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EXHIBIT 4.07
NIKU CORPORATION
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES D PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is
made as of the ____ day of November, 1999, by and between Niku Corporation, a
Delaware corporation (the "Company"), and the Purchasers listed on Exhibit A
hereto (the "Purchasers").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Series D Preferred Stock. Subject to the
terms and conditions of this Agreement, each Purchaser agrees to purchase at the
Initial Closing (as defined below), and the Company agrees to sell and issue to
such Purchaser at the Initial Closing, that number of shares of the Company's
Series D Preferred Stock set forth opposite such Purchaser's name on Exhibit A
hereto (the "Shares") for the purchase price set forth thereon (the "Purchase
Price"). The Company's agreement with each Purchaser is a separate agreement,
and the sale of the Shares to each Purchaser is a separate sale.
1.2 Filing of Restated Certificate. The Company shall adopt and file
with the Secretary of State of Delaware on or before the Initial Closing an
Amended and Restated Certificate of Incorporation in the form attached hereto as
Exhibit B (the "Restated Certificate").
1.3 Closing. The initial purchase and sale of the Shares hereunder
shall take place at the offices of Fenwick & West LLP, Two Palo Alto Square,
Palo Alto, California, concurrently with the execution and delivery of this
Agreement or at such other time and place as the Company and the Purchasers
acquiring a majority of the total number of Shares to be purchased at such time
mutually agree upon orally or in writing (which time and place are designated
the "Initial Closing"). At the Initial Closing, the Company shall deliver to
each Purchaser a certificate representing the Shares that such Purchaser is
purchasing against payment of the purchase price therefor by check or wire
transfer to an account designated by the Company.
1.4 Subsequent Closing(s). The Company may sell up to an aggregate
of 8,000,000 shares of the Series D Preferred Stock at the Initial Closing and
thereafter to such purchasers as it shall select, at the price and on the terms
contained herein and in the exhibits hereto, at one or more subsequent closings
(each, a "Subsequent Closing") provided that all Subsequent Closings shall take
place not later than December 1, 1999. Upon payment of the purchase price for
the Shares being purchased and execution of a signature page counterpart to this
Agreement, the Investor Rights Agreement, the Co-Sale Agreement and the Voting
Agreement (each as defined below) and without need for an amendment hereto or
thereto except to add such purchaser's name to Exhibit A to this Agreement and
to the appropriate exhibit to such other agreements, any such purchaser shall
become a party to this Agreement
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and such other agreements, and shall be deemed a "Purchaser" for purposes of
this Agreement and an "Investor" (or a "New Investor," as applicable) for
purposes of such other agreements, in each case as of the date of the applicable
Subsequent Closing. The Initial Closing and each Subsequent Closing shall be
deemed a "Closing" under this Agreement.
2. Representations and Warranties of the Company. Except as set forth on
the Schedule of Exceptions attached as Exhibit C hereto (the "Schedule of
Exceptions"), the Company hereby represents and warrants to each Purchaser as
follows.
2.1 Organization, Good Standing and Qualification. The Company has
been duly incorporated and organized, and is validly existing in good standing,
under the laws of the State of Delaware. The Company has the corporate power and
authority to enter into and perform its obligations under the Agreements (as
defined below), to own and operate its properties and assets and to carry on its
business as currently conducted. The Company is duly qualified to transact
business and is in good standing in the State of California.
2.2 Capitalization and Voting Rights.
(a) The authorized capital of the Company consists, or will
consist immediately prior to the Initial Closing, of:
(i) Preferred Stock. 51,910,282 shares of Preferred Stock
(the "Preferred Stock") have been authorized, 10,000,000 of which have been
designated Series F Preferred Stock (the "Series F Preferred Stock"), all of
which are outstanding prior to the Initial Closing, 5,142,851 shares of which
have been designated Series A Preferred Stock (the "Series A Preferred Stock"),
all of which are issued and outstanding prior to the Initial Closing, 8,629,992
shares of which have been designated Series B Preferred Stock (the "Series B
Preferred Stock"), 7,999,992 of which are issued and outstanding prior to the
Initial Closing, 9,987,439 shares of which have been designated Series C
Preferred Stock (the "Series C Preferred Stock") 9,987,439 of which are issued
and outstanding prior to the Initial Closing, and 18,150,000 shares of which
have been designated Series D Preferred Stock (the "Series D Preferred Stock")
none of which are issued and outstanding prior to the Initial Closing. The
outstanding shares of Preferred Stock are all duly and validly authorized and
issued, fully paid and nonassessable and were issued in compliance with
applicable Federal and state securities laws and have been approved by all
requisite corporate and shareholder action. The rights, privileges and
preferences of the Preferred Stock will be as stated in the Restated
Certificate.
(ii) Common Stock. 100,000,000 shares of Common Stock (the
"Common Stock"), of which 8,368,618 shares are issued and outstanding. The
outstanding shares of Common Stock are all duly and validly authorized, issued,
fully paid and nonassessable and, were issued in compliance with applicable
federal and state securities laws and have been approved by all requisite
corporate and shareholder action.
(iii) Options, Warrants, Reserved Shares. Except for (i) the
conversion privileges of the Preferred Stock, (ii) the 8,000,000 shares of
Common Stock
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reserved for issuance under the Company's 1998 Stock Plan under which options to
purchase 4,306,427 shares are outstanding, (iii) warrants to purchase 630,000
shares of Series B Preferred Stock, there is no outstanding option, warrant,
right (including conversion or preemptive rights) or agreement for the purchase
or acquisition from the Company of any shares of its capital stock or any
securities convertible into or ultimately exchangeable or exercisable for any
shares of the Company's capital stock. Apart from the exceptions noted in this
Section 2.2(a), and except for rights of first refusal held by the Company to
purchase shares of its stock issued under the Company's 1998 Stock Plan, no
shares of the Company's outstanding capital stock, or stock issuable upon
exercise or exchange of any outstanding options, warrants or rights, or other
stock issuable by the Company, are subject to any preemptive rights, rights of
first refusal or other rights to purchase such stock (whether in favor of the
Company or any other person), pursuant to any agreement or commitment of the
Company.
2.3 Subsidiaries. The Company does not presently own or control,
directly or indirectly, any interest in any other corporation, partnership,
trust, joint venture, association, or other entity.
2.4 Authorization. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and the Fourth Amended and Restated
Investor Rights Agreement attached hereto as Exhibit D (the "Rights Agreement"),
the Amended and Restated Co-Sale Agreement attached hereto as Exhibit E (the
"Co-Sale Agreement") and the Amended and Restated Voting Agreement attached
hereto as Exhibit F (the "Voting Agreement," and collectively with the Rights
Agreement, the Co-Sale Agreement and this Agreement, the "Agreements"), the
performance of all obligations of the Company hereunder and thereunder, and the
authorization, issuance (or reservation for issuance), sale and delivery of the
Series D Preferred Stock being sold hereunder and the Common Stock issuable upon
conversion of the Series D Preferred Stock has been taken or will be taken prior
to the Initial Closing, and the Agreements, when executed and delivered, will
constitute valid and legally binding obligations of the Company, enforceable in
accordance with their respective terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting or relating to the enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of and/or
other equitable remedies. The Series D Preferred Stock being purchased by
Purchasers hereunder, when issued, paid for and delivered in accordance with the
terms of this Agreement for the consideration expressed herein, (when issued in
accordance with the Restated Certificate), will be duly authorized and validly
issued, fully paid and nonassessable. The shares of Common Stock issuable upon
conversion of the Series D Preferred Stock, have been duly and validly reserved
for issuance upon conversion thereof and, when issued upon such conversion in
accordance with the Restated Certificate (assuming no change in the Restated
Certificate or in applicable law), will be duly authorized and validly issued,
fully paid and nonassessable.
2.5 Consents and Agreements. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, third party not already a
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party to any of the Agreements or any federal, state or local governmental
authority on the part of the Company is required in order to enable the Company
to execute, deliver and perform its obligations under this Agreement, the Rights
Agreement, the Co-Sale Agreement or the Voting Agreement except for such
qualifications or filings under applicable securities laws as may be required in
connection with the transactions contemplated by this Agreement. All such
qualifications and filings will, in the case of qualifications, be effective on
the Closing and will, in the case of filings, be made within the time prescribed
by law.
2.6 Litigation. There is no action, suit, proceeding, claim,
arbitration or investigation ("ACTION") pending (or, to the Company's knowledge,
currently threatened) against the Company, its activities, properties or assets
or, to the Company's knowledge, against any officer, director or employee of the
Company in connection with such officer's, director's or employee's relationship
with, or actions taken on behalf of, the Company.
2.7 Proprietary Information and Inventions Agreements. Each present
and former employee, officer and consultant of the Company has executed a
Confidential Information and Inventions Assignment in the form attached as
Exhibit G. The Company after reasonable investigation is not aware that any of
its employees, officers or consultants are in violation thereof, and the Company
will use its best efforts to prevent any such violation. The Company is not
aware that any officer or key employee intends to terminate employment with the
Company, nor does the Company have a present intention to terminate the
employment of any of the foregoing. Subject to general principles relating to
wrongful termination of employees, the employment of each officer and employee
of the Company is terminable at the will of the Company.
2.8 Title to Property and Assets. The Company owns its property and
assets free and clear of all mortgages, liens, loans and encumbrances, except
such encumbrances and liens that arise in the ordinary course of business and do
not materially impair the Company's ownership or use of such property or assets.
With respect to the property and assets it leases, the Company is in compliance
with such leases and, to its knowledge, holds a valid leasehold interest free of
any liens, claims or encumbrances.
2.9 Financial Statements. Prior to the Initial Closing, the Company
has made available to each Purchaser its unaudited balance sheet and income
statement at and for the year ended December 31, 1998 and the nine months ended
September 30, 1999 (collectively, the "Financial Statements"). The Financial
Statements have been prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
indicated, except that the Financial Statements may not contain all footnotes
required by generally accepted accounting principles. The Financial Statements
fairly present the financial condition and operating results of the Company as
of the dates, and for the periods, indicated therein, subject to normal year-end
audit adjustments which the Company does not expect to be material. Except as
set forth in the Financial Statements, the Company has no material liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to the date of the Financial Statements and (ii)
obligations under contracts and commitments incurred in the ordinary course of
business and
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not required under generally accepted accounting principles to be reflected in
the Financial Statements, which, in both cases, individually or in the aggregate
are not material to the financial condition or operating results of the Company.
Except as disclosed in the Financial Statements, the Company is not a guarantor
or indemnitor of any indebtedness of any other person, firm, corporation or
other entity.
2.10 Books and Records. The minute books of the Company contain
accurate summary records of all meetings and written consents to action of the
Company's stockholders, the Company's Board of Directors and all committees, if
any, appointed by the Board of Directors. The Company's stock ledger is complete
and reflects all issuances, transfers, repurchases and cancellations of shares
of capital stock of the Company.
2.11 Rights of Registration. Except as contemplated in the Rights
Agreement, the Company has not granted or agreed to grant any registration
rights, including piggyback rights, to any person or entity.
2.12 Proprietary Rights. The Company owns, has licensed or otherwise
possesses all trademarks, trade names, copyrights and other intellectual
property rights necessary to conduct its business as now being conducted without
any known conflict with or infringement upon any intellectual property rights of
others. The Company has not received any notice alleging that the Company has
infringed upon or is conflict with the asserted rights of others, nor is the
Company aware of any reasonable basis for any such allegation. The Company has
certain trade secrets, including know-how, computer software programs and other
proprietary data (the "Proprietary Information") used, or proposed to be used,
in the development, manufacture and sale of its products. The Company has the
right to use the Proprietary Information, except that the possibility exists
that other persons may have independently developed trade secrets or technical
information similar or identical to those of the Company. The Company is not
aware of any rights to any patents, trademarks, service marks, tradenames,
copyrights, trade secrets and proprietary rights and processes held by third
parties that it will be required to obtain in order to conduct its business as
proposed to be conducted that cannot be obtained on commercially reasonable
terms from such parties. There are no outstanding options, licenses, or
agreements of any kind relating to the Company's patents or trademarks.
2.13 No Conflict of Interest. The Company is not indebted, directly
or indirectly, to any of its officers or directors or to their respective
spouses or children, in any amount whatsoever other than in connection with
expenses or advances of expenses incurred in the ordinary course of business or
relocation expenses of employees. To the Company's knowledge, none of the
Company's officers or directors, or any members of their immediate families,
are, directly or indirectly, indebted to the Company (other than in connection
with purchases of the Company's stock). To the Company's knowledge, none of the
Company's officers or directors or any members of their immediate families have,
directly or indirectly, any economic interest in any contract material to the
Company other than with respect to equity held in the Company.
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2.14 Tax Returns. All tax returns, declarations, statements,
reports, schedules, forms and information returns ("Returns") required by all
U.S. federal, state and local and foreign jurisdictions (in each case, including
all political subdivisions thereof) relating to all U.S. federal, state, local
and foreign taxes and other assessments of a similar nature (whether imposed
directly or through withholding), including any interest, additions to tax, or
penalties applicable thereto ("Taxes"), if any, required to be filed by the
Company prior to the Initial Closing have been (or will be) timely filed and
such Returns are (or will be) true, complete and correct in all material
respects. All Taxes shown on any such Returns to be due from the Company that
are due and payable have been paid, other than those being contested in good
faith and for which an adequate reserve or accrual has been established in
accordance with GAAP. The Company does not know of any actual or proposed
material addition Tax assessments against the Company.
2.15 Compliance with Laws. The Company has obtained and maintained
in good standing all of its licenses, permits, consents and authorizations
required to be obtained by it or them under federal, state and local laws
(collectively, "Laws"), except for those which, individually or in the
aggregate, would not have a material adverse effect on the assets, condition,
affairs or prospects of the Company, financially or otherwise, and all such
licenses, permits, consents and authorizations remain in full force and effect.
The Company is in material compliance with such Laws, and there is no pending
or, to the Company's knowledge, threatened, action or proceeding against the
Company under any of such Laws, other than any such actions or proceedings
which, individually or in the aggregate, if adversely determined, would not have
a material adverse effect on the assets, condition, affairs or prospects of the
Company, financially or otherwise.
2.16 Year 2000 Compliance. The Company's products and services shall
not fail to perform any function specified in the product specifications
therefor, or otherwise be adversely affected in any material respect, solely as
a result of the date change from December 31, 1999 to January 1, 2000, including
without limitation, date data century recognition, calculations which
accommodate same century and multi-century formulas and date values, and date
data interface values which reflect the correct century. In addition, to the
best of the Company's knowledge, all of the products and services upon which the
Company is materially reliant, either individually or in the aggregate,
including, without limitation, information technology systems such as financial
and order entry systems, non-information technology systems such as phones and
facilities, third party licensed software and the products and services of the
Company's customers, vendors and suppliers are designed to be used prior to,
during, and after calendar year 2000 A.D., and such products and services will
operate during each such time period without error relating to date data,
including without limitation any error relating to, or the product of, date data
that represents or references different centuries or more than one century.
2.17 No Contravention. The Company is not in violation or default of
any provision of its Certificate of Incorporation or Bylaws or of any
instrument, judgment, order, writ, decree, or contract to which it is a party or
by which it is bound or of any provision of federal or state statute, rule or
regulation applicable to the Company. The execution, delivery
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and performance by the Company of this Agreement and each other Agreement,
including, without limitation, the issuance of the Series D Preferred Stock: (a)
do not and will not contravene the terms of the Certificate of Incorporation, as
amended, or By-Laws, as amended, of the Company, or any law, rule, regulation or
similar requirement applicable to the Company or its assets, business or
properties; (b) do not and will not (i) conflict with, contravene, result in any
violation or breach of or default under (with or without the giving of notice or
the lapse of time or both), (ii) create in any other person or entity a right or
claim of termination or amendment, or (iii) require modification, acceleration
or cancellation of any agreement, contract, or other instrument or contractual
obligation of the Company; and (c) do not and will not result in the creation of
any lien, charge or encumbrance (or obligation to create a lien, charge or
encumbrance) against any property, asset or business of the Company.
2.18 Disclosure. The Company has fully provided each Purchaser will
all the information which such purchaser has requested for deciding whether to
purchase the Series D Preferred Stock. Neither this Agreement not any other
statements, exhibits or certificates made or delivered in connection herewith,
when taken as a whole contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements herein or therein not
misleading in light of the circumstances under which they were made.
3. Representations and Warranties of Purchaser. Each Purchaser,
severally and not jointly, hereby represents and warrants that:
3.1 Authorization. Such Purchaser has full power and authority to
enter into the Agreements and the Agreements, when executed, will constitute
valid and legally binding obligations of such Purchaser, enforceable in
accordance with their respective terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies, and (iii) to the extent the indemnification
provisions contained in the Rights Agreement may be limited by applicable
federal or state securities laws.
3.2 Purchase Entirely for Own Account. This Agreement is made with
such Purchaser in reliance upon Purchaser's representation to the Company, which
by such Purchaser's execution of this Agreement such Purchaser hereby confirms,
that the Series D Preferred Stock to be received by such Purchaser and the
Common Stock issuable upon conversion thereof (collectively, the "Securities")
will be acquired for investment for such Purchaser's own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and that, except as disclosed to the Company, such Purchaser has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, such Purchaser further
represents that, except as disclosed to the Company, such Purchaser does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to any of the Securities.
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3.3 Disclosure of Information. Such Purchaser believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Series D Preferred Stock. Such Purchaser further
represents that it has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
Series D Preferred Stock and the business, properties, prospects and financial
condition of the Company. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 of this Agreement or
the right of such Purchaser to rely thereon.
3.4 Investment Experience. Such Purchaser is an investor in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Series D
Preferred Stock. If other than an individual, such Purchaser also represents it
has not been organized solely for the purpose of acquiring the Series D
Preferred Stock.
3.5 Accredited Investor. Such Purchaser is an "accredited investor"
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D promulgated under the Securities Act, as presently in effect.
3.6 Restricted Securities. Such Purchaser understands that the
Securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act of 1933, as amended (the "Securities Act"), only in certain
limited circumstances. In addition, such Purchaser represents that it is
familiar with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act. Each Purchaser
understands that no public market presently exists for the Series D Preferred
Stock or Common Stock of the Company, and that there are no assurances that any
such market will be created.
3.7 Further Limitations on Disposition. Without in any way limiting
the above, such Purchaser further agrees not to make any disposition of all or
any portion of the Securities unless:
(a) There is then in effect a Registration Statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement; or
(b) (i) Such Purchaser shall have notified the Company of the
proposed disposition and shall have furnished the Company with a statement of
the circumstances surrounding the proposed disposition, and (ii) if reasonably
requested by the Company, such Purchaser shall have furnished the Company with
an opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such shares under the Securities
Act, provided, however, that the Company will not request an
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opinion in connection with customary distributions to general and limited
partners of venture capital funds.
3.8 Legends. It is understood that the certificate(s) evidencing
the Shares shall bear the following legends:
(a) "The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. Such shares may not be sold
or transferred in the absence of such registration or, if the
Corporation timely requests, unless the Corporation receives an
opinion of counsel reasonably acceptable to it stating that such
sale or transfer is exempt from the registration and prospectus
delivery requirements of said act. Copies of the agreements
covering the purchase of these shares and restricting their
transfer may be obtained at no cost by written request made by
the holder of record of this certificate to the Secretary of the
Corporation at the principal executive offices of the
Corporation."
(b) "The shares represented by this certificate are
subject to the market stand-off provisions contained in the
Corporation's Fourth Amended and Restated Investor Rights
Agreement. A copy of such agreement may be obtained without
charge upon written request to the Corporation at its principal
place of business."
(c) Any other legends required by the Agreements or
applicable law.
4. Conditions of Purchasers' Obligations at Closing. The obligations of
each Purchaser to purchase Shares at the applicable Closing are subject to the
fulfillment of each of the following conditions.
4.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true in all material
respects on and as of the applicable Closing with the same effect as though such
representations and warranties had been made on and as of such Closing.
4.2 Performance. The Company shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the applicable
Closing.
4.3 Compliance Certificate. The President of the Company shall
deliver to such Purchaser at the applicable Closing a certificate certifying
that the conditions specified in Sections 4.1 and 4.2 have been fulfilled.
4.4 Qualifications. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Shares at the applicable Closing shall have been obtained by the Company as
of such Closing.
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4.5 Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the applicable Closing and
all documents incident thereto shall be reasonably satisfactory in form and
substance to such Purchaser.
4.6 Restated Certificate. The Restated Certificate shall have been
filed with the Delaware Secretary of State.
4.7 Rights Agreement. The Company, such Purchaser and Investors (as
defined therein) holding a sufficient number of shares of "Registrable
Securities" to amend and restate the Company's Third Amended and Restated
Investor Rights Agreement shall have entered into and delivered the Rights
Agreement.
4.8 Co-Sale Agreement. The Company, such Purchaser and the Founders
(as defined in the Co-Sale Agreement) holding a sufficient number of Shares to
amend and restate the prior Co-Sale Agreement shall have entered into and
delivered the Co-Sale Agreement.
4.9 Voting Agreement. The Company, such Purchaser and the
stockholders specified therein holding a sufficient number of Shares to amend
and restate the prior Voting Agreement shall have entered into and delivered the
Voting Agreement.
4.10 Opinion of Company Counsel. Such Purchaser shall have received
from Fenwick & West LLP, counsel for the Company, an opinion, dated as of the
applicable Closing, reasonably acceptable to such Purchaser.
4.11 Letter Agreement. CNET, Inc. shall have received from the
Company the letter agreement between CNET, Inc. and Company in a form
satisfactory to CNET, Inc.
5. Conditions of the Company's Obligations at Closing. The obligations
of the Company to sell and issue the Shares at the applicable Closing are
subject to the fulfillment of each of the following conditions:
5.1 Representations and Warranties. The representations and
warranties of each Purchaser contained in Section 3 shall be true in all
material respects on and as of the applicable Closing with the same effect as
though such representations and warranties had been made on and as of such
Closing.
5.2 Qualifications. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities at the applicable Closing pursuant to this Agreement shall be
duly obtained and effective as of such Closing.
5.3 Restated Certificate. The Restated Certificate shall have been
filed with the Delaware Secretary of State.
5.4 Rights Agreement. The Company and Investors (as defined therein)
holding a sufficient number of shares of "Registrable Securities" to amend and
restate the
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Company's Third Amended and Restated Investor Rights Agreement shall have
entered into and delivered the Rights Agreement.
5.5 Co-Sale Agreement. The Company, the Founders (as defined in the
Co-Sale Agreement) and Investors (as defined in the Co-Sale Agreement) holding a
sufficient number of shares to amend and restate the prior Co-Sale Agreement
shall have entered into and delivered the Co-Sale Agreement.
5.6 Voting Agreement. The Company and the other parties thereto,
holding a sufficient number of shares to amend and restate the prior Voting
Agreement shall have entered into and delivered the Voting Agreement.
6. Miscellaneous.
6.1 Indemnification.
(a) The Company shall indemnify and hold the Purchasers and each
of the Purchaser's partners, stockholders, officers, directors, employees and
agents free and harmless from and against all actions, causes of action, suits,
litigation, losses, liabilities and damages, investigations or proceedings
instituted by any governmental agency or any other person and expenses in
connection therewith, including reasonable attorneys' fees and disbursements,
incurred by the indemnitee or any of them as a result of, or arising out of, or
relating to any transaction to which the Purchaser is not a party, financed or
to be financed in whole or in part directly with proceeds from the sale by the
Company of the Series D Preferred Stock.
(b) The Company shall indemnify and hold the Purchasers and each
of the Purchaser's partners, stockholders, officers, directors, employees and
agents, and each Purchaser shall indemnify and hold the Company and each other
Purchaser, free and harmless from and against any losses, claims, damages or
liabilities to which they become subject as a result of, or arising out of, or
relating to any misrepresentation or breach of warranty or representation or any
nonperformance or breach of any covenant or agreement of the indemnifying party
contained in this Agreement.
6.2 Successors and Assigns. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
6.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
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6.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.6 Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be effective when given, and
shall in any event be deemed to be given upon receipt or, if earlier, (a) five
(5) days after deposit with the U.S. Postal Service or other applicable postal
service, if delivered by first class mail, postage prepaid, (b) upon delivery,
if delivered by hand, (c) one (1) business day after the business day of deposit
with Federal Express or similar overnight courier, freight prepaid or (d) one
(1) business day after the business day of facsimile transmission, if delivered
by facsimile transmission with copy by first class mail, postage prepaid, and
shall be addressed (i) if to a Purchaser, at such Purchaser's address as set
forth on Exhibit A, and (ii) if to the Company, at the address of its principal
corporate offices (attention: Secretary), or at such other address as a party
may designate by ten days' advance written notice to the other party pursuant to
the provisions above.
6.7 Finder's Fee. Each party, severally and not jointly, represents
that it neither is nor will be obligated for any finders' fee or commission in
connection with this transaction. Each Purchaser agrees to indemnify and hold
harmless the Company from any liability for any commission or compensation in
the nature of a finders' fee (and the costs and expenses of defending against
such liability or asserted liability) for which Purchaser or any of its
officers, partners, employees, or representative is responsible. The Company
agrees to indemnify and hold harmless each Purchaser from any liability for any
commission or compensation in the nature of a finders' fee (and the costs and
expenses of defending against such liability or asserted liability) for which
the Company or any of its officers, employees or representatives is responsible.
6.8 Fees and Expenses. The Company and each Purchaser shall be
responsible for and pay the fees and expenses of their own counsel.
6.9 Amendment and Waivers. Any term of this Agreement may be amended
and the breach of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively) only with
the written consent of the Company and the holders of at least two-thirds (66
2/3%) of the Common Stock issued or issuable upon conversion of the Series D
Preferred Stock sold hereunder and voting as a single class, provided, that no
such consent will be required to add a party pursuant to Section 1.4 hereof. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any securities purchased under this Agreement at the time
outstanding (including securities into which such securities are convertible),
each future holder of all such securities and the Company.
12
13
6.10 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
6.11 Aggregation of Stock. All shares of the Series D Preferred
Stock held or acquired (or Common Stock issued upon conversion thereof) by
affiliated entities or persons shall be aggregated for the purpose of
determining the availability of or discharge of any rights under this Agreement.
6.12 Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
6.13 California Corporate Securities Law. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
6.14 Survival of Representations and Warranties. All representations
and warranties of the Company made herein shall survive the execution and
delivery of this Agreement, any due diligence or other investigation by or on
behalf of the Purchasers, acceptance of the Shares and payment therefor.
13
14
LIST OF EXHIBITS
Exhibit A - Purchasers
Exhibit B - Restated Certificate
Exhibit C - Schedule of Exceptions
Exhibit D - Rights Agreement
Exhibit E - Co-Sale Agreement
Exhibit F - Voting Agreement
Exhibit G - Confidential Information and Inventions Assignment Agreement
15
EXHIBIT A
SCHEDULE OF PURCHASERS
PURCHASE
NO. OF PRICE PER AGGREGATE
NAME SHARES SHARE PURCHASE PRICE
---- ------ --------- --------------
Amerindo entities (total is $10 million)
Amerindo Technology Growth Fund II 798,500 $5.00 $3,992,500.00
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 5,000 $5.00 $25,000.00
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 10,000 $5.00 $50,000.00
c/o Amerindo Investment Advisors, Inc.
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇ 2,000 $5.00 $10,000.00
c/o Amerindo Investment Advisors, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Pivotal Partners L.P. 320,000 $5.00 $1,600,000.00
Attention: ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
California Bank & Trust Agent for 60,000 $5.00 $300,000.00
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ #1
Attention: ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1,000 $5.00 $5,000.00
c/o Amerindo Investment Advisors, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Vertex Capital II LLC 80,000 $5.00 $400,000.00
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
16
PURCHASE
NO. OF PRICE PER AGGREGATE
NAME SHARES SHARE PURCHASE PRICE
---- ------ --------- --------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ 20,000 $5.00 $100,000.00
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ 3,000 $5.00 $15,000.00
c/o Amerindo Investment Advisors, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ 500 $5.00 $2,500.00
c/o Amerindo Investment Advisors, Inc.
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 400,000 $5.00 $2,000,000.00
c/o Amerindo Investment Advisors, Inc.
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Master Trust 300,000 $5.00 $1,500,000.00
c/o Amerindo Investment Advisors, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Art 20,000 $5.00 $100,000.00
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ as Nominee for the Broadview 57,500 $5.00 $287,500.00
Partners Group
▇▇▇▇▇ ▇▇▇▇▇
c/o Broadview International
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 5,000 $5.00 $25,000.00
c/▇ ▇▇▇▇▇▇ Capital Management, L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
17
PURCHASE
NO. OF PRICE PER AGGREGATE
NAME SHARES SHARE PURCHASE PRICE
---- ------ --------- --------------
Charter Growth Capital, L.P. 480,000 $5.00 $2,400,000.00
c/o Charter Growth Capital
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇. ▇▇▇▇ ▇▇▇▇▇
Charter Growth Capital Co-Investment Fund, L.P. 90,000 $5.00 $450,000.00
c/o Charter Growth Capital
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇. ▇▇▇▇ ▇▇▇▇▇
CGC Investors, L.P. 30,000 $5.00 $150,000.00
c/o Charter Growth Capital
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇. ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 10,191 $5.00 $50,955.00
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
CNET Investments, Inc. 1,000,000 $5.00 $5,000,000.00
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Comdisco, Inc. 400,000 $5.00 $2,000,000.00
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 7,000 $5.00 $35,000.00
c/▇ ▇▇▇▇▇▇ Capital Management, L.L.C.
18
PURCHASE
NO. OF PRICE PER AGGREGATE
NAME SHARES SHARE PURCHASE PRICE
---- ------ --------- --------------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇ 4,268 $5.00 $21,340.00
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
CrossFire Ventures, LLC 100,000 $5.00 $500,000.00
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as 30,000 $5.00 $150,000.00
Co-trustees of the ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Family
Trust dated 12/30/90
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ 70,000 $5.00 $350,000.00
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Essex Private Placement Fund II 400,000 $5.00 $2,000,000.00
Limited Partnership
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
F&W Investments 1999 10,000 $5.00 $50,000.00
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
F&W Investments 2000 20,000 $5.00 $100,000.00
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
19
PURCHASE
NO. OF PRICE PER AGGREGATE
NAME SHARES SHARE PURCHASE PRICE
---- ------ --------- --------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, 500,000 $5.00 $2,500,000.00
Trustees of the ▇▇▇▇▇▇▇ Family Trust U/D/T
dated 4/2/97
c/o Venrock Associates
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ entities (total is $1
million)
Attn: ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (total is $1 million)
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ California 10,000 $5.00 $50,000.00
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ Employee Venture 10,000 $5.00 $50,000.00
Fund, ▇.▇. ▇▇
Access Technology Partners, L.P. 160,000 $5.00 $800,000.00
Access Technology Partners Brokers 3,200 $5.00 $16,000.00
Fund, L.P.
H&Q Niku Investors, LLC 16,800 $5.00 $84,000.00
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 1,132 $5.00 $5,660.00
▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 20,000 $5.00 $100,000.00
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ 5,000 $5.00 $25,000.00
c/▇ ▇▇▇▇▇▇ Capital Management, L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇ 14,267 $5.00 $71,335.00
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
20
PURCHASE
NO. OF PRICE PER AGGREGATE
NAME SHARES SHARE PURCHASE PRICE
---- ------ --------- --------------
▇▇▇▇▇▇ Ventures 286,000 $5.00 $1,430,000.00
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ 5,000 $5.00 $25,000.00
c/o SMART Modular Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ 5,000 $5.00 $25,000.00
c/o Niku Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ 5,000 $5.00 $25,000.00
c/o Niku Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
The Phoenix Partners IV Limited Partnership 100,000 $5.00 $500,000.00
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners, LLC 27,178 $5.00 $135,890.00
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇ 30,000 $5.00 $150,000.00
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ 20,000 $5.00 $100,000.00
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
21
PURCHASE
NO. OF PRICE PER AGGREGATE
NAME SHARES SHARE PURCHASE PRICE
---- ------ --------- --------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 20,000 $5.00 $100,000.00
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ entities (total is $3 million)
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ Fund Management LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Quantum Industrial Partners LDC 540,000 $5.00 $2,700,000.00
SFM Domestic Investments LLC 60,000 $5.00 $300,000.00
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III 4,268 $5.00 $21,340.00
c/o Trust Company of the West
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tailwind Capital Partners, L.P. 150,000 $5.00 $750,000.00
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TCS-America 100,000 $5.00 $500,000.00
Attn: ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Venrock entities (total is $1,940,000)
Venrock Associates 151,126 $5.00 $755,630.00
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, CFO
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Venrock Associates II, L.P. 217,474 $5.00 $1,087,370.00
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, CFO
22
PURCHASE
NO. OF PRICE PER AGGREGATE
NAME SHARES SHARE PURCHASE PRICE
---- ------ --------- --------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Venrock Entrepreneurs Fund, L.P. 19,400 $5.00 $97,000.00
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, CFO
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Walnut Ventures, LLC 5,000 $5.00 $25,000.00
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
c/o Trust Company of the West
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇. ▇. ▇▇▇▇▇▇▇ III, L.P. 750,134 $5.00 $3,750,670.00
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇
Whitney Strategic Partners III, L.P. 18,074 $5.00 $90,370.00
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇
TOTALS: 7,998,012 $39,990,060.00
========= ==============
23
EXHIBIT B
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF NIKU CORPORATION
a Delaware corporation
(Originally incorporated on January 8, 1998 as Niku Corporation)
ARTICLE I
The name of this corporation is Niku Corporation (the "Corporation").
ARTICLE II
The address of the registered office of the Corporation in the State of
Delaware is 1013 Centre Road, in the City of Wilmington, County of New Castle.
The name of its registered agent at such address is the Corporation Service
Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
A. Classes of Stock. This Corporation is authorized to issue two classes
of stock, to be designated, respectively, "Common Stock" and "Preferred Stock."
The total number of shares which the corporation is authorized to issue is One
Hundred Fifty-One Million Nine Hundred Ten Thousand Two Hundred Eighty-Two
(151,910,282) shares. One Hundred Million (100,000,000) shares shall be Common
Stock, par value $0.0001 per share, and Fifty-One Million Nine Hundred Ten
Thousand Two Hundred Eighty-Two (51,910,282) shares shall be Preferred Stock,
par value $0.0001 per share. Ten Million (10,000,000) shares of Preferred Stock
shall be designated "Series F Preferred Stock," Five Million One Hundred
Forty-Two Thousand Eight Hundred Fifty-One (5,142,851) shares of Preferred Stock
shall be designated "Series A Preferred Stock", Eight Million Six Hundred
Twenty-Nine Thousand Nine Hundred Ninety-Two (8,629,992) shares of Preferred
Stock shall be designated "Series B Preferred Stock", Nine Million Nine Hundred
Eighty-Seven Thousand Four Hundred and Thirty-Nine (9,987,439) shares shall be
designated "Series C Preferred Stock" and Eighteen Million One Hundred Fifty
Thousand (18,150,000) shares shall be designated "Series D Preferred Stock."
B. Rights, Preferences, Privileges and Restrictions of Preferred Stock.
The rights, preferences, privileges and restrictions granted to and imposed on
the Series F Preferred Stock, Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock (collectively, the
"Preferred Stock") are as set forth below in this Article IV(B).
1. Dividend Provisions. The holders of shares of Preferred Stock
shall be entitled to receive dividends, out of any assets legally available
therefor, prior and in preference to any declaration or payment of any dividend
(payable other than in Common Stock) on the Common Stock of this Corporation, at
the rate of (a) $0.0025 per share per annum in the case of Series F Preferred
Stock (as adjusted for any stock dividends, combinations or splits with respect
to such shares), (b) $0.0175 per share per annum in the case of Series A
Preferred Stock (as adjusted for any stock dividends, combinations or splits
with respect to such shares (c) $0.0375 per share per annum in the case of
Series B Preferred Stock (as adjusted for any stock dividends, combinations or
splits with respect to such shares), (d) $0.10 per share per annum in the case
of Series C Preferred Stock (as adjusted for any stock dividends, combinations
or splits with respect to such shares) and $0.25 per share
24
per annum in the case of Series D Preferred Stock (as adjusted for any stock
dividends, combinations or splits with respect to such shares), when, as and if
declared by the Board of Directors of the Corporation. Such dividends shall not
be cumulative. No dividend shall be paid on shares of Common Stock in any fiscal
year unless the aforementioned preferential dividends of the Preferred Stock
shall have been paid in full and the aggregate dividends paid on each share of
Preferred Stock during such fiscal year equals or exceeds the dividends per
share (computed on an as-converted basis) paid during such fiscal year on the
Common Stock.
2. Liquidation Preference.
a. Primary Distribution. In the event of any liquidation,
dissolution or winding up of this Corporation, either voluntary or involuntary
(a "Liquidation"),
(i) each holder of Series C Preferred Stock shall be
entitled to receive, prior and in preference to any distribution of any
of the assets of this Corporation to the holders of other series of
Series A Preferred Stock, Series B Preferred Stock, and Series F
Preferred Stock or Common Stock by reason of their ownership thereof an
amount equal to: (A) if the effective date of the Liquidation occurs
within one year of the Series C Original Issue Date (as defined below),
the sum of (x) $2.50 per share (as adjusted for any stock dividends,
combinations or splits with respect to such shares) and (y) all declared
but unpaid dividends on such shares, for each share of Series C
Preferred Stock held by such holder; (B) if the effective date of the
Liquidation occurs after one year from the Series C Original Issue Date
but within two years of the Series C Original Issue Date, the sum of (x)
$3.125 per share (as adjusted for any stock dividends, combinations or
splits with respect to such shares) and (y) all declared but unpaid
dividends on such shares, for each share of Series C Preferred Stock
held by such holder; and (C) if the effective date of the Liquidation
occurs at any time after two years of the Series C Original Issue Date,
the sum of (x) $3.91 per share (as adjusted for any stock dividends,
combinations or splits with respect to such shares) and (y) all declared
but unpaid dividends on such shares, for each share of Series C
Preferred Stock held by such holder;
(ii) each holder of Series D Preferred Stock shall be
entitled to receive, prior and in preference to any distribution of any
of the assets of this Corporation to the holders of the Series A
Preferred Stock, Series B Preferred Stock and Series F Preferred Stock,
or Common Stock by reason of their ownership thereof an amount equal to:
(A) if the effective date of the Liquidation occurs within one year of
the Series D Original Issue Date (as defined below), the sum of (x)
$6.25 per share (as adjusted for any stock dividends, combinations or
splits with respect to such shares) and (y) all declared but unpaid
dividends on such shares, for each share of Series D Preferred Stock
held by such holder; (B) if the effective date of the Liquidation occurs
after one year from the Series D Original Issue Date but within two
years of the Series D Original Issue Date, the sum of (x) $7.8125 per
share (as adjusted for any stock dividends, combinations or splits with
respect to such shares) and (y) all declared but unpaid dividends on
such shares, for each share of Series D Preferred Stock held by such
holder; and (C) if the effective date of the Liquidation occurs at any
time after two years of the Series D Original Issue Date, the sum of (x)
$9.80 per share (as adjusted for any stock dividends, combinations or
splits with respect to such shares) and (y) all declared but unpaid
dividends on such shares, for each share of Series D Preferred Stock
held by such holder;
(iii) each holder of the Series F Preferred Stock shall be
entitled to receive an amount equal to the sum of (x) five cents ($0.05)
(the "Original Series F Issue Price") for each share of Series F
Preferred Stock held of record by such holder (as adjusted for any stock
dividends, combinations or splits with respect to such shares) and (y)
all declared but unpaid dividends on such shares;
(iv) each holder of the Series A Preferred Stock shall be
entitled to receive an amount equal to the sum of (x) thirty-five cents
($0.35) (the "Original Series A Issue Price") for each share of Series A
Preferred Stock held of record by such holder (as adjusted for any stock
25
dividends, combinations or splits with respect to such shares) and (y)
all declared but unpaid dividends on such shares; and
(v) each holder of the Series B Preferred Stock shall be
entitled to receive an amount equal to the sum of (x) seventy-five cents
($0.75) ("Original Series B Issue Price") for each share of Series B
Preferred Stock held of record by such holder (as adjusted for any stock
dividends, combinations or splits with respect to such shares) and (y)
all declared but unpaid dividends on such shares.
If upon the occurrence of such event, the assets and funds of the Corporation
legally available for distribution shall be insufficient to permit the payment
to such holders of the full aforesaid preferential amounts, then the entire
assets and funds of the Corporation legally available for distribution shall be
distributed ratably first among the holders of the Series C Preferred Stock and
Series D Preferred Stock in proportion to the preferential amount each such
holder is otherwise entitled to receive and then among the holders of the Series
F, Series A, and Series B Preferred Stock in proportion to the preferential
amount each such holder is otherwise entitled to receive.
b. Secondary Distribution. Upon the completion of the
distribution required by Section 2(a), the remaining assets of the Corporation
available for distribution to stockholders shall be distributed of record among
the holders of Common Stock pro rata in proportion to the number of shares of
Common Stock held of record by each.
c. Definition of Liquidation Event; Notice.
(i) For purposes of this Section 2, a "Liquidation" of this
Corporation shall be deemed to be occasioned by, and to include, without
limitation, (A) the acquisition of the Corporation by another entity by means of
any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation); or (B) a sale of all
or substantially all of the assets of the Corporation (including, for purposes
of this section, intellectual property rights which, in the aggregate,
constitute substantially all of the Corporation's material assets); unless in
each case, the Corporation's stockholders of record as constituted immediately
prior to such acquisition or sale will, immediately after such acquisition or
sale (by virtue of securities issued as consideration for the Corporation's
acquisition or sale or otherwise) hold at least fifty percent (50%) of the
voting power of the surviving or acquiring entity.
(ii) In any of such events, if the consideration received by
the Corporation is other than cash, its value will be deemed its fair market
value as determined in good faith by the Board of Directors. Any securities
received as consideration shall be valued as follows:
(A) Securities not subject to investment letter or
other similar restrictions on free marketability shall be valued as follows: (1)
if traded on a securities exchange or through The Nasdaq National Market, the
value shall be deemed to be the average of the closing prices of the securities
on such exchange over the thirty day period ending three days prior to the
closing; (2) if actively traded over-the-counter, the value shall be deemed to
be the average of the closing bid or sale prices (whichever is applicable) over
the thirty day period ending three days prior to the closing; and (3) if there
is no active public market, the value shall be the fair market value thereof, as
determined in good faith by the Board of Directors of the Corporation.
(B) Securities subject to investment letter or other
restrictions on free marketability (other than restrictions arising solely by
virtue of a stockholder's status as an affiliate or former affiliate) shall be
valued in such a manner as to make an appropriate discount from the market value
determined as above in (A) (1), (2) or (3) to reflect the approximate fair
market value thereof, as determined in good faith by the Board of Directors of
the Corporation.
(iii) The Corporation shall give each holder of record of
Preferred Stock written notice of any such impending transaction not later than
ten (10) days prior to the stockholder meeting
26
called to approve such transaction, or twenty (20) days prior to the closing of
such transaction whichever notice date is earlier, and shall also notify such
holders in writing of the final approval of such transaction. The first of such
notices shall describe the material terms and conditions of the impending
transaction, the provisions of this Section 2, and the amounts anticipated to be
distributed to holders of each outstanding class of capital stock of the
Corporation pursuant to this Section 2, and the Corporation shall thereafter
give such holders prompt notice of any material changes. The transaction shall
in no event take place sooner than twenty (20) days after the Corporation has
given the first notice provided for herein or sooner than ten (10) days after
the Corporation has given notice of any material changes provided for herein;
provided, however, that such periods may be shortened upon the written consent
of the holders of Preferred Stock that are entitled to such notice rights or
similar notice rights and that represent at least a majority of the voting power
of the then outstanding shares of Preferred Stock (computed on an as-converted
basis).
(iv) In the event the requirements of subsection 2(c)(iii)
are not complied with, this Corporation shall forthwith either:
(A) cause such closing to be postponed until such time
as the requirements of subsection 2(c)(iii) have been complied with; or
(B) cancel such transaction, in which event the rights,
preferences and privileges of the holders of the Preferred Stock shall continue
to be the same as such rights, preferences and privileges existing immediately
prior to the date of the first notice referred to in subsection 2(c)(iii).
3. Conversion. The holders of Preferred Stock shall have conversion
rights as follows (the "Conversion Rights"):
a. Right to Convert. Each share of Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share at the office of this Corporation or any transfer agent
for such stock, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing the applicable Original Issue Price of
such share by the Conversion Price applicable to such share in effect for such
Preferred Stock on the date the certificate is surrendered for conversion. The
Original Issue Price for the Series D Preferred Stock (the "Original Series D
Issue Price") is $5.00 per share. The Original Issue Price for the Series C
Preferred Stock (the "Original Series C Issue Price") is $1.99 per share. The
initial Conversion Price per share for shares of Preferred Stock shall be the
Original Series F Issue Price for the Series F Preferred Stock, the Original
Series A Issue Price for the Series A Preferred Stock, the Original Series B
Issue Price for the Series B Preferred Stock, the Original Series C Issue Price
for the Series C Preferred Stock and the Original Series D Issue Price for the
Series D Preferred Stock; provided, however, that such Conversion Prices shall
be subject to adjustment as set forth in subsection 3(d).
b. Automatic Conversion. Each share of Preferred Stock shall
automatically be converted into shares of Common Stock by dividing the
applicable Original Issue Price of such share by the Conversion Price applicable
to such share at the time in effect for such Preferred Stock immediately upon
the earlier of (i) except as provided below in subsection 3(c), the
Corporation's sale of its Common Stock in an underwritten public offering on
form S-1 or SB-2 under the Securities Act of 1933, as amended (the "Securities
Act"), yielding gross proceeds (before deduction of underwriter's discounts,
commissions, or other costs and fees associated with the offering) to the
Corporation in excess of Twenty Million Dollars ($20,000,000) if the Valuation
(computed in accordance with Section 3(d)(i)(A)(IV)(7) herein) of the
Corporation is greater than or equal to Three Hundred Fifty Million Dollars
($350,000,000) immediately before such offering, and (ii) the date specified by
written consent or agreement of the holders of at least a majority of the voting
power of the then outstanding shares of Preferred Stock (computed on an
as-converted basis) which majority must include at least two-thirds (66 2/3%) of
the voting power of each of the then outstanding shares of Series C Preferred
Stock and Series D Preferred Stock (computed on an as-converted basis).
27
c. Mechanics of Conversion. Before any holder of Preferred Stock
shall be entitled to convert the same into shares of Common Stock, such holder
shall surrender the certificate or certificates therefor, duly endorsed, at the
office of this Corporation or of any transfer agent for the Preferred Stock, and
shall give written notice to this Corporation at its principal corporate office,
of the election to convert the same and shall state therein the name or names in
which the certificate or certificates for shares of Common Stock are to be
issued. This Corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Preferred Stock, or to the nominee or
nominees of such holder, a certificate or certificates for the number of shares
of Common Stock to which such holder shall be entitled as aforesaid. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of Preferred Stock to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such date. If the
conversion is in connection with an underwritten offering of securities
registered pursuant to the Securities Act, the conversion, unless otherwise
designated by the holder, will be conditioned upon the closing with the
underwriters of the sale of securities pursuant to such offering, in which event
the person(s) entitled to receive the Common Stock upon conversion of the
Preferred Stock shall not be deemed to have converted such Preferred Stock until
immediately prior to the closing of such sale of securities.
d. Conversion Price Adjustments of Preferred Stock for Certain
Dilutive Issuances, Splits, Dividends and Combinations. The Conversion Prices of
the Preferred Stock shall be subject to adjustment from time to time as follows:
(i)(A)(I) Adjustment Formula for Series F, Series A and
Series B Preferred Stock. If at any time or from time to time after the Series D
Original Issue Date the Corporation issues or sells Additional Stock (as
hereinafter defined), for an Effective Price (as hereinafter defined) that is
less than the applicable Conversion Price for a series of Preferred Stock (other
than the Series C Preferred Stock and Series D Preferred Stock) in effect
immediately prior to such issue or sale (or deemed issue or sale), then, and in
each such case, the applicable Conversion Price for such series of Preferred
Stock (other than the Series C Preferred Stock and Series D Preferred Stock)
shall be reduced, as of the close of business on the date of such issue or sale,
to the price obtained by multiplying such Conversion Price by a fraction:
(x) The numerator of which shall be the sum of (A)
the number of shares of Common Stock issued and outstanding immediately prior to
such issue or sale of Additional Stock plus (B) the quotient obtained by
dividing the aggregate consideration received by the Corporation for the total
number of Additional Stock so issued or sold (or deemed so issued and sold) by
the Conversion Price for such series of Preferred Stock in effect immediately
prior to such issue or sale; and
(y) The denominator of which shall be the sum of
(A) the number of shares of Common Stock issued and outstanding immediately
prior to such issue or sale plus (B) the number of Additional Stock so issued or
sold (or deemed so issued and sold). The foregoing calculation of Common Stock
outstanding shall take into account shares deemed issued pursuant to Section
3(d)(i)(D) on account of options, rights, convertible or, exchangeable
securities (or actual or deemed consideration therefor).
(II) Adjustment Formula for Series C Preferred Stock. If at
any time or from time to time after the Series D Original Issue Date the
Corporation issues or sells Additional Stock for an Effective Price that is less
than the Conversion Price for Series C Preferred Stock in effect immediately
prior to such issue or sale (or deemed issue or sale), then, and in each such
case, the Conversion Price for the Series C Preferred Stock shall be adjusted as
follows:
(1) If the Valuation (as hereinafter defined), is
greater than or equal to Fifty Million Dollars ($50,000,000) immediately prior
to the issuance of Additional Stock, then the Conversion Price for the Series C
Preferred Stock shall be reduced, as of the close of business on the date of
such issuance or sale, to the Effective Price at which such Additional Stock are
so issued or sold (or deemed issued or sold).
28
(2) If the Valuation is less than Fifty Million Dollars
($50,000,000) immediately prior to the issuance of Additional Stock, then the
Conversion Price for the Series C Preferred Stock shall be reduced, first, to a
price per share that would yield a Valuation, computed in accordance with
Section 3(d)(i)(A)(IV)(7) herein, of Fifty Million Dollars ($50,000,000)
immediately prior to the issuance of the Additional Stock (the "Adjusted
Conversion Price"), and then, the Adjusted Conversion Price for Series C
Preferred Stock shall be further reduced, as of the close of business on the
date of such issue or sale, to the price obtained by multiplying such Adjusted
Conversion Price by a fraction:
(x) The numerator of which shall be the sum of (1)
the number of shares of Common Stock issued and outstanding immediately prior to
such issue or sale of Additional Stock plus (2) the quotient obtained by
dividing the aggregate consideration received by the Corporation for the total
number of Additional Stock so issued or sold (or deemed so issued and sold) by
the Conversion Price for such series of Preferred Stock in effect immediately
prior to such issue or sale; and
(y) The denominator of which shall be the sum of
(1) the number of shares of Common Stock issued and outstanding immediately
prior to such issue or sale plus (2) the number of Additional Stock so issued or
sold (or deemed so issued and sold). The foregoing calculation of Common Stock
outstanding shall take into account shares deemed issued pursuant to Section
3(d)(i)(D) on account of options, rights, or convertible or exchangeable
securities (or actual or deemed consideration therefor).
(III) Adjustment Formula for Series D Preferred Stock. If
at any time or from time to time after the Series D Original Issue Date the
Corporation issues or sells Additional Stock for an Effective Price that is less
than the Conversion Price for Series D Preferred Stock in effect immediately
prior to such issue or sale (or deemed issue or sale), then, and in each such
case, the Conversion Price for the Series D Preferred Stock shall be adjusted as
follows:
(1) If the Valuation (as hereinafter defined), is
greater than or equal to One Hundred Twenty Million Dollars ($120,000,000)
immediately prior to the issuance of Additional Stock, then the Conversion Price
for the Series D Preferred Stock shall be reduced, as of the close of business
on the date of such issuance or sale, to the Effective Price at which such
Additional Stock are so issued or sold (or deemed issued or sold).
(2) If the Valuation is less than One Hundred Twenty
Million Dollars ($120,000,000) immediately prior to the issuance of Additional
Stock, then the Conversion Price for the Series D Preferred Stock shall be
reduced, first, to a price per share that would yield a Valuation, computed in
accordance with Section 3(d)(i)(A)(IV)(7) herein, of One Hundred Twenty Million
Dollars ($120,000,000) immediately prior to the issuance of the Additional Stock
(the "Adjusted Conversion Price"), and then, the Adjusted Conversion Price for
Series D Preferred Stock shall be further reduced, as of the close of business
on the date of such issue or sale, to the price obtained by multiplying such
Adjusted Conversion Price by a fraction:
(x) The numerator of which shall be the sum of (1)
the number of shares of Common Stock issued and outstanding immediately prior to
such issue or sale of Additional Stock plus (2) the quotient obtained by
dividing the aggregate consideration received by the Corporation for the total
number of Additional Stock so issued or sold (or deemed so issued and sold) by
the Conversion Price for such series of Preferred Stock in effect immediately
prior to such issue or sale; and
(y) The denominator of which shall be the sum of
(1) the number of shares of Common Stock issued and outstanding immediately
prior to such issue or sale plus (2) the number of Additional Stock so issued or
sold (or deemed so issued and sold). The foregoing calculation of Common Stock
outstanding shall take into account shares deemed issued pursuant to Section
3(d)(i)(D) on account of options, rights, or convertible or exchangeable
securities (or actual or deemed consideration therefor).
(IV) Certain Definitions. For the purpose of this Section
3(d) the following terms have the following meanings:
29
(1) The "AGGREGATE CONSIDERATION RECEIVED" by the
Corporation for any issue or sale (or deemed issue or sale) of securities shall
(a) to the extent it consists of cash, be computed at the gross amount of cash
received by the Corporation before deduction of any underwriting or similar
commissions, compensation or concessions paid or allowed by the Corporation in
connection with such issue or sale and without deduction of any expenses payable
by the Corporation; (b) to the extent it consists of property other than cash,
be computed at the fair value of that property as determined in good faith by
the Board; and (c) if Additional Stock, Convertible Securities or Options or
Rights to purchase either Additional Stock or Convertible Securities are issued
or sold together with other stock or securities or other assets of the
Corporation for a consideration which covers both, be computed as the portion of
the consideration so received that may be reasonably determined in good faith by
the Board to be allocable to such Additional Stock, Convertible Securities or
Options or Rights.
(2) The "EFFECTIVE PRICE" of Additional Stock shall
mean the quotient determined by dividing the total number of Additional Stock
issued or sold, or deemed to have been issued or sold, by the Corporation under
this subsection 3(d), into the Aggregate Consideration Received, or deemed to
have been received, by the Corporation under this subsection 3(d), for the
issuance (or deemed issuance) of such Additional Stock.
(3) "SERIES C ORIGINAL ISSUE DATE" shall mean the date
on which the first share of Series C Preferred Stock is issued by the
Corporation.
(4) "SERIES D ORIGINAL ISSUE DATE" shall mean the date
on which the first share of Series D Preferred Stock is issued by the
Corporation.
(5) The "OPTIONS OR RIGHTS" shall mean warrants,
options or other rights to purchase or acquire shares of Common Stock or
Convertible Securities.
(6) The "CONVERTIBLE SECURITIES" shall mean securities
convertible into or exchangeable into Additional Stock.
(7) The "VALUATION" of the Company prior to an issuance
of Additional Stock shall mean the Effective Price of the Additional Stock
multiplied by the sum of (x) the total number of shares of Common Stock of the
Corporation outstanding immediately prior to the issuance of Additional Stock
plus (y) the total number of shares of Common Stock of the Corporation into
which all then outstanding shares of Convertible Securities and Options or
Rights of the Corporation are then convertible or exercisable immediately prior
to the issuance of such Additional Stock.
(V) No adjustment of the Conversion Price for a series of
Preferred Stock shall be made in an amount less than one cent per share,
provided that any adjustments which are not required to be made by reason of
this sentence shall be carried forward and shall be either taken into account in
any subsequent adjustment made prior to three years from the date of the event
giving rise to the adjustment being carried forward, or shall be made at the end
of three years from the date of the event giving rise to the adjustment being
carried forward. Except to the limited extent provided for in Sections
3(d)(i)(D)(3) and 3(d)(i)(D)(4), no adjustment of such Conversion Price pursuant
to this Section 3(d)(i) shall have the effect of increasing the Conversion Price
for a series of Preferred Stock above the Conversion Price for such shares in
effect immediately prior to such adjustment.
(B) In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of cash paid therefor
before deducting any reasonable discounts, commissions or other expenses
allowed, paid or incurred by the Corporation for any underwriting or otherwise
in connection with the issuance and sale thereof.
30
(C) In the case of the issuance of the Common Stock for
a consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair value thereof as determined by the
Corporation's Board of Directors irrespective of any accounting treatment.
(D) In the case of the issuance (whether before, on or
after the Series D Original Issue Date) of Options or Rights or Convertible
Securities, the following provisions shall apply for all purposes of this
Section 3(d)(i) and Section 3(d)(ii):
(1) The aggregate maximum number of shares of
Common Stock deliverable upon exercise (assuming the satisfaction of any
conditions to exercisability, including without limitation, the passage of time,
but without taking into account potential antidilution adjustments) of such
Options or Rights shall be deemed to have been issued at the time such Options
or Rights were issued and for a consideration equal to the consideration
(determined in the manner provided in Sections 3(d)(i)(B) and 3(d)(i)(C)), if
any, received by the Corporation upon the issuance of such Options or Rights
plus the minimum exercise price provided for such Options or Rights (without
taking into account potential antidilution adjustments) for the Common Stock
covered thereby.
(2) The aggregate maximum number of shares of
Common Stock deliverable upon conversion of or in exchange (assuming the
satisfaction of any conditions to convertibility or exchangeability, including,
without limitation, the passage of time, but without taking into account
potential antidilution adjustments) for any such Convertible Securities or upon
the exercise of Options or Rights to subscribe for Convertible Securities and
subsequent conversion or exchange thereof shall be deemed to have been issued at
the time such Convertible Securities were issued or such Options or Rights were
issued and for a consideration equal to the consideration, if any, received by
the Corporation for any such Convertible Securities and related Convertible
Options or Rights (excluding any cash received on account of accrued interest or
accrued dividends), plus the minimum additional consideration, if any, to be
received by the Corporation (without taking into account potential antidilution
adjustments) upon the conversion or exchange of such securities or the exercise
of any related Options or Rights (the consideration in each case to be
determined in the manner provided in Sections 3(d)(i)(B) and 3(d)(i)(C)).
(3) In the event of any change in the number of
shares of Common Stock deliverable or in the consideration payable to the
Corporation upon exercise of such Options or Rights or upon conversion of or in
exchange for such Convertible Securities, including, but not limited to, a
change resulting from the antidilution provisions thereof, the applicable
Conversion Price of the affected series of Preferred Stock, to the extent in any
way affected by or computed using such Convertible Options or Rights or
Convertible Securities, shall be recomputed to reflect such change, but no
further adjustment shall be made for the actual issuance of Common Stock or any
payment of such consideration upon the exercise of any such Options or Rights or
the conversion or exchange of such Convertible Securities.
(4) Upon the expiration of any such Options or
Rights, the termination of any such rights to convert or exchange or the
expiration of any Options or Rights related to such Convertible Securities, the
Conversion Price of the affected series of Preferred Stock, to the extent in any
way affected by or computed using such Options, Rights or Convertible Securities
or Options or Rights related to such Convertible Securities, shall be recomputed
to reflect the issuance of only the number of shares of Common Stock (and
Convertible Securities which remain in effect) actually issued upon the exercise
of such Options or Rights, upon the conversion or exchange of such Convertible
Securities or upon the exercise of the Options or Rights related to such
Convertible Securities. Notwithstanding the foregoing sentence, in the event
that the issuance of such Options or Rights or Convertible Securities caused an
adjustment to the Conversion Price for Series C Preferred Stock or Series D
Preferred Stock pursuant to Section 3(d)(i)(A)(II)(1) or Section
3(d)(i)(A)(III)(1), respectively, (i.e., a "full-ratchet" adjustment), then upon
the expiration of any such Options or Rights or Convertible Securities or the
termination of any such rights to convert or exchange or the expiration of any
Options or Rights related to such Convertible Securities, without any of such
Rights, Options or Convertible Securities, as the case may be, having been
exercised and no shares of Common Stock issued pursuant thereto, then the
Conversion Price for the Series C Preferred Stock and Series D Preferred stock,
as appropriate, shall be
31
adjusted, to the Conversion Price for the Series C Preferred Stock or Series D
Preferred Stock, as appropriate, that was in effect immediately prior to such
issuance (the "Prior Series C Conversion Price" or "Prior Series D Conversion
Price", as appropriate), subject, however, to such other adjustments as may have
been made or which would have been made pursuant to this Section 3(d)(i) had the
Prior Series C Conversion Price or Prior Series D Conversion Price, as
appropriate, been in effect immediately prior to such sale or issuance of such
Options, Rights or Convertible Securities.
(5) The number of shares of Common Stock deemed
issued and the consideration deemed paid therefor pursuant to Sections
3(d)(i)(D)(1) and (2) shall be appropriately adjusted to reflect any change,
termination or expiration of the type described in either Section 3(d)(i)(D)(3)
or (4).
(ii) "Additional Stock" shall mean any shares of Common
Stock issued (or deemed to have been issued pursuant to Section 3(d)(i)(D)) by
the Corporation after the Series D Original Issue Date other than:
(A) Common Stock issued pursuant to a transaction
described in Section 3(d)(iii) hereof,
(B) Up to an aggregate of 10,000,000 shares (such
number of shares of Common Stock to be calculated net of any repurchases of such
shares by the Corporation and net of any expired or terminated options, warrants
or rights and to be proportionately adjusted for subsequent events described in
Section 3(d)(iii) and (iv) herein) issued as:
(i) Common Stock issuable or issued to employees,
consultants or directors of the Corporation following the Series D
Original Issue Date directly or pursuant to a stock option plan or
agreement or restricted stock plan or agreement approved by the Board of
Directors of the Corporation,
(ii) Capital stock, or options or warrants to
purchase capital stock, issued to financial institutions, equipment
lessors or landlords in connection with commercial credit arrangements,
equipment financing, real estate leases or similar transactions approved
by the Board of Directors of the Corporation,
(iii) Capital stock or options or warrants to
purchase capital stock, issued to providers of products or technologies
(or rights thereto) to the Corporation, if such issuance is approved by
the Board of Directors of the Corporation, or
(iv) Capital stock or options or warrants to
purchase capital stock, issued in connection with bona fide
acquisitions, mergers or similar transactions, the terms of which are
approved by the Board of Directors of the Corporation,
(C) Common Stock issued or issuable upon conversion of
the Preferred Stock,
(D) Capital stock issued or issuable upon exercise of
any outstanding options or warrants to purchase Series A Preferred
Stock, Series F Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock which are outstanding as of the Series D Original Issue
Date, or
(E) Common Stock issued or issuable in a public
offering in connection with which all outstanding shares of Preferred
Stock will be converted to Common Stock.
(iii) In the event the Corporation should at any time or
from time to time after the Series D Original Issue Date fix a record date for
the effectuation of a split or subdivision of the
32
outstanding shares of Common Stock or for the determination of the outstanding
shares of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock without payment of any
consideration by such holder for the additional shares of Common Stock, then, as
of such record date (or the date of such dividend, distribution, split or
subdivision if no record date is fixed), the Conversion Price of each applicable
series of Preferred Stock shall be appropriately decreased so that the number of
shares of Common Stock issuable on conversion of each share of such series shall
be increased in proportion to such increase of the aggregate of shares of Common
Stock outstanding.
(iv) If the number of shares of Common Stock outstanding at
any time after the Series D Original Issue Date is decreased by a combination of
the outstanding shares of Common Stock or reverse stock split, then, following
the record date of such combination or reverse stock split, the Conversion Price
for each applicable series of Preferred Stock shall be appropriately increased
so that the number of shares of Common Stock issuable on conversion of each
share of such series shall be decreased in proportion to such decrease in
outstanding shares.
e. Other Distributions. In the event the Corporation at any time
after the Series D Original Issue Date shall declare a distribution payable in
securities of other persons, evidences of indebtedness issued by this
Corporation or other persons, assets (excluding cash dividends) or Options or
Rights not referred to in Section 3(d)(i), then, in each such case for the
purpose of this Section 3(e), the holders of the Preferred Stock shall be
entitled to a proportionate share of any such distribution as though they were
the holders of the number of shares of Common Stock of the Corporation into
which their shares of Preferred Stock are convertible as of the record date
fixed for the determination of the holders of Common Stock of the Corporation
entitled to receive such distribution.
f. Recapitalizations. If at any time or from time to time after
the Series D Original Issue Date there shall be a recapitalization of the Common
Stock (other than a subdivision, combination or merger or sale of assets
transaction provided for elsewhere in this Section 3 or Section 2) provision
shall be made so that the holders of the Preferred Stock shall thereafter be
entitled to receive upon conversion of the Preferred Stock the number of shares
of stock or other securities or property of the Corporation or otherwise, which
a holder of Common Stock deliverable upon conversion of such series of Preferred
Stock immediately prior to such recapitalization would have been entitled to
receive on such recapitalization. In any such case, appropriate adjustment shall
be made in the application of the provisions of this Section 3 with respect to
the rights of the holders of the Preferred Stock after the recapitalization to
the extent that the provisions of this Section 3 (including adjustment of the
Conversion Prices then in effect and the number of shares purchasable upon
conversion of the Preferred Stock) shall be applicable after that event as
nearly equivalently as may be practicable.
g. No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 3 and in the taking of all such action as may
be necessary or appropriate in order to protect the Conversion Rights of the
holders of the Preferred Stock against impairment.
h. No Fractional Shares and Certificate as to Adjustment.
(i) No fractional shares shall be issued upon the conversion
of any share or shares of the Preferred Stock, and the number of shares of
Common Stock to be issued shall be rounded to the nearest whole share (with
one-half being rounded downward). Whether or not fractional shares are issuable
upon such conversion shall be determined on the basis of the total number of
shares of Preferred Stock the holder is at the time converting into Common Stock
and the number of shares of Common Stock issuable upon such aggregate
conversion.
33
(ii) Upon the occurrence of each adjustment or readjustment
of the Conversion Price of a series of Preferred Stock pursuant to this Section
3, the Corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of such series of Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the reasonable
written request at any time of any holder of Preferred Stock, furnish or cause
to be furnished to such holder a like certificate setting forth (A) such
adjustment and readjustment, (B) the Conversion Price for each series of
Preferred Stock at the time in effect, and (C) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of a share of each series of Preferred Stock held
by such holder.
i. Notices of Record Date. In the event of any taking by the
Corporation of a record date for determining the holders of any class of
securities who are entitled to receive any dividend (other than a cash dividend)
or other distribution, any right to subscribe for, purchase or otherwise acquire
any shares of stock of any class or any other securities or property, or to
receive any other right, this Corporation shall mail to each holder of Preferred
Stock, at least ten (10) days prior to the record date specified therein, a
notice specifying the record date for the purpose of such dividend, distribution
or right, and the amount and character of such dividend, distribution or right.
j. Reservation of Stock Issuable Upon Conversion. This
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the then outstanding shares of the Preferred Stock, such number of
its shares of Common Stock as shall from time to time be sufficient to effect
the conversion of all outstanding shares of the Preferred Stock; and if at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of the
Preferred Stock, in addition to such other remedies as shall be available to the
holder of such Preferred Stock, the Corporation will take such corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purposes, including, without limitation, engaging in best
efforts to obtain the requisite Board of Directors and stockholder approval of
any necessary amendment to its Certificate of Incorporation.
k. Notices. Any notice required by the provisions of this
Section 3 to be given to the holders of shares of Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books of the
Corporation.
4. Redemption.
a. If requested in writing at any time after the seventh anniversary
of the Series C Original Issue Date by the holders of at least two-thirds (66
2/3%) of the outstanding Series C Preferred Stock and Series D Preferred Stock
(determined together on an as converted basis), the Corporation shall redeem, on
the terms and conditions stated herein, out of funds legally available therefor,
all of the outstanding Preferred Stock in four equal annual installments
beginning on the first anniversary of the date redemption is requested by the
requisite number of holders (the "Initial Redemption Date") and continuing
thereafter on the first, second and third anniversaries of the Initial
Redemption Date (each a "Preferred Stock Redemption Date"), by paying in cash
therefor (i) in the case of the Series F Preferred Stock, an amount equal to the
sum of (x) the Original Series F Issue Price for each share of Series F
Preferred Stock held of record by such holder (as adjusted for any stock
dividends, combinations or splits with respect to such shares) and (y) all
declared but unpaid dividends thereon, (ii) in the case of the Series A
Preferred Stock, an amount equal to the sum of (x) the Original Series A Issue
Price for each share of Series A Preferred Stock held of record by such holder
(as adjusted for any stock dividends, combinations, splits, recapitalizations
and the like with respect to such shares) and (y) all declared but unpaid
dividends thereon, (iii) in the case of the Series B Preferred Stock, an amount
equal to the sum of (x) the Original Series B Issue Price for each share of
Series B Preferred Stock held of record by such holder (as adjusted for any
stock dividends, combinations, splits, recapitalizations and the like with
respect to such shares) and (y) all declared but unpaid dividends thereon, (iv)
in the case of the Series C Preferred Stock, an amount equal to the sum of (x)
the Original
34
Series C Issue Price for each share of Series C Preferred Stock, held of record
by such holder (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like with respect to such shares) and (y) all declared
but unpaid dividends thereon and (v) in the case of the Series D Preferred
Stock, an amount equal to the sum of (x) the Original Series D Issue Price for
each share of Series D Preferred Stock held of record by such holder (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like with respect to such shares) and (y) all declared but unpaid dividends
thereon (the "Series F Redemption Price," "Series A Redemption Price," "Series B
Redemption Price," "Series C Redemption Price," and "Series D Redemption Price,"
respectively). The number of shares of Preferred Stock that the Corporation
shall be required to redeem under this subsection (a) on any one Preferred Stock
Redemption Date shall be equal to the amount determined by dividing (x) the
aggregate number of shares of shares of Preferred Stock outstanding immediately
prior to that Preferred Stock Redemption Date by (y) the number of remaining
Preferred Stock Redemption Dates (including the Preferred Stock Redemption Date
to which such calculation applies). In the event that the Corporation is unable
to redeem the full number of shares of Preferred Stock to be redeemed on any
Preferred Stock Redemption Date, the shares not redeemed shall be redeemed by
this Corporation as provided in this Section 4 as soon as practicable after
funds are legally available therefor. Any redemption effected pursuant to this
subsection 4 (a) shall be made ratably among the holders of the Preferred Stock
in proportion to the redemption payment amount each such holder is otherwise
entitled to receive on such Preferred Stock Redemption Date.
b. At least thirty (30) but no more than sixty (60) days prior
to each Preferred Stock Redemption Date, the Corporation shall give written
notice by certified or registered mail, postage prepaid, to all holders of
outstanding Preferred Stock, at the address last shown on the records of the
Corporation for such holder, stating such Preferred Stock Redemption Date, the
Series F, the Series A, Series B, Series C Redemption Price and Series D
Redemption Price, as the case may be, and shall call upon such holder to
surrender to the Corporation on such Preferred Stock Redemption Date at the
place designated in the notice such holder's certificate or certificates
representing the shares to be redeemed. On or after the Preferred Stock
Redemption Date stated in such notice, the holder of each share of Preferred
Stock called for redemption shall surrender the certificate or certificates
evidencing such shares to the Corporation at the place designated in such notice
and shall thereupon be entitled to receive payment of the Series F, Series A,
Series B, Series C Redemption Price or Series D Redemption Price, as the case
may be, for the shares surrendered. If less than all the shares represented by
any such surrendered certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares. If such notice of redemption shall have been
duly given, and if on such Preferred Stock Redemption Date funds necessary for
the redemption shall be available therefor, then, as to any certificates
evidencing any Preferred Stock so called for redemption and not surrendered, all
rights of the holders of such shares shall cease as the close of business on the
day immediately preceding the Preferred Stock Redemption Date with respect to
such shares, except only the right of the holders to receive the Series F,
Series A, Series B, Series C Redemption Price or Series D Redemption Price, as
the case may be, for the Preferred Stock which they hold, without interest, upon
surrender of their certificate or certificates therefor.
5. Voting Rights. Each holder of shares of Preferred Stock shall be
entitled to a number of votes equal to the number of shares of Common Stock into
which the shares of Preferred Stock held by such holder could be converted,
shall have voting rights and powers equal to the voting rights and powers of the
holders of Common Stock (except as required by law), shall be entitled to notice
of any stockholder meeting in accordance with the Bylaws of the Corporation, and
shall vote together as a single class with holders of Common Stock and all
series of Preferred Stock on all matters except as required by law or as
otherwise specifically provided herein. Fractional votes shall not be permitted
and any fractional voting rights resulting from the above formula (after
aggregating all shares into which shares of Preferred Stock held by each holder
could be converted) shall be rounded to the nearest whole number (with one-half
being rounded upward).
6. Status of Converted Preferred Stock. In the event any shares of
Preferred Stock shall be converted pursuant to Section 3, the shares so
converted shall be canceled and shall not thereafter be issuable by the
Corporation. The Certificate of Incorporation of the Corporation shall be
appropriately amended to effect the corresponding reduction in the Corporation's
authorized capital stock.
35
7. Protective Provisions.
a. Class Vote. The Corporation shall not, without first obtaining
the approval (by vote or written consent, as provided by law) of the holders of
at least (1) a majority of the then outstanding shares of Preferred Stock,
voting together as a single class, (2) two-thirds (66 2/3%) of the then
outstanding Series C Preferred Stock, voting as a separate series, and (3)
two-thirds (66 2/3%) of the then outstanding Series D Preferred Stock, voting as
a separate series, authorize or effect the winding up or cessation of business
of the Corporation.
b. Series Vote. The Corporation shall not, without first obtaining
the approval (by vote or written consent, as provided by law) of the holders of
at least a majority of each series of Preferred Stock so affected, amend, alter,
or change in any adverse manner the rights of such series of Preferred Stock.
c. Series C Vote. The Corporation shall not, without the approval,
by vote or written consent, of the holders of at least two-thirds (66 2/3%) of
the then outstanding shares of Series C Preferred Stock, voting as a separate
series:
(1) amend its Certificate of Incorporation or Bylaws in any
manner that would alter or change the rights, preferences, privileges or
restrictions of the Series C Preferred Stock so as to materially adversely
affect such Series C Preferred Stock;
(2) reclassify any outstanding shares of securities of the
Corporation into shares having rights, preferences or privileges senior to or on
a parity with the Series C Preferred Stock; or
(3) authorize any other equity security, including any other
security convertible into or exercisable for any equity security, having rights
or preferences senior to or on a parity with the Series C Preferred Stock as to
dividend rights, liquidation, redemption or voting preferences, including
without limitation, shares of Series C Preferred Stock.
d. Series D Vote. The Corporation shall not, without the approval,
by vote or written consent, of the holders of at least two-thirds (66 2/3%) of
the then outstanding shares of Series D Preferred Stock, voting as a separate
series:
(1) amend its Certificate of Incorporation or Bylaws in any
manner that would alter or change the rights, preferences, privileges or
restrictions of the Series D Preferred Stock so as to materially adversely
affect such Series D Preferred Stock;
(2) reclassify any outstanding shares of securities of the
Corporation into shares having rights, preferences or privileges senior to or on
a parity with the Series D Preferred Stock; or
(3) authorize any other equity security, including any other
security convertible into or exercisable for any equity security, having rights
or preferences senior to or on a parity with the Series D Preferred Stock as to
dividend rights, liquidation, redemption or voting preferences, including
without limitation, shares of Series D Preferred Stock.
e. Series C and D Vote. The Corporation shall not, without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least two-thirds (66 2/3%) of each of the then outstanding shares
of Series C Preferred Stock and Series D Preferred Stock, each voting as a
separate series:
(1) reorganize, consolidate or merge with or into any
corporation or effect any transaction or series of related transactions if such
transaction or series of related transactions would result in the stockholders
of the Corporation immediately prior to such transaction or series of related
transactions holding less than a majority of the voting power of the surviving
corporation (or its parent corporation if the surviving corporation is wholly
owned by the parent corporation);
36
(2) sell, convey or otherwise dispose of all or substantially
all the Corporation's assets in a single transaction or series of related
transactions;
(3) declare or pay any dividends (other than dividends payable
solely in shares of its own Common Stock) on or declare or make any other
distribution, purchase, redemption or acquisition, directly or indirectly, on
account of any shares of Preferred Stock junior to the Series C Preferred Stock
or Series D Preferred Stock as to dividend rights, liquidation, redemption or
voting privileges or any shares of Common Stock now or hereafter outstanding
other than those distributions, purchases, redemptions, or acquisitions
expressly permitted in this Certificate; or
(4) incur any indebtedness to a bank, financial institution or
lender in excess of ten million dollars ($10,000,000) unless otherwise approved
by the Board of Directors.
C. Common Stock.
1. Dividend Rights. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of the Corporation legally
available therefor, such dividends as may be declared from time to time by the
Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or winding
up of the Corporation, the assets of the Corporation shall be distributed as
provided in Section 2 of Article IV(B) hereof.
3. Redemption. The Common Stock is not redeemable.
4. Voting Rights. Each holder of Common Stock shall be entitled to
one (1) vote for each share of Common Stock held, shall be entitled to notice of
any stockholder meeting in accordance with the Bylaws of the Corporation, and
shall be entitled to vote upon such matters and in such manner as is otherwise
provided herein or as may be provided by law.
ARTICLE V
Except as otherwise provided in this Amended and Restated Certificate of
Incorporation, in furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, repeal, alter,
amend and rescind any or all of the Bylaws of the Corporation.
ARTICLE VI
The number of directors of the Corporation shall be fixed from time to
time by, or in the manner provided in, the Bylaws or amendment thereof duly
adopted by the Board of Directors or by the stockholders.
ARTICLE VII
Elections of directors need not be by written ballot unless the Bylaws
of the Corporation shall so provide.
ARTICLE VIII
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.
37
ARTICLE IX
To the fullest extent permitted by the General Corporation Law of
Delaware, as the same may be amended from time to time, a director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director. If
the General Corporation Law of Delaware is hereafter amended to authorize, with
or without the approval of a corporation's stockholders, further reductions in
the liability of the corporation's directors for breach of fiduciary duty, then
a director of the Corporation shall not be liable for any such breach to the
fullest extent permitted by the General Corporation Law of Delaware, as so
amended.
Any repeal or modification of the foregoing provisions of this Article
IX, by amendment of this Article IX or by operation of law, shall not adversely
affect any right or protection of a director of the Corporation with respect to
any acts or omissions of such director occurring prior, to such repeal or
modification.
ARTICLE X
To the fullest extent permitted by applicable law, the Corporation is
authorized to provide indemnification of (and advancement of expenses to)
directors, officers, employees and other agents of the Corporation (and any
other persons to which Delaware law permits the Corporation to provide
indemnification) through Bylaw provisions, agreements with any such person, vote
of stockholders or disinterested directors or otherwise, in excess of the
indemnification and advancement otherwise permitted by Section 145 of the
Delaware General Corporation Law, subject only to limits created by applicable
Delaware law (statutory or nonstatutory), with respect to actions for breach of
duty to a corporation, its stockholders, and others.
Any repeal or modification of any of the foregoing provisions of this
Article X, by amendment of this Article X or by operation of law, shall not
adversely affect any right or protection of a director, officer, employee or
agent or other person existing at the time of, or increase the liability of any.
director of the Corporation with respect to any acts or omissions of such
director, officer or agent occurring prior to, such repeal or modification.
ARTICLE XI
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
ARTICLE XII
The Corporation shall have perpetual existence.
* * *
The foregoing Amended and Restated Certificate of Incorporation has been
adopted by the Corporation's directors and stockholders in accordance with the
applicable provisions of Sections 228, 242 and 245 of the General Corporation
Law of the State of Delaware.
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IN WITNESS WHEREOF, the undersigned has executed this certificate on
November ___, 1999.
NIKU CORPORATION
By:
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
President and Chief Executive Officer
39
EXHIBIT C
SCHEDULE OF EXCEPTIONS
Set forth below are exceptions to the representations and warranties of
Niku Corporation (the "Company") contained in Section 2 of the Series D
Preferred Stock Purchase Agreement (the "Agreement"). Section references in this
Schedule of Exceptions are for convenience only; each disclosure and exception
set forth below is intended to qualify all of the Company's representations and
warranties in the Agreement. All capitalized terms used herein and not defined
herein shall have the same meaning as in the Agreement.
[Confidential]
40
EXHIBIT D
NIKU CORPORATION
FOURTH AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
THIS FOURTH AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (this
"Agreement") is made as of the _____ day of November, 1999 by and between Niku
Corporation, a Delaware corporation (the "Company") and those holders of the
Company's securities whose names are set forth on Exhibit A hereto (collectively
the "Existing Investors") and those holders of the Company's securities whose
names are set forth on Exhibit B hereto (collectively the "New Investors"). The
New Investors and the Existing Investors are referred to collectively herein as
the "Investors."
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration Rights. The Company covenants and agrees as follows:
1.1 Definitions. For purposes of this Section 1 (unless specifically
stated elsewhere):
(a) The term "Securities Act" means the Securities Act of 1933,
as amended.
(b) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof.
(c) The term "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
(d) The terms "register," "registered" and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document.
(e) The term "Registrable Securities" means
(i) Common Stock issuable or issued upon conversion of the
Shares;
(ii) Common Stock now owned by each of ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Trustees of the Dibachi Family Trust UDT dated 2/11/98 and the ▇▇▇▇▇▇▇
1996 Children's Trust UTA dtd 3-11-96, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee;
(iii) Common Stock issued or issuable upon conversion of
Preferred Stock of the Company issued or issuable upon exercise of warrants to
purchase Preferred Stock of the Company issued after the date hereof to
financial institutions or lessors
41
in connection with commercial credit arrangements, equipment financings or
similar transactions, the terms of which are approved by the Board of Directors
of the Company, provided that any such additional parties to this Agreement
execute a counterpart signature page hereto and agree to be bound by the terms
hereof, and
(iv) Common Stock of the Company issued as (or issuable upon
the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of the foregoing, excluding in all cases, however, any shares
sold or transferred by a person in a transaction in which the rights under this
Section 1 are not assigned.
(f) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are Registrable
Securities.
(g) The term "Shares" shall mean shares of the Company's Series
F Preferred Stock, Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock.
(h) The term "SEC" shall mean the Securities and Exchange
Commission.
1.2 Demand Registration.
(a) Registration Rights. If the Company shall receive at any
time after six (6) months after the effective date of the first registration
statement for a public offering of securities of the Company (other than a
registration statement relating either to the sale of securities to employees of
the Company pursuant to a stock option, stock purchase or similar plan or a SEC
Rule 145 transaction), a written request from holders of at least 50% of the
Registrable Securities then outstanding ("Initiating Holders"), requesting that
the Company file a registration statement under the Securities Act covering the
registration of the lesser of (i) at least twenty percent (20%) of the
Registrable Securities then outstanding and (ii) at least $20,000,000 in gross
proceeds, then the Company shall:
(i) within ten (10) days of the receipt thereof, give
written notice of such request to all Holders; and
(ii) effect as soon as practicable, and in any event within
ninety (90) days of the receipt of such request, the registration under the
Securities Act of all Registrable Securities which the Holders request to be
registered, subject to the limitations of subsection 1.2(b), within fifteen (15)
days of the mailing of such notice by the Company in accordance with Section
4.6.
(b) Underwriting. If the Initiating Holders intend to distribute
the Registrable Securities covered by their request by means of an underwriting,
they shall so
42
advise the Company as a part of their request made pursuant to subsection 1.2(a)
and the Company shall include such information in the written notice referred to
in subsection 1.2(a). The underwriter will be selected by the Company and shall
be reasonably acceptable to a majority in interest of the Initiating Holders. In
such event, the right of any Holder to include Registrable Securities in such
registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute Registrable Securities through such underwriting shall,
together with the Company, enter into an underwriting agreement in customary
form with the managing underwriter selected for such underwriting by the
Company. Notwithstanding any other provision of this Section 1.2, if the Company
and the underwriter advise the Initiating Holders in writing that marketing
factors require a limitation of the number of shares to be underwritten, then
the Initiating Holders shall so advise all Holders of Registrable Securities,
and the number of Registrable Securities that may be included in the
underwriting on behalf of each selling Holder shall be allocated pro-rata
amongst all selling Holders according to the total number of Registrable
Securities held by each such selling Holder. For purposes of the foregoing
allocation and any other similar allocations required by this Section 1, for any
selling Holder which is a partnership or corporation, the partners, retired
partners and stockholders of such Holder (and in the case of a partnership, any
affiliated partnerships), or the estates and family members of any such partners
and retired partners and any trusts for the benefit of any of the foregoing
persons shall be deemed to be a single "selling Holder," and any pro-rata
reduction with respect to such "selling Holder" shall be based upon the
aggregate number of Registrable Securities owned by all entities and individuals
included in such "selling Holder," as defined in this sentence. To facilitate
the allocation of shares in accordance with the above provisions, the Company
may round the number of shares allocated to any Holder to the nearest 100
shares.
(c) Deferral of Registration. Notwithstanding the foregoing, if
the Company shall furnish to the Holders requesting a registration statement
pursuant to this Section 1.2 a certificate signed by the Chief Executive Officer
of the Company stating that in the good faith judgment of the Board of Directors
of the Company, it would be seriously detrimental to the Company for such
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement, the Company shall have the right to defer
taking action with respect to such filing for a period of not more than one
hundred twenty (120) days after receipt of the request of the Initiating
Holders; provided, however that the Company may not utilize this right more than
twice in any twelve-month period and the Company shall not utilize this right
(or the similar right to defer in Section 1.4(b)) for two consecutive one
hundred twenty (120) day periods.
(d) Number of Registrations. The Company shall not be obligated
to effect, or to take any action to effect, any registration pursuant to this
Section 1.2 after the Company has effected two (2) registrations pursuant to
this Section 1.2 and such registrations have been declared or ordered effective.
For the purposes of this Section 1.2, a proposed registration that is withdrawn
due to a material adverse change in the Company's business or financial
condition shall not count as a registration.
43
1.3 Piggyback Registration Rights.
(a) Registration Rights. If the Company proposes to register any
of its stock or other securities under the Securities Act in connection with the
public offering of such securities solely for cash (other than a registration
relating solely to the sale of securities to participants in a Company stock
plan, a registration effected pursuant to Rule 145 under the Securities Act or a
registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities) the Company shall, at such
time, promptly give each Holder written notice of such registration. Upon the
written request of each Holder given within fifteen (15) days after mailing of
such notice by the Company in accordance with Section 4.6, the Company shall,
subject to the provisions of paragraph (b) below, cause to be registered under
the Securities Act all of the Registrable Securities that each such Holder has
requested to be registered.
(b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as part of the written notice given pursuant
to Section 1.3(a). In such event, the right of any Holder to registration
pursuant to this Section 1.3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute Registrable Securities through such underwriting shall (together with
the Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 1.3, if the Company and the
managing underwriter determine that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter may limit or
exclude entirely the Registrable Securities to be included in such registration.
The Company shall so advise all Holders distributing Registrable Securities
through such underwriting, and the number of Registrable Securities that may be
included in the underwriting on behalf of each selling Holder and each other
person distributing securities in such underwriting shall be allocated pro-rata
amongst all selling Holders and all such other persons according to the
respective amounts of Registrable Securities or other securities entitled to
registration rights held by such selling Holders and other persons at the time
of filing the registration statement. To facilitate the allocation of shares in
accordance with the above provisions, the Company may round the number of shares
allocated to any Holder or other person to the nearest 100 shares.
1.4 Form S-3 Registration. If at any time, and from time to time,
that the Company shall be eligible to effect a registration and offering
pursuant to Form S-3 under the Securities Act or any successor form ("Form
S-3"), the Company shall receive from one or more of the Holders a written
request or requests that the Company effect a registration on Form S-3 and any
related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, the Company will:
44
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given
within fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 1.4: (1) if
Form S-3 is not available for such offering by the Holders; (2) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at a gross aggregate price to the public of less than
two million dollars ($2,000,000); (3) if the Company shall furnish to the
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company for such Form S-3 Registration to be
effected at such time, in which event the Company shall have the right to defer
the filing of the Form S-3 registration statement for a period of not more than
one hundred twenty (120) days after receipt of the request of the Holder or
Holders under this Section 1.4; provided, however, that the Company shall not
utilize this right more than twice in any twelve month period, and the Company
shall not utilize this right (or the similar right to defer in Section 1.2(c))
for two consecutive one hundred twenty (120) day periods; (4) if the Company
has, within the twelve (12) month period preceding the date of such request,
previously effected a registration on Form S-3 pursuant to this Section 1.4; or
(5) in any particular jurisdiction in which the Company would be required to
qualify to do business or to execute a general consent to service of process in
effecting such registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. Registrations effected pursuant to this
Section 1.4 shall not be counted as demands for registration or registrations
effected pursuant to Sections 1.2 or 1.3, respectively.
1.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
1.6 Expenses of Registration. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to the registrations pursuant to this
Section I for each Holder (which right may be assigned as provided in Section
1.10), including (without limitation) all registration, filing, and
45
qualification fees, printers and accounting fees relating or apportionable
thereto and the fees and disbursements of counsel for the Company and no more
than one counsel for all the selling Holders, but excluding underwriting
discounts and commissions relating to Registrable Securities; provided, however,
that the Company shall not be required to pay for any expenses of any
registration proceeding begun pursuant to Section 1.2 or 1.4 if the registration
request is subsequently withdrawn at the request of a majority of the Holders of
the Registrable Securities electing to be registered (in which case all
participating Holders shall bear such expenses), unless (i) the registration is
withdrawn following any deferral of the registration by the Company pursuant to
Section 1.2(c) or 1.4(b); (ii) the registration is withdrawn due to a material
adverse change in the Company's business or financial condition; or (iii) in the
case of a demand registration pursuant to Section 1.2, the Holders of a majority
of the Registrable Securities proposed to be registered by such Holders
requesting withdrawal agree that the Holders shall forfeit their right to one
registration pursuant to Section 1.2.
1.7 No Delay of Registration. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.
1.8 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the Securities
Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation"): (i)
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law; and the
Company will pay to each such Holder, underwriter or controlling person any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action,
as such expenses are incurred; provided, however, that the indemnity agreement
contained in this subsection 1.8(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable to any Holder,
any underwriter (as defined in the Securities Act) for such Holder or any person
who controls such Holder or underwriter within the meaning of the Securities Act
or Exchange Act, for any such loss, claim, damage, liability, or action to the
46
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished by such
Holder, underwriter or controlling person.
(b) To the extent permitted by law, each Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls the
Company within the meaning of the Securities Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, severally but not jointly,
against any losses, claims, damages, or liabilities (joint or several) to which
any of the foregoing persons may become subject, under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto) arise out of or are
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished by such Holder specified for use in such registration
statement; and each such Holder will pay any legal or other expenses reasonably
incurred by any person intended to be indemnified pursuant to this subsection
1.8(b), in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this subsection 1.8(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, that, in no event shall any indemnity by
any Holder under this subsection 1.8(b) exceed the net proceeds from the
offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.8 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.8, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with one counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
indemnified party under this Section 1.8 unless the failure to deliver notice is
materially prejudicial to its ability to defend such action. Any omission to so
deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 1.8.
47
(d) If the indemnification provided for in this Section 1.8 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations; provided that in no event shall any Holder be required to
contribute under this subsection 1.8(d) an aggregate amount in excess of the
gross proceeds from the offering received by such Holder less any amounts paid
by the Holder pursuant to subsection 1.8(b). The relative fault of the
indemnifying party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control as to the parties to the underwriters agreement and any
stockholders of the Company selling shares of the Company in such offering.
(f) The obligations of the Company and Holders under this
Section 1.8 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.9 Reports under the Exchange Act. With a view to making available
to the Holders the benefits of Rule 144 promulgated under the Act and any other
rule or regulation of the SEC that may at any time permit a Holder to sell
securities of the Company to the public without registration or pursuant to a
registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Securities
48
Act and the Exchange Act (at any time after it has become subject to such
reporting requirements), (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration.
1.10 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such securities who, after such assignment or transfer, holds at
least five hundred thousand (500,000) shares of Registrable Securities (subject
to appropriate adjustment for stock splits, dividends, combinations and other
recapitalizations), provided: (a) the Company is, within a reasonable time
before such transfer, furnished with written notice of the name and address of
such transferee or assignee and the securities with respect to which such
registration rights are being assigned; (b) such transferee or assignee agrees
in writing to be bound by and subject to the terms and conditions of this
Agreement, including without limitation the provisions of Section 1.11 and (c)
such assignment shall be effective only if immediately following such transfer
the further disposition of such securities by the transferee or assignee is
restricted under the Securities Act. For the purposes of determining the number
of shares of Registrable Securities held by a transferee or assignee of a holder
of Registrable Securities, (i) the holdings of affiliated partnerships and other
entities, constituent or retired partners or members (collectively, "Affiliated
Members") and (ii) the holdings of spouses and ancestors, lineal descendants and
siblings who acquire Registrable Securities by gift, will or intestate
succession (collectively, "Family Members") shall in each case be aggregated
together; provided that all assignees and transferees who would not qualify
individually for assignment of registration rights shall designate in writing to
the Company on behalf of the entire group of Affiliated Persons or Family
Members, as the case may be, a single attorney-in-fact for the purpose of
exercising any rights, receiving notices or taking any action under this Section
1.
1.11 "Market Stand-Off" Agreement. Each Holder hereby agrees that,
during the period of duration specified by the Company and an underwriter of
common stock or other securities of the Company, following the effective time of
a registration statement of the Company filed under the Securities Act, it shall
not, to the extent requested by the Company and such underwriter, directly or
indirectly sell, offer to sell, contract to sell (including, without limitation,
any short sale), grant any option to purchase or otherwise transfer or dispose
of (other than to donees who agree to be similarly bound) any securities of the
Company held by it immediately prior to the effective time of such registration
statement except Registrable Securities included in such registration; provided,
however, that:
(a) all officers and directors of the Company enter into
substantially similar agreements; and
(b) such market stand-off time period shall not exceed one
hundred eighty (180) days except as may be agreed to by holders of a majority of
the then outstanding Registrable Securities.
49
Each Investor agrees to provide to the underwriters of any public
offering such further agreement as such underwriter may require in connection
with this market stand-off agreement. In order to enforce the foregoing
covenant, the Company may impose stop-transfer instructions with respect to the
Registrable Securities of each Investor (and the shares or securities of every
other person subject to the foregoing restriction) until the end of such period.
1.12 Termination of Registration Rights. No Holder shall be entitled
to exercise any right provided for in this Section 1 after the earlier of (a)
five (5) years following the consummation of an underwritten public offering by
the Company of shares of its Common Stock pursuant to a registration statement
on form S-1 or SB-2 under the Securities Act yielding gross proceeds to the
Company in excess of twenty million dollars $20,000,000 (a "Qualified IPO"), and
(b) such time as Rule 144 or another similar exemption under the Securities Act
is available for the sale of all of such Holder's shares during a three
(3)-month period without registration.
2. Right of First Refusal.
2.1 General. Each Holder (as defined in Section 1.1(b)) and any
party to whom such Holder's rights under this Section 2 have been duly assigned
in accordance with Section 2.6 (each such Holder or assignee being hereinafter
referred to as a "Rights Holder") has the right of first refusal to purchase
such Rights Holder's Pro Rata Share (as defined below), of all (or any part) of
any "New Securities" (as defined in Section 2.2) that the Company may from time
to time issue after the date of this Agreement. A Rights Holder's "Pro Rata
Share" for purposes of this right of first refusal is the ratio of (a) the
number of Registrable Securities as to which such Rights Holder is the Holder
(and/or is deemed to be the Holder under Section 1.1(b)), to (b) a number of
shares of Common Stock of the Company equal to the sum of (1) the total number
of shares of Common Stock of the Company then outstanding plus (2) the total
number of shares of Common Stock of the Company into which all then outstanding
shares of Preferred Stock of the Company are then convertible plus (3) the
number of shares of Common Stock of the Company reserved for issuance under
stock purchase and stock option plans of the Company and outstanding warrants.
2.2 New Securities. "New Securities" shall mean any Common Stock or
Preferred Stock of the Company, whether now authorized or not, and rights,
options or warrants to purchase such Common Stock or Preferred Stock, and
securities of any type whatsoever that are, or may become, convertible or
exchangeable into such Common Stock or Preferred Stock; provided, however, that
the term "New Securities" does not include:
(a) shares of Common Stock issued or issuable upon conversion of
the outstanding shares of the Preferred Stock;
(b) up to an aggregate of 10,568,210 shares (such number to be
calculated net of any repurchases of such shares by the Company and net of any
expired or terminated options, warrants or rights and to be proportionately
adjusted to reflect any subsequent split, subdivision, combination or reverse
stock split of the outstanding shares of Common Stock of the Company) issued as
50
(i) shares of Common Stock (or options, warrants or rights
therefor) granted or issued hereafter to employees, officers, directors,
contractors, consultants or advisers to, the Company or any Subsidiary
pursuant to incentive agreements, stock purchase or stock option plans,
stock bonuses or awards, warrants, contracts or other arrangements that
are approved by the Board of Directors;
(ii) shares of the Company's Common Stock or Preferred Stock
(and/or options or warrants therefor) issued or issuable to parties
providing the Company with equipment leases, real property leases,
loans, credit lines, guaranties of indebtedness or similar financing,
under arrangements approved by the Board of Directors;
(c) shares of Common Stock or Preferred Stock issued pursuant to
the acquisition of another corporation or entity by the Company by
consolidation, merger, purchase of all or substantially all of the assets, or
other reorganization in which the Company acquires, in a single transaction or
series of related transactions, all or substantially all of the assets of such
other corporation or entity or fifty percent (50%) or more of the voting power
of such other corporation or entity or fifty percent (50%) or more of the equity
ownership of such other entity;
(d) any shares of Series D Preferred Stock issued under the
Series D Preferred Stock Purchase Agreement of even date herewith;
(e) any securities issuable upon exercise of any options,
warrants or rights to purchase any securities of the Company outstanding on the
date of this Agreement ("Warrant Securities") and any securities issuable upon
the conversion of any Warrant Securities or upon the exercise or conversion of
any securities, if such securities were first offered to the Rights Holders
hereunder;
(f) shares of the Company's Common Stock or Preferred Stock
issued in connection with any stock split or stock dividend; and
(g) securities offered by the Company to the public pursuant to
a registration statement filed under the Securities Act.
2.3 Procedures. In the event that the Company proposes to undertake
an issuance of New Securities, it shall give to each Rights Holder written
notice of its intention to issue New Securities (the "Notice"), describing the
type of New Securities and the price and the general terms upon which the
Company proposes to issue such New Securities. Each Rights Holder shall have ten
(10) business days from the date of mailing of any such Notice to agree in
writing to purchase such Rights Holder's Pro Rata Share of such New Securities
for the price and upon the general terms specified in the Notice by giving
written notice to the Company and stating therein the quantity of New Securities
to be purchased (not to exceed such Rights Holder's Pro Rata Share). If any
Rights Holder fails to so agree in writing within such ten (10) business day
period to purchase such Rights Holder's full Pro Rata Share of an offering of
New Securities (a "Nonpurchasing Holder"), then such Nonpurchasing Holder shall
forfeit the right hereunder to purchase that part of his Pro Rata Share of such
New
51
Securities that he did not so agree to purchase and the Company shall promptly
give each Rights Holder who has timely agreed to purchase his full Pro Rata
Share of such offering of New Securities (a "Purchasing Holder") written notice
of the failure of any Nonpurchasing Holder to purchase such Nonpurchasing Rights
Holder's full Pro Rata Share of such offering of New Securities (the
"Overallotment Notice"). Each Purchasing Holder shall have a right of
overallotment such that such Purchasing Holder may agree to purchase a portion
of the Nonpurchasing Holders' unpurchased Pro Rata Shares of such offering on a
pro rata basis according to the relative Pro Rata Shares of the Purchasing
Rights Holders, at any time within five (5) business days after receiving the
Overallotment Notice.
2.4 Failure to Exercise. In the event that the Rights Holders fail
to exercise in full the right of first refusal within such ten (10) plus five
(5) business day period, then the Company shall have 120 days thereafter to sell
the New Securities with respect to which the Rights Holders' rights of first
refusal hereunder were not exercised, at a price and upon general terms not
materially more favorable to the purchasers thereof than specified in the
Company's Notice to the Rights Holders. In the event that the Company has not
issued and sold the New Securities within such 120 day period, then the Company
shall not thereafter issue or sell any New Securities without again first
offering such New Securities to the Rights Holders pursuant to this Section 2.
2.5 Termination. This right of first refusal shall terminate (a)
immediately before the closing of the first underwritten sale of Common Stock of
the Company to the public pursuant to a registration statement filed with, and
declared effective by, the SEC under the Securities Act, covering the offer and
sale of Common Stock to the public at an aggregate gross public offering price
(calculated before deduction of underwriters' discounts and commissions) of at
least twenty million dollars ($20,000,000) or (b) upon an acquisition of the
Company by another corporation or entity by consolidation, merger or other
reorganization in which the holders of the Company's outstanding voting stock
immediately prior to such transaction (x) own, immediately after such
transaction, securities representing less than a majority of the voting power of
the corporation or other entity surviving such transaction and (y) receive cash,
securities registered under Section 12 of the Exchange Act, or a combination
thereof in exchange for all shares of Common Stock of the Company owned by such
holders immediately before such transaction.
2.6 Assignment of Right of First Refusal. The right to purchase the
Pro Rata Shares pursuant to this Section 2 may be assigned (but only with all
related obligations) by a Holder to a transferee or assignee of such securities
who, after such assignment or transfer, holds at least five hundred thousand
(500,000) shares of Registrable Securities (subject to appropriate adjustment
for stock splits, dividends, combinations and other recapitalizations),
provided: (a) the Company is, within a reasonable time before such transfer,
furnished with written notice of the name and address of such transferee or
assignee and the securities with respect to which such right of first refusal
are being assigned; (b) such transferee or assignee agrees in writing to be
bound by and subject to the terms and conditions of this Agreement,
52
including without limitation the provisions of Section 1.11 and (c) such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act. For the purposes of determining the number
of shares of Registrable Securities held by a transferee or assignee of a holder
of Registrable Securities, (i) the holdings of Affiliated Members and (ii) the
holdings of Family Members shall in each case be aggregated together; provided
that all assignees and transferees who would not qualify individually for
assignment of the right of first refusal shall designate in writing to the
Company on behalf of the entire group of Affiliated Persons or Family Members,
as the case may be, a single attorney-in-fact for the purpose of exercising any
rights, receiving notices or taking any action under this Section 2.
3. Covenants of the Company.
3.1 Delivery of Financial Statements. The Company shall deliver to
each Investor, so long as such Investor shall be a Holder of at least five
hundred thousand (500,000) Shares (subject to appropriate adjustment for stock
splits, dividends, combinations and other recapitalizations):
(a) as soon as practicable, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the Company, an income
statement for such fiscal year, a balance sheet of the Company and statement of
stockholders' equity as of the end of such year, and a statement of cash flows
for such year, such year-end financial reports to be in reasonable detail,
prepared in accordance with generally accepted accounting principles ("GAAP"),
and audited and certified by independent public accountants of nationally
recognized standing selected by the Company;
(b) as soon as practicable, but in any event within sixty (60)
days after the end of each of the first three (3) quarters of each fiscal year
of the Company, an unaudited profit or loss statement, a statement of cash flows
for such fiscal quarter and an unaudited balance sheet as of the end of such
fiscal quarter.
3.2 Inspection. The Company shall permit each Investor, so long as
such Investor shall be a Holder of at least five hundred thousand (500,000)
Shares (subject to appropriate adjustment for stock splits, dividends,
combinations and other recapitalizations), at such Holder's expense, to visit
and inspect the Company's properties, to examine its books of account and
records and to discuss the Company's affairs, finances and accounts with its
officers, all at such reasonable times as may be requested by the Holder;
provided, however, that the Company shall not be obligated pursuant to this
Section 3.2 to provide access to any information which it reasonably considers
to be a trade secret or similar confidential information unless the recipient is
not deemed by the Board of Directors to be a competitor or potential competitor
of the Company and such Holder signs an appropriate nondisclosure agreement. The
Company hereby acknowledges that CNET, Inc. is not and will not be deemed a
competitor or potential competitor for purposes of this Section 3.2.
3.3 Termination of Covenants. The covenants set forth in this
Section 3 shall terminate and be of no further force or effect (a) upon a
Qualified IPO or when the
53
Company first becomes subject to the periodic reporting requirements of Sections
12(g) or 15(d) of the Exchange Act, whichever event shall first occur, or (b)
with respect to the covenants set forth in Section 3.2, as to any Holder, or
transferee or assignee of such Holder, who is deemed by the Board of Directors
of the Company to be a competitor or potential competitor of the Company.
4. Miscellaneous.
4.1 Additional Parties. "Purchaser" under that certain Series D
Preferred Stock Purchase Agreement made as of November ___, 1999 by and between
the Company and such Purchasers shall become a "New Investor" hereunder, when
such Purchaser executes a counterpart signature page hereof and without the need
for an amendment hereto except to add such Purchaser's name to Exhibit B hereto.
In the event of the issuance of warrants to purchase Preferred Stock to
financial institutions or lessors in connection with commercial credit
arrangements, equipment financings or similar transactions, the terms of which
are approved by the Board of Directors of the Company, upon execution of a
counterpart signature page by any such entity and without need for an amendment
hereto except to add such entity's name to Exhibit B hereto, any such entity
shall become a party to this Agreement and shall be deemed an "Investor" for
purposes of Sections 1, 2 and 4 of this Agreement as of the date of execution of
such counterpart signature page.
4.2 Successors and Assigns. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted assigns of the parties
(including transferees of any shares of Registrable Securities). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
4.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California as such laws apply to agreements
entered into by residents of California and to be performed entirely within such
state.
4.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
4.6 Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be effective when given, and
shall in any event be deemed to be given upon receipt or, if earlier, (a) five
(5) days after deposit with the U.S. Postal Service or other applicable postal
service, if delivered by first class mail, postage prepaid, (b) upon delivery,
if delivered by hand, (c) one (1) business day after the business day of deposit
with
54
Federal Express or similar overnight courier, freight prepaid or (d) one (1)
business day after the business day of facsimile transmission, if delivered by
facsimile transmission with copy by first class mail, postage prepaid, and shall
be addressed (i) if to the Investors, at the Investors' respective addresses as
set forth on Exhibit A or Exhibit B hereto and (ii) if to the Company, at the
address of its principal corporate offices (attention: Secretary), or in any
such case at such other address as a party may designate by ten (10) days'
advance written notice to the other party pursuant to the provisions above.
4.7 Expenses. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
4.8 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Registrable Securities then outstanding. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Registrable Securities then outstanding, each future holder of all
such Registrable Securities, and the Company.
4.9 Aggregation of Stock. All shares of the Series F, Series A,
Series B, Series C and Series D Preferred Stock of the Company held or acquired
(or Common Stock issuable upon conversion thereof) by affiliated entities or
persons shall be aggregated together for the purpose of determining the
availability or discharge of any rights under this Agreement.
4.10 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
4.11 Entire Agreement; Amendment; Waiver. This Agreement (including
the Exhibits hereto) constitutes the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
[Signature Page Follows]
55
COMPANY: INVESTOR:
NIKU CORPORATION
By: By:
--------------------------------- ------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
Name:
----------------------------
Title:
---------------------------
56
LIST OF EXHIBITS
Exhibit A - Existing Investors
Exhibit B - New Investors
57
Exhibit A
Existing Investors
COMMON STOCK
NAME SHARES
-----------------------------------------------------------
▇▇▇▇▇▇▇ 1996 Children's Trust 500,000
UTA dtd 3-11-96, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, Trustee
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇., 3,200,000
Trustees of the Dibachi Family
Trust UDT dated 2-11-98
SERIES F
NAME SHARES
-----------------------------------------------------------
▇▇▇▇▇▇▇ 1996 Children's Trust 700,000
UTA dtd 3-11-96, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, Trustee
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇ ▇., 1,300,000
Trustees of the ▇▇▇▇▇▇▇ Family Trust
U/D/T dated 4-2-97
▇▇▇▇▇▇▇▇ V, LLC, ▇▇▇▇▇▇ ▇▇▇▇▇▇, 1,500,000
Managing Member
Dibachi, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 500,000
Trust, ▇▇▇▇▇▇ ▇▇▇▇▇▇, Trustee
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇., 5,900,000
Trustees of the Dibachi Family
Trust UDT dated 2-11-98
SILICON VALLEY COMMUNITIES VENTURES -
NOT A PARTY TO THIS AGREEMENT
(100,000 SHARES)
58
SERIES A
NAME SHARES
-----------------------------------------------------------
▇▇▇▇, ▇▇▇▇ ▇. and ▇▇▇▇▇▇ ▇. ▇▇▇▇ 285,714
Family Trust 1994
Delivanis, Constantin and Alison 142,857
▇▇▇▇▇▇▇ as co-trustees
of the ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Family
Trust dtd 12-13-90
▇▇▇▇▇ ▇▇▇▇▇▇▇ 714,285
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇., 285,714
Trustees of the Dibachi
Family Trust UDT dated 2-11-98
▇▇▇▇ ▇▇▇▇▇▇▇ 142,857
▇▇▇▇▇▇▇▇ V, LLC, ▇▇▇▇▇▇ ▇▇▇▇▇▇, 5,714
Managing Member
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇ 1,857,142
A., Trustees of the
▇▇▇▇▇▇▇ Family Trust U/D/T dated
4-2-97
GCA Investments 1998 30,000
▇▇▇ ▇▇▇▇▇▇▇ 142,857
▇▇▇▇▇ ▇▇▇▇ 150,000
▇▇▇▇▇ Family Partners 285,714
Soroush and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 142,857
59
Kaboli, JTWROS
▇▇▇▇ ▇▇▇▇▇ 71,428
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 71,428
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
▇▇▇▇▇▇ ▇▇▇▇▇▇ 28,571
The ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Revocable Trust 285,714
Madhavan Rangaswami 142,857
VLG Investments 1998 71,428
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. And 285,714
▇▇▇▇▇ ▇. ▇▇▇▇, Trustees of the ▇▇▇▇ Family
Trust, dated June 3, 1995
SERIES B
NAME SHARES
-----------------------------------------------------------
Comdisco, Inc. 146,666
▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇, Trustees of 6,666
the Labe 1998 Revocable Trust, dated 10/5/98
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 6,666
The Phoenix Partners 333,333
▇▇▇▇▇▇ ▇▇▇▇▇▇ 13,333
60
VLG Investments 1998 13,333
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 60,000
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ 33,333
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 66,666
▇▇▇▇▇ ▇▇▇▇▇ 66,666
▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ JTWROS 133,333
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners, LLC 160,000
Venrock Associates 2,328,000
Venrock Associates II, L.P. 2,845,333
▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustees of 666,666
the Dibachi Family Trust UDT dated 2/11/98
▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, 333,333
Trustees of the ▇▇▇▇▇▇▇ Family Trust UDT
dated 4/27/97
▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, 160,000
Trustees of the ▇▇▇▇▇▇▇ Family Trust UDT
dated 4/27/97
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. and ▇▇▇▇▇ ▇. ▇▇▇▇, 133,333
Trustees of the ▇▇▇▇ Family Trust, dated
6/3/95
▇▇▇▇▇ ▇▇▇▇▇▇ as nominee for the Broadview 293,333
Partners Group
61
▇▇▇▇▇ Family Partners 133,333
▇▇▇▇ ▇▇▇▇▇▇ 66,666
SERIES C
NAME SHARES
------------------------------------------------------------
▇.▇. ▇▇▇▇▇▇▇ III, L.P. 4,416,199
Whitney Strategic Partners III, L.P. 106,414
▇▇▇▇▇ ▇. ▇▇▇▇▇ 25,126
F & W Investments 1998 25,126
▇▇▇ ▇▇▇▇ 25,126
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. 502,513
▇▇▇▇▇▇▇, Trustees of the ▇▇▇▇▇▇▇ Family
Trust U/D/T dated 4/2/97
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 75,377
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ California 49,121
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ Employee Venture 28,391
Fund, ▇.▇. ▇▇
Access Technology Partners, L.P. 396,985
Access Technology Partners Brokers 4,397
Fund, L.P.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 12,563
▇.▇. ▇▇▇▇▇▇▇ & Sons C/F ▇▇▇▇▇▇▇ ▇. 5,025
▇▇▇▇▇ ▇▇▇ Account
▇▇▇▇▇▇▇ ▇▇▇ 2,513
▇▇▇▇▇▇ ▇▇▇▇▇▇ 3,518
Phoenix Partners IIIB 251,256
Phoenix Partners IV 251,256
62
TCW/ICICI India Private Equity Fund, 705,944
L.L.C.
TCW/ICICI India Private Equity Amp 299,081
Fund, L.L.C.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 25,126
Venrock Associates 999,246
Venrock Associates II, L.P. 1,437,940
▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇, 50,251
Trustees of the ▇▇▇▇ Family Trust
Dated June, 1995
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III 25,126
▇▇▇▇ ▇. ▇▇▇▇▇ 12,563
Comdisco, Inc. 251,256
63
Exhibit B
New Investors
SEE EXHIBIT A TO SERIES D PREFERRED STOCK PURCHASE AGREEMENT
64
EXHIBIT E
CO-SALE AGREEMENT
NIKU CORPORATION
AMENDED AND RESTATED CO-SALE AGREEMENT
THIS AMENDED AND RESTATED CO-SALE AGREEMENT (this "Agreement") is
made as of the ____ day of November, 1999 by and among ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Trustees of the Dibachi Family Trust UDT Dated 2-11-98 (collectively
"Dibachi") and The ▇▇▇▇▇▇▇ 1996 Children's Trust UTA dtd 3-11-98, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, Trustee (the "Founders"), Niku Corporation, a Delaware corporation (the
"Company"), and those holders of the Company's securities whose names are set
forth on Exhibit A hereto (collectively the "Existing Investors") and those
holders of the Company's securities whose names are set forth on Exhibit B
hereto (collectively the "New Investors"). The New Investors and the Existing
Investors are referred to collectively herein as the "Investors."
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. SALES BY FOUNDERS.
(a) NOTICE OF SALES. Should any Founder propose to accept one or
more bona fide offers (collectively, a "Purchase Offer") from any person or
persons for the purchase of (i) the Company's Common Stock owned by such Founder
or (ii) with respect only to Dibachi, the Series F Preferred Stock owned by
Dibachi, or the shares of Common Stock into which such shares convert (the
"Dibachi Shares", and together with the shares of Common Stock described in
clause (i) above, the "Shares") from such Founder (other than as set forth in
Section 1(e) hereof), such Founder shall promptly deliver a notice (the
"Notice") to the Company and each Investor stating the terms and conditions of
such Purchase Offer including, without limitation, the number of Shares to be
sold or transferred, the nature of such sale or transfer, the consideration to
be paid, and the name and address of each prospective purchaser or transferee.
(b) CO-SALE RIGHT. Each Investor shall have the right (the "Co-Sale
Right"), exercisable upon written notice to the Company within fifteen (15)
business days, to participate in such Founder's sale of Shares pursuant to the
specified terms and conditions of such Purchase Offer. To the extent an Investor
exercises such Co-Sale Right in accordance with the terms and conditions set
forth below, the number of Shares which such Founder may sell pursuant to such
Purchase Offer shall be correspondingly reduced. The Co-Sale Right of each
Investor shall be subject to the following terms and conditions:
65
(i) CALCULATION OF SHARES. Each Investor may sell all or any
part of that number of shares of Common Stock of the Company issued or issuable
upon conversion of Preferred Stock or Common Stock received in connection with
any stock dividend, stock split or other reclassification thereof (the
"Conversion Shares") equal to the product obtained by multiplying (x) the
aggregate number of Shares covered by the Purchase Offer by (y) a fraction, the
numerator of which is the number of Conversion Shares at the time owned by such
Investor and the denominator of which is the combined number of Conversion
Shares of the Company at the time owned by all Investors and all Founders
participating in such sale, including shares transferred by such Founder to
Permitted Transferees (as hereinafter defined) in accordance herewith. The
provisions of this Agreement do not confer any Co-Sale rights with respect to
any shares of Common Stock or other securities held by an Investor that are not
Conversion Shares, nor do the provisions of this Agreement subject any shares of
Preferred Stock of the Company held by the Founders to the Co-Sale rights of the
Investors, other than the Shares.
(ii) DELIVERY OF CERTIFICATES. Each Investor may effect its
participation in the sale by delivering to the selling Founder for transfer to
the prospective purchaser one or more certificates, properly endorsed for
transfer, which represent the number of shares of Preferred Stock, or Common
Stock issued upon conversion thereof, which such Investor elects to sell.
(c) TRANSFER. The stock certificate or certificates which the
Investor delivers to the selling Founder pursuant to Section 1(b) shall be
delivered by such Founder to the prospective purchaser in consummation of the
sale pursuant to the terms and conditions specified in the Notice, and such
Founder shall promptly thereafter remit to such Investor that portion of the
sale proceeds to which such Investor is entitled by reason of its participation
in such sale. To the extent that any prospective purchaser or purchasers
prohibits such assignment or otherwise refuses to purchase shares of capital
stock of the Company from an Investor exercising its Co-Sale Right hereunder,
the selling Founder or Founders shall not sell to such prospective purchaser or
purchasers any shares of capital stock unless and until, simultaneously with
such sale, the selling Founder or Founders shall purchase such shares from such
Investor for the same consideration and on the same terms and conditions as the
proposed transfer described in the Notice (which terms and conditions shall be
no less favorable than those governing the sale to the purchaser by the Founder
or Founders).
(d) NO ADVERSE EFFECT. The exercise or non-exercise of the rights of
the Investors hereunder to participate in one or more sales of Shares made by a
Founder shall not adversely affect their rights to participate in subsequent
sales of Shares by a Founder.
(e) PERMITTED TRANSACTIONS. The provisions of Section 1 of this
Agreement shall not pertain or apply to:
(i) Any pledge of the Shares made by a Founder pursuant to a
bona fide loan transaction which creates a mere security interest;
(ii) Any repurchase of Shares by the Company;
66
(iii) Any bona fide gift;
(iv) Any transfer to a Founder's ancestors, descendants or
spouse or to a trust for their benefit;
(v) Any sale or transfer of Shares between the Founders; or
(vi) Sale(s) or transfer(s) by a Founder in an amount not
exceeding 500,000 shares of Common Stock in the aggregate over the term of this
Agreement.
provided, that (x) the Founder(s) shall inform the Investors of such pledge,
transfer or gift prior to effecting it, and (y) the pledgee, transferee or donee
(collectively, the "Permitted Transferees") shall furnish the Investors with a
written agreement to be bound by and comply with all provisions of this
Agreement applicable to the Founders.
2. PROHIBITED TRANSFERS; PUT OPTION. Any attempt by a Founder to
transfer shares of the Company in violation of Section 1 hereof (a "Prohibited
Transfer") shall be void and the Company agrees it will not effect such a
transfer nor will it treat any alleged transferee as the holder of such shares
without the written consent of the holders of a majority of the Conversion
Shares. In the event of a Prohibited Transfer, in addition to such other
remedies as may be available at law, in equity or hereunder, if any, the
Investors shall have the put option provided below, and the Founders or Founders
who made the Prohibited Transfer shall be bound by the provisions of such
option.
(a) In the event of a Prohibited Transfer, each Investor shall have
the right to sell to the Founder or Founders who made the Prohibited Transfer
the type and number of Shares equal to the number of shares each Investor would
have been entitled to transfer to the third party purchaser under Section 1
hereof, had the Prohibited Transfer been effected pursuant to and in compliance
with the terms hereof. Such sale shall be made on the following terms and
conditions:
(i) The price per share at which the shares are to be sold to
the Founder or Founders who made the Prohibited Transfer shall be equal to the
price per share paid by the third party purchaser to such Founder in such
Prohibited Transfer. The Founder shall also reimburse each Investor for fees and
expenses, including legal fees and expenses, directly incurred pursuant to the
exercise or the attempted exercise of the Investor's rights under this Section
2.
(ii) Within ninety (90) days after the date on which an Investor
receives notice of the Prohibited Transfer or otherwise becomes aware of the
Prohibited Transfer, such Investor shall, if exercising the option created
hereby, deliver to the Founder the certificate or certificates representing
shares to be sold, each certificate to be properly endorsed for transfer.
67
(iii) Such Founder shall, upon receipt of the certificate or
certificates for the shares to be sold by an Investor, pay the aggregate
purchase price therefor and the amount of reimbursable fees and expenses, in
cash or by other means acceptable to the Investor.
(b) Notwithstanding the foregoing, any attempt by a Founder to
transfer securities in violation of this Section 2 shall be voidable at the
option of the holders of a majority of the Conversion Shares if such holders do
not elect to exercise the put option set forth in this Section 2, and the
Company agrees it will not effect such a transfer, nor will the holders of a
majority of the Conversion Shares treat any alleged transferee as the holder of
such shares, without the written consent of the holders of a majority of the
Conversion Shares.
3. LEGENDED CERTIFICATES. Each certificate representing Shares now or
hereafter owned by the Founders or issued to any Permitted Transferee pursuant
to Section l(e) shall be endorsed with the following legend:
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND
CONDITIONS OF A CERTAIN CO-SALE AGREEMENT BY AND BETWEEN THE
STOCKHOLDER, THE CORPORATION AND CERTAIN HOLDERS OF COMMON AND
PREFERRED STOCK OF THE CORPORATION. COPIES OF SUCH AGREEMENT MAY
BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE
CORPORATION."
The foregoing legend shall be removed upon termination of this Agreement
in accordance with the provisions of Section 4(a).
4. MISCELLANEOUS PROVISIONS.
(a) TERMINATION. This Agreement shall terminate (and shall not
apply to any transfer by a Founder in connection with) (a) upon the consummation
of an underwritten public offering by the Company of shares of its Common Stock
pursuant to a registration statement on form S-1 or SB-2 under the Securities
Act, yielding gross proceeds to the Company in excess of twenty million dollars
($20,000,000) or (b) upon an acquisition of the Company by another corporation
or entity by consolidation, merger or other reorganization in which the holders
of the Company's outstanding voting stock immediately prior to such transaction
(x) own, immediately after such transaction, securities representing less than a
majority of the voting power of the corporation or other entity surviving such
transaction and (y) receive cash, securities registered under Section 12 of the
Securities Exchange Act of 1934, or a combination thereof in exchange for all
shares of Common Stock of the Company owned by such holders immediately before
such transaction.
(b) SUCCESSORS AND ASSIGNS. This Agreement and the rights and
obligations of the parties hereunder shall inure to the benefit of, and be
binding upon, their respective successors, assigns and legal representatives.
The rights of the Investors hereunder shall be assignable only (i) by each of
such Investors to any other Investor or (ii) an assignee or
68
transferee who acquires not less than 500,000 shares of Conversion Shares;
provided that such limitation shall not apply to transfers by an Investor to
constituent shareholders, constituent partners or retired constituent partners
(including any constituent of a constituent) of the Investor (including spouses
and ancestors, lineal descendants and siblings of such partners or spouses who
acquire the Preferred Stock or Common Stock issued upon conversion thereof) if
all such transferees or assignees irrevocably agree in writing to appoint a
single representative as their attorney in fact for the purpose of receiving any
notices and exercising their rights under this Agreement.
(c) GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of California as such laws apply to
agreements entered into by residents of California and to be performed entirely
within such state.
(d) COUNTERPARTS. This Agreement may be executed in two or more
Counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(e) TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(f) NOTICES. All notices and other communications required or
permitted hereunder shall be in writing, shall be effective when given, and
shall in any event be deemed to be given upon receipt or, if earlier, (a) five
(5) days after deposit with the U.S. Postal Service or other applicable postal
service, if delivered by first class mail, postage prepaid, (b) upon delivery,
if delivered by hand, (c) one (1) business day after the business day of deposit
with Federal Express or similar overnight courier, freight prepaid or (d) one
(1) business day after the business day of facsimile transmission, if delivered
by facsimile transmission with copy by first class mail, postage prepaid, and
shall be addressed (i) if to the Investors, at the Investors' respective
addresses as set forth on Exhibit A hereto and (ii) if to the Company, at the
address of its principal corporate offices (attention: Secretary), or in any
such case at such other address as a party may designate by ten (10) days'
advance written notice to the other party pursuant to the provisions above.
(g) EXPENSES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
(h) AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Series B Preferred Stock then outstanding, at least two-thirds
(66 2/3%) of the Series C Preferred Stock then outstanding and at least
two-thirds (66 2/3%) of the Series D Preferred Stock then outstanding. Any
amendment or waiver
69
effected in accordance with this paragraph shall be binding upon the Company,
each holder of Preferred Stock and any holder of Shares then outstanding.
(i) AGGREGATION OF STOCK. All shares of the Preferred Stock of
the Company held or acquired (or Common Stock issuable upon conversion thereof)
by affiliated entities or persons shall be aggregated together for the purpose
of determining the availability or discharge of any rights under this Agreement.
(j) SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
(k) ADDITIONAL PARTIES. Each Purchaser under that certain Series
D Preferred Stock Purchase Agreement made as of November ___, 1999 by and
between the Company and such Purchasers shall become a "New Investor" hereunder
when such Purchaser executes a counterpart signature page hereof and without the
need for an amendment hereto except to add such Purchaser's name to Exhibit B
hereto.
(l) ENTIRE AGREEMENT. This Agreement (including the Exhibit
hereto) constitutes the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof
[Signature Pages Follow]
70
The parties have executed this Amended and Restated Co-Sale Agreement as
of the date first written above.
COMPANY: INVESTOR:
NIKU CORPORATION
-----------------------------------
Name of Investor
By: By:
------------------------------------ --------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President Title:
------------------------------
FOUNDERS:
---------------------------------------------
▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustees of the
Dibachi Family Trust UDT Dated 2-11-98
---------------------------------------------
▇▇▇▇▇▇▇ 1996 Children's Trust UTA dtd 3-11-98,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
71
LIST OF EXHIBITS
Exhibit A - Existing Investors - SEE EXHIBIT A TO FOURTH AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
Exhibit B - New Investors - SEE EXHIBIT A TO SERIES D PREFERRED STOCK
PURCHASE AGREEMENT
72
EXHIBIT F
NIKU CORPORATION
AMENDED AND RESTATED VOTING AGREEMENT
THIS AMENDED AND RESTATED VOTING AGREEMENT (this "Agreement") is made as
of the ______ day of November, 1999 by and among Niku Corporation, a Delaware
corporation (the "Company") and those holders of the Company's securities whose
names are set forth on Exhibit A hereto (the "Investors") in connection with
that Series D Preferred Stock Purchase Agreement (the "Stock Purchase
Agreement") dated the date hereof by and among the Company and certain
Purchasers (as defined in the Stock Purchase Agreement).
AGREEMENT
THE PARTIES AGREE AS FOLLOWS:
1. ELECTION OF DIRECTORS.
1.1 BOARD REPRESENTATION. At any meeting of the shareholders of the
Company at which members of the Board of Directors of the Company are to be
elected, or whenever members of the Board of Directors are to be elected by
written consent, the parties agree to vote or act with respect to their shares
(whether now or hereinafter acquired) so as to elect (a) one (1) member of the
Company's Board of Directors designated by Venrock Associates and Venrock
Associates II, L.P. (collectively "Venrock"), such director to initially be
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, (b) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and (c) so long as ▇. ▇. ▇▇▇▇▇▇▇ III, L.
P., Whitney Strategic Partners III, L. P. or any of their respective affiliates
(collectively, "Whitney") beneficially own at least twenty-five percent (25%) of
the amount of Series C Preferred Stock of the Company purchased by Whitney at
the Initial Closing under the Series C Preferred Stock Purchase Agreement made
as of May 13, 1999 (the "Minimum Amount"), one (1) member of the Company's Board
of Directors designated by Whitney (a "Whitney Representative"), such director
to initially be ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
1.2 BOARD OBSERVATION. The parties agree that, if the Venrock or
Whitney designee to the Board of Directors to the Company is unable to attend a
meeting of the Board of Directors, Venrock or Whitney as applicable, may cause
another representative of Venrock or Whitney as applicable to attend such
meeting as an observer, provided that the Company shall have the right to
exclude such representative from all or any part of a Board meeting if in its
reasonable judgment such exclusion is necessary to preserve the attorney-client
privilege or to protect the Company's trade secrets or similar confidential
information.
73
2. LEGENDS. Each certificate representing shares of the Company's
capital stock held by Investors or any assignee of the Investors shall bear the
following legend; provided, however, that stock certificates held by any
assignee of the Investors shall only bear such legend until an underwritten
public offering by the Company of shares of its Common Stock pursuant to a
registration statement on form SB-1 or SB-2 under the Securities Act, yielding
gross proceeds to the Company in excess of twenty million dollars ($20,000,000):
"THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A VOTING AGREEMENT BY
AND AMONG THE COMPANY AND CERTAIN STOCKHOLDERS OF THE COMPANY (A
COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY), AND BY ACCEPTING
ANY INTEREST IN SUCH SHARES THE PERSON ACCEPTING SUCH INTEREST
SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE
PROVISIONS OF SAID VOTING AGREEMENT."
3. TERMINATION.
3.1 TERMINATION EVENTS. This Agreement shall terminate, except as to
the obligation to vote for the Whitney Representative, upon the consummation of
an underwritten public offering by the Company of shares of its Common Stock
pursuant to a registration statement on form S-1 or SB-2 under the Securities
Act, yielding gross proceeds to the Company in excess-of twenty million dollars
($20,000,000).
3.2 REMOVAL OF LEGEND. At any time after the termination of this
Agreement in accordance with Section 3.1 as to any party, any party as to which
this Agreement has been terminated who holds a stock certificate legended
pursuant to Section 2 may surrender such certificate to the Company for removal
of the legend, and the Company will duly reissue a new certificate without the
legend.
4. MISCELLANEOUS.
4.1 SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
4.2 AMENDMENTS AND WAIVERS. Any term hereof may be amended or waived
only with the written consent of the Company, Venrock, Whitney, and holders of
at least a majority of the Shares held by the other parties hereto. Any
amendment or waiver effected in accordance with this Section 4.2 shall be
binding upon the Company, the Investors, and each of their respective successors
and assigns.
74
4.3 NOTICES. All notices and other communications required or
permitted hereunder shall be in writing, shall be effective when given, and
shall in any event be deemed to be given upon receipt or, if earlier, (a) five
(5) days after deposit with the U.S. Postal Service or other applicable postal
service, if delivered by first class mail, postage prepaid, (b) upon delivery,
if delivered by hand, (c) one (1) business day after the business day of deposit
with Federal Express or similar overnight courier, freight prepaid or (d) one
(1) business day after the business day of facsimile transmission, if delivered
by facsimile transmission with copy by first class mail, postage prepaid, and
shall be addressed (i) if to a Purchaser, at such Purchaser's address as set
forth on Exhibit A, and (ii) if to the Company, at the address of its principal
corporate offices (attention: Secretary), or at such other address as a party
may designate by ten days' advance written notice to the other party pursuant to
the provisions above.
4.4 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
4.5 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely in California.
4.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
4.7 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
[Signature Page Follows]
75
The parties hereto have executed this Amended and Restated Voting
Agreement as of the date first written above.
COMPANY: STOCKHOLDERS
NIKU CORPORATION
(Investor)
By: By:
---------------------------------- ------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
Address: Name:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (Print)
Title:
---------------------------
76
Exhibit A
INVESTORS
SEE EXHIBIT A TO SERIES D PREFERRED STOCK PURCHASE AGREEMENT
77
EXHIBIT G
CONFIDENTIAL INFORMATION AND INVENTIONS ASSIGNMENT AGREEMENT
NIKU CORPORATION
CONFIDENTIAL INFORMATION AND
INVENTION ASSIGNMENT AGREEMENT
As a condition of my becoming employed (or my employment being
continued) by or retained as a consultant (or my consulting relationship being
continued) by Niku Corporation, a Delaware corporation or any of its current or
future subsidiaries, affiliates, successors or assigns (collectively, the
"Company"), and in consideration of my employment or consulting relationship
with the Company and my receipt of the compensation now and hereafter paid to me
by the Company, I agree to the following:
1. EMPLOYMENT OR CONSULTING RELATIONSHIP. I understand and acknowledge
that this Agreement does not alter, amend or expand upon any rights I may have
to continue in the employ of, or in a consulting relationship with, or the
duration of my employment or consulting relationship with, the Company under any
existing agreements between the Company and me or under applicable law. Any
employment or consulting relationship between the Company and me, whether
commenced prior to or upon the date of this Agreement, shall be referred to
herein as the "Relationship."
2. AT-WILL RELATIONSHIP. I understand and acknowledge that my
Relationship with the Company is and shall continue to be at-will, as defined
under applicable law, meaning that either I or the Company may terminate the
Relationship at any time for any reason or no reason, without further obligation
or liability.
3. CONFIDENTIAL INFORMATION.
(a) COMPANY INFORMATION. I agree at all times during the term of my
Relationship with the Company and thereafter, to hold in strictest confidence,
and not to use, except for the benefit of the Company, or to disclose to any
person, firm, corporation or other entity without written authorization of the
Board of Directors of the Company, any Confidential Information of the Company
which I obtain or create. I further agree not to make copies of such
Confidential Information except as authorized by the Company. I understand that
"Confidential Information" means any Company proprietary information, technical
data, trade secrets or know-how, including, but not limited to, research,
product plans, products, services, suppliers, customer lists and customers
(including, but not limited to, customers of the Company on whom I called or
with whom I became acquainted during the Relationship), prices and costs,
markets, software, developments, inventions, laboratory notebooks, processes,
formulas, technology, designs, drawings, engineering, hardware configuration
information, marketing, licenses, finances, budgets or other business
information disclosed to me by the Company either directly
78
or indirectly in writing, orally or by drawings or observation of parts or
equipment or created by me during the period of the Relationship, whether or not
during working hours. I understand that "Confidential Information" includes, but
is not limited to, information pertaining to any aspects of the Company's
business which is either information not known by actual or potential
competitors of the Company or is proprietary information of the Company or its
customers or suppliers, whether of a technical nature or otherwise. I further
understand that Confidential Information does not include any of the foregoing
items which has become publicly and widely known and made generally available
through no wrongful act of mine or of others who were under confidentiality
obligations as to the item or items involved.
(b) FORMER EMPLOYER INFORMATION. I represent that my performance of
all terms of this Agreement as an employee or consultant of the Company has not
breached and will not breach any agreement to keep in confidence proprietary
information, knowledge or data acquired by me in confidence or trust prior or
subsequent to the commencement of my Relationship with the Company, and I will
not disclose to the Company, or induce the Company to use, any inventions,
confidential or proprietary information or material belonging to any previous
employer or any other party.
(c) THIRD PARTY INFORMATION. I recognize that the Company has
received and in the future will receive confidential or proprietary information
from third parties subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. I agree to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or
corporation or to use it except as necessary in carrying out my work for the
Company consistent with the Company's agreement with such third party.
4. INVENTIONS.
(a) INVENTIONS RETAINED AND LICENSED. I have attached hereto, as
Exhibit A, a list describing with particularity all inventions, original works
of authorship, developments, improvements, and trade secrets which were made by
me prior to the commencement of the Relationship (collectively referred to as
"Prior Inventions"), which belong solely to me or belong to me jointly with
another, which relate in any way to any of the Company's proposed businesses,
products or research and development, and which are not assigned to the Company
hereunder; or, if no such list is attached, I represent that there are no such
Prior Inventions. If, in the course of my Relationship with the Company, I
incorporate into a Company product, process or machine a Prior Invention owned
by me or in which I have an interest, the Company is hereby granted and shall
have a non-exclusive, royalty-free, irrevocable, perpetual, worldwide license
(with the right to sublicense) to make, have made, copy, modify, make derivative
works of, use, sell and otherwise distribute such Prior Invention as part of or
in connection with such product, process or machine.
(b) ASSIGNMENT OF INVENTIONS. I agree that I will promptly make full
written disclosure to the Company, will hold in trust for the sole right and
benefit of the Company, and hereby assign to the Company, or its designee, all
my right, title and interest throughout the world in and to any and all
inventions, original works of authorship, developments, concepts, know-how,
improvements or trade secrets, whether or not patentable or registrable under
79
copyright or similar laws, which I may solely or jointly conceive or develop or
reduce to practice, or cause to be conceived or developed or reduced to
practice, during the period of time in which I am employed by or a consultant of
the Company (collectively referred to as "Inventions"), except as provided in
Section 4(e) below. I further acknowledge that all inventions, original works of
authorship, developments, concepts, know-how, improvements or trade secrets
which are made by me (solely or jointly with others) within the scope of and
during the period of my Relationship with the Company are "works made for hire"
(to the greatest extent permitted by applicable law) and are compensated by my
salary (if I am an employee) or by such amounts paid to me under any applicable
consulting agreement or consulting arrangements (if I am a consultant), unless
regulated otherwise by the mandatory law of the state of California.
(c) MAINTENANCE OF RECORDS. I agree to keep and maintain adequate
and current written records of all Inventions made by me (solely or jointly with
others) during the term of my Relationship with the Company. The records may be
in the form of notes, sketches, drawings, flow charts, electronic data or
recordings, laboratory notebooks, and any other format. The records will be
available to and remain the sole property of the Company at all times. I agree
not to remove such records from the Company's place of business except as
expressly permitted by Company policy which may, from time to time, be revised
at the sole election of the Company for the purpose of furthering the Company's
business.
(d) PATENT AND COPYRIGHT RIGHTS. I agree to assist the Company, or
its designee, at the Company's expense, in every proper way to secure the
Company's rights in the Inventions and any copyrights, patents, trademarks, mask
work rights, moral rights, or other intellectual property rights relating
thereto in any and all countries, including the disclosure to the Company of all
pertinent information and data with respect thereto, the execution of all
applications, specifications, oaths, assignments, recordations, and all other
instruments which the Company shall deem necessary in order to apply for,
obtain, maintain and transfer such rights and in order to assign and convey to
the Company, its successors, assigns and nominees the sole and exclusive rights,
title and interest in and to such Inventions, and any copyrights, patents, mask
work rights or other intellectual property rights relating thereto. I further
agree that my obligation to execute or cause to be executed, when it is in my
power to do so, any such instrument or papers shall continue after the
termination of this Agreement until the expiration of the last such intellectual
property right to expire in any country of the world. If the Company is unable
because of my mental or physical incapacity or unavailability or for any other
reason to secure my signature to apply for or to pursue any application for any
United States or foreign patents or copyright registrations covering Inventions
or original works of authorship assigned to the Company as above, then I hereby
irrevocably designate and appoint the Company and its duly authorized officers
and agents as my agent and attorney in fact, to act for and in my behalf and
stead to execute and file any such applications and to do all other lawfully
permitted acts to further the application for, prosecution, issuance,
maintenance or transfer of letters patent or copyright registrations thereon
with the same legal force and effect as if originally executed by me. I hereby
waive and irrevocably quitclaim to the Company any and all claims, of any nature
whatsoever, which I now or hereafter have for infringement of any and all
proprietary rights assigned to the Company.
80
(e) EXCEPTION TO ASSIGNMENTS. I understand that the provisions of
this Agreement requiring assignment of Inventions to the Company do not apply to
any invention which qualifies fully under the provisions of California Labor
Code Section 2870 (attached hereto as Exhibit B). I will advise the Company
promptly in writing of any inventions that I believe meet such provisions and
are not otherwise disclosed on Exhibit A.
5. RETURNING COMPANY DOCUMENTS. I agree that, at the time of termination
of my Relationship with the Company, I will deliver to the Company (and will not
keep in my possession, recreate or deliver to anyone else) any and all devices,
records, data, notes, reports, proposals, lists, correspondence, specifications,
drawings, blueprints, sketches, laboratory notebooks, materials, flow charts,
equipment, other documents or property, or reproductions of any aforementioned
items developed by me pursuant to the Relationship or otherwise belonging to the
Company, its successors or assigns. I further agree that to any property
situated on the Company's premises and owned by the Company, including disks and
other storage media, filing cabinets or other work areas, is subject to
inspection by Company personnel at any time with or without notice. In the event
of the termination of the Relationship, I agree to sign and deliver the
"Termination Certification" attached hereto as Exhibit C.
6. NOTIFICATION TO OTHER PARTIES.
(a) EMPLOYEES. In the event that I leave the employ of the Company,
I hereby consent to notification by the Company to my new employer about my
rights and obligations under this Agreement.
(b) CONSULTANTS. I hereby grant consent to notification by the
Company to any other parties besides the Company with whom I maintain a
consulting relationship, including parties with whom such relationship commences
after the effective date of this Agreement, about my rights and obligations
under this Agreement.
7. SOLICITATION OF EMPLOYEES, CONSULTANTS AND OTHER PARTIES. I agree
that during the term of my Relationship with the Company, and for a period of
twenty-four (24) months immediately following the termination of my Relationship
with the Company for any reason, whether with or without cause, I shall not
either directly or indirectly solicit, induce, recruit or encourage any of the
Company's employees or consultants to terminate their relationship with the
Company, or take away such employees or consultants, or attempt to solicit,
induce, recruit, encourage or take away employees or consultants of the Company,
either for myself or for any other person or entity. Further, for a period of
twenty-four (24) months following termination of my Relationship with the
Company for any reason, with or without cause, I shall not solicit any licensor
to or customer of the Company or licensee of the Company's products, in each
case, that are known to me, with respect to any business, products or services
that are competitive to the products or services offered by the Company or under
development as of the date of termination of my Relationship with the Company.
81
8. REPRESENTATIONS AND COVENANTS.
(a) FACILITATION OF AGREEMENT. I agree to execute promptly any
proper oath or verify any proper document required to carry out the terms of
this Agreement upon the Company's written request to do so.
(b) CONFLICTS. I represent that my performance of all the terms of
this Agreement will not breach any agreement to keep in confidence proprietary
information acquired by me in confidence or in trust prior to commencement of my
Relationship with the Company. I have not entered into, and I agree I will not
enter into, any oral or written agreement in conflict with any of the provisions
of this Agreement.
(c) VOLUNTARY EXECUTION. I certify and acknowledge that I have
carefully read all of the provisions of this Agreement and that I understand and
will fully and faithfully comply with such provisions.
9. GENERAL PROVISIONS.
(a) GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California, without giving effect to the principles of conflict of laws.
(b) ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
and understanding between the Company and me relating to the subject matter
herein and merges all prior discussions between us. No modification or amendment
to this Agreement, nor any waiver of any rights under this Agreement, will be
effective unless in writing signed by the party to be charged. Any subsequent
change or changes in my duties, obligations, rights or compensation will not
affect the validity or scope of this Agreement.
(c) SEVERABILITY. If one or more of the provisions in this Agreement
are deemed void by law, then the remaining provisions will continue in full
force and effect.
(d) SUCCESSORS AND ASSIGNS. This Agreement will be binding upon my
heirs, executors, administrators and other legal representatives and will be for
the benefit of the Company, its successors, and its assigns.
(e) SURVIVAL. The provisions of this Agreement shall survive the
termination of the Relationship and the assignment of this Agreement by the
Company to any successor in interest or other assignee.
(f) ADVICE OF COUNSEL. I ACKNOWLEDGE THAT, IN EXECUTING THIS
AGREEMENT, I HAVE HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL
COUNSEL, AND I HAVE READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS
AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF
THE DRAFTING OR PREPARATION HEREOF.
82
The parties have executed this Agreement on the respective dates set
forth below:
COMPANY: EMPLOYEE:
NIKU CORPORATION
--------------------------------- ------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President Signature
------------------------------------
Printed Name
Date: Date:
---------------------------- -------------------------------
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇:
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ---------------------
-----------------------------
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EXHIBIT A
LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP
EXCLUDED FROM SECTION 4
Identifying Number
Title Date or Brief Description
___ No inventions or improvements
___ Additional Sheets Attached
Signature of Employee/Consultant:_____________________
Print Name of Employee/Consultant:____________________
Date:_________________________________________________
84
EXHIBIT B
Section 2870 of the California Labor Code is as follows:
(a) Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to practice of the
invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer; or
(2) Result from any work performed by the employee for the employer.
(b) To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable.
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EXHIBIT C
TERMINATION CERTIFICATION
This is to certify that I do not have in my possession, nor have I
failed to return, any devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, laboratory
notebooks, flow charts, materials, equipment, other documents or property, or
copies or reproductions of any aforementioned items belonging to Niku
Corporation, its subsidiaries, affiliates, successors or assigns (together the
"Company").
I further certify that I have complied with all the terms of the
Company's Confidential Information and Invention Assignment Agreement signed by
me, including the reporting of any inventions and original works of authorship
(as defined therein), conceived or made by me (solely or jointly with others)
covered by that agreement.
I further agree that, in compliance with the Confidential Information
and Invention Assignment Agreement, I will preserve as confidential all trade
secrets, confidential knowledge, data or other proprietary information relating
to products, processes, know-how, designs, formulas, developmental or
experimental work, computer programs, data bases, other original works of
authorship, customer lists, business plans, financial information or other
subject matter pertaining to any business of the Company or any of its
employees, clients, consultants or licensees.
I further agree that for twenty-four (24) months from the date of this
Certificate, I shall not either directly or indirectly solicit, induce, recruit
or encourage any of the Company's employees or consultants to terminate their
relationship with the Company, or take away such employees or consultants, or
attempt to solicit, induce, recruit, encourage or take away employees or
consultants of the Company, either for myself or for any other person or entity.
Further, for a period of twenty-four (24) months from the date of this
Certificate, I shall not solicit any licensor to or customer of the Company or
licensee of the Company's products, in each case, that are known to me, with
respect to any business, products or services that are competitive to the
products or services offered by the Company or under development as of the date
of termination of my Relationship with the Company.
Date:
----------------------------------- -----------------------------
(Employee's Signature)
-----------------------------
(Type/Print Employee's Name)