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M A S T E R L E A S E A G R E E M E N T
MASTER LEASE AGREEMENT (the "Master Lease") dated June 3, 1997 by and between
COMDISCO, INC. ("Lessor") and PACKETEER, INC. 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. TITLE; 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 its obligations to Lessee and will not
materially change Lessee's duties or materially increase the burdens or risks
imposed on Lessee. The Lessee consents to and will acknowledge such assignments
in a written notice given to Lessee. Lessee also agrees that:
(a) The Secured Party will be entitled to exercise all of Lessor's rights, but
will not be obligated to perform any of the obligations of Lessor. The Secured
Party will not disturb Lessee's quiet and peaceful possession and unrestricted
use of the Equipment so long as Lessee is not in default and the Secured Party
continues to receive all Rent payable under the Schedule; and
(b) Lessee will pay all Rent and all other amounts payable to the Secured Party,
despite any defense or claim which it has against Lessor. Lessee reserves its
right to have recourse directly against Lessor for any defense or claim;
(c) Subject to and without impairment of Lessee's leasehold rights in the
Equipment, Lessee holds the Equipment for the Secured Party to the extent of the
Secured Party's rights in that Equipment.
6. NET LEASE; TAXES AND FEES.
6.1 NET LEASE. Each Summary Equipment Schedule constitutes a net lease. Lessee's
obligation to pay Rent and all other amounts due hereunder is absolute and
unconditional and is not subject to any 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.
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(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
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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 CHARGE - means the lesser of five percent (5%) of the payment due or the
maximum amount permitted by the law of the state where the Equipment is located.
LICENSED PRODUCTS - means any software or other licensed products attached to
the Equipment.
LIKE EQUIPMENT - means replacement Equipment which is lien free and of the same
model, type, configuration and manufacture as Equipment.
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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.
PACKETEER, INC., COMDISCO, INC.,
as Lessee as Lessor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Title: Chief Operating Officer Title: President
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EQUIPMENT SCHEDULE VL-1
DATED AS OF JUNE 3, 1997
TO MASTER LEASE AGREEMENT
DATED AS OF JUNE 3, 1997 THE "MASTER LEASE")
LESSEE: PACKETEER, INC. LESSOR: COMDISCO, INC.
Admin. Contact/Phone No.: Address for all Notices:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇/▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ 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: 2.370%
Attn.:
EQUIPMENT (as defined below): Advance: $21,631.66
Equipment (including $96,520 of software) specifically approved by Lessor, which
shall be delivered to and accepted by Lessee during the period June 3, 1997,
through March 31, 1998 ("Equipment Delivery Period"), for which Lessor receives
vendor invoices approved for payment, up to an aggregate purchase price of
$912,728.55 ("Commitment Amount"); excluding custom use equipment, leasehold
improvements, installation costs and delivery costs, rolling stock, special
tooling, hand held items, molds and fungible items.
6
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 July 3, 1997
(*). Lessor will not perform a Sale-Leaseback Transaction for any
request or accompanying Equipment ownership documents which arrive
after the date marked above by an asterisk (*). Further, any sale-
leaseback Equipment will be placed on lease subject to: (1) Lessor
prior approval of the Equipment; and (2) if approved, at 100% of
Lessor's actual net Equipment cost.
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 to Lessee. The Commencement Date for
800 Number Equipment shall be fifteen (15) days from the ship date (provided
Lessee has not notified Lessor that the 800 Number Equipment has been delivered
and is inoperable), 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 and acceptance, 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.
7
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
sixty (60) 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 sixty (60) 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 12% of the Equipment Cost hereunder 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 payment obligations under the applicable Summary
Equipment Schedule have been fulfilled, it is agreed and understood that Lessor
shall retain a purchase money security interest in the Equipment listed therein
and the Summary Equipment Schedule shall constitute a Security Agreement under
the Uniform Commercial Code of the state in which the Equipment is located.
5. TECHNOLOGY EXCHANGE OPTION
If Lessee is not in default, and there is no material adverse change in
Lessee's credit, on or after the expiration of the 12th month of any Summary
Equipment Schedule, Lessee shall have the option to replace any of the Equipment
subject to such summary Equipment Schedule with new technology equipment ("New
Technology Equipment") utilizing the following guidelines:
1. Equipment being replaced with New Technology Equipment shall have an 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 Lessor based upon then current market conditions. Upon request of Lessee,
Lessor will consider permitting Lessee to sell the equipment. 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-
8
6. 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.
PACKETEER, INC. COMDISCO, INC.
as Lessee as Lessor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------- --------------------------------
Title: Chief Operating Officer Title: President
---------------------------- -----------------------------
Date: 6-5-97 Date: 6-10-97
----------------------------- ------------------------------
9
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:
10
EQUIPMENT SCHEDULE VL-2
DATED AS OF JUNE 16, 1998
TO MASTER LEASE AGREEMENT
DATED AS OF JUNE 3, 1997 THE ("MASTER LEASE")
LESSEE: PACKETEER, INC. LESSOR: COMDISCO, INC.
Admin. Contact/Phone No.: Address for all Notices:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇/▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ 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: 2.370%
Attn.:
EQUIPMENT (as defined below): Advance: $23,700.00
Equipment specifically approved by Lessor, which shall be delivered to and
accepted by Lessee during the 12 month period beginning on the later of (i) July
1, 1998 or (ii) the closing date of the Series D Preferred Stock Financing of
$6,000,000 or greater (the "Financing") ("Equipment Delivery Period"), for which
Lessor receives vendor invoices approved for payment, up to an aggregate
purchase price of $1,00,000.00 ("Commitment Amount") made available upon the
closing of the Financing and upon issuance of a Warrant in the form attached
hereto as Exhibit 2 for that number of shares equal to $62,500 divided by the
Exercise Price which shall equal the price per share paid by investors in the
Financing ; excluding custom use equipment, leasehold improvements, installation
costs and delivery costs, rolling stock, special tooling"standalone software,
application software bundled into computer hardware, hand held items, molds and
fungible items.
11
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 30 days from
the Equipment Delivery Period commencement date (*). 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 100 % of
Lessor's actual net Equipment cost.
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 to Lessee. The Commencement Date for
800 Number Equipment shall be fifteen (15) days from the ship date (provided
Lessee has not notified Lessor that the 800 Number Equipment has been delivered
and is inoperable), 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 and acceptance, 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.
12
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
sixty (60) 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 sixty (60) 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 the Equipment Cost hereunder 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 payment obligations under the applicable Summary
Equipment Schedule have been fulfilled, it is agreed and understood that Lessor
shall retain a purchase money security interest in the Equipment listed therein
and the Summary Equipment Schedule shall constitute a Security Agreement under
the Uniform Commercial Code of the state in which the Equipment is located.
5. TECHNOLOGY EXCHANGE OPTION
If Lessee is not in default, and there is no material adverse change in
Lessee's credit, on or after the expiration of the 12th month of any Summary
Equipment Schedule, Lessee shall have the option to replace any of the Equipment
subject to such summary Equipment Schedule with new technology equipment ("New
Technology Equipment") utilizing the following guidelines:
1. Equipment being replaced with New Technology Equipment shall have an 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 Lessor based upon then current market conditions. Upon request of Lessee,
Lessor will consider permitting Lessee to sell the equipment. 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.
13
6. 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.
PACKETEER, INC. COMDISCO, INC.
as Lessee as Lessor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------- --------------------------------
Title: Chief Operating Officer Title: President
---------------------------- -----------------------------
Date: 6-30-98 Date: 7-2-98
----------------------------- ------------------------------
14
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:
15
EQUIPMENT SCHEDULE VL-3
DATED AS OF JUNE 16, 1998
TO MASTER LEASE AGREEMENT
DATED AS OF JUNE 3, 1997 (THE "MASTER LEASE")
LESSEE: PACKETEER, INC. LESSOR: COMDISCO, INC.
Admin. Contact/Phone No.: Address for all Notices:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
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
(Number of Rent Intervals)
Lease Rate Factor: 2.370%
Attn.:
EQUIPMENT (as defined below): Advance: $5,925.00
Software specifically approved by Lessor, which shall be delivered to and
accepted by Lessee during the 12 month period beginning on the later of (i) July
1, 1998 or (ii) the closing date of the Series D Preferred Stock Financing of
$6,000,000 or greater (the "Financing") ("Equipment Delivery Period"), for which
Lessor receives vendor invoices approved for payment, up to an aggregate
purchase price of $250,000.00 ("Commitment Amount") made available upon the
closing of the Financing; excluding custom use equipment, installation costs and
delivery costs, rolling stock, special tooling, hand held items, molds and
fungible items.
-1-
16
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 30 days from
the Equipment Delivery Date commencement period (*). 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 100 % of
Lessor's actual net Equipment cost.
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 to Lessee. The Commencement Date for
800 Number Equipment shall be fifteen (15) days from the ship date (provided
Lessee has not notified Lessor that the 800 Number Equipment has been delivered
and is inoperable), 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 and acceptance, 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 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 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:
(a) Section 9, Delivery and Return of Equipment
-2-
17
Delete second, third and fourth sentences in their entirety.
Master Lease: This Schedule is issued pursuant to the Lease identified on page 1
of this Schedule. All of the terms and conditions of the Lease are incorporated
in and made a part of this Schedule as if they were expressly set forth in this
Schedule. The parties hereby reaffirm all of the terms and conditions of the
Lease (including, without limitation, the representations and warranties set
forth in Section 8) except as modified herein by this Schedule. This Schedule
may not be amended or rescinded except by a writing signed by both parties.
PACKETEER, INC. COMDISCO, INC.
as Lessee as Lessor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------- ---------------------
Title: Chief Operating Officer Title: President
Date: 6-30-98 Date: 7-2-98
-3-
18
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:
-4-
19
LOAN AND SECURITY AGREEMENT
THIS AGREEMENT (the "Agreement"), dated as of June 3, 1997 is entered into
by and between Packeteer, Inc., a Delaware corporation having a principal place
of business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇(▇▇▇
"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 Two Hundred Eighty Seven Thousand Two Hundred Seventy-One and 45/100 DOLLARS
($287,271.45) and Lender is willing to lend said amount to Borrower on June 6,
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 Two Hundred Eighty
Seven Thousand Two Hundred Seventy-One and 45/100 DOLLARS ($287,271.45) (the
"Loan") with interest at the rate of six point seven five percent (6.75%) per
annum 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
June 3, 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.
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1.4 In the event any interest is not paid within 10 days of the date 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.
1.5 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 plus 1.5%, 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 security interest, to be perfected
by filing, 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;
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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 June 3, 1997 pursuant to which Borrower granted to
Lender the right to 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 and rules of law
concerning equitable remedies and public policy concerns;
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 material 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 reasonably
require and as is standard in Borrower's industry, 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
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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 July 1, 2001 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 and from any
insurance proceeds payable, whether to Borrower or Lender, on or in relation to
such Casualty Loss, 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 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
reasonably similar equipment , 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 and all
insurance or other recovery received by Lender and Borrower and Lender agree
that all insurance proceeds and other recoveries less than or equal to $250,000
shall be paid directly to Borrower for application in accordance with this
paragraph; 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
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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)). At the option of Borrower, the remaining
proceeds may either (i) be used to pay any other Indebtedness of amounts then
due and owing to the Lender hereunder; or (2) 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' 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 are 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
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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 on reasonable notice, 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 to Lender for
inspection. Borrower shall use its standard procedures 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 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 or before a penalty is
assessed thereon, 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 in relation to the Equipment and excluding all
taxes on the capital or income of 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 or before a penalty is assessed thereon therefor all personal
property tax returns in respect of the Equipment. Borrower shall not be liable
for any taxes, fees or charges to the extent the same result from any sale or
assignment or grant of security interest by Lender, or to the extent any such
action increases the taxes, fees or charges that would otherwise be payable.
Borrower shall have the right to contest by proper legal proceeding any taxes
levied, as agent for or in the name of Lender. Lender will cooperate in any
legal proceedings being prosecuted by Borrower with regard to any taxes, but
Borrower will pay the expenses in such litigation. Borrower shall have the right
to contest in good faith and by appropriate proceeding the validity or the
amount of taxes unless such contest would subject to collateral to forfeiture or
sale. Borrower shall have the rights to any refund received as a result of any
such contest or proceeding to the extent Borrower has previously reimbursed
Lender for such taxes
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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);
(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
income statements, balance sheets, and names of principal creditors but
excluding tax returns) 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 which power may
be exercised by Lender only after the occurrence and during the continuance of
an Event of Default.
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 material 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 which arise in the ordinary course
of Borrower's business 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 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
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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 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
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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 when made;
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 or stay
such proceeding or, within sixty (60) days after the appointment, without the
written consent or acquiescence of Borrower, of any trustee, receiver or
liquidator of Borrower or of all or any substantial part of the properties of
Borrower, to vacate such appointment; or Lender.
8.6 The material default by Borrower under any other notes or other
agreement for borrowed money, lease if the result of such default is
acceleration of the balance thereof 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
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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 provided that the
proceeds, products rent and other sums realized on the Collateral shall be
applied to reduce the Indebtedness.
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
ten (10) calendar days 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 after 10 days notice by
Lender to Borrower.
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
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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 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
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30
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.
10.13 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. Notwithstanding the foregoing, Lender hereby consents to any
Merger in which the surviving entity has a net worth equal to or greater than
five (5) times the present value of the remaining monthly installments,
discounted at U.S. Treasury rate(s) of comparable maturity to the remaining term
and such entity or transferree has a net worth of at least $5,000,000.
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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:PACKETEER, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
Title: Chief Operating Officer
--------------------------------------
Date: 6-5-97
---------------------------------------
ACCEPTED IN ROSEMONT, ILLINOIS
LENDER: COMDISCO, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Title: President
--------------------------------------
Date: 6-10-97
---------------------------------------
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32
SECURED PROMISSORY NOTE
$287,271.45 Date: June 3, 1997
Due: June 1, 2001
For value received, Packeteer , Inc. 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 Two Hundred Eighty Seven Thousand Two Hundred Seventy
One and 45/100 Dollars ($287,271.45) together with interest at six point seven
five percent (6.75%) 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 interest to be paid in 48 equal monthly installments of $6,807.50
each, commencing July 1, 1997 and on the same day of each month thereafter to
and including June 1, 2001 and an additional final installment of $34,472.57
("Balloon Payment") to be paid on June 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.
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: PACKETEER, INC.
Signature: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------
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33
Title: Chief Operating Officer
____________________________
Accepted in Rosemont, Illinois:
LENDER: COMDISCO, INC.
Signature: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
________________________
Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇
________________________
Title: President
_____________________________
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34
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISTRIBUTED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THE SECURITIES REPRESENTED BY
THIS WARRANT ARE SUBJECT TO A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF
PACKETEER, INC. AND/OR STOCKHOLDERS, AS PROVIDED IN THE BYLAWS OF THE
CORPORATION.
WARRANT AGREEMENT
To Purchase Shares of the Series B Preferred Stock of
PACKETEER, INC.
Dated as of June 3, 1997 (the "Effective Date")
WHEREAS, PACKETEER, INC., a Delaware corporation (the "Company") has
entered into a Master Lease Agreement dated as of June 3, 1997, Equipment
Schedule No. VL-1 dated as of June 3, 1997, and related Summary Equipment
Schedules (collectively, the "Leases") with Comdisco, Inc., a Delaware
corporation (the "Warrantholder"); and
WHEREAS, the Company desires to grant to Warrantholder, in consideration
for such Leases, the right to purchase shares of its Series B Preferred Stock;
NOW, THEREFORE, in consideration of the Warrantholder executing and
delivering such Leases and in consideration of mutual covenants and agreements
contained herein, the Company and Warrantholder agree as follows:
1. GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.
The Company hereby grants to the Warrantholder, and the Warrantholder is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
subscribe to and purchase, from the Company, Ten Thousand Five Hundred (10,500)
fully paid and non-assessable shares of the Company's Series B Preferred Stock
("Preferred Stock") at a purchase price of Four Dollars $4.00 per share (the
"Exercise Price"). The number and purchase price of such shares are subject to
adjustment as provided in Section 8 hereof.
2. TERM OF THE WARRANT AGREEMENT.
(a) Except as otherwise provided for herein, the term of this Warrant
Agreement and the right to purchase Preferred Stock as granted herein shall
commence on the Effective Date and shall be exercisable for a period of (i)
eight (8) years or (ii) three (3) years from the effective date of the Company's
initial public offering, whichever is shorter.
(b) Notwithstanding the term of this Warrant fixed pursuant to Section
2(a) hereof, the right to purchase Preferred Stock as granted herein shall
expire, if not previously exercised, immediately upon the closing of either the
sale of all or substantially all of the assets of the Company or a merger or
consolidation or reorganization of the Company as seta forth in article IV
C.3.(c) of the Company's Amended and Restated Certificate of Incorporation (the
"Accelerating Transaction"). The Company shall provide written notice to
Warrantholder at least ten (10) days prior to the closing of the Accelerating
Transaction. If Warrantholder exercises the Warrant after notice of the
Accelerating Transaction and such Accelerating Transaction does not occur.
Warrantholder may rescind any exercise of the purchase rights within five (5)
days after notice of termination of the Accelerating Transaction.
3. EXERCISE OF THE PURCHASE RIGHTS.
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35
The purchase rights set forth in this Warrant Agreement are exercisable
by the Warrantholder, in whole or in part (no more than 2 parts), at any time,
or from time to time, prior to the expiration of the term set forth in Section 2
above, by tendering to the Company at its principal office a notice of exercise
in the form attached hereto as Exhibit I (the "Notice of Exercise"), duly
completed and executed. Promptly upon receipt of the Notice of Exercise and the
payment of the purchase price in accordance with the terms set forth below, and
in no event later than twenty-one (21) days thereafter, the Company shall issue
to the Warrantholder a certificate for the number of shares of Preferred Stock
purchased and shall execute the acknowledgment of exercise in the form attached
hereto as Exhibit II (the "Acknowledgment of Exercise") indicating the number of
shares which remain subject to future purchases, if any.
The Exercise Price may be paid at the Warrantholder's election either
(i) by cash or check, or (ii) by surrender of Warrants ("Net Issuance") as
determined below. If the Warrantholder elects the Net Issuance method, the
Company will issue Preferred Stock in accordance with the following formula:
X = Y(A-B)
------
A
Where: X = the number of shares of Preferred Stock to be
issued to the Warrantholder.
Y = the number of shares of Preferred Stock
requested to be exercised under this Warrant
Agreement.
A = the fair market value of one (1) share of
Preferred Stock.
B = the Exercise Price.
For purposes of the above calculation, current fair market value of
Preferred Stock shall mean with respect to each share of Preferred Stock:
(i) if the exercise is in connection with an initial public
offering of the Company's Common Stock, and if the Company's
Registration Statement relating to such public offering has been
declared effective by the SEC, then the fair market value per share
shall be the product of (x) the initial "Price to Public" specified in
the final prospectus with respect to the offering and (y) the number of
shares of Common Stock into which each share of Preferred Stock is
convertible at the time of such exercise;
(ii) if this Warrant is exercised after, and not in connection
with the Company's initial public offering, and:
(a) if traded on a securities exchange, the fair market
value shall be deemed to be the product of (x) the average of
the closing prices over a twenty-one (21) day period ending
three days before the day the current fair market value of the
securities is being determined and (y) the number of shares of
Common Stock into which each share of Preferred Stock is
convertible at the time of such exercise; or
(b) if actively traded over-the-counter, the fair market
value shall be deemed to be the product of (x) the average of
the closing bid and asked prices quoted on the NASDAQ National
Market system (or similar system) over the twenty-one (21) day
period ending three days before the day the current fair market
value of the securities is being determined and (y) the number
of shares of Common Stock into which each share of Preferred
Stock is convertible at the time of such exercise;
(iii) if at any time the Common Stock is not listed on any
securities exchange or quoted on the NASDAQ National Market System or
the over-the-counter market, the current fair market value of Preferred
Stock shall be the product of (x) the highest price per share which the
Company could obtain from a willing buyer (not a current employee or
director) for shares of Common Stock sold by the Company, from
authorized but unissued shares, as determined in good faith by its Board
of Directors and (y) the number of shares of Common Stock into which
each share of Preferred Stock is convertible at the time of such
exercise, unless the Company shall become subject to a merger,
acquisition or other consolidation pursuant to which the Company is not
the surviving party, in which case the fair market value of Preferred
Stock shall be deemed to be the value received by the holders of the
Company's Preferred Stock on a common equivalent basis pursuant to such
merger or acquisition.
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36
Upon partial exercise by either cash or Net Issuance, the Company shall
promptly issue an amended Warrant Agreement representing the remaining number of
shares purchasable hereunder. All other terms and conditions of such amended
Warrant Agreement shall be identical to those contained herein, including, but
not limited to the Effective Date hereof.
4. RESERVATION OF SHARES.
(a) Authorization and Reservation of Shares. During the term of this
Warrant Agreement, the Company will at all times have authorized and reserved a
sufficient number of shares of its Preferred Stock to provide for the exercise
of the rights to purchase Preferred Stock as provided for herein.
5. NO FRACTIONAL SHARES OR SCRIP.
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrant, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.
6. NO RIGHTS AS SHAREHOLDER.
This Warrant Agreement does not entitle the Warrantholder to any voting
rights or other rights as a shareholder of the Company prior to the exercise of
the Warrant.
7. WARRANTHOLDER REGISTRY.
The Company shall maintain a registry showing the name and address of
the registered holder of this Warrant Agreement.
8. ADJUSTMENT RIGHTS.
The purchase price per share and the number of shares of Preferred Stock
purchasable hereunder are subject to adjustment, as follows:
(a) Merger and Sale of Assets. If at any time there shall be a capital
reorganization of the shares of the Company's stock (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), or a merger or consolidation of the Company with or into another
corporation whether or not the Company is the surviving corporation, or the sale
of all or substantially all of the Company's properties and assets to any other
person (hereinafter referred to as a "Merger Event"), then, as a part of such
Merger Event, lawful provision shall be made so that the Warrantholder shall
thereafter be entitled to receive, upon exercise of the Warrant, the number of
shares of preferred stock or other securities of the successor corporation
resulting from such Merger Event, equivalent in value to that which would have
been issuable if Warrantholder had exercised this Warrant immediately prior to
the Merger Event. In any such case, appropriate adjustment (as determined in
good faith by the Company's Board of Directors) shall be made in the application
of the provisions of this Warrant with respect to the rights and interest of the
Warrantholder after the Merger Event to the end that the provisions of this
Warrant (including adjustments of the Exercise Price and number of shares of
Preferred Stock purchasable) shall be applicable to the greatest extent
possible. Notwithstanding this subparagraph 8(a), the term of this Warrant shall
be limited as described in subparagraph 2(b) hereof.
(b) Reclassification of Shares. If the Company at any time shall, by
combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant exist into the same or a different number of securities of any other
class or classes, this Warrant shall thereafter represent the right to acquire
such number and kind of securities as would have been issuable as the result of
such change with respect to the securities which were subject to the purchase
rights under this Warrant Agreement immediately prior to such combination,
reclassification, exchange, subdivision or other change.
(c) Subdivision or Combination of Shares. If the Company at any time
shall combine or subdivide its Preferred Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.
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37
(d) Stock Dividends. If the Company at any time shall pay a dividend
payable in, or make any other distribution (except any distribution specifically
provided for in the foregoing subsections (a) or (b)) of the Company's stock,
then the Exercise Price shall be adjusted, from and after the record date of
such dividend or distribution, to that price determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction (i)
the numerator of which shall be the total number of all shares of the Company's
stock outstanding immediately prior to such dividend or distribution, and (ii)
the denominator of which shall be the total number of all shares of the
Company's stock outstanding immediately after such dividend or distribution. The
Warrantholder shall thereafter be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of shares of Preferred Stock
(calculated to the nearest whole share) obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Preferred Stock issuable upon the exercise hereof immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(e) Antidilution Rights. Additional antidilution rights applicable to
the Preferred Stock purchasable hereunder are as set forth in the Company's
Certificate of Incorporation, as amended through the Effective Date, a true and
complete copy of which is attached hereto as Exhibit ___ (the "Charter"). The
Company shall promptly provide the Warrantholder with any restatement,
amendment, modification or waiver of the Charter. The Company shall provide
Warrantholder with the same notice provided to holders of the Series B Preferred
Stock as set forth in the Charter, if any, written notice of any issuance of its
stock or other equity security to occur after the Effective Date of this
Warrant, which notice shall be in the form of a Certificate of Adjustment to be
delivered pursuant to Section 4 (R) of the Charter.
(f) Notice of Adjustments. If: (i) the Company shall declare any
dividend or distribution upon its stock, whether in cash, property, stock or
other securities; (ii) the Company shall offer for subscription prorata to the
holders of any class of its Preferred or other convertible stock any additional
shares of stock of any class or other rights; (iii) there shall be any Merger
Event; (iv) there shall be an initial public offering; or (v) there shall be any
voluntary dissolution, liquidation or winding up of the Company; then, in
connection with each such event, the Company shall send to the Warrantholder the
same notice provided to holders of the Series B Preferred Stock as set forth in
the Charter, if any. 9.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
(a) Reservation of Preferred Stock. The Preferred Stock issuable upon
exercise of the Warrantholder's rights has been duly and validly reserved and,
when issued in accordance with the provisions of this Warrant, will be validly
issued, fully paid and non-assessable, and will be free of any taxes, liens,
charges or encumbrances of any nature whatsoever; provided, however, that the
Preferred Stock issuable pursuant to this Warrant may be subject to restrictions
on transfer under the Company's By Laws, state and/or Federal securities laws.
The Company has made available to the Warrantholder true, correct and complete
copies of its Charter and Bylaws, as amended. The issuance of certificates for
shares of Preferred Stock upon exercise of this Warrant shall be made without
charge to the Warrantholder for any issuance tax in respect thereof, or other
cost incurred by the Company in connection with such exercise and the related
issuance of shares of Preferred Stock. The Company shall not be required to pay
any tax which may be payable in respect of any transfer involved and the
issuance and delivery of any certificate in a name other than that of the
Warrantholder.
(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 of
Preferred Stock, have been duly authorized by all necessary corporate action on
the part of the Company, and the Leases and this Warrant Agreement do not
violate the Company's Charter 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 material
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 Subject to applicable bankruptcy and insolvency and other
similar laws affecting the rights of creditors generally and, rules of law
concerning equitable remedies and public policy concerns.
(c) Consents and Approvals. No consent or approval of, giving of notice
to, registration with, or taking of any other action in respect of 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.
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38
(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.
(i) The authorized capital of the Company consists of (A)
10,000,000 shares of Common Stock, of which 2,216,200 shares are issued
and outstanding, and (B) 1,925,465 shares of Preferred Stock, of which
1,905,465 shares are issued and are as of the date hereof outstanding
and are convertible into 1,905,465 shares of Common Stock.
(ii) The Company has reserved 1,098,300 shares of Common Stock
for issuance under its 1996 Equity Incentive Plan (the "Plan"), of which
options to purchase 905,200 shares have been granted with 816,200 of
such options having been exercised. The Company has repurchased 40,000
shares of its Common Stock issued under the Plan. There are no other
options, warrants, conversion privileges or other rights presently
outstanding to purchase or otherwise acquire any authorized but unissued
shares of the Company's capital stock or other securities of the
Company.
(e) Insurance. The Company has in full force and effect insurance
policies, with extended coverage, insuring the Company and its property and
business against such losses and risks, and in such amounts, as are customary
for corporations engaged in a similar business and similarly situated and as
otherwise may be required pursuant to the terms of any other contract or
agreement.
(f) Exempt Transaction. Subject to the accuracy of the Warrantholder's
representations in Section 10 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.
(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 Securities and Exchange
Commission as set forth in such Rule if the Company is in compliance with such
Rule, as such Rule may be amended from time to time.
10. REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.
This Warrant Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder:
(a) Investment Purpose. This Warrant or the Preferred Stock issuable
upon exercise of the Warrantholder's rights contained herein 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 Preferred
Stock 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 Agreement 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 10.
(c) Disposition of Warrantholder's Rights. In no event will the
Warrantholder make a disposition of this Warrant or the Preferred Stock issuable
upon exercise of the Warrantholder's rights contained herein unless and until
(i) it shall have notified the Company of the proposed disposition and obtained
the Company's prior written consent to such transfer, and (ii) if requested by
the Company, it shall have furnished the Company with an opinion of counsel
(which counsel may either be inside or outside counsel to the Warrantholder)
satisfactory to the Company and its counsel to the effect that (A) appropriate
action necessary for compliance with the 1933 Act has been taken, or (B) an
exemption from the registration requirements of the 1933 Act is available.
Notwithstanding the foregoing, the restrictions imposed upon the transferability
of this Warrant or Preferred Stock issuable on the exercise of the
Warrantholder's rights contained herein do not apply to transfers from the
beneficial owner of any of the aforementioned securities to its nominee or from
such nominee to its beneficial owner, and shall terminate as to any particular
share of Preferred Stock when (1) such security shall have been effectively
registered under the 1933 Act and sold by the holder thereof in accordance with
such registration or (2) such security shall have been sold without registration
in compliance with Rule 144 under the 1933 Act, or (3) a letter shall have been
issued to the
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39
Warrantholder at its request by the staff of the Securities and Exchange
Commission or a ruling shall have been issued to the Warrantholder at its
request by such Commission stating that no action shall be recommended by such
staff or taken by such Commission, as the case may be, if such security is
transferred without registration under the 1933 Act in accordance with the
conditions set forth in such letter or ruling and such letter or ruling
specifies that no subsequent restrictions on transfer are required. Whenever the
restrictions imposed hereunder shall terminate, as hereinabove provided, the
Warrantholder or holder of a share of Preferred Stock then outstanding as to
which such restrictions have terminated shall be entitled to receive from the
Company, without expense to such holder, one or more new certificates for the
Warrant or for such shares of Preferred Stock not bearing any restrictive
legend.
(d) Financial Risk. The Warrantholder has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
investment.
(e) 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 covering the
securities under the 1933 Act is not in effect when it desires to sell (i) the
rights to purchase Preferred Stock pursuant to this Warrant Agreement, or (ii)
the Preferred Stock 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 its rights of the Warrantholder to purchase
Preferred Stock or Preferred Stock 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.
(f) Accredited Investor. Warrantholder is an "accredited investor"
within the meaning of the Securities and Exchange Rule 501 of Regulation D, as
presently in effect.
11. TRANSFERS.
Subject to the terms and conditions contained in Section 10 hereof and
the Company's Charter and Bylaws, this Warrant and all rights hereunder are
transferable in whole or in part by the Warrantholder and any successor
transferee, provided, however, in no event shall the number of transfers of the
rights and interests in all of the Warrants exceed one (1) transfer. The
transfer shall be recorded on the books of the Company upon receipt by the
Company of a notice of transfer in the form attached hereto as Exhibit III (the
"Transfer Notice"), at its principal offices and the payment to the Company of
all transfer taxes and other governmental charges imposed on such transfer. The
Company shall have the right to refuse to transfer any portion of this Warrant
to any person who is a competitor of the Company or who is not an accredited
investor under the 1933 Act.
12. MISCELLANEOUS.
(a) Effective Date. The provisions of this Warrant shall be construed
and shall be given effect in all respects as if it had been executed and
delivered by the Company on the date hereof. This Warrant Agreement shall be
binding upon any successors or assigns of the Company.
(b) Attorney's Fees. In any litigation, arbitration or court proceeding
between the Company and the Warrantholder relating hereto, the prevailing party
shall be entitled to attorneys' fees and expenses and all costs of proceedings
incurred in enforcing this Warrant.
(c) Governing Law. This Warrant shall be governed by and construed for
all purposes under and in accordance with the laws of the State of California.
(d) Counterparts. This Warrant may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(e) Notices. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery,
facsimile transmission (provided that the original is sent by personal delivery
or mail as hereinafter set forth) or seven (7) days after deposit in the United
States mail, by registered or certified mail, addressed (i) to the Warrantholder
at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention: ▇▇▇▇▇ ▇▇▇▇,
Venture Group, cc: Legal Department, attn: General Counsel, (and/or, if by
facsimile, (▇▇▇) ▇▇▇-▇▇▇▇ and (▇▇▇) ▇▇▇-▇▇▇▇) and (ii) to the Company at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇. ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, attention: CFO (and/or if by
facsimile, (415+) 364-0193, cc: ▇▇▇▇▇▇ Godward, ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇,
- 6 -
40
Attn: ▇▇▇▇ ▇▇▇▇▇, or if by facsimile (▇▇▇) ▇▇▇-▇▇▇▇ or at such other address as
any such party may subsequently designate by written notice to the other party.
(f) Remedies. In the event of any default hereunder, the non-defaulting
party may proceed to protect and enforce its rights either by suit in equity
and/or by action at law, including but not limited to an action for damages as a
result of any such default, and/or an action for specific performance for any
default where Warrantholder will not have an adequate remedy at law and where
damages will not be readily ascertainable. The Company expressly agrees that it
shall not oppose an application by the Warrantholder or any other person
entitled to the benefit of this Agreement requiring specific performance of any
or all provisions hereof or enjoining the Company from continuing to commit any
such breach of this Agreement.
(g) No Impairment of Rights. The Company will not, by amendment of its
Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Warrantholder against impairment.
(h) Survival. The representations, warranties, covenants and conditions
of the respective parties contained herein or made pursuant to this Warrant
shall survive the execution and delivery of this Warrant Agreement.
(i) Severability. In the event any one or more of the provisions of this
Warrant shall for any reason be held invalid, illegal or unenforceable, the
remaining provisions of this Warrant shall be unimpaired, and the invalid,
illegal or unenforceable provision shall be replaced by a mutually acceptable
valid, legal and enforceable provision, which comes closest to the intention of
the parties underlying the invalid, illegal or unenforceable provision.
(j) Amendments. Any provision of this Warrant may be amended by a
written instrument signed by the Company and by the Warrantholder.
(k) Additional Documents. The Company, upon execution of this Warrant
Agreement, shall provide the Warrantholder with certified resolutions with
respect to the representations, warranties and covenants set forth in
subparagraphs (a) through (d), (f) and (g) of Section 9 above. The Company shall
also supply such other documents as the Warrantholder may from time to time
reasonably request.
IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be
executed by its officers thereunto duly authorized as of the Effective Date.
COMPANY: PACKETEER, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_____________________________________
Title: Chief Operating Officer
__________________________________
WARRANTHOLDER: COMDISCO, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
_____________________________________
Title: Senior Vice President
__________________________________
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41
EXHIBIT I
NOTICE OF EXERCISE
To:___________________
(1) The undersigned Warrantholder hereby elects to purchase ________ shares
of the Series __ Preferred Stock of ________________, pursuant to the
terms of the Warrant dated the ________ day of ________________, 19__
(the "Warrant") between ________________ and the Warrantholder, and
tenders herewith payment of the purchase price for such shares in full,
together with all applicable transfer taxes, if any.
(2) In exercising its rights to purchase the Series ________ Preferred Stock
of ________________________, the undersigned hereby confirms and
acknowledges the investment representations and warranties made in
Section 10 of the Warrant.
(3) Please issue a certificate or certificates representing said shares of
Series ________ Preferred Stock in the name of the undersigned or in
such other name as is specified below.
_______________________________
(Name)
_______________________________
(Address)
WARRANTHOLDER: COMDISCO, INC.
By:____________________________
Title:_________________________
Date:__________________________
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42
EXHIBIT II
ACKNOWLEDGMENT OF EXERCISE
The undersigned ____________________, hereby acknowledge receipt of the
"Notice of Exercise" from Comdisco, Inc., to purchase _______ shares of the
Series _______ Preferred Stock of ____________________, pursuant to the terms of
the Warrant, and further acknowledges that _______ shares remain subject to
purchase under the terms of the Warrant.
PACKETEER, INC.:
By:_______________________________
Title:____________________________
Date:_____________________________
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EXHIBIT III
TRANSFER NOTICE
(TO TRANSFER OR ASSIGN THE FOREGOING WARRANT EXECUTE THIS FORM AND SUPPLY
REQUIRED INFORMATION. DO NOT USE THIS FORM TO PURCHASE SHARES.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby transferred and assigned to
-----------------------------------------------------------
(Please Print)
whose address is
-------------------------------------------
-----------------------------------------------------------
Dated:
-------------------------------
Holder's Signature:
------------------
Holder's Address:
--------------------
-------------------------------------
Signature Guaranteed:
-------------------------------------
NOTE: The signature to this Transfer Notice must correspond with the name as
it appears on the face of the Warrant, without alteration or enlargement
or any change whatever. Officers of corporations and those acting in a
fiduciary or other representative capacity should file proper evidence
of authority to assign the foregoing Warrant.
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44
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISTRIBUTED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THE SECURITIES REPRESENTED BY
THIS WARRANT ARE SUBJECT TO A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF
PACKETEER, INC. AND/OR STOCKHOLDERS, AS PROVIDED IN THE BYLAWS OF THE
CORPORATION.
WARRANT AGREEMENT
To Purchase Shares of the Series D Preferred Stock of
PACKETEER, INC.
Dated as of June 16, 1998 (the "Effective Date")
WHEREAS, PACKETEER, INC., a Delaware corporation (the "Company") has
entered into a Master Lease Agreement dated as of June 3, 1997, Equipment
Schedule No. VL-2 and 3 dated as of June 16, 1998, and related Summary Equipment
Schedules (collectively, the "Leases") with Comdisco, Inc., a Delaware
corporation (the "Warrantholder"); and
WHEREAS, the Company desires to grant to Warrantholder, in consideration
for such Leases, the right to purchase shares of its Series D Preferred Stock;
NOW, THEREFORE, in consideration of the Warrantholder executing and
delivering such Leases and in consideration of mutual covenants and agreements
contained herein, the Company and Warrantholder agree as follows:
1. GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.
The Company hereby grants to the Warrantholder, and the Warrantholder is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
subscribe to and purchase, from the Company, 15,863 fully paid and
non-assessable shares of the Company's Series D Preferred Stock ("Preferred
Stock") at a purchase price of $3.94 per share (the "Exercise Price"). The
number and purchase price of such shares are subject to adjustment as provided
in Section 8 hereof.
2. TERM OF THE WARRANT AGREEMENT.
(a) Except as otherwise provided for herein, the term of this Warrant
Agreement and the right to purchase Preferred Stock as granted herein shall
commence on the Effective Date and shall be exercisable for a period of (i)
eight (8) years or (ii) three (3) years from the effective date of the Company's
initial public offering, whichever is shorter.
(b) Notwithstanding the term of this Warrant fixed pursuant to Section
2(a) hereof, the right to purchase Preferred Stock as granted herein shall
expire, if not previously exercised, immediately upon the closing of either the
sale of all or substantially all of the assets of the Company or a merger or
consolidation or reorganization of the Company as set forth in article IV
C.3.(b) of the Company's Amended and Restated Certificate of Incorporation (the
"Accelerating Transaction"). The Company shall provide written notice to
Warrantholder at least ten (10) days prior to the closing of the Accelerating
Transaction. If Warrantholder exercises the Warrant after notice of the
Accelerating Transaction and such Accelerating Transaction does not occur.
Warrantholder may rescind any exercise of the purchase rights within five (5)
days after notice of termination of the Accelerating Transaction.
3. EXERCISE OF THE PURCHASE RIGHTS.
The purchase rights set forth in this Warrant Agreement are exercisable
by the Warrantholder, in whole or in part (no more than 2 parts), at any time,
or from time to time, prior to the expiration of the term set forth in
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45
Section 2 above, by tendering to the Company at its principal office a notice of
exercise in the form attached hereto as Exhibit I (the "Notice of Exercise"),
duly completed and executed. Promptly upon receipt of the Notice of Exercise and
the payment of the purchase price in accordance with the terms set forth below,
and in no event later than twenty-one (21) days thereafter, the Company shall
issue to the Warrantholder a certificate for the number of shares of Preferred
Stock purchased and shall execute the acknowledgment of exercise in the form
attached hereto as Exhibit II (the "Acknowledgment of Exercise") indicating the
number of shares which remain subject to future purchases, if any.
The Exercise Price may be paid at the Warrantholder's election either (i)
by cash or check, or (ii) by surrender of Warrants ("Net Issuance") as
determined below. If the Warrantholder elects the Net Issuance method, the
Company will issue Preferred Stock in accordance with the following formula:
X = Y(A-B)
------
A
Where: X = the number of shares of Preferred Stock to be issued
to the Warrantholder.
Y = the number of shares of Preferred Stock requested
to be exercised under this Warrant Agreement.
A = the fair market value of one (1) share of Preferred
Stock.
B = the Exercise Price.
For purposes of the above calculation, current fair market value of
Preferred Stock shall mean with respect to each share of Preferred Stock:
(i) if the exercise is in connection with an initial public
offering of the Company's Common Stock, and if the Company's Registration
Statement relating to such public offering has been declared effective by
the SEC, then the fair market value per share shall be the product of (x)
the initial "Price to Public" specified in the final prospectus with
respect to the offering and (y) the number of shares of Common Stock into
which each share of Preferred Stock is convertible at the time of such
exercise;
(ii) if this Warrant is exercised after, and not in connection
with the Company's initial public offering, and:
(a) if traded on a securities exchange, the fair market
value shall be deemed to be the product of (x) the average of the
closing prices over a twenty-one (21) day period ending three
days before the day the current fair market value of the
securities is being determined and (y) the number of shares of
Common Stock into which each share of Preferred Stock is
convertible at the time of such exercise; or
(b) if actively traded over-the-counter, the fair market
value shall be deemed to be the product of (x) the average of the
closing bid and asked prices quoted on the NASDAQ National Market
system (or similar system) over the twenty-one (21) day period
ending three days before the day the current fair market value of
the securities is being determined and (y) the number of shares
of Common Stock into which each share of Preferred Stock is
convertible at the time of such exercise;
(iii) if at any time the Common Stock is not listed on any
securities exchange or quoted on the NASDAQ National Market System or the
over-the-counter market, the current fair market value of Preferred Stock
shall be the product of (x) the highest price per share which the Company
could obtain from a willing buyer (not a current employee or director)
for shares of Common Stock sold by the Company, from authorized but
unissued shares, as determined in good faith by its Board of Directors
and (y) the number of shares of Common Stock into which each share of
Preferred Stock is convertible at the time of such exercise, unless the
Company shall become subject to a merger, acquisition or other
consolidation pursuant to which the Company is not the surviving party,
in which case the fair market value of Preferred Stock shall be deemed to
be the value received by the holders of the Company's Preferred Stock on
a common equivalent basis pursuant to such merger or acquisition.
- 2 -
46
Upon partial exercise by either cash or Net Issuance, the Company shall
promptly issue an amended Warrant Agreement representing the remaining number of
shares purchasable hereunder. All other terms and conditions of such amended
Warrant Agreement shall be identical to those contained herein, including, but
not limited to the Effective Date hereof.
4. RESERVATION OF SHARES.
(a) Authorization and Reservation of Shares. During the term of this
Warrant Agreement, the Company will at all times have authorized and reserved a
sufficient number of shares of its Preferred Stock to provide for the exercise
of the rights to purchase Preferred Stock as provided for herein.
5. NO FRACTIONAL SHARES OR SCRIP.
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrant, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.
6. NO RIGHTS AS SHAREHOLDER.
This Warrant Agreement does not entitle the Warrantholder to any voting
rights or other rights as a shareholder of the Company prior to the exercise of
the Warrant.
7. WARRANTHOLDER REGISTRY.
The Company shall maintain a registry showing the name and address of the
registered holder of this Warrant Agreement.
8. ADJUSTMENT RIGHTS.
The purchase price per share and the number of shares of Preferred Stock
purchasable hereunder are subject to adjustment, as follows:
(a) Merger and Sale of Assets. If at any time there shall be a capital
reorganization of the shares of the Company's stock (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), or a merger or consolidation of the Company with or into another
corporation whether or not the Company is the surviving corporation, or the sale
of all or substantially all of the Company's properties and assets to any other
person (hereinafter referred to as a "Merger Event"), then, as a part of such
Merger Event, lawful provision shall be made so that the Warrantholder shall
thereafter be entitled to receive, upon exercise of the Warrant, the number of
shares of preferred stock or other securities of the successor corporation
resulting from such Merger Event, equivalent in value to that which would have
been issuable if Warrantholder had exercised this Warrant immediately prior to
the Merger Event. In any such case, appropriate adjustment (as determined in
good faith by the Company's Board of Directors) shall be made in the application
of the provisions of this Warrant with respect to the rights and interest of the
Warrantholder after the Merger Event to the end that the provisions of this
Warrant (including adjustments of the Exercise Price and number of shares of
Preferred Stock purchasable) shall be applicable to the greatest extent
possible. Notwithstanding this subparagraph 8(a), the term of this Warrant shall
be limited as described in subparagraph 2(b) hereof.
(b) Reclassification of Shares. If the Company at any time shall, by
combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant exist into the same or a different number of securities of any other
class or classes, this Warrant shall thereafter represent the right to acquire
such number and kind of securities as would have been issuable as the result of
such change with respect to the securities which were subject to the purchase
rights under this Warrant Agreement immediately prior to such combination,
reclassification, exchange, subdivision or other change.
(c) Subdivision or Combination of Shares. If the Company at any time
shall combine or subdivide its Preferred Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.
(d) Stock Dividends. If the Company at any time shall pay a dividend
payable in, or make any other distribution (except any distribution specifically
provided for in the foregoing subsections (a) or (b)) of the
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47
Company's stock, then the Exercise Price shall be adjusted, from and after the
record date of such dividend or distribution, to that price determined by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction (i) the numerator of which shall be the total number of all shares
of the Company's stock outstanding immediately prior to such dividend or
distribution, and (ii) the denominator of which shall be the total number of all
shares of the Company's stock outstanding immediately after such dividend or
distribution. The Warrantholder shall thereafter be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of shares of Preferred
Stock (calculated to the nearest whole share) obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
shares of Preferred Stock issuable upon the exercise hereof immediately prior to
such adjustment and dividing the product thereof by the Exercise Price resulting
from such adjustment.
(e) Antidilution Rights. Additional antidilution rights applicable to the
Preferred Stock purchasable hereunder are as set forth in the Company's
Certificate of Incorporation, as amended through the Effective Date, a true and
complete copy of which is attached hereto as Exhibit ___ (the "Charter"). The
Company shall promptly provide the Warrantholder with any restatement,
amendment, modification or waiver of the Charter. The Company shall provide
Warrantholder with the same notice provided to holders of the Series D Preferred
Stock as set forth in the Charter, if any, written notice of any issuance of its
stock or other equity security to occur after the Effective Date of this
Warrant, which notice shall be in the form of a Certificate of Adjustment to be
delivered pursuant to Article IV Section 4(k) of the Charter.
(f) Notice of Adjustments. If: (i) the Company shall declare any dividend
or distribution upon its stock, whether in cash, property, stock or other
securities; (ii) the Company shall offer for subscription prorata to the holders
of any class of its Preferred or other convertible stock any additional shares
of stock of any class or other rights; (iii) there shall be any Merger Event;
(iv) there shall be an initial public offering; or (v) there shall be any
voluntary dissolution, liquidation or winding up of the Company; then, in
connection with each such event, the Company shall send to the Warrantholder the
same notice provided to holders of the Series D Preferred Stock as set forth in
the Charter, if any.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
(a) Reservation of Preferred Stock. The Preferred Stock issuable upon
exercise of the Warrantholder's rights has been duly and validly reserved and,
when issued in accordance with the provisions of this Warrant, will be validly
issued, fully paid and non-assessable, and will be free of any taxes, liens,
charges or encumbrances of any nature whatsoever; provided, however, that the
Preferred Stock issuable pursuant to this Warrant may be subject to restrictions
on transfer under the Company's By Laws, state and/or Federal securities laws.
The Company has made available to the Warrantholder true, correct and complete
copies of its Charter and Bylaws, as amended. The issuance of certificates for
shares of Preferred Stock upon exercise of this Warrant shall be made without
charge to the Warrantholder for any issuance tax in respect thereof, or other
cost incurred by the Company in connection with such exercise and the related
issuance of shares of Preferred Stock. The Company shall not be required to pay
any tax which may be payable in respect of any transfer involved and the
issuance and delivery of any certificate in a name other than that of the
Warrantholder.
(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 of
Preferred Stock, have been duly authorized by all necessary corporate action on
the part of the Company, and the Leases and this Warrant Agreement do not
violate the Company's Charter 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 material
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 Subject to applicable bankruptcy and insolvency and other
similar laws affecting the rights of creditors generally and, rules of law
concerning equitable remedies and public policy concerns.
(c) Consents and Approvals. No consent or approval of, giving of notice
to, registration with, or taking of any other action in respect of 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.
- 4 -
48
(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.
(i) The authorized capital of the Company consists of (A)
40,000,000 shares of Common Stock, of which 9,942,550 shares are issued
and outstanding, (B) 13,703,287 shares of Preferred Stock, of which
12,376,251 shares are issued and are as of the date hereof outstanding
and are convertible into 12,376,251 shares of Common Stock.
(ii) The Company has reserved 6,418,300 shares of Common Stock
for issuance under its 1996 Equity Incentive Plan (the "Plan"), of which
options to purchase 5,627,800 shares have been granted with 4,683,800 of
such options having been exercised. The Company has repurchased 505,250
shares of its Common Stock issued under the Plan. There are 189,000
options granted outside the plan, 4,000 of these options have been
exercised. 42,000 warrants for Series B preferred stock have been issued
to Comdisco. There are no other options, warrants, conversion privileges
or other rights presently outstanding to purchase or otherwise acquire
any authorized but unissued shares of the Company's capital stock or
other securities of the Company.
(e) Insurance. The Company has in full force and effect insurance
policies, with extended coverage, insuring the Company and its property and
business against such losses and risks, and in such amounts, as are customary
for corporations engaged in a similar business and similarly situated and as
otherwise may be required pursuant to the terms of any other contract or
agreement.
(f) Exempt Transaction. Subject to the accuracy of the Warrantholder's
representations in Section 10 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.
(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 Securities and Exchange
Commission as set forth in such Rule if the Company is in compliance with such
Rule, as such Rule may be amended from time to time.
10. REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.
This Warrant Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder:
(a) Investment Purpose. This Warrant or the Preferred Stock issuable upon
exercise of the Warrantholder's rights contained herein 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 Preferred
Stock 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 Agreement 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 10.
(c) Disposition of Warrantholder's Rights. In no event will the
Warrantholder make a disposition of this Warrant or the Preferred Stock issuable
upon exercise of the Warrantholder's rights contained herein unless and until
(i) it shall have notified the Company of the proposed disposition and obtained
the Company's prior written consent to such transfer, and (ii) if requested by
the Company, it shall have furnished the Company with an opinion of counsel
(which counsel may either be inside or outside counsel to the Warrantholder)
satisfactory to the Company and its counsel to the effect that (A) appropriate
action necessary for compliance with the 1933 Act has been taken, or (B) an
exemption from the registration requirements of the 1933 Act is available.
Notwithstanding the foregoing, the restrictions imposed upon the transferability
of this Warrant or Preferred Stock issuable on the exercise of the
Warrantholder's rights contained herein do not apply to transfers from the
beneficial owner of any of the aforementioned securities to its nominee or from
such nominee to its beneficial owner, and shall terminate as to any particular
share of Preferred Stock when (1) such security shall have been effectively
registered under the 1933
- 5 -
49
Act and sold by the holder thereof in accordance with such registration or (2)
such security shall have been sold without registration in compliance with Rule
144 under the 1933 Act, or (3) a letter shall have been issued to the
Warrantholder at its request by the staff of the Securities and Exchange
Commission or a ruling shall have been issued to the Warrantholder at its
request by such Commission stating that no action shall be recommended by such
staff or taken by such Commission, as the case may be, if such security is
transferred without registration under the 1933 Act in accordance with the
conditions set forth in such letter or ruling and such letter or ruling
specifies that no subsequent restrictions on transfer are required. Whenever the
restrictions imposed hereunder shall terminate, as hereinabove provided, the
Warrantholder or holder of a share of Preferred Stock then outstanding as to
which such restrictions have terminated shall be entitled to receive from the
Company, without expense to such holder, one or more new certificates for the
Warrant or for such shares of Preferred Stock not bearing any restrictive
legend.
(d) Financial Risk. The Warrantholder has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
investment.
(e) 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 covering the
securities under the 1933 Act is not in effect when it desires to sell (i) the
rights to purchase Preferred Stock pursuant to this Warrant Agreement, or (ii)
the Preferred Stock 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 its rights of the Warrantholder to purchase
Preferred Stock or Preferred Stock 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.
(f) Accredited Investor. Warrantholder is an "accredited investor" within
the meaning of the Securities and Exchange Rule 501 of Regulation D, as
presently in effect.
11. TRANSFERS.
Subject to the terms and conditions contained in Section 10 hereof and
the Company's Charter and Bylaws, this Warrant and all rights hereunder are
transferable in whole or in part by the Warrantholder and any successor
transferee, provided, however, in no event shall the number of transfers of the
rights and interests in all of the Warrants exceed one (1) transfer. The
transfer shall be recorded on the books of the Company upon receipt by the
Company of a notice of transfer in the form attached hereto as Exhibit III (the
"Transfer Notice"), at its principal offices and the payment to the Company of
all transfer taxes and other governmental charges imposed on such transfer. The
Company shall have the right to refuse to transfer any portion of this Warrant
to any person who is a competitor of the Company or who is not an accredited
investor under the 1933 Act.
12. MISCELLANEOUS.
(a) Effective Date. The provisions of this Warrant shall be construed
and shall be given effect in all respects as if it had been executed and
delivered by the Company on the date hereof. This Warrant Agreement shall be
binding upon any successors or assigns of the Company.
(b) Attorney's Fees. In any litigation, arbitration or court proceeding
between the Company and the Warrantholder relating hereto, the prevailing party
shall be entitled to attorneys' fees and expenses and all costs of proceedings
incurred in enforcing this Warrant.
(c) Governing Law. This Warrant shall be governed by and construed for
all purposes under and in accordance with the laws of the State of California.
(d) Counterparts. This Warrant may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(e) Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery, facsimile
transmission (provided that the original is sent by personal delivery or mail as
hereinafter set forth) or seven (7) days after deposit in the United States
mail, by registered or certified mail, addressed (i) to the Warrantholder at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention: ▇▇▇▇▇ ▇▇▇▇, Venture
Group, cc: Legal Department, attn: General Counsel, (and/or, if by facsimile,
(▇▇▇) ▇▇▇-▇▇▇▇ and (▇▇▇) ▇▇▇-▇▇▇▇) and (ii) to the Company at ▇▇▇▇▇ ▇. ▇▇ ▇▇▇▇
▇▇▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, attention:
- 6 -
50
CFO (and/or if by facsimile, (▇▇▇) ▇▇▇-▇▇▇▇, cc: ▇▇▇▇▇▇ Godward, ▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇ ▇▇▇▇▇, or if by facsimile (415)
951-3699 or at such other address as any such party may subsequently designate
by written notice to the other party.
(f) Remedies. In the event of any default hereunder, the non-defaulting
party may proceed to protect and enforce its rights either by suit in equity
and/or by action at law, including but not limited to an action for damages as a
result of any such default, and/or an action for specific performance for any
default where Warrantholder will not have an adequate remedy at law and where
damages will not be readily ascertainable. The Company expressly agrees that it
shall not oppose an application by the Warrantholder or any other person
entitled to the benefit of this Agreement requiring specific performance of any
or all provisions hereof or enjoining the Company from continuing to commit any
such breach of this Agreement.
(g) No Impairment of Rights. The Company will not, by amendment of its
Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Warrantholder against impairment.
(h) Survival. The representations, warranties, covenants and conditions
of the respective parties contained herein or made pursuant to this Warrant
shall survive the execution and delivery of this Warrant Agreement.
(i) Severability. In the event any one or more of the provisions of this
Warrant shall for any reason be held invalid, illegal or unenforceable, the
remaining provisions of this Warrant shall be unimpaired, and the invalid,
illegal or unenforceable provision shall be replaced by a mutually acceptable
valid, legal and enforceable provision, which comes closest to the intention of
the parties underlying the invalid, illegal or unenforceable provision.
(j) Amendments. Any provision of this Warrant may be amended by a written
instrument signed by the Company and by the Warrantholder.
(k) Additional Documents. The Company, upon execution of this Warrant
Agreement, shall provide the Warrantholder with certified resolutions with
respect to the representations, warranties and covenants set forth in
subparagraphs (a) through (d), (f) and (g) of Section 9 above. The Company shall
also supply such other documents as the Warrantholder may from time to time
reasonably request.
IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be
executed by its officers thereunto duly authorized as of the Effective Date.
COMPANY: PACKETEER, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Title: Chief Operating Officer
------------------------------
WARRANTHOLDER: COMDISCO, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Title: Senior Vice President
------------------------------
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51
EXHIBIT I
NOTICE OF EXERCISE
To: ________________________
(1) The undersigned Warrantholder hereby elects to purchase _____ shares of
the Series _____ Preferred Stock of __________ , pursuant to the terms of
the Warrant dated the _____ day of , 19__ (the "Warrant") between
____________________ and the Warrantholder, and tenders herewith payment
of the purchase price for such shares in full, together with all
applicable transfer taxes, if any.
(2) In exercising its rights to purchase the Series _____ Preferred Stock of
__________________________________ , the undersigned hereby confirms and
acknowledges the investment representations and warranties made in
Section 10 of the Warrant.
(3) Please issue a certificate or certificates representing said shares of
Series _____ Preferred Stock in the name of the undersigned or in such
other name as is specified below.
__________________________________
(Name)
__________________________________
(Address)
WARRANTHOLDER: COMDISCO, INC.
By: ______________________________
Title:____________________________
Date:_____________________________
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52
EXHIBIT II
ACKNOWLEDGMENT OF EXERCISE
The undersigned ____________________, hereby acknowledge receipt of the
"Notice of Exercise" from Comdisco, Inc., to purchase _______ shares of the
Series _______ Preferred Stock of ____________________, pursuant to the terms of
the Warrant, and further acknowledges that _______ shares remain subject to
purchase under the terms of the Warrant.
PACKETEER, INC.:
By:_________________________________
Title:______________________________
Date:_______________________________
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53
EXHIBIT III
TRANSFER NOTICE
(TO TRANSFER OR ASSIGN THE FOREGOING WARRANT EXECUTE THIS FORM AND SUPPLY
REQUIRED INFORMATION. DO NOT USE THIS FORM TO PURCHASE SHARES.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby transferred and assigned to
___________________________________________________________
(Please Print)
whose address is___________________________________________
___________________________________________________________
Dated:_______________________________
Holder's Signature:__________________
Holder's Address:____________________
_____________________________________
Signature Guaranteed: _____________________________________
NOTE: The signature to this Transfer Notice must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or
any change whatever. Officers of corporations and those acting in a
fiduciary or other representative capacity should file proper evidence of
authority to assign the foregoing Warrant.
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54
ADDENDUM TO THE MASTER LEASE AGREEMENT
DATED AS OF JUNE 3, 1997
BETWEEN COMDISCO, INC., AS LESSOR, AND
PACKETEER, INC., AS LESSEE
The undersigned hereby agree that the terms and conditions of the
above-referenced Master Lease Agreement are amended and modified as follows:
1. SECTION 3, "RENT AND PAYMENT"
Delete the second sentence in its entirety.
In line 3 after the words "is not made" insert "within five (5) days of
the date..."
2. SECTION 5, "TITLE: RELOCATION OR SUBLEASE: AND ASSIGNMENT"
Subsection 5.2, second paragraph, line 8, add the word "reasonably" after
the word "documents."
Subsection 5.3, paragraph (b), first sentence, line 1, add the phrase
"After receipt of written notice of assignment from Lessor" before the word
"Lessee".
3. SECTION 6, "NET LEASE: TAXES AND FEES"
Subsection 6.2, line 1, add the words "or before a penalty is assessed
thereon" after the word "due".
Subsection 6.2, add the following paragraph at the end of this subsection:
"Lessee shall not be liable for any taxes, fees or charges to the extent
the same result from any sale or assignment or grant of security interest
by Lessor, or to the extent any such action increases the taxes, fees or
charges that would otherwise be payable. Lessee shall have the right to
contest by proper legal proceedings any taxes levied, as agent for or in
the name of Lessor. Lessor will cooperate in any legal proceedings being
prosecuted by Lessee with regard to any taxes, but Lessee will pay the
expenses in such litigation. Lessee shall have the right to contest in good
faith and by appropriate proceeding the validity or the amount of taxes
unless such contest would adversely affect the title of the Lessor to the
Equipment or would subject it to forfeiture or sale. Lessee shall have the
rights to any refund received as a result of any such contest or proceeding
to the extent Lessee has previously reimbursed Lessor for such taxes."
1.
55
4. SECTION 7, "CARE, USE AND MAINTENANCE: ATTACHMENTS AND RECONFIGURATIONS;
AND INSPECTION BY LESSOR"
Subsection 7.1, second sentence, line 4, insert "at commercially
reasonable prices" after "commercially available"; line 7, after the words
"another party acceptable to Lessor", add the words "including self-maintenance
by Lessee"; line 7, after the words "copy of that contract", add the words
"after request from Lessor"; last sentence, insert the following at the end
thereof: "or Lessee has exercised its option to purchase such Equipment."
5. SECTION 8, "REPRESENTATIONS AND WARRANTIES OF LESSEE"
Introductory paragraph, line 3, after the words "executed hereunder",
insert the words "unless otherwise disclosed on the "Disclosure Schedule"
attached hereto".
Paragraph (b), line 3, delete the word "Articles" and substitute
"Certificate"; line 6, insert "material" after the words "under, any"; line 11,
insert "and public policy concerns" after the words "equitable remedies".
Paragraph (g), last line, insert "and public policy concerns" after the
words "equitable remedies".
6. SECTION 9
Second sentence, insert "and provided that the Equipment is not purchased
or the term extended as permitted by the applicable Schedule" after "Schedule".
7. SECTION 11, "INDEMNITY"
First sentence, line 6, after the word "Equipment", delete the words
"during the term of this Master Lease or until Lessee's obligations under the
Master Lease terminate" and insert "arising from acts or events during the
period from the Commencement Date of each Summary Equipment Schedule until
re-delivery of the Equipment to Lessor in accordance with the terms of this
Master Lease." Second sentence, line 3, insert "or wilful misconduct" after the
words "negligent acts".
8. SECTION 12, "RISK OF LOSS"
First paragraph, tenth line, insert "reasonably" after the word
"insurance".
9. SECTION 13, "DEFAULT, REMEDIES AND MITIGATION"
Subsection 13.1:
Paragraph (b), line 1, insert "the applicable" before the word
"Schedule"
2.
56
Paragraph (c), line , insert the following after "foregoing":
"which petition, appointment, proceeding or action is not dismissed, stayed or
vacated within sixty (60) days in the case of a proceeding or action commenced
against Borrower."
Subsection 13.2, introduction, insert "and during the continuance" after
the word "occurrence."
Subsection 13.2, paragraph (c), line 5, substitute "6.75% for "6%"
Subsection 13.2, paragraph (d), line 5, insert "or wilful misconduct"
after "negligence"
Subsection 13.3, second sentence, line 1, insert "AND TO THE EXTENT
PERMITTED BY LAW" after the words "IN THIS SECTION"; third sentence, line 8,
insert "After notice to Lessee," before the words "Lessor may".
Subsection 13.3(a), line 2, insert "discounted to the time of sale at the
rate set forth in Paragraph 13.2(c)" after the words "initial Term".
10. SECTION 14, "ADDITIONAL PROVISIONS"
Subsection 14.1, "Board Attendance." Delete this section in its entirety.
Subsection 14.2, "Financial Statements." Delete the first sentence in its
entirety and replace it with the following:
"As soon as practicable at the end of each month (and in any event within
thirty (30) days), Lessee will provide to Lessor a monthly income
statement and balance sheet prepared in accordance with generally
accepted accounting principles, consistently applied (except that such
financial will not include footnotes required by generally accepted
accounting principles) (the "Financial Statements")."
Subsection 14.2, line 11, delete the words "tax returns" and insert in
line 12, after the words "principal creditors" the words, "but excluding tax
returns".
Subsection 14.3, clause (i), delete the words "Lessee is in default" and
substitute the words "an Event of Default has occurred and is continuing";
clause (iii) is deleted, and (iv) is re-numbered accordingly.
Subsection 14.4, "Merger and Sale Provisions." In line 2, delete "sixty
(60)" and replace with "ten (10)". In line 2, after the words "in its"
add the word "reasonable". In line 8, delete "6%" and replace with
"6.75%". In line 10 after the words "with Section 9" add "or purchase the
Equipment for an amount equal to the present value (discounted at 6.75%)
of the purchase option price set forth in the Schedule, at Lessee's
option." To the end of this Section, add the following:
3.
57
"Notwithstanding the foregoing, Lessor hereby consents to any Merger
in which the surviving entity has a net worth equal to or greater than
five (5) times the present value of the remaining monthly
installments, discounted at U.S. Treasury rate(s) of comparable
maturity to the remaining term and such entity or transferee has a net
worth of at least $5,000,000.
Subsection 14.7, second sentence, add the following at the end thereof:
"except any permitted assignment in accordance with the terms of Subsection
14.4 of this Master Lease."
Subsection 14.9, line 5, insert "applicable" before "Schedule".
Subsection 14.10, change "Illinois" to "California" in lines 2 and 4.
Subsection 14.13, insert at the end of the first sentence, line 2, the
following "until purchase of the related Equipment pursuant to the terms of
this Master Lease".
Subsection 14.14, line 4, insert "reasonably" before "acceptable" and in
line 5, insert "(a), (b) and (c)" after "8".
Subsection 14.16 is hereby deleted in its entirety.
Subsection 14.18, "Definitions":
"Casualty Value", line 1, insert "present value of the" after the words
"greater of the" and line 2, insert "discounted at a rate of 6.75% per
annum" after the word "term".
Delete the definition of "Interim Rent," in its entirety.
In line 4 of the definition "Merger" following the word "entity", add the
words ",provided that no such transactions shall constitute a Merger unless
the Lessee's stockholders, as constituted, immediately before any such
transaction, hold less than fifty percent (50%) of the outstanding voting
securities of the Lessee immediately following such transaction".
4.
58
In line 4 of the definition of "Summary Equipment Schedule", delete the
word "quarter" and replace it with "month."
PACKETEER, INC. COMDISCO, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------ -------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇,
Title: COO/CFO Title: PRESIDENT COMDISCO VENTURES
DIVISION
Date: 6/5/97 Date: 6/10/97
5.