Tenant in connection with any
dedicated or supplemental heating, ventilating and/or air conditioning, computer
power, telecommunications and/or other special units or systems of Tenant,
chilled, heated or condenser water, or water used for any purpose other than
ordinary drinking and lavatory purposes, provided that the Excess Services
desired by Tenant are reasonably available to Landlord and to the Premises, and
provided further that Tenant complies with the procedures established by
Landlord from time to time for requesting for such Excess Services and with all
other provisions of this Paragraph 9. Tenant shall pay for such Excess Services
at the hourly rate established by Landlord, which shall include Landlord's
then-standard administrative charge; the parties agree that Landlord's charge
for after hours heating or air conditioning shall be $25.00 per hour. Landlord
reserves the right, at Tenant's cost, to install in the Premises electric
current and/or water meters (including, without limitation, any additional
wiring, conduit or panel required therefor) to measure the electric current or
water consumed by Tenant or to cause the usage to be measured by other
reasonable methods (e.g. by temporary "check" meters or by survey). If the
temperature otherwise maintained in any portion of the Premises by the HVAC
systems of the Building is affected as a result of (i) any lights, machines or
equipment used by Tenant in the Premises, or (ii) the occupancy of the Premises
by more than one person per 200 square feet of rentable area, then Landlord
shall have the right to install any machinery or equipment reasonably necessary
to restore the temperature, including modifications to the standard
air conditioning equipment. The cost of any such equipment and modifications,
including the cost of installation and any additional cost of operation and
maintenance of the same, shall be paid by Tenant to Landlord upon demand.
11
<PAGE> 16
9.2 Payment. The cost of any services which are not separately
metered and payable for directly by Tenant shall be included in Operating
Expenses. If any such services are, however, separately metered, Tenant shall
pay directly to the charging authority for all costs of providing Basic Services
to the Premises including, all charges for water, gas, electricity, refuse
pickup, and all other utilities and services supplied or furnished to the
Premises which are separately metered to the Premises, and the costs of such
services will be excluded from Operating Expenses.
9.3 Failure. No failure or interruption of any such utilities or
service shall entitle Tenant to terminate this Lease or to withhold rent or
other sums due hereunder and Landlord shall not be liable to Tenant for any such
failure or interruption.
9.4 Security. Landlord may, but shall be under no obligation to,
implement security measures for the Building, such as the registration of all
persons entering or leaving the Building, requiring identification for access to
the Building, evacuation of the Building for cause, suspected cause, or for
drill purposes, the issuance of magnetic pass cards or keys for Building or
elevator access and other actions that Landlord deems necessary or appropriate
to prevent any threat of property loss or damage, bodily injury or business
interruption. landlord shall at all times have the right to change, alter or
reduce any such security services or measures. Tenant shall cooperate and comply
with, and cause Tenant's Representatives and Visitors to cooperate and comply
with, such security measures. Landlord, its agents and employees shall have no
liability to Tenant or its representatives or visitors for the implementation or
exercise of, or the failure to implement or exercise, any such security measures
or for any resulting disturbance of Tenant's use or enjoyment of the Premises,
and Tenant, on behalf of Tenant, its employees and representatives waives all
claims against Landlord with regard thereto.
10. Indemnity. To the fullest extent allowed under applicable law,
Tenant hereby agrees to indemnify, defend, protect and hold Landlord harmless
from and against any and all claims, losses, demands, liabilities, and expenses,
including attorneys' fees, arising from (a) Tenant's use of the Premises or (b)
from any act permitted, or any omission to act, in or about the Premises or (c)
the Property by Tenant or its agents, employees, contractors, representatives,
visitors or invitees, or from any breach or default by Tenant of this Lease, or
(d) from any injury to person or property occurring in or about the Premises,
unless solely caused by Landlord's gross negligence or willful misconduct. In
the event any action or proceeding shall be brought against Landlord by reason
of any such claim, Tenant shall defend the same at Tenant's expense by counsel
reasonably satisfactory to Landlord. The obligations of Tenant under this
Paragraph 10 shall survive the expiration or sooner termination of this Lease.
11. Waiver of Claims. Tenant hereby waives any claims against Landlord
for damage to Tenant's property, or for injury or death of any other person
in or about the Premises or the Property from any cause whatsoever, except to
the extent caused by Landlord's gross negligence or willful misconduct.
12. Insurance.
12.1 Tenant's Liability Insurance. Tenant shall, at its expense,
obtain and keep in force during the Term a policy of commercial public liability
insurance insuring Landlord and
12
<PAGE> 17
Tenant against any liability arising out of the operation of Tenant's business
and the condition, use, occupancy or maintenance of the Premises. Such insurance
policy shall have a combined single limit for both bodily injury and property
damage in an amount not less than Two Million Dollars ($2,000,000). The policy
shall contain cross liability endorsements (to the extent available on
commercially reasonable terms) and shall insure performance by Tenant of the
indemnity provisions of Paragraph 10 above. The limits of said insurance shall
not limit the liability of Tenant hereunder.
12.2 Tenant's Property Insurance. Tenant shall, at its expense, keep
in force during the term of this Lease, a policy of fire and property damage
insurance, in an "all risk" form, insuring, for their full replacement cost,
Tenant's inventory, fixtures, equipment, personal property, any leasehold
improvements (including the Tenant Improvements) and any Alterations made by
Tenant. Tenant also shall obtain and maintain business interruption insurance in
an amount not less than an amount adequate to provide for payment of Base Rent
and other amounts due Landlord under this Lease during a one year interruption
of Tenant's business due to fire or other casualty, During the Term, the
proceeds from any such policies of insurance shall be used for the repair or
replacement of the leasehold improvements, alterations and personal property so
insured. Because Tenant must maintain property insurance pursuant to this
Paragraph 12.2 to cover Tenant's inventory, fixtures, equipment, personal
property, and any leasehold improvements within the Premises, and because of the
waivers of subrogation set forth in Paragraph 12.5, Tenant hereby waives all
claims against Landlord for any loss, cost, liability, damage, or expense to
Tenant's inventory, fixtures, equipment, personal property, and leasehold
improvements within the Premises to the extent such loss, costs, liability,
damage, or expenses are covered (or would have been covered) by the insurance
carried (or required to be carried) by Tenant pursuant to this Paragraph 12.2,
even if such loss, cost, liability, damage, or expense results from the
negligent acts, omissions, or willful misconduct of Landlord or those of its
agents, contractors, servants, employees or licensees.
12.3 Landlord's Insurance. Landlord shall, as part of Operating
Expenses, maintain a policy or policies of liability insurance and of insurance
covering loss or damage to the Property (which may, at Landlord's option,
include earthquake) in such amounts and with such coverages as Landlord deems
advisable. All proceeds under such policies shall be payable exclusively to
Landlord. Landlord may obtain such insurance for the Building separately, or
together with other buildings and improvements which Landlord elects to insure
together under blanket policies of insurance.
12.4 Waiver of Subrogation. Tenant and Landlord each hereby waives,
and shall cause their respective insurers to similarly waive, any and all rights
of recovery against the other, or against the officers, employees, partners,
agents and representatives of the other, for loss of or damage to the property
of the waiving party or the property of others under its control, to the extent
such loss or damage is (or would have been) insured against under any property
insurance policy carried (or required to be carried) by Landlord or Tenant
hereunder.
12.5 Insurance Policies. All of Tenant's insurance shall be primary
insurance written in a form satisfactory to Landlord by companies acceptable to
Landlord and shall specifically provide by endorsements reasonably acceptable to
Landlord that such policies shall: (i) not be subject to cancellation or other
change except after at least thirty (30) days' prior
13
<PAGE> 18
written notice to Landlord; (ii) be Primary insurance, (iii) in the case of
property insurance, specifically waive subrogation pursuant to this Lease.
Insurance companies issuing such policies shall have rating classifications of
"A" or better and financial size category ratings of "VII" or better according
to the latest edition of the A.M. Best Key Rating Guide. All insurance companies
issuing such policies shall be licensed to do business in the state where the
Property is located. Any deductible amount under such insurance shall not exceed
$5,000. Each policy of liability insurance required by this Section shall: (i)
contain a cross liability endorsement or separation of insureds clause; (ii)
provide that any rights or release prior to a loss does not void coverage; (iii)
provide that it is primary to and not contributing with, any policy of insurance
carried by Landlord covering the same loss; (iv) provide that any failure to
comply with the reporting provisions shall not affect coverage provided to
Landlord, its partners, property managers and Mortgagees; and (v) name Landlord,
its partners, Landlord's property manager, and such other parties in interest as
Landlord may from time to time reasonably designate to Tenant in writing, as
additional insureds. Such additional insureds shall be provided the same extent
of coverage as provided to Tenant under such policies. All endorsements
effecting such additional insured status shall be acceptable to Landlord. Copies
of the policies or certificates evidencing the policies shall be deposited with
Landlord on or prior to the Commencement Date, and upon each renewal of such
policies, which shall be effected not less than thirty (30) days prior to the
expiration date of the term of such coverage. Reasonably satisfactory evidence
of payment of policy premiums shall be provided to Landlord upon request.
12.6 Adjustment. Tenant shall increase the amounts of insurance as
required by any mortgagee, and, not more frequently than once every year, as
recommended by Landlord's insurance broker, if, in the opinion of either of
them, the amount of insurance then required under this Lease is not adequate.
Any limits set forth in this Lease on the amount or type of coverage required by
Tenant's insurance shall not limit the liability of Tenant under this Lease.
13. Damage.
13.1 Generally. Except as otherwise provided in this Paragraph 13,
if any portion of the Premises or Building that Landlord is obligated to
maintain is damaged or destroyed by any cause, and if such damage is covered by
insurance maintained by Landlord, then this Lease will not terminate and
Landlord will cause such damage to be repaired with reasonable diligence,
subject to delays in the obtaining and disbursement of insurance proceeds and
delays in repair caused by inclement weather, governmental action or inaction,
and shortage of materials or services and any other cause beyond the reasonable
control of Landlord. From the date of the casualty until the restoration is
completed, Tenant's obligation to pay Base Rent and Additional Rent shall not be
abated to the extent required to be insured under Paragraph 12 above; any
abatement thereafter allowed shall be determined by Landlord with respect to the
extent to which Tenant is prevented from using and actually does not use, the
Premises. If the damage is not insured by Landlord, or if the damage occurs
within the last nine (9) months of the term of this Lease, or if, in Landlord's
determination, the damage would take in excess of one hundred eighty (180) days
to repair, Landlord may, at its option exercised by written notice to Tenant,
elect to terminate this Lease as of the date set forth in Landlord's notice. If
Landlord does not elect to terminate this Lease, Landlord shall complete the
repair. If the damage is such that Tenant's use of or access to the Premises is
substantially impaired, and if Landlord
14
<PAGE> 19
reasonably estimates that the time required for repair of the Premises will
exceed one (1) year, then Tenant shall be entitled to terminate this Lease as of
the date set forth in Tenant's notice (which shall be no more than Sixty (60)
days following Tenant's notice) by delivering written notice of termination to
Landlord within ten (10) days of Landlord's notice) to Tenant of the time
required for repair.
13.2 Tenant's Property. Landlord's obligation to rebuild or restore
shall not include Tenant's trade fixtures, equipment, merchandise, or any
improvements or Alterations made by or on behalf of Tenant to the Premises.
13.3 Waiver. Tenant waives the provisions Of California Civil Code
Sections 1932(2) and 1933(4), and any similar or successor statutes relating to
termination of leases in the event of damage or destruction, and agrees that
the parties, rights and obligations in such event shall instead be governed by
this Lease.
14. Condemnation. If any part of the Building or Premises shall be taken
for any public, or quasi-public use, under any statute or by right of eminent
domain or purchase in lieu thereof, either Landlord or Tenant shall have the
right to terminate this Lease by written notice delivered within forty-five (45)
days of such taking, provided that Tenant's exercise shall be conditioned upon
the Premises, as existing following such taking, not being fit for the conduct
of Tenant's business. If neither party terminates the Lease, this Lease shall,
as to the part so taken, terminate as of the date title shall vest in the
condemnor or purchaser, and the rent payable hereunder shall be adjusted so that
Tenant shall be required to pay for the remainder of the Term only such portion
of such Rent as the value of the part of the Premises remaining after such
taking bears to the value of the entire Premises prior to such taking. All
compensation awarded upon any taking hereunder shall belong exclusively to the
Landlord. Notwithstanding any provision to the contrary contained herein, Tenant
shall have the right to make a separate claim against the appropriate
governmental authority for condemnation proceeds allocable to the unamortized
costs of the leasehold improvements made at the cost of Tenant, the removal of
Tenant's trade fixtures or removable personal property, and relocation expenses
if and only to the extent that such separate claim does not diminish Landlord's
condemnation award.
15. Advertisements and Signs. Tenant shall not place or maintain any
sign, advertisement, notice or other marking whether temporary or permanent in
nature upon or about the Premises.
16. Assignment and Subletting.
16.1 Landlord's Consent Required. Tenant shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Tenant's interest in this Lease or in the Premises,
without Landlord's prior written consent, which shall not be unreasonably
withheld. Without limiting the grounds upon which Landlord may withhold its
consent, the parties hereto agree that it shall be reasonable for Landlord to
deny consent to a proposed assignment or subletting if (a) the use to be made of
the Premises by the proposed assignee or sublessee is not the Permitted Use or
would be prohibited by any other term of this Lease; (b) the character,
reputation and financial condition of the proposed assignee or sublessee are not
satisfactory to Landlord; (c) the assignment or subletting would
15
<PAGE> 20
increase the operating costs for the Building or the burden on the Building
services, or generate additional foot traffic, elevator usage or security
concerns in the Building, or create an increased probability of the comfort
and/or safety of Landlord and other tenants in the Building being Compromised or
reduced; (d) the space will be used for a school or training facility, an
entertainment, sports or recreation facility, retail sales to the public (unless
Tenant's Permitted Use is retail sales), a personnel or employment agency, an
office or facility of any governmental or quasi-governmental agency or
authority, a place of public assembly (including without limitation a meeting
center, theater or public forum), any use by or affiliation with a foreign
government (including without limitation an embassy or consulate or similar
office, or a facility for the provision of social, welfare or clinical health
services or sleeping accommodations (whether temporary, daytime or overnight);
(e) the proposed assignee or subtenant is a current tenant in the Building or a
prospective tenant of the Building; (f) the proposed assignee or subtenant is an
entity or related to an entity with whom Landlord or any affiliate of Landlord
has had adverse dealings; (g) the proposed assignment or subletting may conflict
with any exclusive uses granted to other tenants of the Building, or with the
terms of any easement, covenant, condition or restriction, or other agreement
affecting the Building; (h) Landlord determines that the proposed assignee may
be unable to perform all of Tenant's obligations under this Lease or the
proposed subtenant may be unable to perform all of its obligations under the
proposed sublease; (i) the rental and other consideration payable by the
proposed subtenant or assignee is less than that currently being paid by tenants
under new leases of comparable space in the Building; or (j) Landlord otherwise
determines that the proposed assignment or sublease would have the effect of
decreasing the value of the Building or increasing the expenses associated with
operating, maintaining and repairing the Building. In no event may Tenant
publicly offer or advertise all or any portion of the Premises for assignment or
sublease at a rental less than that then sought by Landlord for a direct lease
(non-sublease) of comparable space in the Building. Notwithstanding the
foregoing, Tenant may assign this Lease at any time, or sublease all or part of
the Premises, without receipt of Landlord's consent (but with prior notice to
Landlord establishing that the conditions set forth in this sentence have been
complied with), to any entity which acquires all or part of Tenant, or which is
acquired in whole or in part by Tenant, or which is controlled directly or
indirectly by Tenant, or which is under common control with Tenant, or which
entity controls, directly or indirectly, Tenant ("Affiliate"), or which owns or
is owned by the Affiliate, so long as such Affiliate has a net worth, as
confirmed by Landlord, equal to or in excess of the greater of (A) the net worth
of Tenant as of the date of this Lease and (B) the net worth of Tenant
immediately prior to such proposed assignment or sublease.
16.2 Transactions Constituting Transfers Governed by this Paragraph
16. For purposes of this Paragraph 16, and without limited the events which
might constitute an assignment of this Lease or a sublease of Tenant's interest
hereunder, the following events shall be deemed an assignment or sublease, as
appropriate: (i) the issuance of equity interests (whether stock, partnership
interests or otherwise) in Tenant or any subtenant or assignee, or any entity
controlling any of them, to any person or group of related persons, in a single
transaction or a series of related or unrelated transactions, such that,
following such issuance, such person or group shall have Control (as defined
below) of Tenant or any subtenant or assignee; (ii) a transfer of Control of
Tenant or any subtenant or assignee, or any entity controlling any of them, in a
single transaction or a series of related or unrelated transactions (including,
without limitation, by consolidation, merger, acquisition or reorganization),
except
16
<PAGE> 21
that the transfer of outstanding capital stock or other listed equity interests
by persons or parties other than "insiders" within the meaning of the Securities
Exchange Act of 1934, as amended, through the "over-the-counter" market or any
recognized national or international securities exchange, shall not be included
in determining whether Control has been transferred; (iii) a reduction of
Tenant's assets to the point that this Lease is substantially Tenant's only
asset; (iv) a change or conversion in the form of entity of Tenant, any
subtenant or assignee, or any entity controlling any of them, which has the
effect of limiting the liability of any of the partners, members or other owners
of such entity; or (v) the agreement by a third party to assume, take over, or
reimburse Tenant for, any or all of Tenant's obligations under this Lease, in
order to induce Tenant to lease space with such third party. "Control" shall
mean direct or indirect ownership of 50% or more of all of the voting stock of a
corporation or 50% or more of the legal or equitable interest in any other
business entity, or the power to direct the operations of any entity (by equity
ownership, contract or otherwise).
16.3 Effect on Options. If Landlord approves of an assignment or
subletting hereunder and this Lease contains any renewal options, expansion
options, rights of first refusal, rights of first negotiation or any other
rights or options pertaining to additional space in the Building, such rights
and/or options shall not run to the subtenant or assignee, it being agreed by
the parties hereto that any such rights and options are personal to the Tenant
originally named herein and may not be transferred.
16.4 Documentation.
(a) Prior to any assignment or sublease, Tenant shall (a)
provide to Landlord the proposed assignee's or sublessee's name, legal
composition, address, financial statements for the previous three (3) years (if
available), and copies of all documents relating to Tenant's proposed assignment
or sublease, and (b) shall specify all monies and other consideration to be
received by Tenant for such assignment or sublease.
(b) In circumstances where Landlord's prior consent is required,
within thirty (30) days after the receipt of such documentation, and subject to
the provisions of Section 16.6 below, Landlord shall have the right to (a)
consent in writing to the proposed assignment or sublease subject to the terms
and conditions hereinafter set forth, or (b) notify Tenant in writing that
Landlord withholds such consent.
(c) No permitted assignment or subletting by Tenant shall be
effective until there has been delivered to Landlord a fully executed
counterpart of the assignment or sublease which expressly provides that (a) the
assignee or subtenant may not further assign or sublet the assigned or sublet
space without Landlord's prior written consent (which, in the case of a further
assignment proposed by an assignee, shall not be unreasonably withheld, subject
to Landlord's rights under the provisions of this Paragraph 16), (b) the
assignee or subtenant will comply with all of the provisions of this Lease
(applicable, in the case of a sublease, to the portion of the Premises
subleased, and excluding the obligation to pay rent as described herein), and
Landlord may enforce the Lease provisions directly against such assignee, (c) in
the case of an assignment, the assignee assumes all of Tenant's obligations
under this Lease arising on or after the date of the assignment, and (d) in the
case of a sublease, the subtenant agrees to be and remain liable for the payment
of rent pertaining to the sublet space in the amount set forth
17
<PAGE> 22
in the sublease, and for the performance of all of the terms and provisions of
this Lease applicable to such sublet space. In addition to the foregoing, no
sublease by Tenant shall be effective until there has been delivered to Landlord
a fully executed counterpart of Landlord's consent to sublease form. The failure
or refusal of a subtenant or assignee to execute any such instrument shall not
release or discharge the subtenant or assignee from its liability as set forth
above. Notwithstanding the foregoing, however, no subtenant or assignee shall be
permitted to occupy the Premises unless and until such subtenant or assignee
provides Landlord with certificates evidencing that such subtenant or assignee
is carrying all insurance coverage required of such subtenant or assignee under
this Lease.
16.5 Excess Consideration. If Landlord consents to a proposed
assignment or subletting, Tenant shall pay to Landlord as additional rent,
within ten (10) days after receipt by Tenant, any consideration paid by the
subtenant or assignee, including, in the case of a sublease, the excess of the
rent and other consideration payable by the subtenant, over the amount of Base
Rent and Additional Rent payable hereunder applicable to the subleased space.
16.6 Landlord's Right to Space. Notwithstanding any of the above
provisions of this Paragraph 16 to the contrary, if Tenant notifies Landlord
that it desires to enter into a sublease or assignment, Landlord, in lieu of
consenting to such transaction, may elect (a) in the case of an assignment or a
sublease of the entire Premises, to terminate this Lease or to sublease the
Premises from Tenant at the lesser of the rental rate payable hereunder or the
rate payable under such proposed transaction, or (y) in the case of a sublease
of less than the entire Premises, to terminate this Lease as it relates to the
space proposed to be subleased by Tenant or to sublease such portions of the
Premises at the lesser of the rental rate payable hereunder or the rate payable
under such proposed transaction. In the event Landlord elects to so terminate
this Lease or sublease such space, this Lease will terminate (or the space
proposed to be subleased will be removed from the Premises subject to this Lease
and the Base Rent and Tenant's Share under this Lease shall be proportionately
reduced) on the date the sublease or assignment was proposed by Tenant to be
effective, and Landlord may lease such space to any party, including the
prospective sublessee or assignee identified by Tenant. In any event, Tenant
shall bear the costs of any demising walls and code-related work associated with
such sublease or termination.
16.7 Terms and Conditions. In connection with any proposed
assignment or sublease, Tenant shall pay Landlord's reasonable processing costs
and attorneys' fees, regardless of whether Landlord consents to such assignment
or sublease. Each assignment or sublease shall be in form satisfactory to
Landlord and shall be subject and subordinate to the provisions of this Lease.
Once approved by Landlord, such assignment or sublease shall not be modified
without Landlord's prior written consent. Each assignee or sublessee shall
acknowledge that the termination of this Lease shall, at Landlord's sole
election, constitute a termination of every such assignment or sublease.
Notwithstanding any assignment or sublease, Tenant shall remain primarily liable
for all obligations and liabilities of Tenant under this Lease.
16.8 Landlord's Remedies. Any assignment or sublease without
Landlord's prior written consent where such consent is required shall at
Landlord's election be void, and shall at Landlord's election constitute a
default under this Lease. The consent by Landlord to any assignment or sublease
shall not constitute a waiver of the provisions of this Paragraph 16 with
respect to any subsequent assignment or sublease.
18
<PAGE> 23
16.9 No Merger. Without limiting any of the provisions of this
Paragraph 16, if Tenant has entered into any subleases of any portion of the
Premises, the voluntary or other surrender of this Lease by Tenant, or a mutual
cancellation by Landlord and Tenant, shall not work a merger, and shall, at the
option of Landlord, terminate all or any existing subleases or subtenancies or,
at the option of Landlord, operate as an assignment to Landlord of any or all
such subleases or subtenancies. If Landlord does elect that such surrender or
cancellation operate as an assignment of such subleases or subtenancies,
Landlord shall in no way be liable for any previous act or omission by Tenant
under the subleases or for the return of any deposit(s) under the subleases
that have not been actually delivered to Landlord, nor shall Landlord be bound
by any sublease modification(s) executed without Landlord's consent or for any
advance rental payment by the subtenant in excess of one month's rent.
16.10 Assignment of Sublease Rents. Tenant hereby absolutely and
irrevocably assigns to Landlord any and all rights to receive rent and other
consideration from any sublease and agrees that Landlord, as assignee or as
attorney-in-fact for Tenant for purposes hereof, or a receiver for Tenant
appointment on Landlord's application may (but shall not be obligated to)
collect such rents and other consideration and apply the same toward Tenant's
obligations to Landlord under this Lease; provided, however, that Landlord
grants to Tenant at all times prior to occurrence of any breach or default by
Tenant a revocable license to collect such rents (which license shall
automatically and without notice be and be deemed to have been revoked and
terminated immediately upon any Event of Default [defined below]).
17. Default.
17.1 Event of Default. The occurrence of any of the following events
(an "Event of Default") shall constitute a default and breach of this Lease by
Tenant:
(a) Tenant fails to occupy and use the Premises for fifteen (15)
consecutive days, which failure shall be deemed an abandonment of the Premises
by Tenant; or
(b) The failure by Tenant to make any payment of rent or any
other required payment, as and when due; or
(c) Tenant's failure to perform any other term, covenant or
condition contained in this Lease and such failure shall have continued for
thirty (30) days after written notice of such failure is given to Tenant;
provided that where such failure cannot reasonably be cured within said thirty
(30) day period, Tenant shall not be in default if Tenant commences such cure
within said thirty (30) day period and thereafter diligently pursues all
reasonable efforts to complete said cure until completion thereof; or
(d) Tenant fails to deliver any estoppel certificate, pursuant
to Paragraph 20 below, or subordination agreement, pursuant to Paragraph 21
below, or other document pursuant to Paragraph 19 below, within the applicable
period set forth therein;
(e) Tenant makes or has made or furnishes or has furnished any
warranty, representation or statement to Landlord in connection with this
Lease, or any other
19
<PAGE> 24
agreement made by Tenant for the benefit of Landlord, which is or was false or
misleading in any material respect when made or furnished, or
(f) Tenant assigns this Lease or subleases any portion of the
Premises in violation of Paragraph 16 above; or
(g) A default by Tenant occurs under any other lease between
Tenant and Landlord or any affiliate of Landlord, and Tenant fails to cure such
default within the applicable period set forth therein; or
(h) the bankruptcy or insolvency of Tenant, transfer by Tenant
in fraud of creditors, an assignment by Tenant for the benefit of creditors, or
the commencement of any proceedings of any kind by or against Tenant under any
provision of the Federal Bankruptcy Act or under any other insolvency,
bankruptcy or reorganization act unless, in the event any such proceedings are
involuntary, Tenant is discharged from the same within thirty (30) days
thereafter.
17.2 Remedies. Upon any Event of Default, Landlord shall have the
following remedies, in addition to all other remedies now or hereafter provided
by law or equity:
(a) Termination. In any notice given pursuant to Paragraph 17.1
above, Landlord in its sole discretion may elect to declare a forfeiture of this
Lease as provided in Section 1161 of the California Code of Civil Procedure, and
provided that Landlord's notice states such an election, Tenant's right to
possession shall terminate and this Lease shall terminate, unless on or before
the date specified in such notice (conforming to the periods described in
Paragraph 17.1 above), all arrears of rent and all other sums payable by Tenant
under this Lease and all costs and expenses incurred by or on behalf of Landlord
hereunder, including attorneys' fees incurred in connection with such defaults,
shall have been paid by Tenant and all other breaches of this Lease by Tenant at
the time existing shall have been fully remedied to the satisfaction of
Landlord. Provided that Landlord serves notice in accordance with the provisions
of this Lease, Tenant hereby waives any notice required by Section 1161 of the
California Code of Civil Procedure. Upon such termination, Landlord may, at its
option and without any further notice or demand, in addition to any other rights
and remedies given hereunder or by law, exercise its remedies relating hereto in
accordance with the following provisions:
(i) In the event of any such termination of this Lease,
Landlord may then or at any time thereafter by judicial process, re-enter the
Premises and remove therefrom all persons and property and again repossess and
enjoy the Premises, without prejudice to any other remedies that Landlord may
have by reason of Tenant's default or of such termination.
(ii) In the event of any such termination of this Lease, and
in addition to any other rights and remedies Landlord may have, Landlord shall
have all of the rights And remedies of a landlord provided by Section 1951.2 of
the California Civil Code or any successor code section. Upon such termination,
in addition to any other rights and remedies to which Landlord may be entitled
under applicable law, Landlord shall be entitled to recover
20
<PAGE> 25
from Tenant: (i) the worth at the time of award of the unpaid Rent and other
amounts which had been earned at the time of termination; (ii) the worth at the
time of award of the amount by which the unpaid Rent which would have been
earned after termination until the time of award exceeds the amount of such Rent
loss that the Tenant proves could have been reasonably avoided; (iii) 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 Rent loss that the
Tenant proves could be reasonably avoided; and (iv) any other amount necessary
to compensate Landlord for all the detriment 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 therefrom. The "worth at the time of award" of
the amounts referred to in (i) and (ii) shall be computed with interest at the
lesser of eighteen percent (18%) per annum or the maximum rate allowed by law.
The "worth at the time of award" of the amount referred to in (iii) shall be
computed by reference to competent appraisal evidence or the formula prescribed
by and using the lowest discount rate permitted under applicable law.
(iii) For purposes of computing unpaid Rent which would have
accrued and become payable under this Lease pursuant to the provisions of
Paragraph 17(2)(a)(ii) above, unpaid Rent shall consist of the aggregate sum
of:
(1) the total Base Rent for the balance of the Term;
plus
(2) any other amounts which Tenant has agreed to pay or
which Tenant owes to Landlord under the terms of this Lease, except any amounts
owed for increases (estimated or actual) in Operating Expenses and Tax Expenses;
plus
(3) a computation of Tenant's Share of the Operating
Expenses and Tax Expenses increases for the balance of the Term, the assumed
Operating Expenses and Tax Expenses for the calendar year of the default and
each future calendar year in the Term to be equal to the Operating Expenses and
Tax Expenses for the final calendar year prior to such termination, increased at
a per annum rate equal to the mean average rate of inflation for the proceeding
three (3) calendar years as determined by reference to the Consumer Price Index,
All Items, San Francisco-Oakland-San Jose.
(iv) After terminating this Lease, Landlord may remove any
and all personal property located in the Premises and place such property in a
public or private warehouse or elsewhere at the sole cost and expense of Tenant.
In the event that Tenant shall not immediately pay the cost of storage of such
property after the same has been stored for a period of thirty (30) days or
more, Landlord may sell any or all thereof at a public or private sale in such
manner and at such times and places as Landlord in its sole discretion may deem
proper, without notice to or demand upon Tenant. Tenant waives all claims for
damages that may be caused by Landlord's removing or storing or selling the
property as herein provided, and Tenant shall indemnify and hold Landlord free
and harmless from and against any and all losses, costs and damages, including
without limitation all costs of court and attorneys' fees of Landlord occasioned
thereby.
21
<PAGE> 26
(b) Continuation After Default. If an Event of Default exists
under this Lease, Landlord shall also have the remedy described in California
Civil Code Section 1951.4 (Landlord may continue this Lease in effect after
Tenant has breached this Lease and recover rent as it becomes due; provided,
however that Tenant shall have the right to sublet or assign this Lease, subject
only to reasonable limitations). Acts of maintenance or preservation or efforts
to relet the Premises or the appointment of a receiver upon initiative of
Landlord to protect Landlord's interest under this Lease shall not constitute a
termination of Tenant's right to possession.
(c) Bankruptcy/Insolvency. In the event of the occurrence of any
of the events specified in Paragraph 17.1(i) of this Lease, if Landlord shall
not choose to exercise, or by law shall not be able to exercise, its rights
hereunder to terminate this Lease, then, in addition to any other rights of
Landlord hereunder or by law, (1) Landlord my discontinue the services provided
pursuant to Paragraph 9 of this Lease, unless Landlord has received compensation
in advance for such services (it being agreed that it is reasonable for Landlord
to require the deposit of three (3) months' estimated cost of performing such
services) in the amount of Landlord's reasonable estimate of the compensation
required with respect to such services, and (2) neither Tenant, as
debtor-in-possession, nor any trustee or other person (collectively, the
"Assuming Tenant") shall be entitled to assume this Lease unless on or before
the date of such assumption, the Assuming Tenant (a) cures, or provides adequate
assurance that the Assuming Tenant will promptly cure, any existing default
under this Lease, (b) compensates, or provides adequate assurance that the
Assuming Tenant will promptly compensate, Landlord for any pecuniary loss
(including, without limitation, attorneys' fees and disbursements) resulting
from such default, and (c) provides adequate assurance of future performance
under this Lease; provided, however, that:
(i) The Assuming Tenant shall also deposit with Landlord, as
security for the timely payment of all Rent, an amount equal to six months'
Rent;
(ii) The obligations imposed upon the Assuming Tenant shall
continue with respect to Tenant or any assignee of the Lease after the
completion of the bankruptcy proceedings; and
(iii) for purposes of this Paragraph 17, Landlord and Tenant
acknowledge that, in the context of a bankruptcy proceeding of Tenant, at a
minimum "adequate assurance" shall mean:
(a) The Assuming Tenant has and will continue to have
sufficient unencumbered assets after the payment of all secured obligations and
administrative expenses to assure Landlord that the Assuming Tenant will have
sufficient funds to fulfill the obligations of Tenant under this Lease as they
become due, and to keep the Premises properly staffed with sufficient employees
to conduct a fully-operational, actively-promoted business on the Premises; and
(b) The Bankruptcy Court shall have entered an order
segregating sufficient cash payable to Landlord and the Assuming Tenant shall
have granted a valid and perfected first lien and security interest or mortgage
in property of Tenant or Trustee,
22
<PAGE> 27
acceptable as to value and kind to Landlord, to secure to Landlord the
obligation of the Trustee or Tenant to cure monetary or non-monetary defaults
under this Lease within the time periods set forth above.
The foregoing shall not limit Landlord's other rights and remedies
under the United States Bankruptcy Code including but not limited to the right
to file a claim against Tenant and obtain the maximum amount allowed in
connection with such bankruptcy proceeding.
17.3 No Relief From Forfeiture After Default. Tenant waives all
rights of redemption or relief from forfeiture under California Code of Civil
Procedure Sections 1174 and 1179, and under any other present or future law, in
the event Tenant is evicted or Landlord otherwise lawfully takes possession of
the Premises by reason of any Event of Default.
17.4 Landlord's Right to Perform Tenant's Obligations. If Tenant
shall at any time fail to perform any obligation required of Tenant hereunder,
and provided Tenant has been provided a thirty (30) day notice from Landlord
concerning such obligation, then Landlord may, at its option, perform such
obligation to the extent Landlord deems desirable, and may pay any and all
reasonable expenses incidental thereto and employ counsel. No such action by
Landlord shall be deemed a waiver by Landlord of any of Landlord's rights or
remedies, or a release of Tenant from performance of such obligation. All sums
so paid by Landlord, together with an administrative fee of five percent (5%) of
the amount so paid, shall be due and payable by Tenant to Landlord on the day
immediately following Landlord's payment thereof. Landlord shall have the same
rights and remedies for the nonpayment of any such sums as for default by Tenant
in the payment of rent in addition to any other remedy available to Landlord.
17.5 Remedies Not Exclusive. No remedy or election hereunder shall
be deemed exclusive but shall, wherever possible, be cumulative with all other
remedies available.
17.6 Termination, Surrender and Abandonment. No act or conduct of
Landlord, including, without limitation, efforts to relet the Premises, an
action in unlawful detainer or service of notice upon Tenant or surrender of
possession by Tenant pursuant to such notice or action, shall extinguish the
liability of Tenant to pay rent or other sums due hereunder or terminate this
Lease, unless Landlord notifies Tenant in writing of Landlord's election to
terminate this Lease. No act or conduct of Landlord, including the acceptance of
the keys to the Premises, other than a written acknowledgment of acceptance of
surrender signed by Landlord, shall be deemed to be or constitute an acceptance
of the surrender of the Premises by Tenant prior to the expiration of the Lease
term. The surrender of this Lease by Tenant, voluntarily or otherwise, shall, at
Landlord's option, operate as an assignment to Landlord of any and all existing
assignments and subleases, or Landlord may elect to terminate any or all of such
assignments and subleases by notifying the assignees and sublessees of its
election within fifteen (15) days after such surrender.
17.7 Attorney's Fees. If as a result of any breach or default in the
performance of any of the provisions of this Lease, Landlord uses the services
of an attorney in order to secure compliance with such provisions or recover
damages therefor, or to terminate this Lease or evict Tenant, Tenant shall
reimburse Landlord upon demand for any and all reasonable attorneys' fees and
expenses so incurred by Landlord, provided that if Tenant shall be the
23
<PAGE> 28
prevailing party in any legal action brought by Landlord against Tenant, Tenant
shall be entitled to recover reasonable attorneys' fees and expenses incurred by
Tenant.
17.8 Landlord's Default. In the event of any failure by Landlord to
perform any of Landlord's obligations under this Lease, Tenant will give
Landlord and any Lender (defined in Paragraph 19 below) written notice
specifying such default with particularity, and Landlord shall thereupon have
sixty (60) days in which to cure any such default. Unless and until Landlord (or
such Lender) fails to so cure any default after such notice, Tenant shall not
have any remedy or cause of action by reason thereof. Notwithstanding anything
to the contrary set forth in this Lease, in no event shall Landlord be liable
for any consequential or remote damages, including, without limitation, loss or
interruption of Tenant's business.
18. Effect of Conveyance. The term "Landlord" as used in this Lease,
means only the current owner(s) of the Building so that in the event of any sale
or other transfer of the Building, the transferor shall be deemed to be relieved
of all obligations of the Landlord hereunder from and after the date of such
sale (except such obligations arising before the date of such sale), and the
transferee shall be deemed to have assumed and agreed to perform any and all
obligations of Landlord hereunder arising from and after said date.
19. Instruments Required by Lender. If any lender or ground lessor that
intends to acquire an interest in, or holds a mortgage, ground lease or deed of
trust encumbering any portion of the Property ("Lender") should require either
the execution by Tenant of an agreement requiring Tenant to send such Lender
written notice of any default by Landlord under this Lease, giving such Lender
the right to cure such default until such Lender has completed foreclosure, and
preventing Tenant from terminating this Lease unless such default remains
uncured after foreclosure has been completed, and/or any modification of the
agreements, covenants, conditions or provisions of this Lease, then Tenant
agrees that it shall, within ten (10) days after Landlord's request, execute and
deliver such agreement and modify this Lease as required by such Lender;
provided, however, that no such modification shall affect the length of the term
or increase the rent payable by Tenant hereunder. Tenant acknowledges and agrees
that its failure to timely execute any such agreement or modification required
by such lender or ground lessor may cause Landlord serious financial damage by
causing the failure of a financing transaction and giving Landlord all of its
rights and remedies under Paragraph 17, including its right to damages caused by
the loss of such financing.
20. Estoppel Certificates. Tenant shall, from time to time, within ten
(10) days after receipt from Landlord of written request therefor, deliver a
duly executed and acknowledged and factually accurate estoppel certificate to
Landlord certifying: (i) that this Lease is unmodified and in full force and
effect, or if there has been any modification, that the same is in full force
and effect as modified, and stating all such modifications; (ii) whether or not
there is then existing any claim by Tenant of default hereunder by Landlord and,
if so, specifying the nature thereof; and (iii) the dates to which the rent and
other charges payable hereunder by Tenant have been paid. If Tenant fails to
timely deliver an estoppel certificate pursuant to the provisions of this
Paragraph 20, Tenant acknowledges that such failure may cause Landlord serious
financial damage by causing the failure of a financing or sale transaction and
giving Landlord all of its rights under Paragraph 17, including its right to
damages caused by the loss of such financing or sale.
24
<PAGE> 29
21. Subordination and Attornment. Tenant agrees that this Lease is
subject and subordinate to any mortgage, deed of trust, any other instrument of
security, or ground lease which is now or shall be placed on the Property. This
subordination is hereby made effective without any further act of Tenant. Tenant
shall, at any time hereafter, on demand, execute any instruments, releases, or
other documents that may be required by any Lender under any security instrument
for the purpose of subjecting and subordinating this Lease to the lien of such
instrument. Tenant shall attorn to any third party purchasing or otherwise
acquiring the Premises at any sale or other proceeding or pursuant to the
exercise of any rights, powers or remedies under any instruments of security or
ground leases now or hereafter encumbering all or any part of the Premises, as
if such third party had been named as Landlord under this Lease.
22. Notices. All notices, demands or requests to be given to Tenant or
Landlord shall be in writing, delivered personally or by commercial courier or
by United States mail, postage prepaid, certified return receipt requested and
addressed (a) to Tenant at the Premises or (b) to Landlord at the address
specified in the Lease Summary or as it may otherwise from time to time
designate to Tenant in writing. Each such notice, demand or request shall be
deemed to have been received by Tenant or Landlord upon actual delivery.
23. No Accord and Satisfaction. No payment by Tenant, or receipt by
Landlord, of an amount which is less than the full amount of Base Rent and all
other sums payable by Tenant hereunder at such time shall be deemed to be other
than on account of (a) the earliest of such other sums due and payable, and
thereafter (b) to the earliest Base Rent or other sum due and payable hereunder.
No endorsement or statement on any check or any letter accompanying any payment
of Base Rent or such other sums shall be deemed an accord and satisfaction, and
Landlord may accept any such check or payment without prejudice to Landlord's
right to receive payment of the balance of such rent and/or other sums, or
Landlord's right to pursue Landlord's remedies.
24. Attorneys' Fees. If any action or proceeding at law or in equity, or
an arbitration proceeding shall be brought to recover any rent under this Lease,
or for or on account of any breach of or to enforce or interpret any of the
terms, covenants, or conditions of this Lease, or for the recovery of possession
of the Premises, the Prevailing Party (defined below) shall be entitled to
recover from the other party as a part of such action or in a separate action
brought for that purpose, its reasonable attorneys' fees and costs and expenses
incurred in connection with the prosecution or defense of such action.
"Prevailing Party" as used in this paragraph shall include, without limitation,
a party who brings an action against the other after the other is in breach or
default, if such action is dismissed upon the other's payment of the sums
allegedly due or upon the performance of the covenants allegedly breached, or if
the party commencing such action or proceeding obtains substantially the relief
sought by it in such action, whether or not such action proceeds to a final
judgment or determination.
25. Surrender; Holding Over
25.1 Surrender. Upon the expiration or termination of this Lease,
Tenant shall surrender the Premises and all Tenant Improvements and Alterations
to Landlord broom-clean and in their original condition, except for reasonable
wear and tear, damage from casualty or condemnation and any changes resulting
from approved Alterations; provided, however, that
25
<PAGE> 30
prior to the expiration or termination of this Lease Tenant shall remove all
telephone and other cabling installed in the Building by or for Tenant and
remove from the Premises all Tenant's personal property, trade fixtures and
Alterations that Tenant has the right or is required by Landlord to remove under
the provisions of this Lease, and repair any damage caused by such removal. If
such removal is not completed before the expiration or termination of the Term,
Landlord shall have the right (but no obligation) to remove the same, and Tenant
shall pay Landlord on demand for all costs of removal and storage thereof
(including Landlord's administrative fee of fifteen percent (15%) of the cost of
performing such work) and for the rental value of the Premises for the period
from the end of the Term through the end of the time reasonably required for
such removal. Landlord shall also have the right to retain or dispose of all or
any portion of such property if Tenant does not pay all such costs and retrieve
the property within ten (10) days after notice from Landlord (in which event
title to all such property described in Landlord's notice shall be transferred
to and vest in Landlord). Tenant waives all claims against Landlord for any
damage or loss to Tenant resulting from Landlord's removal, storage, retention,
or disposition of any such property. Upon expiration or termination of this
Lease or of Tenant's possession, whichever is earliest, Tenant shall surrender
all keys to the Premises or any other part of the Building and shall deliver to
Landlord all keys for or make known to Landlord the combination of locks on all
safes, cabinets and vaults that may be located in the Premises. Tenant's
obligations under this Paragraph 25.1 shall survive the expiration or
termination of this Lease.
25.2 Holdover Rent. This Lease shall terminate without further
notice at the expiration of the Term. Any holding over after the expiration of
the Term without proration for daily occupancy, shall be construed to be a
tenancy from month to month, at a monthly rental of two hundred percent (200%)
of the last applicable Base Rent and Additional Rent payable hereunder, and
shall otherwise be on the terms and conditions herein specified.
25.3 Indemnity. To the fullest extent permitted under applicable
law, Tenant shall indemnify, defend, protect and hold Landlord harmless from and
against any and all loss, cost, damage or liability incurred by or asserted
against Landlord and arising directly or indirectly from Tenant's failure to
timely surrender the Premises, including but not limited to (i) any rent payable
by or any loss, cost, or damages, including lost profits, claimed by any
prospective tenant of the Premises or any portion thereof, and (ii) Landlord's
damages as a result of such prospective tenant rescinding or refusing to enter
into the prospective lease of the Premises or any portion thereof by reason of
such failure to timely surrender the Premises.
26. Landlord Liability. The term "Landlord," as used in this Lease,
shall mean only the owner or owners of the Building at the time in question.
Notwithstanding any other term or provision of this Lease, the liability of
Landlord for its obligations under this Lease is limited solely to Landlord's
interest in the Building as the same may from time to time be encumbered, and no
personal liability shall at any time be asserted or enforceable against any
other assets of Landlord or against Landlord's partners or members or its or
their respective partners, shareholders, members, directors, officers or
managers on account of any of Landlord's obligations or actions under this
Lease.
27. Entry, Inspection and Closure. Upon reasonable oral or written
notice to Tenant (and without notice in emergencies), Landlord and its
authorized representatives may enter the
26
<PAGE> 31
Premises at all reasonable times to determine whether the Premises are in good
condition, to determine whether Tenant is complying with its obligations under
this Lease, to perform any maintenance or repair of the Premises or the Building
that Landlord has the right or obligation to perform, to install or repair
improvements for other tenants where access to the Premises is required for such
installation or repair, to serve, post or keep posted any notices required or
allowed under the provisions of this Lease, to show the Premises to prospective
brokers, agents, buyers, transferees, mortgagees or tenants, or to do any other
act or thing necessary for the safety or preservation of the Premises or the
Building. When reasonably necessary Landlord may temporarily close entrances,
doors, corridors, elevators or other facilities in the Building without
liability to Tenant by reason of such closure. Landlord shall conduct its
activities under this Paragraph in a manner that will minimize inconvenience to
Tenant without incurring additional expense to Landlord. In no event shall
Tenant be entitled to an abatement of rent on account of any entry by Landlord,
and Landlord shall not be liable in any manner for any inconvenience, loss of
business or other damage to Tenant or other persons arising out of Landlord's
entry on the Premises in accordance with this Paragraph. No action by Landlord
pursuant to this paragraph shall constitute an eviction of Tenant, constructive
or otherwise, entitle Tenant to an abatement of rent or to terminate this Lease
or otherwise release Tenant from any of Tenant's obligations under this Lease.
28. Rules and Regulations. Tenant shall be bound by and shall comply
with the rules and regulations attached to and made a part of this Lease as
Exhibit C to the extent those rules and regulations are not in conflict with the
terms of this Lease, as well as any reasonable rules and regulations hereafter
adopted by Landlord for all tenants of the Building, upon notice to Tenant
thereof (collectively, the "Building Rules"). Landlord shall not be responsible
to Tenant or to any other person for any violation of, or failure to observe,
the Building Rules by any other tenant or other person.
29. Consents and Approvals. Wherever the consent, approval, judgment or
determination of Landlord is required or permitted under this Lease, Landlord
may exercise its sole discretion in granting or withholding such consent or
approval or in making such judgment or determination without reference to any
extrinsic standard of reasonableness, unless the provision providing for such
consent, approval, judgment or determination specifies that Landlord's consent
or approval is not to be unreasonably withheld, or that the standard for such
consent, approval, judgment or determination is to be reasonable, or otherwise
specifies the standards under which Landlord may withhold its consent. Whenever
Tenant requests Landlord to take any action or give any consent or approval,
Tenant shall reimburse Landlord for all of Landlord's costs incurred in
reviewing the proposed action or consent (whether or not Landlord consents to
any such proposed action), including without limitation reasonable attorneys' or
consultants' fees and expenses, within ten (10) days after Landlord's delivery
to Tenant of a statement of such costs. If it is determined that Landlord failed
to give its consent or approval where it was required to do so under this Lease,
Tenant's sole remedy will be an order of specific performance or mandatory
injunction of the Landlord's agreement to give its consent or approval. The
review and/or approval by Landlord of any item shall not impose upon Landlord
any liability for accuracy or sufficiency of any such item or the quality or
suitability of such item for its intended use. Any such review or approval is
for the sole purpose of protecting Landlord's interest in the Real Property, and
neither Tenant nor any Tenant Party nor
27
<PAGE> 32
any person or entity claiming by, through or under Tenant, nor any other third
party shall have any rights hereunder by virtue of such review and/or approval
by Landlord.
30. Reserved Rights. Landlord retains and shall have the rights set
forth below, exercisable without notice and without liability to Tenant for
damage or injury to property, person or business and without effecting an
eviction, constructive or actual, or disturbance of Tenant's use or possession
of the Premises or giving rise to any claim for rent abatement:
(a) To grant to anyone the exclusive right to conduct any business
or render any service in or to the Building and its tenants,
provided that such exclusive right shall not operate to require
Tenant to use or patronize such business or service or to
exclude Tenant from its use of the Premises expressly permitted
herein.
(b) To perform, or cause or permit to be performed, at any time and
from time to time, including during Business Hours, construction
in the common areas and facilities or other leased areas in the
Real Property.
(c) To reduce, increase, enclose or otherwise change at any time and
from time to time the size, number, location, lay-out and nature
of the common areas and facilities and other tenancies and
premises in the Real Property and to create additional rentable
areas through use or enclosure of common areas.
31. Financial Statements. Upon submission of this Lease to Landlord and
at any time thereafter within ten (10) days after Landlord's request therefor,
Tenant shall furnish to Landlord copies of true and accurate financial
statements prepared in accordance with generally accepted accounting principles,
reflecting Tenant's then current financial situation (including without
limitation balance sheets, statements, of profit and loss, and changes in
financial condition), Tenant's most recent audited or certified annual financial
statements, and Tenant's federal income tax returns pertaining to Tenant's
business, and in addition shall cause to be furnished to Landlord similar
financial statements and tax returns for any guarantor(s) of this Lease. Tenant
agrees to deliver to any lender, prospective lender, purchaser or prospective
purchaser designated by Landlord such financial statements of Tenant as may be
reasonably requested by such lender or purchaser.
32. Parking. No parking rights are conveyed to Tenant pursuant to this
Lease.
33. General Provisions.
33.1 Entire Agreement. This instrument, together with the Lease
Summary and the exhibits attached hereto, constitutes the entire agreement made
between the parties hereto and may not be modified orally or in any manner other
than by an agreement in writing signed by all of the parties hereto or their
respective successors in interest.
33.2 Timeliness. Time is of the essence with respect to the
performance of each and every provision of this Lease in which time of
performance is a factor.
28
<PAGE> 33
33.3 Captions. The captions of the numbered paragraphs of this Lease
are inserted solely for the convenience of the parties hereto and shall have no
effect upon the construction or interpretation of any part hereof.
33.4 California Law. This Lease shall be construed and interpreted
in accordance with the laws of the State of California, with jurisdiction and
venue in Santa Clara County, California.
33.5 Partial Invalidity. If any provision of this Lease is held by a
court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the provisions hereof shall nonetheless continue in full force and
effect.
33.6 No Warranties. Any agreements, warranties or representations
not expressly contained herein shall not bind either Landlord or Tenant.
33.7 Joint and Several Liability. If Tenant is more than one person
or entity, each such person or entity shall be jointly and severally liable
under the Lease.
33.8 Binding on Successors. The covenants and conditions herein
contained, subject to the provisions as to assignment, shall apply to and be
binding upon the parties hereto and their respective successors in interest.
33.9 Authority. The parties hereby represent and warrant that they
have all necessary power and authority to execute and deliver this Lease on
behalf of Landlord and Tenant, respectively.
33.10 No Light, Air or View Easement. Any diminution or shutting
off of light, air or view by any structure which may be erected on lands
adjacent to or in the vicinity of the Building shall in no way affect this
Lease, entitle Tenant to any reduction of rent or impose any liability upon
Landlord.
33.11 Brokers. Tenant has not engaged any other broker, finder or
agent other than as set forth in the Lease Summary. Tenant hereby agrees to
indemnify, defend, protect and hold Landlord harmless from and against any and
all claims for commissions arising from its dealings with any other broker or
agent.
33.12 Force Majeure. If either party hereto shall be delayed or
prevented from the performance of any act required hereunder (other than
Tenant's obligation to pay rent and any other sums due hereunder) by reason of
acts of God, strikes, inability to procure materials, restrictive governmental
laws or regulations, delay by the other party hereto or other cause without
fault and beyond the control of the party obligated to perform (financial
inability excepted), then upon notice to the other party, the performance of
such act shall be excused for the period of the delay and the period for the
performance of such act shall be extended for a period equal to the period of
such delay; provided, however, the party so delayed or prevented from
performing shall exercise good faith efforts to remedy any such cause of delay
or cause preventing performance.
29
<PAGE> 34
33.13 Exhibits/Rider. The Exhibits and Rider(s) attached hereto are
incorporated herein and form a part of this Lease.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease on the
dates specified below immediately adjacent to their respective signatures.
Delivery of this Lease to Landlord, duly executed by Tenant, constitutes an
offer by Tenant to lease the Premises as herein set forth, and under no
circumstances shall such delivery be deemed to create an option or reservation
to lease the Premises for the benefit of Tenant. This Lease shall only become
effective and binding upon execution of this Lease by Landlord and delivery of a
signed copy to Tenant.
"LANDLORD" "TENANT"
505 HAMILTON AVENUE PARTNERS
a California general partnership GARAGE.COM
a California corporation
By: CHARLES KING AND ASSOCIATES,
a California limited partnership By: /s/ GUY KAWASAKI
-----------------------------
Its: CEO
----------------------------
Its: General Partner
By: /s/ WILLIAM REICHERT
-----------------------------
By: The Charles King, Jr., Its: CEO
Revocable Trust ----------------------------
Its: General Partner
By: /s/ CHARLES W. KING, JR.
--------------------------------
Charles W. King, Jr.,
Trustee
30
<PAGE> 35
EXHIBIT A
PREMISES
31
<PAGE> 36
EXHIBIT B
WORK LETTER
1. General.
(a) Purpose. The Purpose of this Agreement is to set forth the
manner in which the Tenant Improvements (i.e., the improvements to be
constructed within the Premises) are to be constructed, who will design and
construct the Tenant Improvements and the allocation of the cost of the Tenant
Improvements.
(b) Terms. All terms used herein and not herein defined shall have
the same meaning as the defined term in the Lease.
(c) Condition of Premises. Except for the Tenant Improvements to be
constructed pursuant to this Agreement, Tenant accepts the Premises in their "as
is" condition and acknowledges that Tenant has had an opportunity to inspect the
Premises prior to signing the Lease.
2. Commencement Date. The Commencement Date shall be determined in
accordance with the Lease Summary and Paragraph 2 of the Lease.
3. Selection of Designer. The space Plans (defined below) shall be
prepared by a designer selected by Tenant and approved in advance by Landlord
(such approval not to be unreasonably withheld or delayed) ("Designer"). Tenant
shall at all times cooperate fully with Designer in Designer's efforts to timely
complete the Plans.
4. Costs.
(a) Landlord's Allowance. Pursuant to the terms set forth below and
as Landlord's sole contribution to the cost of the design and construction of
the Tenant Improvements, Landlord shall contribute an amount up to the amount
specified in the Lease Summary as "Landlord's Allowance".
(b) Tenant's Cost. Any cost incurred in the design or construction
of the Tenant Improvements in excess of Landlord's Allowance shall be borne by
Tenant, in accordance with the terms and conditions set forth below. Prior to
the construction of the Tenant Improvements, Contractor (defined in Paragraph 6
below) shall submit an estimate of the total cost of completing the Tenant
Improvements. In the event that the aggregate of the cost estimated by
Contractor and the cost of designing and completion of the Tenant Improvements
(collectively, the "Improvements Cost") exceeds Landlord's Allowance, Tenant
shall deliver funds equal to such excess to Landlord prior to the commencement
of construction. In the event of any change order or any other event which
increases the Improvements Cost, Tenant shall, within ten (10) days following
delivery of notice to Tenant from Landlord, deliver to Landlord funds equal to
such increase. If Tenant fails to timely deliver such funds to Landlord,
Landlord
32
<PAGE> 37
shall have no obligation to continue the work of the Tenant Improvements and may
cease such work until payment is received.
(c) Construction Management Fee. Landlord shall receive a
construction management fee in the amount of five percent (5 %) of the
Improvements Cost, which shall be deducted from Landlord's Allowance.
(d) Excess Landlord's Allowance. If Landlord's Allowance exceeds
the aggregate of the Improvements Costs and Landlord's Construction Management
Fee, any such excess may be applied by Tenant toward the completion of
alterations as the installation of equipment and/or wiring within the Premises,
provided that all such alterations shall be carried out in accordance with the
provisions of Article 5 of the Lease. Additionally, if and to the extent that
Tenant has not used all of such excess Landlord's Allowance on or before
December 31, 1998, any remaining Landlord's Allowance shall be revert back to
Landlord.
5. Preparation of Plans.
(a) Submittal of Plans. Landlord shall submit to Tenant proposed
plans for the Tenant Improvements ("Plans") prepared by Designer. Tenant shall
approve such Plans within three (3) business days of receipt or designate by
written notice to Landlord the specific changes required to be made to the Space
Plan, which changes, if approved by Landlord, shall be made by Landlord as soon
as reasonably possible. This procedure shall be repeated until the Plans are
finally approved by Tenant.
(b) Limitation of Landlord's Liability. Tenant agrees and
understands that Landlord shall not be the guarantor of, nor responsible for,
the correctness or accuracy of any of the Plans or the compliance of the Plans
with applicable laws.
6. Construction and Payment.
(a) Construction of Tenant Improvements. Landlord shall retain a
contractor ("Contractor") to complete the Tenant Improvements in conformance
with the approved Plans and all applicable laws. Landlord shall make
arrangements to construct, as soon as reasonably possible, consistent with
industry custom and practice and all applicable laws, the Tenant Improvements.
Whenever possible and practical, Landlord will use the items and materials
designated in the approved Plans for the construction of the Tenant
Improvements. However, whenever Landlord determines in its judgment that it is
not practical or efficient to use such materials, Landlord shall have the right,
upon receipt of Tenant's consent, which consent shall not be unreasonably
withheld or delayed, to substitute comparable items and materials.
(b) Tenant's Changes. In the event that Tenant requests any changes
from the approved Plans which changes shall be requested in a written notice to
Landlord, Landlord shall not unreasonably withhold its consent to any such
changes, provided the changes do not adversely affect the Building's structure,
systems, equipment, security system or appearance. The costs charged by Landlord
to Tenant caused by Tenant's requesting such changes shall be the amount of
money Landlord is required to pay to revise any plans, including, without
33
<PAGE> 38
limitation, the approved plans, and to cause the Tenant Improvements, as
reflected by the revised approved Plans to be constructed above the costs that
Landlord would have had to pay to cause the Tenant Improvements to be
constructed if no changes had been made ("Differential"), plus an amount equal
to ten percent (10%) of the Differential to compensate Landlord for its time and
efforts in connection with such changes.
7. Substantially Complete. As used herein, the terms "Substantially
Complete" or "Substantial Completion" shall mean that the Tenant Improvements
have been completed, notwithstanding the fact that minor details of
construction, mechanical adjustments or decorations which do not materially
interfere with Tenant's use of the Premises remain to be performed (items
normally referred to as "punchlist" items). The Premises shall be deemed
Substantially Complete even though Tenant's furniture, telephones, telexes,
telecopiers, photocopy machines, computers and other business machines or
equipment have not been installed, the purchase and installation of which shall
be Tenant's sole responsibility and which shall be carried out pursuant to the
terms of Paragraph 8 below. Landlord shall cause the punchlist items to be
corrected as soon as reasonably possible and practical, but Landlord's failure
to complete such items as of the date of Substantial Completion of the Premises
shall in no event delay the Commencement Date.
8. Tenant's Work. Any items of work not shown in the approved Plans,
including, for example, the installation of telephone service, security system
or furnishings (including wiring and cabling connections or installations), for
which Tenant contracts separately, and (subject to the provisions of Section
4(d) above) at Tenant's sole cost and expense (hereinafter "Tenant's Work"),
shall be subject to Landlord's reasonable policies and schedules and shall be
conducted in such a way as not to hinder, cause any disharmony with or delay any
work of improvement in the Building. Tenant's suppliers, contractors, workmen
and mechanics shall be subject to approval by Landlord (not to be unreasonably
withheld or delayed) prior to the commencement of their work and shall be
subject to Landlord's administrative control while performing their work. Tenant
shall cause its suppliers and contractors to engage only labor that is
harmonious and compatible with other labor working in the Building. In the event
of any labor disturbance caused by persons employed by Tenant or Tenant's
contractor, Tenant shall immediately, and at Tenant's sole cost and expense,
take all actions necessary to eliminate such disturbance. If at any time any
supplier, contractor, workman or mechanic performing Tenant's Work hinders or
delays any other work of improvement in the Building or performs any work which
may or does impair the quality, integrity or performance of any portion of the
Building, Tenant shall, at Tenant's sole cost and expense, cause such supplier,
contractor, workman or mechanic to leave the Building and remove all his tools,
equipment and materials immediately upon written notice delivered to Tenant and
Tenant shall reimburse Landlord for any repairs or corrections of the Tenant
Improvements or Tenant's Work or of any portion of the Building caused by or
resulting from the work of any supplier, contractor, workman or mechanic with
whom Tenant contracts. Landlord shall give access to Tenant's suppliers,
contractors, workmen and mechanics so as to achieve timely completion and
occupancy of the Premises, Tenant shall be responsible for hoisting charges for
work under this paragraph.
34
<PAGE> 39
9. Default. Any default by Tenant under the terms of this Work Letter
shall constitute a default under the Lease to which this Work Letter is
attached, and shall entitle Landlord to exercise all remedies set forth in the
Lease. Tenant shall have any and all rights to remedy such default pursuant to
the provisions of the Lease.
10. Tenant Improvements. The Tenant Improvements shall be constructed in
accordance with the approved Plans mid applicable laws, in a good and
workmanlike manner, free of defects and using new materials and equipment of
good quality. Landlord hereby assigns to Tenant all warranties with respect to
the Tenant Improvements, including warranties which would reduce Tenant's
maintenance obligations under the Lease, and shall cooperate, at no cost or
expense to Landlord, with Tenant in the enforcement of any such warranties.
IN WITNESS WHEREOF, the parties have executed the Agreement as of
the date first written above.
LANDLORD:
505 HAMILTON AVENUE PARTNERS
a California general partnership
By: CHARLES KING AND ASSOCIATES,
a California limited partnership
Its: General Partner
By: The Charles King, Jr.,
Revocable Trust
Its: General Partner
By: /s/ CHARLES W. KING, JR.
--------------------------
Charles W. King, Jr.,
Trustee
TENANT:
GARAGE.COM
a California corporation
By: /s/ GUY KAWASAKI
----------------------------------------
Its: CEO
----------------------------------------
By: /s/ WILLIAM REICHERT
----------------------------------------
Its: CFO
----------------------------------------
35
<PAGE> 40
EXHIBIT C
BUILDING RULES
A. General Rules and Regulations. The following rules and regulations
govern the use of the Building and the Property common areas. Tenant will be
bound by such rules and regulations and agrees to cause Tenant, its employees,
subtenants, assignees, contractors, suppliers, customers and invitees to observe
the same.
1. Except as specifically provided in the Lease to which these
Building Rules are attached, no sign, placard, picture, advertisement, name or
notice may be installed or displayed on any part of the outside or inside of the
Building without the prior written consent of Landlord, which may be withheld in
Landlord's sole discretion. Landlord will have the right to remove, at Tenant's
expense and without notice, any sign installed or displayed in violation of this
rule. All approved signs or lettering on doors and walls are to be printed,
painted, affixed or inscribed at the expense of Tenant and under the direction
of Landlord by a person or company reasonably designated or approved by
Landlord.
2. If Landlord objects in writing to any curtains, blinds, shades,
screens or hanging plants or other similar objects attached to or used in
connection with any window or door of the Premises, or placed on any windowsill,
which is visible from the exterior of the Premises, Tenant will immediately
discontinue such use. Tenant agrees not to place anything against or near glass
partitions or doors or windows which may appear unsightly from outside the
Premises including from within any interior common areas.
3. Tenant will not obstruct any sidewalks, halls, passages, exits,
entrances, elevators, escalators, or stairways of the Building or Property. The
halls, passages, exits, entrances, elevators and stairways are not open to the
general public, but are open, subject to reasonable regulations, to Tenant's
business invitees. Landlord will in all cases retain the right to control and
prevent access thereto of all persons whose presence in the reasonable judgment
of Landlord would be prejudicial to the safety, character, reputation and
interest of the Property and its tenants, provided that nothing herein contained
will be construed to prevent such access to persons with whom any tenant
normally deals in the ordinary course of its business, unless such persons are
engaged in illegal or unlawful activities. No tenant and no employee or invitee
of any tenant will go upon the roof of the Building.
4. Tenant will not obtain for use on the Premises ice, drinking
water, food, food vendors, towel or other similar services (excluding bottled
water and soft drink vending machines) or accept barbering or bootblacking
service upon the Premises, except at such reasonable hours and under such
reasonable regulations as may be fixed by Landlord. Landlord expressly reserves
the right to absolutely prohibit solicitations, canvassing, distribution of
handbills or any other written material, peddling, sales and displays of
products, goods and wares in all portions of the Property except as may be
expressly permitted under the Lease. Landlord reserves the right to restrict and
regulate the use of the common areas of the Property and Building by invitees of
tenants providing services to tenants on a periodic or daily basis
36
<PAGE> 41
including food and beverage vendors. Such restrictions may include limitations
on time, place, manner and duration of access to a tenant's premises for such
purposes. Without limiting the foregoing, Landlord may require that such parties
use service elevators, halls, passageways and stairways for such purposes to
preserve access within the Building for tenants and the general public.
5. Landlord reserves the right to require tenants to periodically
provide Landlord with a written list of any and all business invitees which
periodically provide goods and services to such tenants at the premises.
Landlord reserves the right to preclude all vendors from entering or conducting
business within the Building and the Property if such vendors are not listed on
a tenant's list of requested vendors.
6. Landlord reserves the right to exclude from the Building between
the hours of 6 p.m. and 8 a.m. the following business day, or such other hours
as may be established from time to time by Landlord, and on weekends and legal
holidays, any person unless that person is known to the person or employee in
charge of the Building or has a pass or is properly identified. Tenant will be
responsible for all persons for whom it requests passes and will be liable to
Landlord for all acts of such persons. Landlord will not be liable for damages
for any error with regard to the admission to or exclusion from the Building of
any person. Landlord reserves the right to prevent access to the Building in
case of invasion, mob, riot, public excitement or other commotion by closing the
doors or by other appropriate action.
7. The directory of the Building will be provided exclusively for
the display of the name and location of tenants only and Landlord reserves the
right to exclude any other names therefrom.
8. All cleaning and janitorial services for the Premises will be
provided exclusively through Landlord, and except with the written consent of
Landlord, no person or persons other than those approved by Landlord will be
employed by tenants or permitted to enter the Building for the purpose of
cleaning the same. Tenant will not cause any unnecessary labor by carelessness
or indifference to the good order and cleanliness of the Premises.
9. Landlord will furnish Tenant, free of charge, with two keys to
each door lock in the Premises. Landlord may make a reasonable charge for any
additional keys. Tenant shall not make or have made additional keys, and Tenant
shall not alter any lock or install any new additional lock or bolt on any door
of the premises. Tenant, upon the termination of its tenancy, will deliver to
Landlord the keys to all doors which have been furnished to Tenant, and in the
event of loss of any keys so furnished, will pay Landlord therefor.
10. If Tenant requires telegraphic, telephonic, burglar alarm,
satellite dishes, antennae or similar services, it will first obtain Landlord's
approval, which may be withheld in Landlord's sole discretion, and comply with,
Landlord's reasonable rules and requirements applicable to such services, which
may include separate licensing by, and fees paid to, Landlord.
11. A freight elevator will be available for use by all tenants in
the Building, subject to such reasonable scheduling as Landlord, in its
discretion, deems appropriate. No equipment, materials, furniture, packages,
supplies, merchandise or other property will be
37
<PAGE> 42
received in the Building or carried in the elevators except between such hours
and in such elevators as may be designated by Landlord. Tenant's initial move in
and subsequent deliveries of bulky items, such as furniture, safes and similar
items will, unless otherwise agreed in writing by Landlord, be made during the
hours of 6:00 p.m. to 6:00 a.m. or on Saturday or Sunday. Deliveries during
normal office hours shall be limited to normal office supplies and other small
items. No deliveries will be made which impede or interfere with other tenants
or the operation of the Building.
12. Tenant will not place a load upon any floor of the Premises
which exceeds the load per square foot which such floor was designed to carry
and which is allowed by law. Landlord will have the right to reasonably
prescribe the weight, size and position of all safes, heavy equipment, files,
materials, furniture or other property brought into the Building. Heavy objects
will, if considered necessary by Landlord, stand on such platforms as determined
by Landlord to be necessary to properly distribute the weight, which platforms
will be provided at Tenant's expense. Business machines and mechanical equipment
belonging to Tenant, which cause noise or vibration that may be transmitted to
the structure of the Building or to any space therein to such a degree as to be
objectionable to any tenants in the Building or Landlord, are to be placed and
maintained by Tenant, at Tenant's expense, on vibration eliminators or other
devices sufficient to eliminate noise or vibration. Tenant will be responsible
for all structural engineering required to determine structural load, as well as
the expense thereof. The persons employed to move such equipment in or out of
the Building must be reasonably acceptable to Landlord. Landlord will not be
responsible for loss of, or damage to, any such equipment or other property from
any cause, and all damage done to the Building by maintaining or moving such
equipment or other property will be repaired at the expense of Tenant.
13. Tenant will not use or keep in the Premises any kerosene,
gasoline or inflammable fluid or material other than those limited quantities
necessary for the operation or maintenance of office equipment. Tenant will not
use or permit to be used on the Premises any foul or noxious gas or substance,
or permit or allow the Premises to be occupied or used in a manner offensive or
objectionable to Landlord or other occupants of the Building by reason of noise,
odors or vibrations, nor will Tenant bring into or keep in or about the Premises
any birds or animals (other than animals assisting disabled invitees of Tenant).
14. Tenant will not use any method of heating or air conditioning
other than that supplied by Landlord without Landlord's prior written consent.
15. Tenant will not waste electricity, water or air conditioning
and agrees to cooperate fully with Landlord to assure the most effective
operation of the Building's heating and air conditioning and to comply with any
governmental energy-saving rules, laws or regulations of which Tenant has actual
notice, and will refrain from attempting to adjust controls. Tenant will keep
corridor doors closed, and shall keep all window coverings pulled down during
periods of solar exposure.
16. Landlord reserves the right, exercisable without notice and
without liability to Tenant, to change the name and street address of the
Building. Without the written consent of Landlord, Tenant will not use the name
of the Building or the Property in connection with or in promoting or
advertising the business of Tenant except as Tenant's address.
38
<PAGE> 43
17. Tenant will close and lock the doors of its Premises and
entirely shut off all water faucets or other water apparatus, and lighting or
gas, before Tenant and its employees leave the Premises. Tenant will be
responsible for any damage or injuries sustained by other tenants, or occupants
of the Building or by Landlord for noncompliance with this rule.
18. The toilet rooms, toilets, urinals, wash bowls and other
apparatus will 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
therein. The expense of any breakage, stoppage or damage resulting from any
violation of this rule will be borne by the tenant who, or whose employees or
invitees, break this rule. Cleaning of equipment of any type is prohibited.
Shaving is prohibited.
19. Tenant will not sell, or permit the sale at retail of
newspapers, magazines, periodicals, theater tickets or any other goods or
merchandise to the general public in or on the Premises. Tenant will not use the
Premises for any business or activity other than that specifically provided for
in this Lease. Tenant will not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Landlord's prior written consent, which consent Landlord may withhold
in its sole and absolute discretion.
20. Tenant will not install any radio or television antenna,
loudspeaker, satellite dishes or other device on the roof(s) or exterior walls
of the Building or the Property. Tenant will not interfere with radio or
television broadcasting or reception from or in the Building or elsewhere.
21. Except for the ordinary hanging of pictures and wall
decorations, Tenant will not mark, drive nails, screw or drill into the
partitions, woodwork or plaster or in any way deface the Premises or any part
thereof, except in accordance with the provisions of the Lease pertaining to
alterations. Landlord reserves the right to direct electricians as to where and
how telephone and telegraph wires are to be introduced to the Premises. Tenants
will not cut or bore holes for wires. Tenant will not affix any floor covering
to the floor of the Premises in any manner except as approved by Landlord.
Tenant shall repair any damage resulting from noncompliance with this rule.
22. Tenant will not install, maintain or operate upon the Premises
any vending machines without the written consent of Landlord, not to be
unreasonably withheld or delayed.
23. Landlord reserves the right to exclude or expel from the
Property any person who, in Landlord's judgment, is intoxicated or under
influence of liquor or drugs or who is in violation of any of the Building
Rules.
24. Tenant will store all its trash and garbage within its Premises
or in other facilities provided by Landlord. Tenant will not place in any trash
box or receptacle any material which cannot be disposed of in the ordinary and
customary manner of trash and garbage disposal. All garbage and refuse disposal
is to be made in accordance with directions issued from time to time by
Landlord.
39
<PAGE> 44
25. The Premises will not be used for lodging or for the storage of
merchandise held for sale by the general public, or for lodging or for
manufacturing of any kind, nor shall the Premises be used for any illegal
purpose. No cooking will be done or permitted on the Premises without Landlord's
consent, except the use of Tenant of Underwriters' Laboratory approved equipment
for brewing coffee, tea, hot chocolate and similar beverages shall be permitted,
and the use of a microwave oven for employees use will be permitted, provided
that such equipment and use is in accordance with all applicable federal, state,
county and city laws, codes, ordinances, rules and regulations.
26. Neither Tenant nor any of its employees, agents, customers and
invitees may use in any space or in the public halls of the Building or the
Property any hand truck except those quipped with rubber tires and side guards
or such other material-handling equipment as Landlord may approve. Tenant will
not bring any other vehicles of any kind into the Building.
27. Tenant agrees to comply with all safety, fire protection and
evacuation procedures and regulations established by Landlord or any
governmental agency.
28. Tenant assumes any and all responsibility for protecting its
Premises from theft, robbery and pilferage, which includes keeping doors locked
and other means of entry into the Premises closed.
29. To the extent Landlord reasonably deems it necessary to exercise
exclusive control over any portions of the common areas for the mutual benefit
of the tenants in the Building or the Property, Landlord may do so subject to
reasonable, non-discriminatory additional rules and regulations.
30. Landlord may prohibit smoking in the Building and may require
Tenant and any of its employees, agents, clients, customers, invitees and guests
who desire to smoke, to smoke within designated smoking areas within the
Property, which may be located outside of the Building.
31. Tenant's requirements will be attended to only upon appropriate
application to Landlord's asset management office for the Building by an
authorized individual of Tenant. Employees of Landlord will not perform any work
or do anything outside of their regular duties unless under special instructions
from Landlord, and no employee of Landlord will admit any person (Tenant or
otherwise) to any office without specific instructions from Landlord.
32. These Building Rules are in addition to, and will not be
construed to in any way modify or amend, in whole or in part, the terms,
covenants and conditions of the Lease. Landlord may waive any one or more of
these Building Rules for the benefit of Tenant or any other tenant, but no such
waiver by Landlord will be construed as a waiver of such Building Rules in favor
of Tenant or any other tenant, nor prevent Landlord from thereafter enforcing
any such Building Rules against any or all of the tenants of the Property.
33. Landlord reserves the right to make such other and reasonable
non-discriminatory Building Rules as, in its judgment, may from time to time be
needed for safety and security, for care and cleanliness of the Property and for
the preservation of good order
40
<PAGE> 45
therein. Tenant agrees to abide by all such Building Rules herein above stated
and any additional reasonable and non-discriminatory rules and regulations which
are adopted. Tenant is responsible for the observance of all the foregoing rules
by Tenant's employees, agents, clients, customers, invitees and guests.
B. Parking Rules and Regulations. The following rules and regulations
govern the use of the parking facilities which serve the Building. Tenant will
be bound by such rules and regulations and agrees to cause its employees,
subtenants, assignees, contractors, suppliers, customers and invitees to observe
the same.
1. Tenant will not permit or allow any vehicles that belong to or
are controlled by Tenant or Tenant's employees, subtenants, customers or
invitees to be loaded, unloaded or parked in areas other than those designated
by Landlord for such activities. No vehicles are to be left in the parking
areas overnight and no vehicles are to parked in the parking areas other than
normally sized passenger automobiles, motorcycles and pick-up trucks. No
extended term storage of vehicles is permitted.
2. Vehicles must be parked entirely within painted stall lines of a
single parking stall.
3. All directional signs and arrows must be observed.
4. The speed limit within all parking areas shall be five (5) miles
per hour.
5. Parking is prohibited: (a) in areas not striped for parking: (b)
in aisles or on ramps, (c) where "no parking" signs are posted; (d) in cross
hatched areas; and (e) in such other areas as may be designated from time to
time by Landlord or Landlord's operator.
6. Landlord reserves the right, without cost or ability to Landlord,
to tow any vehicle if such vehicle's audio theft alarm system remains engaged
for an unreasonable period of time.
7. Washing, waxing, cleaning or servicing of any vehicle in any area
not specifically reserved for such purpose is prohibited.
8. Landlord may refuse to permit any person to park in the parking
facilities who violates these rules with unreasonable frequency, and any
violation of these rules shall subject the violator's car to removal, at such
car owner's expense. Tenant agrees to use its best efforts to acquaint its
employees, assignees, contractors, suppliers, customers and invitees with these
parking provisions, rules and regulations.
9. Parking stickers, access cards, or any other form of
identification supplied by Landlord as a condition of use of the parking
facilities shall remain the property of Landlord. Parking identification
devices, if utilized by Landlord, must be displayed as requested and may not be
mutilated in any manner. The serial number of the parking identification device
may not be obliterated. Parking identification devices, if any, are not
transferable and any device in the possession of an unauthorized holder will be
void. Landlord reserves the right to refuse
41
<PAGE> 46
the sale of monthly stickers or other parking identification devices to Tenant
or any of its agents, employees or representatives who willfully refuse to
comply with these rules and regulations and all unposted city, state or federal
ordinances, laws or agreements.
10. Loss or theft of parking identification devices or access cards
must be reported to the management office for the Property immediately, and a
lost or stolen report must be filed by the Tenant or user of such parking
identification device or access card at the time. Landlord has the right to
exclude any vehicle from the parking facilities that does not have a parking
identification device or valid access card. Any parking identification device or
access card which is reported lost or stolen and which is subsequently found in
the possession of an unauthorized person will be confiscated and the illegal
holder will be subject to prosecution.
11. All damage or loss claimed to be the responsibility of Landlord
must be reported, itemized in writing and delivered to the management office
located within the Building within ten (10) business days after any claimed
damage or loss occurs. Any claim not so made is waived. Landlord is not
responsible for damage by water or fire, or for the acts or omissions of others,
or for articles left in vehicles.
12. The parking operators, managers or attendants, if any, are not
authorized to make or allow any exceptions to these rules and regulations,
without the express written consent of Landlord. Any exceptions to these rules
and regulations made by any parking operators, managers or attendants without
the express written consent of Landlord will not be deemed to have been approved
by Landlord.
13. Landlord reserves the right, without cost or liability to
Landlord, to tow any vehicles which are used or parked in violation of these
rules and regulations.
14. Landlord reserves the right from time to time to modify and/or
adopt such other reasonable and non-discriminatory rules and regulations for the
parking facilities as it deems reasonably necessary for the operation of the
parking facilities.
42
<PAGE> 47
RIDER TO LEASE
THIS RIDER TO LEASE ("Rider") is attached to and forms a part of that
certain Lease dated as of March 10, 1998 by and between 505 HAMILTON AVENUE
PARTNERS ("Landlord") and GARAGE.COM, a California corporation ("Tenant") (the
"Lease") and serves to amend and supplement the Lease. In the event of any
conflict between the terms of the Lease and the terms of this Rider, the terms
of this Rider shall control. Capitalized terms used herein shall have the
meaning given them in the Lease.
1. Term (Article 1).
(a) Option to Extend. Landlord hereby grants Tenant an option to
extend the Term (the "Option to Extend") for one (1) additional period of four
(4) years (the "Option Term"), commencing immediately after the expiration of
the initial Term, upon the same terms and conditions contained herein, except
that (i) the Base Rent for the Premises shall be increased to the Fair Market
Base Rent for the Premises (but in no event less than the Base Rent rate payable
immediately prior to the expiration of the initial Term, determined in the
manner set forth below, (ii) Tenant shall accept the Premises as of the
commencement of the Option Term in an "as is" condition without any obligation
of Landlord to repaint, remodel, repair, improve or alter the Premises, and
(iii) there shall be no further options to extend the Term.
(1) Tenant's exercise of the Option to Extend must be given to
Landlord in writing no less than six (6) months and no earlier than nine (9)
months prior to the expiration of the Term. If Tenant properly exercises the
Option to Extend, references in this Lease to the Term shall be deemed to mean
the Option Term unless the context clearly provides otherwise. Notwithstanding
anything to the contrary contained herein, the Option to Extend shall
automatically terminate without notice and shall be of no further force and
effect, whether or not Tenant has timely exercised an option granted herein, if
(i) an event of default, beyond applicable cure periods, on the part of Tenant
exists under this Lease at the time of exercise of the Option to Extend or at
the time of commencement of the Option Term or (ii) Landlord has given Tenant
two or more notices respecting an Event of Default on the part of Tenant during
the Term.
(2) If Tenant properly exercises the Option to Extend, the Base
Rent during the Option Term shall be determined in the following manner. The
Base Rent shall be increased to an amount equal to the Fair Market Base Rent for
the Premises as of the commencement of the Option Term for a term equal to the
Option Term, as specified by Landlord by notice to Tenant not less than thirty
(30) days prior to commencement of the Option Term, subject to Tenant's right of
arbitration as set forth below. If Tenant believes that the Fair Market Base
Rent specified by Landlord exceeds the actual Fair Market Base Rent for the
Premises as of commencement of the Option Term, then Tenant shall so notify
Landlord within ten (10) days following receipt of Landlord's notice. If Tenant
fails to so notify Landlord within said ten (10) days, Landlord's determination
of the Fair Market Base Rent for the Premises shall be final and binding upon
the parties. If the parties are unable to agree upon the Fair Market Base Rent
for the Premises within ten (10) days after Landlord's receipt of notice of
Tenant's
43
<PAGE> 48
objection, the Base Rent payable as of commencement of the Option Term shall be
determined as follows:
A. Within fifteen (15) days after receipt of Landlord's
notice specifying Fair Market Base Rent, Tenant, at its sole expense, shall
obtain and deliver in writing to Landlord a determination of the Fair Market
Base Rent for the Premises for a term equal to the Option Term from a broker
("Tenant's Broker") licensed in the State of California and engaged in the
office brokerage business in Palo Alto, California vicinity for at least the
immediately preceding five (5) years. If Landlord accepts such determination,
the Base Rent for the Option Term shall be increased to an amount equal to the
amount determined by Tenant's Broker (but in no event shall such amount be less
than the Base Rent rate payable by Tenant immediately preceding the expiration
of the initial Term).
B. If Landlord does not accept such determination, within
15 days after receipt of the determination of Tenant's Broker, Landlord shall
designate a broker ("Landlord's Broker") licensed in the State of California and
engaged in the office brokerage business in Palo Alto, California vicinity for
at least the immediately preceding five (5) years. Landlord's Broker and
Tenant's Broker shall name a third broker (the "Third Broker"), similarly
qualified, within five (5) days after the appointment of Landlord's Broker. Each
of said three brokers shall determine the Fair Market Base Rent for the Premises
as of the commencement of the Option Term for a term equal to the Option Term
within 15 days after the appointment of the Third Broker. The Base Rent payable
by Tenant effective as of the commencement of the Option Term shall be increased
to an amount equal to the arithmetic average of such three determinations;
provided, further, that if any such broker's determination deviates more than
10% from the median of such determinations, the Base Rent payable shall be an
amount equal to the average of the two closest determinations; provided,
however, that in no event shall the Base Rent payable during the Option Term be
less than the Base Rent rate payable immediately preceding the expiration of the
initial Term.
(3) Landlord shall pay the costs and fees of Landlord's Broker in
connection with any determination hereunder, and Tenant shall pay the costs and
fees of Tenant's Broker in connection with such determination. The costs and
fees of any Third Broker shall be paid one-half by Landlord and one-half by
Tenant. Tenant expressly acknowledges that any costs and fees arising in favor
of any broker hired by Tenant to represent Tenant in the negotiation of the
extension of the term of this Lease shall be borne solely by Tenant.
(4) If the amount of the Fair Market Base Rent is not known as of
the commencement of the Option Term, then Tenant shall continue to pay the Base
Rent in effect at the expiration of the initial Term until the amount of the
Fair Market Base Rent is determined. When such determination is made, Tenant
shall pay to Landlord any deficiency to Landlord within thirty (30) days
following Landlord's delivery of an invoice therefore to Tenant.
(b) Notwithstanding the provisions of Article 2 to the contrary, if
the Premises have not been delivered by May 30, 1998, solely due to delays
caused by Landlord, and not due, in whole or in part, to delays caused by or
attributable to Tenant or to force majeure, Tenant shall have the right, to be
exercised by written notice delivered to Landlord on or before June 10, 1998, to
terminate this Lease, effective as of June 10, 1998. If Tenant exercises such
right,
44
<PAGE> 49
and if Landlord is unable to deliver Premises to Tenant on or before June 10,
1998, the Lease shall terminate as of June 10, 1998; provided, however, that if
Tenant exercises such right, and Landlord delivers the Premises to Tenant on or
before June 10, 1998, Tenant's exercise of the right provided herein shall be
null and void and of no further force or effect, and the Lease shall commence,
the same as if Tenant had not exercised such right.
2. Rent (Article 3).
(a) The following is hereby inserted in the first (1st) line of
Section 3.2(a), immediately preceding the word "Tenant": "Commencing on
January 1, 1999,".
(b) The following is hereby inserted in clause (16) of Section
3.2(a)(i), immediately following the phrase "capital assets acquired by
Landlord": "(amortized [together with interest at the rate that Landlord pays,
or would have paid, to finance such improvements] over their useful life, as
reasonably determined by Landlord in accordance with generally accepted
accounting principles)".
(c) The following is hereby inserted in clause (17) of Section
3.2(a)(i), immediately following the phrase "capital assets acquired by
Landlord": "(amortized [together with interest at the rate that Landlord pays,
or would have paid, to finance such improvements] over their useful life, as
reasonably determined by Landlord in accordance with generally accepted
accounting principles)".
(d) In addition to the exclusions to Operating Expenses contained in
Section 3.2(ii), Landlord agrees that Operating Expenses shall also not include
the following: (i) the cost of utilities or services provided to other tenants
or occupants of the Building but not provided to Tenant, and (ii) attorneys'
fees incurred in connection with disputes with other occupants or tenants of the
Building.
(e) Section 3.2(b)(ii) is hereby deleted in its entirety and
rewritten as follows:
"(ii) Tax Expenses shall not include Landlord's
income, franchise, inheritance, gift, estate or
capital stock taxes or any tax or assessment
expense to the extent (a) levied on Landlord's
rental income (other than a "gross receipts tax"),
unless such tax or assessment expense is imposed in
lieu of real property taxes or (b) imposed on land
and improvements other than the Building or the
Property.
(f) The phrase "ten (10)" is hereby deleted from the final line of
Section 3.2(f) and replaced with the following: "twenty (20)".
(g) The phrase "within five (5) days of the date due" is hereby
inserted twice in Section 3.3, as follows: (i) in the second (2nd) line,
immediately following the phrase "by Landlord", and (ii) in the seventh (7th)
line, immediately following the phrase "by Tenant".
45
<PAGE> 50
3. Use (Article 4).
(a) The following is hereby inserted in the second (2nd) line of
Section 4.3(d), immediately following the word "time": "upon reasonable prior
notice (which may be telephonic), except in the case of emergency,".
(b) The word "on" is hereby deleted from the seventh (7th) line of
Section 4.3(d) of the Lease, and replaced with the following: "within twenty
(20) days after".
(c) The word "reasonable" is hereby inserted in the eighth (8th) line
of Section 4.3(d), immediately preceding the word "consultants'".
(d) The phrase "or about" is hereby deleted from the seventh (7th)
line of Section 4.3(e).
(e) A new section 4.3(g) is hereby added to the Lease, as follows:
"(g) Tenant's Release. Notwithstanding anything to the contrary
contained in this Section 4.3, except to the extent that the
Hazardous Material in question was released, emitted, used,
stored, manufactured, transported or discharged, in whole or in
part, by Tenant, or its agents, employees or contractors, in
violation of Hazardous Materials laws or the terms and provisions
of this Lease, Tenant shall not be responsible for, and hereby is
released from, losses, costs (including reasonable attorneys'
fees) and damages with respect to any Hazardous Material present
on or about the Premises, the Building or their surrounding
property, or the soil, ground water or surface water thereof,
without regard as to whether the Hazardous Materials were present
on the Premises or the Building as of the Commencement Date."
(f) The word "reasonable" is hereby inserted in the eighth (8th) line
of Section 4.4(b), immediately following the word "Landlord's".
4. Utilities and Services (Article 9).
(a) The word "reasonable" is hereby inserted in the second (2nd) line
of Section 9.1(ii), immediately preceding the word "judgment".
(b) The word "upon" is hereby deleted from the final line of Section
9.1 of the Lease, and replaced with the following: "within twenty (20) days
after".
46
<PAGE> 51
(c) The word "reasonable" is hereby inserted in the second (2nd)
line of Section 9.4, immediately preceding the word "security."
(d) The word "reasonably" is hereby inserted in the fifth (5th) line
of Section 9.4, immediately following the word "Landlord".
5. Indemnity (Article 10). The word "reasonable" is hereby inserted in
the third (3rd) line of Article 10, immediately preceding the word "attorneys".
6. Waiver Of Claims (Article 11). The following is hereby inserted in
the third (3rd) line of Article 11, immediately preceding the word "gross": "or
Landlord's agents' or employees'".
7. Insurance (Article 12).
(a) The word "including" is hereby deleted from the fourth (4th)
line of Section 12.2 and replaced with the following: "excluding".
(b) The phrase "excluding the Tenant Improvements" is hereby
inserted in the twelfth (12th) line of Section 12.2 immediately following the
word "improvements".
(c) The word "reasonably" is hereby inserted in the fourth (4th)
line of Section 12.3, immediately following the word "Landlord".
(d) The word "reasonably" is hereby inserted twice in the second
(2nd) line of Section 12.5, as follows: (i) immediately preceding the word
"satisfactory" and (ii) immediately preceding the word "acceptable".
(e) The phrase "policies or" is hereby deleted from the twentieth
(20th) line of Section 12.5.
(f) The word "reasonably" is hereby inserted in the twentieth (20th)
line of Section 12.5, immediately preceding the word "acceptable".
(g) The word "reasonably" is hereby inserted in the second (2nd)
line of Section 12.6, immediately preceding the word "recommended".
8. Damage (Article 13).
(a) The following is hereby inserted in the sixteenth (16th) line of
Section 13.1, immediately following the word "repair": "and restore Premises and
or the Building (subject to the limitations set forth herein) as closely as
possible to its condition immediately prior to the damage or destruction, given
the extent of Landlord's insurance proceeds and then-applicable codes, laws,
rules and regulations."
(b) The phrase "one (1) year" is hereby deleted from the eighteenth
(18th) line of Section 13.1 and replaced with the following: "two hundred
seventy (270) days".
47
<PAGE> 52
(c) The phrase "(excluding the Tenant Improvements)" is hereby
inserted in the second (2nd) line of Section 13.2, immediately following the
word "improvements".
(d) In addition to the right to terminate provided to Tenant under
Section 13.1 (as amended by Rider Section 8(b) above), in the event of damage
not caused by the negligence, act, omission or breach of the Lease by Tenant,
Tenant's employees, agents, contractors or invitees, which damage (i) occurs
during the final twelve (12) months of the Initial Term and (ii) materially
impairs Tenant's ability to use the Premises, Tenant shall have the right, to be
exercised within fifteen (15) days following the date of such damage, to
terminate the Lease, effective as of the date set forth in Tenant's notice
(which shall not be more than thirty (30) days following Tenant's notice).
9. Advertisements and Signs (Article 15). Landlord agrees, at Tenant's
cost, to install Building-standard lobby and suite entry signage identifying
Tenant.
10. Assignment and Subletting (Article 16).
(a) The phrase "or delayed" is hereby inserted in the fourth (4th)
line of Section 16.1, immediately following the word "withheld".
(b) The word "reasonably" is hereby inserted in the ninth (9th) line
of Section 16.1, immediately preceding the word "satisfactory".
(c) The phrase "the foregoing" is hereby deleted from the
thirty-fifth (35th) line of Section 16.1, and replaced with the following:
"anything to the contrary contained in this Lease".
(d) The following is hereby inserted in the third (3rd) line of
Section 16.2, immediately following the word "hereunder": ", subject to the
provisions of the final sentence of Section 16.1 above,".
(e) The following is hereby inserted in the fourth (4th) line of
Section 16.3, immediately following the word "assignee": ", except for permitted
transfers pursuant to the provisions of Section 16.1 above,".
(f) Clause (i) is hereby deleted from Section 16.1.
(g) The following is hereby inserted in the fifth (5th) line of
Section 16.5, immediately preceding the phrase "and Additional Rent": "(which,
for the purposes of this Section 16.5 only, shall be deemed to be $3.75 per
rentable square foot per month with respect to Suite 300, and $4.25 per
rentable square foot per month with respect to Suite 102)".
(h) The following is hereby inserted in the final line of Section
16.5, immediately following the word "space": "after Tenant's deduction
therefrom of its reasonable costs actually incurred to consummate the
assignment or subletting, including, without limitation, brokerage commissions,
reasonable legal fees, and the cost of alternations, refurbishment or
redecorating incurred by Tenant in performing work in the space that is the
subject of the
48
<PAGE> 53
subletting or assignment (not including any costs to refurbish, redecorate or
alter space in the Premises which is not the subject of sublease transaction)
(together, "Transaction Costs"), as follows: (i) promptly upon the consummation
of any proposed assignment or sublease which has been consented to by Landlord,
Tenant shall submit to Landlord a statement, setting forth in reasonable detail
all consideration payable by the subtenant or assignee in question, a statement
of the excess consideration over the rent payable hereunder and the calculation
of Tenant's Transaction Costs (together with paid invoices for all such
Transaction Costs), (ii) Tenant's Transaction Costs shall be amortized on a
straight line basis over the remainder of the Term (or in the case of a sublease
for less than the entire remaining Term, the scheduled term of the sublease in
question) and (iii) Tenant shall, on a monthly basis, pay to Landlord as
additional Rent hereunder, the amount by which such excess consideration exceeds
the monthly amortized amount of such Transaction Costs.
(i) The following is hereby added at the end of Section 16.6:
"Notwithstanding the foregoing, if Landlord exercises its termination as set
forth in this Section 16.6, Tenant shall have the right, to be exercised by
written notice right delivered to Landlord within five (5) days following
Landlord's delivery of its exercise of the termination right provided above, to
rescind Tenant's request for consent, in which event this Lease shall continue
in full force and effect, the same as if Tenant had not requested Landlord's
consent to a proposed assignment or sublease,
(j) The word "reasonably" is hereby inserted in the fourth (4th)
line of Section 16.7 of the Lease, immediately following the word "form".
(k) The following is hereby inserted in the sixth (6th) line of
Section 16.7. immediately following the word "consent", "which shall not be
unreasonably withheld or delayed".
(l) The phrase "or as attorney-in-fact for" is hereby deleted from
the third (3rd) line of Section 16.10 and replaced with the following: "of".
(m) The phrase, "beyond applicable cure periods," is hereby
inserted in the seventh (7th) line of Section 16.10, immediately following the
word "default".
11. Default (Article 17).
(a) Section 17.1 (b) is hereby deleted and replaced with the
following:
"(b) The Failure by Tenant to make any payment of rent or any
other payment required under this Lease, within three (3) days
after written notice from Landlord that said payment is past
due; provided. however, that any such notice will be lieu of,
and not in addition to, any notice required under the provisions
of California Code of Civil Procedure (CCP) Section 1161
regarding unlawful detainer actions (or any successor statute or
law of
49
<PAGE> 54
a similar nature), and Tenant hereby acknowledges and agrees that
any such notice shall constitute sufficient notice pursuant to
the provisions of CCP Section 1161, and waives any right to
require additional notice under CCP Section 1161;
(b) The phrase "thirty (30)" is hereby deleted from the fifth (5th)
line of Section 17.1(h), and replaced with the following: "sixty (60)".
(c) The phrase, "upon notice to Tenant," is hereby inserted in the
first (1st) line of Section 17.2(a)(iv), immediately preceding the word
"Landlord".
12. Instruments Required by Leader (Article 19).
(a) The word "business" is hereby inserted in the eighth (8th) line
of Article 19, immediately preceding the word "days".
(b) The following is hereby inserted in the eleventh (11th) line of
Article 19, immediately following the word "hereunder": "materially increase
Tenant's obligations or materially diminish Tenant's rights hereunder".
13. Estoppel Certificates (Article 20). The word "business" is hereby
inserted in the first (1st) line of Article 20, immediately preceding the word
"days".
14. Subordination and Attornment (Article 21). The word "on" is hereby
deleted from the fourth (4th) line of Article 21, and replaced with the
following: "within ten (10) business days following".
15. Surrender: Holding Over (Article 25).
(a) The phrase, "acts of God and Hazardous Materials for which
Tenant is expressly not responsible under this Lease" is hereby inserted in the
fourth (4th) line of Section 25.1, immediately following the word
"alterations".
(b) The word "on" is hereby deleted from the eleventh (11th) line of
Section 25.1, and replaced with the following: "within ten (10) business days
following."
(c) The phrase "and Additional Rent payable hereunder" is hereby
deleted from the fourth (4th) and fifth (5th) lines of Section 25.2, and
replaced with the following: "payable hereunder, as well as one hundred percent
(100%) of the applicable Additional Rent payable hereunder".
16. Landlord's Liability (Article 26). The following is hereby inserted
in the fourth (4th) line of Article 26, immediately following the word
"Building": "including any net sales proceeds thereof".
50
<PAGE> 55
17. Entry, Inspection and Closure (Article 27).
(a) The following is hereby inserted in the ninth (9th) line of
Article 27, immediately preceding the word "tenants": "during the last nine (9)
months of the Term".
(b) The following is hereby inserted in the sixteenth (16th) line of
Article 27, immediately preceding the phrase "other damage": "except to the
extent caused by the gross negligence or wilful misconduct of Landlord,
Landlord's agents or employees".
18. Reserved Rights (Article 30). Landlord agrees that its exercise of
the rights described in Article 30 shall not materially Tenant's obligations
under the Lease nor materially diminish Tenant's rights thereunder.
19. Financial Statements (Article 31).
(a) The phrase "at any time" is hereby deleted from the first (1st)
line of Article 31, and replaced with the following: "not more than once each
year (except with respect to any request made as a result of Tenant's proposed
assignment of its interest in this Lease)".
(b) The word "business" is hereby inserted in the second (2nd) line
of Article 31, immediately following the phrase 'ten (10)".
(c) The phrase "if available" is hereby inserted in the sixth (6th)
line of Article 31, immediately preceding the word "annual".
(d) The phrase "and Tenant's federal income tax returns pertaining
to Tenant's business," is hereby deleted from the sixth (6th) and seventh (7th)
lines of Article 31.
(e) The phrase "and tax returns" is hereby deleted from the eighth
(8th) line of Article 31.
51
<PAGE> 56
20. Brokers (Section 33.11). The second (2nd) sentence Of Section 33.11
is hereby deleted in its entirety and hereby rewritten as follows: "Landlord
and Tenant hereby agree to indemnify, defend, protect and hold the other
harmless from and against and all claims for commissions from their dealings
with any broker or agent other than those described in the Lease Summary."
"LANDLORD" "TENANT"
505 HAMILTON AVENUE PARTNERS
a California general partnership GARAGE.COM
a California corporation
By: CHARLES KING AND ASSOCIATES,
a California limited partnership By: /s/ Guy Kawasaki
-----------------------------
Guy Kawasaki
Its: CEO
----------------------------
Its: General Partner
By: /s/ Guy Kawasaki
-----------------------------
Guy Kawasaki
By: The Charles King, Jr., Its: CEO
Revocable Trust ----------------------------
Its: General Partner
By: /s/ Charles W. King, Jr.
--------------------------------
Charles W. King, Jr.,
Trustee
52
<PAGE> 1
EXHIBIT 10.14
AMENDMENT TO LEASE
This Amendment to Lease (the "Amendment") is dated for reference purposes only
as of November 11, 1999, by and between 505 Hamilton Avenue Partners, A
California Limited Partnership successor in interest to 505 Hamilton Avenue
Partners, a California General Partnership ("Landlord"), and Garage.com, A
California Corporation ("Tenant").
RECITALS
This Amendment is made with reference to the following facts and objectives:
A. Landlord and Garage.com entered into that certain Lease (the "Lease")
dated March 10, 1998 by which Landlord leased to Garage.com and
Garage.com leased from Landlord the premises located at 420 Florence
Street, Palo Alto, California 94301 (the "Premises"), comprising of 3,945
total rentable square feet of which approximately 2,580 rentable square
feet is located on the third floor (Suite 300) and approximately 1,365
rentable square feet is located on the first floor (Suite 102).
B. The term of the Lease commenced on March 15, 1998 and will expire on
April 14, 2002.
C. Landlord and Tenant herein desire to modify the provisions of the Lease
as set forth below.
NOW THEREFORE, for and in consideration of the mutual covenants and obligations
set forth herein, Landlord and Tenant hereby agree as follows:
1. Premises. The original Premises of 3,945 total rentable square feet on
the third floor (2,580 rentable square feet) and first floor (1,365
rentable square feet) shall be increased by approximately 3,703 rentable
square feet (the "Expansion Space") on the second floor (Suite 200), for
a total Premises now consisting of approximately 7,648 (3,945 + 3,703)
rentable square feet located at 420 Florence Street, Palo Alto,
California 94301, thereinafter referred to as the Premises.
2. Term. The Term for the Expansion Space, shall be co-terminus with the
Lease and shall be 32 Months and 14 Days as follows:
Commencement Date: July 1, 1999
Expiration Date: March 14, 2002
The Expiration Date for the Premises shall be revised to March 14, 2002.
<PAGE> 2
3. Monthly Base Rent. The initial Monthly Base Rent for the Expansion Space
shall be $4.50 per square foot per month, effective July 1, 1999, and shall
be subject to a 4% increase on each Lease anniversary date (March 15),
pursuant to the Lease Summary of the Lease. Therefore, the Monthly Base
Rent for the Premises, shall be as follows:
<TABLE>
<CAPTION>
Months Base Monthly Rent
------ -----------------
<S> <C>
7/1/99 - 3/14/00 $30,946.00
3/15/00 - 6/30/00 $32,171.00
7/1/00 - 3/14/01 $34,057.00
3/15/01 - 4/14/02 $35,431.00
</TABLE>
4. Operating Expenses and Tax Expenses. Tenant shall pay for its allocable
share of the increase in the building Operating Expenses and Tax Expenses
over the 1998 Base Year per the Lease Summary of the Lease. However, as a
result of this Amendment, Tenant's allocable share of the building
Operating Expenses and Tax Expenses will increase from 43.6% to 81%.
5. Security Deposit. Upon execution of this Amendment by Tenant, Tenant shall
deliver to Landlord the sum of Fourteen Thousand Eight Hundred Fifty
Dollars and 00/100 ($14,850.00) to increase the Security Deposit held by
Landlord to Forty Nine Thousand Six Hundred Forty-Five Dollars and 00/100
($49,645.00).
6. As-Is Condition. Tenant accepts the Premises in its "As-Is" condition and
acknowledges and agrees that Landlord shall have no obligation to perform
any improvements to the Premises.
7. Parking. No parking shall be provided.
8. Brokerage Fees. Any and all brokerage commissions shall be paid by Tenant.
Tenant hereby agrees to indemnify, defend, protect and hold Landlord
harmless from and against any and all claims for commissions arising from
its dealing with any broker, finder or agent.
9. No Further Modifications. Except as expressly modified by the terms and
conditions of this Amendment, all other terms, conditions and provisions of
the Lease shall remain unmodified and in full force and effect.
<PAGE> 3
In WITNESS WHEREOF, Landlord and Tenant have executed this Amendment effective
as of the date first above written.
LANDLORD:
505 Hamilton Avenue Partners, A California Limited Partnership
By: Palo Alto Properties, LLC, its general partner
By: King Asset Management Corporation, its Manager
By: /s/ CHARLES W. KING JR.
-------------------------------------
Charles W. King Jr.
Its: Vice-President
TENANT:
GARAGE.COM, a California Corporation
By: /s/ WILLIAM REICHERT
-------------------------------------
Print Name: William Reichert
-----------------------------
Title: President
----------------------------------
Date: 12/1/99
----------------------------------
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
Date:
----------------------------------
<PAGE> 1
EXHIBIT 21.1
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
Subsidiary State of Incorporation
--------- ----------------------
<S> <C>
Garage.com Securities Inc. Delaware
Garage.com Investments I, L.P. Delaware
</TABLE>
