Exhibit 10.9
MASTER LEASE AGREEMENT
MASTER LEASE AGREEMENT (the "Master Lease") dated September 30. 1997 by and
between COMDISCO. INC. ("Lessor") and PLACEWARE ("Lessee").
IN CONSIDERATION of the mutual agreements described below, the parties agree as
follows (all capitalized terms are defined in Section 14.18):
1. Property Leased.
Lessor leases to Lessee all of the Equipment described on each Summary Equipment
Schedule. In the event of a conflict, the terms of the applicable Schedule
prevail over this Master Lease.
2. Term.
On the Commencement Date, Lessee will be deemed to accept the Equipment, will be
bound to its rental obligations for each item of Equipment and the term of a
Summary Equipment Schedule will begin and continue through the Initial Term and
thereafter until terminated by either party upon prior written notice received
during the Notice Period. No termination may be effective prior to the
expiration of the Initial Term.
3. Rent and Payment.
Rent is due and payable in advance on the first day of each Rent Interval at the
address specified in Lessor's invoice. Interim Rent is due and payable when
invoiced. If any payment is not made when due, Lessee will pay a Late Charge on
the overdue amount. Upon Lessee's execution of each Schedule, Lessee will pay
Lessor the Advance specified on the Schedule. The Advance will be credited
towards the final Rent payment if Lessee is not then in default. No interest
will be paid on the Advance.
4. Selection; Warranty and Disclaimer of Warranties.
4.1 Selection. Lessee acknowledges that it has selected the Equipment and
disclaims any reliance upon statements made by the Lessor, other than as set
forth in the Schedule.
4.2 Warranty and Disclaimer of Warranties. Lessor warrants to Lessee that, so
long as Lessee is not in default, Lessor will not disturb Lessee's quiet and
peaceful possession, and unrestricted use of the Equipment. To the extent
permitted by the manufacturer, Lessor assigns to Lessee during the term of the
Summary Equipment Schedule any manufacturer's warranties for the Equipment.
LESSOR MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED AS TO ANY MATTER WHATSOEVER,
INCLUDING, WITHOUT LIMITATION, THE MERCHANTABILITY OF THE EQUIPMENT OR ITS
FITNESS FOR A PARTICULAR PURPOSE. Lessor is not responsible for any liability,
claim, loss, damage or expense of any kind (including strict liability in tort)
caused by the Equipment except for any loss or damage caused by the willful
misconduct or negligent acts of Lessor. In no event is Lessor responsible for
special, incidental or consequential damages.
5. Titles; Relocation or Sublease; and Assignment.
5.1 Title. Lessee holds the Equipment subject and subordinate to the rights of
the Owner, Lessor, any Assignee and any Secured Party. Lessee authorizes Lessor,
as Lessee's agent, and at Lessor's expense, to prepare, execute and file in
Lessee's name precautionary Uniform Commercial Code financing statements showing
the interest of the Owner, Lessor, and any Assignee or Secured Party in the
Equipment and to insert serial numbers in Summary Equipment Schedules as
appropriate. Lessee will, at its expense, keep the Equipment free and clear from
any liens or encumbrances of any kind (except any caused by Lessor) and will
indemnify and hold the Owner, Lessor, any Assignee and Secured Party harmless
from and against any loss caused by Lessee's failure to do so, except where such
is caused by Lessor.
5.2 Relocation or Sublease. Upon prior written notice, Lessee may relocate
Equipment to any location within the continental United States provided (i) the
Equipment will not be used by an entity exempt from federal income tax, and (ii)
all additional costs (including any administrative fees, additional taxes and
insurance coverage) are reconciled and promptly paid by Lessee.
Lessee may sublease the Equipment upon the reasonable consent of the Lessor and
the Secured Party. Such consent to sublease will be granted if: (i) Lessee meets
the relocation requirements set out above, (ii) the sublease is expressly
subject and subordinate to the terms of the Schedule, (iii) Lessee assigns its
rights in the sublease to Lessor and the Secured Party as additional collateral
and security, (iv) Lessee's obligation to maintain and insure the Equipment is
not altered, (v) all financing statements required to continue the Secured
Party's prior perfected security interest are filed, and (vi) Lessee executes
sublease documents acceptable to Lessor.
No relocation or sublease will relieve Lessee from any of its obligations under
this Master Lease and the relevant Schedule.
5.3 Assignment by Lessor. The terms and conditions of each Schedule have been
fixed by Lessor in order to permit Lessor to sell and/or assign or transfer its
interest or grant a security interest in each Schedule and/or the Equipment to a
Secured Party or Assignee. In that event, the term Lessor will mean the Assignee
and any Secured Party. However, any assignment, sale, or other transfer by
Lessor will not relieve Lessor of it's obligations to Lessee and will not
materially change Lessee's duties or materially increase the burdens or risks
imposed on Lessee. The Lessee consents to and will acknowledge such assignments
in a written notice given to Lessee. Lessee also agrees that:
(a) The Secured Party will be entitled to exercise all of Lessor's rights, but
will not be obligated to perform any of the obligations of Lessor. The Secured
Party will not disturb Lessee's quiet and peaceful possession and unrestricted
use of the Equipment so long as Lessee is not in default and the Secured Party
continues to receive all Rent payable under the Schedule; and
(b) Lessee will pay all Rent and all other amounts payable to the Secured
Party, despite any defense or claim which it has against Lessor. Lessee reserves
its right to have recourse directly against Lessor for any defense or claim;
(c) Subject to and without impairment of Lessee's leasehold rights in the
Equipment, Lessee holds the Equipment for the Secured Party to the extent of the
Secured Party's rights in that Equipment.
6. Net Lease; Taxes and Fees.
6.1 Net Lease. Each Summary Equipment Schedule constitutes a net lease. Lessee's
obligation to pay Rent and all other amounts due hereunder is absolute and
unconditional and is not subject to any abatement, reduction, set-off, defense,
counterclaim, interruption, deferment or recoupment for any reason whatsoever.
6.2 Taxes and Fees. Lessee will pay when due or reimburse Lessor for all taxes,
fees or any other charges (together with any related interest or penalties not
arising from the negligence of Lessor) accrued for or arising during the term of
each Summary Equipment Schedule against Lessor, Lessee or the Equipment by any
governmental authority (except only Federal, state, local and franchise taxes on
the capital or the net income of Lessor). Lessor will file all personal property
tax returns for the Equipment and pay all such property taxes due. Lessee will
reimburse Lessor for property taxes within thirty (30) days of receipt of an
invoice.
7. Care, Use and Maintenance; inspection by Lessor.
7.1 Care, Use and Maintenance. Lessee will maintain the Equipment in good
operating order and appearance, protect the Equipment from deterioration, other
than normal wear and tear, and will not use the Equipment for any purpose other
than that for which it was designed. If commercially available and considered
common business practice for each item of Equipment, Lessee will maintain in
force a standard maintenance contract with the manufacturer of the Equipment, or
another party acceptable to Lessor, and will provide Lessor with a complete copy
of that contract. If Lessee has the Equipment maintained by a party other than
the manufacturer or self maintains, Lessee agrees to pay any costs necessary for
the manufacturer to bring the Equipment to then current release, revision and
engineering change levels, and to re-certify the Equipment as eligible for
manufacturer's maintenance at the expiration of the lease term, provided re-
certification is available and is required by Lessor. The lease term will
continue upon the same terms and conditions until recertification has been
obtained.
7.2 Inspection by Lessor. Upon reasonable advance notice, Lessee, during
reasonable business hours and subject to Lessee's security requirements, will
make the Equipment and its related log and maintenance records available to
Lessor for inspection.
8. Representations and Warranties of Lessee. Lessee hereby represents, warrants
and covenants that with respect to the Master Lease and each Schedule executed
hereunder:
(a) The Lessee is a corporation duly organized and validly existing in good
standing under the laws of the jurisdiction of its incorporation, is duly
qualified to do business in each jurisdiction (including the jurisdiction where
the Equipment is, or is to be, located) where its ownership or lease of property
or the conduct of its business requires such qualification, except for where
such lack of qualification would not have a material adverse effect on the
Company's business; and has full corporate power and authority to hold property
under the Master Lease and each Schedule and to enter into and perform its
obligations under the Master Lease and each Schedule.
(b) The execution and delivery by the Lessee of the Master Lease and each
Schedule and its performance thereunder have been duly authorized by all
necessary corporate action on the part of the Lessee, and the Master Lease and
each Schedule are not inconsistent with the Lessee's Articles of Incorporation
or Bylaws, do not contravene any law or governmental rule, regulation or order
applicable to it, do not and will not contravene any provision of, or constitute
a default under, any indenture, mortgage, contract or other instrument to which
it is a party or by which it is bound, and the Master Lease and each
Schedule constitute legal, valid and binding
agreements of the Lessee, enforceable in accordance with their terms, subject to
the effect of applicable bankruptcy and other similar laws affecting the rights
of creditors generally and rules of law concerning equitable remedies.
(c) There are no actions, suits, proceedings or patent claims pending or, to
the knowledge of the Lessee, threatened against or affecting the Lessee in any
court or before any governmental commission, board or authority which, if
adversely determined, will have a material adverse effect on the ability of the
Lessee to perform its obligations under the Master Lease and each Schedule.
(d) The Equipment is personal property and when subjected to use by the Lessee
will not be or become fixtures under applicable law.
(e) The Lessee has no material liabilities or obligations, absolute or
contingent (individually or in the aggregate), except the liabilities and
obligations of the Lessee as set forth in the Financial Statements and
liabilities and obligations which have occurred in the ordinary course of
business, and which have not been, in any case or in the aggregate, materially
adverse to Lessee's ongoing business.
(f) To the best of the Lessee's knowledge, the Lessee owns, possesses, has
access to, or can become licensed on reasonable terms under all patents, patent
applications, trademarks, trade names, inventions, franchises, licenses,
permits, computer software and copyrights necessary for the operations of its
business as now conducted, with no known infringement of, or conflict with, the
rights of others.
(g) All material contracts, agreements and instruments to which the Lessee is a
party are in full force and effect in all material respects, and are valid,
binding and enforceable by the Lessee in accordance with their respective terms,
subject to the effect of applicable bankruptcy and other similar laws affecting
the rights of creditors generally, and rules of law concerning equitable
remedies.
9. Delivery and Return of Equipment.
Lessee hereby assumes the full expense of transportation and in-transit
insurance to Lessee's premises and installation thereat of the Equipment. Upon
termination (by expiration or otherwise) of each Summary Equipment Schedule,
Lessee shall, pursuant to Lessor's instructions and at Lessee's full expense
(including, without limitation, expenses of transportation and in-transit
insurance), return the Equipment to Lessor in the same operating order, repair,
condition and appearance as when received, less normal depreciation and wear and
tear. Lessee shall return the Equipment to Lessor at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other address within the continental United
States as directed by Lessor, provided, however, that Lessee's expense shall be
limited to the cost of returning the Equipment to Lessor's address as set forth
herein. During the period subsequent to receipt of a notice under Section 2,
Lessor may demonstrate the Equipment's operation in place and Lessee will supply
any of its personnel as may reasonably be required to assist in the
demonstrations.
10. Labeling.
Upon request, Lessee will ▇▇▇▇ the Equipment indicating Lessor's interest with
labels provided by Lessor. Lessee will keep all Equipment free from any other
marking or labeling which might be interpreted as a claim of ownership.
11. Indemnity.
With regard to bodily injury and property damage liability only, Lessee will
indemnify and hold Lessor, any Assignee and any Secured Party harmless from and
against any and all claims, costs, expenses, damages and liabilities, including
reasonable attorneys' fees, arising out of the ownership (for strict liability
in tort only), selection, possession, leasing, operation, control, use,
maintenance, delivery, return or other disposition of the Equipment during the
term of this Master Lease or until Lessee's obligations under the Master Lease
terminate. However, Lessee is not responsible to a party indemnified hereunder
for any claims, costs, expenses, damages and liabilities occasioned by the
negligent acts of such indemnified party. Lessee agrees to carry bodily injury
and property damage liability insurance during the term of the Master Lease in
amounts and against risks customarily insured against by the Lessee on equipment
owned by it. Any amounts received by Lessor under that insurance will be
credited against Lessee's obligations under this Section.
12. Risk of Loss.
Effective upon delivery and until the Equipment is returned, Lessee relieves
Lessor of responsibility for all risks of physical damage to or loss or
destruction of the Equipment. Lessee will carry casualty insurance for each item
of Equipment in an amount not less than the Casualty Value. All policies for
such insurance will name the Lessor and any Secured Party as additional insured
and as loss payee, and will provide for at least thirty (30) days prior written
notice to the Lessor of cancellation or expiration, and will insure Lessor's
interests regardless of any breach or violation by Lessee of any representation,
warranty or condition contained in such policies and will be primary without
right of contribution from any insurance effected by Lessor. Upon the execution
of any Schedule, the Lessee will furnish appropriate evidence of such insurance
acceptable to Lessor.
Lessee will promptly repair any damaged item of Equipment unless such Equipment
has suffered a Casualty Loss. Within fifteen (15) days of a Casualty Loss,
Lessee will provide written notice of that loss to Lessor and Lessee will, at
Lessee's option, either (a) replace the item of Equipment with Like Equipment
and marketable title to the Like Equipment will automatically vest in Lessor or
(b) pay the Casualty Value; and after that payment and the payment of all other
amounts due and owing with respect to that item of Equipment, Lessee's
obligation to pay further Rent for the item of Equipment will cease.
13. Default, Remedies and Mitigation.
13.1 Default. The occurrence of any one or more of the following Events of
Default constitutes a default under a Summary Equipment Schedule:
(a) Lessee's failure to pay Rent or other amounts payable by Lessee when due if
that failure continues for five (5) business days after written notice; or
(b) Lessee's failure to perform any other term or condition of the Schedule or
the material inaccuracy of any representation or warranty made by the Lessee in
the Schedule or in any document or certificate furnished to the Lessor hereunder
if that failure or inaccuracy continues for ten (10) business days after written
notice; or
(c) An assignment by Lessee for the benefit of its creditors, the failure by
Lessee to pay its debts when due, the insolvency of Lessee, the filing by Lessee
or the filing against Lessee of any petition under any bankruptcy or insolvency
law or for the appointment of a trustee or other officer with similar powers,
the adjudication of Lessee as insolvent, the liquidation of Lessee, or the
taking of any action for the purpose of the foregoing; or
(d) The occurrence of an Event of Default under any Schedule, Summary Equipment
Schedule or other agreement between Lessee and Lessor or its Assignee or Secured
Party.
13.2 Remedies. Upon the occurrence of any of the above Events of Default,
Lessor, at its option, may:
(a) enforce Lessee's performance of the provisions of the applicable Schedule
by appropriate court action in law or in equity;
(b) recover from Lessee any damages and or expenses, including Default Costs;
(c) with notice and demand, recover all sums due and accelerate and recover the
present value of the remaining payment stream of all Rent due under the
defaulted Schedule (discounted at the same rate of interest at which such
defaulted Schedule was discounted with a Secured Party plus any prepayment fees
charged to Lessor by the Secured Party or, if there is no Secured Party, then
discounted at 6%) together with all Rent and other amounts currently due as
liquidated damages and not as a penalty;
(d) with notice and process of law and in compliance with Lessee's security
requirements, Lessor may enter on Lessee's premises to remove and repossess the
Equipment without being liable to Lessee for damages due to the repossession,
except those resulting from Lessor's, its assignees', agents' or
representatives' negligence; and
(e) pursue any other remedy permitted by law or equity.
The above remedies, in Lessor's discretion and to the extent permitted by law,
are cumulative and may be exercised successively or concurrently.
13.3 Mitigation. Upon return of the Equipment pursuant to the terms of Section
13.2, Lessor will use its best efforts in accordance with its normal business
procedures (and without obligation to give any priority to such Equipment) to
mitigate Lessor's damages as described below. EXCEPT AS SET FORTH IN THIS
SECTION, LESSEE HEREBY WAIVES ANY RIGHTS NOW OR HEREAFTER CONFERRED BY STATUTE
OR OTHERWISE WHICH MAY REQUIRE LESSOR TO MITIGATE ITS DAMAGES OR MODIFY ANY OF
LESSOR'S RIGHTS OR REMEDIES STATED HEREIN. Lessor may sell, lease or otherwise
dispose of all or any part of the Equipment at a public or private sale for cash
or credit with the privilege of purchasing the Equipment. The proceeds from any
sale, lease or other disposition of the Equipment are defined as either:.
(a) if sold or otherwise disposed of, the cash proceeds less the Fair Market
Value of the Equipment at the expiration of the Initial Term less the Default
Costs; or
(b) if leased, the present value (discounted at 3 percent (3%) over the U.S.
Treasury Notes of comparable maturity to the term of the re-lease) of the
rentals for a term. not to exceed the Initial Term, less the Default Costs.
Any proceeds will be applied against liquidated damages and any other sums due
to Lessor from Lessee. However, Lessee is liable to Lessor for, and Lessor may
recover, the amount by which the proceeds are less than the liquidated damages
and other sums due to Lessor from Lessee.
14. Additional Provisions.
14.1 Board Attendance. One representative of Lessor will have the right to
attend Lessee's corporate Board of Directors meetings and Lessee will give
Lessor reasonable notice in advance of any special Board of Directors meeting,
which notice will provide an agenda of the subject matter to be discussed at
such board meeting. Lessee will provide Lessor with a certified copy of the
minutes of each Board of Directors meeting within thirty (30) days following the
date of such meeting held during the term of this Master Lease.
14.2 Financial Statements. As soon as practicable at the end of each month (and
in any event within thirty (30) days), Lessee will provide to Lessor the same
information which Lessee provides to its Board of Directors, but which will
include not less than a monthly income statement, balance sheet and statement of
cash flows prepared in accordance with generally accepted accounting principles,
consistently applied (the Financial Statements'). As soon as practicable at the
end of each fiscal year, Lessee will provide to Lessor audited Financial
Statements setting forth in comparative form the corresponding figures for the
fiscal year (and in any event within ninety (90) days), and accompanied by an
audit report and opinion of the independent certified public accountants
selected by Lessee. Lessee will promptly furnish to Lessor any additional
information (including, but not limited to, tax returns, income statements,
balance sheets and names of principal creditors) as Lessor reasonably believes
necessary to evaluate Lessee's continuing ability to meet financial obligations.
After the effective date of the initial registration statement covering a public
offering of Lessee's securities, the term "Financial Statements" will be deemed
to refer to only those statements required by the Securities and Exchange
Commission.
14.3 Obligation to Lease Additional Equipment. Upon notice to Lessee, Lessor
will not be obligated to lease any Equipment which would have a Commencement
Date after said notice if: (i) Lessee is in default under this Master Lease or
any Schedule; (ii) Lessee is in default under any loan agreement, the result of
which would allow the lender or any secured party to demand immediate payment of
any material indebtedness; (iii) there is a material adverse change in Lessee's
credit standing; or (iv) Lessor determines (in reasonable good faith) that
Lessee will be unable to perform its obligations under this Master Lease or any
Schedule.
14.4 Merger and Sale Provisions. Lessee will notify Lessor of any proposed
Merger at least sixty (60) days prior to the closing date. Lessor may, in its
discretion, either (i) consent to the assignment of the Master Lease and all
relevant Schedules to the successor entity, or (ii) terminate the Lease and all
relevant Schedules. If Lessor elects to consent to the assignment, Lessee and
its successor will sign the assignment documentation provided by Lessor. If
Lessor elects to terminate the Master Lease and all relevant Schedules, then
Lessee will pay Lessor all amounts then due and owing and a termination fee
equal to the present value (discounted at 6%) of the remaining Rent for the
balance of the Initial Term(s) of all Schedules, and will return the Equipment
in accordance with Section 9. Lessor hereby consents to any Merger in which the
acquiring entity has a ▇▇▇▇▇'▇ Bond Rating of BA3 or better or a commercially
acceptable equivalent measure of creditworthiness as reasonably determined by
Lessor.
14.5 Entire Agreement. This Master Lease and associated Schedules and Summary
Equipment Schedules supersede all other oral or written agreements or
understandings between the parties concerning the Equipment including, for
example, purchase orders. ANY AMENDMENT OF THIS MASTER LEASE OR A SCHEDULE, MAY
ONLY BE ACCOMPLISHED BY A WRITING SIGNED BY THE PARTY AGAINST WHOM THE AMENDMENT
IS SOUGHT TO BE ENFORCED.
14.6 No Waiver. No action taken by Lessor or Lessee will be deemed to constitute
a waiver of compliance with any representation, warranty or covenant contained
in this Master Lease or a Schedule. The waiver by Lessor or Lessee of a breach
of any provision of this Master Lease or a Schedule will not operate or be
construed as a waiver of any subsequent breach.
14.7 Binding Nature. Each Schedule is binding upon, and inures to the benefit of
Lessor and its assigns. LESSEE MAY NOT ASSIGN ITS RIGHTS OR OBLIGATIONS.
14.8 Survival of Obligations. All agreements, obligations including, but not
limited to those arising under Section 6.2, representations and warranties
contained in this Master Lease, any Schedule, Summary Equipment Schedule or in
any document delivered in connection with those agreements are for the benefit
of Lessor and any Assignee or Secured Party and survive the execution, delivery,
expiration or termination of this Master Lease.
14.9 Notices. Any notice, request or other communication to either party by the
other will be given in writing and deemed received upon the earlier of (1)
actual receipt or (2) three days after mailing if mailed postage prepaid by
regular or airmail to Lessor (to the attention of the Comdisco "Venture Group")
or Lessee, at the address set out in the Schedule, (3) one day after it is sent
by courier or (4) on the same day as sent via facsimile transmission, provided
that the original is sent by personal delivery or mail by the sending party.
14.10 Applicable Law. THIS MASTER LEASE HAS BEEN, AND EACH SCHEDULE WILL HAVE
BEEN MADE, EXECUTED AND DELIVERED IN THE STATE OF ILLINOIS AND WILL BE GOVERNED
AND CONSTRUED FOR ALL PURPOSES IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS WITHOUT GIVING EFFECT TO CONFLICT OF LAW PROVISIONS. NO RIGHTS OR
REMEDIES REFERRED TO IN ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE WILL BE
CONFERRED ON LESSEE UNLESS EXPRESSLY GRANTED IN THIS MASTER LEASE OR A SCHEDULE.
14.11 Severability. If any one or more of the provisions of this Master Lease or
any Schedule is for any reason held invalid, illegal or unenforceable, the
remaining provisions of this Master Lease and any such Schedule will be
unimpaired, and the invalid, illegal or unenforceable provision replaced by a
mutually acceptable valid, legal and enforceable provision that is closest to
the original intention of the parties.
14.12 Counterparts. This Master Lease and any Schedule may be executed in any
number of counterparts, each of which will be deemed an original, but all such
counterparts together constitute one and the same instrument. If Lessor grants a
security interest in all or any part of a Schedule, the Equipment or sums
payable thereunder, only that counterpart Schedule marked "Secured Party's
Original" can transfer Lessor's rights and all other counterparts will be marked
"Duplicate".
14.13 Licensed Products. Lessee will obtain no title to Licensed Products which
will at all times remain the property of the owner of the Licensed Products. A
license from the owner may be required and it is Lessee's responsibility to
obtain any required license before the use of the Licensed Products. Lessee
agrees to treat the Licensed Products as confidential information of the owner,
to observe all copyright restrictions, and not to reproduce or sell the Licensed
Products.
14.14 Secretary's Certificate. Lessee will, upon execution of this Master Lease,
provide Lessor with a secretary's certificate of incumbency and authority. Upon
the execution of each Schedule with a purchase price in excess of $1,000,000,
Lessee will provide Lessor with an opinion from Lessee's counsel in a form
acceptable to Lessor regarding the representations and warranties in Section 8.
14.15 Electronic Communications. Each of the parties may communicate with the
other by electronic means under mutually agreeable terms.
14.16 Landlord/Mortgagee Waiver. Lessee agrees to provide Lessor with a
Landlord/Mortgagee Waiver with respect to the Equipment. Such waiver shall be in
a form satisfactory to Lessor.
14.17 Equipment Procurement Charges/Progress Payments. Lessee hereby agrees that
Lessor shall not, by virtue of its entering into this Master Lease, be required
to remit any payments to any manufacturer or other third party until Lessee
accepts the Equipment subject to this Master Lease.
14.18 Definitions.
Advance - means the amount due to Lessor by Lessee upon Lessee's execution of
-------
each Schedule.
Assignee - means an entity to whom Lessor has sold or assigned its rights as
--------
owner and Lessor of Equipment.
Casualty Loss - means the irreparable loss or destruction of Equipment.
-------------
Casualty Value - means the greater of the aggregate Rent remaining to be paid
--------------
for the balance of the lease term or the Fair Market Value of the Equipment
immediately prior to the Casualty Loss. However, if a Casualty Value Table is
attached to the relevant Schedule its terms will control.
Commencement Date -is defined in each Schedule.
-----------------
Default Costs - means reasonable attorney's fees and remarketing costs resulting
-------------
from a Lessee default or Lessor's enforcement of its remedies.
Delivery Date - means date of delivery of Inventory Equipment to Lessee's
-------------
address.
Equipment - means the property described on a Summary Equipment Schedule and any
---------
replacement for that property required or permitted by this Master Lease or a
Schedule.
Event of Default - means the events described in Subsection 13.1.
----------------
Fair Market Value - means the aggregate amount which would be obtainable in an
-----------------
arm's-length transaction between an informed and willing buyer/user and an
informed and willing seller under no compulsion to sell.
Initial Term - means the period of time beginning on the first day of the first
------------
full Rent Interval following the Commencement Date for all items of Equipment
and continuing for the number of Rent Intervals indicated on a Schedule.
Interim Rent - means the pro-rata portion of Rent due for the period from the
------------
Commencement Date through but not including the first day of the first full Rent
Interval included in the Initial Term.
Late Charges - means the lesser of five percent (5%) of the payment due or the
------------
maximum amount permitted by the law of the state where the Equipment is located.
Licensed Products - means any software or other licensed products attached to
-----------------
the Equipment.
Like Equipment - means replacement Equipment which is lien free and of the same
--------------
model, type, configuration and manufacture as Equipment.
Merger - means any consolidation or merger of the Lessee with or into any other
------
corporation or entity, any sale or conveyance of all or substantially all of the
assets or stock of the Lessee by or to any other person or entity in which
Lessee is not the surviving entity.
Notice Period - means not less than ninety (90) days nor more than twelve (12)
-------------
months prior to the expiration of the lease term.
Owner - means the owner of Equipment.
-----
Rent - means the rent Lessee will pay for each item of Equipment expressed in a
----
Summary Equipment Schedule either as a specific amount or an amount equal to the
amount which Lessor pays for an item of Equipment multiplied by a lease rate
factor plus all other amounts due to Lessor under this Master Lease or a
Schedule.
Rent Interval - means a full calendar month or quarter as indicated on a
-------------
Schedule.
Schedule - means either an Equipment Schedule or a Licensed Products Schedule
--------
which incorporates all of the terms and conditions of this Master Lease.
Secured Party - means an entity to whom Lessor has granted a security interest
-------------
for the purpose of securing a loan.
Summary Equipment Schedule - means a certificate provided by Lessor summarizing
--------------------------
all of the Equipment for which Lessor has received Lessee approved vendor
invoices, purchase documents and/or evidence of delivery during a calendar
quarter which will incorporate all of the terms and conditions of the related
Schedule and this Master Lease and will constitute a separate lease for the
equipment leased thereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Master Lease on or as
of the day and year first above written.
PLACEWARE COMDISCO, INC.
as Lessee as Lessor
By: /s/ XXX /s/ XXX
----------------- ---------------------------------
Title: President Title: ▇▇▇▇▇ ▇. ▇▇▇▇, President,
--------------- --------------------------
Comdisco Ventures Division
--------------------------
ADDENDUM TO THE
MASTER LEASE AGREEMENT DATED AS OF SEPTEMBER 30, ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ AS LESSEE
AND COMDISCO, INC., AS LESSOR
The undersigned hereby agree that the terms and conditions of the above-
referenced Master Lease are hereby modified and amended as follows:
1) Section 14.1 "Board Attendance"
------------------------------
Delete this section in its entirety.
2) Subsection 14.18, Definitions
-----------------
In the definition "Interim Rent", delete "the pro-rata portion" and replace
------------
with "0.0208%".
PLACEWARE COMDISCO, INC.
as LESSEE as LESSOR
By: /s/ XXX By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------- -------------------------------
Title: President Title: ▇▇▇▇▇ ▇. ▇▇▇▇, President
------------------ ----------------------------
Comdisco Ventures Division
Date: 9/30/97 Date:
------------------- -----------------------------
EQUIPMENT SCHEDULE VL-1
DATED AS OF SEPTEMBER 30, 1997
TO MASTER LEASE AGREEMENT
DATED AS OF SEPTEMBER 30, 1997 THE "MASTER LEASE")
LESSEE: PLACEWARE LESSOR: COMDISCO, INC.
Admin. Contact/Phone No.: Address for all Notices:
------------------------- ------------------------
(650) 944--0900 Phone ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ Fax ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Venture Group
Address for Notices:
--------------------
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Central Billing Location: Rent Interval: Monthly
------------------------- ---------------
same as above
Attn.:
Lessee Reference No.:
(24 digits maximum)
Location of Equipment: Initial Term: 48 months
---------------------- --------------
same as above (Number of Rent Intervals)
Lease Rate Factor: 0-6 0%
-------------------
Attn.: 7-48 2.800%
EQUIPMENT (as defined below): Advance: $None
--------
Equipment specifically approved by Lessor, which shall be delivered to and
accepted by Lessee during the period September 30, 1997 through December 30,
1998 ("Equipment Delivery Period"), for which Lessor receives vendor invoices
approved for payment, up to an aggregate purchase price of $510,000 ("Commitment
Amount"); excluding custom use equipment, leasehold improvements, installation
costs and delivery costs, rolling stock, special tooling, "stand-alone"
software, application software bundled into computer hardware, hand held items,
molds and fungible items.
1. Equipment Purchase
This Schedule contemplates Lessor's acquisition of Equipment for lease to
Lessee, either by one of the first three categories listed below or by providing
Lessee with Equipment from the fourth category, in an aggregate value up to the
Commitment Amount referred to on the face of this Schedule. If the Equipment
acquired is of category (i), (ii), (iii) below, the effectiveness of this
Schedule as it relates to those items of Equipment is contingent upon Lessee's
acknowledgment at the time Lessor acquires the Equipment that Lessee has either
received or approved the relevant purchase documentation between vendor and
Lessor for that Equipment.
(i) NEW ON-ORDER EQUIPMENT. Lessor will purchase new Equipment which is
obtained from a vendor by Lessee for its use subject to Lessor's
prior approval of the Equipment.
(ii) SALE-LEASEBACK EQUIPMENT. Any in-place Equipment installed at
Lessee's site and to which Lessee has clear title and ownership may
be considered by Lessor for inclusion under this Lease (the "Sale-
Leaseback Transaction"). Any request for a Sale-Leaseback Transaction
must be submitted to Lessor in writing (along with accompanying
evidence of Lessee's Equipment ownership satisfactory to Lessor for
all Equipment submitted) no later than October 30, 1997 *. Lessor
will not perform a Sale-Leaseback Transaction for any request or
accompanying Equipment ownership documents which arrive after the
date marked above by an asterisk (*). Further, any sale-leaseback
Equipment will be placed on lease subject to: (1) Lessor prior
approval of the Equipment; and (2) if approved, at Lessor's actual
net appraised Equipment value pursuant to the schedule below:
ORIGINAL EQUIPMENT INVOICE PERCENT OF ORIGINAL MANUFACTURER'S
DATE NET EQUIPMENT COST PAID BY LESSOR
---- ---------------------------------
Between 08/01/97-10/30/97 100%
Lessee represents that it has paid all California sales tax due on the cost of
that portion of Equipment to be installed in California and agrees to provide
evidence of such payment to Lessor, if specifically requested. As a result of
the election, Lessor agrees that it will not invoice Lessee for use tax on the
monthly rental rate. Lessee understands that this is an irrevocable election to
measure the tax by the Equipment cost and cannot be changed except prior to
installation of the Equipment.
(iii) USED ON-ORDER EQUIPMENT. Lessor will purchase used Equipment which
is obtained from a third party by Lessee for its use subject to
Lessor's prior approval of the Equipment and at Lessor's appraised
value for such used Equipment.
(iv) 800 NUMBER EQUIPMENT. Upon Lessee's use of Comdisco's 1-800 Direct
Service, Lessor will purchase new or used Equipment from a third
party or Lessor will supply new or used Equipment from its inventory
for use by Lessee at rates provided by Lessor.
2. Commencement Date
The Commencement Date for each item of new on-order or used on-order
Equipment will be the install date as confirmed in writing by Lessee as set
forth on the vendor invoice of which a facsimile transmission will constitute an
original document. The Commencement Date for sale-leaseback Equipment shall be
the date Lessor tenders the purchase price. The Commencement Date for 800 Number
Equipment shall be fifteen (15) days from the ship date, such ship date to be
set forth on the vendor invoice or if unavailable on the vendor invoice the ship
date will be determined by Lessor upon other supporting shipping documentation.
Lessor will summarize all approved invoices, purchase documentation and evidence
of delivery, as applicable, received in the same calendar month into a Summary
Equipment Schedule in the form attached to this Schedule as Exhibit 1, and the
Initial Term will begin the first day of the calendar month thereafter. Each
Summary Equipment Schedule will contain the Equipment location, description,
serial number(s) and cost and will incorporate the terms and conditions of the
Master Lease and this Schedule and will constitute a separate lease.
3. Option to Extend
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term of a Summary
Equipment Schedule, Lessee will have the right to extend the Initial Term of
such Summary Equipment Schedule for a period of one (1) year. In such event, the
rent to be paid during said extended period shall be mutually agreed upon and if
the parties cannot mutually agree, then the Summary Equipment Schedule shall
continue in full force and effect pursuant to the existing terms and conditions
until terminated in accordance with its terms. The Summary Equipment Schedule
will continue in effect following said extended period until terminated by
either party upon not less than ninety (90) days prior written notice, which
notice shall be effective as of the date of receipt.
4. Purchase Option
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term or the extended
term of the applicable Summary Equipment Schedule, Lessee will have the option
at the expiration of the Initial Term of the Summary Equipment Schedule to
purchase all, but not less than all, of the Equipment listed therein for a
purchase price not to exceed 15% of Lessor's equipment cost and upon terms and
conditions to be mutually agreed upon by the parties following Lessee's written
notice, plus any taxes applicable at time of purchase. Said purchase price shall
be paid to Lessor at least thirty (30) days before the expiration date of the
Initial Term or extended term. Title to the Equipment shall automatically pass
to Lessee upon payment in full of the purchase price but, in no event, earlier
than the expiration of the fixed Initial Term or extended term, if applicable.
If the parties are unable to agree on the purchase price or the terms and
conditions with respect to said purchase, then the Summary Equipment Schedule
with respect to this Equipment shall remain in full force and effect.
Notwithstanding the exercise by Lessee of this option and payment of the
purchase price, until all obligations under the applicable Summary Equipment
Schedule have been fulfilled, it is agreed and understood that Lessor shall
retain a purchase money security interest in the Equipment listed therein and
the Summary Equipment Schedule shall constitute a Security Agreement under the
Uniform Commercial Code of the state in which the Equipment is located.
5. Option Amount
So long as no Event of Default shall have occurred and is continuing and
upon Lessee's request, subject to final review by Lessor, Lessor agrees to
provide to Lessee an additional $1,000,000 of Equipment upon rates and terms to
be negotiated.
6. Technology Exchange Option
If Lessee is not in default, and there is no material adverse change in
Lessee's credit, on or after the expiration of the 12th month of any Summary
Equipment Schedule, Lessee shall have the option to replace any of the Equipment
subject to such summary Equipment Schedule with new technology equipment ("New
Technology Equipment") utilizing the following guidelines:
1. Equipment being replaced with New Technology Equipment shall have an
aggregate original cost equal to or greater than $20,000 and be comprised of
full configurations of equipment.
2. This technology Exchange Option shall be limited to a maximum in the
aggregate of fifty percent (50%) of the original equipment cost and shall not
apply to software.
3. The cost of the New Technology Equipment must be equal to or greater than
the original equipment cost of the replaced equipment, but in no event shall
exceed 150% of the original equipment cost.
4. The remaining lease payments applicable to the equipment being replaced by
the New Technology Equipment will be discounted to present value at 6%.
The wholesale market value of the equipment being replaced will be established
by Comdisco based upon then current market conditions. Upon the return of the
replaced equipment, the wholesale price will be deducted from the present value
of the remaining rentals and the differential will be added to the cost of the
New Technology Equipment in calculating the new rental. The lease for the New
Technology Equipment will contain terms and conditions substantially similar to
those for the replaced equipment and will have an Initial Term not less than the
balance of the remaining Initial Term for the replaced equipment.
7. Special Terms
The terms and conditions of the Lease as they pertain to this Schedule are
hereby modified and amended as follows'
Master Lease: This Schedule is issued pursuant to the Lease identified on page 1
of this Schedule. All of the terms and conditions of the Lease are incorporated
in and made a part of this Schedule as if they were expressly set forth in this
Schedule. The parties hereby reaffirm all of the terms and conditions of the
Lease (including, without limitation, the representations and warranties set
forth in Section 8) except as modified herein by this Schedule. This Schedule
may not be amended or rescinded except by a writing signed by both parties.
PLACEWARE COMDISCO, INC.
as Lessee as Lessor
By: /s/ XXX By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------- --------------------------
Title: President Title: ▇▇▇▇▇ ▇. ▇▇▇▇, President
-------------- --------------------------
Comdisco Ventures Division
Date: 9/30/97 Date:
--------------- ---------------------------
EXHIBIT 1
SUMMARY EQUIPMENT SCHEDULE
--------------------------
This Summary Equipment Schedule dated XXXX is executed pursuant to
Equipment Schedule No. X to the Master Lease Agreement dated XXXX between
Comdisco, Inc. ("Lessor") and XXXX ("Lessee"). All of the terms, conditions,
representations and warranties of the Master Lease Agreement and Equipment
Schedule No. X are incorporated herein and made a part hereof, and this Summary
Equipment Schedule constitutes a Schedule for the Equipment on the attached
invoices.
1. For Period Beginning: And Ending:
-------------------- ----------
2. Initial Term Starts on: Initial Term: (Number of Rent Intervals)
---------------------- ------------
3. Total Summary Equipment Cost:
----------------------------
4. Lease Rate Factor:
-----------------
5. Rent:
----
6. Acceptance Doc Type:
-------------------
EQUIPMENT SCHEDULE VL-2
DATED AS OF SEPTEMBER 30, 1997
TO MASTER LEASE AGREEMENT
DATED AS OF SEPTEMBER 30, 1997 THE "MASTER LEASE")
LESSEE: PLACEWARE LESSOR: COMDISCO, INC.
Admin. Contact/Phone No.: Address for all Notices:
------------------------ -----------------------
(650) 944--0900 Phone ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ Fax ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Venture Group
Address for Notices:
-------------------
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Central Billing Location: Rent Interval: Monthly
------------------------ -------------
same as above
Attn.:
Lessee Reference No.:___________
(24 digits maximum)
Location of Equipment: Initial Term: 48 months
--------------------- --------------
same as above (Number of Rent Intervals)
Attn.: Lease Rate Factor: 0-6 0%
-----------------
7-48 2.800%
EQUIPMENT (as defined below): Advance: $None
-------
Equipment (including software and tenant improvements) specifically approved by
Lessor, which shall be delivered to and accepted by Lessee during the period
September 30, 1997 through December, 1998 ("Equipment Delivery Period"), for
which Lessor receives vendor invoices approved for payment, up to an aggregate
purchase price of $340,000 ("Commitment Amount").
1. Equipment Purchase
This Schedule contemplates Lessor's acquisition of Equipment for lease to
Lessee, either by one of the first three categories listed below or by providing
Lessee with Equipment from the fourth category, in an aggregate value up to the
Commitment Amount referred to on the face of this Schedule. If the Equipment
acquired is of category (i), (ii), (iii) below, the effectiveness of this
Schedule as it relates to those items of Equipment is contingent upon Lessee's
acknowledgment at the time Lessor acquires the Equipment that Lessee has either
received or approved the relevant purchase documentation between vendor and
Lessor for that Equipment.
(i) NEW ON-ORDER EQUIPMENT. Lessor will purchase new Equipment which is
obtained from a vendor by Lessee for its use subject to Lessor's
prior approval of the Equipment.
(ii) SALE-LEASEBACK EQUIPMENT. Any in-place Equipment installed at
Lessee's site and to which Lessee has clear title and ownership may
be considered by Lessor for inclusion under this Lease (the "Sale-
Leaseback Transaction"). Any request for a Sale-Leaseback Transaction
must be submitted to Lessor in writing (along with accompanying
evidence of Lessee's Equipment ownership satisfactory to Lessor for
all Equipment submitted) no later than October 30, 1997. Lessor will
not perform a Sale-Leaseback Transaction for any request or
accompanying Equipment ownership documents which arrive after the
date marked above by an asterisk ('). Further, any sale-leaseback
Equipment will be placed on lease subject to: (1) Lessor prior
approval of the Equipment; and (2) if approved, at Lessor's actual
net appraised Equipment value pursuant to the schedule below:
ORIGINAL EQUIPMENT INVOICE PERCENT OF ORIGINAL MANUFACTURER'S
DATE NET EQUIPMENT COST PAID BY LESSOR
---- ---------------------------------
Between 08/01/97-10/30/97 100%
Lessee represents that it has paid all California sales tax due on the cost of
that portion of Equipment to be installed in California and agrees to provide
evidence of such payment to Lessor, if specifically requested. As a result of
the election, Lessor agrees that it will not invoice Lessee for use tax on the
monthly rental rate. Lessee understands that this is an irrevocable election to
measure the tax by the Equipment cost and cannot be changed except prior to
installation of the Equipment.
(iii) USED ON-ORDER EQUIPMENT. Lessor will purchase used Equipment which
is obtained from a third party by Lessee for its use subject to
Lessor's prior approval of the Equipment and at Lessor's appraised
value for such used Equipment.
(iv) 800 NUMBER EQUIPMENT. Upon Lessee's use of Comdisco's 1-800 Direct
Service, Lessor will purchase new or used Equipment from a third
party or Lessor will supply new or used Equipment from its inventory
for use by Lessee at rates provided by Lessor.
2. Commencement Date
The Commencement Date for each item of new on-order or used on-order
Equipment will be the install date as confirmed in writing by Lessee as set
forth on the vendor invoice of which a facsimile transmission will constitute an
original document. The Commencement Date for sale-leaseback Equipment shall be
the date Lessor tenders the purchase price. The Commencement Date for 800 Number
Equipment shall be fifteen (15) days from the ship date, such ship date to be
set forth on the vendor invoice or if unavailable on the vendor invoice the ship
date will be determined by Lessor upon other supporting shipping documentation.
Lessor will summarize all approved invoices, purchase documentation and evidence
of delivery, as applicable, received in the same calendar month into a Summary
Equipment Schedule in the form attached to this Schedule as Exhibit 1, and the
Initial Term will begin the first day of the calendar month thereafter. Each
Summary Equipment Schedule will contain the Equipment location, description,
serial number(s) and cost and will incorporate the terms and conditions of the
Master Lease and this Schedule and will constitute a separate lease.
3. Miscellaneous
In consideration of Lessor financing software and tenant improvements
hereunder, Lessee agrees in addition to its last Monthly Rent Payment to
remit to Lessor an amount equal to 15% of Lessor's aggregate cost of
software and tenant improvements provided hereunder
4. Special Terms
The terms and conditions of the Lease as they pertain to this Schedule are
hereby modified and amended as follows:
Master Lease: This Schedule is issued pursuant to the Lease identified on page 1
of this Schedule. All of the terms and conditions of the Lease are incorporated
in and made a part of this Schedule as if they were expressly set forth in this
Schedule. The parties hereby reaffirm all of the terms and conditions of the
Lease (including, without limitation, the representations and warranties set
forth in Section 8) except as modified herein by this Schedule. This Schedule
may not be amended or rescinded except by a writing signed by both parties.
PLACEWARE COMDISCO, INC.
as Lessee as Lessor
By: /s/ XXX By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------- ------------------------------
Title: President Title: ▇▇▇▇▇ ▇. ▇▇▇▇, President
----------------- ---------------------------
Comdisco Ventures Division
Date: 9/30/97 Date: 11/4/97
------------------ ----------------------------
EXHIBIT 1
SUMMARY EQUIPMENT SCHEDULE
--------------------------
This Summary Equipment Schedule dated XXXX is executed pursuant to
Equipment Schedule No. X to the Master Lease Agreement dated XXXX between
Comdisco, Inc. ("Lessor") and XXXX ("Lessee"). All of the terms, conditions,
representations and warranties of the Master Lease Agreement and Equipment
Schedule No. X are incorporated herein and made a part hereof, and this Summary
Equipment Schedule constitutes a Schedule for the Equipment on the attached
invoices.
1. For Period Beginning: And Ending:
-------------------- ----------
2. Initial Term Starts on: Initial Term: (Number of Rent Intervals)
---------------------- ------------
3. Total Summary Equipment Cost:
----------------------------
4. Lease Rate Factor:
-----------------
5. Rent:
----
6. Acceptance Doc Type:
-------------------
LOAN AND SECURITY AGREEMENT
THIS AGREEMENT (the "Agreement"), dated as of September 30, 1997 is entered
into by and between PlaceWare, a Delaware corporation having a principal place
of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Borrower") and
Comdisco, Inc., a Delaware corporation having a principal place of business at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Lender"). In consideration
of the mutual agreements contained herein, the parties hereto agree as follows:
WHEREAS, Borrower desires to borrow from the Lender hereunder the amount of
Four Hundred Thousand and 00/100 DOLLARS ($400,000) and Lender is willing to
lend said amount to Borrower on or before October 30, 1997 (the "Funding Date");
NOW, THEREFORE, it is agreed:
SECTION 1. THE LOAN
1.1 Subject to the terms and conditions set forth herein, Lender shall
lend to Borrower the aggregate original principal amount of Four Hundred
Thousand and 00/100 DOLLARS ($400,000) (the "Loan") with interest payable in
monthly installments as set forth in the promissory note (the "Note") in the
form attached hereto and made a part hereof as Exhibit A, dated October __,
1997.
1.2 Upon the occurrence of and during an Event of Default (as defined
herein), interest shall thereafter be calculated at a rate of five percent (5%)
in excess of the rate that would otherwise be applicable ("Default Rate"). All
such interest shall be due and payable in arrears, on the first day of the
following month.
1.3 Notwithstanding any provision in this Agreement the Note, or any other
"Loan Document" (as defined herein), it is not the parties' intent to contract
for, charge or receive interest at a rate that is greater than the maximum rate
permissible by law which a court of competent jurisdiction shall deem applicable
hereto (which under the laws of the State of Illinois shall be deemed to be the
laws relating to permissible rates of interest on commercial loans) (the
"Maximum Rate"). If the Borrower actually pays Lender an amount of interest,
chargeable on the total aggregate principal Obligations of Borrower under this
Agreement and the Note (as said rate is calculated over a period of time that is
the longer of (i) the time from the date of this Agreement through the maturity
time as set forth on the Note, or (ii) the entire period of time that any
principal is outstanding on the Note), which amount of interest exceeds interest
calculated at the Maximum Rate on said principal chargeable over said period of
time, then such excess interest actually paid by Borrower shall be applied
first, to the payment of principal outstanding on the Note; second, after all
-----
principal is repaid, to the payment of Lender's out of pocket costs, expenses,
and professional fees which are owed by Borrower to Lender under the Agreement
or the Loan Documents; and third, after all principal, costs, expenses, and
professional fees owed by Borrower to Lender are repaid, the excess (if any)
shall be refunded to Borrower.
1.4 In the event any interest is not paid when due hereunder, delinquent
interest shall be added to principal and shall bear interest on interest,
compounded at the rate set forth in section 1.1.
-1-
1.5 Upon and during the continuation of an Event of Default hereunder (as
defined herein), all Obligations, including principal, interest, compounded
interest, and reasonable professional fees, shall bear interest at a rate per
annum equal to the Default Rate.
1.6 Borrower shall have the option to prepay the Note, in whole or in
part, at any time after the date hereof by paying the principal amount together
with all accrued and unpaid interest with respect to such principal amount, as
of the date of such prepayment and the Balloon Payment as described in the Note
together with a prepayment premium equal to the difference, if any, between (x)
the amount being prepaid and (y) the present value, discounted at the Treasury
Rate, of each installment of principal and interest being prepaid discounted to
the date of prepayment, if the amount in (x) is greater than the amount in (y),
no prepayment premium shall be due. The "Treasury Rate" shall mean the then
prevailing yield on US Treasury Constant Maturities for the most recent business
day, as quoted in the Federal Reserve Statistical Release H15, as of the date of
prepayment for an obligation of comparable maturity to the maturity date of the
Note.
SECTION 2. SECURITY INTEREST
As security for the payment of all indebtedness ("Indebtedness") of the
Borrower to the Lender hereunder and under the Note, as the same may be renewed,
extended for any period or rearranged, and the performance by the Borrower of
its other obligations hereunder (the Indebtedness and such other obligations
being hereinafter sometimes collectively referred to as the "Obligations"), the
Borrower hereby assigns to the Lender, and grants to the Lender a first priority
security interest in, all the Borrower's right, title, and interest in and to
the following property ("Collateral"): (i) the equipment and other property (the
"Equipment") described in Exhibit B attached hereto; and (ii) all proceeds,
products, replacements, additions to, substitutions for and accessions to any
and all Equipment including, without limitation, the proceeds applicable to the
insurance referred to in Section 4 hereof.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF BORROWER
The Borrower represents, warrants and agrees that:
3.1 it has good title in and to the Equipment, free of all liens, security
interests, encumbrances and claims whatsoever, except for the interest of the
Lender therein;
3.2 it has the full power and authority to, and does hereby grant and
convey to the Lender, a valid first priority perfected security interest in the
Equipment as security for the Obligations, free of all liens, security
interests, encumbrances and claims, and shall execute such Uniform Commercial
Code ("UCC") financing statements in connection herewith as the Lender may
reasonably request. No other lien, security interest, adverse claim or
encumbrance has been created by Borrower or is known by Borrower to exist with
respect to any Collateral;
3.3 it is a corporation duly organized, legally existing and in good
standing under the laws of the State of Delaware, and is duly qualified as a
foreign corporation in all jurisdictions where the failure to so qualify would
have a material adverse effect on the Collateral or the business of the Borrower
taken as a whole;
3.4 the execution, delivery and performance of the Note, this Agreement,
the Warrant Agreement dated October 30, 1997 pursuant to which Borrower granted
to Lender the right to
-2-
purchase the number of shares of preferred stock as set forth therein ("Warrant
Agreement"), and all financing statements, certificates and other documents
required to be delivered or executed in connection herewith (collectively, the
"Loan Documents") have been duly authorized by all necessary corporate action of
Borrower, the individual or individuals executing the Documents were duly
authorized to do so, the Equipment is personal property and as used by the
Borrower will not be or become fixtures under applicable law, and the Loan
Documents constitute legal, valid and binding obligations of the Borrower,
enforceable in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization or other similar laws generally affecting
the enforcement of the rights of creditors;
3.5 it shall only relocate any item of the Equipment provided that: (a) it
shall have caused to be filed and/or delivered to the Lender all UCC financing
statements, certificates or other documents or instruments necessary to continue
in effect the first prior perfected security interest of the Lender in the
Collateral, and (b) it shall have given the Lender no less than fifteen (15)
days prior written notice of such relocation;
3.6 the Loan Documents do not and will not violate any provisions of its
articles or certificate of incorporation, bylaws or any contract, agreement,
law, regulation, order, injunction, judgment, decree or writ to which the
Borrower is subject, or result in the creation or imposition of any lien,
security interest or other encumbrance upon the Collateral, other than those
created by this Agreement;
3.7 the execution, delivery and performance of the Loan Documents do not
require the consent or approval of any other person or entity including, without
limitation, any regulatory authority or governmental body of the United States
or any state thereof or any political subdivision of the United States or any
state thereof.
SECTION 4. INSURANCE AND RISK OF LOSS
4.1 Risk of loss of, damage to or destruction of the Equipment shall be
borne by the Borrower and effective upon the Funding Date under the Note and
until the payment and performance in full of all Obligations, Borrower shall at
its own expense cause to be carried and maintained all risk casualty insurance
(covering risk of fire, theft and other such risks as the Lender may require,
including standard and extended coverage) with respect to each item of Equipment
in an amount no less than the replacement costs applicable to such item of
Equipment during the term of this Agreement. All policies evidencing such
casualty insurance shall contain a standard mortgagee's endorsement and shall
provide for at least thirty days prior written notice by the underwriter or
insurance company to the Lender in the event of cancellation or expiration.
Borrower shall provide Lender with insurance certificates evidencing the
foregoing at time of closing.
4.2 If any item of Equipment is lost or rendered unusable as a result of
any physical damage to or destruction of such item of Equipment during the
period from the Funding Date to and including or the date all Obligations
hereunder have been fully satisfied, whichever is later, Borrower shall give to
Lender prompt notice thereof. Borrower shall determine, within fifteen (15) days
after the date of occurrence of such loss, damage or destruction, whether such
item of Equipment can be repaired and restored to the condition in which such
item of Equipment was required to be maintained as of the date immediately
preceding such damage. If Borrower determines that such item of Equipment can be
repaired, Borrower, at its expense, shall cause such item of Equipment to be
promptly repaired. If Borrower determines that such item of Collateral is lost
or cannot be repaired, Borrower shall promptly notify the Lender and such item
-3-
of Equipment shall be deemed to have suffered a "Casualty Loss" for purposes of
this Section as of the date of the occurrence of such loss. Within fifteen (15)
days following the occurrence of any such loss, damage or destruction, Borrower
shall notify the Lender of the item(s) of Equipment which has suffered such
Casualty Loss ("Loss Item"), and within thirty (30) days thereafter (the
"Settlement Date"), Borrower shall either (a) replace such item(s) of Equipment
with equipment of the same model, type and feature configuration, in an
operating condition and repair no less than that required hereunder of the
damaged or lost equipment immediately prior to the date of such damage or loss,
and having a fair market value no less than the Casualty Value applicable to
such Equipment as of the date immediately prior to such damage, in which case
such replacement equipment shall for all purposes hereunder become part of the
Collateral and (without limiting the preceding provisions) Borrower shall grant
to Lender a first lien and security interest in respect of such replacement
equipment pursuant to the terms of this Agreement, and Borrower shall provide
the Lender evidence satisfactory to the Lender of Borrower's good and marketable
title to such replacement equipment (free of any liens, security interests or
encumbrances other than those created by this Agreement and Borrower shall be
entitled to receive the amount of any insurance or other recovery received by
Lender up to cost of obtaining the replacement equipment; or (b) so long as no
Event of Default or event which with the giving of notice or passage of time, or
both, would constitute an Event of Default, has occurred and is continuing,
Borrower may provide substitute equipment satisfactory to Lender to become part
of the Collateral and Borrower shall grant to Lender a first lien and security
interest in respect of such substitute equipment pursuant to the terms of this
Agreement, and Borrower shall provide the Lender evidence satisfactory to Lender
of Borrower's good and marketable title to such substitute equipment (free of
any liens, security interests or encumbrances other than created by this
Agreement and Lender shall provide any required endorsements in connection with
any insurance proceeds received by Borrower pursuant to such insurance policies;
or (c) Borrower shall pay Lender the insurance proceeds payable pursuant to such
insurance policies ("Insurance Proceeds")with respect to such Loss Item(s) and
the principal amount of the Note (and interest accrued on the principal amount
so prepayable) shall become due and payable on the Settlement Date to the extent
of the replacement cost for all such Loss Item(s). Moneys so received shall be
applied, on the date of such receipt, as follows: first, to pay any accrued
interest on the outstanding principal amount of the Note on such date; second,
to prepay, the outstanding principal amount of the Note (to the extent of the
fair market value attributable to such Loss Item(s)); third, to pay any other
Indebtedness of amounts then due and owing to the Lender hereunder; and fourth,
so long as there has occurred no Event of Default under Section 8 hereof and no
event which with the giving of notice or passage of time or both would
constitute an Event of Default, has occurred and is continuing, Borrower and
Lender hereby agree that the balance of any such Insurance Proceeds shall be
paid promptly to the Borrower.
4.3 Effective upon the Funding Date under the Note and while there are any
Obligations outstanding, Borrower shall cause to be carried and maintained
comprehensive general liability insurance with regard to the Collateral against
risks customarily insured against in the Borrower's business. Such risks shall
include, without limitation, the risks of death, bodily injury and property
damage associated with the Collateral. All policies evidencing such insurance
shall provide for at least thirty (30) days prior written notice by the
underwriter or insurance company to the Lender in the event of cancellation or
expiration.
4.4 Borrower shall and does hereby indemnify and hold Lender, its agents
and shareholders harmless from and against any and all claims, costs, expenses,
damages and liabilities (including without limitation such claims, costs,
expenses, damages and liabilities based on liability in tort including without
limitation strict liability in tort) including reasonable attorneys'
-4-
fees, arising out of Borrower's ownership, possession, operation, control, use,
maintenance, delivery, or other disposition of the Collateral. Notwithstanding
the foregoing, Borrower shall not be responsible under the terms of this Section
4.4 to a party indemnified hereunder for any claims, costs, expenses, damages
and liabilities occasioned by the negligence or willful misconduct of such
indemnified party.
SECTION 5. COVENANTS OF BORROWER
Borrower covenants and agrees as follows at all times while any of the
Obligations remain outstanding:
5.1 Borrower shall maintain the Equipment in good operating order, repair,
condition and appearance and protect the Equipment from deterioration, other
than normal wear and tear. Borrower shall not use each of the Equipment or
permit its use for any purpose other than for which it was designed. Borrower's
obligation regarding the maintenance of the Equipment shall include, without
limitation, all maintenance, repair, refurbishment and replacement recommended
or advised either by the manufacturer, or that commonly performed by prudent
business and/or professional practice. Any exceptions or qualifications
expressed in this Agreement relating to normal or ordinary wear and tear shall
not be deemed to limit Borrower's obligations pursuant to the preceding
sentence.
5.2 In the event Borrower adds or installs any Upgrade (as hereinafter
defined) on the Equipment, at the request of Lender, Borrower shall, upon the
occurrence of an Event of Default, remove any such Upgrade and restore the
Equipment to the condition in which such Equipment is required to be maintained
hereunder as if such Upgrade had never been attached thereto. Borrower will not,
without the prior written consent of Lender and subject to such conditions as
Lender may impose for its protection, affix the Equipment to any real property
if, as a result thereof, the Equipment could become a fixture under applicable
law.
For purposes hereof and all Loan Documents relating hereto, the term
"Upgrade" shall mean: (i) any accessory, equipment or device manufactured or
sold by the manufacturer of the Equipment for installation on the Equipment and
installed in compliance with said manufacturer's installation procedures (other
than those added by the manufacturer in order to maintain the Equipment at
current engineering levels), or (ii) any other accessory, equipment or device
installed on the Equipment so long as such item does not impair the original
function or use of the Equipment, capable of being removed without causing
material damage to the Equipment and does not decrease the fair market value of
the Equipment. An Upgrade shall not become an accession to the Equipment. For
purposes hereof and of all Loan Documents relating hereto, the term "Equipment"
shall not be deemed to include any such Upgrade.
5.3 Upon the request of Lender, Borrower shall, during business hours,
make the Equipment available to Lender for inspection at the place where it is
normally located and shall make Borrower's log and maintenance records
pertaining to the Equipment available to the Equipment available to Lender for
inspection. Borrower shall take all action necessary to maintain such logs and
maintenance records in a correct and complete fashion.
5.4 Upon the request of Lender, Borrower shall cause the Equipment to be
plainly, permanently and conspicuously marked, by stenciling or by metal tag or
plate affixed thereto, indicating Lender's security interest in the Equipment.
Borrower shall replace any such stenciling, tag or plate which may be removed or
destroyed or become illegible. Borrower shall keep all
-5-
Equipment free from any marking or labeling which might be interpreted as a
claim of ownership adverse to Borrower's.
5.5 Borrower covenants and agrees to pay when due, all taxes, fees or
other charges of any nature whatsoever (together with any related interest or
penalties) now or hereafter imposed or assessed against Borrower, Lender or the
Equipment or upon Borrower's ownership, possession, use, operation or
disposition thereof or upon Borrower's rents, receipts or earnings arising
therefrom. Borrower shall file on or before the due date therefor all personal
property tax returns in respect of the Equipment.
5.6 Borrower shall furnish to Lender the financial statements listed
hereinafter, prepared in accordance with generally accepted accounting
principles consistently applied (the "Financial Statements"):
(a) as soon as practicable (and in any event within thirty (30) days)
after the end of each month an internally prepared income statement,
balance sheet, and cash flow statement, (including the commencement of any
material litigation by or against Borrower), each certified by Borrower's
Chief Executive or Financial Officer to be true and correct;
(b) as soon as practicable (and in any event within ninety (90) days)
after the end of each fiscal year, audited Financial Statements, setting
forth in comparative form the corresponding figures for the preceding
fiscal year, and accompanied by any audit report and opinion of the
independent certified public accountants selected by Borrower; and
(c) promptly any additional information (including but not limited to
tax returns, income statements, balance sheets, and names of principal
creditors) as Lender reasonably believes necessary to evaluate Borrower's
continuing ability to meet financial obligations.
5.7 Notwithstanding the foregoing, after the effective date of the initial
registration statement covering a public offering of Borrower's securities, the
term "Financial Statements" shall be deemed to refer to only those statements
required by the Securities and Exchange Commission, to be provided no less
frequently than quarterly. Borrower will from time to time execute, deliver and
file, alone or with Lender, any financing statements, security agreements or
other documents; and take all further action that may be necessary, or that
Lender may reasonably request, to confirm, perfect, preserve and protect the
security interests intended to be granted hereby, and in addition, and for such
purposes only, Borrower hereby authorizes Lender to execute and deliver on
behalf of Borrower and to file such financing statements, security agreement and
other documents without the signature of Borrower either in Lender's name or in
the name of Borrower as agent and attorney-in-fact for Borrower.
5.8 Borrower shall protect and defend Borrower's title as well as the
interest of the Lender against all persons claiming any interest adverse to
Borrower or Lender and shall at all times keep the Collateral free and clear
from any attachment or levy, liens or encumbrances whatsoever (except any placed
thereon by Lender, or any liens arising by operation of law with respect to any
obligations not yet overdue or any other liens consented to in writing by
Lender) and shall give Lender immediate written notice thereof.
5.9 Upon the occurrence of an Event of Default, if Lender seeks to
foreclose on the Equipment, Borrower shall be liable for the full expense of
transportation and in-transit insurance
-6-
to Lender's premises or, in the event that Lender has immediately available
warehouse space in the San Francisco bay area, Borrower's liability for expense
of transportation of the Equipment shall be limited to the costs of
transportation to such warehouse space, Borrower will arrange for the
deinstallation and audit of the Equipment, and will pack; ship and send the
Equipment to Lender in good operating order, repair, condition and appearance,
and in a condition required pursuant to Section 5 hereof.
SECTION 6. CONDITIONS PRECEDENT TO LOAN
On or prior to the Funding Date, Borrower will provide to Lender the
following, in form and substance satisfactory to Lender:
6.1 Such documentation, including without limitation, a ▇▇▇▇ of Sale, and
other documents as shall reasonably evidence Borrower's right, title and
interest in and to the Equipment;
6.2 A certified resolution or other certificate of corporate authority for
the execution and the delivery of, and the performance of all Obligations under
the Loan Documents and all related documentation;
6.3 Incumbency certificate evidencing the authority and facsimile
signatures of the individuals executing the Loan Documents;
6.4 UCC financing statements as deemed appropriate by Lender to perfect
its security interest in the Collateral;
6.5 Certified copies of the [CERTIFICATE/ARTICLES] of incorporation of
Borrower;
6.6 Certificate of good standing for Borrower from its state of
incorporation and similar certificates from all jurisdictions in which it does
business and where the failure to be qualified would have a material adverse
effect on Borrower's business; and
6.7 Insurance certificates as required by Section 4 hereof.
SECTION 7. ASSIGNMENT BY LENDER
7.1 Borrower acknowledges and understands that Lender may sell and assign
all or a part of its interest hereunder and under the Note and Loan Documents to
any person or entity (an "Assignee"). After such assignment the term Lender
shall mean such Assignee, and such Assignee shall be vested with all rights,
powers and remedies of Lender hereunder with respect to the interest so
assigned; but with respect to any such interest not so transferred, the Lender
shall retain all rights, powers and remedies hereby given. No such assignment by
Lender shall relieve Borrower of any of its obligations hereunder. Borrower
shall acknowledge such assignment or assignments as shall be designated by
written notice given by Lender to Borrower. The Lender agrees that in the event
of any transfer by it of the Note, it will endorse thereon a notation as to the
portion of the principal of the Note which shall have been paid at the time of
such transfer and as to the date to which interest shall have been last paid
thereon.
SECTION 8. DEFAULT
-7-
The occurrence of any one or more of the following events (herein called
"Events of Default") shall constitute a default hereunder and under the Note:
8.1 The Borrower defaults in the payment of any principal or interest
payable under the Note for more than five (5) days after the receipt of notice
of such an Event of Default from Lender;
8.2 The Borrower defaults in the payment or performance of any other
covenant or obligation of the Borrower hereunder or under the Note or any other
Loan Documents for more than thirty (30) days after the Lender has given notice
of such default to the Borrower;
8.3 Any representation or warranty made herein by the Borrower shall prove
to have been false or misleading in any material respect;
8.4 The making of an assignment by Borrower for the benefit of its
creditors or the admission by Borrower in writing of its inability to pay its
debts as they become due, or the insolvency of Borrower, or the filing by
Borrower of a voluntary petition in bankruptcy, or the adjudication of Borrower
as a bankrupt, or the filing by Borrower of any petition or answer seeking for
itself any reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future statute, law or
regulation, or the filing of any answer by Borrower admitting, or the failure by
Borrower to deny, the material allegations of a petition filed against it for
any such relief, or the seeking or consenting by Borrower to, or acquiescence by
Borrower in, the appointment of any trustee, receiver or liquidator of Borrower
or of all or any substantial part of the properties of Borrower, or the
inability of Borrower to pay its debts when due, or the commission by Borrower
of any act of bankruptcy as defined in the Federal Bankruptcy Act, as amended;
8.5 The failure by Borrower, within sixty (60) days after the commencement
of any proceeding against Borrower seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, to obtain the dismissal of such
proceeding or, within sixty (60) days after the appointment, without the written
consent or acquiescence of Lender, of any trustee, receiver or liquidator of
Borrower or of all or any substantial part of the properties of Borrower, to
vacate such appointment; or Lender.
8.6 The default by Borrower under any other notes or other agreement for
borrowed money, lease or other agreement between Borrower and Lender.
SECTION 9. REMEDIES
Upon the occurrence hereof of any one or more Events of Default, Lender, at
its option, may declare the Note to be accelerated and immediately due and
payable, (provided, that upon the occurrence of an Event of Default of the type
described in 8.4 or 8.5, the Note and all other Obligations shall automatically
be accelerated and made due and payable without any further act) whereupon the
unpaid principal of and accrued interest on such Note shall become immediately
due and payable, and shall thereafter bear interest at the Default Rate and
calculated in accordance with section 1.2. Lender may exercise all rights and
remedies with respect to the Collateral granted pursuant hereto for such Note,
or otherwise available to it under applicable law, including the right to
release, hold or otherwise dispose of all or any part of the Collateral and the
right to utilize, process and commingle the Collateral.
-8-
Upon the happening and during the continuance of any Event of Default,
Lender may then, or at any time thereafter and from time to time, apply,
collect, sell in one or more sales, lease or otherwise dispose of, any or all of
the Collateral, in its then condition or following any commercially reasonably
preparation or processing, in such order as Lender may elect, and any such sale
may be made either at public or private sale at its place of business or
elsewhere. Borrower agrees that any such public or private sale may occur upon
five (5) calendar day's notice to Borrower. Lender may require Borrower to
assemble the Collateral and make it available to Lender at a place designated by
Lender which is reasonably convenient to Lender and Borrower. The proceeds of
any sale, disposition or other realization upon all or any part of the
collateral shall be distributed by Lender in the following order of priorities:
First, to Lender in an amount sufficient to pay in full Lender's reasonable
costs and professionals' and advisors' fees and expenses;
Second, to Lender in an amount equal to the then unpaid amount of the
Obligations in such order and priority as Lender may choose in its sole
discretion; and
Finally, upon payment in full of all of the Obligations, to Borrower or its
representatives or as a court of competent jurisdiction may direct.
The Lender shall return to the Borrower any surplus Collateral remaining after
payment of all Obligations.
SECTION 10. MISCELLANEOUS
10.1 Borrower shall remain liable to Lender for any unpaid Obligations,
advances, costs, charges and expenses, together with interest thereon and shall
pay the same immediately to Lender at Lender's offices.
10.2 The powers conferred upon Lender by this Agreement are solely to
protect its interest in the Collateral and shall not impose any duty upon Lender
to exercise any such powers.
10.3 This is a continuing Agreement and the grant of a security interest
hereunder shall remain in full force and effect and all the rights, powers and
remedies of Lender hereunder shall continue to exist until the Obligations are
paid in full as the same become due and payable. When Borrower has paid in full
all Obligations, Lender will execute a written termination statement,
reassigning to Borrower, without recourse, the Collateral and all rights
conveyed hereby and return possession (if Lender has possession) of the
Collateral to Borrower. The rights, powers and remedies of Lender hereunder
shall be in addition to all rights, powers and remedies given by statute or rule
of law and are cumulative. The exercise of any one or more of the rights, powers
and remedies provided herein shall not be construed as a waiver of any other
rights, powers and remedies of Lender. Furthermore, regardless of whether or not
the UCC is in effect in the jurisdiction where such rights, powers and remedies
are asserted, Lender shall have the rights, powers and remedies of a secured
party under the UCC.
10.4 Upon payment in full of all Obligations, the Lender shall cancel the
Note, this Agreement and all UCC financing statements, if any, and shall
promptly deliver all such canceled documents to the Borrower.
10.5 GOVERNING LAW. This Agreement, the Note and the other Loan Documents
have been negotiated and delivered to Lender in the State of Illinois and shall
not become
-9-
effective until accepted by Lender in the State of Illinois. Payment to Lender
by Borrower of the Obligations is due in the State of Illinois. This Agreement
shall be governed by, and construed and enforced in accordance with the laws of
the State of Illinois excluding conflict of laws principles that would cause the
application of laws of any other jurisdiction.
10.6 CONSENT TO JURISDICTION AND VENUE. All judicial proceedings arising
in or under or related to this Agreement, the Note or any of the other Loan
Documents may be brought in any state or federal court of competent jurisdiction
located in the State of Illinois. By execution and delivery of this Agreement,
each party hereto generally and unconditionally: (a) consents to personal
jurisdiction in ▇▇▇▇ County, State of Illinois; (b) waives any objection as to
jurisdiction or venue in the aforesaid courts; and (d) irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement, the
Note an the other Loan Documents. Service of process on any party hereto in any
action arising out of or relating to this agreement shall be effective if given
in accordance with the requirements for notice set forth in subsection 10.8
below and shall be deemed effective and received as set forth in subsection 10.8
below. Nothing herein shall affect the right to serve process in any other
manner permitted by law or shall limit the right of either party to bring
proceedings in the courts of any other jurisdiction.
10.7 Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective only to the extent and duration of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
10.8 Any notice required or given hereunder shall be deemed properly given
upon the earlier of: (i) the first business day after transmission by facsimile
or hand delivery or deposit with an overnight express service or overnight mail
delivery service; or (ii) or three (3) days after mailed, postage prepaid, in
each case, addressed to the designated recipient at its address set forth herein
or such other address as such party may advise the other party by notice given
in accordance with this provision.
10.9 Lender and Borrower acknowledge that there are no agreements or
understandings, written or oral, between Lender and Borrower with respect to the
Loan, other than as set forth herein, in the Note and the other Loan Documents
and that this Agreement, the Note and the other Loan Documents contain the
entire agreement between Lender and Borrower with respect thereto. None of the
terms of this Agreement, the Note and the other Loan Documents may be amended
except by an instrument executed by each of the parties hereto.
10.10 No omission, or delay, by Lender at any time to enforce any right or
remedy reserved to it, or to require performance of any of the terms, covenants
or provisions hereof by Borrower at any time designated, shall be a waiver of
any such right or remedy to which Lender is entitled, nor shall it in any way
affect the right of Lender to enforce such provisions thereafter.
10.11 All agreements, representations and warranties contained in this
Agreement or the Note, or in any Loan Documents delivered pursuant hereto or in
connection herewith shall be for the benefit of Lender and any Assignee and
shall survive the execution and delivery of this Agreement or the Note and the
expiration or other termination of this Agreement or the Note.
10.12 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument.
-10-
10.13 This Agreement shall be binding upon, and shall inure to the benefit
of, Borrower and its permitted assigns (if any). Borrower shall not assign its
obligations under this Agreement, the Note or any of the other Loan Documents
without Lender's express written consent and any such attempted assignment shall
be void and of no effect. Any assignment by Borrower in connection with a
"Merger" (as defined below) shall be subject to Lender's prior consent. Any
consent granted by Lender shall be conditioned upon such surviving entity or
transferee assuming Borrower's Obligations hereunder pursuant to assignment
documents reasonably acceptable to Lender. If Lender reasonably withholds its
consent to such assignment in connection with a Merger, the outstanding
principal and accrued and unpaid interest shall be prepaid in whole.
For purposes of this Agreement, a "Merger" shall mean any consolidation or
merger of the Borrower with or into any other corporation or entity, any sale or
conveyance of an or substantially all of the assets or stock of the Borrower by
or to any other person or entity in which Borrower is not the surviving entity.
IN WITNESS WHEREOF, the Borrower and the Lender have duly executed and
delivered this Agreement as of the day and year first above written.
BORROWER: PLACEWARE
By: /s/ XXX
---------------------
Title: President
------------------
Date: 9/30/97
-------------------
ACCEPTED IN ROSEMONT, ILLINOIS:
------------------------------
LENDER: COMDISCO, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------
Title: PRESIDENT, COMDISCO VENTURES DIVISION
-------------------------------------
Date: 11/9/97
------------------------
-11-
EXHIBIT A
SECURED PROMISSORY NOTE
$400,000 Date: October _____, 1997
Due: October 1, 2001
FOR VALUE RECEIVED, Placeware a Delaware corporation (the "Borrower") hereby
promises to pay to the order of Comdisco, Inc., a Delaware corporation (the
"Lender") at ▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ or such other place of payment as
the holder of this Secured Promissory Note (this "Note") may specify from time
to time in writing, in lawful money of the United States of America, the
principal amount of Four Hundred Thousand and 00/100 Dollars ($400,000) together
with interest at seven percent (7.5%) per annum from the date of this Note to
maturity of each installment on the principal hereof remaining from time to time
unpaid, such principal and/or interest to be paid in 6 installments in the
amount of $0.00 and followed by 42 equal monthly installments of $11,201.58
each, commencing November 1, 1997 and on the same day of each month thereafter
to and including October 1, 2001 and an additional final installment of $60,000
("Balloon Payment") to be paid on October 1, 2001, such installments to be
applied first to accrued and unpaid interest and the balance to unpaid
principal. Interest shall be computed on the basis of a year consisting of
twelve months of thirty days each.
This Note is the Note referred to in, and is executed and delivered in
connection with, that certain Loan and Security Agreement of even date herewith
by and between Borrower and Lender (as the same may from time to time be
amended, modified or supplemented in accordance with its terms, the "Loan
Agreement"), and is entitled to the benefit and security of the Loan Agreement
and the other Loan Documents (as defined in the Loan Agreement), to which
reference is made for a statement of all of the terms and conditions thereof.
All terms defined in the Loan Agreement shall have the same definitions when
used herein, unless otherwise defined herein.
The Borrower waives presentment and demand for payment, notice of dishonor,
protest and notice of protest and any other notice as permitted under the UCC or
any applicable law.
This Note has been negotiated and delivered to Lender and is payable in the
State of Illinois, and shall not become effective until accepted by Lender in
the State of Illinois. This Note shall be governed by and construed and enforced
in accordance with, the laws of the State of Illinois, excluding any conflicts
of law rules or principles that would cause the application of the laws of any
other jurisdiction.
BORROWER: PLACEWARE
Signature: ___________________________
Print Name: ___________________________
Title: ___________________________
Accepted in Rosemont, Illinois:
LENDER: COMDISCO, INC.
Signature: ___________________________
Print Name: ___________________________
Title: ___________________________
-1-
EXHIBIT A
SECURED PROMISSORY NOTE
$333,646 Date: January 15, 1998
Due: January 1, 2002
FOR VALUE RECEIVED, Placeware a Delaware corporation (the "Borrower") hereby
promises to pay to the order of Comdisco, Inc., a Delaware corporation (the
"Lender") at ▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ or such other place of payment as
the holder of this Secured Promissory Note (this "Note") may specify from time
to time in writing, in lawful money of the United States of America, the
principal amount of Three Hundred Thirty Three Thousand, Six Hundred Forty Six
and 00/100 Dollars ($333,646) together with interest from the date of this Note
to maturity of each installment on the principal hereof remaining from time to
time unpaid, such principal and/or interest to be paid in 6 installments in the
amount of $0.00 and followed by 42 equal monthly installments of $9,342.04 each,
commencing August 1, 1998 and on the same day of each month thereafter to and
including January 1, 2002 and an additional final installment of $50,046.90
("Balloon Payment") to be paid on January 1, 2002, such installments to be
applied first to accrued and unpaid interest and the balance to unpaid
principal. Interest shall be computed on the basis of a year consisting of
twelve months of thirty days each.
This Note is the Note referred to in, and is executed and delivered in
connection with, that certain Loan and Security Agreement of even date herewith
by and between Borrower and Lender (as the same may from time to time be
amended, modified or supplemented in accordance with its terms, the "Loan
Agreement"), and is entitled to the benefit and security of the Loan Agreement
and the other Loan Documents (as defined in the Loan Agreement), to which
reference is made for a statement of all of the terms and conditions thereof.
All terms defined in the Loan Agreement shall have the same definitions when
used herein, unless otherwise defined herein.
The Borrower waives presentment and demand for payment, notice of dishonor,
protest and notice of protest and any other notice as permitted under the UCC or
any applicable law.
This Note has been negotiated and delivered to Lender and is payable in the
State of Illinois, and shall not become effective until accepted by Lender in
the State of Illinois. This Note shall be governed by and construed and enforced
in accordance with, the laws of the State of Illinois, excluding any conflicts
of law rules or principles that would cause the application of the laws of any
other jurisdiction.
BORROWER: PLACEWARE
Signature: /s/ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------
Print Name: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------
Title: CEO
----------------------
-1-
--------------------------------------------------------------------------------------------------------------
Placeware
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Prepared by ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Loan Amount: 333,646
---------------------------------------------========----------------------------------------------------------
7.50%
---------------------------------------------------------------------------------------------------------------
Payment 9,342.04
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
ment Num Date Principal Interest Payment Balance
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
01/15/97 333,646.00
---------------------------------------------------------------------------------------------------------------
1 02/01/98 0.00 0.00 0.00 333,646.00
---------------------------------------------------------------------------------------------------------------
2 03/01/98 0.00 0.00 0.00 333,646.00
---------------------------------------------------------------------------------------------------------------
3 04/01/98 0.00 0.00 0.00 333,646.00
---------------------------------------------------------------------------------------------------------------
4 05/01/98 0.00 0.00 0.00 333,646.00
---------------------------------------------------------------------------------------------------------------
5 06/01/98 0.00 0.00 0.00 333,646.00
---------------------------------------------------------------------------------------------------------------
6 07/01/98 0.00 0.00 0.00 333,646.00
---------------------------------------------------------------------------------------------------------------
7 08/01/98 6,747.94 2,594.10 9,342.04 326,898.06
---------------------------------------------------------------------------------------------------------------
8 09/01/98 6,800.41 2,541.63 9,342.04 320,097.65
---------------------------------------------------------------------------------------------------------------
9 10/01/98 6,853.28 2,488.76 9,342.04 313,244.37
---------------------------------------------------------------------------------------------------------------
10 11/01/98 6,906.56 2,435.48 9,342.04 306,337.81
---------------------------------------------------------------------------------------------------------------
11 12/01/98 6,960.26 2,381.78 9,342.04 299,377.55
---------------------------------------------------------------------------------------------------------------
12 01/01/99 7,014.38 2,327.66 9,342.04 292,363.17
---------------------------------------------------------------------------------------------------------------
13 02/01/99 7,068.91 2,273.12 9,342.04 285,294.25
---------------------------------------------------------------------------------------------------------------
14 03/01/99 7,123.88 2,218.16 9,342.04 278,170.38
---------------------------------------------------------------------------------------------------------------
15 04/01/99 7,179.26 2,162.77 9,342.04 270,991.11
---------------------------------------------------------------------------------------------------------------
16 05/01/99 7,235.08 2,106.96 9,342.04 263,756.03
---------------------------------------------------------------------------------------------------------------
17 06/01/99 7,291.34 2,050.70 9,342.04 256,464.70
---------------------------------------------------------------------------------------------------------------
18 07/01/99 7,348.03 1,994.01 9,342.04 249,116.67
---------------------------------------------------------------------------------------------------------------
19 08/01/99 7,405.16 1,936.88 9,342.04 241,711.51
---------------------------------------------------------------------------------------------------------------
20 09/01/99 7,462.73 1,879.31 9,342.04 234,248.78
---------------------------------------------------------------------------------------------------------------
21 10/01/99 7,520.75 1,821.28 9,342.04 226,728.03
---------------------------------------------------------------------------------------------------------------
22 11/01/99 7,579.23 1,762.81 9,342.04 219,148.80
---------------------------------------------------------------------------------------------------------------
23 12/01/99 7,638.16 1,703.88 9,342.04 211,510.64
---------------------------------------------------------------------------------------------------------------
24 01/01/00 7,697.54 1,644.50 9,342.04 203,813.10
---------------------------------------------------------------------------------------------------------------
25 02/01/00 7,757.39 1,584.65 9,342.04 196,055.71
---------------------------------------------------------------------------------------------------------------
26 03/01/00 7,817.71 1,524.33 9,342.04 188,238.00
---------------------------------------------------------------------------------------------------------------
27 04/01/00 7,878.49 1,463.55 9,342.04 180,359.51
---------------------------------------------------------------------------------------------------------------
28 05/01/00 7,939.74 1,402.30 9,342.04 172,419.77
---------------------------------------------------------------------------------------------------------------
29 06/01/00 8,001.47 1,340.56 9,342.04 164,418.30
---------------------------------------------------------------------------------------------------------------
30 07/01/00 8,063.69 1,278.35 9,342.04 156,354.61
---------------------------------------------------------------------------------------------------------------
31 08/01/00 8,126.38 1,215.66 9,342.04 148,228.23
---------------------------------------------------------------------------------------------------------------
32 09/01/00 8,189.56 1,152.47 9,342.04 140,038.66
---------------------------------------------------------------------------------------------------------------
33 10/01/00 8,253.24 1,088.80 9,342.04 131,785.43
---------------------------------------------------------------------------------------------------------------
34 11/01/00 8,317.41 1,024.63 9,342.04 123,468.02
---------------------------------------------------------------------------------------------------------------
35 12/01/00 8,382.07 959.96 9,342.04 115,085.94
---------------------------------------------------------------------------------------------------------------
36 01/01/01 8,447.25 894.79 9,342.04 106,638.70
---------------------------------------------------------------------------------------------------------------
37 02/01/01 8,512.92 829.12 9,342.04 98,125.78
---------------------------------------------------------------------------------------------------------------
Sheet 1
Page 1
-------------------------------------------------------------------------------------------------------------------------------
38 03/01/01 8,579.11 762.93 9,342.04 89,546.67
-------------------------------------------------------------------------------------------------------------------------------
39 04/01/01 8,645.81 696.23 9,342.04 80,900.85
-------------------------------------------------------------------------------------------------------------------------------
40 05/01/01 8,713.03 629.00 9,342.04 72,187.82
-------------------------------------------------------------------------------------------------------------------------------
41 06/01/01 8,780.78 561.26 9,342.04 63,407.04
-------------------------------------------------------------------------------------------------------------------------------
42 07/01/01 8,849.05 492.99 9,342.04 54,557.99
-------------------------------------------------------------------------------------------------------------------------------
43 08/01/01 8,917.85 424.19 9,342.04 45,640.14
-------------------------------------------------------------------------------------------------------------------------------
44 09/01/01 8,987.19 354.85 9,342.04 36,652.95
-------------------------------------------------------------------------------------------------------------------------------
45 10/01/01 9,057.06 284.98 9,342.04 27,595.89
-------------------------------------------------------------------------------------------------------------------------------
46 11/01/01 9,127.48 214.56 9,342.04 18,468.41
-------------------------------------------------------------------------------------------------------------------------------
47 12/01/01 9,198.45 143.59 9,342.04 9,269.96
-------------------------------------------------------------------------------------------------------------------------------
48 01/01/02 9,269.96 72.07 9,342.04 0.00
-------------------------------------------------------------------------------------------------------------------------------
48 01/01/02 50,046.90
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
Page 2
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SUCH ACT.
No.--WPB-1 Void after September 30, 2007
PLACEWARE, INC.
WARRANT TO PURCHASE SHARES OF SERIES B PREFERRED STOCK
------------------------------------------------------
This Warrant is issued to Comdisco, Inc., a Delaware corporation (the
"Warrantholder") by PlaceWare, Inc., a Delaware corporation (the "Company"), in
consideration of the mutual covenants and agreements contained herein and
Warrantholder's entering into, and performing its obligations under, that
certain Master Lease Agreement dated as of September 30, 1997 by and between the
Company and Warrantholder, including any related equipment schedules
(collectively, the "Leases").
1. Purchase of Shares. Subject to the terms and conditions
------------------
hereinafter set forth, the Warrantholder (and any subsequent holder of this
Warrant) is entitled, upon surrender of this Warrant at the principal office of
the Company (or at such other place as the Company shall notify the holder
hereof in writing), to purchase from the Company up to 40,625 fully paid and
nonassessable shares of Series B Preferred Stock of the Company, as more fully
described below. The shares of Series B Preferred Stock issuable pursuant to
this Section 1 (the "Shares") shall also be subject to adjustment pursuant to
Section 7 hereof.
2. Exercise Price. The exercise price for the Shares shall initially
--------------
be $2.00 per share and shall be subject to adjustment pursuant to Section 7
hereof (such price, as adjusted from time to time, is herein referred to as the
"Exercise Price").
3. Exercise Period. This Warrant is immediately exercisable and it
---------------
shall remain exercisable until the later of and including September 30, 2007 or
five years after the Company's initial public offering; provided, however, that
in the event of (a) the sale of all or substantially all the assets of the
Company or (b) the closing of the acquisition of the Company by another entity
by means of merger, consolidation or other transaction or series of related
transactions, resulting in the exchange of the outstanding shares of the
Company's capital stock such that the stockholders of the Company prior to such
transaction own, directly or indirectly, less than 50% of the voting power of
the surviving entity, this Warrant shall, on the date of such event, terminate
and no longer be exercisable. In the event of a proposed transaction of the kind
described above, the Company shall notify the holder of the Warrant at least
fifteen (15) days prior to the consummation of such event or transaction.
4. Method of Exercise. While this Warrant remains outstanding and
------------------
exercisable in accordance with Section 3 above, the holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(i) the surrender of the Warrant, together with a duly executed
copy of the form of subscription attached hereto, to the Secretary of the
Company at its principal offices; and
(ii) the payment to the Company of the cash mount equal to the
aggregate Exercise Price for the number of Shares being purchased.
5. Net Exercise. In lieu of exercising this Warrant with a cash
------------
payment, the holder of this Warrant may elect to receive shares equal to the
value of this Warrant (or the portion thereof being canceled) by surrender of
this Warrant at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the holder hereof a number
of shares of Series B Preferred Stock computed using the following formula:
Y (A - B)
---------
X = A
Where
X = The number of shares of Series B Preferred Stock to be
issued to the holder of this Warrant upon a net exercise.
Y = The number of shares of Series B Preferred Stock purchasable
under this Warrant (or the portion of this Warrant being
canceled).
A = The fair market value of one share of the Company's Series B
Preferred Stock.
B = The Exercise Price (as adjusted to the date of such
calculations).
For purposes of this Paragraph 5, if the Company's Common Stock is
then actively traded over-the-counter or on a securities exchange or through the
Nasdaq National Market (each referred to herein as an "Exchange"), the fair
market value of Series B Preferred Stock shall mean the average of the closing
bid and asked prices of the Common Stock into which the Series B Preferred Stock
is then convertible as quoted in the over-the-counter market in which the Common
Stock is then traded or the closing price quoted on any Exchange on which the
Common Stock is listed, whichever is applicable, as published in the Western
Edition of The Wall Street Journal for the ten trading days immediately prior to
-----------------------
the date of the net exercise of the Warrant (or such shorter period of time
during which such stock was traded over-
2.
the-counter or on such exchange). If the Common Stock is not traded on the over-
the-counter market or on an Exchange, the fair market value shall be the price
per share that the Company could obtain from a willing buyer for shares of
Series B Preferred Stock sold by the Company from authorized but unissued
shares, as such prices shall be determined in good faith by the Company's Board
of Directors. Notwithstanding the previous terms of this paragraph, in the case
of a sale or merger of the Company as described under Section 3(a) or (b)
hereof, the fair market value of the Series B Preferred Stock shall be the value
determined in good faith by the Company's Board of Directors.
6. Certificates for Shares. Upon the exercise of the purchase rights
-----------------------
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty. (30) days of the delivery of the subscription notice. In case the
holder shall exercise this Warrant with respect to less than all of the Shares
that may be purchased under this Warrant, the Company shall execute a new
warrant in the form of this Warrant for the balance of such Shares and deliver
such new warrant to the holder of this Warrant.
7. Adjustment of Exercise Price and Number of Shares. The number of
-------------------------------------------------
and kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the Company
----------------------------------------------
shall at any time prior to the expiration of this Warrant subdivide its Series B
Preferred Stock, by split-up or otherwise, or combine its Series B Preferred
Stock, or issue additional shares of its Series B Preferred Stock or Common
Stock as a dividend with respect to any shares of its Series B Preferred Stock,
the number of Shares issuable on the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision or stock dividend, or
proportionately decreased in the case of a combination. Appropriate adjustments
shall also be made to the purchase price payable per share, but the aggregate
purchase price payable for the total number of Shares purchasable under this
Warrant (as adjusted) shall remain the same. Any adjustment under this Section
7(a) shall become effective at the close of business on the date the subdivision
or combination becomes effective, or as of the record date of such dividend, or
in the event that no record date is fixed, upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In case
--------------------------------------------------
of any reclassification, capital reorganization, or change in the Series B
Preferred Stock of the Company (other than as a result of a subdivision,
combination, or stock dividend provided for in Section 7(a) above), then, as a
condition of such reclassification, reorganization, or change, lawful provision
shall be made, and duly executed documents evidencing the same from the Company
or its successor shall be delivered to the holder of this Warrant, so that the
holder of this Warrant shall have the right at any time prior to the expiration
of this Warrant to purchase, at a total price equal to that payable upon the
exercise of this Warrant, the kind and mount of shares of stock and other
securities and property receivable in connection with such reclassification,
reorganization, or change by a holder of the same number of shares of Series B
Preferred Stock as were purchasable by the holder of this Warrant immediately
prior to such
3.
reclassification, reorganization, or change. In any such case appropriate
provisions shall be made with respect to the rights and interest of the holder
of this Warrant so that the provisions hereof shall thereafter be applicable
with respect to any shares of stock or other securities and property deliverable
upon exercise hereof, and appropriate adjustments shall be made to the purchase
price per share payable hereunder, provided the aggregate purchase price shall
remain the same.
(c) Notice of Adjustment. When any adjustment is required to be made
--------------------
in the number or kind of shares purchasable upon exercise of the Warrant, or in
the Warrant Price, the Company shall promptly notify the holder of such event
and of the number of shares of Series B Preferred Stock or other securities or
property thereafter purchasable upon exercise of this Warrant.
8. Representations, Warranties and Covenants of the Company.
--------------------------------------------------------
(a) Reservation and Issuance of Shares. The Company covenants that it
----------------------------------
will at all times keep available such number of authorized shares of its Series
B Preferred Stock, free from all preemptive rights with respect thereto, which
will be sufficient to permit the exercise of this Warrant for the full number of
Shares specified herein. The Company further covenants that the Shares, when
issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issuance thereof.
(b) Due Authority. The execution and delivery by the Company of this
-------------
Warrant and the performance of all obligations of the Company hereunder,
including the issuance to Warrantholder of the right to acquire the Shares, have
been duly authorized by all necessary corporate action on the part of the
Company, and the Leases and this Warrant are not inconsistent with the Company's
Certificate of Incorporation or Bylaws, do not contravene any law or
governmental rule, regulation or order applicable to it, to its knowledge do not
and will not contravene any provision of, or constitute a default under, any
indenture, mortgage, contract or other instrument to which it is a party or by
which it is bound, and the Leases and this Warrant Agreement constitute legal,
valid and binding agreements of the Company, enforceable in accordance with
their respective terms.
(c) Consents and Approvals. No consent or approval of, giving notice
----------------------
to, registration with, or taking of any other action in respect to any state,
Federal or other governmental authority or agency is required with respect to
the execution, delivery and performance by the Company of its obligations under
this Warrant, except for the filing of notices pursuant to Regulation D under
the 1933 Act and any filing required by applicable state securities law, which
filings will be effective by the time required thereby.
(d) Issued Securities. All issued and outstanding shares of Common
-----------------
Stock, Preferred Stock or any other securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. All
outstanding shares of Common Stock, Preferred Stock and any other securities
were issued in full compliance with all Federal and state securities laws. In
addition:
4.
(i) The authorized capital of the Company consists of (A)
Ten Million (10,000,000) shares of Common Stock, of which One
Million Nine Hundred Thirty-Five Thousand (1,935,000) shares are
issued and outstanding, and (B) Five Million (5,000,000) shares
of preferred stock, One Million Seven Hundred Five Thousand
(1,705,000) shares of which have been designated Series A
Preferred Stock, One Million Seven Hundred Five Thousand
(1,705,000) of which are outstanding, and Two Million Seven
Hundred Thousand (2,700,000) shares of which have been designated
Series B Preferred Stock, Two Million Five Hundred Thousand
(2,500,000) of which are outstanding.
(ii) Except for (A) the conversion privileges of the Series
A Preferred Stock and Series B Preferred Stock and (B) the rights
provided in Section 2.4 of that certain Restated Investors'
Rights Agreement, dated as of April 23, 1997, by and among the
Company, the investors listed on Schedule A thereto and the
management holders listed on Schedule B thereto (the "Restated
Investors' Rights Agreement"), there are not outstanding any
options, warrants, rights (including conversion or preemptive
rights) or agreements of any kind for the purchase or acquisition
from the Company of any shares of its capital stock or, except
for the outstanding Preferred Stock of the Company, any
securities convertible into or ultimately exchangeable or
exercisable for any shares of its capital stock. The Company has
reserved One Million Eighty-Three Thousand (1,083,500) shares of
its Common Stock for purchase upon exercise of options to be
granted under the Company's 1997 Stock Plan.
(e) Other Commitments to Register Securities. Except as set
----------------------------------------
forth in this Warrant and the Restated Investors' Rights Agreement, the Company
is not, pursuant to the terms of any other agreement currently in existence,
under any obligation to register under the 1933 Act any of its presently
outstanding securities or any of its securities which may hereafter be issued.
(f) Exempt Transaction. Subject to the accuracy of the
------------------
Warrantholder's representations in Section 9 hereof, the issuance of the
Preferred Stock upon exercise of this Warrant will constitute a transaction
exempt from (i) the registration requirements of Section 5 of the 1933 Act, in
reliance upon Section 4(2) thereof, and (ii) the qualification requirements of
the applicable state securities laws.
(g) Compliance with Rule 144. At the written request of the
------------------------
Warrantholder, who proposes to sell Preferred Stock issuable upon the exercise
of the Warrant in compliance with Rule 144 promulgated by the Securities and
Exchange Commission, the Company shall furnish to the Warrantholder, within ten
days after receipt of such request, a written statement confirming the Company's
compliance with the filing requirements of the
5.
Securities and Exchange Commission as set forth in such Rule, as such Rule may
be amended from time to time.
9. Representations and Covenants of the Warrantholder.
--------------------------------------------------
This Warrant has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder:
(a) Investment Purpose. The right to acquire the Shares upon
------------------
exercise of the Warrantholder's rights contained herein, and the Common Stock
into which the Shares are convertible, will be acquired for investment and not
with a view to the sale or distribution of any part thereof, and the
Warrantholder has no present intention of selling or engaging in any public
distribution of the same except pursuant to a registration or exemption.
(b) Private Issue. The Warrantholder understands (i) that the
-------------
Shares issuable upon exercise of this Warrant is not registered under the 1933
Act or qualified under applicable state securities laws on the ground that the
issuance contemplated by this Warrant will be exempt from the registration and
qualifications requirements thereof, and (ii) that the Company's reliance on
such exemption is predicated on the representations set forth in this Section 9.
(c) Financial Risk. The Warrantholder has such knowledge and
--------------
experience in financial and business matters as to be capable of evaluating the
merits and risk of its investment, and has the ability to bear the economic
risks of its investment.
(d) Risk of No Registration. The Warrantholder understands that
-----------------------
if the Company does not register with the Securities and Exchange Commission
pursuant to Section 12 of the 1934 Act (the "1934 Act"), or file reports
pursuant to Section 15(d), of the 1934 Act, or if a registration statement
coveting the securities under the 1933 Act is not in effect when it desire to
sell (i) the rights to purchase the Shares pursuant to this Warrant or (ii) the
Shares issuable upon exercise of the right to purchase, it may be required to
hold such securities for an indefinite period. The Warrantholder also
understands that any sale of (i) the rights of the Warrantholder to purchase the
Shares or (ii) the Shares issuable upon exercise of the right to purchase which
might be made by it in reliance upon Rule 144 under the 1933 Act may be made
only in accordance with the terms and conditions of that Rule.
(e) Accredited Warrantholder. Warrantholder is an "accredited
------------------------
Warrantholder" within the meaning of the Securities and Exchange Rule 501 of
Regulation D, as presently in effect.
10. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the Company shall make a cash
payment therefor on the basis of the Exercise Price then in effect.
6.
11. No Stockholder Rights. Prior to exercise of this Warrant, the
---------------------
holder shall not be entitled to any rights of a stockholder with respect to the
Shares, including (without limitation) the right to vote such Shares, receive
dividends or other distributions thereon, exercise preemptive rights or be
notified of shareholder meetings, and, except as explicitly stated herein, such
holder shall not be entitled to any notice or other communication concerning the
business or affairs of the Company.
12. Market Stand-Off. By accepting the terms of this Warrant, the
----------------
holder hereby agrees that, upon the exercise of this Warrant, the holder shall
be bound by the following market stand-off requirements with respect to the
Shares:
(a) In connection with the initial public offering of the
Company's securities, the holder hereby agrees, upon request of the Company or
the underwriters managing any underwritten offering of the Company's securities,
not to sell, make any short sale of, loan, grant any option for the purchase of,
or otherwise dispose of any securities of the Company (other than those included
in the registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed one
hundred eighty (180) days) from the effective date of such registration as may
be requested by the underwriters, provided that all officers and directors of
the Company who own stock of or hold options to purchase stock of the Company
also agree to such restrictions.
(b) In order to enforce the foregoing covenant, the holder
agrees that the Company may impose stop-transfer instructions with respect to
the Shares (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
(c) Notwithstanding the foregoing, the obligations described in
this Section 11 shall not apply to a registration relating solely to employee
benefit plans on Form S-I or Form S-8 or similar forms which may be promulgated
in the future, or a registration relating solely to a Commission Rule 145
transaction on Form S-4 or similar forms which may be promulgated in the future.
13. Successors and Assigns. The terms and provisions of this Warrant
----------------------
shall inure to the benefit of, and be binding upon, the Company and the holders
hereof and their respective successors and assigns.
14. Amendments and Waivers. Any term of this Warrant may be amended
----------------------
and the observance of any term of this Warrant may be waived (either generally
or in a particular instance and either retroactively or prospectively), with the
written consent of (i) the Company and (ii) the holder of this Warrant or, if
this Warrant has previously been exercised in whole or part, by the holder of a
majority of the shares of Common Stock issued or issuable upon conversion of the
Series B Preferred Stock issued upon exercise of this Warrant. Any waiver or
amendment effected in accordance with this Section 14 shall be binding upon each
holder of any Shares purchased under this Warrant at the time outstanding
(including securities into which such Shares have been convened), each furore
holder of all such Shares, and the Company.
7.
15. Effect of Amendment or Waiver. The holder of this Warrant
-----------------------------
acknowledges that by the operation of Section 14 hereof, the holders of a
majority of the shares of Series B Preferred Stock issued or issuable upon
exercise of this Warrant that are then outstanding will have the right and power
to diminish or eliminate all rights of such holder under this Warrant.
16. Notices. Any notices or certificates sent by the Company to the
-------
holder of this Warrant or notices or other documents sent by the holder of this
Warrant to the Company shall be deemed delivered if delivered in person or by
registered mail (return receipt requested) addressed, if to the holder, to such
holder's address shown in the Company's records (as the same may be changed from
time to time by notice from the holder), and if to the Company, to PlaceWare,
Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: President (as the same
may be changed from time to time by notice from the Company).
17. Transferability of Warrant. This Warrant may not be transferred
--------------------------
or assigned in whole or in part without compliance with all applicable federal
and state securities laws by the transferor and the transferee (including the
delivery of investment representation letters and legal opinions satisfactory to
the Company, if such are requested by the Company) and the prior written consent
of the Company.
18. Governing Law. This Warrant shall be governed by the laws of the
-------------
State of California as applied to Agreements among California residents made and
to be performed entirely within the State of California.
PLACEWARE, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, President
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
8.
SUBSCRIPTION
------------
PlaceWare, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
The undersigned hereby elects to purchase, pursuant to the provisions
of the Warrant to Purchase Shares of Series B Preferred Stock dated September
30, 1997, issued by PlaceWare, Inc., a Delaware corporation (the "Company"), and
held by the undersigned,______________ shares of Series B Preferred Stock of the
Company.
Payment of the exercise price per share required under such Warrant
accompanies this Subscription.
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
for resale or with a view to distribution of such shares or any part thereof.
WARRANTHOLDER:
Date:___________ By:___________________________
Signature
Print Name:___________________
Title:________________________
Address:
______________________________
______________________________
______________________________
Exact Name in which shares should be registered:
______________________________