-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ej7UC99II4iXpKJXloEiSiYIDk+fdlHmxNPD8CaEqRaDVYgaL8Jtou3M7T0WuztM MHo0fNGFqy7qNHvGHtFEyQ== 0001032210-99-001130.txt : 19990809 0001032210-99-001130.hdr.sgml : 19990809 ACCESSION NUMBER: 0001032210-99-001130 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 16 FILED AS OF DATE: 19990802 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AGILE SOFTWARE CORP CENTRAL INDEX KEY: 0001088653 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 770397905 STATE OF INCORPORATION: DE FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 333-81387 FILM NUMBER: 99676212 BUSINESS ADDRESS: STREET 1: ONE ALMADEN BOULEVARD CITY: SAN JOSE STATE: CA ZIP: 95113 BUSINESS PHONE: 4089753900 MAIL ADDRESS: STREET 1: ONE ALMADEN BOULEVARD CITY: SAN JOSE STATE: CA ZIP: 95113 S-1/A 1 FORM S-1 AMENDMENT NO. 1 As filed with the Securities and Exchange Commission on August 2, 1999 Registration No. 333-81387 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ---------------- AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------- AGILE SOFTWARE CORPORATION (Exact name of Registrant as specified in its charter)
Delaware 7372 77-0397905 (State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Number) Identification No.)
One Almaden Boulevard San Jose, California 95113-2211 (408) 975-3900 (Address and telephone number of principal executive offices) ---------------- Bryan D. Stolle Chairman of the Board and Chief Executive Officer Agile Software Corporation One Almaden Boulevard San Jose, California 95113-2211 (408) 975-3900 (Name, address and telephone number of agent for service) Copies to: Gregory M. Gallo, Esq. Jeffrey R. Vetter, Esq. Peter M. Astiz, Esq. Scott J. Leichtner, Esq. Sally J. Rau, Esq. Cynthia E. Garabedian, Esq. Paul K. Lauher, Esq. Fenwick & West LLP Gray Cary Ware & Freidenrich LLP Two Palo Alto Square 400 Hamilton Avenue Palo Alto, California 94306 Palo Alto, California 94301-1825 (650) 494-0600 (650) 328-6561
---------------- Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. ---------------- If the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 of the Securities Act of 1933, please check the following box. [_] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. [_] ---------------- CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------
Proposed Proposed Maximum Title of Each Class of Maximum Aggregate Amount of Securities to be Amount to be Offering Price Offering Registration Registered Registered Per Share Price(1) Fee - ------------------------------------------------------------------------------ Common Stock ($.001 par value)................. 3,450,000(2) $17.00 $58,650,000 $16,305(3) - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------
(1) Estimated solely for the purposes of determining the registration fee pursuant to Rule 457(a) promulgated under the Securities Act. (2) Includes 450,000 shares subject to the underwriters over-allotment option. (3) Previously paid. ---------------- The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +The information in this prospectus is not complete and may be changed. We may + +not sell these securities until the registration statement filed with the + +Securities and Exchange Commission is effective. This prospectus is not an + +offer to sell these securities, and we are not soliciting an offer to buy + +these securities in any state where the offer or sale is not permitted. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ PROSPECTUS (Subject to Completion) Issued August 2, 1999 3,000,000 Shares [LOGO OF AGILE SOFTWARE APPEARS HERE] COMMON STOCK ----------- Agile Software Corporation is offering 3,000,000 shares of its common stock. This is our initial public offering and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $15 and $17 per share. Concurrent with the sale of the shares in this offering, Agile will sell directly to each of Dell Computer Corporation and Flextronics International Ltd. $5.0 million of common stock. The sale price will be the public offering price less anticipated underwriting discounts and commissions. ----------- We have applied to list our common stock for quotation on the Nasdaq National Market under the symbol "AGIL." ----------- Investing in the common stock involves risks. See "Risk Factors" beginning on page 6. ----------- PRICE $ A SHARE -----------
Underwriting Price to Discounts and Proceeds to Public Commissions Agile -------- ------------- ----------- Per Share....................... $ $ $ Total........................... $ $ $
The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Agile has granted the underwriters the right to purchase up to an additional 450,000 shares to cover over-allotments. Morgan Stanley & Co. Incorporated expects to deliver the shares to purchasers on , 1999. ----------- MORGAN STANLEY DEAN WITTER DEUTSCHE BANC ALEX. BROWN HAMBRECHT & QUIST ,1999 TABLE OF CONTENTS
Page ---- Prospectus Summary.................. 3 Risk Factors........................ 6 Use of Proceeds..................... 18 Dividend Policy..................... 18 Capitalization...................... 19 Dilution............................ 20 Selected Consolidated Financial Data............................... 21 Management's Discussion and Analysis of Financial Condition and Results of Operations...................... 22 Business............................ 33 Management.......................... 44 Certain Transactions................ 51 Principal Stockholders.............. 53 Description of Capital Stock........ 56 Shares Eligible for Future Sale..... 59 Underwriters........................ 61 Legal Matters....................... 63 Experts............................. 63 Where to Find Additional Information About Agile............ 63 Index to Consolidated Financial Statements......................... F-1
---------------- You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of our common stock only in those jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. Until , 1999, 25 days after commencement of this offering, all dealers that buy, sell or trade our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. 2 PROSPECTUS SUMMARY You should read this summary together with the more detailed information regarding our company and the common stock being sold in this offering and our consolidated financial statements and notes to the consolidated financial statements appearing elsewhere in this prospectus. AGILE SOFTWARE CORPORATION We are a leading supplier of product content management software, which is software that enables companies to collaborate over the Internet by interactively exchanging information about the manufacture and supply of products and components. Our suite of software products is designed to improve the ability of all members of the manufacturing supply chain to communicate and collaborate with one another about new or changing information concerning the manufacture, source or supply of products or components. We believe that our products are well-suited for participants in outsourced supply chains, as well as companies managing multi-site engineering, manufacturing, sales and distribution operations, connected via the Internet. Since June 1996, when we shipped our first product, we have licensed our products to approximately 300 customers in the computers and peripherals, components, consumer electronics, data networking and telecommunications equipment, electronics manufacturing, medical equipment and semiconductor equipment markets. Our current customers in these markets include Gateway, Texas Instruments, Philips Mobile Computing, Lucent Technologies, Solectron, GE Marquette Medical Systems and FSI International. The competitive environment for manufacturing and supply companies has intensified dramatically and expanded globally in recent years. Many of these companies are shifting their organizations from traditional manufacturing approaches, where a manufacturer controls most phases of the manufacturing process of its products from raw materials to finished goods, to a manufacturing process where much or all of the manufacturing process is outsourced to multiple companies as part of a supply chain. According to Technology Forecasters, Inc., the outsourcing market in electronics alone exceeded $89 billion in 1998 and is expected to grow to $178 billion in 2001, although we cannot be certain that this projection will be met. Outsourcing production is geared toward creating supply chains that are more efficient, dynamic and flexible than manufacturing operations that are controlled by manufacturers. A critical aspect of managing the outsourced supply chain across multiple suppliers is finding effective ways to store, access and share information within the manufacturer, as well as with all participants in the supply chain during each stage of the production process. The Internet has created new and evolving ways for conducting commerce. According to Forrester Research, business-to-business electronic commerce is expected to grow to $1.3 trillion in 2003, accounting for more than 90% of the dollar value of electronic commerce in the United States. The market for applications that enable business-to-business electronic commerce is expected to reach $1.5 billion by 2002, according to Dataquest. However, we cannot be certain that these projections will be met. Companies that have successfully implemented strategies to communicate with their customers over the Internet now face the challenge of utilizing the Internet and intranets to gain the same level of increased efficiencies in their supply chain. The Agile solution is designed to facilitate communication and collaboration within and among supply chain members without requiring substantial investments in additional technology infrastructure. We believe that our solution can enable companies and their supply chain partners to increase revenue by accelerating time-to-market, facilitate cost-effective production by increasing output, reducing inventory and shortening the production process, and enhance return on investment by facilitating rapid implementation. Our growth strategy is to be the leading provider of business-to-business collaborative supply chain applications to global organizations. We will focus on providing superior customer satisfaction to continue to build a highly referenceable customer base of market leaders in targeted manufacturing industry vertical markets. 3 We seek to capitalize on network effects that can be created when our software is deployed across the supply chains of our customers, enabling even non- customer participants in the supply chain to experience first-hand some of the benefits from our solutions. We will also seek to continue the development of our technology to extend the features and functionality of our product content management software. THE OFFERING Common stock offered................................ 3,000,000 shares Common stock to be outstanding after this offering.. 19,805,340 shares Over-allotment option............................... 450,000 shares Use of proceeds..................................... For general corporate purposes, including working capital, capital expenditures and repayment of debt. See "Use of Proceeds." Proposed Nasdaq National Market symbol.............. AGIL
The above information is based on 16,805,340 shares outstanding as of April 30, 1999. This information does not include 1,159,725 shares of common stock subject to outstanding options under our 1995 Stock Option Plan as of April 30, 1999 and 98,301 shares of common stock issuable upon exercise of outstanding warrants. After April 30, 1999, we granted options to purchase an additional 544,700 shares of common stock. See "Capitalization" on page 20 and "Management--Stock Plans" on page 48 for additional information concerning the terms, conditions and number of outstanding shares of our capital stock and stock options. Unless otherwise specifically stated, the information in this prospectus: . gives effect to the conversion of each outstanding share of preferred stock into one share of common stock effective upon the closing of the offering; . assumes no exercise of the underwriters' over-allotment option; . assumes the exercise of a warrant to purchase 60,000 shares of our common stock which was outstanding on April 30, 1999; and . gives effect to the sale of 672,042 shares of common stock to two corporate investors, based upon an assumed initial public offering price of $16.00 per share. The shares will be sold at the initial public offering price less anticipated underwriters' discounts and commissions, contemporaneously with this offering. We originally incorporated in California on March 13, 1995 and will reincorporate in Delaware prior to the completion of this offering. Our principal executive offices are located at One Almaden Boulevard, San Jose, California 95113, and our telephone number is (408) 975-3900. Our principal web site is located at www.agilesoft.com. Information contained on our web site does not constitute a part of this prospectus. In this prospectus, "Agile," "we," "us" and "our" refer to Agile Software Corporation and not to the underwriters. We incurred net losses of approximately $11.4 million for fiscal 1999 and as of April 30, 1999 we had an accumulated deficit of approximately $26.5 million. Agile(TM), Agile Workplace(TM), Agile Anywhere(TM), Agile eHub(TM), Agile iCM(TM), My Agile(TM), Agile eXpress Viewer(TM), Agile ChangeCAST(TM), Agile Product Definition Server(TM), Agile Product Change Server(TM), Agile AML Server(TM), Agile Administrator(TM), Agile Scan(TM), Agile Import(TM), Agile Export(TM) and the Agile logo are trademarks of Agile Software Corporation. All other trademarks or tradenames referred to in this prospectus are the property of their respective owners. 4 SUMMARY CONSOLIDATED FINANCIAL DATA (in thousands, except per share data)
March 13, 1995 Fiscal Year Ended April (Inception) to 30, April 30, -------------------------- 1996 1997 1998 1999 -------------- ------- ------- -------- Consolidated Statement of Operations Data: Total revenues..................... $ 38 $ 1,352 $ 8,003 $ 16,807 Gross profit....................... 32 1,086 5,835 10,822 Loss from operations............... (1,399) (4,906) (8,874) (11,606) Net loss........................... (1,327) (4,836) (8,942) (11,428) Net loss per share: Basic and diluted................ $ (1.94) $ (3.72) $ (4.20) $ (3.87) Weighted average shares.......... 684 1,300 2,129 2,952 Unaudited pro forma net loss per share: Basic and diluted................ $ (.78) Weighted average shares.......... 14,668
As of April 30, 1999 ------------------- Actual As Adjusted ------- ----------- Consolidated Balance Sheet Data: Cash and cash equivalents................................... $10,003 $60,567 Working capital............................................. 4,174 54,738 Total assets................................................ 17,948 68,512 Long-term obligations, noncurrent........................... 3,224 871 Stockholders' equity........................................ 3,291 56,855
Shares used in computing unaudited pro forma basic and diluted net loss per share include the shares used in computing basic and diluted net loss per share adjusted for the conversion of preferred stock to common stock, as if the conversion occurred at the date of original issuance. The as adjusted information above reflects the application of the estimated net proceeds from the sale of the 3,000,000 shares of common stock that we are offering at an assumed initial public offering price of $16.00 per share, after deducting estimated underwriting discounts and commissions and our estimated offering expenses. It also gives effect to the exercise of a warrant to purchase 60,000 shares of our common stock and the contemporaneous private placement to two corporate investors of an aggregate of $10.0 million or 672,042 shares of common stock, based upon an assumed initial public offering price of $16.00 per share. 5 RISK FACTORS You should carefully consider the risks described below, together with all of the other information included in this prospectus, before you decide to buy our common stock. If any of the following risks actually occur, our business could be harmed. If our business is harmed, the trading price of our common stock could decline, and you could lose all or part of your investment. Risks Related to Our Operations Because We Have a Limited Operating History, It Is Difficult to Evaluate Our Business and Prospects We are still in the early stages of our development, so evaluating our business operations and our prospects is difficult. We incorporated in 1995 and began shipping our first product in June 1996. The revenues and income potential of our business and market are unproven. We will encounter risks and difficulties frequently encountered by early-stage companies in new and rapidly evolving markets. These risks include the following: . we have only one product suite, and will need to successfully introduce new products and enhance existing products to this suite, including Agile Anywhere, a new version which has been available only since August 1999; . we need to increase sales to achieve profitability, requiring us to sell additional licenses and software products to our existing customers and expand our customer base outside of the electronics and medical device industries; . we need to expand our sales and marketing, customer support and professional services organizations, build strategic relationships and expand our international operations in order to increase sales; and . we need to effectively manage our anticipated growth which could lead to management distractions and increased operating expenses, and will require us to attract and retain key personnel. Our business strategy may not be successful and we may not be able to successfully address these risks. In addition, because of our limited operating history, we have limited insight into trends that may emerge and affect our business. We Have a History of Losses, We Expect to Incur Losses in the Future and We May Not Achieve or Maintain Profitability We incurred net losses of approximately $4.8 million for fiscal 1997, $8.9 million for fiscal 1998, and $11.4 million for fiscal 1999. As of April 30, 1999, we had an accumulated deficit of approximately $26.5 million. Moreover, we expect to continue to incur significant sales and marketing, research and development and general and administrative expenses. We have incurred and expect to continue to incur substantial non-cash costs relating to the amortization of deferred compensation which will contribute to our net losses. We expect to incur losses for the foreseeable future. We will need to generate significant increases in revenues to achieve and maintain profitability, and we may not be able to do so. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis in the future. See "Selected Consolidated Financial Data" on page 21 and "Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 22 for more detailed information about our operating results. Our Quarterly Operating Results Fluctuate and Are Difficult to Predict and, if Our Future Results are Below the Expectations of Public Market Analysts or Investors, the Price of Our Common Stock May Decline Our quarterly operating results have varied significantly in the past and are likely to vary significantly in the future, which makes it difficult for us to predict our future operating results. This quarter-to-quarter fluctuation is due to a number of factors, including the following: . fluctuations in demand for Internet product content management software; 6 . size and timing of sales and installations of our products; . entry of new competitors into our market, or the announcement of new products or product enhancements by competitors; . our ability to successfully expand our direct sales force and our international sales organization; . changes in our sales force incentives; . unexpected delays in developing or introducing new and enhanced products; . unexpected decline in purchases by our existing customers, including purchases of additional licenses and maintenance contracts; . delays in our customers' orders due to their year 2000 priorities; . variability in the mix of our license and professional service revenues; . our ability to accurately price fixed-priced professional services projects; . variability in the mix of professional services that we perform versus those performed for our customers by others; and . our ability to establish and maintain relationships with our third-party implementation partners. License revenues in any quarter can be difficult to forecast because they depend on orders shipped or installed in that quarter. Moreover, we typically recognize a substantial percentage of revenues in the last month of each quarter; for example, in fiscal 1999, revenues generated each quarter that was recognized in the last month of the quarter ranged from 35% to 51%. This increase in revenues earned in the last month of each quarter is driven primarily by quarter-end commissions payable and the time required to supplement software installations. A high percentage of our operating expenses are essentially fixed in the short term and we may be unable to adjust spending to compensate for an unexpected shortfall in our revenues. In addition, we expect our operating expenses to increase as we expand our engineering and sales and marketing operations, broaden our customer support capabilities, develop new distribution channels and strategic alliances, fund increased levels of research and development and build our operational infrastructure. As a result, if we experience delays in recognizing revenue, or if our revenues do not grow faster than the increase in these expenses, we could experience significant variations in operating results from quarter to quarter. If, in response to market pressures or other demands, we introduce new pricing structures for our existing products, we could experience customer dissatisfaction and loss of sales. In addition, if we introduce products that are sold in a manner different from how we currently market our products, or we could recognize revenue differently than under our current accounting policies. Depending on the manner in which we sell existing or future products, this could have the effect of extending the length of time over which we recognize revenues. Furthermore, our quarterly revenues could be significantly affected based on how applicable accounting standards are amended or interpreted over time. Due to these and other factors, we believe that period-to-period comparisons of our results of operations are not meaningful and should not be relied upon as indicators of our future performance. It is possible that in some future periods our results of operations may be below the expectations of public market analysts and investors. If this occurs, the price of our common stock may decline. We May Not Achieve Anticipated Revenues if the Introduction and Customer Acceptance of Our New Release, Agile Anywhere, or Any Upgrades or Enhancements to Our Products, Is Unsuccessful Our future financial performance will depend on the successful introduction and customer acceptance of Agile Anywhere and any upgrades or enhancements that we may make to our products in the future. We have generated substantially all of our revenues from licenses and services related to current and prior versions of our product suite. Agile Anywhere, the latest version of our product suite, has only been available since August 1999. We believe that revenues from Agile Anywhere, together with revenues from maintenance and support contracts 7 from Agile Anywhere and prior versions of our suite, will account for a substantial portion of our revenues for the foreseeable future. If we are unable to ship or implement any upgrades or enhancements when planned, or if the introduction of upgrades or enhancements causes customers to defer orders for our existing products, we may not achieve anticipated revenues. Year 2000 Considerations Among Our Customers and Potential Customers May Reduce Our Sales We may experience reduced sales of products as customers and potential customers put a priority on correcting year 2000 problems and therefore defer purchase decisions for software products until later in 2000. Accordingly, demand for our products may be particularly volatile and unpredictable for the remainder of 1999 and early 2000. Implementation of Our Products By Large Customers May Be Complex and Customers Could Become Dissatisfied if Implementation of Our Products Proves Difficult, Costly or Time-Consuming Our products must integrate with many existing computer systems and software programs used by our customers. Integrating with many other computer systems and software programs can be complex, time consuming and expensive and cause delays in the deployment of our products. Because we are one of the first companies to offer products designed for product content management, many customers will be facing these integration issues for the first time in the context of collaborating with supply chain partners. Customers could become dissatisfied with our products if implementations prove to be difficult, costly or time-consuming. We Currently Perform Most of Our Implementations on a Fixed-Price Basis, Which Could Cause Us to Incur More Costs Than We Expect When we install our products or when we have a third party install them, we typically charge customers a fixed fee for these services. At the time of a product sale and prior to agreeing to an installation price, we estimate the amount of work involved for a particular installation project. We have at times in the past underestimated and may in the future underestimate the amount of time or resources required to install our products. If we do not correctly estimate the amount of time or resources required for a large number of installations, our gross margins could decline. If We Do Not Sell Additional Licenses or Enhanced Versions or Upgrades of Our Products to Existing Customers, We May Not Achieve Revenue Growth The size of a new customer's initial order is relatively small and may include a limited number of user licenses. In later orders, customers often add user licenses or additional products designed for specific functions, such as the AML Server targeted at manufacturers. In order to grow revenues, we depend on sales of additional user licenses to our existing customers as well as sales of new licenses to new customers. Therefore, it is important that our customers are satisfied with their initial product implementations and that they believe that expanded use of the product they purchased will provide them with additional benefits. Customers could choose not to purchase any new products or expand the use of our products. If we do not increase sales to existing customers, we may not be able to achieve revenue growth. If We Do Not Establish and Maintain Relationships With Key Partners, We May Encounter Difficulty in Providing Implementation and Customer Support of Our Products We rely heavily on our relationships with consulting and integration partners to implement our software, provide customer support services and endorse our products during the evaluation stage of the sales cycle. Currently, only three companies provide implementation services for our products in North America. We expect to increasingly rely on these types of partners in the future. These companies are not contractually obligated to continue to provide implementation services for us or to otherwise promote our products. Although we seek to develop and maintain relationships with these types of service providers, they may have similar or more 8 established relationships with our competitors. If these service providers do not increase this segment of their business, or reduce or discontinue their relationships with us or their support of our products, our business could be harmed. We will need to develop new third party relationships if sales of our products increase and our current partners cannot fulfill the need for implementation and customer support services. Without these third parties we would have to expand our services organization to increase the consulting and professional services that we provide to our customers and divert resources from other areas of our business. If we are required to expand our professional services capabilities, we may not be able to do so on a timely basis. To meet customer demand, we might have to outsource services to more costly independent contractors and other third parties. In addition, if our implementation partners do not adequately perform implementation services, our customers could become dissatisfied with our products. In order to avoid dissatisfaction, we may need to provide supplemental implementation services at no additional cost to the customer. Although we could experience an increase in services revenues if our service partners are not successful, services revenues have lower gross margins than license revenues. We could also experience delays in revenue recognition if customer implementation projects fall behind schedule. We May Experience Customer Dissatisfaction and Lost Sales if Our Products Do Not Scale to Accommodate Substantial Increases in the Number of Concurrent Users Our strategy requires that our software be highly scalable, or able to accommodate substantial increases in the number of users concurrently using the product. To date, however, only a limited number of our customers have deployed our software to manage the manufacturing process across their entire organization. While we have performed product testing on the scalability of our products, these products have not been tested in the context of a customer implementation. If our customers cannot successfully implement large-scale deployments, or if they determine that our products cannot accommodate large- scale deployments, we could experience customer dissatisfaction and find it more difficult to obtain new customers or to sell additional products to our existing customers. We May Not be Able to Increase Sales of Our Products if We Do Not Expand Our Direct Sales Organization We sell our products primarily through our direct sales force. Our ability to increase our sales will depend on our ability to recruit, train and retain top quality sales people with the advanced sales skills and technical knowledge we need. There is a shortage of the sales personnel we need, and competition for qualified personnel is intense in our industry. In addition, it takes time for our new sales personnel to become productive, particularly our senior sales and services personnel, who could take up to nine months to become fully productive. If we are unable to hire or retain qualified sales personnel, or if newly hired personnel fail to develop the necessary skills or reach productivity more slowly than anticipated, it would be more difficult for us to sell our products, and we may experience a shortfall in revenues. Our Lengthy and Variable Sales Cycle Makes it Difficult For Us to Predict When or if Sales Will Be Made Our products have an unpredictable sales cycle that contributes to the uncertainty of our future operating results. Our product content management software is a new category of products, and customers often view the purchase of our products as a significant and strategic decision. As a result, customers may take time to evaluate our products, resulting in a sales cycle that has historically ranged from approximately four to seven months. The sale of our products may be subject to delays due to the lengthy internal budgeting, approval and evaluation processes of our customers. We may expend significant sales and marketing expenses during this evaluation period before the customer places an order with us. Customers may initially purchase a smaller number of user licenses before expanding the order to allow a greater number of users to benefit from the application. Larger customers may purchase our products as part of multiple simultaneous purchasing decisions, which may result in additional unplanned administrative processing and other delays in our product sales. If sales forecasted from a specific customer for a particular quarter are not realized, we may experience an unplanned shortfall in revenues. As a result, we have only a limited ability to forecast the timing and size of sales of our products. 9 The Success of Our Business Depends on Our Key Personnel, Whose Knowledge of Our Business and Technical Expertise Would Be Difficult to Replace Our success depends largely on the continued contributions of our key senior management, particularly Bryan D. Stolle, our Chief Executive Officer, who is not bound by an employment agreement, as well as of our key engineering and sales and marketing personnel. We do not have key-man life insurance on Mr. Stolle. If one or more members of our senior management or any of our key employees were to resign, the loss of personnel could result in delays to product development, loss of sales, and diversion of management resources. See "Management" for additional information on our key personnel. Because of Competition for Additional Qualified Personnel, We May Not be Able to Recruit or Retain Necessary Personnel, Which Could Impact Development or Sales of Our Products Our success depends on our ability to attract and retain qualified, experienced employees. We currently are seeking to hire a Senior Vice President of World Field Operations. There is substantial competition for experienced engineering, sales and marketing personnel in our industry. If we are unable to retain our existing key personnel, or attract and retain additional qualified personnel, we may from time to time experience inadequate levels of staffing to perform services for our customers. In addition, if we are unable to hire a qualified Vice President of Sales, we may experience delays in the expansion of our sales organization. As a result, our growth could be limited due to our lack of capacity to develop and market our products to our customers, or we could experience deterioration in service levels or decreased customer satisfaction. Our Efforts to Expand Sales of Our Products to Other Industries May Not Succeed We have historically sold our products primarily to companies in the electronics and medical device manufacturing industries. We intend to market products to customers in additional industries. Although we have targeted enterprises in other markets as potential customers, these potential customers may not be as willing to purchase products like ours as have other technology- based industries such as the electronics and medical device manufacturing industries. The Market For Our Products Is Newly Emerging and Customers May Not Accept Our Products The market for software products that allow companies to collaborate with suppliers on product information and change is newly emerging. Companies have not traditionally automated this product content management process throughout the supply chain. We cannot be certain that this market will continue to develop and grow or that companies will elect to utilize our products rather than attempt to develop applications internally or through other sources. In addition, the use of the Internet, as well as corporate intranets, has not been widely adopted for sharing product information as well as for collaboration among supply chain participants. Companies that have already invested substantial resources in other methods of sharing product information during the manufacturing and supply process may be reluctant to adopt a new approach that may replace, limit or compete with their existing systems or methods. We expect that we will continue to need to pursue intensive marketing and sales efforts to educate prospective customers about the uses and benefits of our products. Therefore, demand for and market acceptance of our products will be subject to a high level of uncertainty. Competition Among Providers of Software Enabling Collaboration in a Manufacturing Supply Chain May Increase, Which Could Cause Us to Reduce Prices, and Result in Reduced Gross Margins or Loss of Market Share The market for products that enable companies to interactively manage and share information relating to the manufacture and supply of products is new, highly fragmented, rapidly changing and increasingly competitive. We expect competition to intensify, which could result in price reductions for our products, reduced gross margins and loss of market share. Competitors vary in size and in the scope and breadth of the products and services offered. We face potential competition from in-house development efforts by potential customers or partners, vendors of software designed for management of engineering information, and developers of general 10 purpose groupware software addressing only limited technology components involved in managing data generated by changes to the engineering process. We also face potential competition from providers of enterprise software. Many of our actual or potential competitors have a number of significant advantages over us, including: . longer operating histories; . significantly greater financial, technical, marketing and other resources; . significantly greater name recognition and a larger installed base of customers; and . well-established relationships with our actual and potential customers as well as with systems integrators and other vendors and service providers. These competitors may also be able to respond more quickly to new or emerging technologies and changes in customer requirements, or to devote greater resources to the development, promotion and sale of their products, than we can. Some of our actual or potential competitors may also bundle their products in a manner that may discourage potential customers from purchasing our products. Accordingly, we may not be able to maintain or expand our sales if competition increases and we are unable to respond effectively. See "Business--Competition" on page 41 for further discussion of the competitive market in which we operate. We May Experience Difficulties in Introducing New Products and Upgrades Which Could Result in Negative Publicity, Loss of Sales, Delay in Market Acceptance or Customer Dissatisfaction Our future financial performance depends on our successful and timely development, introduction and market acceptance of new and enhanced products. The life cycles of our products are difficult to predict because the market for our products is new and emerging, and is characterized by rapid technological change, changing customer needs and evolving industry standards. The introduction of products or computer systems employing new technologies and emerging industry standards could render our existing products obsolete and unmarketable. For example, portions of our software are written in the Java computer programming language. If a new software language becomes standard in our industry or is considered more robust than Java, we may need to rewrite portions of our products in another computer language in order to remain competitive. The introduction of enhancements to our suite of products may also cause customers to defer orders for our existing products. We may experience difficulties that could delay or prevent the successful development, introduction or marketing of new or enhanced products in the future. In addition, those products may not meet the requirements of the marketplace and achieve market acceptance. We expect to add new products to our supply chain applications by acquisition or internal development and by developing enhancements to our existing products. We have in the past experienced delays in the planned release dates of our software products and upgrades, and we have discovered software defects in new products after their introduction. New products or upgrades may not be released according to schedule, or may contain defects when released. Either situation could result in negative publicity, loss of sales, delay in market acceptance of our products or customer claims against us. Our Products Might Not Be Compatible With All Major Platforms, Which Could Inhibit Sales We must continually modify and enhance our products to keep pace with changes in computer hardware and software and database technology, as well as emerging technical standards in the software industry. For example, we have designed our products to work with databases and servers such as Oracle and Microsoft SQL Server. Any changes to these platforms could require us to modify our products, and could cause us to delay releasing a product until the updated version of that platform has been released. Furthermore, third parties develop adapters to integrate our products with other design, manufacture, finance and supply chain systems used by our customers. We rely on these third parties to update the adapters to reflect changes to our products as well as to the targeted platform in order to maintain the functionality provided by our products. As a result, 11 uncertainties related to the timing and nature of new product announcements, introductions or modifications by vendors of operating systems, back-office applications and browsers and other Internet-related applications could hurt our business, as customers may not be certain as to how our product will operate with their existing systems. In addition, although portions of our products are based upon the Java programming language, the Java language does not offer all of the features available in Windows. Accordingly, certain features available to products that run on Windows may not be available in the non-Windows version of our products, and this could result in reduced customer demand. Furthermore, some of our products do not run on certain types of popular server computers, such as those that utilize the UNIX operating system. If another platform becomes more widely used, we could be required to convert, or "port," our product to that platform. We may not succeed in these efforts, and even if we do, potential customers may not choose our product. If We Are Unable to Timely Expand Our International Operations, We May Not Achieve Anticipated Revenue Growth We believe that expansion of our international operations will be necessary for our future success, and a key aspect to our business strategy is to expand our sales and support organizations internationally. Therefore, we believe that we will need to commit significant resources to expand our international operations. We employ sales professionals in Europe and are in the early stages of expanding into the Asia Pacific market. If we are unable to successfully enter into and expand these international markets on a timely basis, we may not be able to achieve anticipated revenue growth. This expansion may be more difficult or take longer than we anticipate, and we may not be able to successfully market, sell, deliver and support our products internationally. If successful in our international expansion, we will be subject to a number of risks associated with international business activities. These risks include: . difficulty in providing customer support for our software in multiple time zones; . need to develop our software in multiple foreign languages; . longer sales cycles associated with educating foreign customers on the benefits of using our products; . greater difficulty in collecting accounts receivable from customers located abroad; . political and economic instability, particularly in Asia; . difficulties in enforcing agreements through foreign legal systems; and . unexpected changes in regulatory requirements that may limit our ability to export our software or sell into particular jurisdictions or impose multiple conflicting tax laws and regulations. To date, most of our revenues have been denominated in United States dollars. If we experience an increase in the portion of our revenues denominated in foreign currencies, we may incur greater risks in currency fluctuations, particularly since we translate our foreign currency revenues once at the end of each quarter. In the future, our international revenues could be denominated in the Euro, the currency of the European Union. The Euro is an untested currency and may be subject to economic risks that are not currently contemplated. We currently do not engage in foreign exchange hedging activities, and therefore our international revenues and expenses are currently subject to the risks of foreign currency fluctuations. We Depend on Licensed Technology and the Loss or Inability to Maintain These Technology Licenses Could Result in Increased Cost or Delays in Sales of Our Products We license technology on a non-exclusive basis from several businesses for use with our products, including licenses from RSA Data Security, Inc. for security and encryption technology software, Actuate Corporation for reporting capability and from Cimmetry Systems Inc. for our viewers. We anticipate that we will continue to license technology from third parties in the future. Some of the software we license from third parties would be 12 difficult to replace. This software may not continue to be available on commercially reasonable terms, if at all. The loss or inability to maintain any of these technology licenses could result in delays in the licensing of our products until equivalent technology, if available, is identified, licensed and integrated. In addition, the effective implementation of our products depends upon the successful operation of third-party licensed products in conjunction with our products, and therefore any undetected errors in these licensed products may prevent the implementation or impair the functionality of products, delay new product introductions and/or injure our reputation. The increased use of third-party software could require us to enter into license agreements with third parties, which could result in higher royalty payments and a loss of product differentiation. Defects In Our Software Products Could Diminish Demand For Our Products Our software products are complex and may contain errors, including year 2000 related errors, that may be detected at any point in the life of the product. We have in the past discovered software errors in certain of our products and as a result have experienced delays in shipment of products during the period required to correct these errors. We cannot assure you that, despite testing by us, our implementation partners and our current and potential customers, errors will not be found in new products or releases after shipment, resulting in loss of revenue, delay in market acceptance and sales, diversion of development resources, injury to our reputation or increased service and warranty costs. Further, our products are generally used in systems with other vendors' products, and as a result, our products must integrate successfully with these existing systems. System errors, whether caused by our products or those of another vendor, could adversely affect the market acceptance of our products, and any necessary revisions could cause us to incur significant expenses. If We Become Subject to Product Liability Litigation, It Could Be Time Consuming and Costly to Defend Since our products are used for mission critical applications in the supply chain, errors, defects or other performance problems could result in financial or other damages to our customers. For example, our products are designed to communicate information relating to changes in product specifications during the manufacturing process. If a supplier or other participant receives inaccurate or erroneous data, it is possible that it could claim it incurred damages based on its reliance on that data. Although our license agreements generally contain provisions designed to limit our exposure to product liability litigation, existing or future laws or unfavorable judicial decisions could negate such limitation of liability provisions. Product liability litigation, even if unsuccessful, would be time-consuming and costly to defend and could harm our business. In Order to Manage Our Growth and Expansion, We Will Need to Improve and Implement New Systems, Procedures and Controls We have recently experienced a period of rapid growth and expansion that has placed a significant strain on our management information systems and our administrative, operational and financial resources. For example, we have grown from 65 employees at April 30, 1997 to 156 employees at April 30, 1999. If we are unable to manage our growth and expansion in an efficient or timely manner, our business will be seriously harmed. In addition, we have recently hired a significant number of employees and plan to further increase our total headcount. We also plan to expand the geographic scope of our operations. This expansion has resulted and will continue to result in substantial demands on our management resources. To accommodate continued anticipated growth and expansion, we will be required to: . improve existing and implement new operational and financial systems, procedures and controls; . hire, train, manage, retain and motivate qualified personnel; and . enter into relationships with strategic partners. These measures may place additional burdens on our management and our internal resources. 13 If We Are Unable to Protect Our Intellectual Property We May Lose a Valuable Asset, Experience Reduced Market Share or Incur Costly Litigation to Protect Our Rights Our success and ability to compete depend upon our proprietary technology, including our brand and logo and the technology underlying our products. We rely on trademark, trade secret and copyright laws to protect our intellectual property. Despite our efforts to protect our intellectual property, a third party could copy or otherwise obtain our software or other proprietary information without authorization, or could develop software competitive to ours. Our means of protecting our proprietary rights may not be adequate and our competitors may independently develop similar technology, duplicate our products or design around patents that may be issued to us or our other intellectual property. In addition, the laws of some foreign countries do not protect our proprietary rights to as great an extent as do the laws of the United States, and we expect that it will become more difficult to monitor the use of our products if we increase our international presence. We may have to resort to litigation to enforce our intellectual property rights, to protect our trade secrets or know-how or to determine their scope, validity or enforceability. Enforcing or defending our proprietary technology is expensive, could cause the diversion of our resources, and may not prove successful. Our protective measures may prove inadequate to protect our proprietary rights, and any failure to enforce or protect our rights could cause us to lose a valuable asset. We May Be Subject to Intellectual Property Infringement Claims That, With or Without Merit, Could Be Costly to Defend or Settle We may from time to time be subject to claims of infringement of other parties' proprietary rights or claims that our own intellectual property rights are invalid. There has been a substantial amount of litigation in the software and Internet industries regarding intellectual property rights. It is possible that, in the future, third parties may claim that we or our current or potential future products infringe their intellectual property. We expect that software product developers and providers of electronic commerce solutions will increasingly be subject to infringement claims as the number of products and competitors in our industry segment grows and the functionality of products in industry segments overlaps. Any infringement claims made against us, with or without merit, could be time-consuming, result in costly litigation, cause product shipment delays or negative publicity. In addition, if our products were found to infringe a third party's proprietary rights, we could be required to enter into royalty or licensing agreements in order to continue to be able to sell our products. Royalty or licensing agreements, if required, may not be available on terms acceptable to us or at all. Year 2000 Compliance Costs and Risks Are Difficult to Assess and Could Result in Delay or Loss of Revenue, Diversion of Development Resources, Damage to Our Reputation or Increased Service, Warranty or Litigation Costs Our products are generally integrated into computer systems involving sophisticated hardware and complex software products, which may not be year 2000 compliant. The failure of our customers' systems to be year 2000 compliant could impede the success of applications that we have developed for them. Accordingly, known or unknown defects that affect the operation of our software, including any defects or errors in applications that include our products, could result in delay or loss of revenue, diversion of development resources, damage to our reputation or increased service, warranty or litigation costs, any of which could harm our business. In addition, earlier versions of our products may not be year 2000 compliant, and we do not intend to make them year 2000 compliant. We also need to ensure year 2000 compliance of our own internal computer and other systems, to continue testing our software products, and to audit the year 2000 compliance status of our suppliers and business partners. We have not completed our year 2000 investigation and overall compliance initiative, and the total cost of our year 2000 compliance may be substantial and may harm our business. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Year 2000 Readiness" on page 30 for a discussion of the status of our year 2000 compliance review. 14 Future Acquisitions May Be Difficult to Integrate, Disrupt Our Business, Dilute Stockholder Value or Divert Management Attention As part of our business strategy, we may seek to acquire or invest in businesses, products or technologies that we feel could complement or expand our business, augment our market coverage, enhance our technical capabilities or that may otherwise offer growth opportunities. Acquisitions could create risks for us, including: . difficulties in assimilation of acquired personnel, operations, technologies or products; . unanticipated costs associated with the acquisition; . diversion of management's attention from other business concerns; . adverse effects on our existing business relationships with suppliers and customers; and . use of substantial portions of our available cash, including the proceeds of this offering, to consummate the acquisition. In addition, if we consummate acquisitions through an exchange of our securities, our stockholders could suffer significant dilution. Any future acquisitions, even if successfully completed, may not generate any additional revenue or provide any benefit to our business. Provisions Contained in Our Charter Documents May Delay or Prevent a Change in Our Control We intend to reincorporate in Delaware prior to the completion of this offering. Provisions of our Delaware certificate of incorporation and bylaws and of Delaware law could make it more difficult for a third party to acquire us, even if a change in control would be beneficial to our stockholders. These provisions also may prevent changes in our management. See "Description of Capital Stock--Antitakeover Effect of Delaware Law and Provisions of Our Certificate of Incorporation and Bylaws" on page 57 for further discussion of the specific provisions in our charter documents that may delay or prevent a change in our control. Risks Related to the Internet on Our Business and Prospects If Use of the Internet Does Not Continue to Develop and Reliably Support the Demands Placed on It by Electronic Commerce, We May Experience Loss of Sales Our success depends upon continued growth in the use of the Internet as a medium of commerce. Although the Internet is experiencing rapid growth in the number of users, this growth is a recent phenomenon and may not continue. Furthermore, despite this growth in usage, the use of the Internet for commerce is relatively new. As a result, a sufficiently broad base of companies and their supply chain partners may not adopt or continue to use the Internet as a medium of exchanging product content information. Our business would be seriously harmed if: . use of the Internet does not continue to increase or increases more slowly than expected; . the infrastructure for the Internet does not effectively support enterprises and their supply chain partners; . the Internet does not create a viable commercial marketplace, inhibiting the development of electronic commerce and reducing the demand for our products; or . concerns over the secure transmission of confidential information over public networks inhibit the growth of the Internet as a means of conducting commercial transactions. Capacity Restraints May Restrict the Use of the Internet as a Commercial Marketplace, Resulting in Decreased Demand for Our Products The Internet infrastructure may not be able to support the demands placed on it by increased usage or the limited capacity of networks to transmit large amounts of data. Other risks associated with commercial use of the Internet could slow its growth, including: . outages and other delays resulting from the inadequate reliability of the network infrastructure; 15 . slow development of enabling technologies and complementary products; and . limited availability of cost-effective, high-speed access. Delays in the development or adoption of new equipment standards or protocols required to handle increased levels of Internet activity, or increased governmental regulation, could cause the Internet to lose its viability as a means of communication between manufacturers and their supply chain partners. If these or any other factors cause use of the Internet for commerce to slow or decline, the Internet may not prove viable as a commercial marketplace, resulting in decreased demand for our products. Increasing Governmental Regulation of the Internet Could Limit the Market for Our Products As Internet commerce continues to evolve, we expect that federal, state and foreign governments will adopt laws and regulations covering issues such as user privacy, taxation of goods and services provided over the Internet, pricing, content and quality of products and services. It is possible that legislation could expose companies involved in electronic commerce to liability, taxation or other increased costs, any of which could limit the growth of electronic commerce generally. Legislation could dampen the growth in Internet usage and decrease its acceptance as a communications and commercial medium. If enacted, these laws and regulations could limit the market for our products. Risks Related to This Offering Our Executive Officers, Directors and Major Stockholders Will Retain Significant Control Over Us After This Offering, Which May Lead to Conflicts With Other Stockholders Over Corporate Governance Matters After this offering, executive officers, directors and holders of 5% or more of our outstanding common stock will, in the aggregate, own approximately 53.0% of our outstanding common stock. These stockholders would be able to significantly influence all matters requiring approval by our stockholders, including the election of directors and the approval of significant corporate transactions. This concentration of ownership may also delay, deter or prevent a change in our control and may make some transactions more difficult or impossible to complete without the support of these stockholders. Our Stock Price May Be Volatile, Which May Lead to Losses By Investors and to Securities Litigation Prior to this offering, you could not buy or sell our common stock publicly. An active public market for our common stock may not develop or be sustained after the offering. We will negotiate and determine the initial public offering price with the representatives of the underwriters based on several factors. This price may vary from the market price of the common stock after the offering. The stock market has experienced significant price and volume fluctuations and the market prices of securities of technology companies, particularly Internet-related companies, have been highly volatile. Investors may not be able to resell their shares at or above the initial public offering price. In the past, securities class action litigation has often been instituted against a company following periods of volatility in the company's stock price. This type of litigation, if filed against us, could result in substantial costs and could divert our management's attention and resources. Our Management Will Retain Broad Discretion in the Use of Proceeds From This Offering and May Not Obtain a Significant Return on the Use of These Proceeds We currently have no specific plans for a significant portion of our net proceeds from this offering. Consequently, our management has complete discretion as to how to spend the proceeds from this offering. They may spend these proceeds in ways with which our stockholders may not agree. Management's allocation of the proceeds of this offering may not benefit our business and the investment of the proceeds may not yield a favorable return. 16 Substantial Future Sales of Our Common Stock Could Cause Our Stock Price to Decline Sales of a substantial number of shares of our common stock after this offering could cause the market price of our common stock to decline by potentially introducing a large number of sellers of our common stock into a market in which our common stock price is already volatile. In addition, the sale of these shares could impair our ability to raise capital through the sale of additional equity securities. Based on shares outstanding as of April 30, 1999, we will have 19,805,340 shares of our common stock outstanding, or 20,255,340 shares if the underwriters' overallotment is exercised in full. Our directors, executive officers and current stockholders have executed lock-up agreements that limit their ability to sell shares of our common stock. These stockholders have agreed, subject to limited exceptions, not to sell or otherwise dispose of any shares of our common stock for a period of 180 days after the date of this prospectus without the prior written approval of Morgan Stanley & Co. Incorporated. When these lock-up agreements expire, these shares and the shares of the common stock underlying any options held by these individuals will become eligible for sale, in some cases subject only to the volume, manner of sale and notice requirements of Rule 144 of the Securities Act of 1933. See "Shares Eligible for Future Sale" on page 59 for further discussion of the shares that will be freely tradeable after the date of this prospectus. Investors in This Offering Will Suffer Immediate Dilution We expect that the initial public offering price of our common stock will be substantially higher than the pro forma net tangible book value per share of our outstanding common stock. Accordingly, purchasers of common stock in this offering will experience immediate and substantial dilution of approximately $13.13 in net tangible book value per share, or approximately 82.1% of the assumed offering price of $16.00 per share. In contrast, our existing stockholders paid an average price of $2.19 per share. Investors will incur additional dilution upon the exercise of outstanding stock options and warrants. See "Dilution" on page 20 for further discussion of the deletion that new investors will incur. Special Note Regarding Forward-Looking Statements Some of the information in this prospectus contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions. Because these forward-looking statements involve risks and uncertainties, actual results could differ materially from those expressed or implied by these forward-looking statements for a number of reasons, including those discussed under "Risk Factors" and elsewhere in this prospectus. You should read statements that contain these words carefully because they discuss our expectations about our future performance, contain projections of our future operating results or our future financial condition, or state other "forward-looking" information. Before you invest in our common stock, you should be aware that the occurrence of any of the events described in these risk factors and elsewhere in this prospectus could substantially harm our business, results of operations and financial condition and that upon the occurrence of any of these events, the trading price of our common stock could decline and you could lose all or part of your investment. 17 USE OF PROCEEDS We estimate that we will receive net proceeds of $43.2 million from the sale of the 3,000,000 shares of common stock in this offering, assuming an initial public offering price of $16.00 per share and after deducting estimated underwriting discounts and commissions and estimated offering expenses of $4.8 million. If the underwriters' over-allotment option is exercised in full, we estimate that our net proceeds will be $49.9 million. We intend to use the net proceeds of the offering primarily for general corporate purposes, including working capital, capital expenditures and repayment of approximately $3.0 million of indebtedness under our subordinated notes payable. We may, if appropriate opportunities arise, use an undetermined portion of the net proceeds to acquire or invest in complementary companies, product lines, products or technologies. We do not currently have any agreements or commitments with respect to any acquisition or investment and we are not currently involved in any negotiations with respect to any such transaction. Pending these uses, the net proceeds of the offering will be invested in short-term, interest-bearing investments or accounts. Borrowings under our subordinated notes payable, due through fiscal 2002, bear interest at an annual rate of 11.75%. DIVIDEND POLICY We have never paid cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future. We currently intend to retain any future earnings to develop and expand our business. Under the terms of our line of credit facilities, we may not declare or pay any dividends without the prior consent of the lenders under these facilities. 18 CAPITALIZATION The following table sets forth our capitalization as of April 30, 1999: . on an actual basis; . on a pro forma basis to reflect the assumed exercise of a warrant to purchase 60,000 shares of preferred stock at an exercise price of $6.75 per share, based upon an indication from the warrant holder that it intends to exercise the warrant and the fact that the warrant expires upon completion of the offering, the conversion of all outstanding shares of preferred stock, including the shares issued upon the exercise of the warrant, into 11,933,273 shares of common stock and the sale of 672,042 shares of common stock to be issued to two corporate investors at a price per share equal to the initial public offering price, less the per share aggregate underwriters' discounts and commissions for an aggregate of $10.0 million in a private placement that will close contemporaneously with this offering; and . on a pro forma as adjusted basis to reflect the application of the estimated net proceeds from the sale of 3,000,000 shares of common stock in this offering, including the repayment of approximately $3.0 million of indebtedness under our subordinated notes payable, after deducting the estimated underwriting discounts and commissions and estimated offering expenses. The outstanding share information excludes 1,159,725 shares of common stock reserved for issuance upon exercise of outstanding options granted under our 1995 Stock Option Plan with a weighted average exercise price of $2.12 per share; 2,245,025 shares of common stock available for issuance under our 1995 Stock Option Plan; 500,000 shares of common stock reserved for issuance under our 1999 Employee Stock Purchase Plan; and 98,301 shares of common stock issuable upon exercise of outstanding warrants at a weighted average exercise price of $1.22 per share, which will remain outstanding after this offering. Of the total shares outstanding, 963,606 shares are subject to our right of repurchase. You should read this table in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and the related notes to the consolidated financial statements.
April 30, 1999 ------------------------------- Pro Pro Forma Actual Forma As Adjusted -------- -------- ----------- (in thousands, except share data) Capital lease obligations and notes payable, less current portion.......................... $ 3,224 $ 3,224 $ 871 -------- -------- -------- Stockholders' equity: Convertible preferred stock, $.001 par value; 21,175,556 shares authorized, 11,873,273 shares issued and outstanding actual; 10,000,000 shares authorized, no shares issued or outstanding pro forma and pro forma as adjusted........................... 12 -- -- Common stock, $.001 par value; 29,000,000 shares authorized, 4,200,025 shares issued and outstanding actual; 100,000,000 shares authorized, 16,805,340 shares issued and outstanding pro forma; 100,000,000 shares authorized, 19,805,340 shares issued and outstanding pro forma as adjusted........... 4 17 Additional paid-in capital................... 34,814 45,218 88.374 Notes receivable from stockholders........... (748) (748) (748) Unearned stock compensation.................. (4,258) (4,258) (4,258) Accumulated deficit.......................... (26,533) (26,533) (26,533) -------- -------- -------- Total stockholders' equity................. 3,291 13,696 56,855 -------- -------- -------- Total capitalization..................... $ 6,515 $ 16,920 $ 57,726 ======== ======== ========
19 DILUTION Our pro forma net tangible book value at April 30, 1999 was approximately $13.7 million or approximately $.81 per share. Pro forma net tangible book value per share represents total assets less total liabilities, divided by the number of shares outstanding as of April 30, 1999, after giving effect to the conversion into common stock of all of our outstanding shares of preferred stock, the exercise of a warrant to purchase 60,000 shares of preferred stock at an exercise price of $6.75 per share and the sale of 672,042 shares of common stock to be issued to two corporate investors at a price per share equal to the initial public offering price, less the per share aggregate underwriters' discounts and commissions for an aggregate of $10.0 million in a private placement contemporaneous with this offering. After giving effect to our sale of 3,000,000 shares of common stock in this offering at an assumed initial public offering price of $16.00 per share, and after deducting the estimated underwriters' discounts and commissions and estimated offering expenses payable by us, our pro forma net tangible book value as of April 30, 1999 would have been approximately $56.9 million, or $2.87 per share. This represents an immediate increase in net tangible book value of $2.06 per share to existing stockholders and an immediate dilution in net tangible book value of $13.13 per share to new investors purchasing shares in this offering. The following table illustrates this per share dilution: Assumed initial public offering price per share.................... $16.00 Pro forma net tangible book value per share as of April 30, 1999............................................................ $.81 Increase per share attributable to new investors................. 2.06 ---- Pro forma net tangible book value per share after this offering.... 2.87 ------ Dilution per share to new investors in this offering............... $13.13 ======
The following table assumes conversion into common stock of all of our outstanding shares of preferred stock, the exercise of a warrant to purchase 60,000 shares of preferred stock at an exercise price of $6.75 per share and the sale of 672,042 shares of common stock to two corporate investors at a price per share equal to the initial public offering price, less the per share aggregate underwriters' discounts and commissions, for an aggregate of $10.0 million, and sets forth, on a pro forma basis as of April 30, 1999,the difference between the existing stockholders and the purchasers of shares in this offering, at the assumed initial public offering price of $16.00 per share, with respect to the number of shares of common stock purchased from us, the total consideration paid to us and the average price per share paid by existing stockholders and by new investors, before deduction of the estimated underwriting discounts and commissions and estimated offering expenses payable by us:
Shares Purchased Total Consideration Average ------------------ ------------------- Price Per Number Percent Amount Percent Share ---------- ------- ----------- ------- --------- Existing stockholders.......... 16,805,340 84.9% $36,849,000 43.4% $ 2.19 New stockholders............... 3,000,000 15.1 48,000,000 56.6 16.00 ---------- ----- ----------- ----- Totals....................... 19,805,340 100.0% $84,849,000 100.0% ========== ===== =========== =====
As of April 30, 1999, there were options outstanding to purchase a total of 1,159,725 shares of common stock at a weighted average exercise price of $2.12 per share under our 1995 Stock Option Plan. In addition, as of April 30, 1999, there were 98,301 shares of common stock issuable upon exercise of outstanding warrants at a weighted average exercise price of $1.22 per share. To the extent outstanding options or warrants are exercised, there will be further dilution to new investors. 20 SELECTED CONSOLIDATED FINANCIAL DATA The following selected consolidated financial data should be read in conjunction with, and are qualified by reference to, our consolidated financial statements and related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations." The selected consolidated statement of operations data for each of the three years in the period ended April 30, 1999 and the selected consolidated balance sheet data at April 30, 1998 and April 30, 1999, are derived from, and are qualified by reference to, our consolidated financial statements included elsewhere in this prospectus. The selected consolidated statement of operations data for the period from inception on March 13, 1995 to April 30, 1996 and the selected consolidated balance sheet data as of April 30, 1996 and April 30, 1997 are derived from consolidated financial statements not included in this prospectus. The historical results are not necessarily indicative of results to be expected in any future period.
Period from March 13, Fiscal Year Ended April 30, 1995 (Inception) to ----------------------------- April 30, 1996 1997 1998 1999 --------------------- --------- --------- --------- (in thousands, except per share data) Consolidated Statement of Operations Data: Revenues: License................ $ 24 $ 1,143 $ 6,102 $ 10,859 Professional services.. 14 187 1,385 3,665 Maintenance............ -- 22 516 2,283 ------- -------- -------- --------- Total revenues....... 38 1,352 8,003 16,807 ------- -------- -------- --------- Cost of revenues: License................ 2 113 543 819 Professional services.. 4 88 1,347 3,823 Maintenance............ -- 65 278 1,343 ------- -------- -------- --------- Total cost of revenues............ 6 266 2,168 5,985 ------- -------- -------- --------- Gross profit............. 32 1,086 5,835 10,822 ------- -------- -------- --------- Operating expenses: Sales and marketing.... 198 2,149 8,070 13,495 Research and development........... 852 2,510 3,788 4,742 General and administrative........ 381 1,333 1,995 1,938 Amortization of stock compensation.......... -- -- 856 2,253 ------- -------- -------- --------- Total operating expenses............ 1,431 5,992 14,709 22,428 ------- -------- -------- --------- Loss from operations..... (1,399) (4,906) (8,874) (11,606) Interest income (expense), net.......... 72 70 (68) 178 ------- -------- -------- --------- Net loss................. $(1,327) $ (4,836) $ (8,942) $ (11,428) ======= ======== ======== ========= Net loss per share: Basic and diluted...... $ (1.94) $ (3.72) $ (4.20) $ (3.87) ======= ======== ======== ========= Weighted average shares................ 684 1,300 2,129 2,952 ======= ======== ======== ========= Unaudited pro forma net loss per share: Basic and diluted...... $ (.78) ========= Weighted average shares................ 14,668 =========
As of April 30, ----------------------------- 1996 1997 1998 1999 ------ ------ ------ ------- (in thousands) Consolidated Balance Sheet Data: Cash, cash equivalents and short-term investments.................................... $3,829 $3,292 $2,160 $10,003 Working capital (deficit)....................... 3,747 2,617 (930) 4,174 Total assets.................................... 4,219 5,366 7,531 17,948 Long-term obligations........................... 152 626 782 3,224 Stockholders' equity............................ 3,867 3,154 177 3,291
21 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with "Selected Consolidated Financial Data" and our consolidated financial statements and related notes included elsewhere in this prospectus. In addition to historical information, the discussion in this prospectus contains certain forward- looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated by these forward-looking statements due to factors, including, but not limited to, those set forth under "Risk Factors" and elsewhere in this prospectus. Overview We are a leading supplier of product content management software for the use within and among companies in a manufacturing supply chain over the Internet. Our suite of software products is designed to improve the ability of all members of the supply chain to communicate and collaborate with one another about new or changing information concerning the manufacture, source or supply of products or components. We were founded in March 1995 and in June 1996 we began selling our first products and delivering related services. We currently license our products in the United States through our direct sales force, and in Europe through our direct sales force and distributors. To date, revenues from international sales have not been material. We have derived our revenues principally from the licenses of our products, the delivery of professional services and from maintenance contracts. Customers who license our software products receive a license for our application servers, one or more user licenses, and third-party provided adapters to connect with the customer's other existing enterprise systems. Our customers generally purchase a limited number of user licenses at the time of the initial license of the software products and may purchase additional user licenses as needed. Customers may purchase implementation services from us. These professional services are generally provided on a fixed-price basis and are often provided by third-party consulting organizations. We also offer fee- based training services to our customers. Substantially all of our customers who license our products purchase maintenance contracts, which provide unspecified software upgrades, on a when-and-if available basis, and technical support over a stated term, which is generally a twelve-month period. We recognize revenue under Statement of Position, or SOP, 97-2, Software Revenue Recognition, and SOP 98-9, Modification of SOP 97-2, Software Revenue Recognition, with Respect to Certain Transactions. When contracts contain multiple elements and vendor-specific objective evidence exists for all undelivered elements, we account for the delivered elements in accordance with the "Residual Method" prescribed by SOP 98-9. Software licenses sold to new customers are recognized upon installation and acceptance by the customer. Software licenses sold to existing customers, or add-on sales, do not include acceptance provisions and are recognized upon shipment of the software product. During fiscal 1997, our first full year of operations, substantially all of our license revenues were generated from new customers. In fiscal 1998 and fiscal 1999, a majority of our license revenues were generated from new customers. Our professional services revenues consist of implementation services which are recognized upon customer acceptance and training revenues which are recognized as the services are performed. Our maintenance revenues are recognized ratably over the contract period, generally twelve months. Our cost of license revenues include royalties due to third parties for integrated technology, the cost of manuals and product documentation, production media used to deliver our products and packaging costs. Our cost of professional services revenues include salaries and related expenses for the implementation and training services organizations, costs of third parties contracted to provide implementation services to customers and an allocation of our overhead expenses. Our cost of maintenance revenues include salaries and related expenses for the customer support organization and an allocation of our overhead expenses. The cost of professional services can fluctuate depending upon whether more or less of the professional services are provided to our customers by us rather than by third-party service providers. We generally provide implementation services to our customers 22 on a fixed-price basis. If we have to engage independent contractors or third parties to provide these services on our behalf, it is generally at higher cost resulting in a lower gross margin than if we had provided the services to our customers ourselves. Therefore, our gross margin from professional services may fluctuate based on who performs the services and the actual cost to provide these services. Although services revenues may increase in absolute dollars if we increase the professional services we provide, services revenues have lower gross margins than license revenues. Our overall gross profit can therefore fluctuate based on the mix of license revenues compared to professional services revenues and maintenance revenues. Our operating expenses are classified as sales and marketing, research and development and general and administrative. We classify all charges to these operating expense categories based on the nature of the expenditures. Although each category includes expenses that are unique to the category type, there are common recurring expenditures that are typically included in all operating expenses categories, such as salaries, employee benefits, incentive compensation, bonuses, travel costs, telephone, communication, rent and allocated facilities costs and professional fees. The sales and marketing category of operating expenses includes additional expenditures specific to the marketing group, such as public relations and advertising, trade shows, marketing collateral materials, and customer user group meetings and expenditures specific to the sales group, such as commissions. To date, all software development costs in research and development have been expensed as incurred. Also included in our operating expenses is the amortization of stock compensation described below. In connection with the granting of stock options to our employees, we have recorded unearned stock compensation totaling approximately $7.4 million through April 30, 1999, of which $4.3 million remains to be amortized. This amount represents the difference between the exercise price and the current estimated fair value of our common stock on the date these stock options were granted. This amount is included as a component of stockholders' equity and is being amortized by charges to operations over the vesting period of the options, consistent with the method described in Financial Accounting Standards Board, or FASB, Interpretation No. 28. We recognized amortization of unearned stock compensation of $856,000 for fiscal 1998 and $2.3 million for fiscal 1999. We expect to record additional unearned stock compensation with respect to stock option grants made subsequent to April 30, 1999 of at least $2.5 million. The amortization of the remaining unearned stock compensation at April 30, 1999 will result in additional charges to operations through fiscal 2004. The amortization of stock compensation is classified as a separate component of operating expenses in our consolidated statement of operations. Although our total revenues have increased from quarter to quarter, we have incurred significant costs to develop our products and to recruit and train personnel for our engineering, sales, marketing, professional services and administration departments. As a result, we have incurred significant losses since inception, and, as of April 30, 1999, had an accumulated deficit of $26.5 million. We intend to continue to incur significant sales and marketing, research and development and general and administrative expenses. For example, we had 65 full-time employees as of April 30, 1997 compared to 103 at April 30, 1998 and 156 at April 30, 1999. We will seek to hire additional employees in the future. We expect to continue to incur operating losses for the foreseeable future. In order to achieve profitability, we will need to increase our revenues significantly. Therefore, we cannot assure you that we will ever attain or maintain profitability. Our expansion will also place significant demands on our management and operational resources. To manage this rapid growth and increased demands, we must improve existing and implement new operational and financial systems, procedures and controls. We must also hire, train, manage, retain and motivate qualified personnel. We expect future expansion to continue to challenge our ability to hire, train, manage, retain and motivate our employees. In view of the rapidly changing nature of our market and our limited operating history, we believe that period-to-period comparisons of our revenues and other operating results are not necessarily meaningful and should not be relied upon as indications of future performance. Our historic revenue growth rates are not necessarily sustainable or indicative of our future growth. 23 Results of Operations The following table sets forth selected consolidated financial data for the periods indicated, expressed as a percentage of total revenues:
Fiscal Year Ended April 30, ----------------------- 1997 1998 1999 ------ ------ ----- Revenues: License............................................ 84 % 76 % 65 % Professional services.............................. 14 17 22 Maintenance........................................ 2 7 13 ------ ------ ----- Total revenues................................... 100 100 100 ------ ------ ----- Cost of revenues: License............................................ 8 7 5 Professional services.............................. 7 17 23 Maintenance........................................ 5 3 8 ------ ------ ----- Total cost of revenues........................... 20 27 36 ------ ------ ----- Gross profit......................................... 80 73 64 ------ ------ ----- Operating expenses: Sales and marketing................................ 159 101 80 Research and development........................... 185 47 28 General and administrative......................... 99 25 12 Amortization of stock compensation................. -- 11 13 ------ ------ ----- Total operating expenses......................... 443 184 133 ------ ------ ----- Loss from operations................................. (363) (111) (69) Interest income (expense), net....................... 5 (1) 1 ------ ------ ----- Net loss............................................. (358)% (112)% (68)% ====== ====== =====
Revenues Our total revenues were $1.4 million for fiscal 1997, $8.0 million for fiscal 1998 and $16.8 million for fiscal 1999, representing increases of $6.6 million, or 492%, from fiscal 1997 to fiscal 1998 and $8.8 million, or 110%, from fiscal 1998 to fiscal 1999. We had no customer that accounted for more than 10% of our total revenues in fiscal 1997, fiscal 1998 or fiscal 1999. License Revenues. Our license revenues were $1.1 million for fiscal 1997, $6.1 million for fiscal 1998 and $10.9 million for fiscal 1999, representing increases of $5.0 million, or 434%, from fiscal 1997 to fiscal 1998 and $4.8 million, or 78%, from fiscal 1998 to fiscal 1999. License revenues as a percentage of total revenues were 84% for fiscal 1997, 76% for fiscal 1998 and 65% for fiscal 1999. The increase in our license revenues from fiscal 1997 to fiscal 1998 was due primarily to increased market acceptance of our suite of products and, to a lesser extent, to increases in both the size and productivity of our sales force. The increase in license revenues from fiscal 1998 to fiscal 1999 was primarily due to the continued impact of those same factors, and, to a lesser extent, to the release of a new version of our products. Professional Services Revenues. Our professional services revenues were $187,000 for fiscal 1997, $1.4 million for fiscal 1998 and $3.7 million for fiscal 1999, representing increases of $1.2 million, or 640%, from fiscal 1997 to fiscal 1998 and $2.3 million, or 165%, from fiscal 1998 to fiscal 1999. Professional services revenues as a percentage of total revenues were 14% for fiscal 1997, 17% for fiscal 1998 and 22% for fiscal 1999. The increase in professional services revenues from fiscal 1997 to fiscal 1998 and from fiscal 1998 to fiscal 24 1999 reflects increased license revenues and, to a lesser extent, an increased range of services, consisting of additional data migration and integration services. The increase in professional services revenues as a percentage of total revenues from fiscal 1997 to fiscal 1998 and from fiscal 1998 to fiscal 1999 was primarily due to the increased range of services. To date, a portion of our professional services revenues relates to our invoicing for services provided by third parties. In the future, we anticipate that an increasing percentage of professional services will be provided by third parties who will invoice the customer directly. As a result, we anticipate that professional services revenues will decline as a percentage of total revenues. Maintenance Revenues. Our maintenance revenues were $22,000 for fiscal 1997, $516,000 for fiscal 1998 and $2.3 million for fiscal 1999, representing increases of $494,000, or 2,245%, from fiscal 1997 to fiscal 1998 and $1.8 million, or 342%, from fiscal 1998 to fiscal 1999. Maintenance revenues as a percentage of total revenues were 2% for fiscal 1997, 7% for fiscal 1998 and 13% for fiscal 1999. The increase in maintenance revenues and maintenance revenues as a percentage of total revenues from fiscal 1997 to fiscal 1998 and from fiscal 1998 to fiscal 1999 is primarily due to increased licenses for our products, and, to a lesser extent, to renewals of prior period maintenance contracts. Cost of Revenues Cost of License Revenues. Cost of license revenues were $113,000 for fiscal 1997, $543,000 for fiscal 1998 and $819,000 for fiscal 1999, representing increases of $430,000, or 381%, from fiscal 1997 to fiscal 1998 and $276,000, or 51%, from fiscal 1998 to fiscal 1999. Cost of license revenues as a percentage of license revenues were 10% for fiscal 1997, 9% for fiscal 1998 and 8% for fiscal 1999. Cost of license revenues increased from fiscal 1997 to fiscal 1998 and from fiscal 1998 to fiscal 1999 primarily due to increased expenses associated with the sub-licensing of third-party software used in our products, and, to a lesser extent, the costs of production, manuals and other media associated with the license of an increased number of software products. Cost of license revenues as a percentage of total license revenues have decreased as add-on licenses, which have a higher gross margin than initial customer licenses, have increased as a percentage of total license revenues. Cost of Professional Services Revenues. Cost of professional services revenues were $88,000 for fiscal 1997, $1.3 million for fiscal 1998 and $3.8 million for fiscal 1999, representing increases of $1.2 million, or 1,431%, from fiscal 1997 to fiscal 1998 and $2.5 million, or 183%, from fiscal 1998 to fiscal 1999. Cost of services revenues as a percentage of services revenues were 47% for fiscal 1997, 97% for fiscal 1998 and 104% for fiscal 1999. The increase in cost and as a percentage of professional services revenues from fiscal 1997 to fiscal 1998 was primarily due to hiring and training a consulting organization to implement our products. The increase in cost and as a percentage of professional services revenues from fiscal 1998 to fiscal 1999 was primarily due to an increase in third-party professional services personnel to support the increased customer base. In certain periods in the past, and potentially in the future, our cost of professional services revenues exceeded our professional services revenues. This is generally because the actual cost of providing the services, whether provided internally or through third parties, exceeded the fixed price payment received from some of our customers. In addition, as we increase the size of our professional services staff, costs are incurred for new personnel before they become fully productive. Cost of Maintenance Revenues. Cost of maintenance revenues were $65,000 for fiscal 1997, $278,000 for fiscal 1998 and $1.3 million for fiscal 1999, representing increases of $213,000, or 328%, from fiscal 1997 to fiscal 1998 and $1.0 million, or 383%, from fiscal 1998 to fiscal 1999. Cost of maintenance revenues as a percentage of maintenance revenues were 295% for fiscal 1997, 54% for fiscal 1998 and 59% for fiscal 1999. The increase in cost of maintenance revenues from fiscal 1997 to fiscal 1998 and from fiscal 1998 to fiscal 1999 was primarily due to hiring and training a support organization needed in connection with our increased customer base during these periods. The decrease in cost of maintenance revenues as a percentage of maintenance revenues from fiscal 1997 to fiscal 1998 was primarily due to economies of scale realized as a result of increased management personnel and increased experience of the maintenance personnel. The increase in the cost of maintenance revenues as a percentage of maintenance revenues from fiscal 1998 to fiscal 1999 was primarily due to expansion of the support organization. 25 Operating Expenses Sales and Marketing. Sales and marketing expenses were $2.1 million for fiscal 1997, $8.1 million for fiscal 1998 and $13.5 million for fiscal 1999, representing increases of $5.9 million, or 276%, from fiscal 1997 to fiscal 1998 and $5.4 million, or 67%, from fiscal 1998 to fiscal 1999. Sales and marketing expenses as a percentage of total revenues were 159% for fiscal 1997, 101% for fiscal 1998 and 80% for fiscal 1999. The increase in sales and marketing expenses from fiscal 1997 to fiscal 1998 and from fiscal 1998 to fiscal 1999 primarily reflect our investment in our sales and marketing organization, including significant personnel-related expenses such as salaries, benefits and commissions, recruiting fees, travel expenses and related costs of hiring sales management, sales representatives, sales engineers and marketing personnel. The increase in sales and marketing expenses from fiscal 1997 to fiscal 1998 also reflects increased hiring rates, and, to a lesser extent, increased public relations and trade show expenses. We anticipate that our sales and marketing expenses will increase in absolute dollars for the foreseeable future as we expand our domestic and international sales force. Research and Development. Research and development expenses were $2.5 million for fiscal 1997, $3.8 million for fiscal 1998 and $4.7 million for fiscal 1999, representing increases of $1.3 million, or 51%, from fiscal 1997 to fiscal 1998 and $954,000, or 25%, from fiscal 1998 to fiscal 1999. Research and development costs as a percentage of total revenues were 185% for fiscal 1997, 47% for fiscal 1998 and 28% for fiscal 1999. The increases in research and development expenses from fiscal 1997 to fiscal 1998 and from fiscal 1998 to fiscal 1999 were primarily due to the increase in the number of our software developers, quality assurance personnel and outside contractors to support our product development, documentation and testing activities related to the development and release of the latest versions of our products. We anticipate that research and development expenses will continue to increase in absolute dollars for the foreseeable future as we continue to add to our research and development staff. General and Administrative. General and administrative expenses were $1.3 million for fiscal 1997, $2.0 million for fiscal 1998 and $1.9 million for fiscal 1999, representing an increase of $662,000, or 50%, from fiscal 1997 to 1998 and a decrease of $57,000, or 3%, from fiscal 1998 to 1999. General and administrative expenses as a percentage of total revenues were 99% for fiscal 1997, 25% for fiscal 1998 and 12% for fiscal 1999. The increase in costs from fiscal 1997 to fiscal 1998 was primarily due to hiring additional finance, executive and administrative personnel to support the growth of our business during that period. We expect that general and administrative expenses will increase in absolute dollars for the foreseeable future as we expand our operations and incur the normal costs of a public company. Amortization of Stock Compensation. During fiscal 1998 and fiscal 1999, we recorded a total of approximately $7.4 million of unearned stock compensation. We recognized amortization of stock compensation of $856,000 in fiscal 1998 and $2.3 million in fiscal 1999. Interest Income (Expense), Net. Interest income (expense), net, was $70,000 for fiscal 1997, $(68,000) for fiscal 1998 and $178,000 for fiscal 1999. At April 30, 1999, we had unamortized interest of $253,000 related to warrants issued in connection with $3.0 million of subordinated notes payable which were issued during fiscal 1999. We plan to use proceeds from our initial public offering to prepay these subordinated notes payable in their entirety. As a result, we will recognize the unamortized interest balance as an expense in the period we prepay the notes payable. Income Taxes. No provision for income taxes has been recorded since our inception because we have incurred net losses in all periods. As of April 30, 1999, we had net operating loss carryforwards for federal income tax reporting purposes of approximately $20.0 million that expire in various amounts beginning in fiscal 2016. We also had net operating loss carryforwards for state income tax reporting purposes of approximately $18.0 million that expire in various amounts beginning in fiscal 2004. The U.S. tax laws contain provisions that limit the use in any future period of net operating loss and credit carryforwards upon the occurrence of certain events, including a significant change in ownership interests. We had deferred tax assets, including our net 26 operating loss carryforwards and tax credits of approximately $8.7 million as of April 30, 1999. A valuation allowance has been recorded for the entire deferred tax asset as a result of uncertainties regarding the realization of the asset balance. See note 4 of notes to consolidated financial statements. Quarterly Results of Operations The following tables set forth our unaudited consolidated statement of operations data for each of the eight quarters in the period ended April 30, 1999, as well as that data expressed as a percentage of our total revenues for the quarters presented. You should read this information in conjunction with our consolidated financial statements and related notes appearing elsewhere in this prospectus. We have prepared this unaudited consolidated information on a basis consistent with our audited consolidated financial statements, and, in the opinion of our management, reflects all normal recurring adjustments that we consider necessary for a fair presentation of our financial position and operating results for the quarters presented. You should not draw any conclusions about our future results from the operating results for any quarter.
Three Months Ended ------------------------------------------------------------------------------ Jul. 31, Oct. 31, Jan. 31, Apr. 30, Jul. 31, Oct. 31, Jan. 31, Apr. 30, 1997 1997 1998 1998 1998 1998 1999 1999 -------- -------- -------- -------- -------- -------- -------- -------- (in thousands) Revenues: License................ $ 926 $ 1,324 $ 1,543 $ 2,309 $ 2,270 $ 2,486 $ 2,898 $ 3,205 Professional services.. 213 254 419 499 655 816 976 1,218 Maintenance............ 40 91 166 219 316 510 718 739 ------- ------- ------- ------- ------- ------- ------- ------- Total revenues........ 1,179 1,669 2,128 3,027 3,241 3,812 4,592 5,162 ------- ------- ------- ------- ------- ------- ------- ------- Cost of revenues: License................ 79 124 119 221 165 241 211 202 Professional services.. 199 330 348 470 756 790 1,165 1,112 Maintenance............ 59 64 116 39 237 306 371 429 ------- ------- ------- ------- ------- ------- ------- ------- Total cost of revenues............. 337 518 583 730 1,158 1,337 1,747 1,743 ------- ------- ------- ------- ------- ------- ------- ------- Gross profit............ 842 1,151 1,545 2,297 2,083 2,475 2,845 3,419 ------- ------- ------- ------- ------- ------- ------- ------- Operating expenses: Sales and marketing.... 1,279 2,024 2,006 2,761 2,756 3,234 3,339 4,166 Research and development........... 745 826 1,044 1,173 1,076 1,140 1,294 1,232 General and administrative........ 428 448 481 638 431 439 492 576 Amortization of stock compensation.......... -- 223 280 353 444 501 622 686 ------- ------- ------- ------- ------- ------- ------- ------- Total operating expenses............. 2,452 3,521 3,811 4,925 4,707 5,314 5,747 6,660 ------- ------- ------- ------- ------- ------- ------- ------- Loss from operations.... (1,610) (2,370) (2,266) (2,628) (2,624) (2,839) (2,902) (3,241) Interest income (expense), net......... (2) (26) (23) (17) 52 98 64 (36) ------- ------- ------- ------- ------- ------- ------- ------- Net loss................ $(1,612) $(2,396) $(2,289) $(2,645) $(2,572) $(2,741) $(2,838) $(3,277) ======= ======= ======= ======= ======= ======= ======= =======
27
As a Percentage of Total Revenues ----------------------------------------------------------------------- Jul. 31, Oct. 31, Jan. 31, Apr. 30, Jul. 31, Oct. 31, Jan. 31, Apr. 30, 1997 1997 1998 1998 1998 1998 1999 1999 -------- -------- -------- -------- -------- -------- -------- -------- Revenues: License................ 79 % 79 % 72 % 76 % 70 % 65 % 63 % 62 % Professional services.. 18 15 20 17 20 22 21 24 Maintenance............ 3 6 8 7 10 13 16 14 ---- ---- ---- --- --- --- --- --- Total revenues........ 100 100 100 100 100 100 100 100 ---- ---- ---- --- --- --- --- --- Cost of revenues: License................ 7 7 6 7 5 6 5 4 Professional services.. 17 20 16 16 24 21 25 22 Maintenance............ 5 4 5 1 7 8 8 8 ---- ---- ---- --- --- --- --- --- Total cost of revenues............. 29 31 27 24 36 35 38 34 ---- ---- ---- --- --- --- --- --- Gross profit............ 71 69 73 76 64 65 62 66 ---- ---- ---- --- --- --- --- --- Operating expenses: Sales and marketing.... 109 121 94 91 85 85 73 80 Research and development........... 63 50 49 39 33 30 28 24 General and administrative........ 36 27 23 21 13 11 11 11 Amortization of stock compensation.......... -- 13 13 12 14 13 13 14 ---- ---- ---- --- --- --- --- --- Total operating expenses............. 208 211 179 163 145 139 125 129 ---- ---- ---- --- --- --- --- --- Loss from operations.... (137) (142) (106) (87) (81) (74) (63) (63) Interest income (expense), net......... -- (2) (2) -- 2 2 1 -- ---- ---- ---- --- --- --- --- --- Net loss................ (137)% (144)% (108)% (87)% (79)% (72)% (62)% (63)% ==== ==== ==== === === === === ===
Revenues. Our total revenues increased in each of the eight quarterly periods ended April 30, 1999. The increase in revenues in these periods reflects the increase in the number of customers and increased sales following our December 1998 release of a new version of our product suite. License revenues in the first quarter of fiscal 1999 decreased 2% from the fourth quarter of fiscal 1998 due to the effect of our sales commission plan providing increased bonuses for sales in the last quarter of fiscal 1998. Although in future periods first quarter license revenues could be lower than the level achieved in the preceding fourth quarter due to year-end sales efforts, we are unable to determine if this is a historical trend. Cost of Revenues. Cost of revenues increased in each of the eight quarterly periods ended April 30, 1999 as a result of the growth of revenues. In the quarters ended July 31, 1998 and January 31, 1999, cost of professional services as a percentage of total professional services revenues significantly increased primarily due to lower margin third-party implementation projects and losses on certain implementation projects. Operating Expenses. Operating expenses increased significantly in each of the eight quarterly periods ended April 30, 1999 as a result of increased sales and marketing expenses associated with higher numbers of personnel, use of independent contractors and other third parties for development of our products, recruiting and related hiring expenses for additional senior management in our research and development, administrative, sales and marketing organizations and amortization of stock compensation. In addition, sales and marketing expenses increased significantly in the fourth quarter of fiscal 1998 and fiscal 1999 primarily due to commissions and other compensation paid to the direct sales force for the attainment of sales quotas. Our quarterly operating results have varied widely in the past, and we expect that they will continue to fluctuate in the future as a result of a number of factors, many of which are outside our control. We believe that our period-to-period operating results are not meaningful, and you should not rely on them as indicative of our future performance. You should also evaluate our prospects in light of the risks, expenses and difficulties commonly encountered by comparable early-stage companies in new and rapidly emerging markets. We might not successfully address the risks and challenges that face us. In addition, although we have experienced 28 significant revenue growth recently, our revenue might not continue to grow and we might not become or remain profitable in the future. Our future operating results will depend on many factors, including: . size and timing of sales and installations of our products; . entry of new competitors into our market, or the announcement of new products or product enhancements by competitors; . our ability to successfully expand our direct sales force and our international sales organization; . changes in our sales force incentives; . unexpected delays in developing and marketing new and enhanced products; . deferral of customer orders in anticipation of product enhancements or new products; . unexpected decline in purchases by our existing customers, including purchases of additional licenses and maintenance contracts; . delays in our customers' orders due to their year 2000 priorities; . variability in the mix of our license and professional service revenues; . our ability to accurately price fixed-priced professional services projects; . variability in the mix of professional services that we perform versus those performed for our customers by others; and . our ability to establish and maintain relationships with our third-party implementation partners. Liquidity and Capital Resources Since our inception, we have primarily financed our operations through the sale of convertible preferred stock, resulting in net proceeds of $26.2 million through April 30, 1999. To a lesser extent, we have financed our operations through equipment financing and lending arrangements. As of April 30, 1999, we had cash and cash equivalents of $10.0 million, an increase from $2.2 million of cash and cash equivalents held as of April 30, 1998. Our working capital at April 30, 1999 was $4.2 million, compared to a working capital deficit of $930,000 at April 30, 1998. The increase in the working capital is attributable to the increase in cash from the sales of our equity securities and the increase in accounts receivable. We have a $2.0 million senior line of credit facility with a bank that bears interest at 8.5% and expires on August 31, 1999. We are currently in the process of applying for an extension to the line of credit. At April 30, 1999, no balance was outstanding under this line of credit. This line of credit is secured by accounts receivable and certain other assets. We also have $3.0 million outstanding of subordinated notes payable which bear interest at an annual rate of 11.75% and are payable through fiscal 2002. In addition, capital lease obligations including both short-term and long-term portions, were $1.6 million at April 30, 1999, and are payable through fiscal 2003. Our senior line of credit requires us to maintain certain monthly financial covenants, including a minimum tangible net worth and a minimum quick ratio. We were in compliance with all of our financial covenants at April 30, 1999. We also have noncancelable operating leases for office space and equipment of approximately $2.4 million which are payable through fiscal 2003. Our operating activities resulted in net cash outflows of $4.2 million for fiscal 1997 compared to $6.4 million for fiscal 1998 and $5.1 million for fiscal 1999. Investing activities resulted in cash outflows of $728,000 for fiscal 1997, provided cash of $2.6 million for fiscal 1998 and resulted in cash outflows of $459,000 for fiscal 1999. Net cash provided by investing activities 29 for fiscal 1998 consisted of proceeds from the sale of short-term investments offset by cash used to acquire property and equipment. Net cash outflows in fiscal 1997 and fiscal 1999 were due to the acquisition of property and equipment. Financing activities provided cash of $4.0 million in fiscal 1997, $5.7 million in fiscal 1998 and $13.4 million in fiscal 1999, primarily through proceeds from the issuance of preferred stock and net proceeds from debt and capital lease borrowings. Purchases of property and equipment, including equipment purchased under capital leases, were approximately $1.1 million in fiscal 1997, $1.3 million in fiscal 1998 and $1.5 million in fiscal 1999. These expenditures were primarily for computer hardware and software and furniture and fixtures. We expect that capital expenditures will continue to increase to the extent we continue to increase our headcount or expand our operations. We currently anticipate that we will continue to experience significant growth in our operating expenses for the foreseeable future as we: . enter new markets for our products; . increase research and development spending; . increase our sales and marketing activities; and . enhance our operational and financial systems. We currently anticipate that the net proceeds from this offering, together with our current cash, cash equivalents and available credit facilities, will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months. However, we may need to raise additional funds in future periods through public or private financings, or other sources, to fund our operations and potential acquisitions, if any, until we achieve profitability, if ever. We may not be able to obtain adequate or favorable financing at that time. Failure to raise capital when needed could harm our business. If we raise additional funds through the issuance of equity securities, the percentage of ownership of our stockholders would be reduced. Furthermore, these equity securities might have rights, preferences or privileges senior to our common stock. Year 2000 Readiness Many currently installed computer systems are not capable of distinguishing 21st century dates from 20th century dates or have been programmed with default dates ending in 99, the common two-digit reference for 1999. As a result, as we transition from the 20th century to the 21st century, computer systems and software used by many companies and organizations in a wide variety of industries will produce erroneous results or fail unless they have been modified or upgraded to process date information correctly. Significant uncertainty exists in the software industry and other industries concerning the scope and magnitude of problems associated with the year 2000 issue. State of Readiness. We have completed our initial assessment of the potential overall impact of the impending century change on our business. Based on our current assessment, we believe the current versions of our software products are year 2000 compliant. By year 2000 compliant, we mean that our software products, when used with accurate date data and in accordance with their associated documentation, are capable of properly processing date data from, into and between the 20th and 21st centuries, including the years 1999, 2000 and leap years, provided that all other products, e.g., hardware, software and firmware, used with our products properly exchange date data with them. However, our products are generally integrated into enterprise systems involving sophisticated hardware and complex software products that we cannot adequately evaluate for year 2000 compliance. We may face claims based on year 2000 problems in other companies' products, or issues arising from the integration of multiple products within an overall system even if our products are otherwise year 2000 compliant. Although we have not been a party to any litigation or arbitration proceeding involving our products 30 or services related to year 2000 compliance issues, we may in the future be required to defend our products or services in these proceedings, or to negotiate resolutions of claims based on year 2000 issues. The costs of defending and resolving year 2000-related disputes, regardless of the merits of these disputes, and any liability we have for year 2000-related damages, including consequential damages, could substantially harm our business. In addition, we believe that the purchasing patterns of customers and potential customers may be affected by year 2000 issues, as companies expend significant resources to correct or upgrade their current software systems for year 2000 compliance and as they delay purchase of new systems that may not be year 2000 compliant. These expenditures may result in reduced funds available to purchase software products such as those we offer. To the extent year 2000 issues cause a significant delay in, or cancellation of, decisions to purchase our products or services, our business would be substantially harmed. We are currently reviewing our internal management information and other computer systems to identify any year 2000 problems, and are beginning to communicate with the external vendors that supply us with material software and information systems and with our significant suppliers to determine their year 2000 readiness. We have not completed our year 2000 investigation and overall compliance initiative. Costs. To date, we have not incurred any material costs directly associated with our year 2000 compliance efforts, except for compensation expenses associated with our salaried employees who have devoted some of their time to our year 2000 assessment and remediation efforts. We do not expect the total cost of year 2000 problems to be material to our business. However, during the months prior to the century change, we will continue to evaluate new versions of our software products, new software and information systems provided to us by third parties and any new infrastructure systems that we acquire to determine whether they are year 2000 compliant. Despite our current assessment, we may not identify and correct all significant year 2000 problems on a timely basis. Year 2000 compliance efforts may involve significant time and expense and unremediated problems could substantially harm our business. We currently have no contingency plans to address the risks associated with unremediated year 2000 problems. Risks. We are not currently aware of any year 2000 readiness problems relating to our internally-developed proprietary systems that would substantially harm our business. We may discover year 2000 readiness problems in these systems that will require substantial revision. In addition, third- party software, hardware or services incorporated into our material systems may need to be revised or replaced, all of which could be time-consuming and expensive. Our failure to fix or replace our internally developed proprietary software or third-party software, hardware or services on a timely basis could result in lost revenues, increased operating costs, the loss of customers and other business interruptions, any of which could substantially harm our business. Moreover, our failure to adequately address year 2000 readiness issues in our internally developed proprietary software could result in claims of mismanagement, misrepresentation or breach of contract and related litigation, which could be costly and time-consuming to defend. In addition, governmental agencies, utility companies, Internet access companies, third-party service providers and others outside of our control may not be year 2000 ready. The failure by these entities to be year 2000 ready could result in a systemic failure beyond our control, such as a prolonged Internet, telecommunications or electrical failure, which could also prevent us from delivering our services to our customers, decrease the use of the Internet or prevent users from accessing web sites. Contingency Plan. As discussed above, we are engaged in an ongoing year 2000 assessment and have not yet developed any contingency plans. The results of our year 2000 simulation testing and the responses received from third- party vendors and service providers will be taken into account in determining the nature and extent of any contingency plans we adopt. 31 Recent Accounting Pronouncements In March 1998, the American Institute of Certified Public Accountants, or AICPA, issued Statement of Position, or SOP, 98-1, Accounting for the Cost of Computer Software Developed or Obtained for Internal Use. SOP 98-1 will be effective for our fiscal year ending April 30, 2000. SOP 98-1 provides guidance on accounting for computer software developed or obtained for internal use including the requirement to capitalize and amortize specified costs. We do not expect the adoption of this standard to have a material impact on our results of operations, financial position or cash flows. In June 1998, the FASB issued Statement of Financial Accounting Standard, or SFAS, 133, Accounting for Derivative Instruments and Hedging Activities. This statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. SFAS 133 will be effective for our fiscal year ending April 30, 2001. The adoption of SFAS is not expected to have a material impact on our results of operations, financial position or cash flows in the foreseeable future. Qualitative and Quantitative Disclosures About Market Risk We develop products in the United States and market our products in North America, and to a lesser extent in the Europe and Asia Pacific regions. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets. Because all of our revenues are currently denominated in U.S. dollars, a strengthening of the dollar could make our products less competitive in foreign markets. Our interest income is sensitive to changes in the general level of U.S. interest rates, particularly since the majority of our investments are in short-term instruments. Due to the short-term nature of our investments, we believe that there is not a material risk exposure. 32 BUSINESS The following description of Agile's business should be read in conjunction with the information included elsewhere in this prospectus. This description contains forward-looking statements that involve risks and uncertainties. Agile's actual results could differ significantly from the results discussed in the forward-looking statements as a result of the factors set forth in "Risk Factors" and elsewhere in this prospectus. Overview We are a leading supplier of product content management software for use over the Internet within and among companies in a manufacturing supply chain. Our suite of products is designed to improve the ability of supply chain members to communicate and collaborate with one another about new or changing product content. We believe that our products are well-suited for participants connected in outsourced supply chains, as well as those managing multi-site engineering, manufacturing, sales and distribution via the Internet. Since June 1996, when we shipped our first product, we have licensed our products to approximately 300 customers in the computers and peripherals, components, consumer electronics, data networking and telecommunications equipment, electronics manufacturing, medical equipment and semiconductor equipment markets. Our current customers in these markets include Gateway, Texas Instruments, Philips Mobile Computing, Lucent Technologies, Solectron, GE Marquette Medical Systems and FSI International. Industry Background The competitive environment for companies engaged in the manufacture and supply of products has intensified dramatically and expanded globally in recent years. This trend has been driven principally by productivity improvements arising from advances in technology and growing customer expectations for feature-rich products delivered quickly and at competitive prices. To remain competitive, companies are adopting new strategies to address these challenges. Many companies are shifting from traditional manufacturing approaches, where a manufacturer controls most phases of the manufacturing process from raw materials to finished goods, to a manufacturing process where much or all of the manufacturing process is outsourced to multiple companies as part of a supply chain. According to Technology Forecasters, Inc., the outsourcing market in electronics alone exceeded $89 billion in 1998 and is expected to grow to $178 billion in 2001, although we cannot be certain that this projection will be met. By outsourcing their production, some companies have created supply chains that are more efficient, dynamic and flexible than manufacturing operations that control all phases of the manufacturing process. Use of the outsourced supply chain has afforded companies the flexibility to choose top suppliers and partners to make each link in the supply chain more competent, innovative and productive. As companies operate on a global basis, supply chains can span multiple continents, tying suppliers in one part of the world with a plant in another to serve customers in a third location. The end result is that companies can bring their products to market more efficiently while at the same time achieving higher levels of customer satisfaction. Managing the Outsourced Supply Chain A critical aspect of managing the outsourced supply chain across multiple suppliers is finding effective ways to store, access, and share information within the company as well as with all supply chain partners during each stage of the production process. Different stages of the production process generate many complex types of data that need to be shared across the supply chain. There are many types of data and a vast number of information flows that can occur in the production process. Product Content. During the product design stage, the company must communicate large amounts of data within the company as well as to supply chain partners. The company begins by designating the content of the finished product with a list of components known as the bill of materials. The components on this list can be 33 divided into two classes: "buy" or "make." For the "buy" components, also called off-the-shelf components, specifications for each part must be determined and information must be collected and analyzed to determine if the available components meet the required specifications. Once eligible components have been selected, the manufacturers of the parts are incorporated into the approved manufacturers list. For customized, or "make" components, other data are created, including: . assembly drawings, detailing precisely how the component should be fabricated; . work instructions, which guide the manual assembly process; . machine instructions, to drive automated manufacturing and assembly equipment; . art work, for processes such as printed circuit board fabrication; . schematics, for describing electronic components and assemblies; and . test instructions, which enable the suppliers and original equipment manufacturers to test for conformity to the manufacturer's specifications. New Product Introduction. Prior to volume production, the data created during the product design stage must be communicated to each relevant party in the supply chain. One of the complexities of the outsourced supply chain model is that supply chain members often have multiple discrete roles, including sourcing parts, fabrication, assembling components, testing and delivery. In addition, the manufacture of a product such as a personal computer can include several hundred suppliers. Ensuring that accurate product information is disseminated promptly and to the correct parties is one of the most difficult challenges for a company employing the outsourced supply chain model. Further, suppliers may often discover constraints and/or opportunities for improvements during the prototyping and pilot production phases. This often prompts a flurry of product changes that requires rapid collaboration among supply chain partners to avoid delays and excessive start-up or inventory costs. Volume Production and Product Changes. Product specifications frequently change even during volume production. This can occur due to a number of reasons, including: . changes in design in response to customer requests or market conditions; . changes required to address a defect in the design or to improve the manufacturing process; and . changes in the costs or availability of components. The communication of information regarding product changes is a dynamic loop in which members of the supply chain must respond to market-dictated demands while also reacting to information being shared among supply chain partners. Whatever the reason for the change, executing it through the manufacturing process expeditiously and effectively, while minimizing cost, is a complex problem. To change a design requires: . creating an engineering change order; . developing the specifications required by the engineering change order; . securing the necessary approvals to effect the change; and . communicating the change to the supply chain. This problem is especially complex for companies operating in a market where product specifications or volume requirements may be changing continuously. For example, the requirements of a personal computer manufacturer that builds products to order may change continuously during each day as information regarding orders is received from customers or its sales force. To address these challenges, many companies have implemented software systems that govern supply chain management, electronic data interchange, product data management and enterprise resource planning. However, 34 many of these products were not designed to interconnect multiple companies in an outsourced supply chain, and therefore do not fully address the need for supply chain collaboration. Electronic data interchange, a software system that facilitates interconnection and exchange of data, is expensive to install and maintain and therefore is viable only to large organizations that can justify the cost. Other methods of communication and collaboration within the supply chain, including phone, paper-based solutions such as courier or fax, or e-mail or web page sources, are not linked in real-time and are slow, incomplete and often inaccurate. As product changes become more frequent and time to market increasingly becomes important, the ability to manage this process effectively becomes critical to a company's competitiveness. A company that can disseminate information quickly and accurately to the appropriate supply chain partners may be in a position to compete effectively. However, a company that is agile and can effectively collaborate with its supply chain partners in real time can have an even larger competitive advantage. For example, through collaboration with its supply chain partners, a company may learn that a component is not readily available due to lack of supply or that a new component is available which might substantially reduce costs or improve manufacturing efficiencies. Instead of continuing to rely on the originally selected component, the company can respond by incorporating another component in the product design and notify partners before these components are incorporated into new products. By doing so, the company has the opportunity to increase revenues by maintaining product availability or increase profits by taking advantage of lower cost components more quickly. Impact of the Internet The Internet, as a fast growing communications network, is changing the way businesses communicate and share information and creating new and evolving ways for conducting commerce. The typical corporate web site is evolving from a mere repository for information regarding products into a medium for conducting business. According to Forrester Research, its research indicates that business-to-business electronic commerce is expected to grow to $1.3 trillion in 2003, accounting for more than 90% of the dollar value of electronic commerce in the United States. This market is expected to create substantial demand for Internet and intranet-based commerce applications. The market for applications that enable business-to-business electronic commerce is expected to reach $1.5 billion by 2002, according to Dataquest based upon its research. However, we cannot be certain that these projections will be met. Companies that have successfully implemented strategies to communicate with their customers over the Internet now face the challenge of utilizing the Internet and intranets to gain the same level of increased efficiencies in their supply chain. An Internet-based software solution can offer scalability, easier implementation, compatibility across diverse information technology platforms and reduced incremental infrastructure investments. However, many companies are wary of major software development projects due to the cost and complications of enterprise application development projects undertaken in recent years. To compete effectively, companies must implement a solution which will allow them to interactively communicate information related to product design, development and manufacturing within the company and will allow them to collaborate with their supply chain partners. At the same time, companies want to be able to implement new software systems without the need to burden already over-taxed internal information technology staffs while avoiding costs of outside consulting and minimizing incremental infrastructure-related expenses. The Agile Solution Our product content management software is designed to improve the ability of supply chain members to communicate and collaborate with one another over the Internet about new or changing product content. Our solution is designed for use over the Internet, reduces dependence upon traditional methods of interaction, and allows supply chain members to link to each other without requiring substantial investments in additional technology infrastructure. We have also designed our products to allow for rapid implementation by the manufacturer with limited consulting assistance and by supply chain members with minimal technical expertise. 35 We believe that our products are well-suited for participants in outsourced supply chains connected via the Internet, as well as those managing multi-site engineering, manufacturing and sales and distribution. The Agile solution delivers the following benefits to companies and their supply chain partners: Enhanced Productivity and Response Time. With the help of our solution, Agile Anywhere, and the Internet, companies can respond more rapidly to changes in customer demand, availability of components, market conditions and manufacturing capacities arising throughout the production cycle. This ability to effect change even during volume production allows Agile Anywhere users to adjust production strategies, enabling companies to produce what they can sell, rather than sell what they can produce. Agile Anywhere also enables companies to enhance their sales productivity by being first to market with the right product. More Cost-effective Production. The Agile Anywhere suite of products is designed to help companies increase output, reduce inventory and compress the time required to complete the production cycle. Through effective collaboration, both time to market and design effectiveness can be improved. Companies can benefit by reducing design and production errors due to miscommunication within the supply chain, and can decrease operating inefficiencies incurred when obsolete parts are specified and incorrectly built products must be scrapped. More Rapid Return on Investment. Because Agile Anywhere is based on existing industry standards and does not require the implementation of custom data models, Agile Anywhere implementations can be completed in less time than required for traditional enterprise software applications which tend to require extensive customization. The Agile Growth Strategy Our objective is to be the leading provider of product content management software, enabling business-to-business global collaboration among supply chain partners. Key elements of our strategy include: Provide superior customer satisfaction. We expect to continue to build a highly referenceable customer base of market leaders in various vertical markets. We intend to continue to focus significant resources on customer satisfaction programs. We intend to continue to anticipate customer needs by introducing new product functionality and new technology platforms. We believe this focus can help create high levels of customer loyalty, which can provide follow-on sales opportunities and shorter sales cycles. Capitalize on network effects to expand our customer base. As users of Agile Anywhere deploy our software across their supply chains, additional supply chain members will be exposed to our solution and the functionality provided by our products. We believe that this exposure, which allows non- customer participants in the supply chain to benefit from our solution first hand, creates a network effect that accelerates industry recognition and adoption of our products. As additional members of a supply chain deploy Agile Anywhere, the quality and timeliness of available information improves, which increases the value to each participant and helps drive greater usage. Pursue a vertical market strategy. Since inception, we have pursued a vertical market strategy, developing product features tailored for particular industries. To date, we have focused on various electronics market segments, including data communications, computers and peripherals, and the medical device market. We seek to further penetrate our current markets while addressing new vertical markets characterized by high rates of product change, short product cycles, and extensive supply chains. Leverage our technology platform. We intend to continue to pioneer new Internet business applications based on emerging standards supporting electronic commerce. For instance, we have leveraged the Java computer programming language to deliver a robust, powerful and rapidly deployable Internet business application to our customers. Further, we have taken the initiative to define a protocol for supply chains, Product Definition eXchange, or PDX, based on eXtensible Mark-up Language, or XML, and have submitted it to 36 industry standards groups for approval. We intend to continue to lead technological innovation in the product content management market, offering our customers solutions designed to provide a rapid and high return on investment. Extend supply chain collaboration and functionality. We believe our solution provides a robust platform to enable us to extend the functionality and application of our products to the creation and delivery of new value- added applications. We intend to continue to develop our products to enable increased collaboration among outsourced supply chain partners and to address new opportunities that result from new business processes that are being created for Internet-based collaboration and interaction among supply chain partners. The Agile Suite of Products The Agile Anywhere suite of products provides a comprehensive business-to- business solution to the problem of product change collaboration across the manufacturing supply chain. Utilizing XML technology, Agile Anywhere will allow supply chain partners to share and collaborate on product content and changes in real time via the Internet. Agile Anywhere is designed to provide the scalability, security and open standards that are required in an electronic supply chain. At the core of the Agile Anywhere suite is the Agile eHub, which manages product content, processes and business rules. Users interact with the product content within the eHub via the My Agile portal. Enterprises that manage and create the product content interact with the Agile iCM client. Utilizing the Agile eXpress Viewer, product content can also be published to users anywhere throughout the supply chain. To complete the suite, Agile provides several integration products that import, export, and publish product content from or to existing design, manufacturing, finance, and supply chain systems. Following the initial implementation of Agile Anywhere, licenses for additional concurrent users and application-specific modules can be added to expand the scope of the manufacturer's implementations. In our latest release, available starting in August 1999, we have renamed our product suite "Agile Anywhere." Previously known as Agile Workplace, our latest release retains all of the core technology and functionality provided by earlier releases, but adds significant enhancements to the number of users that can be accommodated, and the speed and performance of our solutions. Agile Anywhere also incorporates additional security features, and provides enhanced capabilities for the transmission and exchange of data and integration with other software applications, allowing for further collaboration capabilities among supply chain partners. As part of the enhancements, individual products in the suite have been renamed, and Agile eXpress Viewer, Product Definition eXchange and a software development kit have been included as new separate products. Agile eHub The foundation of the suite is Agile eHub. The Agile eHub is comprised of application servers that enable users to define, store, change and manage product content information. Agile eHub incorporates new technology for high speed performance, storage and secure data, and is designed to scale to accommodate the needs of supply chain partners of all sizes. It is also designed to facilitate fast, direct Internet access, and is easily implemented. Agile eHub includes one or more of the following server modules: Agile Product Definition Server, previously Agile Configurator, manages parts, documents, bills of materials and drawings, in a web environment that provides fast, easy access to product content for all members of the supply chain. Agile Product Change Server, previously Agile CCB, automates the electronic routing, notification and sign-off processes that are associated with engineering changes. This functionality can result in reduced ordering errors and costs and improved cycle times associated with evaluating, approving and implementing changes. Agile AML Server, previously Agile Parts, enables companies to collaborate with supply chain partners on approved parts and manufacturers at the time of new product introduction as well as tracking changes throughout the manufacturing process. 37 Agile Administrator enables companies to easily and rapidly configure and modify Agile Anywhere components without writing code. Agile Administrator, which has not been renamed, speeds the implementation of the Agile Anywhere suite and minimizes maintenance time. Accessing Agile eHub Agile customers and their supply chain partners can gain access to product content for review or modification by the following: Agile iCM (Internet Content Manager) is designed for individuals who have responsibility for managing a product and its content through its entire lifecycle. This functionality is also provided through Agile CM, a module designed for Windows-based applications. My Agile includes a web portal to allow secure, personalized web access to product content that is stored in any Agile eHub. It is an intuitive, easy-to- use portal allowing users to link to any or all of their supply-chain information sources in a customizable interface and participate in product content related processes via the Internet. Agile eXpress Viewer allows supply chain partners to send and receive information in the PDX format, a new standard for data exchange that we have first offered with Agile Anywhere. Agile eXpress Viewer will be available for downloading free of charge from the Agile web site, to enable supply chain partners to share data even if they are not Agile customers. Agile Integration Products Product content information flows throughout the supply chain, and is published to or from Agile Anywhere and a variety of other design, manufacturing, finance and supply chain systems. Agile Anywhere integration products, previously available with Agile Workplace, provide data exchange between systems, as follows: Agile ChangeCAST publishes released engineering change orders, approved parts lists, approved manufacturers lists and bills of materials from Agile to separate enterprise resource planning systems. Agile Scan allows customers to scan drawings and documents into the Agile eHub database. Agile Import allows customers to import bills of materials produced in ASCII format or in Microsoft Excel, providing a consolidated database of product information. Agile Export provides a quick and easy method of exporting information to an ASCII file, allowing information in Agile Anywhere to be shared with other business applications. Agile Software Development Kit, newly available with Agile Anywhere, allows customers and partners to develop complementary applications integrating Agile Anywhere with design, manufacturing, customer service, supply chain or other legacy systems. The Agile Software Development Kit allows users to write applications in Java, Visual Basic and Visual C++. Initial implementations of the Agile Anywhere suite typically include the Agile eHub and one or more server modules such as what we now call the Product Definition Server, Product Change Server and AML Server, together with user licenses, and one or more of the integration products, in particular Agile ChangeCAST, and often a third-party adapter for other existing enterprise systems of the customer. Following the initial implementation, additional user licenses and additional server modules may be purchased. Customers To date, we have licensed our products to approximately 300 customers, predominantly within the electronics and medical device manufacturing industries. No customer accounted for more than ten percent of our total revenues in fiscal 1997, fiscal 1998 or fiscal 1999. 38 The following is a representative list of current customers in our targeted industry markets that to date have purchased over $50,000 of Agile products and services. These customers represented more than 26% of our total revenue for fiscal 1999: Datacom/Telecom Equipment Computers and Peripherals Medical Equipment Alcatel Schweiz Diamond Multimedia Systems EndoSonics Aspect Telecommunications Fujitsu Computer Products GE Marquette Medical Systems Brocade Communications Systems Gateway Guidant Lucent Technologies Hitachi Hologic Nortel Networks Iomega Humphrey Instruments PairGain Packard Bell Visx Xircom Electronics Manufacturing Components Semiconductor Equipment EFTC Advanced Micro Devices Credence Systems Flextronics International Micron Technology Electro-Scientific Industries Pemstar Reltec Communications FSI International Solectron Texas Instruments Johnson Matthey Electronics Xetel VLSI Technology Strasbaugh Consumer Electronics 3Com Palm Computing Dolby Laboratories Philips Mobile Computing Scientific Atlanta WebTV Networks
Product Technology and Architecture The Agile Anywhere product suite is designed upon open systems based on software industry standards for scalable Internet applications. The result is a low cost, low maintenance end-user business application that eliminates the need for complex custom or in-house development. Agile Anywhere is built on an Internet-based architecture: . The core of our architecture is the Agile eHub, the application server, which currently runs on Microsoft NT. The application server is the intermediary between the iCM and My Agile applications and the database, providing the necessary security for validation of the data, and the web server, which hosts the Internet access to Agile Anywhere. We use encryption technology licensed from RSA Data Security to maintain secure data when transported over the Internet. . The applications are Java and HTML-based applications that can run on versions of Microsoft Internet Explorer and Netscape Navigator. There is also a Windows application for users who prefer a Windows user interface rather than a web browser interface. Operating systems supported include Windows 95, Windows 98, Windows NT and Sun Solaris. We follow the Microsoft standards for the Windows 95 and 98 CM clients, and Internet standards for the Java iCM application running within Microsoft Internet Explorer and Netscape Communicator. Our products can be integrated with more than 15 enterprise resource planning systems including, among others, Oracle, J.D. Edwards and SAP. . The backend includes the database server, which is either Oracle or Microsoft SQL Server, and the Agile Internet File Server. We connect with Microsoft SQL Server through Open Database Connectivity, and Oracle's database through direct integration. 39 We are certified in Windows Back-Office, Oracle CAI, as a Microsoft Solution Provider, and from Sun Microsystems Inc. in "100% Pure Java." The Agile Anywhere suite is enabled for both single-byte and double-byte localization, and has been localized for French. We intend to provide localization for additional languages. We have entered into platform alliances to ensure our products are based on industry standards and to enable us to take advantage of current and emerging technologies, including alliances with Sun Microsystems, Oracle and Microsoft. To promote development, definition, adoption, promotion and implementation of open standards that can be leveraged by Agile Anywhere, we work with several industry standards organizations such as the National Institute of Standards and Technology, National Electronics Manufacturing Initiative, Institute for Interconnecting and Packaging Electronic Circuits, RosettaNet, and World Wide Web Consortium. We are involved with Solectron, Marshall Industries, and other industry participants in an initiative to define an XML-based protocol called Product Definition eXchange. Product Development Our product development objectives are to: . be innovative in developing solutions to remove complexity from supply chain collaboration; . develop products that require no custom code, contain reusable components and are easy to use, implement, maintain, and upgrade; and . adopt industry standard technologies. Our software development staff is divided into teams consisting of development engineers, project managers, quality assurance engineers, and technical writers. Working closely with our marketing department, we determine product functionality based upon market requirements, customer feedback, available technical support and customer engineering in addition to emerging technologies allowing us to develop additional features. We introduced our first product, Agile Configurator version 1.3, in June, 1996 and have subsequently released nine revisions, adding over a dozen new modules. During this time, the product has evolved from a 2-tiered client- server database application running on Oracle to a multi-tiered application supporting both Windows and Java clients, and both Oracle and Microsoft SQL Server databases. Our product development activities are focused on broadening the scalability and functionality of Agile Anywhere, enhancing scalability, and including application interfaces that allow customers to more easily integrate Agile Anywhere with other systems. Our research and development expenses were $2.5 million for fiscal 1997, $3.8 million for fiscal 1998 and $4.7 million for fiscal 1999, and we expect to continue to invest significantly in research and development in the future. We cannot be sure that we will complete our existing and future development efforts within our anticipated schedule or that our new and enhanced products will have the features to make them successful. We may experience difficulties that could delay or prevent the successful development, introduction or marketing of new or enhanced products. In addition, these new and enhanced products may not meet the requirements of the marketplace and achieve market acceptance. Furthermore, despite testing by us, our implementation partners and our customers, errors might be found in new products or in releases after shipment, resulting in loss of revenue or delay in market acceptance and sales, diversion of development resources, injury to our reputation or increased service and warranty costs. Sales and Marketing Our sales and marketing organization is responsible for identifying and developing vertical markets as well as identifying and notifying our research and development staff of customer product requirements. We market and sell our products primarily through our direct sales force located at our headquarters in San Jose, California, 40 and at regional and local sales offices in the United States and at one office in France. Our direct sales force consists of Major Account Executives who focus entirely on our major accounts, Senior Account Executives who focus on specific geographic territories, and Emerging Technology Manufacturers Account Executives who focus on emerging and smaller-sized companies. We also market and sell through our direct telesales and telemarketing representatives. Sales engineers at most regional offices provide pre-sales technical support. We intend to expand our domestic and international direct sales force significantly by expanding into additional geographic locations. We are also in the early stages of complementing our direct sales force, particularly internationally, through additional distribution channels, including non- exclusive distributors, integrators and consulting partners. To support our direct sales efforts and to actively promote our Agile brand, we engage in a variety of marketing activities. These include co- marketing strategies with our existing business partners, targeting additional strategic relationships, managing and maintaining our web site content, advertising in industry and other publications, conducting public relations campaigns and establishing and maintaining relationships with recognized industry analysts. We also actively participant in manufacturing-related trade shows. A critical element of our sales strategy is to establish marketing alliances to promote sales and marketing of our products, as well as to increase product interoperability. We also pursue services alliances with consulting and integration firms to implement our software, provide customer support services, create customized customer presentations and demonstrations and endorse our products during the evaluation stage of the sales cycle. We believe that our relationships with these service providers may shorten our sales cycle because these service providers have generated and qualified sales leads, made initial customer contacts and assessed needs prior to our introduction. We currently have relationships with Siemens and Origin Technology in Business. Customer Service and Support Consulting and Implementation. We offer services, primarily on a fixed- price basis, to assist in implementation planning, product installation, implementation assistance, legacy data loading and effectiveness audits. To facilitate and enhance the integration of our products, we have alliances for integration of our products with existing design, manufacturing, finance and supply chain systems. This approach allows us to focus on our core competencies and leverage our partners' domain knowledge, which helps reduce time to market both for us and our customers. Customer Support. We believe that responsive technical support is a requirement for our continued growth. We provide technical support and unspecified product upgrades on a when-and-if available basis through our annual maintenance program. Our customers are not entitled to new products under our annual maintenance program. Customers generally purchase the first year of support at the time they initially license a product. After the initial term, support may be renewed on an annual or multi-year basis. Customer support is offered by telephone, email, fax and Internet-based support that features frequently asked questions, technical alerts, product upgrades and updates, problem reporting and analysis, and self-help through our on-line knowledge base. In addition, our consulting and implementation partners provide customer support and maintenance in some instances. Revenues associated with maintenance contracts are recognized ratably over the term of the maintenance contract, which is generally 12 months. Training. We offer a variety of classes and related materials to train our customers on system administration, upgrades and new releases. These classes are also available as part of our Train the Trainer program. Training classes are offered at our headquarters in San Jose, California, at customer sites, and at other locations. To improve access to our explanatory materials, we offer on-line documentation contained on the compact discs for our products and from our web site for all our products. We also offer on-line help for the majority of our products. Customers can purchase additional documentation via our web site. Competition The market for product content management software is new, highly fragmented, rapidly changing and increasingly competitive. We expect competition to persist and intensify, which could result in price reductions, 41 reduced gross margins and loss of market share, any one of which could seriously harm our business. Competitors vary in size and in the scope and breadth of the products and services offered. We believe that our ability to compete depends on many factors both within and beyond our control, including: . the performance, functionality, price, reliability and speed of implementation of our solutions; . the timing and market acceptance of new products and product enhancements to our Agile Anywhere suite of products; . the quality of our customer service; and . the effectiveness of our sales and marketing efforts. Although we believe that we currently compete favorably as to each of these factors, our market is relatively new and our product content management software is a new category of products. However, we encounter competition with respect to different aspects of our solution from a variety of vendors. We currently face three primary sources of competition: . in-house development efforts by potential customers or partners; . vendors of engineering information management software, such as Parametric Technology Corporation, Dassault Systemes S.A., Structural Dynamics Research Corporation and Unigraphics Solutions, Inc.; and . developers of general purpose groupware software addressing only limited technology components of engineering change management, including companies such as Novell, Inc. and Lotus Development Corporation. In addition, we face potential competition from providers of enterprise software who seek to extend the functionality of their products, such as Oracle Corporation, SAP A.G., i2 Technologies, Inc., Aspect Development, Inc. and Baan Company N.V. We may not be able to maintain our competitive position against current and potential competition, particularly competitors that have longer operating histories and significantly greater financial, technical, marketing and other resources than we do and therefore may be able to respond more quickly to new or changing opportunities, technologies and customer requirements. Also, many current and potential competitors have greater name recognition and more extensive customer bases that could be leveraged to gain market share to our detriment. These competitors may be able to undertake more extensive promotional activities, adopt more aggressive pricing policies, and offer more attractive terms to purchasers than we can. In addition, current and potential competitors have established or may establish cooperative relationships among themselves or with third parties to enhance their products. Accordingly it is possible that new competitors or alliances among competitors may emerge and rapidly acquire significant market share. We also expect that competition may increase as a result of industry consolidation. We may not be able to maintain our competitive position against current and potential competitors, especially those with significantly greater financial, marketing, service, support, technical and other resources. Proprietary Rights Our success and ability to compete depend upon our proprietary technology. We rely on patent, copyright, trade secret and trademark law to protect our proprietary information. We also typically enter into agreements with our employees, consultants and customers to control their access to and distribution of our software, documentation and other proprietary information. Nevertheless, a third party could copy or otherwise obtain our software or other proprietary information without authorization, or could develop software competitive to ours. Our means of protecting our proprietary rights may not be adequate and our competitors may independently develop similar technology, duplicate our products or design around patents that may be issued to us or our other intellectual property. In addition, the laws of some foreign countries do not protect our proprietary rights to as 42 great an extent as do the laws of the United States, and we expect that it will become more difficult to monitor the use of our products if we increase our international presence. We utilize database management software from Microsoft and Oracle for our database servers. Our customers can purchase this software directly from Microsoft and Oracle or from us. In addition, we integrate third-party software into our products from RSA Data Security for security and encryption technology, from Actuate for reporting capability and from Cimmetry Systems for our viewers. This third-party software may not continue to be available on commercially reasonable terms. If we cannot maintain licenses to this third- party software at an acceptable cost, shipments of our products could be delayed until equivalent software could be developed or licensed and integrated into our products. We do not believe that our business could be considered to be substantially dependent on any one of these license agreements, and none of these licenses are responsible for a significant amount of our revenues. There has been a substantial amount of litigation in the software and Internet industries regarding intellectual property rights. It is possible that, in the future, third parties may claim that we or our current or potential future products infringe their intellectual property. We expect that software product developers and providers of electronic commerce solutions will increasingly be subject to infringement claims as the number of products and competitors in our industry segment grows and the functionality of products in industry segments overlaps. Any claims, with or without merit, could be time-consuming, result in costly litigation, cause product shipment delays or require us to enter into royalty or licensing agreements. If our products were found to infringe a third party's proprietary rights, we could be required to enter into royalty or licensing agreements in order to continue to be able to sell our products. Royalty or licensing agreements, if required, may not be available on terms acceptable to us or at all, which could seriously harm our business. Employees As of April 30, 1999, we had a total of 156 employees. Of this total, 37 were in engineering, 51 in sales and marketing, 46 in professional services, including technical support and customer training, and 22 in finance and administration. We also retain independent contractors to support activities such as our professional services and product development. Our success depends on our ability to attract and retain qualified, experienced employees. None of our employees are represented by a collective bargaining unit, and we have never experienced a work stoppage. We consider our relations with our employees to be good. Facilities Our headquarters are currently located in a leased facility in San Jose, California, consisting of approximately 43,000 square feet under a lease expiring in 2002 with expansion and renewal options, of which approximately 12,000 square feet is currently sublet to other tenants on short-term subleases. We also lease offices for sales and service personnel in eight locations in the United States as well as in Paris, France. We believe our current facilities will be adequate to meet our needs for the foreseeable future. Legal Proceedings We are currently involved in litigation with Facilities Management International, a Southern California based systems integration company that filed a complaint against us in the Superior Court for the State of California, County of Orange, on February 19, 1999. The complaint alleges our interference with prospective economic advantage and unfair business practices in connection with our quote for services to one of our customers. We have responded by filing an answer that denies all allegations. The lawsuit seeks unspecified compensatory and punitive damages as well as injunctive relief. We intend to defend ourselves vigorously, and after consideration of the nature of the claims do not believe that resolution of this matter will harm our business. However, due to the inherently uncertain nature of litigation and the fact that discovery has yet to take place, we cannot determine the possible loss, if any, that we may ultimately incur either in the context of a trial or as a result of a negotiated settlement. Our defense of this litigation, regardless of its outcome, could result in the expenditure of significant financial and managerial resources. 43 MANAGEMENT Executive Officers and Directors Our executive officers and directors and their ages as of June 15, 1999 are as follows:
Name Age Position - ---- --- -------- Bryan D. Stolle......... 41 Chairman of the Board, Chief Executive Officer, President and Director Thomas P. Shanahan...... 52 Executive Vice President, Chief Financial Officer, Secretary and Director Carol B. Schrader....... 43 Vice President, Marketing Dorothy O. Wise......... 38 Vice President, Development and Support Mark C. Irvine.......... 42 Vice President, North American Field Operations Gregory G. Schott....... 35 Vice President, Business Development Klaus-Dieter Laidig..... 57 Director Michael Moritz.......... 44 Director James L. Patterson...... 61 Director Nancy J. Schoendorf..... 44 Director
Bryan D. Stolle is a co-founder of Agile and has served as our President and Chief Executive Officer and a member of our board of directors since our inception in March 1995. From 1987 to 1994, Mr. Stolle served as Director of Product and Strategic Marketing at Sherpa Corporation, a developer of enterprise product data management software. From 1983 to 1987, Mr. Stolle served as Marketing Officer at Rexcom Systems, a software company co-founded by Mr. Stolle. Mr. Stolle received a B.A. in Business Administration and an M.B.A. from the University of Texas at Austin. Thomas P. Shanahan is a co-founder of Agile and has been a member of our board of directors since our inception in March 1995. Since November 1997, Mr. Shanahan has served as Agile's Executive Vice President and Chief Financial Officer. From 1994 to 1997, Mr. Shanahan served as Vice President and Chief Financial Officer of Digital Generation Systems, Inc., a provider of electronic and physical distribution of audio and video spot advertising. From 1993 to 1994, Mr. Shanahan served as Chief Financial Officer of Sherpa Corporation. Mr. Shanahan received a B.A. in Economics from Stanford University and an M.B.A. from Harvard University. Carol B. Schrader has served as Agile's Vice President of Marketing since October 1997. In 1997, Ms. Schrader served as an independent consultant with Killarney Group. From 1995 to 1997, Ms. Schrader served as Director, Industry Development at Documentum, Inc., a provider of web content management solutions. From 1990 to 1995, Ms. Schrader served as Director, Market Development at Sherpa Corporation. Ms. Schrader received a B.A. in Business Management from Clarke College. Dorothy O. Wise has served as Agile's Vice President of Development and Support since March 1996. From 1994 to 1996, Ms. Wise served as Vice President, Quattro Pro Business Unit, at Novell, Inc., a provider of network services operating system software. Ms. Wise received a B.S.E. in Electrical Engineering and Computer Science from Princeton University. Mark C. Irvine has served as Agile's Vice President of North American Field Operations since May 1999. From 1996 to 1999, Mr. Irvine served as Director, Western Field Operations, at Agile. From 1995 to 1996, Mr. Irvine served as Vice President, Sales, at ExpertEdge Corp., a field service application software company. From 1991 to 1995, Mr. Irvine served as District Manager at Sybase, Inc. Mr. Irvine received a B.A. in Biology from the University of Colorado. Gregory G. Schott has served as Agile's Vice President of Business Development since June 1999. From 1997 to 1999, Mr. Schott served as Vice President of Marketing at Digital Generation Systems, Inc., a provider and distributor of electronic audio and video spot advertising. From 1996 to 1997, Mr. Schott served as Vice President of Operations, from 1995 to 1996 as Director of Business Development and from 1994 to 1995 as Director of Operations, all at Digital Generation Systems, a developer of radio and television servers and 44 distributor of audio and video content. From 1991 to 1994, Mr. Schott served as a management consultant at The Boston Consulting Group. Mr. Schott received a B.S. in Mechanical Engineering from North Carolina State University and an M.B.A. from Stanford University. Klaus-Dieter Laidig has served as a director of Agile since 1998. Mr. Laidig has served as a management consultant with Laidig Business Consulting GmbH since 1998. From 1984 to 1997, Mr. Laidig served as General Manager of Hewlett-Packard GmbH. Mr. Laidig currently serves as a director of SAP AG, Henninger Braeu AG and several privately held companies. Mr. Laidig received an M.B.A. from the Pforzheim University of Applied Sciences in Germany. Michael Moritz has served as a director of Agile since 1996. Mr. Moritz has been a general partner of Sequoia Capital, a venture capital firm, since 1986. Mr. Moritz serves as a director of eToys, Inc., Flextronics International Ltd., Yahoo! Inc. and several additional private companies. Mr. Moritz received an M.A. from Christ Church, Oxford. James L. Patterson has served as a director of Agile since 1996. Mr. Patterson has been an independent consultant since 1989. Mr. Patterson currently serves as a director of Latitude Communications, Inc., a provider of integrated voice and data conferencing solutions, and several privately held companies. Mr. Patterson received a B.S. in Electrical Engineering from the University of Colorado. Nancy J. Schoendorf has served as a director of Agile since 1995. Ms. Schoendorf has been a general partner of Mohr, Davidow Ventures, a venture capital firm, since 1994, and a Managing Partner since 1997. Prior to joining Mohr, Davidow Ventures, Ms. Schoendorf spent 17 years in the computer industry including management positions with Hewlett-Packard, Software Publishing Corporation and Sun Microsystems. Ms. Schoendorf currently serves as a director of Actuate Software Corp., a provider of enterprise reporting software solutions and several privately held companies. Ms. Schoendorf received a B.S. in Computer Science from Iowa State University and an M.B.A. from Santa Clara University. Board of Directors Upon completion of the offering, the terms of the board of directors will be divided into three classes: Class I, whose term will expire at the annual meeting of stockholders to be held in 2000; Class II, whose term will expire at the annual meeting of stockholders to be held in 2001; and Class III, whose term will expire at the annual meeting of stockholders to be held in 2002. The Class I directors are Mr. Moritz and Mr. Laidig, the Class II directors are Ms. Schoendorf and Mr. Patterson, and the Class III directors are Mr. Stolle and Mr. Shanahan. At each annual meeting of stockholders after the initial classification, the successors to directors whose term expires will be elected to serve a term of three years. This classification of directors may have the effect of delaying or preventing changes in our control. Board Committees Audit Committee. The board of directors has established an audit committee consisting of Mr. Laidig and Mr. Moritz. The audit committee reviews with our independent accountants the scope and timing of their audit services and any other services that they are asked to perform, the independent accountants' report on our consolidated financial statements following completion of their audit, and our policies and procedures with respect to internal accounting and financial controls. In addition, the audit committee makes annual recommendations to our board of directors for the appointment of independent accountants for the ensuing year. Compensation Committee. The board of directors has established a compensation committee consisting of Mr. Patterson and Ms. Schoendorf. The compensation committee makes recommendations to the board concerning salaries and incentive compensation for our officers and employees and administers our employee benefit plans. 45 Director Compensation Our directors do not receive any cash compensation for their services as directors but are reimbursed for their reasonable travel expenses in attending meetings of the board of directors. Our directors are eligible to participate in our 1995 Stock Option Plan and employee-directors will be able to participate in our 1999 Employee Stock Purchase Plan. Mr. Laidig received an option to purchase 50,000 shares of common stock at an exercise price of $2.65 per share when he joined the board of directors in November, 1998. Compensation Committee Interlocks and Insider Participation No interlocking relationship exists between any member of our board of directors or our compensation committee and any member of the board of directors or compensation committee of any other company, and no such relationship has existed in the past. Prior to the creation of our compensation committee in May 1999, all compensation decisions were made by our full board. Neither Mr. Stolle nor Mr. Shanahan participated in discussions by our board with respect to his compensation. Employment Contracts, Termination of Employment and Change of Control Arrangements None of our executive officers is employed under an employment agreement with significant contractual severance provisions. However, if any of our executives is terminated without cause during the eighteen months following a change of control, then vesting of all options to purchase our common stock held by these employees will accelerate. Executive Compensation The following table presents information regarding the compensation paid to our chief executive officer and each of our other highest-paid executive officers whose total salary and bonus exceeded $100,000 for the fiscal year ended April 30, 1999: Summary Compensation Table
Long Term Annual Compensation Compensation Awards ---------------- -------------- Securities Underlying All Other Name and Principal Position Salary Bonus Options/SARs(#) Compensation - --------------------------- -------- ------- -------------- ------------ Bryan D. Stolle................. $159,997 $50,000 125,000 $4,000 Chairman and Chief Executive Officer Thomas P. Shanahan.............. 146,664 29,735 25,000 -- Chief Financial Officer Carol B. Schrader............... 114,000 19,000 32,000 -- Vice President, Marketing Dorothy O. Wise................. 138,000 41,669 25,000 -- Vice President, Development and Support Mark C. Irvine.................. 87,000 264,902 18,000 3,600 Vice President, North America Field Operations
Option Grants in Last Fiscal Year The following table designates each grant of stock options during the fiscal year ended April 30, 1999 to our chief executive officer and each of our other highest-paid executive officers. All of these options were granted under our 1995 Stock Option Plan. Each of these options has been exercised, but the shares purchased under 46 these options are subject to repurchase by us at the original exercise price paid per share upon the optionee's cessation of service with us prior to vesting of the shares. Our repurchase right lapses and the optionee vests in 20% of his or her option shares upon completion of 12 months of service from the vesting start date and vests in the balance in a series of equal monthly installments over the next four years of service. Vesting of the option shares will fully accelerate upon a change in our control and involuntary termination of the employee's services during the subsequent 18 months. The percentages in the column entitled "Percent of Total Options Granted to Employees in Fiscal 1999" are based on an aggregate of 978,275 options granted to our employees under our 1995 Stock Option Plan during the fiscal year ended April 30, 1999. The exercise price of each option is equal to the fair market value of our common stock as determined by the board of directors on the date of grant, taking into account the purchase price paid by investors for shares of our preferred stock, the liquidation preferences and other rights, privileges and preferences associated with the preferred stock and an evaluation by the board of directors of our revenues, operating history and prospects. The potential realizable value is calculated based on the ten-year term of the option at the time of grant. For purposes of these columns, we assumed stock price appreciation of 5% and 10% as required by the Securities and Exchange Commission. These rates of appreciation do not represent our prediction of our stock price performance. The potential realizable values at 5% and 10% appreciation are calculated by assuming that the estimated fair market value on the date of grant appreciates at the indicated rate for the entire term of the options and that the option is exercised at the exercise price and sold on the last day of its term at the appreciated price. Information on how we determined the fair market value of our common stock is disclosed in the preceding paragraph. The initial public offering price is estimated to be higher than the estimated fair market value on the date of grant. Therefore, the potential realizable value of the option grants would be significantly higher than the numbers shown in this column if future stock prices were projected to the end of the option term by applying the same annual rates of stock price appreciation to the initial public offering price.
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Individual Grants Option Term --------------------------------------------- ----------------- Number of Percent of Securities Total Options Underlying Granted to Exercise Options Employees in Price Expiration Name Granted Fiscal 1999 ($/Share) Date 5% 10% ---- ---------- ------------- -------- ---------- -------- -------- Bryan D. Stolle......... 33,333 3.4% $3.00 3/26/09 $ 62,889 $159,373 91,667 9.4 3.00 3/26/09 172,947 438,281 Thomas P. Shanahan...... 25,000 2.6 2.50 8/25/08 59,667 132,031 Carol B. Schrader....... 22,000 2.3 2.35 7/8/08 55,807 119,487 10,000 1.0 2.65 11/17/08 22,367 51,312 Dorothy O. Wise......... 25,000 2.6 2.65 11/17/08 55,917 128,281 Mark C. Irvine.......... 3,000 .3 1.75 5/21/08 9,410 18,094 15,000 1.5 2.65 11/17/08 33,550 76,968
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values The following table presents for our chief executive officer and each of our other highest-paid executive officers the number of options exercised during the fiscal year ended April 30, 1999 and the number and value of securities underlying unexercised options that are held by our chief executive officer and each of our other highest-paid executive officers as of April 30, 1999. Each of the options listed in the table is immediately exercisable. The shares purchased under the options may be repurchased by us at the original exercise price paid per share if the optionee ceases service with us before vesting in the shares. The heading "Vested" refers to shares no longer subject to repurchase; the heading "Unvested" refers to shares subject to repurchase as of April 30, 1999. The numbers in the column entitled "Value of Unexercised In-the-Money Options at April 30, 47 1999" are based on the fair market value of our common stock of $3.00 at April 30, 1999, as determined by our board of directors, less the exercise price payable for these shares. The fair market value of our common stock at April 30, 1999 was estimated by the board of directors on the basis of the purchase price paid by investors for shares of our preferred stock, taking into account the liquidation preferences and other rights, privileges and preferences associated with the preferred stock, and an evaluation by the board of our revenues, operating history and prospects. The initial public offering price is estimated to be higher than the estimated fair market value on April 30, 1999. Consequently, the value of unexercised options would be higher than the numbers shown in the table if values were calculated by subtracting the option's exercise price from the initial public offering price.
Number of Securities Value of Underlying Unexercised Unexercised In-The-Money Shares Options at Options at Acquired on April 30, 1999 April 30, 1999 ($) Exercise Value --------------- --------------------- (#) Realized ($) Vested Unvested Vested Unvested ----------- ------------ ------ -------- -------- ----------- Bryan D. Stolle......... -- -- -- 175,000 -- $77,500 Thomas P. Shanahan...... -- -- -- 25,000 -- 12,500 Carol B. Schrader....... 22,000 $51,700 -- 10,000 -- 3,500 Dorothy O. Wise......... -- -- -- 25,000 -- 8,750 Mark Irvine............. 3,000 15,000 22,500
Stock Plans 1995 Stock Option Plan. Our 1995 stock option plan was approved by our board of directors in May 1995 and by our stockholders in January 1996. The plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to employees, and for grants of nonstatutory stock options and stock issuances to employees, including officers, non-employee directors and consultants. The plan is currently administered by the compensation committee. Subject to the provisions of the plan, the board or its committee has the authority to select the persons to whom options or stock issuances are granted and determine the terms of each option or stock issuance, including: . the number of shares of common stock covered by the option or stock issuance; . when the option becomes exercisable or when the stock issuance vests; . the per share option exercise price, which in the case of incentive stock options must be at least equal to the fair market value of a share of common stock on the grant date or 110% of such fair market value for incentive stock options granted to 10% stockholders, and, in the case of nonstatutory stock options, must be at least 85% of the fair market value of a share of common stock on the grant date; and . the duration of the option, which for incentive stock options may not exceed ten years, or, with respect to incentive stock options granted to 10% stockholders, five years. Generally, options granted under the plan are immediately exercisable. Options and stock issuances granted under the plan generally vest over five years, although the board or its committee may specify a different vesting schedule for a particular grant. Options granted under the plan are non- transferable other than by will or the laws of descent and distribution; provided, however that the board or its committee may provide that nonstatutory stock options are transferable for estate planning purposes, subject to applicable law. Unvested shares issued pursuant to a stock issuance are generally non-transferrable. In the event of a change in control of Agile, the acquiring or successor corporation may either assume the outstanding options granted under the plan or replace the options with a cash incentive program that is paid out in accordance with the original vesting schedule and that preserves the spread on the unvested shares subject to the options. If the options or stock issuances are not assumed or replaced by the acquiring or successor 48 corporation, then the shares subject to each option outstanding under the plan at the time of the change in control shall automatically vest in full, and then expire. Currently, the maximum number of shares issuable under the plan is 5,375,000. The share reserve will automatically be increased on the first day of each fiscal year beginning on and after May 1, 2000 by the lesser of 500,000 shares per year, 5% of the number of shares of our common stock that was issued and outstanding on the last day of the preceding fiscal year, or a lesser number of shares determined by the board of directors. As of April 30, 1999, 2,127,880 shares have been issued upon the exercise of options, options to purchase a total of 1,159,725 shares at a weighted average exercise price of $2.12 per share were outstanding and 2,245,025 shares were available for future option grants. 1999 Employee Stock Purchase Plan. The board of directors adopted, subject to stockholder approval, our 1999 employee stock purchase plan in June 1999. We have reserved a total of 500,000 shares of common stock for issuance under the 1999 employee stock purchase plan, none of which have been issued as of the effective date of this offering. The share reserve will automatically be increased on May 1, 2000 and on each May 1 thereafter until and including May 1, 2009, by an amount equal to the lesser of 500,000 shares per year, 2% of our outstanding common stock on the last day of the immediately preceding fiscal year, or such lesser number of shares as determined by the board of directors. The employee stock purchase plan is intended to qualify under Section 423 of the Internal Revenue Code. The plan will be administered by our compensation committee. Employees, including officers and employee directors, of Agile or any subsidiary designated by the board for participation in the plan, are eligible to participate in the plan if they are customarily employed for more than 20 hours per week and more than five months per year. Eligible employees may begin participating at the start of any offering period. The first offering period will run for approximately 24 months and will be divided into four consecutive purchase periods of approximately six months. The first offering period and the first purchase period commence on the date of this prospectus and will terminate on the last day of August, 2001. Subsequent offering periods will generally have a duration of approximately 6 months. Offering periods after the initial offering period will commence on the first day of March and September of each year. The board may change the dates or duration of one or more offering periods, but no offering may exceed 27 months. The employee stock purchase plan permits eligible employees to purchase common stock through payroll deductions at a price no less than 85% of the lower of the fair market value of the common stock on (a) the first day of the offering, or (b) the purchase date. Participants generally may not purchase more than 1,000 shares in a six-month offering period or stock having a value greater than $25,000 in any calendar year as measured at the beginning of the offering period. In the event of a change in control of Agile, the board may accelerate the purchase date of the then current offering period to a date prior to the change in control, unless the acquiring or successor corporation assumes or replaces the purchase rights outstanding under the employee stock purchase plan. Our board of directors may amend or terminate the 1999 employee stock purchase plan at any time. 401(k) Plan Agile provides a tax-qualified employee savings and retirement plan, commonly known as a 401(k) plan, which covers its eligible employees. Pursuant to the 401(k) plan, employees may elect to reduce their current annual compensation up to the lesser of 20% or the statutorily prescribed annual limit, which is $10,000 in calendar year 1999, and have the amount of the reduction contributed to the 401(k) plan. The 401(k) plan does not currently permit additional matching contributions to the 401(k) plan by Agile on behalf of the participants in the 401(k) plan. The 401(k) plan is intended to qualify under Sections 401(a) and 401(k) of the Internal Revenue Code, so that contributions by Agile or its employees to the 401(k) plan, and income earned on such contributions, are not taxable to employees until withdrawn from the 401(k) plan, and so that contributions by Agile, if any, will be deductible by Agile when made. The trustee of the 401(k) plan invests the assets of the 401(k) plan in the various investment options as directed by the participants. 49 Limitation of Liability and Indemnification As permitted by the Delaware General Corporation Law, we have adopted provisions in our certificate of incorporation and bylaws that limit or eliminate the personal liability of our directors for a breach of their fiduciary duty of care as a director. The duty of care generally requires that, when acting on behalf of the corporation, directors exercise an informed business judgment based on all material information reasonably available to them. Consequently, a director will not be personally liable to us or our stockholders for monetary damages or breach of fiduciary duty as a director, except for liability for: . any breach of the director's duty of loyalty to us or our stockholders; . acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; . unlawful payments of dividends or unlawful stock repurchases, redemptions or other distributions; or . any transaction from which the director derived an improper personal benefit. Our certificate of incorporation allows us to indemnify our officers, directors and other agents to the full extent permitted by Delaware law. We intend to enter into indemnification agreements with each of our directors and officers that are, in some cases, broader than the specific indemnification provisions permitted by in Delaware law, and that may provide additional procedural protection. The indemnification agreements require us, among other things, to: . indemnify officers and directors against certain liabilities that may arise because of their status as officers or directors; . advance expenses, as incurred, to officers and directors in connection with a legal proceeding, subject to limited exceptions; or . obtain directors' and officers' insurance. Our bylaws also permit us to purchase insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in such capacity, regardless of whether Delaware law would permit indemnification, and to provide indemnification in circumstances in which indemnification is otherwise discretionary under Delaware law. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees in which indemnification is sought, nor are we aware of any threatened litigation that may result in claims for indemnification. 50 CERTAIN TRANSACTIONS Since May 1, 1996 there has been no transaction or series of transactions to which we were a party involving $60,000 or more and in which any director, executive officer or holder of more than 5% of our capital stock had a material interest other than the transactions described below. Sales of Preferred Stock to Insiders Since inception in March 1995, we have issued shares of preferred stock, in private placement transactions to the following persons who are executive officers, directors or principal stockholders of Agile:
Series A Series B Series C Series D Series E Series F Preferred Preferred Preferred Preferred Preferred Preferred Investor Stock Stock Stock Stock Stock Stock - -------- --------- --------- --------- --------- --------- --------- Entities affiliated with Sequoia Capital........ 150,000 -- 2,275,000 322,000 334,672 148,148 Entities affiliated with Mohr, Davidow Ventures............... 30,000 2,825,000 1,225,000 448,000 565,424 74,074 Entities affiliated with Accel Partners......... 140,000 -- -- 580,000 85,893 222,222 Entities affiliated with James L. Patterson..... -- -- 75,000 -- 14,011 14,816 Affiliates of Bryan D. Stolle................. 185,000 -- -- -- -- -- Thomas P. Shanahan...... 85,000 -- -- -- -- --
The preferred stock purchased by these directors and affiliates was purchased on the same terms and conditions as the preferred stock purchased by other investors. The preferred stock is convertible into common stock at the rate of one share of common stock for each share of preferred stock. In April, 1995, we issued a total of 1,150,000 shares of Series A preferred stock and in May 1995 we issued 82,500 shares of Series A Preferred Stock at a purchase price of $.10 per share. The purchasers of the Series A Preferred Stock originally included various private individuals including Thomas P. Shanahan, Chief Financial Officer and a director of Agile, and relatives of Bryan Stolle, Chairman and Chief Executive Officer of Agile. Subsequently, entities affiliated with Sequoia Capital, Mohr, Davidow Ventures and Accel Partners purchased the shares of Series A preferred stock reflected in the table above from some of these private individuals. In June 1995, we issued a total of 2,937,995 shares of Series B preferred stock at a purchase price of $.354 per share. In January 1996, we issued 3,500,000 shares of Series C preferred stock and in October 1996 we issued 75,000 shares of Series C preferred stock at a purchase price of $1.16 per share. In February 1997, we issued 1,350,000 shares of Series D preferred stock at a purchase price of $2.964 per share. In November 1997, we issued 1,000,000 shares of Series E preferred stock at a purchase price of $5.00 per share. In June 1998, we issued 1,777,778 shares of Series F preferred stock at a purchase price of $6.75 per share. The entities affiliated with Sequoia Capital are together considered a greater than 5% stockholder of Agile. Mr. Michael Moritz, a director of Agile, is a general partner of Sequoia Capital. Entities affiliated with Mohr, Davidow are together considered a greater than 5% stockholder of Agile. Ms. Nancy Schoendorf, a director of Agile, is a general partner of Mohr, Davidow. Entities affiliated with Accel Investors are together considered a greater than 5% stockholder of Agile. Mr. James Patterson is a director of Agile, Mr. Bryan Stolle is Chairman and Chief Executive Officer of Agile, and Mr. Thomas Shanahan is Chief Financial Officer and a director of Agile. Loans to Executive Officers and Directors On November 17, 1997, we loaned $31,800 to Carol B. Schrader, our Vice President, Marketing, in connection with the purchase of 53,000 shares of our common stock for $.60 per share upon exercise of stock options. The note accrues interest at the rate of 6.14% per year and is due on November 17, 2001. On August 4, 1998, we loaned $51,700 to Ms. Schrader, in connection with the purchase of 22,000 shares of our common stock for $2.35 per share upon exercise of stock options. This note accrues interest at the rate of 5.68% per year, 51 and is due on August 4, 2003. On November 17, 1997, we loaned $5,475 to Eric Schrader, an affiliate of Carol Schrader, in connection with the purchase of 9,125 shares of our common stock for $.60 per share upon exercise of stock options. The note accrues interest at the rate of 6.14% per year and is due on November 17, 2001. The principal amounts of each of these notes remain outstanding. Each of these loans are full recourse and secured by a pledge of the stock purchased upon exercise of the stock option. On February 11, 1999, we loaned an aggregate of $15,250 to Mark Irvine, our Vice President, North America Field Operations, under 3 promissory notes in connection with his purchase of 12,000 shares of our common stock for prices ranging from $1.00 to $1.75 per share upon the exercise of his stock options. The notes accrue interest at the rate of 4.57% and are due on February 11, 2003. On October 6, 1997, November 14, 1997 and November 17, 1997, we loaned Mr. Irvine an aggregate of $21,600 under 3 promissory notes in connection with his purchase of 41,000 shares of our common stock for prices ranging from $.15 to .60 per share upon the exercise of his stock options. The notes accrue interest at the rate of 6.14% and are due four years from the date of issuance, from October 6, 2001 to November 15, 2001. The principal amounts of each of these notes remain outstanding. Each of these loans are full recourse and secured by the shares of common stock purchased by Mr. Irvine. On June 1, 1999, we loaned $132,500 to Klaus-Dieter Laidig, one of our directors, in connection with the purchase of 50,000 shares of our common stock for $2.65 per share upon exercise of stock options. The note accrues interest at the rate of 4.84% per year, and is due on June 1, 2004. The principal amount of the note remains outstanding. This loan is full recourse and is secured by a pledge of the stock purchased upon exercise of the stock option. All loan amounts outstanding as of April 30, 1999 are reflected as a reduction of equity in the consolidated balance sheet. Recent Option Grants Subsequent to April 30, 1999, our board of directors granted to the following executive officers options to purchase shares of common stock at an exercise price per share of $5.00: . Mr. Shanahan received an option to purchase 25,000 shares; . Ms. Schrader received an option to purchase 45,000 shares; and . Ms. Wise received an option to purchase 15,000 shares. . Mr. Irvine received an option to purchase 12,000 shares. . Mr. Schott received an option to purchase 100,000 shares. Indemnification We intend to enter into indemnification agreements with each of our directors and officers. These indemnification agreements will require us to indemnify our directors and officers to the fullest extent permitted by Delaware law. See "Management--Limitation of Liability and Indemnification." Conflict of Interest Policy We believe that all transactions with our directors, officers and principal stockholders described above were made on terms no less favorable to us than could have been obtained from unaffiliated third parties. A majority of the disinterested outside directors on our board of directors approves all transactions between Agile and our officers, directors, principal stockholders and their affiliates. Any similar transactions will continue to be on terms no less favorable to us than we could have obtained from unaffiliated third parties. 52 PRINCIPAL STOCKHOLDERS The following table sets forth the beneficial ownership of our common stock as of April 30, 1999 and as adjusted to reflect the sale of the shares of common stock offered hereby by: . the chief executive officer, each of the executive officers named in the summary compensation table and each of our directors; . all executive officers and directors as a group; and . each person or entity who is known by us to beneficially own more than 5% of our outstanding common stock. Unless otherwise indicated, the address for each of the named individuals is c/o Agile Software Corporation, One Almaden Boulevard, San Jose, California 95113-2211. Except as otherwise indicated, and subject to applicable community property laws, we believe that the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. Applicable percentage ownership in the table is based on 16,073,298 shares of common stock outstanding as of April 30, 1999, and 19,805,340 shares outstanding immediately following the completion of this offering, assuming the underwriters' over-allotment option is not exercised, the exercise of a warrant to purchase 60,000 shares of preferred stock and the conversion of all shares of preferred stock into common stock and the issuance of 672,042 shares of common stock, based on an assumed initial public offering price of $16.00 less anticipated underwriters' commissions and discounts to two corporate investors. Of the total shares outstanding, 963,606 shares are subject to our right of repurchase. Beneficial ownership is determined under the rules and regulations of the Securities and Exchange Commission. Shares of common stock subject to options or warrants that are presently exercisable or exercisable within 60 days of April 30, 1999 are deemed outstanding for the purpose of computing the percentage ownership of the person or entity holding options or warrants, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person or entity. Entries denoted by an asterisk represent an amount less than 1%.
Shares Percentage Beneficially Beneficially Owned Owned ------------ ----------------- Prior to After Name and Address of Beneficial Owner Number Offering Offering - ------------------------------------ ------------ -------- -------- Bryan D. Stolle(1)............................... 1,020,500 6.3% 5.2% Thomas P. Shanahan(2)............................ 410,000 2.5 2.1 Dorothy O. Wise(3)............................... 228,000 1.4 1.2 Carol B. Schrader(4)............................. 135,000 * * Mark C. Irvine(5)................................ 103,000 * * Gregory G. Schott(6)............................. 100,000 * * James L. Patterson(7)............................ 153,827 1.0 * Nancy J. Schoendorf(8)........................... 5,280,493 32.9 26.7 c/o Mohr, Davidow Ventures 2775 Sand Hill Road Building 1, Suite 240 Menlo Park, CA 94025 Michael Moritz(9)................................ 3,229,820 20.0 16.3 c/o Sequoia Capital 3000 Sand Hill Road Building 4, Suite 280 Menlo Park, CA 94025 Klaus-Dieter Laidig(10).......................... 50,000 * *
53
Shares Percentage Beneficially Beneficially Owned Owned ------------ ----------------- Prior to After Name and Address of Beneficial Owner Number Offering Offering - ------------------------------------ ------------ -------- -------- Entities associated with Mohr Davidow Ventures(11).................................. 5,280,493 32.9% 26.7% 2775 Sand Hill Road Building 1, Suite 240 Menlo Park, CA 94025 Entities associated with Sequoia Capital(12)... 3,229,820 20.0 16.3 3000 Sand Hill Road Building 4, Suite 280 Menlo Park, CA 94025 Entities associated with Accel Partners(13).... 1,028,115 6.4 5.2 428 University Avenue Palo Alto, CA 94301 All executive officers and directors as a group (10 persons)(14).................. 10,710,640 65.0 53.0
- -------- (1) Includes 18,750 shares held by Bryan D. Stolle as Custodian for Jacob N. Stolle under UCAUTMA and 18,750 shares held by Bryan D. Stolle as Custodian for Wilson E. Stolle under UCAUTMA. Also includes 175,000 shares subject to options that are immediately exercisable. (2) Includes 81,563 shares subject to a right of repurchase in favor of Agile which lapses over time. Also includes 15,000 shares held by Thomas P. Shanahan as Custodian for Thomas A. Shanahan, 15,000 shares held by Thomas P. Shanahan as Custodian for Kelly J. Shanahan, and 15,000 shares held by Thomas P. Shanahan as Custodian for Patrick L. Shanahan, and 340,000 shares held by Thomas P. Shanahan and Robyn Lynn Shanahan, Trustees of the Shanahan Family Trust u/d/t dated April 15, 1997. Also includes 25,000 shares subject to options that are immediately exercisable. (3) Includes 70,000 shares subject to a right of repurchase in favor of Agile which lapses over time. Also includes 25,000 shares subject to options that are immediately exercisable. (4) Includes 55,125 shares subject to a right of repurchase in favor of Agile which lapses over time. Also includes 10,000 shares subject to options that are immediately exercisable and 50,000 shares held by Eric Schrader. (5) Includes 45,373 shares subject to a right of repurchase in favor of Agile which lapses over time and 15,000 shares subject to options that are immediately exercisable. Also includes 6,000 shares held by Mark C. Irvine as Custodian for Adriana E. Irvine under UCAUTMA, 5,000 shares held by Mark C. Irvine as Custodian for Conor M. Irvine under UCAUTMA, and 4,000 shares held by Mark C. Irvine as Custodian for Melissa E. Irvine under UCAUTMA. (6) Includes 100,000 shares subject to options that are immediately exercisable. (7) Includes 73,011 shares held directly by James L. Patterson, 34,800 shares held by The Patterson Grandchildren's Trust, of which James L. Patterson is trustee, and 14,816 shares held by The Patterson Family Trust, of which James L. Patterson is trustee. Also includes 2,200 shares held by Mark R. Patterson, 2,200 shares held by Matthew S. Patterson, 2,200 shares held by Michael J. Patterson, 12,300 shares held by Steven C. Patterson Irrevocable Trust dated October 18, 1994, Mark R. Patterson, Trustee, and 12,300 shares held by Paul R. Patterson Irrevocable Trust dated October 18, 1994, Mark R. Patterson, Trustee, all of which Mr. James Patterson disclaims beneficial ownership. (8) Ms. Schoendorf is a general partner of Mohr, Davidow and is a director of Agile. Represents 216,284 shares held by MDV IV Entrepreneurs Network Fund, L.P., and 5,064,209 shares held by Mohr, Davidow Ventures IV, L.P. Ms. Schoendorf disclaims beneficial ownership of shares held by these entities, except to the extent of her proportional pecuniary interest arising from her partnership interest in Mohr, Davidow. 54 (9) Mr. Moritz is a general partner of the general partners of the entities affiliated with Sequoia Capital and is a director of Agile. Represents 109,880 shares held by Sequoia 1995, 2,080 shares held by Sequoia 1997, 318,074 shares held by Sequoia Capital Growth Fund, 2,631,214 shares held by Sequoia Capital VI, 20,302 shares held by Sequoia Technology Partners III, 144,572 shares held by Sequoia Technology Partners VI, and 3,698 shares held by SQP 1997. SC VIII Management, LLC exercises investment and voting power over the shares held by Sequoia 1997. Mr. Moritz disclaims beneficial ownership of shares held by these entities, except to the extent of his proportional pecuniary interest arising from his partnership interest in the general partner of the general partners of the entities affiliated with Sequoia Capital. Mr. Moritz does not hold sole voting or investment power in any of these entities. (10) Represents shares subject to options that are immediately exercisable. (11) Represents 216,284 shares held by MDV IV Entrepreneurs Network Fund, L.P., and 5,064,209 shares held by Mohr, Davidow Ventures IV, L.P. Ms. Schoendorf, a director of Agile, is a general partner of Mohr, Davidow. (12) Represents 109,880 shares held by Sequoia 1995, 2,080 shares held by Sequoia 1997, 318,074 shares held by Sequoia Capital Growth Fund, 2,631,214 shares held by Sequoia Capital VI, 20,302 shares held by Sequoia Technology Partners III, 144,572 shares held by Sequoia Technology Partners VI, and 3,698 shares held by SQP 1997. SC VIII Management, LLC exercises investment and voting power over the shares held by Sequoia 1997. Mr. Moritz, a director of Agile, is a general partner of the general partners of the entities affiliated with Sequoia Capital. (13) Represents 828,661 shares held by Accel V L.P., 111,036 shares held by Accel Internet/Strategic Technology Fund L.P., 49,350 shares held by Accel Investors '96 L.P., 16,450 shares held by Accel Keiretsu V L.P and 22,618 shares held by Ellmore C. Patterson Partners. (14) Shares listed as held by all directors and executive officers as a group include 400,000 shares subject to options that are immediately exercisable. 55 DESCRIPTION OF CAPITAL STOCK Upon completion of this offering, our authorized capital stock will consist of 100,000,000 shares of common stock and 10,000,000 shares of preferred stock. The following is a summary of our capital stock. Our certificate of incorporation and bylaws, to be effective after the closing of this offering, and the provisions of applicable law provide further information about our capital stock. Common Stock As of April 30, 1999 there were 4,200,025 shares of common stock outstanding held of record by approximately 125 stockholders. Subject to preferences that may be applicable to any preferred stock outstanding at the time, the holders of outstanding shares of common stock are entitled to the following rights: . to receive dividends out of assets legally available therefor at such times and in such amounts as the board from time to time may determine in its sole discretion; . one vote for each share held on all matters submitted to a vote of stockholders; and . upon liquidation, dissolution or winding-up of Agile, to share ratably in all assets remaining after payment of liabilities and the liquidation of any preferred stock. Cumulative voting for the election of directors is not authorized by our certificate of incorporation, which means that the holders of a majority of the shares voted can elect all of the directors then standing for election. The common stock is not entitled to preemptive rights and is not subject to conversion or redemption. Each outstanding share of common stock is, and all shares of common stock to be outstanding upon completion of this offering will be, upon payment, duly and validly issued, fully paid and nonassessable. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of any shares of preferred stock which we may issue in the future. Preferred Stock Upon completion of this offering, all outstanding shares of preferred stock will be converted on a one-to-one basis into 11,933,273 shares of common stock. However, following this conversion, under our certificate of incorporation, the board of directors will have the authority, without further action by the stockholders, to designate and issue up to 10,000,000 shares of preferred stock in one or more series. The board of directors can fix the rights, preferences and privileges of the shares of each series and any qualifications, limitations or restrictions on these shares. The board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes could, under certain circumstances, have the effect of delaying, deferring or preventing a change in control of Agile. We have no current plans to issue any shares of preferred stock. Warrants In September 1995, Agile issued a warrant to Comdisco, Inc. to purchase an aggregate of 41,111 shares of Series B preferred stock at an exercise price of $.354 per share. The warrant may be exercised at any time within seven years after issuance. In March 1996, Agile issued a warrant to Comdisco, Inc. to purchase an aggregate of 35,313 shares of Series C preferred stock at an exercise price of $1.16 per share. The warrant may be exercised at any time within seven years after issuance. 56 In February 1997, Agile issued a warrant to Comdisco, Inc. to purchase an aggregate of 17,828 shares of Series D preferred stock at an exercise price of $2.964 per share. The warrant may be exercised at any time within seven years after issuance. In November 1997, Agile issued a warrant to Comdisco, Inc. to purchase an aggregate of 4,049 shares of Series D preferred stock at an exercise price of $2.964 per share. The warrant may be exercised at any time within seven years after issuance. In February 1999, Agile issued a warrant to Comdisco, Inc. to purchase an aggregate of 60,000 shares of Series F preferred stock at an exercise price of $6.75 per share. The warrant, if not exercised prior to the completion of this offering, will expire. Registration Rights of Some of Our Stockholders Following this offering, the holders of approximately 11,933,273 shares of preferred stock convertible into 11,933,273 shares of common stock and 98,301 shares of stock issuable upon exercise of warrants will have certain rights to register those shares under the Securities Act and an amended and restated rights agreement. Subject to certain limitations in the registration rights agreement, the holders of at least 30% of these shares, or a lesser percent if the anticipated aggregate offering price, net of underwriting discounts and commissions, would exceed $10,000,000, may require, on two occasions, that Agile use its best efforts to register those shares for public resale. If Agile registers any of its common stock for its own account or for the account of other security holders, the holders of those shares are entitled to include their shares of common stock in the registration, subject to the ability of the underwriters to limit the number of shares included in the offering. Any holder or holders of those shares may also require Agile to register all or a portion of their registrable securities in a registration statement on Form S- 3 when Agile is eligible to use that form, provided, among other limitations, that the proposed aggregate price to the public is at least $500,000 and that Agile has not effected two of these registrations in any 12-month period. Agile will pay all fees, costs and expenses of these registrations, other than underwriting discounts and commissions. These rights terminate on the earlier of the date three years following the consummation of this public offering, and the date when all shares of a holder can be sold by the holder under Rule 144 of the Securities Act during any 90 day period. Dell and Flextronics will have the right to include the 672,042 shares to be purchased by them concurrently with this offering, based upon an assumed initial offering price of $16.00, less anticipated underwriting' discounts and commissions, in subsequent registration by Agile of its common stock for its own account or for the account other securities holders. All of the registration rights described above are subject to conditions and limitations, among them the right of the underwriters in any underwritten offering to limit the number of shares of common stock to be included in a registration. Registrations of any shares of common stock held by holders with registration rights would result in these shares being freely tradeable without restriction under the Securities Act upon the effective date of the registration. Antitakeover Effects of Delaware Law and Provisions of Our Certificate of Incorporation and Bylaws Delaware Takeover Statute We are subject to Section 203 of the Delaware General Corporation Law. This provision generally prohibits any Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years following the date the stockholder became an interested stockholder, unless: . prior to that date the board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; . upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock outstanding at the time the transaction began; or 57 . on or following that date, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder. Section 203 defines a business combination to include: . any merger or consolidation involving the corporation and the interested stockholder; . any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder; . subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; . any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or . the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by such entity or person. Certificate of Incorporation and Bylaws Upon filing after the closing of this offering, our certificate of incorporation will provide that all stockholder actions must be effected at a duly called meeting and not by a consent in writing. The bylaws provide that, except as otherwise required by law or by our certificate of incorporation, special meetings of the stockholders can only be called by a resolution adopted by a majority of the board of directors, or by the president or at the request of stockholders holding at least 10% of our capital stock. Our certificate of incorporation and bylaws also provide that our board of directors will be divided into three classes, with each class serving staggered three-year terms. The classification system of electing directors may tend to discourage a third party from making a tender offer or otherwise attempting to obtain control of us and may maintain the incumbency of our board of directors, as the classification of the board of directors generally increases the difficulty of replacing a majority of the directors. Our certificate of incorporation authorizes undesignated preferred stock, which makes it possible for the board of directors to issue preferred stock with voting or other rights or preferences that could discourage potential acquisition proposals and could delay or prevent a change in our control or management. The amendment of any of these provisions would require approval by holders of at least two-thirds of the outstanding common stock. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal, and to enhance the likelihood of continuity and stability in the composition of our board of directors. These provisions are also designed to discourage tactics that may be used in proxy fights. However, these provisions could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they may also inhibit fluctuations in the market price of our shares that could result from rumored or actual takeover attempts. Transfer Agent and Registrar The transfer agent and registrar for Agile's common stock is Boston EquiServe. Listing Agile has applied to list its common stock on the Nasdaq National Market under the trading symbol "AGIL." 58 SHARES ELIGIBLE FOR FUTURE SALE Prior to this offering, there has not been a public market for our common stock. Future sales of substantial amounts of our common stock in the public market, or the possibility of these sales, could cause the trading price of our common stock to decline. Upon completion of this offering, we will have outstanding 19,805,340 shares of common stock, assuming no exercise of the underwriters' over- allotment option and no exercise of outstanding options to purchase common stock after April 30, 1999. Of these shares, the 3,000,000 shares sold in this offering through the underwriters will be freely tradeable without restriction or further registration under the Securities Act, except for any shares purchased by our "affiliates," as defined in Rule 144 under the Securities Act, which would be subject to the limitations and restrictions described below. Shares purchased by affiliates will also be restricted from sale until 180 days after the date of this prospectus pursuant to lock-up agreements between these affiliates and the underwriters. The remaining 16,805,340 shares of common stock outstanding upon completion of this offering will be "restricted securities" as defined in Rule 144. These securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rules 144 or 701 under the Securities Act, which are summarized below. Sales of these restricted securities in the public market, or the availability of these shares for sale, could cause the trading price of our common stock to decline. The amounts of restricted securities that will be available for sale in the public market, subject in some cases to the volume limitations and other restrictions of Rule 144, will be as follows:
Days after Date of Approximate Shares this Prospectus Eligible for Future Sale Comment ---------------------- ------------------------ ------------------------------------------------------------- On Effectiveness........ 3,000,000 Freely tradeable shares sold in offering 180 Days................ 15,224,763 180 day lock-up expires; shares salable under Rule 144 or 701 More than 180 Days...... 1,580,577 Restricted securities held for one year or less
The 672,042 shares to be sold to Dell Computer Corporation and Flextronics International Ltd. will be "restricted securities" and the one year holding period for these shares will expire one year from the date of sale, which we anticipate will be in August 2000. Shares issued upon exercise of options granted by us prior to the date of this prospectus will be available for sale in the public market under Rule 701 of the Securities Act. Rule 701 permits resales of these shares in reliance upon Rule 144 but without compliance with various restrictions, including the holding period requirement, imposed under Rule 144. In general, under Rule 144, beginning 90 days after the date of this prospectus, a person (or persons whose shares are aggregated) who has beneficially owned restricted securities for at least one year would be entitled to sell within any three-month period a number of shares not to exceed the greater of (1) one percent of the then outstanding shares of common stock or (2) the average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a Form 144 with respect to the sale. Sales under Rule 144 are also subject to manner of sale and notice requirements, as well as to the availability of current public information about us. Under Rule 144(k), a person who is not deemed to have been an affiliate at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least two years is entitled to sell the shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144. We have reserved an aggregate of 5,375,000 shares of common stock for issuance pursuant to our 1995 Stock Option Plan. As of April 30, 1999, options to purchase an aggregate of 1,159,725 shares of common stock were outstanding and 2,245,025 shares remained available for grant under our 1995 Stock Option Plan. We intend to file registration statements on Form S-8 under the Securities Act approximately 90 days after the date 59 of this prospectus to register all of the shares of common stock issued or reserved for issuance under our 1995 Stock Option Plan and 1999 Employee Stock Purchase Plan. Shares of common stock issued under these plans, after the filing of related registration statements, will be freely tradable in the public market, subject in the case of the holders to the Rule 144 limitations applicable to our affiliates, lock-up agreements with the underwriters and vesting restrictions imposed by us. Our officers, directors and substantially all other stockholders have agreed with Morgan Stanley & Co. Incorporated not to sell or otherwise dispose of any of their shares for a period of 180 days after the date of the offering without the consent of Morgan Stanley & Co. Incorporated. 60 UNDERWRITERS Under the terms and subject to the conditions contained in the underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley & Co. Incorporated, Deutsche Bank Securities Inc. and Hambrecht & Quist LLC are acting as representatives, have severally agreed to purchase, and we have agreed to sell to them, severally, the respective number of shares of common stock set forth opposite the names of the underwriters below:
Number Name of Shares ---- --------- Morgan Stanley & Co. Incorporated................................ Deutsche Bank Securities Inc..................................... F Hambrecht & Quist LLC............................................ ---- Total.......................................................... ====
The underwriters are offering the shares subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of common stock offered hereby are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of common stock offered hereby, other than those covered by the over- allotment option described below, if any such shares are taken. The underwriters initially propose to offer part of the shares of common stock directly to the public at the public offering price set forth on the cover page hereof and part to certain dealers at a price that represents a concession not in excess of $ a share under the public offering price. Any underwriters may allow, and such dealers may reallow, a concession not in excess of $ a share to other underwriters or to certain other dealers. After the initial offering of the shares of common stock, the offering price and other selling terms may from time to time be varied by the representatives of the underwriters. We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to an aggregate of 450,000 additional shares of common stock at the public offering price set forth on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of common stock offered by the prospectus. To the extent this option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase approximately the same percentage of additional shares of common stock as the number set forth next to each underwriters name in the preceding table bears to the total number of shares of common stock set forth next to the names of all underwriters in the preceding table. At our request, the underwriters have reserved up to 297,500 shares of common stock to be sold in the offering and offered hereby for sale, at the public offering price, to various business associates and persons related to us. The number of shares of commons stock available for sale to the general public will be reduced to the extent these individuals purchase these reserved shares. Any reserved shares which are not so purchased will be offered by the underwriters to the general public on the same basis as the other shares offered by this prospectus. 61 Agile and our officers, directors and substantially all of our stockholders has agreed that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the underwriters, or otherwise during the period ending 180 days after the date of this prospectus, it will not: . offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any contract to sell, grant any option, right or warrant to purchase, lend, or otherwise dispose of, directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock; . enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common stock; or . whether any transaction described above is to be settled by delivery of common stock or such other securities, in cash or by alternative payment. The restrictions described in the previous paragraph do not apply to: . the sale of shares to the underwriters; . the issuance by Agile of shares of common stock upon the exercise of an option or a warrant or the conversion of a security outstanding on the date of this prospectus which is described in the prospectus; . transactions by any person other than Agile relating to shares of common stock or other securities acquired in open market transactions after the completion of the offering of the shares; or . the grant of options to purchase shares of common stock pursuant to our existing employee benefit plans. The underwriters have informed us that they do not intend sales to discretionary accounts to exceed five percent of the total number of shares of common stock offered by them. We have submitted an application to have our common stock approved for quotation on the Nasdaq National Market under the symbol "AGIL." In order to facilitate the offering of the common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common stock. Specifically, the underwriters may over-allot in connection with the offering, creating a short position in the common stock for their own account. In addition, to cover over-allotments or to stabilize the price of the common stock, the underwriters may bid for, and purchase, shares of common stock in the open market. Finally, the underwriting syndicate may reclaim selling concessions allowed to an underwriter or a dealer for distributing the common stock in the offering if the syndicate repurchases previously distributed shares of common stock in transactions to cover syndicate short positions, in stabilization transactions or otherwise. Any of these activities may stabilize or maintain the market price of the common stock above independent market levels. The underwriters are not required to engage in these activities and may end any of these activities at any time. We and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act. On June 4, 1998, we sold shares of our Series F Preferred Stock in a private placement. In this private placement, entities associated with Hambrecht & Quist LLC, one of the underwriters in this offering, purchased 148,148 shares of Series F Preferred Stock, which are convertible into 148,148 shares of common stock, for $999,999, or $6.75 per share. These entities purchased these shares on the same terms as the other investors in the private placement. Concurrent with the sale of the shares in this offering, Agile will sell directly to each of Dell Computer Corporation and Flextronics International Ltd. $5.0 million of common stock (in a private placement). The sale price will be the public offering price less anticipated underwriting discounts and commissions. Dell and Flextronics have each agreed to execute lockup agreements with Morgan Stanley & Co. in the same form as other stockholders. 62 Pricing of the Offering Prior to this offering, there has been no public market for the shares of our common stock. Consequently, the public offering price for the shares of common stock will be determined by negotiations between Agile and the representatives of the underwriters. Among the factors to be considered in determining the public offering price will be: . our record of operations, our current financial position and future prospects, . the experience of our management, . sales, earnings and other financial and operating information in recent periods, and . the price-earnings ratios, price-sales ratios, market prices of securities and certain financial and operating information of companies engaged in activities similar to ours. The estimated initial public offering price range indicated on the cover page of this prospectus is subject to change as a result of market conditions and other factors. LEGAL MATTERS The validity of the shares of common stock offered hereby will be passed upon for Agile by Gray Cary Ware & Freidenrich LLP, Palo Alto, California. Certain legal matters in connection with the offering will be passed upon for the underwriters by Fenwick & West LLP, Palo Alto, California. EXPERTS The consolidated financial statements of Agile Software Corporation as of April 30, 1998 and 1999 and for each of the three years in the period ended April 30, 1999 included in this Prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. WHERE TO FIND ADDITIONAL INFORMATION ABOUT AGILE Agile has filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock offered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement and the exhibits and schedules filed with it. For further information with respect to Agile and the common stock, reference is made to the registration statement and the exhibits and schedules filed with it. With respect to statements contained in this prospectus regarding the contents of any agreement or any other document, in each instance, reference is made to the copy of such agreement or other document filed as an exhibit to the registration statement. Each statement is qualified in all respects by the exhibits and schedules. For further information with respect to Agile and the common stock, reference is made to the registration statement and its exhibits and schedules. You may read and copy any document Agile files at the SEC's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information about the public reference rooms. Agile's SEC filings are also available to the public from the SEC's Web site at http://www.sec.gov. Upon completion of this offering, Agile will become subject to the information and periodic reporting requirements of the Exchange Act, and will file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information will be available for inspection and copying at the SEC's public reference rooms and the SEC's Web site, which is described above. 63 AGILE SOFTWARE CORPORATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Accountants........................................... F-2 Consolidated Balance Sheet.................................................. F-3 Consolidated Statement of Operations........................................ F-4 Consolidated Statement of Stockholders' Equity.............................. F-5 Consolidated Statement of Cash Flows........................................ F-6 Notes to Consolidated Financial Statements.................................. F-7
F-1 REPORT OF INDEPENDENT ACCOUNTANTS The reincorporation described in Note 1 to the consolidated financial statements has not been consummated at May 28, 1999. When it has been consummated, we will be in a position to furnish the following report: "To the Board of Directors and Stockholders of Agile Software Corporation In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, of stockholders' equity and of cash flows present fairly, in all material respects, the financial position of Agile Software Corporation and its subsidiary (the "Company") at April 30, 1998 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended April 30, 1999 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above." PricewaterhouseCoopers LLP San Jose, California May 28, 1999 F-2 AGILE SOFTWARE CORPORATION CONSOLIDATED BALANCE SHEET (in thousands, except per share amounts)
April 30, ------------------ 1998 1999 -------- -------- ASSETS Current assets: Cash and cash equivalents................................ $ 2,160 $ 10,003 Accounts receivable, net of allowance for doubtful accounts of $379 and $495, respectively................. 3,384 4,980 Other current assets..................................... 98 624 -------- -------- Total current assets....................................... 5,642 15,607 Property and equipment, net................................ 1,694 1,973 Other assets............................................... 195 368 -------- -------- $ 7,531 $ 17,948 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Bank line of credit borrowings........................... $ 1,000 $ -- Accounts payable......................................... 698 1,287 Accrued expenses and other liabilities................... 1,227 3,618 Deferred revenue......................................... 3,146 5,107 Current portion of capital lease obligations............. 501 735 Current portion of notes payable......................... -- 686 -------- -------- Total current liabilities.................................. 6,572 11,433 Capital lease obligations, noncurrent...................... 743 871 Notes payable, noncurrent.................................. 39 2,353 -------- -------- 7,354 14,657 -------- -------- Commitments and contingencies (Note 7) Stockholders' equity: Convertible Preferred Stock, $.001 par value; 25,000 shares authorized; 10,096 and 11,874 shares issued and outstanding............................................. 10 12 Common Stock, $.001 par value; 100,000 shares authorized; 3,998 and 4,200 shares issued and outstanding........... 4 4 Additional paid-in capital............................... 17,868 34,814 Notes receivable from stockholders....................... (363) (748) Unearned stock compensation (Note 6)..................... (2,237) (4,258) Accumulated deficit...................................... (15,105) (26,533) -------- -------- Total stockholders' equity................................. 177 3,291 -------- -------- $ 7,531 $ 17,948 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. F-3 AGILE SOFTWARE CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (in thousands, except per share amounts)
Year Ended April 30, -------------------------- 1997 1998 1999 ------- ------- -------- Revenues: License.......................................... $ 1,143 $ 6,102 $ 10,859 Professional services............................ 187 1,385 3,665 Maintenance...................................... 22 516 2,283 ------- ------- -------- Total revenues................................. 1,352 8,003 16,807 ------- ------- -------- Cost of revenues: License.......................................... 113 543 819 Professional services............................ 88 1,347 3,823 Maintenance...................................... 65 278 1,343 ------- ------- -------- Total cost of revenues......................... 266 2,168 5,985 ------- ------- -------- Gross profit....................................... 1,086 5,835 10,822 ------- ------- -------- Operating expenses: Sales and marketing.............................. 2,149 8,070 13,495 Research and development......................... 2,510 3,788 4,742 General and administrative....................... 1,333 1,995 1,938 Amortization of stock compensation (Note 6)...... -- 856 2,253 ------- ------- -------- Total operating expenses....................... 5,992 14,709 22,428 ------- ------- -------- Loss from operations............................... (4,906) (8,874) (11,606) Interest and other income.......................... 134 95 447 Interest expense................................... (64) (163) (269) ------- ------- -------- Net loss........................................... $(4,836) $(8,942) $(11,428) ======= ======= ======== Net loss per share: Basic and diluted................................ $ (3.72) $ (4.20) $ (3.87) ======= ======= ======== Weighted average shares.......................... 1,300 2,129 2,952 ======= ======= ======== Unaudited pro forma net loss per share: Basic and diluted................................ $ (.78) ======== Weighted average shares.......................... 14,668 ========
The accompanying notes are an integral part of these consolidated financial statements. F-4 AGILE SOFTWARE CORPORATION CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (in thousands, except per share amounts)
Convertible Preferred Notes Stock Common Stock Additional Receivable Unearned ------------- -------------- Paid-In From Stock Accumulated Shares Amount Shares Amount Capital Stockholders Compensation Deficit Total ------ ------ ------ ------ ---------- ------------ ------------ ----------- -------- Balance at April 30, 1996................... 7,671 $ 8 2,215 $ 2 $ 5,214 $ (40) $ -- $ (1,327) $ 3,857 Issuance of Common Stock for cash............... -- -- 52 -- 3 -- -- -- 3 Issuance of Common Stock on exercise of options................ -- -- 564 1 64 -- -- -- 65 Issuance of Common Stock in exchange for services............... -- -- 12 -- 2 -- -- -- 2 Issuance of Series C Convertible Preferred Stock at $1.16 per share, net of issuance costs.................. 75 -- -- -- 83 -- -- -- 83 Issuance of Series D Convertible Preferred Stock at $2.964 per share, net of issuance costs.................. 1,350 1 -- -- 3,979 -- -- -- 3,980 Net loss................ -- -- -- -- -- -- -- (4,836) (4,836) ------ --- ----- --- ------- ----- ------- -------- -------- Balance at April 30, 1997................... 9,096 9 2,843 3 9,345 (40) -- (6,163) 3,154 Repurchase of unvested Common Stock........... -- -- (48) -- (18) 15 -- -- (3) Issuance of Common Stock on exercise of options................ -- -- 255 -- 71 -- -- -- 71 Issuance of Common Stock in exchange for notes receivable on exercise of options............. -- -- 772 1 293 (294) -- -- -- Issuance of restricted Common Stock in exchange for notes receivable............. -- -- 176 -- 106 (106) -- -- -- Repayment of notes receivable............. -- -- -- -- -- 62 -- -- 62 Issuance of Series E Convertible Preferred Stock at $5.00 per share, net of issuance costs.................. 1,000 1 -- -- 4,978 -- -- -- 4,979 Unearned stock compensation (Note 6).. -- -- -- -- 3,093 -- (3,093) -- -- Amortization of unearned compensation (Note 6).. -- -- -- -- -- -- 856 -- 856 Net loss................ -- -- -- -- -- -- -- (8,942) (8,942) ------ --- ----- --- ------- ----- ------- -------- -------- Balance at April 30, 1998................... 10,096 10 3,998 4 17,868 (363) (2,237) (15,105) 177 Repurchase of unvested Common Stock........... -- -- (120) -- (38) 32 -- -- (6) Issuance of Common Stock on exercise of options................ -- -- 56 -- 28 -- -- -- 28 Issuance of Common Stock in exchange for notes receivable on exercise of options............. -- -- 259 -- 419 (419) -- -- -- Issuance of restricted Common Stock in exchange for notes receivable............. -- -- 7 -- 19 (19) -- -- -- Repayment of notes receivable............. -- -- -- -- -- 21 -- -- 21 Issuance of Series F Convertible Preferred Stock at $6.75 per share, net of issuance costs.................. 1,778 2 -- -- 11,970 -- -- -- 11,972 Issuance of warrants.... -- -- -- -- 274 -- -- -- 274 Unearned stock compensation (Note 6).. -- -- -- -- 4,274 -- (4,274) -- -- Amortization of unearned compensation (Note 6).. -- -- -- -- -- -- 2,253 -- 2,253 Net loss................ -- -- -- -- -- -- -- (11,428) (11,428) ------ --- ----- --- ------- ----- ------- -------- -------- Balance at April 30, 1999................... 11,874 $12 4,200 $ 4 $34,814 $(748) $(4,258) $(26,533) $ 3,291 ====== === ===== === ======= ===== ======= ======== ========
The accompanying notes are an integral part of these consolidated financial statements. F-5 AGILE SOFTWARE CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands)
Year Ended April 30, -------------------------- 1997 1998 1999 ------- ------- -------- Cash flows from operating activities: Net loss......................................... $(4,836) $(8,942) $(11,428) Adjustments to reconcile net loss to net cash used in operating activities: Provision for doubtful accounts................ 100 277 155 Depreciation................................... 220 673 1,180 Amortization of stock compensation (Note 6).... -- 856 2,253 Warrant expense................................ -- -- 21 Changes in assets and liabilities: Accounts receivable.......................... (838) (2,900) (1,751) Other assets, current and non-current........ (90) (89) (446) Accounts payable............................. 370 313 589 Accrued expenses and other liabilities....... 270 912 2,391 Deferred revenue............................. 607 2,485 1,961 ------- ------- -------- Net cash used in operating activities...... (4,197) (6,415) (5,075) ------- ------- -------- Cash flows from investing activities: Purchase of short-term investments............... (387) -- -- Proceeds from sale of short-term investments..... -- 3,023 -- Acquisition of property and equipment............ (341) (420) (459) ------- ------- -------- Net cash provided by (used in) investing activities................................ (728) 2,603 (459) ------- ------- -------- Cash flows from financing activities: Proceeds from bank line of credit................ -- 2,230 1,900 Repayment of bank line of credit................. -- (1,230) (2,900) Repayment of capital lease obligations........... (145) (382) (638) Proceeds from notes payable...................... 39 -- 3,000 Repayment of notes payable....................... (24) (24) -- Proceeds from issuance of Common Stock, net of repurchase...................................... 68 68 22 Repayment of notes receivable from stockholders.. -- 62 21 Proceeds from issuance of Convertible Preferred Stock, net...................................... 4,063 4,979 11,972 ------- ------- -------- Net cash provided by financing activities.. 4,001 5,703 13,377 ------- ------- -------- Net increase (decrease) in cash and cash equivalents....................................... (924) 1,891 7,843 Cash and cash equivalents at beginning of period... 1,193 269 2,160 ------- ------- -------- Cash and cash equivalents at end of period......... $ 269 $ 2,160 $ 10,003 ======= ======= ======== Supplemental disclosure: Cash paid during the year for interest........... $ 48 $ 138 $ 168 ======= ======= ======== Noncash investing and financing activities: Common Stock issued in exchange for notes receivable...................................... $ -- $ 400 $ 438 ======= ======= ======== Property and equipment acquired under capital lease........................................... $ 743 $ 838 $ 1,000 ======= ======= ======== Issuance of warrants............................. $ -- $ -- $ 274 ======= ======= ========
The accompanying notes are an integral part of these consolidated financial statements. F-6 AGILE SOFTWARE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1--The Company And Summary Of Significant Accounting Policies: The Company Agile Software Corporation (the "Company") was incorporated in California on March 15, 1995 and is headquartered in San Jose, California. The Company is a leading supplier of product content management software for use within and among companies in a manufacturing supply chain over the Internet. The Company's suite of software products is designed to improve the ability of all members of the supply chain to communicate and collaborate with one another about new or changing information concerning the manufacture, source or supply of products or components. Reincorporation In June 1999, the Company's Board of Directors authorized the reincorporation of the Company in the State of Delaware. As a result of the reincorporation, the Company is authorized to issue 100,000,000 shares of $.001 par value Common Stock and 25,000,000 shares of $.001 par value Preferred Stock. The Board of Directors has the authority to issue the undesignated Preferred Stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof. The par value of the Preferred Stock and shares of Common Stock and Preferred Stock authorized in the consolidated balance sheet at April 30, 1998 and 1999 and in consolidated statement of stockholders' equity for the each of the three years in the period ended April 30, 1999 have been retroactively adjusted to reflect the reincorporation. Principles of consolidation and basis of presentation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Agile Software International Corporation. All significant intercompany balances and transactions have been eliminated in consolidation. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and cash equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The majority of the Company's cash equivalents consist of money market funds. Concentrations of credit risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents, short-term investments and accounts receivable. Cash and cash equivalents are deposited with financial institutions that management believes are credit worthy. The Company performs ongoing credit evaluations of its customers' financial condition and, generally, requires no collateral from its customers. The Company maintains an allowance for doubtful accounts receivable based on the expected collectibility of accounts receivable. To date, the Company has not experienced any material losses with respect to its accounts receivable. F-7 AGILE SOFTWARE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Fair value of financial instruments The Company's financial instruments, including cash, cash equivalents, short-term investments, accounts receivable, accounts payable, notes payable and capital lease obligations are carried at cost, which approximates their fair value because of the short-term maturity of these instruments. Property and equipment Property and equipment are recorded at cost. Depreciation is computed using the straight-line method based upon the useful lives of the assets, which range from two to five years, or the lease term of the respective assets. Software development costs Software development costs are included in research and development and are expensed as incurred. After technological feasibility is established, material software development costs are capitalized. The capitalized cost is then amortized on a straight-line basis over the estimated product life, or in the ratio of current revenues to total projected product revenues, whichever is greater. To date, the period between achieving technological feasibility, which the Company has defined as the establishment of a working model which typically occurs when the beta testing commences, and the general availability of such software has been short and software development costs qualifying for capitalization have been insignificant. Accordingly, the Company has not capitalized any software development costs. Revenue recognition The Company derives revenues from the license of software products under software license agreements and from the delivery of professional services and maintenance services. When contracts contain multiple elements, and vendor specific objective evidence exists for all undelivered elements, the Company accounts for the delivered elements in accordance with the "Residual Method" prescribed by Statement of Position ("SOP") 98-9. License revenues are recognized when persuasive evidence of an arrangement exists, the fee is fixed or determinable, collectibility is probable, and delivery and customer acceptance, if required under the terms of the contract, of the software products have occurred. A provision for the estimated losses on fixed-price contracts is recognized in the period in which the loss becomes known. Allowances for estimated returns are provided upon product delivery. In instances where vendor obligations remain, revenues are deferred until the obligation has been satisfied. Revenues from professional services consist of implementation and training services. Training revenues are recognized as the services are performed. Implementation services are typically performed under fixed-price contracts and accordingly, revenues are recognized upon customer acceptance. Maintenance contracts include the right to unspecified upgrades on a when-and-if available basis, and ongoing support. Maintenance revenues are recognized ratably over the term of the maintenance contract, which is generally twelve months. During 1999, the Company has recognized revenues in accordance with Statement of Position No. 97-2, "Software Revenue Recognition," and SOP 98-9, "Modification of SOP 97-2, Software Revenue Recognition, with Respect to Certain Transactions." Income taxes The Company accounts for income taxes under the asset and liability approach which recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the tax basis of assets and liabilities and their financial statement reported amounts. The Company records a valuation allowance against deferred tax assets when it is more likely than not that such assets will not be realized. F-8 AGILE SOFTWARE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Comprehensive income Effective May 1, 1998, the Company adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for reporting comprehensive income and its components in financial statements. Comprehensive income, as defined, includes all changes in equity (net assets) during a period from non-owner sources. To date, the Company has not had any significant transactions that are required to be reported in comprehensive income. Net loss per share The Company computes net loss per share in accordance with SFAS No. 128, "Earnings per Share" and SEC Staff Accounting Bulletin ("SAB") No. 98. Under the provisions of SFAS No. 128 and SAB No. 98, basic and diluted net loss per share is computed by dividing the net loss available to holders of Common Stock for the period by the weighted average number of shares of Common Stock outstanding during the period. The calculation of diluted net loss per share excludes potential Common Stock if their effect is antidilutive. Potential Common Stock consists of unvested restricted Common Stock, incremental common shares issuable upon the exercise of stock options and warrants and shares issuable upon conversion of the Series A, Series B, Series C, Series D, Series E and Series F Convertible Preferred Stock. The following table sets forth the computation of basic and diluted net loss per share of the period indicated (in thousands, except per share amounts):
Year Ended April 30, -------------------------- 1997 1998 1999 ------- ------- -------- Numerator: Net loss..................................... $(4,836) $(8,942) $(11,428) ======= ======= ======== Denominator: Weighted average shares...................... 2,414 3,467 4,140 Weighted average unvested shares of Common Stock subject to repurchase................. (1,114) (1,338) (1,188) ------- ------- -------- Denominator for basic and diluted calculation................................. 1,300 2,129 2,952 ======= ======= ======== Net loss per share: Basic and diluted............................ $ (3.72) $ (4.20) $ (3.87) ======= ======= ========
The following table sets forth potential shares of Common Stock that are not included in the diluted net loss per share calculation above because to do so would be anti-dilutive for the periods indicated (in thousands):
April 30, -------------------- 1997 1998 1999 ------ ------ ------ Series A Preferred Stock................................ 1,233 1,233 1,233 Series B Preferred Stock................................ 2,938 2,938 2,938 Series C Preferred Stock................................ 3,575 3,575 3,575 Series D Preferred Stock................................ 1,350 1,350 1,350 Series E Preferred Stock................................ -- 1,000 1,000 Series F Preferred Stock................................ -- -- 1,778 Preferred Stock warrants................................ 94 98 158 Unvested Common Stock subject to repurchase............. 1,251 1,361 964 Common Stock options.................................... 732 527 1,160 ------ ------ ------ 11,173 12,082 14,156 ====== ====== ======
F-9 AGILE SOFTWARE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Pro forma net loss per share (unaudited) Pro forma net loss per share for the year ended April 30, 1999 is computed using the weighted average number of shares of Common Stock outstanding, including the pro forma effects of the automatic conversion of the Company's Series A, Series B, Series C, Series D, Series E and Series F Convertible Preferred Stock and Series F Preferred Stock warrants into shares of the Company's Common Stock effective upon the closing of the Company's initial public offering as if such conversion occurred on May 1, 1998, or at the date of original issuance, if later. The resulting pro forma adjustment includes an increase in the weighted average shares used to compute basic net loss per share of 11,716,000 for the year ended April 30, 1999. The calculation of diluted net loss per share excludes potential shares of Common Stock as their effect would be antidilutive. Pro forma potential Common Stock consist of unvested Common Stock subject to repurchase rights and incremental shares of Common Stock issuable upon the exercise of stock options and warrants. Stock compensation The Company accounts for stock-based employee compensation arrangements in accordance with provisions of Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees" and complies with the disclosure provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." Under APB No. 25, unearned compensation is based on the difference, if any, on the date of the grant, between the fair value of the Company's stock and the exercise price. Unearned compensation is amortized and expensed in accordance with Financial Accounting Standards Board ("FASB") Interpretation No. 28. The Company accounts for stock issued to non-employees in accordance with the provisions of SFAS No. 123 and Emerging Issues Task Force No. 96-18, "Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services." Foreign currency translation The Company uses the U.S. dollar as its functional currency in all foreign locations expect for France. The balance sheet accounts are translated into United States dollars at the end-of-period exchange rates except for fixed assets, which are translated at historical exchange rates. Revenue and expenses are translated at average exchange rates in effect during each period. Gains and losses resulting from translation are accumulated as a component of stockholders' equity. Net gains or losses resulting from foreign currency exchange transactions are included in the consolidated statement of operations and were not significant during any of the periods presented. Segment information Effective May 1, 1998, the Company adopted the provisions of SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." The Company identifies its operating segments based on business activities, management responsibility and geographical location. During each of the three years in the period ended April 30, 1999, the Company operated in a single business segment, primarily in the United States. Through April 30, 1999, foreign operations have not been significant in either revenue or investment in long-lived assets. Recent accounting pronouncements In March 1998, the AICPA issued SOP No. 98-1, "Accounting for the Cost of Computer Software Developed or Obtained for Internal Use." SOP No. 98-1 will be effective for the Company's fiscal year ending April 30, 2000. SOP No. 98-1 provides guidance on accounting for computer software developed or obtained for internal use including the requirement to capitalize specified costs and amortization of such costs. The Company does not expect the adoption of SOP No. 98-1 to have a material effect on the Company's results of operations, financial position or cash flows. F-10 AGILE SOFTWARE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivatives and Hedging Activities." This statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. SFAS No. 133 will be effective for the Company's fiscal year ending April 30, 2001. The adoption of SFAS No. 133 is not expected to have a material effect on the Company's results of operations, financial position or cash flows. Reclassifications Certain reclassifications have been made to the prior year consolidated financial statements to conform to the current year presentation. Note 2--Balance Sheet Components (in thousands): Property and equipment comprise the following:
April 30, --------------- 1998 1999 ------ ------- Computer hardware and software.............................. $2,087 $ 3,214 Furniture and equipment..................................... 508 828 Leasehold improvements...................................... 34 46 ------ ------- 2,629 4,088 Less: accumulated depreciation.............................. (935) (2,115) ------ ------- $1,694 $ 1,973 ====== =======
Accrued expenses and other liabilities comprise the following:
April 30, -------------- 1998 1999 ------ ------- Accrued employee costs....................................... $ 661 $ 1,770 Sales taxes payable.......................................... 151 172 Accrued professional fees.................................... 125 400 Other........................................................ 290 1,276 ------ ------- $1,227 $ 3,618 ====== =======
Note 3--Borrowings: Notes payable Notes payable consist of amounts payable to equipment financing companies and are collateralized by the underlying assets as follows (in thousands):
April 30, ----------- 1998 1999 ---- ------ 11.75% note; interest payable monthly; principal payable monthly commencing September 1999; matures February 2002...... -- $1,000 11.75% note; interest payable monthly; principal payable monthly commencing November 1999; matures March 2002.......... -- 1,000 11.75% note; interest payable monthly; principal payable monthly commencing December 1999; matures April 2002.......... -- 1,000 Non-interest bearing note; principal payable upon maturity in July 2002..................................................... $39 39 --- ------ 39 3,039 Less: current portion of notes payable......................... -- (686) --- ------ Notes payable, non-current..................................... $39 $2,353 === ======
F-11 AGILE SOFTWARE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Future minimum principal payments under the notes at April 30, 1999 are as follows (in thousands):
Year Ending April 30, --------------------- 2000.................................................................. $ 686 2001.................................................................. 1,181 2002.................................................................. 1,133 2003.................................................................. 39 ------ Total payments........................................................ $3,039 ======
Bank line-of-credit As of April 30, 1999, the Company had a $2,000,000 line-of-credit agreement with a bank that provides for borrowings of up to $2,000,000, including $250,000 available for the issuance of letters of credit and foreign currency exchange activity. Borrowings under the credit agreement bear interest at an annual rate of 8.5%, subject to adjustment by the bank. The interest rate was 8.5% at April 30, 1999. Borrowings under the line of credit are secured by the assets of the Company. As of April 30, 1998 and 1999, $1,000,000 and no amount, respectively, were outstanding under the line. The credit agreement expires in August 1999. In connection with this line-of-credit, the Company is required to meet certain monthly financial tests, including a minimum tangible net worth and a minimum quick ratio. At April 30, 1999, the Company was in compliance with all financial covenants. Note 4--Income Taxes: The Company's operating losses are generated domestically, and amounts attributable to its foreign operations have been insignificant for all periods presented. For each of the three years in the period ended April 30, 1999, the Company incurred net operating losses and accordingly no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At April 30, 1999, the Company had approximately $20,000,000 of federal and $18,000,000 of state net operating loss carryforwards available to offset future taxable income which expire in varying amounts beginning in 2016 and 2004, respectively. Under the Tax Reform Act of 1986, the amounts of and benefits from net operating loss carryforwards may be impaired or limited in certain circumstances. Events which cause limitations in the amounts of net operating losses that the Company may utilize in any one year include, but are not limited to, a cumulative ownership change of more than 50%, as defined, over a three year period. Deferred taxes comprise the following (in thousands):
April 30, ---------------- 1998 1999 ------- ------- Deferred tax assets: Depreciation............................................. $ 66 $ 67 Other accruals and liabilities........................... 123 398 Net operating loss and credit carryforwards.............. 5,235 8,197 ------- ------- Total deferred tax assets................................ 5,424 8,662 Less: Valuation allowance................................ (5,424) (8,662) ------- ------- Net deferred tax assets.................................... $ -- $ -- ======= =======
For financial reporting purposes, the Company has incurred a loss in each period since its inception. Based on the available objective evidence, including the Company's history of losses, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company has provided for a full valuation allowance against its net deferred tax assets at April 30, 1998 and 1999. F-12 AGILE SOFTWARE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) A reconciliation between the amount of income tax benefit determined by applying the applicable U.S. statutory income tax rate to pre-tax loss is as follows:
Year Ended April 30, ------------------ 1997 1998 1999 ---- ---- ---- Federal statutory rate................................. (35)% (35)% (35)% State tax, net of federal impact....................... (6)% (6)% (6)% Provision for valuation allowance on deferred tax assets................................................ 41% 41% 41% --- --- --- --% --% --% === === ===
Note 5--Stockholders' Equity: Preferred stock Convertible Preferred Stock at April 30, 1999 comprise the following (in thousands):
Shares Liquidation Proceeds, Net ---------------------- Preference of Issuance Authorized Outstanding Amount Costs ---------- ----------- ----------- ------------- Series A.................... 1,500 1,233 $ 123 $ 115 Series B.................... 3,000 2,938 1,040 1,024 Series C.................... 4,000 3,575 4,147 4,124 Series C1................... 4,000 -- -- -- Series D.................... 1,500 1,350 4,001 3,980 Series D1................... 1,500 -- -- -- Series E.................... 1,000 1,000 5,000 4,979 Series E1................... 1,000 -- -- -- Series F.................... 1,838 1,778 12,002 11,972 Series F1................... 1,838 -- -- -- ------ ------ ------- ------- 21,176 11,874 $26,313 $26,194 ====== ====== ======= =======
Each share of Series A, Series B, Series C, Series C1, Series D, Series D1, Series E, Series E1, Series F and Series F1 Preferred Stock is convertible into one share of Common Stock, at the option of the holder. The conversion ratio of the Series C Preferred Stock is subject to adjustment for dilution. Holders of at least 100,000 shares of Preferred Stock have a right of first offer in connection with any subsequent issuances of Preferred Stock. These provisions will terminate upon the Company's initial public offering. In the event that such holders of Series C or Series D Preferred Stock elect not to participate in certain subsequent financings, their existing shares of Series C and Series D Preferred Stock will automatically convert into shares of Series C1 and Series D1 Preferred Stock, respectively. Each share of Series A, Series B, Series C, Series C1, Series D, Series D1, Series E, Series E1, Series F and Series F1 Preferred Stock automatically converts into Common Stock upon the closing of an underwritten public offering with an offering price of at least $8.78 per share and aggregate proceeds of at least $20,000,000 or upon the consent of the holders of a majority of the outstanding shares of Series A, Series B, Series C, Series C1, Series D, Series D1, Series E and Series E1 Preferred Stock (voting together as a single class and not as separate series, on an as-converted basis). Each share of Series F and Series F1 will automatically convert into Common Stock upon the consent of a majority of the outstanding Series F and Series F1 shares. F-13 AGILE SOFTWARE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Each share of Series A, Series B, Series C, Series C1, Series D, Series D1, Series E, Series E1, Series F and Series F1 Preferred Stock has voting rights equal to the number of shares of Common Stock into which it is convertible. As long as at least 50% or more of the original issued shares of each respective class remain outstanding, holders of Series A, Series B and Series C and C1 (Series C and C1 voting as a class) are entitled to elect one director at each annual election of members of the Board of Directors. Holders of all shares of Common Stock and Preferred Stock, on an as-converted basis, are entitled to vote to elect the remaining directors of the Company. As long as at least 50% of the original Preferred Stock issued remains outstanding, the Company may not, without prior approval of at least the majority of the then outstanding shares of Preferred Stock, (a) sell, merge or consolidate the Company, (b) effect any transaction or series of transactions which would result in the dissolution of more than 50% of the voting power of the Company, (c) change the rights, preferences and privileges of the Preferred Stock or (d) authorize or issue any equity security or any security convertible into or exercisable for any equity security having a preference over or equal to those of the existing Preferred Stock with respect to voting, dividends or liquidation. Holders of Series A, Series B, Series C, Series C1, Series D, Series D1, Series E, Series E1, Series F and Series F1 Preferred Stock are entitled to receive, when and as declared by the Board of Directors, noncumulative annual dividends of $.01 per share. No dividends on the Preferred Stock or Common Stock have been declared by the Board of Directors from the Company's inception through April 30, 1999. In the event of a liquidation, dissolution or winding up of the Company, the holders of Series A, Series B, Series C, Series C1, Series D, Series D1, Series E, Series E1, Series F and Series F1 Preferred Stock shall be entitled to receive $.10, $.354, $1.16, $1.16, $2.964, $2.964, $5.00, $5.00, $6.75 and $6.75 per share, respectively, plus any declared but unpaid dividends. Thereafter, the remaining assets of the Company will be distributed pro rata among the holders of Series B, Series C, Series C1, Series D, Series D1, Series E, Series E1, Series F and Series F1 Preferred Stock and Common Stock until the holders of Series B, Series C, Series C1, Series D, Series D1, Series E, Series E1, Series F and Series F1 Preferred Stock have received an aggregate of $.708, $2.32, $2.32, $5.928, $5.928, $10.00, $10.00, $13.50 and $13.50 per share, respectively. Thereafter, the holders of Common Stock will receive all of the remaining assets of the Company. Preferred Stock warrants In conjunction with certain capital leases and notes payable, the Company issued warrants to purchase shares of the Company's Preferred Stock as follows:
Fiscal Exercise Year of Date of Grant Shares Price Expiration Value -------------- ------ -------- ---------- ----------- Series B Preferred Stock warrants...................... September 1995 41,111 $.354 2003 de minimus Series C Preferred Stock warrants...................... March 1996 35,313 1.160 2003 de minimus Series D Preferred Stock warrants...................... February 1997 17,828 2.964 2004 de minimus Series D Preferred Stock warrants...................... November 1997 4,049 2.964 2005 de minimus Series F Preferred Stock warrants...................... February 1999 60,000 6.750 2010 $ 274,000
The Company calculated the minimum fair value of all warrants on the date of grant using the Black-Scholes option pricing model as prescribed by SFAS No. 123 with the following underlying assumptions: expected volatility of 50%, risk free interest rates ranging from 4.7% to 6.3% and terms ranging from 7 to 10.5 years. F-14 AGILE SOFTWARE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) The Series B, Series C and Series D Preferred Stock warrants are exercisable for the period stated above or three years from the effective date of the Company's initial public offering, whichever is longer. The Series F Preferred Stock warrants are exercisable for the shorter of the period stated above or immediately prior to the Company's initial public offering. Upon completion of the Company's initial public offering, the Series F Preferred Stock warrants expire. If the Company's initial public offering yields proceeds of not less than $14.00 per share, then the warrant shall be exercisable for no more than 45,000 shares of Series F Preferred Stock or the Common Stock issuable upon conversion thereof. The Company records the expense related to the warrants over the life of the associated financing instrument as interest expense. At April 30, 1999, the Company has unamortized interest of $253,000 related to warrants issued in connection with $3.0 million of subordinated notes payable which were issued during fiscal 1999. The Company plans to use proceeds from its initial public offering to prepay these subordinated notes payable in their entirety. As a result, the Company will recognize the unamortized interest balance as an expense in the period it prepays the notes payable in entirety. Common Stock The Company's Certificate of Incorporation, as amended, authorizes the Company to issue 100,000,000 shares of $.001 par value Common Stock. The Company has granted restricted stock to certain founders and employees. As of April 30, 1999, the Company had 2,269,775 shares of restricted Common Stock outstanding. The Company has a right of first offer in connection with any proposed sale or transfer of these shares and has the right to repurchase these shares at the original issue price. The Company's right to repurchase such shares declines on a percentage basis, usually over four years, based on the length of the employees' continual employment with the Company. At April 30, 1999, 173,371 of such shares granted under the Company's restricted stock plan were subject to repurchase at a weighted-average exercise price of $.69 per share and 76,500 shares were reserved for issuance as restricted Common Stock in the future. This plan was terminated in June 1999. Certain of these and other shares were issued in exchange for notes receivable, which are full recourse and additionally collateralized by the underlying shares of Common Stock. These notes receivable are payable on various dates through March 2004 and bear interest at rates ranging from 4.52% to 7.34%. These notes receivable have been included in stockholders' equity. At April 30, 1999, the Company has reserved shares of Common Stock for future issuance as follows (in thousands):
April 30, 1999 -------------- Conversion of Series A Preferred Stock........................ 1,500 Conversion of Series B Preferred Stock........................ 3,000 Conversion of Series C and Series C1 Preferred Stock.......... 8,000 Conversion of Series D and Series D1 Preferred Stock.......... 3,000 Conversion of Series E and Series E1 Preferred Stock.......... 2,000 Conversion of Series F and Series F1 Preferred Stock.......... 3,556 Exercise of Preferred Stock warrants.......................... 158 Exercise of Common Stock options.............................. 1,405 Issuance of restricted Common Stock........................... 77
F-15 AGILE SOFTWARE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Note 6--Employee Benefit Plans: 401(k) plan Employees of the Company may elect to participate in the Company's 401(k) plan. The Company does not make contributions to the 401(k) plan. Stock option plan In May 1995, the Company adopted the 1995 Stock Option Plan (the "Plan") which, as amended, provides for the issuance of incentive and nonqualified stock options to employees, directors and consultants of the Company. Under the Plan, 3,375,000 shares have been authorized for issuance. Options granted under the Plan are for periods not to exceed ten years and options must be issued at prices not less than 100% and 85%, for incentive and nonqualified stock options, respectively, of the estimated fair value of the stock on the date of grant as determined by the Board of Directors. Options granted to shareholders who own greater than 10% of the outstanding stock are for periods not to exceed five years, and must be issued at prices not less than 110% of the estimated fair value of the stock on the date of grant. Options are exercisable upon grant and generally vest 25% or 20% at the end of the first year and at a rate of 1/36 or 1/48 per month thereafter such that they vest over four or five years, respectively. The following table summarizes activity under the Plan (shares in thousands):
Weighted Shares Average Available Number Exercise for Grant Outstanding Price --------- ----------- -------- Balance at April 30, 1996........................ 372 406 $ .10 Options authorized............................. 575 -- -- Options granted................................ (933) 933 .24 Options exercised.............................. -- (564) .12 Options canceled............................... 43 (43) .18 ----- ------ Balance at April 30, 1997........................ 57 732 .26 Options authorized............................. 800 -- -- Options granted................................ (857) 857 .63 Options exercised.............................. -- (1,027) .31 Options canceled............................... 35 (35) .56 Unvested shares repurchased.................... 43 -- -- ----- ------ Balance at April 30, 1998........................ 78 527 .84 Options authorized............................. 1,000 -- -- Options granted................................ (978) 978 2.57 Options exercised.............................. -- (315) 1.42 Options canceled............................... 30 (30) 1.70 Unvested shares repurchased.................... 115 -- -- ----- ------ Balance at April 30, 1999........................ 245 1,160 2.12 ===== ======
At April 30, 1999, 790,235 outstanding shares of Common Stock purchased under the Plan are subject to repurchase. Upon termination of employment, unvested shares previously purchased under the Plan are subject to repurchase by the Company at a price equal to the exercise price. F-16 AGILE SOFTWARE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) The following table summarizes the information about stock options outstanding and exercisable as of April 30, 1999 (shares in thousands):
Options Vested Options Outstanding and Exercisable -------------------------------------- ----------------------- Weighted Average Weighted Weighted Range of Remaining Average Average Exercise Number Contractual Exercise Number Exercise Prices Outstanding Life (Years) Price Outstanding Price ------------ ----------- ------------ -------- ----------- -------- $.015 - .45 83 7.97 $ .36 38 $ .35 .50 - 1.25 154 8.54 .91 52 .86 1.45 - 2.50 454 9.20 2.19 18 1.91 2.65 - 3.00 469 9.71 2.77 -- -- ----- --- 1,160 9.23 2.12 108 .86 ===== ===
Fair value disclosures The Company calculated the minimum fair value of each option grant under the Plan on the date of grant using the Black-Scholes option pricing model as prescribed by SFAS No. 123 with the followings underlying assumptions:
Year Ended April 30, ---------------- 1997 1998 1999 ---- ---- ---- Dividend yield........................................... -- -- -- Expected volatility...................................... -- -- -- Average risk free interest rate.......................... 6.3% 6.0% 5.7% Expected life (in years)................................. 5 5 5 Weighted average fair value of options granted........... $.07 $.17 $.64
Had compensation cost for options granted under the Plan been determined based on the fair value at the grant dates for the awards under a method prescribed by SFAS No. 123, the Company's net loss would have been increased to the pro forma amounts below for the fiscal years ended April 30, 1997, 1998 and 1999, respectively (in thousands, except per share amounts):
Year Ended April 30, -------------------------- 1997 1998 1999 ------- ------- -------- Net loss as reported.......................... $(4,836) $(8,942) $(11,428) Pro forma net loss............................ (4,843) (8,973) (11,529) Net loss per share as reported................ (3.72) (4.20) (3.87) Pro forma net loss per share.................. (3.73) (4.21) (3.91)
Because the determination of the fair value of all options granted after the Company becomes a public entity will include an expected volatility factor in addition to the factors described above and because additional option grants are expected to be made each year, the compensation expense for options granted during each of the three years in the period ended April 30, 1999 are not representative of the pro forma effects of option grants on reported net income (loss) for future years. F-17 AGILE SOFTWARE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Unearned stock compensation In connection with certain stock option grants during the years ended April 30, 1998 and 1999, the Company recorded unearned stock compensation cost totaling $3,093,000 and $4,274,000, respectively, which is being recognized over the vesting period of the related options of five years. Amortization of unearned stock compensation totaled $856,000 and $2,253,000 for the years ended April 30, 1998 and 1999, respectively. Note 7--Commitments And Contingencies: Leases The Company has entered into noncancelable operating leases for office space and equipment and capital leases for equipment with original terms ranging from 12 to 60 months. The terms of certain operating leases provide for rental payments on a graduated scale. The Company recognizes expense on a straight-line basis over the lease period and has accrued for rent expense incurred but not paid. The future minimum lease payments under these leases at April 30, 1999 are as follows (in thousands):
Operating Capital Year Ending April 30, Leases Leases --------------------- --------- ------- 2000...................................................... $1,061 $ 843 2001...................................................... 967 598 2002...................................................... 339 292 2003...................................................... 56 58 ------ ------ Total minimum lease payments.............................. $2,423 1,791 ====== Less: Amount representing interest........................ (185) ------ Present value of capital lease obligations................ 1,606 Less: Current portion..................................... (735) ------ Capital lease obligations, noncurrent..................... $ 871 ======
Property and equipment under capital leases are as follows (in thousands):
April 30, --------------- 1998 1999 ------ ------- Computer hardware and software.............................. $1,519 $ 2,338 Furniture and equipment..................................... 289 470 ------ ------- 1,808 2,808 Less: Accumulated depreciation.............................. (710) (1,558) ------ ------- $1,098 $ 1,250 ====== =======
Rent expense under noncancelable operating leases was approximately $160,000, net of sublease rental income of $28,000, for the year ended April 30, 1997, $396,000 for the year ended April 30, 1998 and $568,000, net of sublease rental income of $208,000, for the year ended April 30, 1999. Contingencies As of April 30, 1999, the Company was involved in litigation with Facilities Management International. The complaint against the Company, filed in the Orange County Superior Court, alleges interference with prospective economic advantage and unfair business practices in connection with the Company's quote for F-18 AGILE SOFTWARE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) services to a customer. The lawsuit seeks unspecified compensatory and punitive damages as well as injunctive relief. The Company intends to vigorously defend itself against the claim. The Company believes that the ultimate outcome of this matter will not have a material adverse affect on its financial condition, results of operations or cash flows. Note 8--Subsequent Events: Initial public offering In June 1999, the Company's Board of Directors authorized management to file a registration statement with the Securities and Exchange Commission to permit the Company to sell shares of its Common Stock to the public. On August 2, 1999, the Company entered into agreements to sell shares of Common Stock in a private placement with two separate corporate investors for $5.0 million each. The sale of Common Stock will occur contemporaneous with the Company's initial public offering and the number of shares issued to the corporate investors will be calculated by dividing the amount invested by the offering price per share less an amount equal to the underwriter's commissions and discounts per share. Stock option plan Subsequent to April 30, 1999, the Board adopted an increase in the number of shares reserved for issuance under the Company's 1995 Stock Option Plan by an additional 2,000,000 shares. This reserve will be automatically increased on the first day of each fiscal year beginning on and after May 1, 2001 by the lesser of 500,000 shares per year, 5% of the number of shares of the Company's Common Stock which were issued and outstanding on the last day of the preceding fiscal year or a number of shares determined by the Company's board of directors. Employee stock purchase plan In June 1999, the Board adopted the 1999 Employee Stock Purchase Plan (the "Purchase Plan") which will become effective on the date of the Company's initial public offering, and reserved 500,000 shares of Common Stock for issuance thereunder. This reserve will be automatically increased on May 1, 2000 and on each May 1 thereafter until and including May 1, 2009, by an amount equal to the lesser of 500,000 shares per year, 2% of the number of shares of Common Stock which are issued and outstanding on the last day of the preceding fiscal year or a number of shares determined by the Company's board of directors. Employees generally will be eligible to participate in the Purchase Plan if they are customarily employed by the Company for more than 20 hours per week and more than five months in a fiscal year end. The first Offering Period is expected to begin on the first business day on which price quotations for the Company's Common Stock are available. Depending on the effective date, the first Offering Period may be more or less than 24 months long. Offering Periods and Purchase Periods thereafter will begin on the first day of May and September of each year. In general, the price at which the Common Stock is purchased under the Purchase Plan is 85% of the lesser of the fair market value of the Company's Common Stock on the first day of the applicable Offering Period or on the purchase date. Employees generally may not purchase more than 1,000 shares in a six-month period or stock having a value greater than $25,000 in any calendar year as measured at the beginning of the offering period. Unearned stock compensation During the period May 1, 1999 through June 23, 1999, the Company granted options to purchase an aggregate of 544,700 shares of Common Stock at exercise prices ranging from $5.00 to $8.00 per share. F-19 AGILE SOFTWARE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Note 9--Unaudited Quarterly Consolidated Financial Data:
Quarter Ended ------------------------------------ Jul. Apr. 31, Oct. 31, Jan. 31, 30, Fiscal 1998 1998 1999 1999 1999 ------- -------- -------- ------- -------- 1999: (in thousands, except per share amounts) Total revenues................. $ 3,241 $ 3,812 $ 4,592 $ 5,162 $ 16,807 Gross profit................... 2,083 2,475 2,845 3,419 10,822 Loss from operations........... (2,624) (2,839) (2,902) (3,241) (11,606) Net loss....................... (2,572) (2,741) (2,838) (3,277) (11,428) Net loss per share--basic and diluted....................... (.94) (.96) (.94) (1.02) (3.87) Quarter Ended ------------------------------------ Jul. Apr. 31, Oct. 31, Jan. 31, 30, Fiscal 1997 1997 1998 1998 1998 ------- -------- -------- ------- -------- 1998: (in thousands, except per share amounts) Total revenues................. $ 1,179 $ 1,669 $ 2,128 $ 3,027 $ 8,003 Gross profit................... 842 1,151 1,545 2,297 5,835 Loss from operations........... (1,610) (2,370) (2,266) (2,628) (8,874) Net loss....................... (1,612) (2,396) (2,289) (2,645) (8,942) Net loss per share--basic and diluted....................... (.89) (1.20) (1.02) (1.07) (4.20)
F-20 [LOGO OF AGILE SOFTWARE APPEARS HERE] PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 13. Other Expenses of Issuance and Distribution The following table sets forth the costs and expenses, other than underwriting discounts and commissions to be paid by Agile, in connection with this offering. All amounts shown are estimates except for the registration fee and the NASD filing fee. SEC registration fee........................................... $ 16,305 NASD filing fee................................................ 6,365 Nasdaq National Market initial listing fee..................... 5,000 Blue sky fees and expenses..................................... 10,000 Printing and engraving expenses................................ 150,000 Legal fees and expenses........................................ 400,000 Accounting fees and expenses................................... 225,000 Director and officer Securities Act liability insurance........ 550,000 Transfer agent and registrar fees.............................. 8,000 Miscellaneous expenses......................................... 110,330 ---------- Total........................................................ $1,481,000 ==========
Item 14. Indemnification of Officers and Directors Section 145 of the Delaware General Corporation Law authorizes a court to award, or a corporation's board of directors to grant, indemnity to officers, directors and other corporate agents under certain circumstances and subject to certain limitations. Our certificate of incorporation and bylaws provide that we shall indemnify our directors, officers, employees and agents to the full extent permitted by Delaware General Corporation Law, including in circumstances in which indemnification is otherwise discretionary under Delaware law. In addition, we intend to enter into separate indemnification agreements with our directors, officers and certain employees which would require us, among other things, to indemnify them against certain liabilities which may arise by reason of their status as directors, officers or certain other employees. We also intend to maintain director and officer liability insurance, if available on reasonable terms. These indemnification provisions and the indemnification agreements that we intend to enter into with our officers and directors may be sufficiently broad to permit indemnification of our officers and directors for liabilities (including reimbursement of expenses incurred) arising under the Securities Act. We intend to obtain in conjunction with the effectiveness of the registration statement a policy of directors' and officers' liability insurance that insures our directors and officers against the cost of defense, settlement or payment of a judgment under certain circumstances. The form of Underwriting Agreement filed as Exhibit 1.1 to this Registration Statement provides for indemnification by the underwriters of Agile and our officers and directors for certain liabilities arising under the Securities Act, or otherwise. Item 15. Recent Sales of Unregistered Securities (a) Since May 1, 1996, we have sold and issued the following unregistered securities: (1) From inception to April 30, 1999, we issued options to purchase an aggregate of 3,395,750 shares of common stock under the 1995 Stock Option Plan at exercise prices of $.015 to $3.00 per share, of which options to purchase 2,117,880 shares have been exercised. II-1 (2) From inception to April 30, 1999, we issued options to purchase an aggregate of 183,500 shares of common stock under our Restricted Stock Purchase Plan at exercise prices of $.60 to $2.65 per share, of which options to purchase 183,500 shares have been exercised. (3) On January 16, 1996, we issued and sold 3,500,000 shares of Series C Preferred Stock to 5 private investors at a price of $1.16 per share for a total offering of $4,060,000. (4) On October 31, 1996, we issued and sold 75,000 shares of Series C Preferred Stock to one private investor at a price of $1.16 per share for a total price of $87,000. (5) On February 16, 1997, in connection with an equipment lease, we issued a warrant to an equipment lessor to purchase 17,828 shares of Series D preferred stock at an exercise price of $2.964 per share. (6) On February 16, 1997, we issued and sold an aggregate of 1,350,000 shares of Series D Preferred Stock to 10 private investors at a price of $2.964 per share for a total offering price of $4,001,400. (7) On May 1, 1997, we issued 6,750 shares of Common Stock to our Chief Executive Officer as a bonus in lieu of cash. (8) On November 14, 1997, we issued and sold an aggregate of 1,000,000 shares of Series E Preferred Stock to 14 private investors at a price of $5.00 per share for a total offering price of $5,000,000. (9) On November 14, 1997, in connection with an equipment lease, we issued a warrant to an equipment lessor to purchase 4,049 shares of Series D preferred stock at an exercise price of $2.964 per share. (10) On June 4, 1998, we issued and sold an aggregate of 1,777,778 shares of Series F Preferred Stock to 24 private investors at a price of $6.75 per share for a total offering price of $12,000,001.50. (11) On February 8, 1999, in connection with an equipment lease, we issued a warrant to an equipment lessor to purchase an aggregate of 60,000 shares of Series F preferred stock at an exercise price of $6.75 per share. There were no underwriters employed in connection with any of the transactions set forth in Item 15. For additional information concerning these equity investment transactions, please see the section entitled "Certain Transactions" in the prospectus. The issuances described in Items 15(a)(3) through 15(a)(6) and 15(a)(8) through 15(a)(11) were deemed exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act as transactions by an issuer not involving a public offering. Certain issuances described in Item 15(a)(1), 15(a)(2) and 15(a)(7) were deemed exempt from registration under the Securities Act in reliance on Section 4(2) or Rule 701 promulgated thereunder as transactions pursuant to compensatory benefit plans and contracts relating to compensation. The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates and other instruments issued in such transactions. All recipients either received adequate information about us or had access, through employment or other relationships, to such information. II-2 Item 16. Exhibits and Financial Statement Schedules (a) Exhibits
Exhibit Number Description of Document ------- ----------------------- 1.1** Form of Underwriting Agreement. 3.1 Certificates of Incorporation of Agile Software Corporation, as amended to date. 3.2 Form of Certificate of Elimination and Certificate of Amendment. 3.3 Bylaws of Agile Software Corporation. 4.1* Specimen Common Stock Certificate. 5.1* Opinion of Gray Cary Ware & Freidenrich LLP. 10.1 Amended and Restated 1995 Stock Option Plan. 10.2 1999 Employee Stock Purchase Plan. 10.3 Form of Indemnity Agreement between Agile Software Corporation and its directors and officers. 10.4** Almaden Financial Plaza Office Lease dated May 30, 1996 between North Block Partnership and Agile Software Corporation, as amended. 10.5** Subordinated Loan and Security Agreement dated February 8, 1999 between Comdisco, Inc. and Agile Software Corporation. 10.6 Revolving Credit Loan and Security Agreement (Accounts and Inventory) dated December 11, 1996 between Comerica Bank-- California and Agile Software Corporation as modified. 10.7 Master Lease Agreement dated September 18, 1995 between Comdisco, Inc. and Agile Software Corporation, and associated equipment schedules. 10.8** Fifth Amended and Restated Investors' Rights Agreement dated June 4, 1998 by and among Agile Software Corporation and the investors listed on Schedule A thereto. 10.9 Series A Preferred Stock Purchase Agreement. 10.10 Series B Preferred Stock Purchase Agreement. 10.11 Series C Preferred Stock Purchase Agreement. 10.12 Series D Preferred Stock Purchase Agreement. 10.13 Series E Preferred Stock Purchase Agreement. 10.14 Series F Preferred Stock Purchase Agreement. 21.1** Subsidiaries of Agile Software Corporation. 23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants. 23.2* Consent of Gray Cary Ware & Freidenrich LLP (included in Exhibit 5.1). 24.1** Power of Attorney (included on page II-5). 27.1** Financial Data Schedule (EDGAR filed version only).
- -------- * To be filed by amendment **Previously filed (b) Financial Statement Schedules All financial statement schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto. II-3 Item 17. Undertakings We hereby undertake to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser. Insofar as indemnification by us for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the provisions described in Item 14 above or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer, or controlling person of ours in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. We hereby undertake that: (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of Prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by us pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Agile has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Jose, State of California, on the 2nd day of August, 1999. Agile Software Corporation /s/ Bryan D. Stolle By: _________________________________ Bryan D. Stolle Chief Executive Officer and President Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated:
Signature Title Date --------- ----- ---- /s/ Bryan D. Stolle Chief Executive Officer, August 2, 1999 ____________________________________ President and Director Bryan D. Stolle (Principal Executive Officer) /s/ Thomas P. Shanahan Chief Financial Officer, August 2, 1999 ____________________________________ Secretary and Director Thomas P. Shanahan (Principal Financial and Accounting Officer) Klaus-Dieter Laidig* Director August 2, 1999 ____________________________________ Klaus-Dieter Laidig Michael Moritz* Director August 2, 1999 ____________________________________ Michael Moritz James L. Patterson* Director August 2, 1999 ____________________________________ James L. Patterson Nancy J. Schoendorf* Director August 2, 1999 ____________________________________ Nancy J. Schoendorf /s/ Thomas P. Shanahan *By: _______________________________ Attorney-in-Fact
II-5 INDEX TO EXHIBITS
Exhibit Number Description of Document ------- ----------------------- 1.1** Form of Underwriting Agreement. 3.1 Certificates of Incorporation of Agile Software Corporation, as amended to date. 3.2 Form of Certificate of Elimination and Certificate of Amendment. 3.3 Bylaws of Agile Software Corporation. 4.1* Specimen Common Stock Certificate. 5.1* Opinion of Gray Cary Ware & Freidenrich LLP. 10.1 Amended and Restated 1995 Stock Option Plan. 10.2 1999 Employee Stock Purchase Plan. 10.3 Form of Indemnity Agreement between Agile Software Corporation and its directors and officers. 10.4** Almaden Financial Plaza Office Lease dated May 30, 1996 between North Block Partnership and Agile Software Corporation, as amended. 10.5** Subordinated Loan and Security Agreement dated February 8, 1999 between Comdisco, Inc. and Agile Software Corporation. 10.6 Revolving Credit Loan and Security Agreement (Accounts and Inventory) dated December 11, 1996 between Comerica Bank--California and Agile Software Corporation as modified. 10.7 Master Lease Agreement dated September 18, 1995 between Comdisco, Inc. and Agile Software Corporation, and associated equipment schedules. 10.8** Fifth Amended and Restated Investors' Rights Agreement dated June 4, 1998 by and among Agile Software Corporation and the investors listed on Schedule A thereto. 10.9 Series A Preferred Stock Purchase Agreement. 10.10 Series B Preferred Stock Purchase Agreement. 10.11 Series C Preferred Stock Purchase Agreement. 10.12 Series D Preferred Stock Purchase Agreement. 10.13 Series E Preferred Stock Purchase Agreement. 10.14 Series F Preferred Stock Purchase Agreement. 21.1** Subsidiaries of Agile Software Corporation. 23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants. 23.2* Consent of Gray Cary Ware & Freidenrich LLP (included in Exhibit 5.1). 24.1** Power of Attorney (included on page II-5). 27.1** Financial Data Schedule (EDGAR filed version only).
- -------- *To be filed by amendment **Previously filed EX-3.1 2 CERTIFICATE OF INCORPORATION Exhibit 3.1 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF AGILE SOFTWARE CORPORATION I, Thomas P. Shanahan, Chief Financial Officer of Agile Software Corporation, a Delaware corporation (the "Corporation"), hereby certify: 1. That the Corporation's Board of Directors has duly adopted the following resolutions: RESOLVED, that Article First of the Certificate of Incorporation is hereby amended to read in full as follows: FIRST: The name of this corporation is Agile Software Corporation ----- Delaware (hereinafter sometimes referred to as the "Corporation"). 2. That the proposed amendment has been duly adopted by the Corporation's Board of Directors and sole stockholder in accordance with the provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment of Certificate of Incorporation to be signed by a duly authorized officer on this 30th day of June, 1999. AGILE SOFTWARE CORPORATION By: /s/ Thomas P. Shanahan ------------------------------------------- Thomas P. Shanahan, Chief Financial Officer CERTIFICATE OF INCORPORATION OF AGILE SOFTWARE CORPORATION FIRST: The name of this corporation is Agile Software Corporation ----- (hereinafter sometimes referred to as the "Corporation"). SECOND: The address of the registered office of the Corporation in the ------ State of Delaware is Incorporating Services, Ltd., 15 East North Street, in the City of Dover, County of Kent. The name of the registered agent at that address is Incorporating Services, Ltd. THIRD: The purpose of the Corporation is to engage in any lawful act or ----- activity for which a corporation may be organized under the General Corporation Law of Delaware. FOURTH: The total number of shares of stock which the Corporation shall ------ have authority to issue is One Thousand (1,000) shares of Common Stock, par value $0.001 per share (the "Common Stock"). FIFTH: The name and mailing address of the incorporator is: ----- Lynn Rooke c/o Gray Cary Ware & Freidenrich LLP 400 Hamilton Avenue Palo Alto, CA 94031 SIXTH: The business and affairs of the Corporation shall be managed by or ----- under the direction of the Board of Directors. In addition to the powers and authority expressly conferred upon them by Statute or by this Certificate of Incorporation or the Bylaws of the Corporation, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation. Election of directors need not be by written ballot unless the Bylaws so provide. SEVENTH: The Board of Directors is authorized to make, adopt, amend, alter ------- or repeal the Bylaws of the Corporation. The stockholders shall also have power to make, adopt, amend, alter or repeal the Bylaws of the Corporation. EIGHTH: This Corporation reserves the right to amend or repeal any of the ------ provisions contained in this Certificate of Incorporation in any manner now or hereafter permitted by law, and the rights of the stockholders of this Corporation are granted subject to this reservation. NINTH: To the fullest extent permitted by the Delaware General Corporation ----- Law, a director of this Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. Any repeal or modification of the foregoing provisions of this Article NINTH by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification. I, THE UNDERSIGNED, being the incorporator, for the purpose of forming a corporation under the laws of the State of Delaware, do make, file and record this Certificate of Incorporation, do certify that the facts herein stated are true, and accordingly, have hereto set my hand this 23rd day of June, 1999. /s/ Lynn Rooke RESTATED CERTIFICATE OF INCORPORATION OF DELAWARE AGILE SOFTWARE CORPORATION (Pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware) Delaware Agile Software Corporation, a corporation organized and existing under the General Corporation Law of the State of Delaware on June 22, 1999, (the "Corporation") certifies as follows: 1. The Corporation's Restated Certificate of Incorporation was duly adopted by the Board of Directors and sole stockholder by written consent in accordance with Sections 242 and 245 of the General Corporation Law. 2. The Corporation's Certificate of Incorporation is restated to read in full as follows: FIRST: The name of the Corporation is Delaware Agile Software ----- Corporation. SECOND: The address of the registered office of the Corporation in ------ the State of Delaware is Incorporating Services, Ltd., 15 East North Street, in the City of Dover, County of Kent. The name of the registered agent at that address is Incorporating Services, Ltd. THIRD: The purpose of the Corporation is to engage in any lawful act ----- or activity for which a corporation may be organized under the General Corporation Law of Delaware. FOURTH: ------ A. The Corporation is authorized to issue a total of 131,175,556 shares of stock in two classes designated respectively "Preferred Stock" and "Common Stock". The total number of shares of all series of Preferred Stock that the Corporation shall have the authority to issue is 31,175,556 and the total number of shares of Common Stock that the Corporation shall have the authority to issue is 100,000,000. All of the authorized shares shall have a par value of $0.001. B. The shares of Preferred Stock may be divided into such number of series as the Board of Directors may determine. The Board of Directors is authorized to determine and alter the rights, preferences, privileges and restrictions granted to and imposed upon the Preferred Stock or any series thereof with respect to any wholly unissued series of Preferred Stock, and to fix the number of shares of any such series of Preferred Stock. The Board of Directors, within the limits and restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series, may increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any series subsequent to the issue of shares of that series. FIFTH: The following provisions are inserted for the management of the ----- business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders: A. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authority expressly conferred upon them by statute or by this Certificate of Incorporation or the Bylaws of the Corporation, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation. B. The directors of the Corporation need not be elected by written ballot unless the Bylaws so provide. C. On and after the closing date of the first sale of the Corporation's Common Stock pursuant to a firmly underwritten registered public offering (the "IPO"), any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders. Prior to such sale, unless otherwise provided by law, any action which may otherwise be taken at any meeting of the stockholders may be taken without a meeting and without prior notice, if a written consent describing such actions is signed by the holders of outstanding shares having not less than the minimum number of votes which would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. D. Special meetings of stockholders of the Corporation may be called only (1) by the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board for adoption), (2) by the President of the Corporation or (3) by the holders of not less than ten percent (10%) of all of the shares entitled to cast votes at the meeting. 2 SIXTH: ----- A. The number of directors shall initially be set at six (6) and, thereafter, shall be fixed from time to time exclusively by the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board for adoption). Upon the closing of the IPO, the directors shall be divided into three classes with the term of office of the first class (Class I) to expire at the first annual meeting of the stockholders following the IPO; the term of office of the second class (Class II) to expire at the second annual meeting of stockholders held following the IPO; the term of office of the third class (Class III) to expire at the third annual meeting of stockholders; and thereafter for each such term to expire at each third succeeding annual meeting of stockholders after such election. Subject to the rights of the holders of any series of Preferred Stock then outstanding, a vacancy resulting from the removal of a director by the stockholders as provided in Article SIXTH, Section C below may be filled at a special meeting of the stockholders held for that purpose. All directors shall hold office until the expiration of the term for which elected, and until their respective successors are elected, except in the case of the death, resignation, or removal of any director. B. Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation or other cause (other than removal from office by a vote of the stockholders) may be filled only by a majority vote of the directors then in office, though less than a quorum, and directors so chosen shall hold office for a term expiring at the next annual meeting of stockholders at which the term of office of the class to which they have been elected expires, and until their respective successors are elected, except in the case of the death, resignation, or removal of any director. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. C. Subject to the rights of the holders of any series of Preferred Stock then outstanding, any directors, or the entire Board of Directors, may be removed from office at any time, with or without cause, but only by the affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. Vacancies in the Board of Directors resulting from such removal may be filled by a majority of the directors then in office, though less than a quorum, or by the stockholders as provided in Article SIXTH, Section A above. Directors so chosen shall hold office for a term expiring at the next annual meeting of stockholders at which the term of office of 3 the class to which they have been elected expires, and until their respective successors are elected, except in the case of the death, resignation, or removal of any director. SEVENTH: The Board of Directors is expressly empowered to adopt, ------- amend or repeal Bylaws of the Corporation. Any adoption, amendment or repeal of Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any resolution providing for adoption, amendment or repeal is presented to the Board). The stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of Bylaws of the Corporation by the stockholders shall require, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by this Certificate of Incorporation, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. EIGHTH: 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, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involved intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. If the Delaware General Corporation Law is hereafter amended to authorize the further elimination or limitation of the liability of a director, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended. Any repeal or modification of the foregoing provisions of this Article EIGHTH by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification. 4 NINTH: The Corporation reserves the right to amend or repeal any ----- provision contained in this Certificate of Incorporation in the manner prescribed by the laws of the State of Delaware and all rights conferred upon stockholders are granted subject to this reservation; provided, however, that, notwithstanding any other -------- ------- provision of this Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any vote of the holders of any class or series of the stock of this Corporation required by law or by this Certificate of Incorporation, the affirmative vote of the holders of at least 66-2/3% of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend or repeal this Article NINTH, Article FIFTH, Article SIXTH, Article SEVENTH or Article EIGHTH. 5 IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate to be signed by a duly authorized officer on this ____ day of ______, 1999. DELAWARE AGILE SOFTWARE CORPORATION By: ---------------------------------------- Thomas P. Shanahan, Chief Financial Officer, and Secretary 6 EX-3.2 3 FORM OF CERTIFICATE OF ELIMINATION EXHIBIT 3.2 CERTIFICATE OF ELIMINATION OF SERIES A, SERIES B, SERIES C, SERIES C1, SERIES D, SERIES D1, SERIES E, SERIES E1, SERIES F AND SERIES F1 PREFERRED STOCK OF AGILE SOFTWARE CORPORATION (Pursuant to Section 151 of the General Corporation Law of the State of Delaware) Agile Software Corporation, a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), certifies as follows: FIRST: Article FOURTH of the Certificate of Incorp oration of the ----- Corporation authorizes the issuance of 31,175,556 shares of Preferred Stock, par value $0.001 per share (the "Preferred Stock"), of which Preferred Stock, 1,500,000 shares have been designated Series A Preferred Stock, 3,000,000 shares have been designated Series B Preferred Stock, 4,000,000 shares have been designated Series C Preferred Stock, 4,000,000 shares have been designated Series C1 Preferred Stock, 1,500,000 shares have been designated Series D Preferred Stock, 1,500,000 shares have been designated Series D1 Preferred Stock, 1,000,000 shares have been designated Series E Preferred Stock, 1,000,000 shares have been designated Series E1 Preferred Stock, 1,837,778 shares have been designated Series F Preferred Stock, and 1,837,778 shares have been designated Series F1 Preferred Stock pursuant to a Certificate of Designations filed pursuant to Section 151 of the General Corporation Law of the State of Delaware. SECOND: The following resolution was adopted on __________, 1999 the ------ Board of Directors of the Corporation as required by Section 151(g) of the General Corporation Law of the State of Delaware: RESOLVED, that none of the authorized shares of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series C1 Preferred Stock, Series D Preferred Stock, Series D1 Preferred Stock, Series E Preferred Stock, Series E1 Preferred Stock, Series F Preferred Stock and Series F1 Preferred Stock are outstanding and no shares of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series C1 Preferred Stock, Series D Preferred Stock, Series D1 Preferred Stock, Series E Preferred Stock, Series E1 Preferred Stock, Series F Preferred Stock and Series F1 Preferred Stock will be issued subject to the Certificate of Designations previously file d with respect to such Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series C1 Preferred Stock, Series D Preferred Stock, Series D1 Preferred Stock, Series E Preferred Stock, Series E1 Preferred Stock, Series F Preferred Stock and Series F1 Preferred Stock. THIRD: Pursuant to the provisions of Section 151(g) of the General ----- Corporation Law of the State of Delaware, all matters set forth in the Certificate of Designations with respect to such 1 Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series C1 Preferred Stock, Series D Preferred Stock, Series D1 Preferred Stock, Series E Preferred Stock, Series E1 Preferred Stock, Series F Preferred Stock and Series F1 Preferred Stock are hereby eliminated from the Certificate of Incorporation. 2 IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by its duly authorized officer this ____ day of __________, 1999. AGILE SOFTWARE CORPORATION By: ___________________________________ Thomas P. Shanahan, Chief Financial Officer and Secretary 3 CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION OF AGILE SOFTWARE CORPORATION Agile Software Corporation, a Delaware corporation (the "Corporation"), hereby certifies: 1. That the Corporation's Board of Directors has duly adopted the following resolutions: RESOLVED, that the first paragraph of Article FOURTH of the Restated Certificate of Incorporation is hereby amended to read in full as follows: FOURTH: ------ A. The Corporation is authorized to issue a total of 110,000,000 shares of stock in two classes designated respectively "Prefe rred Stock" and "Common Stock." The total number of shares of all series of Preferred Stock that the Corporation shall have the authority to issue is 10,000,000 and the total number of shares of Common Stock that the Corporation shall have the authority to issue is 100,000,000. All of the authorized shares shall have a par value of $0.001. 2. That the proposed amendment has been duly adopted by the Corporation's Board of Directors and sole stockholder in accordance with the provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment of Restated Certificate of Incorporation to be signed by a duly authorized officer on this _____ day of ___________, 1999. AGILE SOFTWARE CORPORATION By: ___________________________________ Thomas P. Shanahan, Chief Financial Officer and Secretary EX-3.3 4 BYLAWS OF AGILE SOFTWARE CORPORATION EXHIBIT 3.3 BYLAWS OF DELAWARE AGILE SOFTWARE CORPORATION TABLE OF CONTENTS
Page ---- ARTICLE I STOCKHOLDERS.................................................... 1 Section 1.1 Annual Meeting............................................. 1 Section 1.2 Special Meetings........................................... 1 Section 1.3 Notice of Meetings......................................... 1 Section 1.4 Quorum..................................................... 2 Section 1.5 Conduct of the Stockholders' Meeting....................... 2 Section 1.6 Conduct of Business........................................ 2 Section 1.7 Notice of Stockholder Business............................. 2 Section 1.8 Proxies and Voting......................................... 3 Section 1.9 Stock List................................................. 3 ARTICLE II BOARD OF DIRECTORS.............................................. 4 Section 2.1 Number and Term of Office.................................. 4 Section 2.2 Vacancies and Newly Created Directorships.................. 4 Section 2.3 Removal.................................................... 4 Section 2.4 Regular Meetings........................................... 5 Section 2.5 Special Meetings........................................... 5 Section 2.6 Quorum..................................................... 5 Section 2.7 Participation in Meetings by Conference Telephone.......... 5 Section 2.8 Conduct of Business........................................ 5 Section 2.9 Powers..................................................... 5 Section 2.10 Compensation of Directors.................................. 6 Section 2.11 Nomination of Director Candidates.......................... 6 ARTICLE III COMMITTEES...................................................... 7 Section 3.1 Committees of the Board of Directors....................... 7 Section 3.2 Conduct of Business........................................ 8 ARTICLE IV OFFICERS........................................................ 8 Section 4.1 Generally.................................................. 8 Section 4.2 Chairman of the Board...................................... 8 Section 4.3 President.................................................. 8 Section 4.4 Vice President............................................. 8 Section 4.5 Treasurer/Chief Financial Officer.......................... 9 Section 4.6 Secretary.................................................. 9 Section 4.7 Delegation of Authority.................................... 9 Section 4.8 Removal.................................................... 9 Section 4.9 Action With Respect to Securities of Other Corporations.... 9 ARTICLE V STOCK........................................................... 9 Section 5.1 Certificates of Stock...................................... 9 Section 5.2 Transfers of Stock......................................... 9 Section 5.3 Record Date................................................ 9
TABLE OF CONTENTS (continued)
Page ---- Section 5.4 Lost, Stolen or Destroyed Certificates..................... 10 Section 5.5 Regulations................................................ 10 ARTICLE VI NOTICES......................................................... 10 Section 6.1 Notices.................................................... 10 Section 6.2 Waivers.................................................... 10 ARTICLE VII MISCELLANEOUS................................................... 10 Section 7.1 Facsimile Signatures....................................... 10 Section 7.2 Corporate Seal............................................. 11 Section 7.3 Reliance Upon Books, Reports and Records................... 11 Section 7.4 Fiscal Year................................................ 11 Section 7.5 Time Periods............................................... 11 ARTICLE VIII INDEMNIFICATION OF DIRECTORS AND OFFICERS....................... 11 Section 8.1 Right to Indemnification................................... 11 Section 8.2 Right of Claimant to Bring Suit............................ 12 Section 8.3 Non-Exclusivity of Rights.................................. 12 Section 8.4 Indemnification Contracts.................................. 12 Section 8.5 Insurance.................................................. 13 Section 8.6 Effect of Amendment........................................ 13 ARTICLE IX AMENDMENTS...................................................... 13 Section 9.1 Amendment of Bylaws........................................ 13
DELAWARE AGILE SOFTWARE CORPORATION A DELAWARE CORPORATION BYLAWS ARTICLE I STOCKHOLDERS ------------ Section 1.1 Annual Meeting. An annual meeting of the stockholders, for the -------------- election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held at such place, on such date, and at such time as the Board of Directors shall each year fix, which date shall be within thirteen months subsequent to the later of the date of incorporation or the last annual meeting of stockholders. Section 1.2 Special Meetings. Special meetings of the stockholders, for any ---------------- purpose or purposes prescribed in the notice of the meeting, may be called only (i) by the Board of Directors pursuant to a resolution adopted by a majority of the board of directors or (ii) by the President or (iii) by the holders of not less than 10% of capital stock and shall be held at such place, on such date, and at such time as they shall fix. Business transacted at special meetings shall be confined to the purpose or purposes stated in the notice. Section 1.3 Notice of Meetings. Written notice of the place, date, and time ------------------ of all meetings of the stockholders shall be given, not less than ten (10) nor more than sixty (60) days before the date on which the meeting is to be held, to each stockholder entitled to vote at such meeting, except as otherwise provided herein or required by law (meaning, here and hereinafter, as required from time to time by the Delaware General Corporation Law or the Certificate of Incorporation of the Corporation). When a meeting is adjourned to another place, date or time, written notice need not be given of the adjourned meeting if the place, date and time thereof are announced at the meeting at which the adjournment is taken; provided, however, that if the date of any adjourned meeting is more than thirty (30) days after the date for which the meeting was originally noticed, or if a new record date is fixed for the adjourned meeting, written notice of the place, date, and time of the adjourned meeting shall be given in conformity herewith. At any adjourned meeting, any business may be transacted which might have been transacted at the original meeting. Section 1.4 Quorum. At any meeting of the stockholders, the holders of a ------ majority of all of the shares of the stock entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum for all purposes, unless or except to the extent that the presence of a larger number may be required by law. If a quorum shall fail to attend any meeting, the chairman of the meeting or the holders of a majority of the shares of stock entitled to vote who are present, in person or by proxy, may adjourn the meeting to another place, date, or time. If a notice of any adjourned special meeting of stockholders is sent to all stockholders entitled to vote thereat, stating that it will be held with those present constituting a quorum, then except as otherwise required by law, those present at such adjourned meeting shall constitute a quorum, and all matters shall be determined by a majority of the votes cast at such meeting. Section 1.5 Conduct of the Stockholders' Meeting. At every meeting of the ------------------------------------ stockholders, the Chairman, if there is such an officer, or if not, the President of the Corporation, or in his absence the Vice President designated by the President, or in the absence of such designation any Vice President, or in the absence of the President or any Vice President, a chairman chosen by the majority of the voting shares represented in person or by proxy, shall act as Chairman. The Secretary of the Corporation or a person designated by the Chairman shall act as Secretary of the meeting. Unless otherwise approved by the Chairman, attendance at the stockholders' meeting is restricted to stockholders of record, persons authorized in accordance with Section 8 of these Bylaws to act by proxy, and officers of the Corporation. Section 1.6 Conduct of Business. The Chairman shall call the meeting to ------------------- order, establish the agenda, and conduct the business of the meeting in accordance therewith or, at the Chairman's discretion, it may be conducted otherwise in accordance with the wishes of the stockholders in attendance. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting. The Chairman shall also conduct the meeting in an orderly manner, rule on the precedence of and procedure on, motions and other procedural matters, and exercise discretion with respect to such procedural matters with fairness and good faith toward all those entitled to take part. The Chairman may impose reasonable limits on the amount of time taken up at the meeting on discussion in general or on remarks by any one stockholder. Should any person in attendance become unruly or obstruct the meeting proceedings, the Chairman shall have the power to have such person removed from participation. Notwithstanding anything in the Bylaws to the contrary, no business shall be conducted at a meeting except in accordance with the procedures set forth in this Section 1.6 and Section 1.7, below. The Chairman of a meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the provisions of this Section 1.6 and Section 1.7, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Section 1.7 Notice of Stockholder Business. At an annual or special ------------------------------ meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before a meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) properly brought before the meeting by or at the direction of the Board of Directors, (c) properly brought before an annual meeting by a stockholder, or (d) properly brought before a special meeting by a stockholder, but if, and only if, the notice of a special 2 meeting provides for business to be brought before the meeting by stockholders. For business to be properly brought before a meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder proposal to be presented at an annual meeting shall be received at the Corporation's principal executive offices not less than 120 calendar days in advance of the date that the Corporation's (or the Corporation's predecessor's) proxy statement was released to stockholders in connection with the previous year's annual meeting of stockholders, except that if no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than 30 calendar days from the date contemplated at the time of the previous year's proxy statement, or in the event of a special meeting, notice by the stockholder to be timely must be received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual or special meeting (a) a brief description of the business desired to be brought before the annual or special meeting and the reasons for conducting such business at the special meeting, (b) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business, (c) the class and number of shares of the Corporation which are beneficially owned by the stockholder, and (d) any material interest of the stockholder in such business. Section 1.8 Proxies and Voting. At any meeting of the stockholders, every ------------------ stockholder entitled to vote may vote in person or by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting. No stockholder may authorize more than one proxy for his shares. Each stockholder shall have one vote for every share of stock entitled to vote which is registered in his or her name on the record date for the meeting, except as otherwise provided herein or required by law. All voting, including on the election of directors but excepting where otherwise required by law, may be by a voice vote; provided, however, that upon demand therefor by a stockholder entitled to vote or his or her proxy, a stock vote shall be taken. Every stock vote shall be taken by ballots, each of which shall state the name of the stockholder or proxy voting and such other information as may be required under the procedure established for the meeting. Every vote taken by ballots shall be counted by an inspector or inspectors appointed by the chairman of the meeting. All elections shall be determined by a plurality of the votes cast, and except as otherwise required by law, all other matters shall be determined by a majority of the votes cast. Section 1.9 Stock List. A complete list of stockholders entitled to vote at ---------- any meeting of stockholders, arranged in alphabetical order for each class of stock and showing the address of each such stockholder and the number of shares registered in his or her name, shall be open to the examination of any such stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. 3 The stock list shall also be kept at the place of the meeting during the whole time thereof and shall be open to the examination of any such stockholder who is present. This list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them. ARTICLE II BOARD OF DIRECTORS ------------------ Section 2.1 Number and Term of Office. The number of directors shall ------------------------- initially be six (6) and, thereafter, shall be fixed from time to time exclusively by the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board for adoption). Upon the closing of the first sale of the Corporation's common stock pursuant to a firmly underwritten registered public offering (the "IPO"), the directors shall be divided into three classes, with the term of office of the first class to expire at the first annual meeting of stockholders held after the IPO, the term of office of the second class to expire at the second annual meeting of stockholders held after the IPO, the term of office of the third class to expire at the third annual meeting of stockholders held after the IPO and thereafter for each such term to expire at each third succeeding annual meeting of stockholders after such election. A vacancy resulting from the removal of a director by the stockholders as provided in Article II, Section 2.3 below may be filled at special meeting of the stockholders held for that purpose. All directors shall hold office until the expiration of the term for which elected and until their respective successors are elected, except in the case of the death, resignation or removal of any director. Section 2.2 Vacancies and Newly Created Directorships. Subject to the ----------------------------------------- rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification or other cause (other than removal from office by a vote of the stockholders) may be filled only by a majority vote of the directors then in office, though less than a quorum, and directors so chosen shall hold office for a term expiring at the next annual meeting of stockholders. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. Section 2.3 Removal. Subject to the rights of holders of any series of ------- Preferred Stock then outstanding, any directors, or the entire Board of Directors, may be removed from office at any time, with or without cause, but only by the affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. Vacancies in the Board of Directors resulting from such removal may be filled by a majority of the directors then in office, though less than a quorum, or by the stockholders as provided in Article II, Section 2.1 above. Directors so chosen shall hold office until the new annual meeting of stockholders. 4 Section 2.4 Regular Meetings. Regular meetings of the Board of Directors ---------------- shall be held at such place or places, on such date or dates, and at such time or times as shall have been established by the Board of Directors and publicized among all directors. A notice of each regular meeting shall not be required. Section 2.5 Special Meetings. Special meetings of the Board of Directors ---------------- may be called by one-third of the directors then in office (rounded up to the nearest whole number) or by the chief executive officer and shall be held at such place, on such date, and at such time as they or he or she shall fix. Notice of the place, date, and time of each such special meeting shall be given each director by whom it is not waived by mailing written notice not fewer than five (5) days before the meeting or by telegraphing or personally delivering the same not fewer than twenty-four (24) hours before the meeting. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting. Section 2.6 Quorum. At any meeting of the Board of Directors, a majority ------ of the total number of authorized directors shall constitute a quorum for all purposes. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date, or time, without further notice or waiver thereof. Section 2.7 Participation in Meetings by Conference Telephone. Members of ------------------------------------------------- the Board of Directors, or of any committee thereof, may participate in a meeting of such Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and such participation shall constitute presence in person at such meeting. Section 2.8 Conduct of Business. At any meeting of the Board of ------------------- Directors, business shall be transacted in such order and manner as the Board may from time to time determine, and all matters shall be determined by the vote of a majority of the directors present, except as otherwise provided herein or requited by law. Action may be taken by the Board of Directors without a meeting if all members thereof consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors. Section 2.9 Powers. The Board of Directors may, except as otherwise ------ required by law, exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, including, without limiting the generality of the foregoing, the unqualified power: (a) To declare dividends from time to time in accordance with law; (b) To purchase or otherwise acquire any property, rights or privileges on such terms as it shall determine; (c) To authorize the creation, making and issuance, in such form as it may determine, of written obligations of every kind, negotiable or non- negotiable, secured or unsecured, and to do all things necessary in connection therewith; 5 (d) To remove any officer of the Corporation with or without cause, and from time to time to devolve the powers and duties of any officer upon any other person for the time being; (e) To confer upon any officer of the Corporation the power to appoint, remove and suspend subordinate officers, employees and agents; (f) To adopt from time to time such stock, option, stock purchase, bonus or other compensation plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine; (g) To adopt from time to time such insurance, retirement, and other benefit plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine; and (h) To adopt from time to time regulations, not inconsistent with these bylaws, for the management of the Corporation's business and affairs. Section 2.10 Compensation of Directors. Directors, as such, may receive, ------------------------- pursuant to resolution of the Board of Directors, fixed fees and other compensation for their services as directors, including, without limitation, their services as members of committees of the Board of Directors. Section 2.11 Nomination of Director Candidates. Subject to the rights of --------------------------------- holders of any class or series of Preferred Stock then outstanding, nominations for the election of Directors may be made by the Board of Directors or a proxy committee appointed by the Board of Directors or by any stockholder entitled to vote in the election of Directors generally. However, any stockholder entitled to vote in the election of Directors generally may nominate one or more persons for election as Directors at a meeting only if timely notice of such stockholder's intent to make such nomination or nominations has been given in writing to the Secretary of the Corporation. To be timely, a stockholder nomination for a director to be elected at an annual meeting shall be received at the Corporation's principal executive offices not less than 120 calendar days in advance of the date that the Corporation's (or the Corporation's Predecessor's) Proxy statement was released to stockholders in connection with the previous year's annual meeting of stockholders, except that if no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than 30 calendar days from the date contemplated at the time of the previous year's proxy statement, or in the event of a nomination for director to be elected at a special meeting, notice by the stockholders to be timely must be received not later than the close of business on the tenth day following the day on which such notice of the date of the special meeting was mailed or such public disclosure was made. Each such notice shall set forth: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote for the election of Directors on the date of such notice and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons 6 (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by the Board of Directors; and (e) the consent of each nominee to serve as a director of the Corporation if so elected. In the event that a person is validly designated as a nominee in accordance with this Section 2.11 and shall thereafter become unable or unwilling to stand for election to the Board of Directors, the Board of Directors or the stockholder who proposed such nominee, as the case may be, may designate a substitute nominee upon delivery, not fewer than five days prior to the date of the meeting for the election of such nominee, of a written notice to the Secretary setting forth such information regarding such substitute nominee as would have been required to be delivered to the Secretary pursuant to this Section 2.11 had such substitute nominee been initially proposed as a nominee. Such notice shall include a signed consent to serve as a director of the Corporation, if elected, of each such substitute nominee. If the chairman of the meeting for the election of Directors determines that a nomination of any candidate for election as a Director at such meeting was not made in accordance with the applicable provisions of this Section 2.11, such nomination shall be void; provided, however, that nothing in this Section 2.11 shall be deemed to limit any voting rights upon the occurrence of dividend arrearages provided to holders of Preferred Stock pursuant to the Preferred Stock designation for any series of Preferred Stock. ARTICLE III COMMITTEES ---------- Section 3.1 Committees of the Board of Directors. The Board of Directors, ------------------------------------ by a vote of a majority of the whole Board, may from time to time designate committees of the Board, with such lawfully delegable powers and duties as it thereby confers, to serve at the pleasure of the Board and shall, for those committees and any others provided for herein, elect a director or directors to serve as the member or members, designating, if it desires, other directors as alternate members who may replace any absent or disqualified member at any meeting of the committee. Any committee so designated may exercise the power and authority of the Board of Directors to declare a dividend, to authorize the issuance of stock or to adopt a certificate of ownership and merger pursuant to Section 253 of the Delaware General Corporation Law if the resolution which designates the committee or a supplemental resolution of the Board of Directors shall so provide. In the absence or disqualification of any member of any committee and any alternate member in his place, the member or members of the committee present at the meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may by unanimous vote appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member. Section 3.2 Conduct of Business. Each committee may determine the ------------------- procedural rules for meeting and conducting its business and shall act in accordance therewith, except as 7 otherwise provided herein or required by law. Adequate provision shall be made for notice to members of all meetings; one-third of the authorized members shall constitute a quorum unless the committee shall consist of one or two members, in which event one member shall constitute a quorum; and all matters shall be determined by a majority vote of the members present. Action may be taken by any committee without a meeting if all members thereof consent thereto in writing, and the writing or writings are filed with the minutes of the proceedings of such committee. ARTICLE IV OFFICERS -------- Section 4.1 Generally. The officers of the Corporation shall consist of a --------- President, one or more Vice Presidents, a Secretary and a Treasurer. The Corporation may also have, at the discretion of the Board of Directors, a Chairman of the Board and such other officers as may from time to time be appointed by the Board of Directors. Officers shall be elected by the Board of Directors, which shall consider that subject at its first meeting after every annual meeting of stockholders. Each officer shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. The Chairman of the Board, if there shall be such an officer, and the President shall each be members of the Board of Directors. Any number of offices may he held by the same person. Section 4.2 Chairman of the Board. The Chairman of the Board, if there --------------------- shall be such an officer, shall, if present, preside at all meetings of the Board of Directors, and exercise and perform such other powers and duties as may be from time to time assigned to him by the Board of Directors or prescribed by these bylaws. Section 4.3 President. The President shall be the chief executive officer --------- of the Corporation. Subject to the provisions of these bylaws and to the direction of the Board of Directors, he or she shall have the responsibility for the general management and control of the business and affairs of the Corporation and shall perform all duties and have all powers which are commonly incident to the office of chief executive or which are delegated to him or her by the Board of Directors. He or she shall have power to sign all stock certificates, contracts and other instruments of the Corporation which are authorized and shall have general supervision and direction of all of the other officers, employees and agents of the Corporation. Section 4.4 Vice President. Each Vice President shall have such powers -------------- and duties as may be delegated to him or her by the Board of Directors. One Vice President shall be designated by the Board to perform the duties and exercise the powers of the President in the event of the President's absence or disability. Section 4.5 Treasurer/Chief Financial Officer. The Treasurer/Chief --------------------------------- Financial Officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital retained earnings, 8 and shares. The books of account shall at all reasonable times be open to inspection by any director. The Treasurer/Chief Financial Officer shall deposit all moneys and other valuables in the name and to the credit of the Corporation with such depositories as may be designated by the Board of Directors. He or she shall disburse the funds of the Corporation as may be ordered by the Board of Directors, shall render to the President, the Chief Executive Officer, or the directors, upon request, an account of all his or her transactions as Treasurer/Chief Financial Officer and of the financial condition of the corporation, and shall have other powers and perform such other duties as may be prescribed by the Board of Directors or the Bylaws. Section 4.6 Secretary. The Secretary shall issue all authorized notices --------- for, and shall keep, or cause to be kept, minutes of all meetings of the stockholders, the Board of Directors, and all committees of the Board of Directors. He or she shall have charge of the corporate books and shall perform such other duties as the Board of Directors may from time to time prescribe. Section 4.7 Delegation of Authority. The Board of Directors may from time ----------------------- to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof. Section 4.8 Removal. Any officer of the Corporation may be removed at any ------- time, with or without cause, by the Board of Directors. Section 4.9 Action With Respect to Securities of Other Corporations. ------------------------------------------------------- Unless otherwise directed by the Board of Directors, the President or any officer of the Corporation authorized by the President shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of stockholders of or with respect to any action of stockholders of any other corporation in which this Corporation may hold securities and otherwise to exercise any and all rights and powers which this Corporation may possess by reason of its ownership of securities in such other corporation. ARTICLE V STOCK ----- Section 5.1 Certificates of Stock. Each stockholder shall be entitled to --------------------- a certificate signed by, or in the name of the Corporation by, the President or a Vice President, and by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, certifying the number of shares owned by him or her. Any of or all the signatures on the certificate may be facsimile. Section 5.2 Transfers of Stock. Transfers of stock shall be made only ------------------ upon the transfer books of the Corporation kept at an office of the Corporation or by transfer agents designated to transfer shares of the stock of the Corporation. Except where a certificate is issued in accordance with Section 4 of Article V of these bylaws, an outstanding certificate for the number of shares involved shall be surrendered for cancellation before a new certificate is issued therefor. 9 Section 5.3 Record Date. The Board of Directors may fix a record date, ----------- which shall not be more than sixty (60) nor fewer than ten (10) days before the date of any meeting of stockholders, nor more than sixty (60) days prior to the time for the other action hereinafter described, as of which there shall be determined the stockholders who are entitled: to notice of or to vote at any meeting of stockholders or any adjournment thereof; to receive payment of any dividend or other distribution or allotment of any rights; or to exercise any rights with respect to any change, conversion or exchange of stock or with respect to any other lawful action. Section 5.4 Lost, Stolen or Destroyed Certificates. In the event of the -------------------------------------- loss, theft or destruction of any certificate of stock, another may be issued in its place pursuant to such regulations as the Board of Directors may establish concerning proof of such loss, theft or destruction and concerning the giving of a satisfactory bond or bonds of indemnity. Section 5.5 Regulations. The issue, transfer, conversion and registration ----------- of certificates of stock shall be governed by such other regulations as the Board of Directors may establish. ARTICLE VI NOTICES ------- Section 6.1 Notices. Except as otherwise specifically provided herein or ------- required by law, all notices required to be given to any stockholder, director, officer, employee or agent shall be in writing and may in every instance be effectively given by hand delivery to the recipient thereof, by depositing such notice in the mails, postage paid, or by sending such notice by prepaid telegram, mailgram, telecopy or commercial courier service. Any such notice shall be addressed to such stockholder, director, officer, employee or agent at his or her last known address as the same appears on the books of the Corporation. The time when such notice shall be deemed to be given shall be the time such notice is received by such stockholder, director, officer, employee or agent, or by any person accepting such notice on behalf of such person, if hand delivered, or the time such notice is dispatched, if delivered through the mails or be telegram or mailgram. Section 6.2 Waivers. A written waiver of any notice, signed by a ------- stockholder, director, officer, employee or agent, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such stockholder, director, officer, employee or agent. Neither the business nor the purpose of any meeting need be specified in such a waiver. ARTICLE VII MISCELLANEOUS ------------- Section 7.1 Facsimile Signatures. In addition to the provisions for use -------------------- of facsimile signatures elsewhere specifically authorized in these bylaws, facsimile signatures of any officer 10 or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof. Section 7.2 Corporate Seal. The Board of Directors may provide a suitable -------------- seal, containing the name of the Corporation, which seal shall be in the charge of the Secretary. If and when so directed by the Board of Directors or a committee thereof, duplicates of the seal may be kept and used by the Treasurer or by an Assistant Secretary or Assistant Treasurer. Section 7.3 Reliance Upon Books, Reports and Records. Each director, each ---------------------------------------- member of any committee designated by the Board of Directors, and each officer of the Corporation shall, in the performance of his duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation, including reports made to the Corporation by any of its officers, by an independent certified public accountant, or by an appraiser selected with reasonable care. Section 7.4 Fiscal Year. The fiscal year of the Corporation shall be as ----------- fixed by the Board of Directors. Section 7.5 Time Periods. In applying any provision of these bylaws which ------------ require that an act be done or not done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded, and the day of the event shall be included. ARTICLE VIII INDEMNIFICATION OF DIRECTORS AND OFFICERS ----------------------------------------- Section 8.1 Right to Indemnification. Each person who was or is made a ------------------------ party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative ("proceeding"), by reason of the fact that he or she or a person of whom he or she is the legal representative, is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director, officer or employee of another corporation, or of a Partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer or employee or in any other capacity while serving as a director, officer or employee, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by Delaware Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said Law permitted the Corporation to provide prior to such amendment) against all expenses, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties, amounts paid or to be paid in settlement and amounts expended in seeking indemnification granted to such person under applicable law, this bylaw or any agreement with the Corporation) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer or employee and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, -------- ------- that, except as 11 provided in Section 8.2 of this Article VIII, the Corporation shall indemnify any such person seeking indemnity in connection with an action, suit or proceeding (or part thereof) initiated by such person only if (a) such indemnification is expressly required to be made by law, (b) the action, suit or proceeding (or part thereof) was authorized by the Board of Directors of the Corporation, (c) such indemnification is provided by the Corporation, in its sole discretion, pursuant to the powers vested in the Corporation under the Delaware General Corporation Law, or (d) the action, suit or proceeding (or part thereof) is brought to establish or enforce a right to indemnification under an indemnity agreement or any other statute or law or otherwise as required under Section 145 of the Delaware General Corporation Law. Such right shall be a contract right and shall include the right to be paid by the Corporation expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, unless the Delaware General Corporation -------- ------- Law then so prohibits, the payment of such expenses incurred by a director or officer of the Corporation in his or her capacity as a director or officer (and not in any other capacity in which service was or is tendered by such person while a director or officer, including, without limitation. service to an employee benefit plan) in advance of the final disposition of such proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it should be determined ultimately that such director or officer is not entitled to be indemnified under this Section or otherwise. Section 8.2 Right of Claimant to Bring Suit. If a claim under Section 1 ------------------------------ of this Article VIII is not paid in full by the Corporation within ninety (90) days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if such suit is not frivolous or brought in bad faith, the claimant shall be entitled to be paid also the expense of prosecuting such claim. The burden of proving such claim shall be on the claimant. It shall be a defense to any such action (other then an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any, has been tendered to this Corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct. Section 8.3 Non-Exclusivity of Rights. The rights conferred on any person ------------------------- in Sections 1 and 2 shall not be exclusive of any other right which such persons may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, bylaw, agreement, vote of stockholders or disinterested directors or otherwise. Section 8.4 Indemnification Contracts. The Board of Directors is ------------------------- authorized to enter into a contract with any director, officer, employee or agent of the Corporation, or any person 12 serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including employee benefit plans, providing for indemnification rights equivalent to or, if the Board of Directors so determinates, greater than, those provided for in this Article VIII. Section 8.5 Insurance. The Corporation shall maintain insurance to the --------- extent reasonably available, at its expense, to protect itself and any such director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. Section 8.6 Effect of Amendment. Any amendment, repeal or modification of ------------------- any provision of this Article VIII by the stockholders and the directors of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of such amendment, repeal or modification. ARTICLE IX AMENDMENTS ---------- Section 9.1 Amendment of Bylaws. The Board of Directors is expressly ------------------- empowered to adopt, amend or repeal Bylaws of the Corporation. Any adoption, amendment or repeal of Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any resolution providing for adoption, amendment or repeal is presented to the Board). The stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of By-Laws of the Corporation by the stockholders shall require, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by this Certificate of Incorporation, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. 13 CERTIFICATE OF SECRETARY ------------------------ I hereby certify that I am the duly elected and acting Secretary of Delaware Agile Software Corporation Delaware, a Delaware corporation (the "Corporation"), and that the foregoing Bylaws, comprising thirteen (13) pages, constitute the Bylaws of the Corporation as duly adopted on _____, 1999, by the unanimous written consent of the Board of Directors of the Corporation. IN WITNESS WHEREOF, I have hereunto subscribed my name on ________________, 199____. _________________________________________ Thomas P. Shanahan EX-10.1 5 AMENDED AND RESTATED 1995 STOCK OPTION PLAN EXHIBIT 10.1 AGILE SOFTWARE CORPORATION 1995 STOCK OPTION PLAN (As Amended through July , 1999) ARTICLE ONE GENERAL PROVISIONS ------------------ I. PURPOSE OF THE PLAN This 1995 Stock Option Plan is intended to promote the interests of Agile Software Corporation, a Delaware corporation, by providing eligible persons with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an incentive for them to remain in the service of the Corporation. Capitalized terms herein shall have the meanings assigned to such terms in the attached Appendix. II. ADMINISTRATION OF THE PLAN A. The Plan shall be administered by the Board. However, any or all administrative functions otherwise exercisable by the Board may be delegated to a Committee. Members of the Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the Board at any time. The Board may also at any time terminate the functions of the Committee and reassume all powers and authority previously delegated to the Committee. B. Any officer of the Corporation shall have the authority to act on behalf of the Corporation with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated to the Corporation herein, provided the officer has apparent authority with respect to such matter, right, obligation, determination or election. C. In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Plan Administrator shall have the full and final power and authority, in its discretion to: 1. establish such rules and regulations as it may deem appropriate for proper administration of the Plan and to make such determinations under, and issue such interpretations of, the Plan and any outstanding option or stock issuance as it may deem necessary or advisable; 2. determine which eligible persons are to receive option grants and stock issuances under the Plan, the time or times when such option grants or stock issuances are to be made, the number of shares to be covered by each such grant, the status of the granted option as either an Incentive Option or a Non- Statutory Option, the time or times at which each option is to become exercisable, the vesting schedule (if any) applicable to each option or stock issuance, the maximum term for which the option is to remain outstanding; 1 3. amend, modify, extend, cancel, or renew, any option or stock issuance or to waive any restrictions or conditions applicable to any option or shares acquired pursuant to a stock issuance or upon the exercise of an option; 4. amend the exercisability of any option or the vesting of any shares acquired upon the exercise of any option or pursuant to any stock issuance, including with respect to the period following an Optionee's termination of Service with the Corporation; 5. delegate to any proper officer of the Corporation the authority to grant one or more options or stock issuances, without further approval of the Board, to any person eligible pursuant to Section II below, other than a person who, at the time of such grant, is an Insider; provided, however, that (i) such options and stock issuances shall not be granted to any one person within any fiscal year of the Corporation for more than 250,000 shares in the aggregate, (ii) the exercise price per share of each option shall be equal to the Fair Market Value per share of the Common Stock on the effective date of grant (or, if the Common Stock has not traded on such date, on the last day preceding the effective date of grant on which the Common Stock was traded), and (iii) each option or stock issuance shall be subject to the terms and conditions of the appropriate standard form of option agreement or Issuance Agreement approved by the Board and shall conform to the provisions of the Plan and such other guidelines as shall be established from time to time by the Board; and 6. correct any defect, supply any omission or reconcile any inconsistency in the Plan, any option agreement, or any stock issuance agreement and to make all other determinations and take such other actions with respect to the Plan or any option or stock issuance as the Board may deem advisable to the extent not inconsistent with the provisions of the Plan or applicable law. Decisions of the Plan Administrator shall be final and binding on all parties who have an interest in the Plan or any option, stock issuance, or shares issued thereunder. D. With respect to participation by Insiders in the Plan, at any time that any class of equity security of the Corporation is registered pursuant to Section 12 of the 1934 Act, the Plan shall be administered in compliance with the requirements, if any, of Rule 16b-3 of the 1934 Act. E. If the Corporation (or participating Parent or Subsidiary corporation) is a "publicly held corporation" within the meaning of Section 162(m) of the Code, the Board may establish a Committee of "outside directors" within the meaning of Section 162(m) of the Code to approve the grant of any option or stock issuance which might reasonably be anticipated to result in the payment of employee remuneration that would otherwise exceed the limit on employee remuneration deductible for income tax purposes pursuant to Section 162(m). F. In addition to such other rights of indemnification as they may have as members of the Board or officers or employees of the Corporation (or participating Parent or Subsidiary corporation), members of the Board and any officers or employees of the Corporation (or participating Parent or Subsidiary corporation) to whom authority to act for the Board or the Corporation is delegated shall be indemnified by the Corporation against all reasonable expenses, including attorneys' fees, actually and necessarily incurred in connection with the 2 defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Corporation) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Corporation, in writing, the opportunity at its own expense to handle and defend the same. III. ELIGIBILITY A. Employees, Consultants and non-employee Directors are eligible to receive option grants pursuant to the option Grant Program and/or stock issuances under the Stock Issuance Program. B. For purposes of the foregoing sentence, Employees, Consultants, and non- employee Directors shall include prospective Employees, prospective Consultants and prospective non-employee Directors to whom options and/or stock issuances are granted in connection with written offers of employment or other service relationship with the Corporation or any participating Parent or Subsidiary corporation. Eligible persons may be granted more than one (1) option and/or stock issuance. IV. STOCK SUBJECT TO THE PLAN A. The maximum number of shares of Common Stock which may be issued over the term of the Plan shall not exceed 5,375,000 shares, cumulatively increased on May 1, 2000 and each May 1 thereafter until and including May 1, 2005 by an amount equal to the lesser of (a) five hundred thousand (500,000) shares per year or (b) five percent (5%) of the number of shares of Common Stock issued and outstanding on the immediately preceding April 30, or (c) a lesser amount of shares determined by the Board, and shall consist of authorized but unissued or reacquired shares of Common Stock, or any combination thereof. If an outstanding option for any reason expires or is terminated or canceled or if shares of stock are acquired upon the exercise of an option or pursuant to a stock issuance are subject to repurchase by the Corporation and are repurchased by the Corporation, the shares of stock allocable to the unexercised portion of such option or such repurchased shares of stock shall again be available for issuance under the Plan. B. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation's receipt of consideration, appropriate adjustments shall be made to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the number and/or class of securities and the exercise price per share in effect under each outstanding option, and (iii) the number and/or class of securities acquired pursuant to each stock issuance that are subject to vesting and/or a repurchase right of the Corporation in order to prevent the dilution or enlargement of benefits thereunder. The 3 adjustments determined by the Plan Administrator shall be final, binding and conclusive. In no event shall any such adjustments be made in connection with the conversion of one or more outstanding shares of the Corporation's preferred stock into shares of Common Stock. ARTICLE TWO OPTION GRANT PROGRAM -------------------- I. OPTION TERMS Each option shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided, however, that each such document -------- shall comply with the terms specified below. Each document evidencing an Incentive Option shall, in addition, comply with the terms of the Plan applicable to Incentive Options. A. Exercise Price. -------------- 1. The exercise price per share shall not be less than eighty-five percent (85%) of the Fair Market Value per share of Common Stock on the option grant date. 2. The exercise price shall become immediately due upon exercise of the option and shall, subject to the documents evidencing the option, be made: a. in cash, cash equivalent, or check made payable to the Corporation; b. in shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation's earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date; c. to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable instructions (a) to a Corporation- designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (b) to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale; d. provided that the person to whom the Option is granted is an Employee and in the Corporation's sole discretion at the time the Option is exercised, by delivery of a promissory note in a form approved by the Corporation for the aggregate exercise price, provided that, if the Corporation is incorporated in the State of Delaware, the portion of the aggregate exercise price not less than the par value of the shares being acquired shall be paid in cash; 4 e. by such other consideration as may be approved by the Board from time to time to the extent permitted by applicable law; or f. by any combination thereof. The Board may at any time or from time to time, grant options which do not permit all of the foregoing forms of consideration to be used in payment of the exercise price or which otherwise restrict one or more forms of consideration. 3. No promissory note shall be permitted if the exercise of an option using a promissory note would be a violation of any law. Any permitted promissory note shall be on such terms as the Board shall determine at the time the option is granted. The Board shall have the authority to permit or require the Optionee to secure any promissory note used to exercise an option with the shares of stock acquired upon the exercise of the option or with other collateral acceptable to the Corporation. Unless otherwise provided by the Board, if the Corporation at any time is subject to the regulations promulgated by the Board of Governors of the Federal Reserve System or any other governmental entity affecting the extension of credit in connection with the Corporation's securities, any promissory note shall comply with such applicable regulations, and the Optionee shall pay the unpaid principal and accrued interest, if any, to the extent nece ssary to comply with such applicable regulations. B. Exercise and Term of Options. Each option shall be exercisable at such ---------------------------- time or times, during such period and for such number of shares as shall be determined by the Plan Administrator and set forth in the documents evidencing the option grant; provided, however, that no option granted to a prospective Employee, prospective Consultant, prospective non-employee Director may become exercisable prior to the date on which such person commences services with the Corporation (or any Parent or Subsidiary corporation). C. Effect of Termination of Service. The following provisions shall -------------------------------- govern the exercise of any options held by the Optionee at the time of cessation of Service or death: 1. Should the Optionee cease to remain in Service for any reason other than Disability, death or Misconduct, then the Optionee shall have a period of three (3) months following the date of such cessation of Service during which to exercise each outstanding option held by such Optionee. 2. Should such Service terminate by reason of Disability, then the Optionee shall have a period of twelve (12) months following the date of such cessation of Service during which to exercise each outstanding option held by such Optionee. 3. Should the Optionee die while holding one or more outstanding options, then the personal representative of the Optionee's estate or the person or persons to whom the option is transferred pursuant to the Optionee's will or in accordance with the laws of descent and distribution shall have a period of twelve (12) months following the date of the Optionee's death during which to exercise each such option. 4. Notwithstanding the foregoing, if the exercise of an Option within the applicable time periods set forth above is prevented by the provisions of Section V of Article 5 Four below, the option shall remain exercisable until three (3) months after the date the Optionee is notified by the Corporation that the option is exercisable, but in any event no later than the specified expiration of the option term. 5. Notwithstanding the foregoing, if a sale within the applicable time periods set forth above of shares acquired upon the exercise of the option would subject the Optionee to suit under Section 16(b) of the 1934 Act, the option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a sale of such shares by the Optionee would no longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day after the Optionee's termination of Service, or (iii) the specified expiration of the option term. 6. Under no circumstances, however, shall any option be exercisable after the specified expiration of the option term. 7. During the applicable post-Service exercise period, the option may not be exercised in the aggregate for more than the number of vested shares for which the option is exercisable on the date of the Optionee's cessation of Service. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any vested shares for which the option has not been exercised. However, the option shall, immediately upon the Optionee's cessation of Service, terminate and cease to be outstanding to the extent it is not exercisable for vested shares on the date of such cessation of Service. 8. Should Optionee's Service be terminated for Misconduct, then all outstanding options held by the Optionee shall terminate immediately and cease to remain outstanding. D. Stockholder Rights. The holder of an option shall have no stockholder ------------------ rights with respect to the shares subject to the option until such person shall have exercised the option, paid the exercise price and become a holder of record of the purchased shares. E. Transferability of Options. During the lifetime of the Optionee, an -------------------------- option shall be exercisable only by the Optionee or the Optionee's guardian or legal representative. No option shall be assignable or transferable by the Optionee, except by will or by the laws of descent and distribution. Notwithstanding the foregoing, to the extent permitted by the Board, in its discretion, and set forth in the option agreement evidencing such option, a Non- Statutory Option shall be assignable or transferable subject to the applicable limitations, if any, described in Section 260.140.41 of Title 10 of the California Code of Regulations, Rule 701 under the Securities Act, and the General Instructions to Form S-8 Registration Statement under the Securities Act. F. Withholding. The Corporation's obligation to deliver shares of Common ----------- Stock upon the exercise of any options granted under the Plan shall be subject to the satisfaction of all applicable federal, state, local, and foreign income and employment tax withholding requirements. 6 II. INCENTIVE OPTIONS The terms specified below shall be applicable to all Incentive Options. Except as modified by the provisions of this Section II, all the provisions of the Plan shall be applicable to Incentive Options. Options which are specifically designated as Non-Statutory Options shall not be subject to the terms specified in this Section II. A. Eligibility. Incentive Options may only be granted to Employees. Any ----------- person who is not an Employee on the effective date of the grant of an option to such person may be granted only a Non-statutory Option. An Incentive Option granted to a prospective Employee upon the condition that such person become an Employee shall be deemed granted effective on the date such person commences service as an Employee with the Corporation or participating Parent or Subsidiary corporation, with an exercise price determined as of such date. B. Exercise Price. The exercise price per share shall be fixed by the -------------- Plan Administrator in accordance with the following provisions: 1. The exercise price per share shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date. 2. If the person to whom the option is granted is a Ten Percent Stockholder, then the exercise price per share shall not be less than one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the option grant date. C. Dollar Limitation. The aggregate Fair Market Value of the shares of ----------------- Common Stock (determined as of the respective date or dates of grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or any Parent or Subsidiary corporation) may for the first time become exercisable as Incentive Options during any one (1) calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more such options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted. D. Term of Incentive Options. No Incentive Option shall be exercisable ------------------------- after the expiration of ten (10) years after the effective date of grant of such Incentive Option and no Incentive Option granted to a Ten Percent Stockholder shall be exercisable after the expiration of five (5) years after the effective date of grant of such option. ARTICLE THREE STOCK ISSUANCE PROGRAM ---------------------- I. TERMS AND CONDITIONS OF STOCK ISSUANCES Shares of Common Stock shall be issued under the Stock Issuance Program through direct and immediate purchases without any intervening stock options grants. The issued shares 7 shall be evidenced by a Stock Issuance Agreement ("Issuance Agreement") that complies with the terms and conditions of this Article Three. A. Consideration. ------------- Shares of Common Stock shall be issued under the Plan for one or more of the following items of consideration, which the Plan Administrator may deem appropriate in each individual instance: 1. cash or cash equivalents (such as a personal check or bank draft) paid to the Corporation; 2. Common Stock of the Corporation valued at Fair Market Value on the date of issuance; 3. a promissory note payable to the Corporation's order in one or more installments, which may be subject to cancellation in whole or in part upon terms and conditions established by the Plan Administrator; 4. past services rendered to the Corporation or any parent or subsidiary corporation; or 5. any combination of the above approved by the Plan Administrator. Shares may, in the absolute discretion of the Plan Administrator, be issued for consideration with a value less than one-hundred percent (100%) of the Fair Market Value of such shares, but in no event less than eighty-five percent (85%) of such Fair Market Value. B. Vesting Provisions. ------------------ 1. Shares of Common Stock issued under this Article Three may, in the absolute discretion of the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more installments over the Participant's period of Service. The effect which death, disability or other event designated by the Plan Administrator is to have upon the vesting schedule shall be determined by the Plan Administrator and incorporated into the Issuance Agreement executed by the Corporation and the Participant at the time such unvested shares are issued. 2. The Participant shall have full stockholder rights with respect to any shares of Common Stock issued to him or her under this Article Three, whether or not his or her interest in those shares is vested. Accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares. Any new, additional or different shares of stock or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to his or her unvested shares by reason of any stock dividend, stock split, reclassification of Common Stock or other similar change in the Corporation's capital structure or by reason of any Corporate Transaction shall be issued, subject to (i) the same vesting requirements applicable to his or her unvested shares and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate. 8 3. Should the Participant cease to remain in Service while holding one or more unvested shares of Common Stock under this Article Three, then those shares shall be immediately surrendered to the Corporation for cancellation, and the Participant shall have no further stockholder rights with respect to those shares. The Corporation shall repay to the Participant the cash consideration paid for the surrendered shares and shall cancel the principal balance of any outstanding purchase-money note of the Participant to the extent attributable to such surrendered shares. The surrendered shares may, at the Plan Administrator's discretion, be retained by the Corporation as treasury shares or may be retired to authorized but unissued share status. 4. The Plan Administrator may in its discretion elect to waive the surrender and cancellation of one or more unvested shares of Common Stock (or other assets attributable thereto) which should otherwise occur upon the non- completion of the vesting schedule applicable to such shares. Such waiver shall result in the immediate vesting of the Participant's interest in the shares of Common Stock as to which the waiver applies. Such wavier may be effected at any time, whether before or after the Participant's cessation of Service. II. TRANSFER RESTRICTIONS/SHARE ESCROW A. Unvested shares under this Article Three may, in the Plan Administrator's discretion, be held in escrow by the Corporation until the Participant's interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing such unvested shares. To the extent an escrow arrangement is utilized, the unvested shares and any securities or other assets issued with respect to such shares (other than regular cash dividends) shall be delivered in escrow to the Corporation to be held until the Participant's interest in such shares (or other securities or assets) vests. Alternatively, if the unvested shares are issued directly to the Participant, the restrictive legend on the certificates for such shares shall read substantially as follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND ARE ACCORDINGLY SUBJECT TO (I) CERTAIN TRANSFER RESTRICTIONS AND TO (II) CANCELLATION OR OTHER REPURCHASE IN THE EVENT THE REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN INTEREST) CEASES TO REMAIN IN THE CORPORATION'S SERVICE. SUCH TRANSFER RESTRICTIONS AND THE TERMS AND CONDITIONS OF SUCH CANCELLATION OR REPURCHASE ARE SET FORTH IN A STOCK ISSUANCE AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN INTEREST) DATED _______________, 19__, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE CORPORATION." 9 B. The Participant shall have no right to transfer any unvested shares of Common Stock issued to him or her under this Article Three. For purposes of this restriction, the term ("transfer") shall include (without limitation) any sale, pledge, assignment, encumbrance, gift, or other disposition of such shares, whether voluntary or involuntary. Upon any such attempted transfer, the unvested shares shall immediately be cancelled, and neither the Participant nor the proposed transferee shall have any rights with respect to those shares. However, the Participant shall have the right to make a gift of unvested shares acquired under the Plan to his or her spouse or issue, including adopted children, or to a trust established for such spouse or issue, provided the donee of such shares delivers to the Corporation a written agreement to be bound by all the provisions of the Plan and the Issuance Agreement applicable to the gifted shares. ARTICLE FOUR MISCELLANEOUS ------------- I. CORPORATE TRANSACTIONS A. The shares subject to each option outstanding under the Plan at the time of a Corporate Transaction shall automatically vest in full so that each such option shall, immediately prior to the effective date of the Corporate Transaction, become fully exercisable for all of the shares of Common Stock at the time subject to that option and may be exercised for any or all of those shares as fully-vested shares of Common Stock. However, the shares subject to an outstanding option shall not vest on such an accelerated basis if and to the extent: (i) such option is assumed by the successor corporation (or parent thereof) in the Corporate Transaction and the Corporation's repurchase rights with respect to the unvested option shares are concurrently assigned to such successor corporation (or parent thereof) or (ii) such option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing on the unvested option shares at the time of the Corporate Transaction and provides for subsequent payout in accordance with the same vesting schedule applicable to those unvested option shares or (iii) the acceleration of such option is subject to other limitations imposed by the Plan Administrator at the time of the option grant. B. All outstanding repurchase rights shall also terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, except to the extent: (i) those repurchase rights are assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued. C. The Corporation shall use its best efforts to provide at least twenty (20) days prior written notice of the occurrence of any Corporate Transaction in which the options or repurchase rights under the Plan are not to be assumed by or assigned to the successor corporation and such options or repurchase rights vest or terminate on an accelerated basis. D. Immediately following the consummation of the Corporate Transaction, all outstanding options shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof). 10 E. Each option which is assumed in connection with a Corporate Transaction shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Corporate Transaction, had the option been exercised immediately prior to such Corporate Transaction. Appropriate adjustments shall also be made to (i) the number and class of securities available for issuance under the Plan following the consummation of such Corporate Transaction and (ii) the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same. F. The Plan Administrator shall have the discretion, exercisable either at the time the option or stock issuance is granted or at any time while the option remains outstanding or shares acquired pursuant to a stock issuance are unvested, to provide for the automatic acceleration (in whole or in part) of one or more outstanding options and the immediate termination of the Corporation's repurchase rights with respect to the shares subject to those options or any stock issuance upon the occurrence of a Corporate Transaction, whether or not those options or repurchase rights are to be assumed or assigned in the Corporate Transaction. G. The Plan Administrator shall also have full power and authority, exercisable either at the time the option or stock issuance is granted or at any time while the option remains outstanding or shares acquired pursuant to a stock issuance are unvested, to structure such option or stock issuance so that the shares subject to that option or stock issuance will automatically vest on an accelerated basis should the Optionee's or Participant's Service terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Corporate Transaction in which the option or is assumed and the repurchase rights applicable to the unvested option shares or stock issuance shares do not otherwise terminate. Any option so accelerated shall remain exercisable for the fully-vested option shares until the earlier of (i) the expiration of the option term or (ii) the expiration of the one (1)-year period measured from the effective date of the Involuntary Termination. In addition, the Plan Administrator may provide that one or more of the Corporation's outstanding repurchase rights with respect to shares held by the Optionee or Participant at the time of such Involuntary Termination shall immediately terminate on an accelerated basis, and the shares subject to those terminated rights shall accordingly vest at that time. H. The portion of any Incentive Option accelerated in connection with a Corporate Transaction shall remain exercisable as an Incentive Option only to the extent the applicable One Hundred Thousand Dollar limitation is not exceeded. To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Non-Statutory Option under federal tax laws. I. The grant of options or stock issuances under the Plan shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 11 II. EFFECTIVE DATE AND TERM OF THE PLAN A. The Plan became effective when adopted by the Board on May 8, 1995. The initial share reserve established for the Plan was 750,000 shares. On May 26, 1995 and January 9, 1996, the Board approved 250,000 and 575,000-share increases, respectively, in the total number of shares reserved for issuance over the term of the Plan. The Plan, together with the 250,000 and 575,000-share increases, was approved by the Corporation's stockholders on January 9, 1996. B. On July 9, 1997, the Board amended and restated the Plan (the "July 1997 Restatement") in order to effect the following changes: (i) increase the number of shares reserved for issuance by an additional 500,000 shares to 2,075,000 shares of Common Stock, (ii) allow unvested shares issued under the Plan and subsequently repurchased by the Corporation at the option exercise price paid per share to be reissued under the Plan and (iii) broaden the option acceleration provisions of the Plan applicable in the event there is a change in ownership or control of the Corporation. On November 19, 1997, the Board again amended and restated the Plan (the "November 1997 Restatement") in order to increase the number of shares reserved for issuance by an additional 300,000 shares to 2,375,000 shares of Common Stock. The stockholders approved the July and November 1997 Restatements in July 1997 and November 1997, respectively. C. On October 7, 1998, the Board again amended and restated the Plan (the "October 1998 Restatement") in order to increase the number of shares reserved for issuance by an additional 500,000 shares to 2,875,000 shares of Common Stock. The stockholders approved the October 1998 Restatement on October 7, 1998. D. On June 22, 1999, the Board again amended and restated the Plan (the "June 1999 Restatement") in order to: (i) increase the number of shares reserved for issuance by an additional 2,500,000 shares to 5,375,000 shares of Common Stock and to provide for automatic annual increases to the share reserve beginning on May 1, 2000 and ending on May 1, 2005, and (ii) to make certain other changes to the Plan in connection with the Corporation's initial public offering of its Common Stock. The stockholders approved the June 1999 Restatement on __________________, 1999. E. The Plan shall terminate upon the earliest of: (i) the date on which all shares available for issuance under the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing options or stock issuances granted under the Plan have lapsed, or (ii) its termination by the Board; provided, however, that, all Incentive Options shall be granted, if at all, on or before May 7, 2005. III. AMENDMENT OF THE PLAN A. The Board shall have complete and exclusive power and authority to amend or modify the Plan in any or all respects. However, subject to changes in applicable law, regulations or rules that would permit otherwise, without the approval of the Corporation's stockholders, there shall be (i) no increase in the maximum aggregate number of shares of Common Stock that may be issued under the Plan (except by operation of the provisions of 12 Section IV(C) of Article One), (ii) no change in the class of persons eligible to receive Incentive Options, and (iii) no other amendment of the Plan that would require approval of the Company's stockholders under any applicable law, regulation or rule. No amendment or modification of the Plan shall affect any then outstanding option or unvested shares acquired pursuant to a stock issuance unless expressly provided by the Board. In any event, no amendment or modification of the Plan may adversely affect any then outstanding option or unvested shares acquired pursuant to a stock issuance without the consent of the Optionee or Participant, unless such amendment or modification is required to enable an option designated as an Incentive Option to qualify as an Incentive Option or is necessary to comply with any applicable law, regulation or rule. IV. USE OF PROCEEDS Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the Plan shall be used for general corporate purposes. V. REGULATORY APPROVALS The implementation of the Plan, the granting of any option hereunder and the issuance of any shares of Common Stock upon the exercise of any option shall be subject to the Corporation's procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the options granted under it and the shares of Common Stock issued pursuant to it. VI. NO EMPLOYMENT OR SERVICE RIGHTS Nothing in the Plan shall confer upon the Optionee or Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary corporation employing or retaining the Optionee or Participant) or of the Optionee or Participant, which rights are hereby expressly reserved by each, to terminate the Optionee's or Participant's Service at any time for any reason, with or without cause. VII. FINANCIAL REPORTS Each Optionee or Participant shall be given access to information concerning the Corporation equivalent to that information generally made available to the Corporation's common stockholders. 13 APPENDIX -------- The following definitions shall be in effect under the Plan: A. Board shall mean the Corporation's Board of Directors. ----- B. Code shall mean the Internal Revenue Code of 1986, as amended. ---- C. Committee shall mean a committee of the Board duly appointed to --------- administer the Plan and having such powers as shall be specified by the Board. Unless the powers of the Committee have been specifically limited, the Committee shall have all of the powers of the Board granted herein, including, without limitation, the power to amend or terminate the Plan at any time, subject to the terms of the Plan and any applicable limitations imposed by law. D. Common Stock shall mean the Corporation's common stock. ------------ E. Consultant shall mean a person engaged to provide consulting or ---------- advisory services (other than as an Employee or a Director) to the Corporation or any participating Parent or Subsidiary corporation, provided that the identity of such person, the nature of such services or the entity to which such services are provided would not preclude the Corporation from offering or selling securities to such person pursuant to the Plan in reliance on either the exemption from registration provided by Rule 701 under the Securities Act or, if the Corporation is required to file reports pursuant to Section 13 or 15(d) of the Exchange Act, registration on a Form S-8 Registration Statement under the Securities Act. F. Corporate Transaction shall mean an Ownership Change Event or a series --------------------- of related Ownership Change Events (collectively, a "Transaction") wherein the stockholders of the Corporation immediately before the Transaction do not retain immediately after the Transaction, in substantially the same proportions as their ownership of shares of the Corporation's voting stock immediately before the Transaction, direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding voting stock of the Corporation or the corporation or corporations to which the assets of the Corporation were transferred (the "Transferee Corporation(s)"), as the case may be. For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting stock of one or more corporations which, as a result of the Transaction, own the Corporation or the Transferee Corporation(s), as the case may be, either directly or through one or more subsidiary corporations. The Board shall have the right to determine whether multiple sales or exchanges of the voting stock of the Corporation or multiple Ownership Change Events are related, and its determination shall be final, binding and conclusive. G. Corporation shall mean Agile Software Corporation, a Delaware ----------- corporation, and any successor corporation to all or substantially all of the assets or voting stock of Agile Software Corporation which shall by appropriate action adopt the Plan. H. Director shall means a member of the Board or of the board of -------- directors of any other Parent or Subsidiary corporation. A-1 I. Disability shall mean the permanent and total disability on the ---------- Optionee or Participant within the meaning of Section 22(e)(3) of the Code. J. Employee shall mean an individual who is in the employ of the -------- Corporation (or any Parent or Subsidiary corporation), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance. K. Exercise Date shall mean the date on which the Corporation shall have ------------- received written notice of the option exercise. L. Fair Market Value per share of Common Stock on any relevant date shall ----------------- be determined in accordance with the following provisions: (i) If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market or any successor system. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. (ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. (iii) If the Common Stock is at the time neither listed on any Stock Exchange nor traded on the Nasdaq National Market, then the Fair Market Value shall be determined by the Plan Administrator after taking into account such factors as the Plan Administrator shall deem appropriate. M. Incentive Option shall mean an option which satisfies the requirements ---------------- of Code Section 422. N. Insider shall mean an officer or Director of the Corporation or any ------- other person whose transactions in Common Stock are subject to Section 16 of the 1934 Act. O. Involuntary Termination shall mean the termination of the Service of ----------------------- any individual which occurs by reason of: (i) such individual's involuntary dismissal or discharge by the Corporation for reasons other than Misconduct, or (ii) such individual's voluntary resignation following (A) a change in his or her position with the Corporation which materially reduces his or her duties and responsibilities or the level of management to which he or she reports, (B) a reduction in his or A-2 her level of compensation (including base salary, fringe benefits and target bonuses under any corporate-performance based bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of such individual's place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected without the individual's consent. P. Misconduct shall mean the commission of any act of fraud, embezzlement ---------- or dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary corporation), or any other intentional misconduct by such person adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary corporation) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation (or any Parent or Subsidiary corporation) may consider as grounds for the dismissal or discharge of any Optionee, Participant or other person in the Service of the Corporation (or any Parent or Subsidiary corporation). Q. 1934 Act shall mean the Securities Exchange Act of 1934, as amended. -------- R. Non-Statutory Option shall mean an option not intended to satisfy the -------------------- requirements of Code Section 422. S. Ownership Change Event shall be deemed to have occurred if any of the ---------------------- following occurs with respect to the Corporation: (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Corporation of more than fifty percent (50%) of the voting stock of the Corporation; (ii) a merger or consolidation in which the Corporation is a party; (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Corporation; or (iv) a liquidation or dissolution of the Corporation. T. Optionee shall mean any person to whom an option is granted pursuant -------- to the Option Grant Program under the Plan. U. Parent shall mean any corporation (other than the Corporation) in an ------ unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. V. Participant shall mean any person to whom a stock issuance or stock ----------- bonus is granted pursuant to the Stock Issuance Program under the Plan. W. Plan shall mean the Corporation's 1995 Stock Option Plan, as set forth ---- in this document. X. Plan Administrator shall mean either the Board or the Committee, to ------------------ the extent the Committee is at the time responsible for the administration of the Plan. Y. Securities Act shall mean the Securities Act of 1933, as amended. -------------- A-3 Z. Service shall mean an Optionee's or Participant's employment or service with the Corporation or participating Parent or Subsidiary corporation, whether in the capacity of an Employee, a Director or a Consultant. Unless otherwise determined by the Board, an Optionee's or Participant's Service shall not be deemed to have terminated merely because of a change in the capacity in which the Optionee or Participant renders Service to the Corporation or participating Parent or Subsidiary corporation or a change in the Corporation or participating Parent or Subsidiary corporation for which the Optionee or Participant renders such Service, provided that there is no interruption or termination of the Optionee's or Participant's Service. Furthermore, an Optionee's or Participant's Service with the Corporation or participating Parent or Subsidiary corporation shall not be deemed to have terminated if the Optionee or Participant takes any military leave, sick leave, or other bona fide leave of absence approved by the Corporation; provided, however, that if any such leave exceeds ninety (90) days, on the one hundred eighty-first (181st) day following the commencement of such leave any Incentive Option held by the Optionee shall cease to be treated as an Incentive Option and instead shall be treated thereafter as a Non-Statutory Option unless the Optionee's right to return to Service with the Corporation or participating Parent or Subsidiary corporation is guaranteed by statute or contract. Notwithstanding the foregoing, unless otherwise designated by the Corporation or required by law, a leave of absence shall not be treated as Service for purposes of determining vesting under the Optionee's option agreement or Participant's stock issuance agreement. An Optionee's or Participant's Service shall be deemed to have terminated either upon an actual termination of Service or upon the corporation for which the Optionee or Participant performs Service ceasing to be a participating corporation. Subject to the foregoing, the Corporation, in its discretion, shall determine whether an Optionee's or Participant's Service has terminated and the effective date of such termination. AA. Stock Exchange shall mean either the American Stock Exchange or the ------------- New York Stock Exchange. BB. Subsidiary shall mean any corporation (other than the Corporation) in ---------- an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. CC. Ten Percent Stockholder shall mean the owner of stock (as determined ----------------------- under Code Section 424(d)) possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation (or any Parent or Subsidiary corporation). A-4 EX-10.2 6 1999 EMPLOYEE STOCK PURCHASE PLAN EXHIBIT 10.2 AGILE SOFTWARE CORPORATION 1999 EMPLOYEE STOCK PURCHASE PLAN Adopted by the Board on June 22, 1999 1. Establishment, Purpose and Term of Plan. --------------------------------------- 1.1 Establishment. This 1999 Employee Stock Purchase Plan (the "Plan") is hereby established effective as of the effective date of the initial registration by the Company of its Stock under Section 12 of the Securities Exchange Act of 1934, as amended (the "Effective Date"). 1.2 Purpose. The purpose of the Plan is to advance the interests of Company and its shareholders by providing an incentive to attract, retain and reward Eligible Employees of the Participating Company Group and by motivating such persons to contribute to the growth and profitability of the Participating Company Group. The Plan provides such Eligible Employees with an opportunity to acquire a proprietary interest in the Company through the purchase of Stock. The Company intends that the Plan qualify as an "employee stock purchase plan" under Section 423 of the Code. 1.3 Term of Plan. The Plan shall continue in effect until the earlier of its termination by the Board or the date on which all of the shares of Stock available for issuance under the Plan have been issued. 2. Definitions and Construction. ---------------------------- 2.1 Definitions. Any term not expressly defined in the Plan but defined for purposes of Section 423 of the Code shall have the same definition herein. Whenever used herein, the following terms shall have their respective meanings set forth below: (a) "Board" means the Board of Directors of the Company. If one or more Committees have been appointed by the Board to administer the Plan, "Board" also means such Committee(s) . (b) "Code" means the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder. (c) "Committee" means a committee of the Board duly appointed to administer the Plan and having such powers as shall be specified by the Board. Unless the powers of the Committee have been specifically limited, the Committee shall have all of the powers of the Board granted herein, including, without limitation, the power to amend or terminate the Plan at any time, subject to the terms of the Plan and any applicable limitations imposed by law. (d) "Company" means Agile Software Corporation, a California corporation, or any successor corporation thereto. 1 (e) "Compensation" means, with respect to any Offering Period, base wages or salary, commissions, overtime, bonuses, annual awards, other incentive payments, shift premiums, and all other compensation paid in cash during such Offering Period before deduction for any contributions to any plan maintained by a Participating Company and described in Section 401(k) or Section 125 of the Code. Compensation shall not include reimbursements of expenses, allowances, long-term disability, workers' compensation or any amount deemed received without the actual transfer of cash or any amounts directly or indirectly paid pursuant to the Plan or any other stock purchase or stock option plan, or any other compensation not included above. (f) "Eligible Employee" means an Employee who meets the requirements set forth in Section 5 for eligibility to participate in the Plan. (g) "Employee" means a person treated as an employee of a Participating Company for purposes of Section 423 of the Code. A Participant shall be deemed to have ceased to be an Employee either upon an actual termination of employment or upon the corporation employing the Participant ceasing to be a Participating Company. For purposes of the Plan, an individual shall not be deemed to have ceased to be an Employee while such individual is on any military leave, sick leave, or other bona fide leave of absence approved by the Company of ninety (90) days or less. In the event an individual's leave of absence exceeds ninety (90) days, the individual shall be deemed to have ceased to be an Employee on the ninety-first (91st) day of such leave unless the individual's right to reemployment with the Participating Company Group is guaranteed either by statute or by contract. The Company shall determine in good faith and in the exercise of its discretion whether an individual has become or has ceased to be an Employee and the effective date of such individual's employment or termination of employment, as the case may be. For purposes of an individual's participation in or other rights, if any, under the Plan as of the time of the Company's determination, all such determinations by the Company shall be final, binding and conclusive, notwithstanding that the Company or any governmental agency subsequently makes a contrary determination. (h) "Entry Date" means (i) the Offering Date of an Offering Period, or (ii) with respect to persons who first become Eligible Employees after the commencement of the Initial Offering Period (as defined in Section 6.1 below) but prior to the commencement of the final Purchase Period of the Initial Offering Period, the first day of the Purchase Period following the date on which such person becomes an Eligible Employee. Notwithstanding the foregoing, in the event that the Fair Market Value of a share of Stock on the first, second or third Purchase Date of the Initial Offering Period is less than the Fair Market Value of a share of Stock on the Entry Date for a Participant who was participating in the Offering as of such Purchase Date, the Entry Date for such Participant for the remainder of the Offering shall be the first day of the Purchase Period following such Purchase Date. (i) "Fair Market Value" means, as of any date, if there is then a public market for the Stock, the closing price of a share of Stock (or the mean of the closing bid and asked prices if the Stock is so quoted instead) as quoted on the Nasdaq National Market, The Nasdaq SmallCap Market or such other national or regional securities exchange or market system constituting the primary market for the Stock, as reported in The Wall Street Journal or such other source as ----------------------- the Company deems reliable. If the relevant date does not fall on a day on 2 which the Stock has traded on such securities exchange or market system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock was so traded prior to the relevant date, or such other appropriate day as shall be determined by the Board, in its discretion. If, as of any date, there is then no public market for the Stock, the Fair Market Value on any relevant date shall be as determined by the Board. Notwithstanding the foregoing, the Fair Market Value per share of Stock on the Effective Date shall be deemed to be the public offering price set forth in the final prospectus filed with the Securities and Exchange Commission in connection with the initial public offering of the Stock. (j) "Offering" means an offering of Stock as provided in Section 6. (k) "Offering Date" means, for any Offering, the first day of the Offering Period with respect to such Offering. (l) "Offering Period" means a period established in accordance with Section 6.1. (m) "Parent Corporation" means any present or future "parent corporation" of the Company, as defined in Section 424(e) of the Code. (n) "Participant" means an Eligible Employee who has become a participant in an Offering Period in accordance with Section 7 and remains a participant in accordance with the Plan. (o) "Participating Company" means the Company or any Parent Corporation or Subsidiary Corporation designated by the Board as a corporation the Employees of which may, if Eligible Employees, participate in the Plan. The Board shall have the sole and absolute discretion to determine from time to time which Parent Corporations or Subsidiary Corporations shall be Participating Companies. (p) "Participating Company Group" means, at any point in time, the Company and all other corporations collectively which are then Participating Companies. (q) "Purchase Date" means the last day of (i) any Purchase Period during the Initial Offering Period, or (ii) an Offering Period which begins after the Initial Offering Period. (r) "Purchase Period" means a period established in accordance with Section 6.2. (s) "Purchase Price" means the price at which a share of Stock may be purchased under the Plan, as determined in accordance with Section 9. (t) "Purchase Right" means an option granted to a Participant pursuant to the Plan to purchase such shares of Stock as provided in Section 8, which the Participant may or may not exercise during the Offering Period in which such option is outstanding. Such option arises from the right of a Participant to withdraw any accumulated 3 payroll deductions of the Participant not previously applied to the purchase of Stock under the Plan and to terminate participation in the Plan at any time during an Offering Period. (u) "Stock" means the common stock of the Company, as adjusted from time to time in accordance with Section 4.2. (v) "Subscription Agreement" means a written agreement in such form as specified by the Company, stating an Employee's election to participate in the Plan and authorizing payroll deductions under the Plan from the Employee's Compensation. (w) "Subscription Date" means the last business day prior to an Entry Date or such other date as the Company shall establish. (x) "Subsidiary Corporation" means any present or future "subsidiary corporation" of the Company, as defined in Section 424(f) of the Code. 2.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term "or" is not intended to be exclusive, unless the context clearly requires otherwise. 3. Administration. -------------- 3.1 Administration by the Board. The Plan shall be administered by the Board. All questions of interpretation of the Plan, of any form of agreement or other document employed by the Company in the administration of the Plan, or of any Purchase Right shall be determined by the Board and shall be final and binding upon all persons having an interest in the Plan or the Purchase Right. Subject to the provisions of the Plan, the Board shall determine all of the relevant terms and conditions of Purchase Rights granted pursuant to the Plan; provided, however, that all Participants granted Purchase Rights pursuant to the Plan shall have the same rights and privileges within the meaning of Section 423(b)(5) of the Code. All expenses incurred in connection with the administration of the Plan shall be paid by the Company. 3.2 Authority of Officers. Any officer of the Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election that is the responsibility of or that is allocated to the Company herein, provided that the officer has apparent authority with respect to such matter, right, obligation, determination or election. 3.3 Policies and Procedures Established by the Company. The Company may, from time to time, consistent with the Plan and the requirements of Section 423 of the Code, establish, change or terminate such rules, guidelines, policies, procedures, limitations, or adjustments as deemed advisable by the Company, in its sole discretion, for the proper administration of the Plan, including, without limitation, (a) a minimum payroll deduction amount required for participation in an Offering, (b) a limitation on the frequency or number of changes permitted in the rate of payroll deduction during an Offering, (c) an exchange ratio applicable to amounts withheld in a currency other than United States dollars, (d) a payroll 4 deduction greater than or less than the amount designated by a Participant in order to adjust for the Company's delay or mistake in processing a Subscription Agreement or in otherwise effecting a Participant's election under the Plan or as advisable to comply with the requirements of Section 423 of the Code, and (e) determination of the date and manner by which the Fair Market Value of a share of Stock is determined for purposes of administration of the Plan. 4. Shares Subject to Plan. ---------------------- 4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be five hundred thousand (500,000), cumulatively increased on May 1, 2000 and each May 1 thereafter until and including May 1, 2009 by an amount equal to the lesser of (a) five hundred thousand (500,000) shares per year or (b) two percent (2%) of the number of shares of common stock that was issued and outstanding on the last day of the preceding fiscal year, or (c) a lesser amount of shares determined by the Board, and shall consist of authorized but unissued or reacquired shares of Stock, or any combination thereof. If an outstanding Purchase Right for any reason expires or is terminated or canceled, the shares of Stock allocable to the unexercised portion of such Purchase Right shall again be available for issuance under the Plan. 4.2 Adjustments for Changes in Capital Structure. In the event of any stock dividend, stock split, reverse stock split, recapitalization, combination, reclassification or similar change in the capital structure of the Company, or in the event of any merger (including a merger effected for the purpose of changing the Company's domicile), sale of assets or other reorganization in which the Company is a party, appropriate adjustments shall be made in the number and class of shares subject to the Plan and each Purchase Right and in the Purchase Price. If a majority of the shares which are of the same class as the shares that are subject to outstanding Purchase Rights are exchanged for, converted into, or otherwise become (whether or not pursuant to an Ownership Change Event) shares of another corporation (the "New Shares"), the Board may unilaterally amend the outstanding Purchase Rights to provide that such Purchase Rights are exercisable for New Shares. In the event of any such amendment, the number of shares subject to, and the Purchase Price of, the outstanding Purchase Rights shall be adjusted in a fair and equitable manner, as determined by the Board, in its sole discretion. Notwithstanding the foregoing, any fractional share resulting from an adjustment pursuant to this Section 4.2 shall be rounded down to the nearest whole number, and in no event may the Purchase Price be decreased to an amount less than the par value, if any, of the stock subject to the Purchase Right. The adjustments determined by the Board pursuant to this Section 4.2 shall be final, binding and conclusive. 5. Eligibility. ----------- 5.1 Employees Eligible to Participate. Each Employee of a Participating Company is eligible to participate in the Plan and shall be deemed an Eligible Employee, except the following: (a) Any Employee who is customarily employed by the Participating Company Group for less than twenty (20) hours per week; or 5 (b) Any Employee who is customarily employed by the Participating Company Group for not more than five (5) months in any calendar year. 5.2 Exclusion of Certain Shareholders. Notwithstanding any provision of the Plan to the contrary, no Employee shall be granted a Purchase Right under the Plan if, immediately after such grant, such Employee would own or hold options to purchase stock of the Company or of any Parent Corporation or Subsidiary Corporation possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of such corporation, as determined in accordance with Section 423(b)(3) of the Code. For purposes of this Section 5.2, the attribution rules of Section 424(d) of the Code shall apply in determining the stock ownership of such Employee. 6. Offerings. --------- 6.1 Offering Periods. (a) Initial Offering Period. The Plan shall be implemented by sequential Offerings (an "Offering Period"). The first Offering Period shall commence on the Effective Date and end on the last day of August, 2001 (the "Initial Offering Period"). (b) Subsequent Offering Periods. After the completion of the Initial Offering Period, subsequent Offerings shall commence on the first day of March and September of each year and end on the last day of August and February, respectively, occurring thereafter, and will have a duration of approximately six (6) months. 6.2 Purchase Periods. The Initial Offering Period shall consist of four (4) consecutive Purchase Periods of approximately six (6) months duration. Purchase Periods shall commence on the Effective Date, March 1, 2000, September 1, 2000 and March 1, 2001. Purchase Periods beginning on the first day of March and September shall end on the last day of August and February, respectively, occurring thereafter. The Purchase Period commencing on the Effective Date shall end on February 29, 2000. 6.3 Discretion to Vary Duration. Notwithstanding the foregoing, the Board may establish a different duration for one or more Offering Periods or Purchase Periods or different commencing or ending dates for such periods; provided, however, that no Offering Period may have a duration exceeding twenty- seven (27) months. If the first or last day of an Offering Period or a Purchase Period is not a day on which the national securities exchanges or Nasdaq Stock Market are open for trading, the Company shall specify the trading day that will be deemed the first or last day, as the case may be, of the period. 7. Participation in the Plan. ------------------------- 7.1 Initial Participation. An Eligible Employee may become a Participant in an Offering Period by delivering a properly completed Subscription Agreement to the Company not later than the close of business for such office on the Subscription Date established by the Company for the applicable Entry Date. An Eligible Employee who does not deliver a properly completed Subscription Agreement to the Company's designated office on or before the Subscription Date shall not participate in that Offering Period or any subsequent Offering Period 6 unless such Eligible Employee subsequently delivers a properly completed Subscription Agreement to the appropriate office of the Company on or before the Subscription Date for such subsequent Offering Period. An Employee who becomes an Eligible Employee after the Offering Date of an Offering Period (other than the Initial Offering Period) shall not be eligible to participate in such Offering Period but may participate in any subsequent Offering Period provided such Employee is still an Eligible Employee as of the Offering Date of such subsequent Offering Period. 7.2 Continued Participation. A Participant shall automatically participate in the next Offering Period commencing immediately after the final Purchase Date of each Offering Period in which the Participant participates provided that such Participant remains an Eligible Employee on the Offering Date of the new Offering Period and has not either (a) withdrawn from the Plan pursuant to Section 10.7 or (b) terminated employment as provided in Section 13. A Participant who may automatically participate in a subsequent Offering Period, as provided in this Section, is not required to deliver any additional Subscription Agreement for the subsequent Offering Period in order to continue participation in the Plan. However, a Participant may deliver a new Subscription Agreement for a subsequent Offering Period in accordance with the procedures set forth in Section 7.1 if the Participant desires to change any of the elections contained in the Participant's then effective Subscription Agreement. 8. Right to Purchase Shares. ------------------------ 8.1 Grant of Purchase Right. Except as set forth below, on the Offering Date of each Offering Period, each Participant in such Offering Period shall be granted automatically, on his or her Entry Date, a Purchase Right consisting of an option to purchase, on each Purchase Date within such Offering Period, that number of whole shares of Stock determined by dividing the aggregate payroll deductions collected from the Participant by the applicable Purchase Price on such Purchase Date; provided, that no Participant may purchase more than one thousand (1,000) shares of Stock on any Purchase Date. 8.2 Calendar Year Purchase Limitation. Notwithstanding any provision of the Plan to the contrary, no Participant shall be granted a Purchase Right which permits his or her right to purchase shares of Stock under the Plan to accrue at a rate which, when aggregated with such Participant's rights to purchase shares under all other employee stock purchase plans of a Participating Company intended to meet the requirements of Section 423 of the Code, exceeds Twenty-Five Thousand Dollars ($25,000) in Fair Market Value (or such other limit, if any, as may be imposed by the Code) for each calendar year in which such Purchase Right is outstanding at any time. For purposes of the preceding sentence, the Fair Market Value of shares purchased during a given Offering Period shall be determined as of the Entry Date for such Offering Period. The limitation described in this Section shall be applied in conformance with applicable regulations under Section 423(b)(8) of the Code. 9. Purchase Price. -------------- The Purchase Price at which each share of Stock may be acquired in an Offering Period upon the exercise of all or any portion of a Purchase Right shall be established by the Board; provided, however, that the Purchase Price shall not be less than eighty-five percent 7 (85%) of the lesser of (a) the Fair Market Value of a share of Stock on the Participant's Entry Date of the Offering Period or (b) the Fair Market Value of a share of Stock on the Purchase Date. Unless otherwise provided by the Board prior to the commencement of an Offering Period, the Purchase Price for that Offering Period shall be eighty-five percent (85%) of the lesser of (a) the Fair Market Value of a share of Stock on the Participant's Entry Date of the Offering Period, or (b) the Fair Market Value of a share of Stock on the Purchase Date. 10. Accumulation of Purchase Price through Payroll Deduction. -------------------------------------------------------- Shares of Stock acquired pursuant to the exercise of all or any portion of a Purchase Right may be paid for only by means of payroll deductions from the Participant's Compensation accumulated during the Offering Period for which such Purchase Right was granted, subject to the following: 10.1 Amount of Payroll Deductions. Except as otherwise provided herein, the amount to be deducted under the Plan from a Participant's Compensation on each payday during an Offering Period (after the Participant's Entry Date) shall be determined by the Participant's Subscription Agreement. The Subscription Agreement shall set forth the percentage of the Participant's Compensation to be deducted on each payday during an Offering Period (after the Participant's Entry Date) in whole percentages of not less than one percent (1%) (except as a result of an election pursuant to Section 10.3 to stop payroll deductions made effective following the first payday during an Offering after the Participant's Entry Date) or more than ten percent (10%). Notwithstanding the foregoing, the Board may change the limits on payroll deductions effective as of any future Offering Date. 10.2 Commencement of Payroll Deductions. Payroll deductions shall commence on the first payday following the Entry Date and shall continue to the end of the Offering Period unless sooner altered or terminated as provided herein. 10.3 Election to Change or Stop Payroll Deductions. During an Offering Period, a Participant may elect to increase or decrease the rate of or to stop deductions from his or her Compensation by delivering to the Company an amended Subscription Agreement authorizing such change on or before the "Change Notice Date." The "Change Notice Date" shall be a date prior to the beginning of the first pay period for which such election is to be effective as established by the Company from time to time and announced to the Participants. A Participant who elects to decrease the rate of his or her payroll deductions to zero percent (0%) shall nevertheless remain a Participant in the current Offering Period unless such Participant withdraws from the Plan as provided in Section 12.1. 10.4 Administrative Suspension of Payroll Deductions. The Company may, in its sole discretion, suspend a Participant's payroll deductions under the Plan as the Company deems advisable to avoid accumulating payroll deductions in excess of the amount that could reasonably be anticipated to purchase the maximum number of shares of Stock permitted during a calendar year under the limit set forth in Section 8.2. Payroll deductions shall be resumed at the rate specified in the Participant's then effective Subscription Agreement at the beginning of the next Purchase Period the Purchase Date of which falls in the following calendar year. 8 10.5 Participant Accounts. Individual bookkeeping accounts shall be maintained for each Participant. All payroll deductions from a Participant's Compensation shall be credited to such Participant's Plan account and shall be deposited with the general funds of the Company. All payroll deductions received or held by the Company may be used by the Company for any corporate purpose. 10.6 No Interest Paid. Interest shall not be paid on sums deducted from a Participant's Compensation pursuant to the Plan. 10.7 Voluntary Withdrawal from Plan Account. A Participant may withdraw all or any portion of the payroll deductions credited to his or her Plan account and not previously applied toward the purchase of Stock by delivering to the Company a written notice on a form provided by the Company for such purpose. A Participant who withdraws the entire remaining balance credited to his or her Plan account shall be deemed to have withdrawn from the Plan in accordance with Section 12.1. Amounts withdrawn shall be returned to the Participant as soon as practicable after the withdrawal and may not be applied to the purchase of shares in any Offering under the Plan. The Company may from time to time establish or change limitations on the frequency of withdrawals permitted under this Section, establish a minimum dollar amount that must be retained in the Participant's Plan account, or terminate the withdrawal right provided by this Section. 11. Purchase of Shares. ------------------ 11.1 Exercise of Purchase Right. On each Purchase Date, each Participant who has not withdrawn from the Plan and whose participation in the Offering has not terminated before such Purchase Date shall automatically acquire pursuant to the exercise of the Participant's Purchase Right the number of whole shares of Stock determined by dividing (a) the total amount of the Participant's payroll deductions accumulated in the Participant's Plan account during the Purchase Period and not previously applied toward the purchase of Stock by (b) the Purchase Price. No shares of Stock shall be purchased on a Purchase Date on behalf of a Participant whose participation in the Offering or the Plan has terminated before such Purchase Date. 11.2 Pro Rata Allocation of Shares. In the event that the number of shares of Stock which might be purchased by all Participants in the Plan on a Purchase Date exceeds the number of shares of Stock available in the Plan as provided in Section 4.1, the Company shall make a pro rata allocation of the remaining shares in as uniform a manner as shall be practicable and as the Company shall determine to be equitable. Any fractional share resulting from such pro rata allocation to any Participant shall be disregarded. 11.3 Delivery of Certificates. As soon as practicable after each Purchase Date, the Company shall arrange the delivery to each Participant, as appropriate, of a certificate representing the shares acquired by the Participant on such Purchase Date; provided that the Company may deliver such shares to a broker that holds such shares in street name for the benefit of the Participant. Shares to be delivered to a Participant under the Plan shall be registered in the name of the Participant, or, if requested by the Participant, in the name of the Participant and his or her spouse, or, if applicable, in the names of the heirs of the Participant. 9 11.4 Return of Cash Balance. Any cash balance remaining in a Participant's Plan account following any Purchase Date shall be refunded to the Participant as soon as practicable after such Purchase Date. However, if the cash to be returned to a Participant pursuant to the preceding sentence is an amount less than the amount that would have been necessary to purchase an additional whole share of Stock on such Purchase Date, the Company may retain such amount in the Participant's Plan account to be applied toward the purchase of shares of Stock in the subsequent Purchase Period or Offering Period, as the case may be. 11.5 Tax Withholding. At the time a Participant's Purchase Right is exercised, in whole or in part, or at the time a Participant disposes of some or all of the shares of Stock he or she acquires under the Plan, the Participant shall make adequate provision for the foreign, federal, state and local tax withholding obligations of the Participating Company Group, if any, which arise upon exercise of the Purchase Right or upon such disposition of shares, respectively. The Participating Company Group may, but shall not be obligated to, withhold from the Participant's compensation the amount necessary to meet such withholding obligations. 11.6 Expiration of Purchase Right. Any portion of a Participant's Purchase Right remaining unexercised after the end of the Offering Period to which the Purchase Right relates shall expire immediately upon the end of the Offering Period. 11.7 Reports to Participants. Each Participant who has exercised all or part of his or her Purchase Right shall receive, as soon as practicable after the Purchase Date, a report of such Participant's Plan account setting forth the total payroll deductions accumulated prior to such exercise, the number of shares of Stock purchased, the Purchase Price for such shares, the date of purchase and the cash balance, if any, remaining immediately after such purchase that is to be refunded or retained in the Participant's Plan account pursuant to Section 11.4. The report required by this Section may be delivered in such form and by such means, including by electronic transmission, as the Company may determine. 12. Withdrawal from Offering or Plan. -------------------------------- 12.1 Voluntary Withdrawal from the Plan. A Participant may withdraw from the Plan by signing and delivering to the Company a written notice of withdrawal on a form provided by the Company for such purpose. Such withdrawal may be elected at any time prior to the end of an Offering Period; provided, however, that if a Participant withdraws from the Plan after the Purchase Date of a Purchase Period, the withdrawal shall not affect shares of Stock acquired by the Participant on such Purchase Date. A Participant who voluntarily withdraws from the Plan is prohibited from resuming participation in the Plan in the same Offering from which he or she withdrew, but may participate in any subsequent Offering by again satisfying the requirements of Sections 5 and 7.1. The Company may impose a requirement that the notice of withdrawal from the Plan be on file with the Company for a reasonable period prior to the effectiveness of the Participant's withdrawal. 12.2 Return of Payroll Deductions. Upon a Participant's voluntary withdrawal from the Plan pursuant to Section 12.1, the Participant's accumulated payroll deductions which have not been applied toward the purchase of shares of Stock shall be refunded to the Participant as soon as practicable after the withdrawal, without the payment of any 10 interest, and the Participant's interest in the Plan or the Offering, as applicable, shall terminate. Such accumulated payroll deductions to be refunded in accordance with this Section may not be applied to any other Offering under the Plan. 13. Termination of Employment or Eligibility. ---------------------------------------- Upon a Participant's ceasing, prior to a Purchase Date, to be an Employee of the Participating Company Group for any reason, including retirement, disability or death, or the failure of a Participant to remain an Eligible Employee, the Participant's participation in the Plan shall terminate immediately. In such event, the payroll deductions credited to the Participant's Plan account since the last Purchase Date shall, as soon as practicable, be returned to the Participant or, in the case of the Participant's death, to the Participant's legal representative, and all of the Participant's rights under the Plan shall terminate. Interest shall not be paid on sums returned pursuant to this Section 13. A Participant whose participation has been so terminated may again become eligible to participate in the Plan by again satisfying the requirements of Sections 5 and 7.1. 14. Change in Control. ----------------- 14.1 Definitions. (a) An "Ownership Change Event" shall be deemed to have occurred if any of the following occurs with respect to the Company: (i) the direct or indirect sale or exchange in a single or series of related transactions by the shareholders of the Company of more than fifty percent (50%) of the voting stock of the Company; (ii) a merger or consolidation in which the Company is a party; (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company; or (iv) a liquidation or dissolution of the Company. (b) A "Change in Control" shall mean an Ownership Change Event or a series of related Ownership Change Events (collectively, the "Transaction") wherein the shareholders of the Company immediately before the Transaction do not retain immediately after the Transaction, in substantially the same proportions as their ownership of shares of the Company's voting stock immediately before the Transaction, direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding voting stock of the Company or the corporation or corporations to which the assets of the Company were transferred (the "Transferee Corporation(s)"), as the case may be. For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting stock of one or more corporations which, as a result of the Transaction, own the Company or the Transferee Corporation(s), as the case may be, either directly or through one or more subsidiary corporations. The Board shall have the right to determine whether multiple sales or exchanges of the voting stock of the Company or multiple Ownership Change Events are related, and its determination shall be final, binding and conclusive. 14.2 Effect of Change in Control on Purchase Rights. In the event of a Change in Control, the surviving, continuing, successor, or purchasing corporation or parent corporation thereof, as the case may be (the "Acquiring Corporation"), may assume the 11 Company's rights and obligations under the Plan. If the Acquiring Corporation elects not to assume the Company's rights and obligations under outstanding Purchase Rights, the Purchase Date of the then current Purchase Period shall be accelerated to a date before the date of the Change in Control specified by the Board, but the number of shares of Stock subject to outstanding Purchase Rights shall not be adjusted. All Purchase Rights which are neither assumed by the Acquiring Corporation in connection with the Change in Control nor exercised as of the date of the Change in Control shall terminate and cease to be outstanding effective as of the date of the Change in Control. 15. Nontransferability of Purchase Rights. ------------------------------------- A Purchase Right may not be transferred in any manner otherwise than by will or the laws of descent and distribution and shall be exercisable during the lifetime of the Participant only by the Participant. 16. Compliance with Securities Law. ------------------------------ The issuance of shares under the Plan shall be subject to compliance with all applicable requirements of federal, state and foreign law with respect to such securities. A Purchase Right may not be exercised if the issuance of shares upon such exercise would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any securities exchange or market system upon which the Stock may then be listed. In addition, no Purchase Right may be exercised unless (a) a registration statement under the Securities Act of 1933, as amended, shall at the time of exercise of the Purchase Right be in effect with respect to the shares issuable upon exercise of the Purchase Right, or (b) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Purchase Right may be issued in accordance with the terms of an applicable exemption from the registration requirements of said Act. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company's legal counsel to be necessary to the lawful issuance and sale of any shares under the Plan shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to the exercise of a Purchase Right, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation, and to make any representation or warranty with respect thereto as may be requested by the Company. 17. Rights as a Shareholder and Employee. ------------------------------------ A Participant shall have no rights as a shareholder by virtue of the Participant's participation in the Plan until the date of the issuance of a certificate for the shares purchased pursuant to the exercise of the Participant's Purchase Right (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such certificate is issued, except as provided in Section 4.2. Nothing herein shall confer upon a Participant any right to continue in the employ of the Participating Company 12 Group or interfere in any way with any right of the Participating Company Group to terminate the Participant's employment at any time. 18. Legends. ------- The Company may at any time place legends or other identifying symbols referencing any applicable federal, state or foreign securities law restrictions or any provision convenient in the administration of the Plan on some or all of the certificates representing shares of Stock issued under the Plan. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to a Purchase Right in the possession of the Participant in order to carry out the provisions of this Section. Unless otherwise specified by the Company, legends placed on such certificates may include but shall not be limited to the following: "THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE CORPORATION TO THE REGISTERED HOLDER UPON THE PURCHASE OF SHARES UNDER AN EMPLOYEE STOCK PURCHASE PLAN AS DEFINED IN SECTION 423 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THE TRANSFER AGENT FOR THE SHARES EVIDENCED HEREBY SHALL NOTIFY THE CORPORATION IMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE REGISTERED HOLDER HEREOF. THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE PLAN IN THE REGISTERED HOLDER'S NAME (AND NOT IN THE NAME OF ANY NOMINEE)." 19. Notification of Sale of Shares. ------------------------------ The Company may require the Participant to give the Company prompt notice of any disposition of shares acquired by exercise of a Purchase Right within two (2) years from the date of granting such Purchase Right or one (1) year from the date of exercise of such Purchase Right. The Company may require that until such time as a Participant disposes of shares acquired upon exercise of a Purchase Right, the Participant shall hold all such shares in the Participant's name (or, if elected by the Participant, in the name of the Participant and his or her spouse but not in the name of any nominee) until the lapse of the time periods with respect to such Purchase Right referred to in the preceding sentence. The Company may direct that the certificates evidencing shares acquired by exercise of a Purchase Right refer to such requirement to give prompt notice of disposition. 20. Notices. ------- All notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof. 21. Indemnification. --------------- In addition to such other rights of indemnification as they may have as members of the Board or officers or employees of the Participating Company Group, members of the 13 Board and any officers or employees of the Participating Company Group to whom authority to act for the Board or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys' fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same. 22. Amendment or Termination of the Plan. ------------------------------------ The Board may at any time amend or terminate the Plan, except that (a) such termination shall not affect Purchase Rights previously granted under the Plan, provided that the Board may terminate the Plan (and any Offering thereunder) on any Purchase Date if the Board determines that such termination is in the best interests of the Company and its shareholders except as permitted under the Plan, and (b) no amendment may adversely affect a Purchase Right previously granted under the Plan (except to the extent permitted by the Plan or as may be necessary to qualify the Plan as an employee stock purchase plan pursuant to Section 423 of the Code or to obtain qualification or registration of the shares of Stock under applicable federal, state or foreign securities laws). In addition, an amendment to the Plan must be approved by the shareholders of the Company within twelve (12) months of the adoption of such amendment if such amendment would authorize the sale of more shares than are authorized for issuance under the Plan or would change the definition of the corporations that may be designated by the Board as Participating Companies. 14 AGILE SOFTWARE CORPORATION 1999 EMPLOYEE STOCK PURCHASE PLAN SUBSCRIPTION AGREEMENT NAME (Please print):____________________________________________________________ (Last) (First) (Middle) ADDRESS:________________________________________________________________________ MY SOCIAL SECURITY NUMBER:______________________________________________________ (TM) Original Application for the Offering Period beginning_____________, 199__. (TM) Change in Payroll Deduction rate effective with the pay period ending ___________________, 199__. I hereby elect to participate in the 1999 Employee Stock Purchase Plan (the "Plan") of Agile Software Corporation (the "Company") and subscribe to purchase shares of the Company's Stock in accordance with this Subscription Agreement and the Plan. I hereby authorize payroll deductions in the amount of ________ percent (in whole percentages not less than 1% or more than 10%) of my "Compensation" on each payday throughout the "Offering Period" in accordance with the Plan. I understand that these payroll deductions will be accumulated for the purchase of shares of Stock at the applicable purchase price determined in accordance with the Plan. I understand that, except as otherwise provided by the Plan, I will automatically purchase shares on each Purchase Date under the Plan unless I withdraw from the Plan by giving written notice on a form provided by the Company or unless my employment terminates. I understand that I will automatically participate in each subsequent Offering that commences immediately after the last day of an Offering in which I am participating until I withdraw from the Plan by giving written notice on a form provided by the Company or my employment terminates. Shares I purchase under the Plan should be issued in the name(s) set forth below. (Shares may be issued in the participant's name alone or together with the participant's spouse as community property or in joint tenancy.) NAME(S): __________________________________________________________________ (TM) In my name alone(TM) Community Property (TM) Joint Tenancy I agree to make adequate provision for the federal, state, local and foreign tax withholding obligations, if any, which may arise upon my purchase of shares under the Plan and/or my disposition of such shares. The Company may, but will not be obligated to, withhold from my compensation the amount necessary to meet such withholding obligations. I agree that while I hold shares acquired under the Plan, unless otherwise permitted by the Company, I will hold such shares in the name(s) entered above (and not in the name of any nominee). This restriction only applies to the name(s) in which shares are held and does not affect my ability to dispose of --- Plan shares. The tax treatment of a disposition of Plan shares (including a gift) depends on when the disposition occurs. I agree that I will notify the Chief Financial Officer of the Company in writing within 30 days after any disposition of Plan shares that occurs within 2 years after the Entry Date or 1 year after -- the Purchase Date (a "Disqualifying Disposition"). I further agree that if I do not respond within 30 days to a Company survey delivered to me requesting information about a possible Disqualifying Disposition, the Company may (1) treat my nonresponse as my notice to the Company that a Disqualifying Disposition occurred, and (2) report the ordinary income I must recognize as a result of the Disqualifying Disposition to the Internal Revenue Service. I am familiar with the provisions of the Plan and agree to participate in the Plan subject to all of its provisions. I understand that the Board of Directors of the Company reserves the right to terminate the Plan or to amend the Plan and my right to purchase stock under the Plan to the extent provided by the Plan. I understand that the effectiveness of this Subscription Agreement is dependent upon my eligibility to participate in the Plan. Date: _______________________ Signature:____________________________________ AGILE SOFTWARE CORPORATION 1999 EMPLOYEE STOCK PURCHASE PLAN NOTICE OF WITHDRAWAL NAME (Please print): _________________________________________________________ (Last) (First) (Middle) I hereby elect to withdraw from the Offering under Agile Software Corporation 1999 Employee Stock Purchase Plan (the "Plan") which began on _________________________, 19____ and in which I am currently participating (the "Current Offering"). Elect either A or B below: (TM) A. I elect to terminate immediately my participation in the Current Offering and in the Plan. I request that the Company cease all further payroll deductions from my Compensation under the Plan (provided that I have given sufficient notice prior to the next payday). I request that all payroll deductions credited to my account under the Plan (if any) not previously used to purchase shares under the Plan shall not be used to --- purchase shares on the next Purchase Date of the Current Offering. Instead, I request that all such amounts be paid to me as soon as practicable. I understand that this election immediately terminates my interest in the Current Offering and in the Plan. (TM) B. I elect to terminate my participation in the Current Offering and in the Plan following my purchase of shares on next Purchase Date of the Current Offering. I request that the Company cease all further payroll deductions from my Compensation under the Plan (provided that I have given sufficient notice prior to the next payday). I request that all payroll deductions credited to my account under the Plan (if any) not previously used to purchase shares under the Plan shall be used to purchase shares on the next Purchase Date of the Current Offering to the extent permitted by the Plan. I understand that this election will terminate my interest in the Current Offering and in the Plan immediately following such purchase. I request that any cash balance remaining in my account under the Plan after my purchase of shares be paid to me as soon as practicable. I understand that by making this election I am terminating my interest in the Plan and that no further payroll deductions will be made (provided that I have given sufficient notice prior to the next payday) unless I elect in accordance with the Plan to become a participant in another Offering under the Plan by filing a new Subscription Agreement with the Company. Date: ______________________________ Signature:______________________________ EX-10.3 7 FORM OF INDEMNITY AGREEMENT Exhibit 10.3 INDEMNITY AGREEMENT This Indemnity Agreement, dated as of __________, 1999, is made by and between Agile Software Corporation, a Delaware corporation (the "Company"), and ______________ (the "Indemnitee"). RECITALS -------- A. The Company is aware that competent and experienced persons are increasingly reluctant to serve as directors, officers or agents of corporations unless they are protected by comprehensive liability insurance or indemnification, due to increased exposure to litigation costs and risks resulting from their service to such corporations, and due to the fact that the exposure frequently bears no reasonable relationship to the compensation of such directors, officers and other agents. B. The statutes and judicial decisions regarding the duties of directors and officers are often difficult to apply, ambiguous, or conflicting, and therefore fail to provide such directors, officers and agents with adequate, reliable knowledge of legal risks to which they are exposed or information regarding the proper course of action to take. C. Plaintiffs often seek damages in such large amounts and the costs of litigation may be so enormous (whether or not the case is meritorious), that the defense and/or settlement of such litigation is often beyond the personal resources of directors, officers and other agents. D. The Company believes that it is unfair for its directors, officers and agents and the directors, officers and agents of its subsidiaries to assume the risk of huge judgments and other expenses which may occur in cases in which the director, officer or agent received no personal profit and in cases where the director, officer or agent was not culpable. E. The Company recognizes that the issues in controversy in litigation against a director, officer or agent of a corporation such as the Company or its subsidiaries are often related to the knowledge, motives and intent of such director, officer or agent, that he is usually the only witness with knowledge of the essential facts and exculpating circumstances regarding such matters, and that the long period of time which usually elapses before the trial or other disposition of such litigation often extends beyond the time that the director, officer or agent can reasonably recall such matters; and may extend beyond the normal time for retirement for such director, officer or agent with the result that he, after retirement or in the event of his death, his spouse, heirs, executors or administrators, may be faced with limited ability and undue hardship in maintaining an adequate defense, which may discourage such a director, officer or agent from serving in that position. F. Based upon their experience as business managers, the Board of Directors of the Company (the "Board") has concluded that, to retain and attract talented and experienced individuals to serve as directors, officers and agents of the Company and its subsidiaries and to encourage such individuals to take the business risks necessary for the success of the Company 1 and its subsidiaries, it is necessary for the Company to contractually indemnify its directors, officers and agents and the directors, officers and agents of its subsidiaries, and to assume for itself maximum liability for expenses and damages in connection with claims against such directors, officers and agents in connection with their service to the Company and its subsidiaries, and has further concluded that the failure to provide such contractual indemnification could result in great harm to the Company and its subsidiaries and the Company's stockholders. G. Section 145 of the General Corporation Law of Delaware, under which the Company is organized ("Section 145"), empowers the Company to indemnify its directors, officers, employees and agents by agreement and to indemnify persons who serve, at the request of the Company, as the directors, officers, employees or agents of other corporations or enterprises, and expressly provides that the indemnification provided by Section 145 is not exclusive. H. The Company desires and has requested the Indemnitee to serve or continue to serve as a director, officer or agent of the Company and/or one or more subsidiaries of the Company free from undue concern for claims for damages arising out of or related to such services to the Company and/or one or more subsidiaries of the Company. I. Indemnitee is willing to serve, or to continue to serve, the Company and/or one or more subsidiaries of the Company, provided that he is furnished the indemnity provided for herein. AGREEMENT --------- NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Definitions. ----------- (a) Agent. For the purposes of this Agreement, "agent" of the ----- Company means any person who is or was a director, officer, employee or other agent of the Company or a subsidiary of the Company; or is or was serving at the request of, for the convenience of, or to represent the interests of the Company or a subsidiary of the Company as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise; or was a director, officer, employee or agent of a foreign or domestic corporation which was a predecessor corporation of the Company or a subsidiary of the Company, or was a director, officer, employee or agent of another enterprise at the request of, for the convenience of, or to represent the interests of such predecessor corporation. (b) Expenses. For purposes of this Agreement, "expenses" -------- include all out of pocket expenses costs of any type or nature whatsoever (including, without limitation, all attorneys' fees and related disbursements), actually and reasonably incurred by the Indemnitee in connection with either the investigation, defense or appeal of a proceeding or establishing or enforcing a right to indemnification under this Agreement or Section 145 or otherwise; provided, 2 however, that "expenses" shall not include any judgments, fines, ERISA excise taxes or penalties, or amounts paid in settlement of a proceeding. (c) Proceeding. For the purposes of this Agreement, ---------- "proceeding" means any threatened, pending, or completed action, suit or other proceeding, whether civil, criminal, administrative, or investigative. (d) Subsidiary. For purposes of this Agreement, "subsidiary" ---------- means any corporation of which more than 50% of the outstanding voting securities is owned directly or indirectly by the Company, by the Company and one or more other subsidiaries, or by one or more other subsidiaries. 2. Agreement to Serve. The Indemnitee agrees to serve and/or ------------------ continue to serve as agent of the Company, at its will (or under separate agreement, if such agreement exists), in the capacity Indemnitee currently serves as an agent of the Company, so long as he is duly appointed or elected and qualified in accordance with the applicable provisions of the Bylaws of the Company or any subsidiary of the Company or until such time as he tenders his resignation in writing; provided, however, that nothing contained in this Agreement is intended to create any right to continued employment by Indemnitee. 3. Liability Insurance. ------------------- (a) Maintenance of D&O Insurance. The Company hereby covenants ---------------------------- and agrees that, so long as the Indemnitee shall continue to serve as an agent of the Company and thereafter so long as the Indemnitee shall be subject to any possible proceeding by reason of the fact that the Indemnitee was an agent of the Company, the Company, subject to Section 3(c), shall promptly obtain and maintain in full force and effect directors' and officers' liability insurance ("D&O Insurance") in reasonable amounts from established and reputable insurers. (b) Rights and Benefits. In all policies of D&O Insurance, the ------------------- Indemnitee shall be named as an insured in such a manner as to provide the Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company's directors, if the Indemnitee is a director; or of the Company's officers, if the Indemnitee is not a director of the Company but is an officer; or of the Company's key employees, if the Indemnitee is not a director or officer but is a key employee. (c) Limitation on Required Maintenance of D&O Insurance. --------------------------------------------------- Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain D&O Insurance if the Company determines in good faith that such insurance is not reasonably available, the premium costs for such insurance are disproportionate to the amount of coverage provided, the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or the Indemnitee is covered by similar insurance maintained by a subsidiary of the Company. 4. Mandatory Indemnification. Subject to Section 9 below, the ------------------------- Company shall indemnify the Indemnitee as follows: 3 (a) Successful Defense. To the extent the Indemnitee has been ------------------ successful on the merits or otherwise in defense of any proceeding (including, without limitation, an action by or in the right of the Company) to which the Indemnitee was a party by reason of the fact that he is or was an Agent of the Company at any time, against all expenses of any type whatsoever actually and reasonably incurred by him in connection with the investigation, defense or appeal of such proceeding. (b) Third Party Actions. If the Indemnitee is a person who was ------------------- or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of the Company) by reason of the fact that he is or was an agent of the Company, or by reason of anything done or not done by him in any such capacity, the Company shall indemnify the Indemnitee against any and all expenses and liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes and penalties, and amounts paid in settlement) actually and reasonably incurred by him in connection with the investigation, defense, settlement or appeal of such proceeding, provided the Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and its stockholders, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. (c) Derivative Actions. If the Indemnitee is a person who was ------------------ or is a party or is threatened to be made a party to any proceeding by or in the right of the Company by reason of the fact that he is or was an agent of the Company, or by reason of anything done or not done by him in any such capacity, the Company shall indemnify the Indemnitee against all expenses actually and reasonably incurred by him in connection with the investigation, defense, settlement, or appeal of such proceeding, provided the Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and its stockholders; except that no indemnification under this subsection 4(c) shall be made in respect to any claim, issue or matter as to which such person shall have been finally adjudged to be liable to the Company by a court of competent jurisdiction unless and only to the extent that the court in which such proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such amounts which the court shall deem proper. (d) Actions where Indemnitee is Deceased. If the Indemnitee ------------------------------------ is a person who was or is a party or is threatened to be made a party to any proceeding by reason of the fact that he is or was an agent of the Company, or by reason of anything done or not done by him in any such capacity, and if prior to, during the pendency of after completion of such proceeding Indemnitee becomes deceased, the Company shall indemnify the Indemnitee's heirs, executors and administrators against any and all expenses and liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes and penalties, and amounts paid in settlement) actually and reasonably incurred to the extent Indemnitee would have been entitled to indemnification pursuant to Sections 4(a), 4(b), or 4(c) above were Indemnitee still alive. 4 (e) Notwithstanding the foregoing, the Company shall not be obligated to indemnify the Indemnitee for expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes and penalties, and amounts paid in settlement) for which payment is actually made to Indemnitee under a valid and collectible insurance policy of D&O Insurance, or under a valid and enforceable indemnity clause, by-law or agreement. 5. Partial Indemnification. If the Indemnitee is entitled under any ----------------------- provision of this Agreement to indemnification by the Company for some or a portion of any expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes and penalties, and amounts paid in settlement) incurred by him in the investigation, defense, settlement or appeal of a proceeding, but not entitled, however, to indemnification for all of the total amount hereof, the Company shall nevertheless indemnify the Indemnitee for such total amount except as to the portion hereof to which the Indemnitee is not entitled. 6. Mandatory Advancement of Expenses. Subject to Section 8(a) --------------------------------- below, the Company shall advance all expenses incurred by the Indemnitee in connection with the investigation, defense, settlement or appeal of any proceeding to which the Indemnitee is a party or is threatened to be made a party by reason of the fact that the Indemnitee is or was an agent of the Company. Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it shall be determined ultimately that the Indemnitee is not entitled to be indemnified by the Company as authorized hereby. The advances to be made hereunder shall be paid by the Company to the Indemnitee within twenty (20) days following delivery of a written request therefor by the Indemnitee to the Company. 7. Notice and Other Indemnification Procedures. ------------------------------------------- (a) Promptly after receipt by the Indemnitee of notice of the commencement of or the threat of commencement of any proceeding, the Indemnitee shall, if the Indemnitee believes that indemnification with respect thereto may be sought from the Company under this Agreement, notify the Company of the commencement or threat of commencement thereof. (b) If, at the time of the receipt of a notice of the commencement of a proceeding pursuant to Section 7(a) hereof, the Company has D&O Insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies. (c) In the event the Company shall be obligated to pay the expenses of any proceeding against the Indemnitee, the Company, if appropriate, shall be entitled to assume the defense of such proceeding, with counsel approved by the Indemnitee, upon the delivery to the Indemnitee of written notice of its election so to do. After delivery of such notice, approval of such counsel by the Indemnitee and the retention of such counsel by the Company, the Company will not be liable to the Indemnitee under this Agreement for any fees of counsel subsequently incurred by the Indemnitee with respect to the same proceeding, provided that (i) the Indemnitee 5 shall have the right to employ his counsel in any such proceeding at the Indemnitee's expense; and (ii) if (A) the employment of counsel by the Indemnitee has been previously authorized by the Company, (B) the Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and the Indemnitee in the conduct of any such defense; or (C) the Company shall not, in fact, have employed counsel to assume the defense of such proceeding, the fees and expenses of Indemnitee's counsel shall be at the expense of the Company. 8. Exceptions. Any other provision herein to the contrary ---------- notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement: (a) Claims Initiated by Indemnitee. To indemnify or advance ------------------------------ expenses to the Indemnitee with respect to proceedings or claims initiated or brought voluntarily by the Indemnitee and not by way of defense, unless (i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by the Board, (iii) such indemnification is provided by the Company, in its sole discretion, pursuant to the powers vested in the Company under the General Corporation Law of Delaware or (iv) the proceeding is brought to establish or enforce a right to indemnification under this Agreement or any other statute or law or otherwise as required under Section 145. (b) Lack of Good Faith. To indemnify the Indemnitee for any ------------------ expenses incurred by the Indemnitee with respect to any proceeding instituted by the Indemnitee to enforce or interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by the Indemnitee in such proceeding was not made in good faith or was frivolous; or (c) Unauthorized Settlements. To indemnify the Indemnitee ------------------------ under this Agreement for any amounts paid in settlement of a proceeding unless the Company consents to such settlement, which consent shall not be unreasonably withheld. 9. Non-exclusivity. The provisions for indemnification and --------------- advancement of expenses set forth in this Agreement shall not be deemed exclusive of any other rights which the Indemnitee may have under any provision of law, the Company's Certificate of Incorporation or Bylaws, the vote of the Company's stockholders or disinterested directors, other agreements, or otherwise, both as to action in his official capacity and to action in another capacity while occupying his position as an agent of the Company, and the Indemnitee's rights hereunder shall continue after the Indemnitee has ceased acting as an agent of the Company and shall inure to the benefit of the heirs, executors and administrators of the Indemnitee. 10. Enforcement. Any right to indemnification or advances granted by ----------- this Agreement to Indemnitee shall be enforceable by or on behalf of Indemnitee in any court of competent jurisdiction if (i) the claim for indemnification or advances is denied, in whole or in part, or (ii) no disposition of such claim is made within ninety (90) days of request therefor. Indemnitee, in such enforcement action, if successful in whole or in part, shall be entitled to be paid also the expense of prosecuting his claim. It shall be a defense to any action for which a claim for indemnification is made under this Agreement (other than an action brought to enforce 6 a claim for expenses pursuant to Section 6 hereof, provided that the required undertaking has been tendered to the Company) that Indemnitee is not entitled to indemnification because of the limitations set forth in Sections 4 and 8 hereof. Neither the failure of the Corporation (including its Board of Directors or its stockholders) to have made a determination prior to the commencement of such enforcement action that indemnification of Indemnitee is proper in the circumstances, nor an actual determination by the Company (including its Board of Directors or its stockholders) that such indemnification is improper, shall be a defense to the action or create a presumption that Indemnitee is not entitled to indemnification under this Agreement or otherwise. 11. Subrogation. In the event of payment under this Agreement, the ----------- Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights. 12. Survival of Rights. ------------------ (a) All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an agent of the Company and shall continue thereafter so long as Indemnitee shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal, arbitrational, administrative or investigative, by reason of the fact that Indemnitee was serving in the capacity referred to herein. (b) The Company shall require any successor to the Company (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. 13. Interpretation of Agreement. It is understood that the parties --------------------------- hereto intend this Agreement to be interpreted and enforced so as to provide indemnification to the Indemnitee to the fullest extent permitted by law including those circumstances in which indemnification would otherwise be discretionary. 14. Severability. If any provision or provisions of this Agreement ------------ shall be held to be invalid, illegal or unenforceable for any reason whatsoever, (i) the validity, legality and enforceability of the remaining provisions of the Agreement (including without limitation, all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby, and (ii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, all portions of any paragraph of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable and to give effect to Section 13 hereof. 7 15. Modification and Waiver. No supplement, modification or ----------------------- amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 16. Notice. All notices, requests, demands and other communications ------ under this Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand and receipted for by the party addressee or (ii) if mailed by certified or registered mail with postage prepaid, on the third business day after the mailing date. Addresses for notice to either party are as shown on the signature page of this Agreement, or as subsequently modified by written notice. 17. Governing Law. This Agreement shall be governed exclusively by ------------- and construed according to the laws of the State of Delaware as applied to contracts between Delaware residents entered into and to be performed entirely within Delaware. 18. Consent to Jurisdiction. The Company and the Indemnitee each ----------------------- hereby consent to the jurisdiction of the courts of the State of Delaware with respect to any action or proceeding which arises out of or relates to this Agreement. 8 The parties hereto have entered into this Indemnity Agreement effective as of the date first above written. THE COMPANY: AGILE SOFTWARE CORPORATION By___________________________________ Its__________________________________ Address: One Almaden Boulevard San Jose, California 95113 INDEMNITEE: _____________________________________ [NAME] Address: _____________________________________ _____________________________________ 9 EX-10.6 8 REVOLVING CREDIT LOAN AND SECURITY AGREEMENT REVOLVING CREDIT LOAN & SECURITY AGREEMENT (ACCOUNTS AND INVENTORY) EXHIBIT 10.6
- --------------------------------------------------------------------------------------------------------- OBLIGOR# NOTE# AGREEMENT DATE DECEMBER 11, 1996 - --------------------------------------------------------------------------------------------------------- CREDIT LIMIT INTEREST RATE B+1.00% OFFICER NO./INITIALS $1,000,000.00 9.25% 48704 CLAY JONES - ---------------------------------------------------------------------------------------------------------
THIS AGREEMENT is entered into on DECEMBER 11, 1996, between COMERICA BANK- CALIFORNIA ("Bank") as secured party, whose Headquarter Office is 333 WEST SANTA CLARA STREET, SAN JOSE, CA and AGILE SOFTWARE CORPORATION ("Borrower"), a CALIFORNIA CORPORATION whose sole place of business (if it has only one), chief executive office (if it has more than one place of business) or residence (if an individual is located at ONE ALMADEN BLVD., 12TH FLOOR, SAN JOSE, CA. The parties agree as follows: 1. DEFINITIONS ----------- 1.1 "Agreement" as used in this Agreement means and includes this Revolving Credit Loan & Security Agreement (Accounts and Inventory), any concurrent or subsequent rider to this Revolving Credit Loan & Security Agreement (Accounts and Inventory) and any extensions, supplements, amendments or modifications to this Revolving Credit Loan & Security Agreement (Accounts and Inventory) and to any such rider. 1.2 "Bank Expenses" as used in this Agreement means and includes: all costs or expenses required to be paid by Borrower under this Agreement which are paid or advanced by Bank; taxes and insurance premiums of every nature and kind of Borrower paid by Bank; filing, recording, publication and search fees, appraiser fees, auditor fees and costs, and title insurance premiums paid or incurred by Bank in connection with Bank's transactions with Borrower; costs and expenses incurred by Bank in collecting the Receivables (with or without suit) to correct any default or enforce any provision of this Agreement, or in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, disposing of, preparing for sale and/or advertising to sell the Collateral, whether or not a sale is consummated; costs and expenses of suit incurred by Bank in enforcing or defending this Agreement or any portion hereof, including, but not limited to, expenses incurred by Bank in attempting to obtain relief from any stay, restraining order, injunction or similar process which prohibits Bank from exercising any of its rights or remedies; and attorneys' fees and expenses incurred by Bank in advising, structuring, drafting, reviewing, amending, terminating, enforcing, defending or concerning this Agreement, or any portion hereof or any agreement related hereto, whether or not suit is brought. Bank Expenses shall include Bank's in-house legal charges at reasonable rates. 1.3 "Base Rate" as used in this Agreement means that variable rate of interest so announced by Bank at its headquarters office in San Jose, California as its "Base Rate" from time to time and which serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto. 1.4 "Borrower's Books" as used in this Agreement means and includes all of the Borrower's books and records including but not limited to: minute books; ledgers; records indicating, summarizing or evidencing Borrower's assets, liabilities, Receivables, business operations or financial condition, and all information relating thereto, computer programs; computer disk or tape files; computer printouts, computer runs; and other computer prepared information and equipment of any kind. 1.5 "Borrowing Base" as used in this Agreement means the sum of: (1) SEVENTY FIVE percent (75.00%) of the net amount of Eligible Accounts after deducting therefrom all payments, adjustments and credits applicable thereto ("Accounts Receivable Borrowing Base"); and (2) the amount, if any, of the advances against inventory agreed to be made pursuant to any Inventory Rider ("Inventory Borrowing Base"), or other rider, amendment or modification to this Agreement, that may now or hereafter be entered into by Bank and Borrower. Up to $350,000 can be advanced without regard to formula; Upon borrowings exceeding $350,000 (including Letters of Credit) advance on Accounts Receivable will be limited, in aggregate, to 75% of eligible accounts receivable. 1.6 "Cash Flow" as used in this Agreement means, for any applicable period of determination, the Net Income (after deduction for income taxes and other taxes of such person determined by reference to income or profits of such person) for such period, plus, to the extent deducted in computation of such Net Income, the amount of depreciation and amortization expense and the amount of deferred tax liability during such period, all as determined in accordance with GAAP. The applicable period of determination will be N/A, beginning with the period from ____________ to _________________________. 1.7 "Collateral" as used in this Agreement means and includes each and all of the following: the Receivables; the Intangibles; the negotiable collateral, the inventory; all money, deposit accounts and all other assets of Borrower in which Bank receives a security interest or which hereafter come into the possession, custody or control of Bank; and the proceeds of any of the foregoing, including, but not limited to, proceeds of insurance covering the collateral and any and all Receivables, Intangibles, negotiable collateral, inventory, equipment, money, deposit accounts or other tangible and intangible property of borrower resulting from the sale or other disposition of the collateral, and the proceeds thereof. Notwithstanding anything to the contrary contained herein, collateral shall not include any waste or other materials which have been or may be designated as toxic or hazardous by Bank. 1.8 "Credit" as used in this Agreement means all Obligations, except those obligations arising pursuant to any other separate contract, instrument, note, or other separate agreement which, by its terms, provides for a specified interest rate and term. 1 REVOLVING LOAN & SECURITY AGREEMENT (ACCOUNTS & INVENTORY) 1.9 "Current Assets" as used in this Agreement means, as of any applicable date of determination, all cash, non-affiliated customer receivables, United States government securities, claims against the United States government, and inventories. 1.10 "Current Liabilities" as used in this Agreement means, as of any applicable date of determination, (i) all liabilities of a person that should be classified as current in accordance with GAAP, including without limitation any portion of the principal of the Indebtedness classified as current, plus (ii) to the extent not otherwise included, all liabilities of the Borrower to any of its affiliates whether or not classified as current in accordance with GAAP. 1.11 "Daily Balance" as used in this Agreement means the amount determined by taking the amount of the Credit owed at the beginning of a given day, adding any new Credit advanced or incurred on such date, and subtracting any payments or collections which are deemed to be paid and are applied by Bank in reduction of the Credit on that date under the provisions of this Agreement. 1.12 "Eligible Accounts" as used in this Agreement means and includes those accounts of Borrower which are due and payable within THIRTY (30) days, or ------ ---- less, from the date of invoice, have been validly assigned to Bank and strictly comply with all of Borrower's warranties and representations to Bank; but Eligible Accounts shall not include the following: (a) accounts with respect to which the account debtor is an officer, employee, partner, joint venturer or agent of Borrower; (b) accounts with respect to which goods are placed on consignment, guaranteed sale or other terms by reason of which the payment by the account debtor may be conditional; (c) accounts with respect to which the account debtor is not a resident of the United States; (d) accounts with respect to which the account debtor is the United States or any department, agency or instrumentality of the United States; (e) accounts with respect to which the account debtor is any State of the United States or any city, county, town, municipality or division thereof; (f) accounts with respect to which the account debtor is a subsidiary of, related to, affiliated or has common shareholders, officers or directors with Borrower; (g) accounts with respect to which Borrower is or may become liable to the account debtor for goods sold or services rendered by the account debtor to Borrower; (h) accounts not paid by an account debtor within ninety (90) days from the date of the invoice; (i) accounts with respect to which account debtors dispute liability or make any claim, or have any defense, crossclaim, counterclaim, or offset; (j) accounts with respect to which any insolvency Proceeding is filed by or against the account debtor, or if an account debtor becomes insolvent, fails or goes out of business; and (k) accounts owed by any single account debtor which exceed twenty percent (20%) of all of the Eligible Accounts; and (l) accounts with a particular account debtor on which over twenty-five percent (25%) of the aggregate amount owing is greater than ninety (90) days from the date of the invoice. 1.13 "Event of Default" as used in this Agreement means those events described in Section 7 contained herein below. 1.14 "Fixed Charges" as used in this Agreement means and includes, for any applicable period of determination, the sum, without duplication, of (a) all interest paid or payable during such period by a person on debt of such person, plus (b) all payments of principal or other sums paid or payable during such period by such person with respect to debt of such person having a final maturity more than one year from the date of creation of such debt, plus (c) all debt discount and expense amortized or required to be amortized during such period by such person, plus (d) the maximum amount of all rents and other payments paid or required to be paid by such person during such period under any lease or other contract or arrangement providing for use of real or personal property in respect of which such person is obligated as a lessee, use or obligor, plus (e) all dividends and other distributions paid or payable by such person or otherwise accumulating during such period on any capital stock of such person, plus (f) all loans or other advances made by such person during such period to any Affiliate of such person. The applicable period of determination will be N/A, beginning with the period from ________________ --- to ____________________. 1.15 "GAAP" as used in this Agreement means as of any applicable period, generally accepted accounting principles in effect during such period. 1.16 "Insolvency Proceeding" as used in this Agreement means and includes any proceeding or case commenced by or against the Borrower, or any guarantor of Borrower's Obligations, or any of borrower's account debtors, under any provisions of the Bankruptcy Code, as amended, or any other bankruptcy or insolvency law, including but not limited to assignments for the benefit of creditors, formal or informal moratoriums, composition or extensions with some or all creditors, any proceeding seeking a reorganization, arrangement or any other relief under the Bankruptcy code, as amended, or any other bankruptcy or insolvency law. 1.17 "Intangibles" as used in this Agreement means and includes all of Borrower's present and future general intangibles and other personal property (including, without limitation, any and all rights in any legal proceedings, goodwill, patents, trade names, copyrights, trademarks, blueprints, drawings, purchase orders, computer programs, computer disks, computer tapes, literature, reports, catalogs and deposit accounts) other than goods and Receivables, as well as Borrower's Books relating to any of the foregoing. 1.18 "Inventory" as used in this Agreement means and includes all present and future inventory in which Borrower has any interest, including, but not limited to, goods held by Borrower for sale or lease or to be furnished under a contract of service and all of Borrower's present and future raw materials, work in process, finished goods, advertising materials, and packing and shipping materials, wherever located and any documents of title representing any of the above, and any equipment, fixtures or other property used in the storing, moving, preserving, identifying, accounting for and shipping of preparing for the shipping of inventory, and any and all other items hereafter acquired by Borrower by way of substitution, 2 REVOLVING LOAN & SECURITY AGREEMENT (ACCOUNTS & INVENTORY) replacement, return, repossession or otherwise, and all additions and accessions thereto, and the resulting product or mass, and any documents of title respecting any of the above. 1.19 "Net Income" as used in this Agreement means the net income (or loss) of a person for any period determined in accordance with GAAP but excluding in any event: (a) any gains or losses on the sale or other disposition, not in the ordinary course of business, of investments or fixed or capital assets, and any taxes on the excluded gains and any tax deductions or credits on account on any excluded losses; and (b) in the case of the Borrower, net earnings of any Person in which Borrower has an ownership interest, unless such net earnings shall have actually been received by Borrower in the form of cash distributions. 1.20 "Judicial Officer or Assignee" as used in this Agreement means and includes any trustee, receiver, controller, custodian, assignee for the benefit of creditors or any other person or entity having powers or duties like or similar to the powers and duties of trustee, receiver, controller, custodian or assignee for the benefit of creditors. 1.21 "Obligations" as used in this Agreement means and includes any and all loans, advances, overdrafts, debts, liabilities (including, without limitation, any and all amounts charged to Borrower's account pursuant to any agreement authorizing Bank to charge Borrower's account), obligations, lease payments, guaranties, covenants and duties owing by Borrower to Bank of any kind and description whether advanced pursuant to or evidenced by this Agreement; by any note or other instrument; or by any other agreement between Bank and Borrower and whether or not for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including, without limitation, any debt, liability or obligation owing from Borrower to others which Bank may have obtained by assignment, participation, purchase or otherwise, and further including, without limitation, all interest not paid when due and all Bank Expenses which Borrower is required to pay or reimburse by this Agreement, by law, or otherwise. 1.22 "Person" or "person" as used in this Agreement means and includes any individual, corporation, partnership, joint venture, association, trust, unincorporated association, joint stock company, government, municipality, political subdivision or agency, or other entity. 1.23 "Receivables" as used in this Agreement means and includes all presently existing and hereafter arising accounts, instruments, documents, chattel paper, general intangibles, all other forms of obligations owing to Borrower, all of Borrower's rights in, to and under all purchase orders heretofore or hereafter received, all moneys due to Borrower under all contracts or agreements (whether or not yet earned or due), all merchandise returned to or reclaimed by Borrower and the Borrower's books (except minute books) relating to any of the foregoing. 1.24 "Subordinated Debt" as used in this Agreement means indebtedness of the Borrower to third parties which has been subordinated to the Obligations pursuant to a subordination agreement in form and content satisfactory to the Bank. 1.25 "Subordination Agreement" as used in this Agreement means a subordination agreement in form satisfactory to Bank making all present and future indebtedness of the Borrower to N/A subordinate to the Obligations. --- 1.26 "Tangible Effective Net Worth" as used in this Agreement means net worth as determined in accordance with GAAP consistently applied, increased by Subordinated Debt, if any, and decreased by the following: patents, licenses, goodwill, subscription lists, organization expenses, trade receivables converted to notes, money due from affiliates (including officers, directors, subsidiaries and commonly held companies). 1.27 "Tangible Net Worth" as used in this Agreement means, as of any applicable date of determination, the excess of a. the net book value of all assets of a person (other than patents, patent rights, trademarks, trade names, franchises, copyrights, licenses, goodwill, and similar intangible assets) after all appropriate deductions in accordance with GAAP (including, without limitation, reserves for doubtful receivables, obsolescence, depreciation and amortization), over b. all Debt of such person. 1.28 "Total Liabilities" as used in this Agreement means the total of all items of indebtedness, obligation or liability which, in accordance with GAAP consistently applied, would be included in determining the total liabilities of the Borrower as of the date Total Liabilities is to be determined, including without limitation (a) all obligations secured by any mortgage, pledge, security interest or other lien on property owned or acquired, whether or not the obligations secured thereby shall have been assumed; (b) all obligations which are capitalized lease obligations; and (c) all guaranties, endorsements or other contingent or surety obligations with respect to the indebtedness of others, whether or not reflected on the balance sheets of the Borrower, including any obligation to furnish funds, directly or indirectly through the purchase of goods, supplies, services, or by way of stock purchase, capital contribution, advance or loan or any obligation to enter into a contract for any of the foregoing. 1.29 "Working Capital" as used in this Agreement means, as of any applicable date of determination, Current Assets less Current Liabilities. 3 REVOLVING LOAN & SECURITY AGREEMENT (ACCOUNTS & INVENTORY) 1.30 Any and all terms used in this Agreement shall be construed and defined in accordance with the meaning and definition of such terms under and pursuant to the California Uniform Commercial Code (hereinafter referred to as the "Code") as amended. 1.31 As of 6/30/1997 all existing current obligations under stand-by and commercial Letters of Credit will be reserved under the Borrowing Base. 2. LOAN AND TERMS OF PAYMENT ------------------------- For value received, Borrower promises to pay to the order of Bank such amount, as provided below, together with interest, as provided for below. 2.1 Upon the request of Borrower, made at any time and from time to time during the term hereof, and so long as no Event of Default has occurred, Bank shall lend to Borrower an amount equal to the Borrowing Base; provided, however, that in no event shall Bank be obligated to make advances to Borrower under this Section 2.1 whenever the Daily Balance exceeds, at any time, either the Borrowing Base or the sum of ONE MILLION AND NO/100 ---------------------- ($1,000,000.00), such amount being referred to herein as an "Overadvance". --------------- 2.2 Except as hereinbelow provided, the Credit shall bear interest, on the Daily Balance owing, at a rate of ONE AND NO/1000 (1.000) percentage points --------------- ------- per annum above the Base Rate (the "Rate"). The Credit shall bear interest, from and after the occurrence of an Event of Default and without constituting a waiver of any such Event of Default, on the Daily Balance owing, at a rate three (3) percentage points per annum above the Rate. All Interest chargeable under this Agreement that is based upon a per annum calculation shall be computed on the basis of a three hundred sixty (360) day year for actual days elapsed. The Base Rate as of the date of this Agreement is EIGHT AND 250/1000 ------------------ (8.250%) per annum. In the event that the Base Rate announced is, from time -------- to time hereafter changed, adjustment in the Rate shall be made and based on the Base Rate in effect on the date of such change. The Rate, as adjusted, shall apply to the Credit until the Base Rate is adjusted again. The minimum interest payable by the Borrower under this Agreement shall in no event be less than N/A per month. All interest payable by Borrower under the Credit, --- shall be due and payable on the first day of each calendar month during the term of this Agreement and Bank may, at its option, elect to treat such interest and any and all Bank Expenses as advances under the Credit, which amounts shall thereupon constitute Obligations and shall thereafter accrue interest at the rate applicable to the Credit under the terms of the Agreement. 2.3 Without affecting Borrower's obligation to repay immediately any Overadvance in accordance with Section 2.1 hereof, all Overadvances shall bear additional interest on the amount thereof at a rate equal to N/A --- (N/A%) percentage points per month in excess of the interest rate set forth ------ in Section 2.2, from the date incurred and for each month thereafter, until repaid in full. 3. TERM. ---- 3.1 This Agreement shall remain in full force and effect until JANUARY 1, 1998, or until terminated by notice by Borrower. Notice of such termination by Borrower shall be effectuated by mailing of a registered or certified letter not less than thirty (30) days prior to the effective date of such termination, addressed to the Bank at the address set forth herein and the termination shall be effective as of the date so fixed in such notice. Notwithstanding the foregoing, should Borrower be in default of one or more of the provisions of this Agreement, Bank may terminate this Agreement at any time without notice. Notwithstanding the foregoing, should either Bank or Borrower become insolvent or unable to meet its debts as they mature, or fail, suspend, or go out of business, the other party shall have the right to terminate this Agreement at any time without notice. On the date of termination all Obligations shall become immediately due and payable without notice or demand; no notice of termination by Borrower shall be effective until Borrower shall have paid all Obligations to Bank in full. Notwithstanding termination, until all Obligations have been fully satisfied, Bank shall retain its security interest in all existing Collateral and Collateral arising thereafter, and Borrower shall continue to perform all of its Obligations. 3.2 After termination and when Bank has received payment in full of Borrower's obligations to Bank, Bank shall reassign to Borrower all Collateral held by Bank, and shall execute a termination of all security agreements and security interests given by Borrower to Bank, upon the execution and delivery of mutual general releases. 4. CREATION OF SECURITY INTEREST. ----------------------------- 4.1 Borrower hereby grants to Bank a continuing security interest in all presently existing and hereafter arising Collateral in order to secure prompt repayment of any and all Obligations owed by Borrower to Bank and in order to secure prompt performance by Borrower of each and all of its covenants and Obligations under this Agreement and otherwise created. Bank's security interest in the Collateral shall attach to all Collateral without further act on the part of Bank or Borrower. In the event that any Collateral, including proceeds, is evidenced by or consists of a letter of credit, advice of credit, instrument, money, negotiable documents, chattel paper or similar property (collectively, "Negotiable Collateral"), Borrower shall, immediately upon receipt thereof, endorse and assign such Negotiable Collateral over to Bank and deliver actual physical possession of the Negotiable Collateral to Bank. 4.2 Bank's security interest in Receivables shall attach to all Receivables without further act on the part of Bank or Borrower. Upon request from Bank, Borrower shall provide Bank with schedules describing all Receivables created or acquired by Borrower (including without limitation agings listing the names and addresses of, and amounts owing by date by account debtors), and shall execute and deliver written assignments of all Receivables to Bank all in a form acceptable to Bank, provided, however, Borrower's failure to execute and deliver such schedules and/or assignments shall not effect or limit Bank's security interest and other rights in and to the Receivables. Together with each schedule, 4 REVOLVING LOAN & SECURITY AGREEMENT (ACCOUNTS AND INVENTORY) Borrower shall furnish Bank with copies of Borrower's customers' invoices or the equivalent, and original shipping or delivery receipts for all merchandise sold, and Borrower warrants the genuineness thereof. Bank or Bank's designee may notify customers or account debtors of collection costs and expenses to Borrower's account but, unless and until Bank does so or gives Borrower other written instructions, Borrower shall collect all Receivables for Bank, receive in trust all payments thereon as Bank's trustee, and, if so requested to do so from Bank, Borrower shall immediately deliver said payments to Bank in their original form as received from the account debtor and all letters of credit, advices of credit, instruments, documents, chattel paper or any similar property evidencing or constituting Collateral. Notwithstanding anything to the contrary contained herein, if sales of inventory are made for cash, Borrower shall immediately deliver to Bank, in identical form, all such cash, checks, or other forms of payment which Borrower receives. The receipt of any check or other item of payment by Bank shall not be considered a payment on account until such check or other item of payment is honored when presented for payment, in which event, said check or other item of payment shall be deemed to have been paid to Bank TWO (2) calendar days after the date Bank actually receives such check or other item of payment. 4.3 Bank's security interest in inventory shall attach to all inventory without further act on the part of Bank or Borrower. Upon Bank's request Borrower will from time to time at Borrower's expense pledge, assemble and deliver such inventory to Bank or to a third party as Bank's bailee; or hold the same in trust for Bank's account or store the same in a warehouse in Bank's name; or deliver to Bank documents of title representing said inventory; or evidence of Bank's security interest in some other manner acceptable to Bank. Until a default by Borrower under this Agreement or any other Agreement between Borrower and Bank. Borrower may, subject to the provisions hereof and consistent herewith, sell the inventory, but only in the ordinary course of Borrower's business. A sale of inventory in Borrower's ordinary course of business does not include an exchange or a transfer in partial or total satisfaction of a debt owing by Borrower. 4.4 Borrower shall execute and deliver to Bank concurrently with Borrower's execution of this Agreement, and at any time or times hereafter at the request of Bank, all financing statements, continuation financing statements, security agreements, mortgages, assignments, certificates of title, affidavits, reports, notices, schedules of accounts, letters of authority and all other documents that Bank may request, in form satisfactory to Bank, to perfect and maintain perfected Bank's security interest in the Collateral and in order to fully consummate all of the transactions contemplated under this Agreement. Borrower hereby irrevocably makes, constitutes and appoints Bank (and any of Bank's officers, employees or agents designated by Bank) as Borrower's true and lawful attorney-in-fact with power to sign the name of Borrower on any financing statements, continuation financing statements, security agreement, mortgage, assignment, certificate of title, affidavit, letter of authority, notice of other similar documents which must be executed and/or filed in order to perfect or continue perfected Bank's security interest in the Collateral. Borrower shall make appropriate entries in Borrower's Books disclosing Bank's security interest in the Receivables. Bank (through any of its officers, employees or agents) shall have the right at any time or times hereafter during Borrower's usual business hours, or during the usual business hours of any third party having control over the records of Borrower, to inspect and verify Borrower's Books in order to verify the amount or condition of, or any other matter, relating to, said Collateral and Borrower's financial condition. 4.5 Borrower appoints Bank or any other person whom Bank may designate as Borrower's attorney-in-fact, with power to endorse Borrower's name on any checks, notes, acceptances, money order, drafts or other forms of payment or security that may come into Bank's possession; to sign Borrower's name on any invoice or bill of lading relating to any Receivables, on drafts against account debtors, on schedules and assignments of Receivables, on verifications of Receivables and on notices to account debtors; to establish a lock box arrangement and/or to notify the post office authorities to change the address for delivery of Borrower's mail addressed to Borrower to an address designated by Bank, to receive and open all mail addressed to Borrower, and to retain all mail relating to the Collateral and forward all other mail to Borrower; to send, whether in writing or by telephone, requests for verification of Receivables; and to do all things necessary to carry out this Agreement. Borrower ratifies and approves all acts of the attorney-in- fact. Neither Bank nor its attorney-in-fact will be liable for any acts or omissions or for any error of judgement or mistake of fact or law. This power being coupled with an interest, is irrevocable so long as any Receivables in which Bank has a security interest remain unpaid and until the Obligations have been fully satisfied. 4.6 In order to protect or perfect any security interest which Bank is granted hereunder, Bank may, in its sole discretion, discharge any lien or encumbrance or bond the same, pay any insurance, maintain guards, warehousemen, or any personnel to protect the Collateral, pay any service bureau, or, obtain any records, and all costs for the same shall be added to the Obligations and shall be payable on demand. 4.7 Borrower agrees that Bank may provide information relating to this Agreement or relating to Borrower to Bank's parent, affiliates, subsidiaries and service providers. 5. CONDITIONS PRECEDENT -------------------- 5.1 Conditions precedent to the making of the loans and the extension of the financial accommodations hereunder, Borrower shall execute, or cause to be executed, and deliver to Bank, in form and substance satisfactory to Bank and its counsel, the following: a. This Agreement and other documents required by Bank; b. Financing statements (Form UCC-1) in form satisfactory to Bank for filing and recording with the appropriate governmental authorities; 5 REVOLVING LOAN & SECURITY AGREEMENT (ACCOUNTS AND INVENTORY) c. If Borrower is a corporation, then certified extracts from the minutes of the meeting of its board of directors, authorizing the borrowings and the granting of the security interest provided for herein and authorizing specific officers to execute and deliver the agreements provided for herein; d. If Borrower is a corporation, then a certificate of good standing showing that Borrower is in good standing under the laws of the state of its incorporation and certificates indicating that Borrower is qualified to transact business and is in good standing in any other state in which it conducts business; e. If Borrower is a partnership, then a copy of Borrower's partnership agreement certified by each general partner of Borrower; f. UCC searches, tax lien and litigation searches, fictitious business statement filings, insurance certificates, notices or other similar documents which Bank may require and in such form as Bank may require, in order to reflect, perfect or protect Bank's first priority security interest in the Collateral and in order to fully consummate all of the transactions contemplated under this Agreement; g. Evidence that Borrower has obtained insurance and acceptable endorsements; h. Waivers executed by landlords and mortgagees of any real property on which any Collateral is located; and i. Warranties and representations of officers. 6. WARRANTIES REPRESENTATIONS AND COVENANTS. ---------------------------------------- 6.1 If so requested by Bank, Borrower shall, at such intervals designated by Bank, during the term hereof execute and deliver a Report of Accounts Receivable or similar report, in form customarily used by Bank. Borrower's Borrowing Base at all times pertinent hereto shall not be less than the advances made hereunder. Bank shall have the right to recompute Borrower's Borrowing Base in conformity with this Agreement. 6.2 If any warranty is breached as to any account, or any account is not paid in full by an account debtor within NINETY (90) days from the date of invoice, or an account debtor disputes liability or makes any claim with respect thereto, or a petition in bankruptcy or other application for relief under the Bankruptcy Code or any other insolvency law is filed by or against an account debtor, or an account debtor makes and assignment for the benefit of creditors, becomes insolvent, fails or goes out of business, then Bank may deem ineligible any and all accounts owing by that account debtor, and reduce Borrower's Borrowing Base by the amount thereof. Bank shall retain its security interest in all Receivables and accounts, whether eligible or ineligible, until all Obligations have been fully paid and satisfied. Returns and allowances, if any, as between Borrower and its customers, will be on the same basis and in accordance with the usual customary practices of the Borrower, as they exist at this time. Any merchandise which is returned by an account debtor or otherwise recovered shall be set aside, marked with Bank's name, and Bank shall retain a security interest therein. Borrower shall promptly notify Bank of all disputes and claims and settle or adjust them on terms approved by Bank. After default by Borrower hereunder, no discount, credit or allowance shall be granted to any account debtor by Borrower and no return of merchandise shall be accepted by Borrower without Bank's consent, Bank may, after default by Borrower, settle or adjust disputes and claims directly with account debtors for amounts and upon terms which Bank considers advisable, and in such cases Bank will credit Borrower's account with only the net amounts received by Bank in payment of the accounts, after deducting all Bank Expenses in connection therewith. 6.3 Borrower warrants, represents, covenants and agrees that: a. Borrower has good and marketable title to the Collateral. Bank has and shall continue to have a first priority perfected security interest in and to the Collateral. The Collateral shall at all times remain free and clear of all liens, encumbrances and security interests (except those in favor of Bank). b. All accounts are and will, at all times pertinent hereto, be bona fide existing obligations created by the sale and delivery of merchandise or the rendition of services to account debtors in the ordinary course of business, free of liens, claims, encumbrances and security interests (except as held by Bank and except as may be consented to, in writing, by Bank) and are unconditionally owed to Borrower without defenses, disputes, offsets, counterclaims, rights of return or cancellation, and Borrower shall have received no notice of actual or imminent bankruptcy or insolvency of any account debtor at the time an account due from such account debtor is assigned to Bank. c. At the time each account is assigned to Bank, all property giving rise to such account shall have been delivered to the account debtor or to the agent for the account debtor for immediate shipment to, and unconditional acceptance by, the account debtor. Borrower shall deliver to Bank, as Bank may from time to time require, delivery receipts, customer's purchase orders, shipping instruction, bills of lading and any other evidence of shipping arrangements. Absent such a request by Bank, copies of all such documentation shall be held by Borrower as custodian for Bank. 6.4 At the time each eligible account is assigned to Bank, all such eligible accounts will be due and payable on terms set forth in Section 1.12, or on such other terms approved in writing by Bank in advance of the creation of such accounts and which are expressly set forth on the face of all invoices, copies of which shall be held by Borrower as custodian for Bank, and no such eligible account will then be past due. 6 REVOLVING LOAN & SECURITY AGREEMENT (ACCOUNTS AND INVENTORY) 6.5 Borrower shall keep the inventory only at the following locations: _______ __________________________________________ and the owner or mortgagees of the respective locations are:____________________________________________________ a. Borrower, immediately upon demand by Bank therefor, shall now and from time to time hereafter, at such intervals as are requested by Bank, deliver to Bank, designations of inventory specifying Borrower's cost of inventory, the wholesale market value thereof and such other matters and information relating to the inventory as Bank may request; b. Borrower's inventory, valued at the lower of Borrower's cost or the wholesale market value thereof, at all times pertinent hereto shall not be less than N/A Dollars ($N/A) of which no less than N/A Dollars ($N/A) --- ------ --- ------ shall be in raw materials and finished goods; c. All of the inventory is and shall remain free from all purchase money or other security interests, liens or encumbrances, except as held by Bank; d. Borrower does now keep and hereafter at all times shall keep correct and accurate records itemizing and describing the kind, type, quality and quantity of the inventory, its cost therefor and selling price thereof, and the daily withdrawals therefrom and additions thereto, all of which records shall be available upon demand to any of Bank's officers, agents and employees for inspection and copying; e. All inventory, now and hereafter at all times, shall be new inventory of good and merchantable quality free from defects; f. Inventory is not now and shall not at any time or times hereafter be located or stored with a bailee, warehouseman or other third party without Bank's prior written consent, and, in such event, Borrower will concurrently therewith cause any such bailee, warehouseman or other third party to issue and deliver to Bank, in a form acceptable to Bank, warehouse receipts in Bank's name evidencing the storage of inventory or other evidence of Bank's prior rights in the inventory. In any event, Borrower shall instruct any third party to hold all such inventory for Bank's account subject to Bank's security interests and its instructions; and g. Bank shall have the right upon demand now and/or at all times hereafter, during Borrower's usual business hours, to inspect and examine the inventory and to check and test the same as to quality, quantity, value and condition and Borrower agrees to reimburse Bank for Bank's reasonable costs and expenses in so doing. 6.6 Borrower represents, warrants and covenants with Bank that Borrower will not, without Bank's prior written consent: a. Grant a security interest in or permit a lien, claim or encumbrance upon any of the Collateral to any person, association, firm, corporation, entity or governmental agency or instrumentality; b. Permit any levy, attachment or restraint to be made affecting any of Borrower's assets; c. Permit any Judicial Officer or Assignee to be appointed or to take possession of any or all of Borrower's assets; d. Other than sales of inventory in the ordinary course of Borrower's business, to sell, lease, or otherwise dispose of, move, or transfer, whether by sale or otherwise, any of Borrower's assets; e. Change its name, business structure, corporate identity or structure; add any new fictitious names, liquidate, merge or consolidate with or into any other business organization; f. Move or relocate any Collateral; g. Acquire any other business organization; h. Enter into any transaction not in the usual course of Borrower's business; i. Make any investment in securities of any person, association, firm, entity, or corporation other than the securities of the United States of America; j. Make any change in Borrower's financial structure or in any of its business objectives, purposes or operations which would adversely effect the ability of Borrower to repay Borrower's Obligations; k. Incur any debts outside the ordinary course of Borrower's business except renewals or extensions of existing debts and interest thereon; l. Make any advance or loan except in the ordinary course of Borrower's business as currently conducted; 7 REVOLVING LOAN & SECURITY AGREEMENT (ACCOUNTS AND INVENTORY) m. Make icons, advances or extensions of credit to any Person, except for sales on open account and otherwise in the ordinary course of business; n. Guarantee or otherwise, directly or indirectly, in any way be or become responsible for obligations of any other Person, whether by agreement to purchase the indebtedness of any other Person, agreement for the furnishing of funds to any other Person through the furnishing of goods, supplies or services, by way of stock purchase, capital contribution, advance or loan, for the purpose of paying or discharging (or causing the payment or discharge of) the indebtedness of any other Person, or otherwise, except for the endorsement of negotiable instruments by the Borrower in the ordinary course of business for deposit or collection. o. (a) Sell, lease, transfer or otherwise dispose of properties and assets having an aggregate book value of more than N/A Dollars ($N/A) (whether in one --- ------ transaction or in a series of transactions) except as to the sale of inventory in the ordinary course of business; (b) change its name, consolidate with or merge into any other corporation, permit another corporation to merge into it, acquire all or substantially all the properties or assets of any other Person, enter into any reorganization or recapitalization or reclassify its capital stock, or (c) enter into any sale-leaseback transaction; p. Subordinate any indebtedness due to it from a person to indebtedness of other creditors of such person; q. Purchase or hold beneficially any stock or other securities of, or make any investment or acquire any interest whatsoever in, any other Person except for the common stock of the Subsidiaries owned by the Borrower on the date of this Agreement and except for certificates of deposit with maturities of one year or less of United States commercial banks with capital, surplus and undivided profits in excess of $100,000,000 and direct obligations of the United States Government maturing within one year from the date of acquisition thereof; or r. Allow any fact, condition or event to occur or exist with respect to any employee pension or profit sharing plans established or maintained by it which might constitute grounds for termination of any such plan or for the court appointment of a trustee to administer any such plan. 6.7 Borrower is not a merchant whose sales for resale of goods for personal, family or household purposes exceeded seventy-five percent (75%) in dollar volume of its total sales of all goods during the 12 months preceding the filing by Bank of a financing statement describing the Collateral. At no time hereafter shall Borrower's sales for resale of goods for personal, family or household purposes exceed seventy-five (75%) in dollar volume of its total sales. 6.8 Borrower's sole place of business or chief executive office or residence is located at the address indicated above and Borrower covenants and agrees that it will not, during the term of the Agreement, without prior written notification to Bank, relocate said sole place of business or chief executive office or residence. 6.9 If Borrower is a corporation, Borrower represents, warrants and covenants as follows: a. Borrower will not make any distribution or declare or pay any dividend (in stock or in cash) to any shareholder or on any of its capital stock, of any class, whether now or hereafter outstanding, or purchase, acquire, repurchase, redeem or retire any such capital stock; b. Borrower is and shall at all times hereafter be a corporation duly organized and exleting in good standing under the laws of the state of its incorporation and qualified and licensed to do business in California or any other state in which it conducts its business; c. Borrower has the right and power and is duly authorized to enter into this Agreement; and d. The execution by Borrower of this Agreement shall not constitute a breach of any provision contained in Borrower's articles of incorporation or by-laws, 6.10 The execution of and performance by Borrower of all of the terms and provisions contained in this Agreement shall not result in a breach of or constitute an event of default under any agreement to which Borrower is now or hereafter becomes a party. 6.11 Borrower shall promptly notify Bank in writing of its acquisition by purchase, lease or otherwise of any after acquired property of the type included in the Collateral, with the exception of purchases of inventory in the ordinary course of business. 6.12 All assessments and taxes, whether real, personal or otherwise, due payable by, or imposed, levied or assessed against, Borrower or any of its property have been paid, and shall hereafter be paid in full, before delinquency, Borrower shall make due and timely payment or deposit of all federal, state and local taxes, assessments or contributions required of it by law, and will execute and deliver to Bank, on demand, appropriate certificates attesting to the payment or deposit thereof. Borrower will make timely payment or deposit of all F.I.C.A. payments and withholding taxes required of it by applicable laws, and will upon request furnish Bank with proof satisfactory to it that Borrower has made such payments or deposit. If Borrower fails to pay any such assessment, tax, contribution, or make such deposit, or furnish the required proof, Bank may, in its sole and absolute discretion and without notice to Borrower, 8 REVOLVING LOAN & SECURITY AGREEMENT (Accounts & Inventory) (i) make payment of the same or any part thereof; or (ii) set up such reserves in Borrower's account as Bank deems necessary to satisfy the liability therefor, or both. Bank may conclusively rely on the usual statements of the amount owing or other official statements issued by the appropriate governmental agency. Each amount so paid or deposited by Bank shall constitute a Bank Expense and an additional advance to Borrower. 6.13 There are no actions or proceedings pending by or against Borrower or any guarantor of Borrower before any court or administrative agency and Borrower has no knowledge of any pending, threatened or imminent litigation, governmental investigations or claims, complaints, actions or prosecutions involving Borrower or any guarantor of Borrower, except as heretofore specifically disclosed in writing to Bank. If any of the foregoing arise during the term of the Agreement, Borrower shall immediately notify Bank in writing. 6.14 a. Borrower, at its expense, shall keep and maintain its assets insured against loss or damage by fire, theft, explosion, sprinklers and all other hazards and risks ordinarily insured against by other owners who use such properties in similar businesses for the full insurable value thereof. Borrower shall also keep and maintain business interruption insurance and public liability and property damage insurance relating to Borrower's ownership and use of the Collateral and its other assets. All such policies of insurance shall be in such form, with such companies, and in such amounts as may be satisfactory to Bank. Borrower shall deliver to Bank certified copies of such policies of insurance and evidence of the payments of all premiums therefor. All such policies of insurance (except those of public liability and property damage) shall contain an endorsement in a form satisfactory to Bank showing Bank as a loss payee thereof, with a waiver of warranties (Form 438-BFU), and all proceeds payable thereunder shall be payable to Bank and, upon receipt by Bank shall be applied on account of the Obligations owing to Bank. To secure the payment of the Obligations, Borrower grants Bank a security interest in and to all such policies of insurance (except those of public liability and property damage) and the proceeds thereof, and Borrower shall direct all insurers under such policies of insurance to pay all proceeds thereof directly to Bank. b. Borrower hereby irrevocably appoints Bank (and any of Bank's officers, employees or agents designated by Bank) as Borrower's attorney for the purpose of making, selling and adjusting claims under such policies of insurance, endorsing the name of Borrower on any check, draft, instruments or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect to such policies of insurance. Borrower will not cancel any of such policies without Bank's prior written consent. Each such insurer shall agree by endorsement upon the policy or policies of insurance issued by it to Borrower as required above, or by independent instruments furnished to Bank, that it will give Bank at least ten (10) days written notice before any such policy or policies of insurance shall be altered or cancelled, and that no act or default of Borrower, or any other person, shall affect the right of Bank to recover under such policy or policies of insurance required above or to pay any premium in whole or in part relating thereto. Bank without waiving or releasing any Obligations or any Event of Default, may, but shall have no obligation to do so, obtain and maintain such policies of insurance and pay such premiums and take any other action with respect to such policies which Bank deems advisable. All sums so disbursed by Bank, as well as reasonable attorneys' fees, court costs, expenses and other charges relating thereto, shall constitute Bank Expenses and are payable on demand. 6.15 All financial statements and information relating to Borrower which have been or may hereafter be delivered by Borrower to Bank are true and correct and have been prepared in accordance with GAAP consistently applied and there has been no material adverse change in the financial condition of Borrower since the submission of such financial information to Bank. 6.16 a. Borrower at all times hereafter shall maintain a standard and modern system of accounting in accordance with GAAP consistently applied with ledger and account cards and/or computer tapes and computer disks, computer printouts and computer records pertaining to the Collateral which contain information as may from time to time be requested by Bank, not modify or change its method of accounting or enter into, modify or terminate any agreement presently existing, or at any time hereafter entered into with any third party accounting firm and/or service bureau for the preparation and/or storage of Borrower's accounting records without the written consent of Bank first obtained and without said accounting firm and/or service bureau agreeing to provide information regarding the Receivables and Inventory and Borrower's financial condition to Bank; permit Bank and any of its employees, officers or agents, upon demand, during Borrower's usual business hours, or the usual business hour of third persons having control thereof, to have access to and examine all of the Borrower's Books relating to the Collateral, Borrower's Obligations to Bank, Borrower's financial condition and the results of Borrower's operations and in connection therewith, permit Bank or any of its agents, employees or officers to copy and make extracts therefrom. b. Borrower shall deliver to Bank within thirty (30) days after the end of each month, a company prepared balance sheet and profit and loss statement covering Borrower's operations and deliver to Bank within one hundred twenty (120) days after the end of each of Borrower's fiscal years a(n) audited statement of the financial condition of the Borrower for each such fiscal year, including but not limited to, a balance sheet and profit and loss statement and any other report requested by Bank relating to the Collateral and the financial condition of Borrower, and a certificate signed by an authorized employee of Borrower to the effect that all reports, statements, computer disk or tape files, computer printouts, computer runs, or other computer prepared information of any kind or nature relating to the foregoing or documents delivered or caused to be delivered to Bank under this subparagraph are complete, correct and thoroughly present the financial condition of borrower and that there exists on the date of delivery to Bank no condition or event which constitutes a breach or Event of Default under this Agreement. 9. REVOLVING LOAN & SECURITY AGREEMENT (Accounts & Inventory) c. In addition to the financial statements requested above, the Borrower agrees to provide Bank with the following schedules:
x Accounts Receivable Agings on a MONTHLY basis: * ---------------------- ---------------------------------------- x Accounts Payable Agings on a MONTHLY basis: * ---------------------- ---------------------------------------- Job Progress Reports on a basis; and ______________________ ________________________________________ x BORROWING BASE CERTIFICATES on a MONTHLY basis: * ---------------------- ----------------------------------------
* within 15 days of month end 6.17 Borrower shall maintain the following financial ratios and covenants on a consolidated and non-consolidated basis: a. Working Capital in an amount not less than n/a ------------------------------ ___________________________________________________________________________ b. Tangible Effective Net Worth in an amount not less than $750,000.00 ----------------- ___________________________________________________________________________ c. a ratio of Current Assets to Current Liabilities of not less than n/a ------- ___________________________________________________________________________ d. a quick ratio of cash plus securities plus Receivables to Current Liabilities of not less than 1.25:1.00 ----------------------------------------------- ___________________________________________________________________________ e. a ratio of Total Liabilities (less debt subordinated to Bank) to tangible Effective Net Worth of less than 2.50:1.00 ---------------------------------- ___________________________________________________________________________ f. a ratio of Cash Flow to Fixed Charges of not less than n/a ------------------ ___________________________________________________________________________ g. Net income after taxes of ______________________________________________ ___________________________________________________________________________ h. Borrower shall not without Bank's prior written consent acquire or expend for or commit itself to acquire or expend for fixed assets by lease, purchase or otherwise in an aggregate amount that exceeds no/100 ------------------ n/a Dollars ($ n/a 0.00) in any fiscal year; and - -------------------------- --------------- i. Upon a capital raising event of $1,000,000 or greater, Borrower and ------------------------------------------------------------------------ Lender will review and revisit financial covenants. ------------------------------------------------------------------------ All financial covenants shall be computed in accordance with GAAP consistently applied except as otherwise specifically set forth in this Agreement. All monies due from affiliates (including officers, directors and shareholders) shall be excluded from Borrower assets for all purposes hereunder. 6.18 Borrower shall promptly supply Bank (and cause any guarantor to supply Bank) with such other information (including tax returns) concerning its financial affairs (or that any guarantor) as Bank may request from time to time hereafter, and shall promptly notify Bank of any material adverse change in Borrower's financial condition and of any condition or event which constitutes a breach of or an event which constitutes an Event of Default under this Agreement. 6.19 Borrower is now and shall be at all times hereafter solvent and able to pay its debts (including trade debts) as they mature. 6.20 Borrower shall immediately and without demand reimburse Bank for all sums expended by Bank in connection with any action brought by Bank to correct any default or enforce any provision of this Agreement, including all Bank Expenses; Borrower authorizes and approves all advances and payments by Bank for items described in this Agreement as Bank Expenses. 6.21. Each warranty, representation and agreement contained in this Agreement shall be automatically deemed repeated with each advance and shall be conclusively presumed to have been relied on by Bank regardless of any investigations made or information possessed by Bank. The warranties, representations and agreements set forth herein shall be cumulative and in addition to any and all other warranties, representations and agreements which Borrower shall give, or cause to be given, to Bank, either now or hereafter. 6.22 Borrower shall keep all of its principal bank accounts with Bank and shall notify the Bank immediately in writing of the existence of any other bank account, deposit account, or any other account into which money can be deposited. 6.23. Borrower shall furnish to the Bank: (a) as soon as possible, but in no event later than thirty (30) days after Borrower knows or has reason to know that any reportable event with respect to any deferred compensation plan has occurred, a statement of the chief financial officer of Borrower setting forth the details concerning such reportable 10. REVOLVING LOAN & SECURITY AGREEMENT (Accounts & Inventory) event and the action which Borrower proposes to take with respect thereto, together with a copy of the notice of such reportable event given to the Pension Benefit Guaranty Corporation, if a copy of such notice is available to Borrower; (b) promptly after filing thereof with the United States Secretary of Labor or the Pension Benefit Guaranty Corporation, copies of each annual report with respect to each deferred compensation plan; (c) promptly after receipt thereof, a copy of any notice Borrower may receive from the Pension Benefit Guaranty Corporation or the Internal Revenue Service with respect to any deferred compensation plan; provided, however, this subparagraph shall not apply to notice of general application issued by the Pension Benefit Guaranty Corporation or the Internal Revenue Service; and (d) when the same is made available to participants in the deferred compensation plan, all notices and other forms of information from time to time disseminated to the participants by the administrator of the deferred compensation plan. 6.24 Borrower is now and shall at all times hereafter remain in compliance with all federal, state and municipal laws, regulations and ordinances relating to the handling, treatment and disposal of toxic substances, wastes and hazardous material and shall maintain all necessary authorizations and permits. 6.25 Borrower shall maintain Insurance on the life of N/A in an ------------ amount not to be less than No/100 Dollars ($ n/a ) ------------------------- ---------------- under one or more policies issued by insurance companies satisfactory to Bank, which policies shall be assigned to Bank as security for the Obligations and on which Bank shall be named as sole beneficiary. 6.26 Borrower shall limit direct and indirect compensation paid to the following employees: _______________________, __________________, to an aggregate of N/A Dollars ($ N/A ) per __________. -------------------------- ------------- 7. EVENTS OF DEFAULT ----------------- Any one or more of the following events shall constitute a default by Borrower under the Agreement: a. If Borrower fails or neglects to perform, keep or observe any term, provision, condition, covenant, agreement, warranty or representation contained in this Agreement, or any other present or future agreement between Borrower and Bank; b. If any representation, statement, report, or certificate made or delivered by Borrower, or any of its officers, employees or agents to Bank is not true and correct; c. If Borrower fails to pay when due and payable or declared due and payable, all or any portion of the Borrower's Obligations (whether of principal, interest, taxes, reimbursement of Bank Expenses, or otherwise); d. If there is a material impairment of the prospect of repayment of all or any portion of Borrower's Obligations or a material impairment of the value or priority of Bank's security interest in the Collateral; e. If all or any of Borrower's assets are attached, seized, subject to a writ or distress warrant, or are levied upon, or come into the possession of any Judicial Officer or Assignee and the same are not released, discharged or bonded against within ten (10) days thereafter; f. If any insolvency Proceeding is filed or commenced by or against Borrower without being dismissed within ten (10) days thereafter; g. If any proceeding is filed or commenced by or against Borrower for its dissolution or liquidation; h. If Borrower is enjoined, restrained or in any way prevented by court order from continuing to conduct all or any material part of its business affairs; i. If a notice of lien, levy or assessment is filed of record with respect to any or all of Borrower's assets by the United States Government, or any department, agency or instrumentality thereof, or by any state, county municipal, or other government agency, or if any taxes or debts owing at any time hereafter to any one or more of such entitles becomes a lien, whether choate or otherwise, upon any or all of the Borrower's assets and the same is not paid on the payment date thereof; j. If a judgement or other claim becomes a lien or encumbrance upon any or all of Borrower's assets and the same is not satisfied, dismissed or bonded against within ten (10) days thereafter; k. If Borrower's records are prepared and kept by an outside computer service bureau at the time this Agreement is entered into or during the term or this Agreement such an agreement with an outside service bureau is entered into, and at any time thereafter, without first obtaining the written consent of Bank, Borrower terminates, modifies, amends or changes its contractual relationship with said computer service bureau or said computer service bureau fails to provide Bank with any requested information or financial data pertaining to Bank's Collateral, Borrower's financial condition or the results of Borrower's operations; l. If Borrower permits a default in any material agreement to which Borrower is a party with third parties so as to result in an acceleration of the maturity of Borrower's indebtedness to others, whether under any indenture, agreement or otherwise; 11. REVOLVING LOAN & SECURITY AGREEMENT (Accounts & Inventory) m. If Borrower makes any payment on account of indebtedness which has been subordinated to Borrower's Obligations to Bank; n. If any misrepresentation exists now or thereafter in any warranty or representation made to Bank by any officer or director of Borrower, or if any such warranty or representation is withdrawn by any officer or director; o. If any party subordinating its claims to that of Bank's or any guarantor of Borrower's Obligations dies or terminates its subordination or guaranty, becomes insolvent or an insolvency Proceeding is commenced by or against any such subordinating party or guarantor; p. If Borrower is an individual and Borrower dies; q. If there is a change of ownership or control of N/A percent -------------- (__________ %) or more of the issued and outstanding stock of Borrower; or r. If any reportable event, which the Bank determines constitutes grounds for the termination of any deferred compensation plan by the Pension Benefit Guaranty Corporation or for the appointment by the appropriate United States District Court of a trustee to administer any such plan, shall have occurred and be continuing thirty (30) days after written notice of such determination shall have been given to Borrower by Bank, or any such Plan shall be terminated within the meaning of Title IV of the Employment Retirement Income Security Act ("ERISA"), or a trustee shall be appointed by the appropriate United States District Court to administer any such plan, or the Pension Benefit Guaranty Corporation shall institute proceedings to terminate any plan and in case of any event described in this Section 7.0, the aggregate amount of the Borrower's liability to the Pension Benefit Guaranty Corporation under Sections 4062, 4063 or 4064 of ERISA shall exceed five percent (5%) of Borrower's Tangible Effective Net Worth. Notwithstanding anything contained in Section 7 to the contrary, Bank shall refrain from exercising its rights and remedies and Event of Default shall thereafter not be deemed to have occurred by reason of the occurrence of any of the events set forth in Sections 7.e, 7.f or 7.j of this Agreement if, within ten (10) days from the date thereof, the same is released, discharged, dismissed, bonded against or satisfied; provided, however, if the event is the institution of Insolvency Proceedings against Borrower, Bank shall not be obligated to make advances to Borrower during such cure period. 8. BANK'S RIGHTS AND REMEDIES -------------------------- 8.1 Upon the occurrence of an Event of Default by Borrower under this Agreement, Bank may, at its election, without notice of its election and without demand, do any one or more of the following, all of which are authorized by Borrower: a. Declare Borrower's Obligations, whether evidenced by this Agreement, Installment notes, demand notes or otherwise, immediately due and payable to the Bank; b. Cease advancing money or extending credit to or for the benefit of Borrower under this Agreement, or any other agreement between Borrower and Bank; c. Terminate this Agreement as to any future liability or obligation of Bank, but without affecting Bank's rights and security interests in the Collateral, and the Obligations of the Borrower to Bank. d. Without notice to or demand upon Borrower or any guarantor, make such payments and do such acts as Bank considers necessary or reasonable to protect its security interest in the Collateral. Borrower agrees to assemble the Collateral if Bank so requires and to make the Collateral available to Bank as Bank may designate. Borrower authorizes Bank to enter the premises where the Collateral is located, take and maintain possession of the Collateral and the premises (at no charge to Bank), or any part thereof, and to pay, purchase, contest or compromise any encumbrance, charge or lien which in the opinion of Bank appears to be prior or superior to its security interest and to pay all expenses incurred in connection therewith; e. Without limiting Bank's rights under any security interest, Bank is hereby granted a license or other right to use, without charge, Borrower's labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks and advertising matter, or any property of a similar nature as it pertains to the Collateral, in completing production of, advertising for sale and selling any Collateral and Borrower's rights under all license and all franchise agreement shall inure to Bank's benefit, and Bank shall have the right and power to enter into sublicense agreements with respect to all such rights with third parties on terms acceptable to Bank; f. Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sales and sell (in the manner provided for herein) the inventory; g. Sell or dispose the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower's premises) as is commercially reasonable in the opinion of Bank. It is not necessary that the Collateral be present at any such sale; h. Bank shall give notice of the disposition of the Collateral as follows: 12. REVOLVING LOAN & SECURITY AGREEMENT (Accounts & Inventory) (1) Bank shall give the Borrower and each holder of a security interest in the Collateral who has filed with Bank a written request for notice, a notice in writing of the time and place of public sale, or, if the sale is a private sale or some disposition other than a public sale is to be made of the Collateral, the time on or after which the private sale or other disposition is to be made: (2) The notice shall be personally delivered or mailed, postage prepaid, to Borrower's address appearing in this Agreement, at least five (5) calendar days before the date fixed for the sale, or at least five (5) calendar days before the date on or after which the private sale or other disposition is to be made, unless the Collateral is perishable or threatens to decline speedily in value. Notice to persons other than Borrower claiming an interest in the Collateral shall be sent to such addresses as they have furnished to Bank; (3) If the sale is to be a public sale, Bank shall also give notice of the time and place by publishing a notice one time at least five (5) calendar days before the date of the sale in a newspaper of general circulation in the county in which the sale is to be held; and (4) Bank may credit bid and purchase at any public sale. i. Borrower shall pay all Bank Expenses incurred in connection with Bank's enforcement and exercise of any of its rights and remedies as herein provided, whether or not suit is commenced by Bank; j. Any deficiency which exists after disposition of the Collateral as provided above will be paid immediately by Borrower. Any excess will be returned, without interest and subject to the rights of third parties, to Borrower by Bank or, in Bank's discretion, to any party who Bank believes, in good faith, is entitled to the excess; and k. Without constituting a retention of Collateral in satisfaction of an obligation within the meaning of 9505 of the Uniform Commercial Code or an action under California Code of Civil Procedure 726, apply any and all amounts maintained by Borrower as deposit accounts (as that term is defined under 8105 of the Uniform Commercial Code) or other accounts that Borrower maintains with Bank against the Obligations. 8.2 Bank's rights and remedies under this Agreement and all other agreements shall be cumulative. Bank shall have all other rights and remedies not inconsistent herewith as provided by law or in equity. No exercise by Bank of one right or remedy shall be deemed an election, and no waiver by Bank of any default on Borrower's part shall be deemed a continuing waiver. No delay by Bank shall constitute a waiver, election or acquiescence by Bank. 9. TAXES AND EXPENSES REGARDING BORROWER'S PROPERTY. ------------------------------------------------ If Borrower fails to pay promptly when due to another person or entity, monies which Borrower is required to pay by reason of any provision in the Agreement, Bank may, but need not, pay the same and charge Borrower's account therefor, and Borrower shall promptly reimburse Bank. All such sums shall become additional indebtedness owing to Bank, shall bear interest at the rate hereinabove provided, and shall be secured by all Collateral. Any payments made by Bank shall not constitute (i) an agreement by it to make similar payments in the future; or (ii) a waiver by Bank of any default under this Agreement. Bank need not inquire as to, or contest the validity of, any such expense, tax, security interest, encumbrance or lien and the receipt of the usual official notice of the payment thereof shall be conclusive evidence that the same was validly due and owing. Such payments shall constitute Bank Expenses and additional advances to Borrower. 10. WAIVERS. ------- 10.1 Borrower agrees that checks and other instruments received by Bank in payment or on account of Borrower's Obligations constitute only conditional payment until such items are actually paid to the Bank and Borrower waives the right to direct the application of any and all payments at any time or times hereafter received by Bank on account of Borrower's Obligations and Borrower agrees that Bank shall have the continuing exclusive right to apply and reapply such payments in any manner as Bank may deem advisable, notwithstanding any entry by Bank upon its books. 10.2 Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts, documents, instruments chattel paper, and guarantees at any time held by Bank on which Borrower may in any way be liable. 10.3 Bank shall not in any way or manner be liable or responsible for (a) the safekeeping of the inventory; (b) any loss or damage thereto occurring or arising in any manner or fashion from any cause; (c) any diminution in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency or other person whomsoever. All risk of loss, damage or destruction of inventory shall be borne by Borrower. 10.4 Borrower waives the right and the right to assert a confidential relationship, if any, it may have with any accountant, accounting firm and/or service bureau or consultant in connection with any information requested by Bank pursuant to or in accordance with this Agreement, and agrees that a Bank may contact directly any such accountants, accounting firm and/or service bureau or consultant in order to obtain such information. 10.5 BORROWER AND BANK EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY TRANSACTION HEREUNDER, OR CONTEMPLATED HEREUNDER OR ANY OTHER CLAIM (INCLUDING TORT OR BREACH OF DUTY CLAIMS) OR DISPUTE HOWSOEVER ARISING BETWEEN BANK AND BORROWER. 13. REVOLVING LOAN & SECURITY AGREEMENT (Accounts & Inventory) 10.6 In the event that Bank elects to waive any rights or remedies hereunder, or compliance with any of the terms hereof, or delays or fails to pursue or enforce any terms, such waiver, delay or failure to pursue or enforce shall only be effective with respect to that single act and shall not be construed to affect any subsequent transactions or Bank's right to later pursue such rights and remedies. 11. ONE CONTINUING LOAN TRANSACTION. ------------------------------- All loans and advances heretofore, now or at any time or times hereafter made by Bank to Borrower under this Agreement or any other agreement between Bank and Borrower, shall constitute one loan secured by Bank's security interests in the Collateral and by all other security interests, liens, encumbrances heretofore, now or from time to time hereafter granted by Borrower to Bank. Notwithstanding the above, (i) to the extent that any portion of the Obligations are a consumer loan, that portion shall not be secured by any deed of trust or mortgage on or other security interest in the Borrower's principal dwelling which is not a purchase money security interest as to that portion, unless expressly provided to the contrary in another place, or (ii) if the Borrower (or any of them) has (have) given or give(s) Bank a deed of trust or mortgage covering real property, that deed of trust or mortgage shall not secure the loan and any other Obligation of the Borrower (or any of them), unless expressly provided to the contrary in another place. 12. NOTICES. ------- Unless otherwise provided in this Agreement, all notices or demands by either party on the other relating to this Agreement shall be in writing and sent by regular United States mail, postage prepaid, properly addressed to Borrower or to Bank at the addresses stated in this Agreement, or to such other addresses as Borrower or Bank may from time to time specify to the other in writing. Requests to Borrower by Bank hereunder may be made orally. 13. AUTHORIZATION TO DISBURSE. ------------------------- Bank is hereby authorized to make loans and advances hereunder upon telephonic or other instructions received from anyone purporting to be an officer, employee, or representative of Borrower, or at the discretion of Bank if said loans and advances are necessary to meet any Obligations of Borrower to Bank. Bank shall have no duty to make inquiry or verify the authority of any such party, and Borrower shall hold Bank harmless from any damage, claims or liability by reason of Bank's honor of, or failure to honor, any such instructions. 14. DESTRUCTION OF BORROWER'S DOCUMENTS. ----------------------------------- Any documents, schedules, invoices or other papers delivered to Bank, may be destroyed or otherwise disposed of by Bank six (6) months after they are delivered to or received by Bank, unless Borrower requests, in writing, the return of the said documents, schedules, invoices or other papers and makes arrangements, at Borrower's expense, for their return. 15. CHOICE OF LAW. ------------- The validity of this Agreement, its construction, interpretation and enforcement, and the rights of the parties hereunder and concerning the Collateral, shall be determined according to the laws of the State of California. The parties agree that all actions or proceedings arising in connection with this Agreement shall be tried and litigated only in the state and federal courts in the Northern District of California or County of Santa Clara. 16. GENERAL PROVISIONS. ------------------- 16.1 This Agreement shall be binding and deemed effective when executed by the Borrower and accepted and executed by Bank at its Headquarter Office. 16.2 This Agreement shall bind and inure to the benefit of the respective successors and assign of each of the parties, provided, however, that Borrower may not assign this Agreement or any rights hereunder without Bank's prior written consent and any prohibited assignment shall be absolutely void. No consent to an assignment by Bank shall release Borrower or any guarantor from their Obligations to Bank. Bank may assign this Agreement and its rights and duties hereunder. Bank reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in Bank's rights and benefits hereunder. In connection therewith, Bank may disclose all documents and information which Bank now or hereafter may have relating to Borrower or Borrower's business. 16.3 Paragraph headings and paragraph numbers have been set forth herein for convenience only; unless the contrary is compelled by the context, everything contained in each paragraph applies equally to this entire Agreement. 16.4 Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against Bank or Borrower, whether under any rule of construction or otherwise; on the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of all parties hereto. When permitted by the context, the singular includes the plural and vice versa. 14. REVOLVING LOAN & SECURITY AGREEMENT (Accounts & Inventory) 16.5 Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision. 16.6 This Agreement cannot be changed or terminated orally. Except as to currently existing Obligations owing by Borrower to Bank, all prior agreements, understandings, representations, warranties, and negotiations, if any, with respect to the subject matter hereof, are merged into this Agreement. 16.7 The parties intend and agree that their respective rights, duties, powers liabilities, obligations and discretions shall be performed, carried out, discharged and exercised reasonably and in good faith. IN WITNESS WHEREOF, the parties hereto have caused this Revolving Credit Loan & Security Agreement (Accounts and Inventory) to be executed as of the date first hereinabove written. ATTEST: BORROWER: AGILE SOFTWARE CORPORATION ___________________________________ By: /s/ Bryan D. Stolle ------------------------------------- Title: Signature of Bryan D. Stolle Accepted and effective as of Title: President & CEO DECEMBER 11, 1996 at Bank's ---------------------------------- - --------------------- Headquarter Office By:_____________________________________ Signature of (Bank) Title:__________________________________ By:________________________________ By:_____________________________________ Signature of CLAY JONES Signature of Title: VICE PRESIDENT Title:__________________________________ ----------------------------- By:_____________________________________ Signature of Title:__________________________________ 15. Comerica Bank-California 75 East Trimble Road San Jose, California 95131 (408) 556-5000 MODIFICATION TO REVOLVING CREDIT LOAN & SECURITY AGREEMENT ---------------------------------------------------------- This First Modification to Revolving Credit Loan & Security Agreement (this "Modification") is entered into by and between AGILE SOFTWARE CORPORATION -------------------------- ("Borrower") and Comerica Bank-California ("Bank") as of this 24TH day of ---- September 1997 at San Jose, California. - -------------- RECITALS -------- A. Bank and Borrower have previously entered into or are concurrently herewith entering into a Revolving Credit Loan & Security Agreement (Accounts & Inventory) (the "Agreement") dated December 11, 1996. ----------------- B. Borrower has requested, and Bank has agreed, to modify the Agreement as set forth below. AGREEMENT --------- For good and valuable consideration, the parties agree as set forth below: Incorporation by Reference. The Agreement as modified hereby and the -------------------------- Recitals are incorporated herein by this reference. Section 1.5 "Borrowing Base" as used in this Agreement means the sum ----------- of: (1) Seventy-five percent (75.00%) of the net amount of Eligible Accounts after deducting therefrom all payments, adjustments and credits applicable thereto ("Accounts Receivable Borrowing Base"); and (2) the amount, if any, of the advances against inventory agreed to be made pursuant to any Inventory Rider ("Inventory Borrowing Base"), or other rider, amendment or modification to this Agreement, that may now or hereafter be entered into by Bank and Borrower. Up to $500,000.00 can be advanced without regard to formula; Upon borrowings exceeding $500,000.00 (including Letters of Credit) and potential letter of credit obligations, advance on Accounts Receivable will be limited, in aggregate, to 75% of eligible Accounts Receivable and 100% of pledged cash. Section 1.31 LETTER OF CREDIT SUB-FEATURE - The amount of $250,000.00 ------------ for the issuance of Letters of Credit is to be allowed within the Borrowing Base and within the Line amount. Letters of Credit are allowed to expire up to 180 days past the expiration of the Line. If the Line is not renewed, Letters of Credit must be cash secured. Section 2.1 Upon the request of Borrower, made at any time and from ----------- time to time during the term hereof, and so long as no Event of Default has occurred, Bank shall lend to Borrower an amount equal to the Borrowing Base; provided, however, that in no event shall Bank be obligated to make advances to Borrower under this Section 2.1 whenever the Daily Balance exceeds, at any time, either the Borrowing Base or the sum of TWO MILLION AND NO/100 DOLLARS ($2,000.000.00), such amount being ------------------------------ --------------- referred to herein as an "Overadvance". Section 2.4 A fee of 1.5% Per Annum of the Line ($30,000.00) is to ----------- be paid as follows: 1/3 ($10,000.00) due on acceptance and 2/3 ($20,000.00) due upon the earlier of the Maturity date or a Capital Raising Event. Section 3.1 This Agreement shall remain in full force and effect ----------- until August 31, 1998, or until terminated by notice by Borrower. Notice of such --------------- termination by Borrower shall be effectuated by mailing of a registered or certified letter not less than thirty (30) days prior to the effective date of such termination, addressed to the Bank at the address set forth herein and the termination shall be effective as of the date so fixed in such notice. Notwithstanding the foregoing, should borrower be in default of one or more of the provisions of this Agreement, Bank may terminate this Agreement at any time without notice. Notwithstanding the foregoing, should either Bank or Borrower become insolvent or unable to meet its debts as they mature, or fail, suspend, or go out of business, the other party shall have the right to terminate this Agreement at any time without notice. On the date of termination all Obligations shall become immediately due and payable without notice or demand; no notice of termination by Borrower shall be effective until Borrower shall have paid all Obligations to Bank in full. Notwithstanding termination, until all obligations have been fully satisfied, Bank shall retain its security interest in all existing Collateral and Collateral arising thereafter, and Borrower shall continue to perform all of its Obligations. Section 6.16c In addition to the financial statements requested above, ------------- the Borrower agrees to provide Bank with the following schedules: X Accounts Receivable Agings on a MONTHLY basis * - ---------- ------- X Accounts Payable Agings on a MONTHLY basis * - ---------- ------- X Borrowing Base Certificates on a MONTHLY basis * - ---------- ------- X Compliance Certificate within 30 days of month end; - ---------- X Other reports as reasonably requested. - ---------- *within 15 days of month end Section 6.17(b) is ELIMINATED. --------------- Section 6.17(d) A quick ratio of 1.25:1.00 to be calculated as Cash + --------------- Accounts Receivable/Current Liabilities excluding Deferred Revenue tested monthly. Section 6.17(e) is ELIMINATED. --------------- Section 6.17(g) Net Income after taxes of Q4 ending 4/30/98, maximum --------------- loss of $500,000.00; Quarterly Profitability (after taxes)of $50,000.00 or more beginning with the quarter ending 7/31/98 and thereafter - OR - to complete a Capital Raising Event by 7/31/98 of $2,000,000.00 or greater. Section 6.17(i) Upon a capital raising event of $2,000,000.00 or --------------- greater, the financial covenants will be renegotiated. Section 6.17(j) Borrower to provide "Comfort Letters" from Mohr --------------- Davidow Ventures & Sequoia Capital indicating a willingness of continued support if needed. Legal Effect. Except as specifically set forth in this Modification, ------------ all of the terms and conditions of the Agreement remain in full force and effect. Integration. This is an integrated Modification and supersedes all ----------- prior negotiations and agreements regarding the subject matter hereof. All amendments hereto must be in writing and signed by the parties. IN WITNESS WHEREOF, the parties have agreed as of the date first set forth above. COMERICA BANK-CALIFORNIA By:_________________________________ R. Clay Jones Title: Vice President ----------------------------- BORROWER: AGILE SOFTWARE CORPORATION By: /s/ --------------------------------- Title: CFO (Acting) ------------------------------ [LOGO OF COMERICA] - -------------------------------------------------------------------------------- Comerica Bank-California 75 East Trimble Road San Jose, California 95131 (408) 556-5000 MODIFICATION TO REVOLVING LOAN & SECURITY AGREEMENT --------------------------------------------------- This Second Modification to Revolving Loan & Security Agreement (this "Modification") is entered into by and between AGILE SOFTWARE CORPORATION ("Borrower") and Comerica Bank-California ("Bank") as of this 3rd day of February, 1998, at San Jose, California. RECITALS -------- A. Bank and Borrower have previously entered into or are concurrently herewith entering into a Revolving Loan & Security Agreement (Accounts & Inventory) (the "Agreement") dated December 11, 1996. B. Borrower has requested, and Bank has agreed, to modify the Agreement as set forth below. AGREEMENT --------- For good and valuable consideration, the parties agree as set forth below: Incorporation by Reference. The Agreement as modified hereby and the -------------------------- Recitals are incorporated herein by this reference. Section 1.5 "Borrowing Base" as used in this Agreement means the sum of: (1) Seventy-Five percent (75.00%) of the net amount of Eligible Accounts after deducting therefrom all payments, adjustments and credits applicable thereto ("Accounts Receivable Borrowing Base"); and (2) the amount, if any, of the advances against Inventory agreed to be made pursuant to any Inventory Rider ("Inventory Borrowing Base"), or other rider, amendment or modification to this Agreement, that may now or hereafter be entered into by Bank and Borrower. Up to $500,000.00 can be advanced without regard to formula; Upon borrowings exceeding $500,000.00 (including Letters of Credit) and potential letter of credit obligations, advance on Accounts Receivable will be limited, in aggregate, to 75% of Eligible Accounts Receivable and 100% of pledged cash. Training and service receivables will be eligible for borrowing. Foreign accounts will be limited to $750,000.00 in aggregate. Section 2.2 Except as hereinbelow provided, the Credit shall bear interest, on the Daily Balance owing, at a rate of Zero (0.00%) percentage points per annum above the Base Rate (the "Rate"). The Credit shall bear interest, from and after the occurrence of an Event of Default and without constituting a waiver of any such Event of Default, on the Daily Balance owing, at a rate three (3) percentage points per annum above the Rate. All interest chargeable under this Agreement that is based upon a per annum calculation shall be computed on the basis of a three hundred sixty (360) day year for actual days elapsed. The Base Rate as of the date of this Agreement is Eight and 500/1000 (8.500%) per annum. In the event that the Base Rate announced is, from time to time hereafter changed, adjustment in the Rate shall be made and based on the Base Rate in effect on the date of such change. The Rate, as adjusted, shall apply to the Credit until the Base Rate is adjusted again. The minimum interest payable by the Borrower under this Agreement shall in no event be less than N/A per month. All interest payable by ------- Borrower under the Credit shall be due and payable on the first day of each calendar month during the term of this Agreement and Bank may, at its option, elect to treat such interest and any and all Bank Expenses as advances under the Credit, which amounts shall thereupon constitute Obligations and shall thereafter accrue interest at the rate applicable to the Credit under the terms of the Agreement. Section 6.16b Borrower shall deliver to Bank within thirty (30) days after the end of each Month, a Company Prepared balance sheet and profit and loss statement covering Borrower's operations and deliver to Bank within One Hundred Twenty (120) days after the end of each Borrower's fiscal years a CPA Audited statement of the financial condition of the Borrower for each such fiscal year, including but not limited to, a balance sheet and profit and loss statement and any other report requested by Bank relating to the collateral and the financial condition of Borrower, and a certificate signed by an authorized employee of Borrower to the effect that all reports, statements, computer disk or tape files, computer printouts, computer runs, or other computer prepared information of any kind or nature relating to the foregoing or documents delivered or caused to be delivered to Bank under this subparagraph are complete, correct and thoroughly present the financial condition of borrower and delivery to Bank no condition or event which constitutes a breach or Event of Default under this Agreement. Section 6.17b Tangible Net Worth in an amount not less than $1,000,000.00 to increase by 80% of new equity and quarterly net profit after tax, when applicable. Section 6.17d a quick ratio of cash plus securities plus Receivables to Current Liabilities of not less than 1.50:1.00 - Quick Ratio excludes deferred revenue from current liabilities Legal Effect. Except as specifically set forth in this Modification, ------------ all of the terms and conditions of the Agreement remain in full force and effect. Integration. This is an integrated Modification and supersedes all prior ----------- negotiations and agreements regarding the subject matter hereof. All amendments hereto must be in writing and signed by the parties. IN WITNESS WHEREOF, the parties have agreed as of the date first set forth above. AGILE SOFTWARE CORPORATION COMERICA BANK-CALIFORNIA By: [ILLEGIBLE] By: /s/ R. Clay Jones ------------------------- ------------------------- R. Clay Jones Title: CFO Title: Vice President ---------------------- MODIFICATION TO REVOLVING LOAN & SECURITY AGREEMENT --------------------------------------------------- This Third Modification to Revolving Loan & Security Agreement (this "Modification") is entered into by and between AGILE SOFTWARE CORPORATION ("Borrower") and Comerica Bank-California ("Bank") as of this 17th day of September, 1998, at San Jose, California. RECITALS -------- A. Bank and Borrower have previously entered into or are concurrently herewith entering into a Revolving Loan & Security Agreement (Accounts & Inventory) (the "Agreement") dated December 11, 1996. B. Borrower has requested, and Bank has agreed, to modify the Agreement as set forth below. AGREEMENT --------- For good and valuable consideration, the parties agree as set forth below: Incorporated by Reference. The Agreement as modified hereby and the ------------------------- Recitals are incorporated herein by this reference. Section 1.5 "Borrowing Base" as used in this Agreement means the sum of: (1) eighty percent (80.00%) of the net amount of Eligible Accounts after deducting therefrom all payments, adjustments, and credits applicable thereto ("Accounts Receivable Borrowing Base"); and (2) the amount if any, of the advances against Inventory Rider ("Inventory Borrowing Base"), or other rider, amendment or modification to this Agreement. That may now or hereafter be entered into by Bank and Borrower. The entire amount outstanding, including potential letter of credit obligations, will be limited to eighty percent (80%) of eligible accounts receivable. Section 1.12 (e) Accounts with respect to which the accounts debtor is any State of the United States or any city, county, town, municipality or division thereof. Training and service receivables will be eligible for borrowing and foreign accounts will be limited to $750,000.00 in aggregate. Section 3.1 This Agreement shall remain in full force and effect until August 31, 1999, or until terminated by notice by Borrower. Notice of such termination by Borrower shall be effectuated by mailing of a registered or certified letter not less than thirty (30) days prior to the effective date of such termination, addressed to the Bank at the address set forth herein and the termination shall be effective as of the date so fixed in such notice. Notwithstanding the foregoing, should Borrower be in default of one or more of the provisions of this Agreement, Bank may terminate this Agreement at any time without notice. Notwithstanding the foregoing, should either Bank or Borrower become insolvent or unable to meet its debts as they mature, or fail, suspend, or go out of business, the other party shall have the right to terminate this Agreement at any time without notice. On the date of termination all Obligations shall become immediately due and payable without notice or demand; no notice of termination by Borrower shall be effective until Borrower shall have paid all Obligations to Bank in full. Notwithstanding termination, until all Obligations have been fully satisfied, Bank shall retain its security interest in all existing Collateral and Collateral arising thereafter, and Borrower shall continue to perform all of its Obligations. 2 Section 6.17b Tangible Net Worth in an amount not less than $2,000,000.00 to increase by 50% of new equity and quarterly net profit after tax. Legal Effect. Except as specifically set forth in this Modification, all of ------------ the terms and conditions of the Agreement remain in full force and effect. Integration. This is an integrated Modification and supersedes all prior ----------- negotiations and agreements regarding the subject matter hereof. All amendments hereto must be in writing and signed by the parties. IN WITNESS WHEREOF, the parties have agreed as of the date first set forth above. AGILE SOFTWARE CORPORATION COMERICA BANK-CALIFORNIA By: By: /s/ Brad Smith ------------------------------ ------------------------------ Brad Smith Title: Chief Financial Officer Title: Vice President --------------------------- MODIFICATION OF REVOLVING CREDIT LOAN & SECURITY AGREEMENT This Fourth Modification to Revolving Credit Loan & Security Agreement (Accounts & Inventory) (this "Modification") is entered into by and between Agile Software Corporation ("Borrower") and COMERICA BANK-CALIFORNIA ("Bank") as of this 17th day of July, 1999, at San Jose, California. RECITALS -------- A. Bank and Borrower have previously entered into a Loan & Security Agreement (Accounts & Inventory) (the "Agreement") dated December 11, 1996. B. Borrower has requested, and Bank has agreed, to modify the Agreement as set forth below. AGREEMENT --------- For good and valuable consideration, the parties agree as set forth below: Incorporation by Reference. The Agreement as modified hereby and the -------------------------- Recitals are incorporated herein by this reference; Section 1.31 Letter of Credit Sub-feature - The amount of $500,000.00 for the ----------- issuance of Letters of Credit is to be allowed within the Borrowing Base and within the Line amount. Letters of Credit are allowed to expire up to 180 days past the expiration of the Line. If the Line is not renewed, Letters of Credit must be cash secured. Section 2.1 Upon the request of the Borrower, made at any time and from time to time during the term hereof, and so long as no Event of Default has occurred, Bank shall lend to Borrower an amount equal to the Borrowing Base; provided, however, that in no event shall Bank be obligated to make advances to Borrower under this Section 2.1 whenever the Daily Balance exceeds, at any time, either the Borrowing Base or the sum of Five Million ------------ and No/100 Dollars ($5,000,000.00), such amount being referred to herein as ---------------------------------- "Overadvance." Section 6.17 Borrower shall maintain the following financial ratios and covenants on a consolidated and consolidating basis: (b) Effective Tangible Net Worth in an amount not less than Six Million and No/100 Dollars ($6,000,000.00), to increase by 80% of new equity and 75% of Quarterly NPAT, when applicable, reduced by 100% of quarterly losses. (g) Maximum net quarterly losses of $3,000,000.00 for the first quarter ending July 31, 1999; $2,600,000.00 for the second quarter ending October 31, 1999; $1,750,000.00 for the third quarter ending January 31, 2000; $1,000,000.00 for the fourth quarter ending April 30, 2000; $500,000.00 for the first quarter ending July 31, 2000. Losses to exclude one- time non-cash charges for stock acquisitions or non-cash compensation charges. (h) Borrower shall not without Bank's prior written consent acquire or expend for or commit itself to acquire or expend for fixed assets by lease, purchase or otherwise in an aggregate amount that exceeds Two Million Five Hundred Dollars ($2,500,000.00) in any fiscal year; and Section 3.1 This Agreement shall remain in full force and effect until August 31, 2000 or until terminated by notice by Borrower. Notice of such termination by Borrower shall be effectuated by mailing of a registered or certified letter not less than thirty (30) days prior to the effective date of such termination, addressed to the Bank at the address set forth herein and the termination shall be effective as of the date so fixed in such notice. Notwithstanding the foregoing, should Borrower be in default of one or more of the provisions of this Agreement, Bank may terminate this Agreement at any time without notice. Notwithstanding the foregoing, should either Bank or Borrower become insolvent or unable to meet its debts as they mature, or fail, suspend, or go out of business, the other party shall have the right to terminate this Agreement at any time without notice. On the date of termination all Obligations shall become immediately due and payable without notice or demand; no notice of termination by Borrower shall be effective until Borrower shall have paid all Obligations to Bank in full. Notwithstanding termination, until all Obligations have been fully satisfied, Bank shall retain its security interest in all existing Collateral and Collateral arising thereafter, and Borrower shall continue to perform all of its Obligations. Section 6. Section 6 of this Agreement is hereby amended by adding the following at the end thereof. 6.27 Borrower shall perform all acts reasonably necessary to ensure that: (i) Borrower and any business in which Borrower holds a substantial interest, (ii) all customers, suppliers and vendors that are material to Borrower's business, become Year 2000 Compliant in a timely manner. Such acts shall include, without limitation, performing a comprehensive review and assessment of all of Borrower's systems and adopting a detailed plan, with itemized budget, for the remediation, monitoring and testing of such systems. As used in this paragraph, "Year 2000 Compliant" shall mean, in regard to any entity, that all software, hardware, firmware, equipment, goods or systems utilized by or material to the business operations or financial condition of such entity, will properly perform date sensitive functions before, during and after the year 2000. Borrower shall, immediately upon request, provide to Bank such certifications or other evidence of Borrower's compliance with terms of this paragraph as Bank may from time to time require. Legal Effect. Except as specifically set forth in this Modification, all ------------ of the terms and conditions of the Agreement remain in full force and effect. Integration. This is an integrated Modification and supersedes all prior ----------- negotiations and agreements regarding the subject matter hereof. All amendments hereto must be in writing and signed by the parties. IN WITNESS WHEREOF, the parties have agreed as of the date first set forth above. COMERICA BANK-CALIFORNIA AGILE SOFTWARE CORPORATION By: By: Mary Beth Suhr Title: Vice President Title: -------------- EX-10.7 9 MASTER LEASE AGREEMENT DATED SEP. 18, 1995 EXHIBIT 10.7 MASTER LEASE AGREEMENT MASTER LEASE AGREEMENT (the "Master Lease") dated September 18, 1995 by and between COMDISCO, INC. ("Lessor") and Agile Software Corporation ("Lessee"), IN CONSIDERATION of the mutual agreements described below, the parties agree as follows (all capitalized terms are defined in Section 14.18): 1. Property Leased. Lessor leases to Lessee all of the Equipment described on each Summary Equipment Schedule. In the event of a conflict, the terms of the applicable Schedule prevail over this Master Lease. 2. Term. On the Commencement Date, Lessee will be deemed to accept the Equipment, will be bound to its rental obligations for each item of Equipment and the term of a Summary Equipment Schedule will begin and continue through the Initial Term and thereafter until terminated by either party upon prior written notice received during the Notice Period. No termination may be effective prior to the expiration of the Initial Term. 3. Rent and Payment. Rent is due and payable in advance on the first day of each Rent Interval at the address specified in Lessor's Invoice. Interim Rent is due and payable when invoiced. If any payment is not made when due, Lessee will pay a Late Charge on the overdue amount. Upon Lessee's execution of each Schedule, Lessee will pay Lessor the Advance specified on the Schedule. The Advance will be credited towards the final Rent payment if Lessee is not then in default. No interest will be paid on the Advance. 4. Selection; Warranty and Disclaimer of Warranties. 4.1 Selection. Lessee acknowledges that it has selected the Equipment and disclaims any reliance upon statements made by the Lessor, other than as set forth in the Schedule. 4.2 Warranty and Disclaimer of Warranties. Lessor warrants to Lessee that, so long as Lessee is not in default, Lessor will not disturb Lessee's quiet and peaceful possession, and unrestricted use of the Equipment. To the extent permitted by the manufacturer, Lessor assigns to Lessee during the term of the Summary Equipment Schedule any manufacturer's warranties for the Equipment. LESSOR MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT IMITATION. THE MERCHANTABILITY OF THE EQUIPMENT OR ITS FITNESS FOR A PARTICULAR PURPOSE. Lessor is not responsible for any liability, claim, loss, damage or expense of any kind (including strict liability in tort) caused by the Equipment except for any loss or damage caused by the willful misconduct or negligent acts of Lessor. In no event is Lessor responsible for special, incidental or consequential damages. 6. Title; Relocation or Sublease; and Assignment. 6.1 Title. Lessee holds the Equipment subject and subordinate to the rights of the Owner, Lessor, any Assignee and any Secured Party. Lessee authorizes Lessor, as Lessee's agent, and at Lessor's expense, to prepare, execute and file in Lessee's name precautionary Uniform Commercial Code financing statements showing the interest of the Owner, Lessor, and any Assignee or Secured Party in the Equipment and to insert serial numbers in Summary Equipment Schedules as appropriate. Lessee will, at its expense, keep the Equipment free and clear from any liens or encumbrances of any kind (except any caused by Lessor) and will indemnify and hold the Owner, Lessor, any Assignee and Secured Party harmless from and against any loss caused by Lessee's failure to do so, except where such is caused by Lessor. 5.2 Relocation or Sublease. Upon prior written notice, Lessee may relocate equipment to any location within the continental United States provided (i) the Equipment will not be used by an entity exempt from federal income tax, and (ii) all additional costs (including any administrative fees, additional taxes and insurance coverage) are reconciled and promptly paid by Lessee. Lessee may sublease the Equipment upon the reasonable consent of the Lessor and the Secured Party. Such consent to sublease will be granted if: (i) Lessee meets the relocation requirements set out above, (ii) the sublease is expressly subject and subordinate to the terms of the Schedule, (iii) Lessee assigns its rights in the sublease to Lessor and the Secured Party as additional collateral and security, (iv) Lessee's obligation to maintain and insure the Equipment is not altered, (v) all financing statements required to continue the Secured Party's prior perfected security interest are filed, and (vi) Lessee executes sublease documents acceptable to Lessor. filed and or exchange will relieve Leasee from any of its obligations under this Master Lease and the relevant Schedule. 5.3 Assignment by Lessor. The terms and conditions of each Schedule have been fixed by Lessor in order to permit Lessor to sell and/or assign or transfer its interest or grant a security interest in each Schedule and/or the Equipment to a Secured Party or Assignee. In that event, the term Lessor will mean the Assignee and any Secured Party. However, any assignment, sale, or other transfer by Lessor will not relieve Lessor of its obligations to Lessee and will not materially change Lessee's duties or materially increase the burdens or risks imposed on Lessee. The Lessee consents to and will acknowledge such assignments in a written notice given to Lessee. Lessee also agrees that: (a) The Secured Party will be entitled to exercise all of Lessor's rights, but will not be obligated to perform any of the obligations of Lessor. The Secured Party will not disturb Lessee's quiet and peaceful possession and unrestricted use of the Equipment so long as Lessee is not in default and the secured Party continues to receive all Rent payable under the Schedule; and (b) Lessee will pay all Rent and all other amounts payable to the Secured Party, despite any defense or claim which it has against Lessor. Lessee reserves its right to have recourse directly against Lessor for any defense or claim; (c) Subject to and without impairment of Lessee's leasehold rights in the Equipment, Lessee holds the Equipment for the Secured Party to the extent of the Secured Party's rights in that Equipment. 6. Net Lease; Taxes and Fees. 6.1 Net Lease. Each Summary Equipment Schedule constitutes a net lease. Lessee's obligation to pay Rent and all other amounts due hereunder is absolute and unconditional and is not subject to any statement, reduction, set-off, defense, counterclaim, interruption, deferment or recoupment for any reason whatsoever. 6.2 Taxes and Fees. Lessee will pay when due or reimburse Lessor for all taxes, fees or any other charges (together with any related interest or penalties not arising from the negligence of Lessor) accrued for or arising during the term of each Summary Equipment Schedule against Lessor, Lessee or the Equipment by any governmental authority (except only Federal, state, local and franchise taxes on the capital or the net Income of Lessor). Lessor will file all personal property tax returns for the Equipment and pay all such properly taxes due, Lessee will reimburse Lessor for property taxes within thirty (30) days of receipt of an invoice. 7. Care, Use and Maintenance; Inspection by Lessor. 7.1 Care, Use and Maintenance. Lessee will maintain the Equipment in good operating order and appearance, protect the Equipment from deterioration, other than normal wear and tear, and will not use the Equipment for any purpose other than that for which it was designed. If commercially available and considered common business practice for each item of Equipment, Lessee will maintain in force a standard maintenance contract with the manufacturer of the Equipment, or another party acceptable to Lessor, and will provide Lessor with a complete copy of that contract. If Lessee has the Equipment maintained by a party other than the manufacturer or self maintains, Lessee agrees to pay any costs necessary for the manufacturer to bring the Equipment to then current release, revision and engineering change levels, and to re-certify the Equipment as eligible for manufacturer's maintenance at the expiration of the lease term, provided re- certification is available and is required by Lessor. The lease term will continue upon the same terms and conditions until recertification has been obtained. 7.2 Inspection by Lessor. Upon reasonable advance notice, Lessee, during reasonable business hours and subject to Lessee's security requirements, will make the Equipment and its related log and maintenance records available to Lessor for inspection. 8. Representations and Warranties of Lessee. Lessee hereby represents, warrants and covenants that with respect to the Master Lease and each Schedule executed hereunder: (a) The Lessee is a corporation duly organized and validly existing in good standing under the laws of the jurisdiction of its incorporation, in duly qualified to do business in each jurisdiction (Including the jurisdiction where the Equipment is, or is to be, located) where its ownership or lease of property or the conduct of its business requires such qualification, except for where such lack of qualification would not have a material adverse effect on the Company's business; and has full corporate power and authority to hold property under the Master Lease and each Schedule and to enter into and perform its obligations under the Master Lease and each Schedule. (b) The execution and delivery by the Lessee of the Master Lease and each Schedule and its performance thereunder have been duly authorized by all necessary corporate action on the part of the Lessee, and the Master Lease and each Schedule are not inconsistent with the Lessee's Articles of Incorporation or Bylaws, do not contravene any law or governmental rule, regulation or order applicable to it, do not and will not contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other instrument to which it is a party or by which it is bound, and the Master Lease and each Schedule constitute legal, valid and binding agreements of the Lessee, enforceable in accordance with their terms, subject to the effect of applicable bankruptcy and other similar laws affecting the rights of creditors generally and rules of law concerning equitable remedies. 1 (c) There are no actions, suits, proceedings or patent claims pending or, to the knowledge of the Lessee, threatened against or affecting the Lessee in any court or before any governmental commission, board or authority which, if adversely determined, will have a material adverse effect on the ability of the Lessee to perform its obligations under the Master Lease and each Schedule. (d) The Equipment is personal property and when subjected to use by the Lessee will not be or become fixtures under applicable law. (e) The Lessee has no material liabilities or obligations, absolute or contingent (Individually or in the aggregate), except the liabilities and obligations of the lessee as set forth in the Financial Statements and liabilities and obligations which have occurred in the ordinary course of business, and which have not been, in any case or in the aggregate, materially adverse to Lessee's ongoing business. (f) To the best of the Lessee's knowledge, the Lessee owns, possesses, has access to, or can become licensed on reasonable terms under all patents, patent applications, trademarks, trade names, inventions, franchises, licenses, permits, computer software and copyrights necessary for the operations of its business as now conducted, with no known infringement of, or conflict with, the rights of others. (g) All material contracts, agreements and instruments to which the Lessee is a party are in full force and effect in all material respects, and are valid, binding and enforceable by the Lessee in accordance with their respective terms, subject to the effect of applicable bankruptcy and other similar laws affecting the rights of creditors generally, and rules of law concerning equitable remedies. 9. Delivery and Return of Equipment. Lessee hereby assumes the full expense of transportation and in-transit insurance to Lessee's premises and installation thereat of the Equipment. Upon termination (by expiration or otherwise) of each Summary Equipment Schedule, Lessee shall, pursuant to Lessor's instructions and at Lessee's full expense (including, without limitation, expenses of transportation and in-transit insurance), return the Equipment to Lessor in the same operating order, repair, condition and appearance as when received, less normal depreciation and wear and tear. Lessee shall return the Equipment to Lessor at 6111 North River Road, Rosemont, Illinois 60018 or at such other address within the continental United States as directed by Lessor, provided, however, that Lessee's expense shall be limited to the cost of returning the equipment to Lessor's address as set forth herein. During the period subsequent to receipt of a notice under Section 2, Lessor may demonstrate the Equipment's operation in place and Lessee will supply any of its personnel as may reasonably be required to assist in the demonstrations. 10. Labeling. Upon request, Lessee will mark the Equipment indicating Lessor's Interest with labels provided by Lessor. Lessee will keep all Equipment free from any other marking or labeling which might be interpreted as a claim of ownership. 11. Indemnity. With regard to bodily injury and property damage liability only, Lessee will indemnify and hold Lessor, any Assignee and any Secured Party harmless from and against any and all claims, costs, expenses, damages and liabilities, including reasonable attorneys' fees, arising out of the ownership (for strict liability in tort only), selection, possession, leasing, operation, control, use, maintenance, delivery, return or other disposition of the Equipment during the term of this Master Lease or until Lessee's obligations under the Master Lease terminate. However, Lessee is not responsible to a party indemnified hereunder for any claims, costs, expenses, damages and liabilities occasioned by the negligent acts of such indemnified party. Lessee agrees to carry bodily injury and property damage liability insurance during the term of the Master Lease in amounts and against risks customarily insured against by the Lessor on equipment owned by it. Any amounts received by Lessor under that insurance will be credited against Lessee's obligations under this Section. 12. Risk of Loss. Effective upon delivery and until the Equipment is returned, Lessee relieves Lessor of responsibility for all risks of physical damage to or loss or destruction of the Equipment. Lessee will carry casualty insurance for each item of Equipment in an amount not less than the Casualty Value. All policies for such insurance will name the Lessor and any Secured Party as additional insured and as loss payee, and will provide for at least thirty (30) days prior written notice to the Lessor of cancellation or expiration, and will insure Leasor's interests regardless of any breach or violation by Lessee of any representation, warranty or condition contained in such policies and will be primary without right of contribution from any Insurance effected by Lessor. Upon the execution of any Schedule, the Lessee will furnish appropriate evidence of such Insurance acceptable to Lessor. Lessee will promptly repair any damaged item of Equipment unless such Equipment has suffered a Casualty Loss. Within fifteen (15) days of Casualty Loss, Lessee will provide written notice of that loss to Lessor and Lessee will, at Lessee's option, either (a) replace the item of Equipment with Like Equipment and marketable title to the Like Equipment will automatically vest in Lessor or (b) pay the Casually Value and after that payment and the payment of all other amounts due and owing with respect to that item of Equipment, Lessee's obligation to pay further Rent for the item of Equipment will cease. 13. Default, Remedies and Mitigation. 13.1 Default. The occurrence of any one or more of the following Events of Default constitutes a default under a Summery Equipment Schedule: (a) Lessee's failure to pay Rent or other amounts payable by Lessee when due if that failure continues for five (5) business days after written notice; or (b) Lessee's failure to perform any other term or condition of the Schedule or the material inaccuracy of any representation or warranty made by the Lessee in the Schedule or in any document or certificate furnished to the Lessor hereunder if that failure or inaccuracy continues for ten (10) business days after written notice; or (c) An assignment by Lessee for the benefit of its creditors, the failure by Lessee to pay its debts when due, the insolvency of Lessee, the filing by Lessee or the filing against Lessee of any petition under any bankruptcy or insolvency law or for the appointment of a trustee or other officer with similar powers, the adjudication of Lessee as insolvent, the liquidation of Lessee, or the taking of any action for the purpose of the foregoing; or (d) The occurrence of an Event of Default under any Schedule, Summary Equipment Schedule or other agreement between Lessee and Lessor or its Assignee or Secured Party. 13.2 Remedies. Upon the occurrence of any of the above Events of Default, Lessor, at its option, may: (a) enforce Lessee's performance of the provisions of the applicable Schedule by appropriate court action in law or in equity; (b) recover from Lessee any damages and or expenses, including Default Costs; (c) with notice and demand, recover all sums due and accelerate and recover the present value of the remaining payment stream of all Rent due under the defaulted Schedule (discounted at the same rate of interest at which such defaulted Schedule was discounted with a Secured Party plus any prepayment fees charged to Lessor by the Secured Party or, if there is no Secured Party, then discounted at 8%) together with all Rent and other amounts currently due as liquidated damages and not as a penalty; (d) with notice and process of law and in compliance with Lessee's security requirements, Lessor may enter on Lessee's premises to remove and repossess the Equipment without being liable to Lessee for damages due to the repossession, except those resulting from Lessor's, its assignees', agents' or representatives' negligence: and (e) pursue any other remedy permitted by law or equity. The above remedies, in Lessor's discretion and to the extent permitted by law, are cumulative and may be exercised successively or concurrently. 13.3 Mitigation. Upon return of the Equipment pursuant to the terms of Section 13.2, Lessor will use its best efforts in accordance with its normal business procedures (and without obligation to give any priority to such Equipment) to mitigate Lessor's damages as described below. EXCEPT AS SET FORTH IN THIS SECTION, LESSEE HEREBY WAIVES ANY RIGHTS NOW OR HEREAFTER CONFERRED BY STATUTE OR OTHERWISE WHICH MAY REQUIRE LESSOR TO MITIGATE ITS DAMAGES OR MODIFY ANY OF LESSOR'S RIGHTS OR REMEDIES STATED HEREIN. Lessor may sell, lease or otherwise dispose of all or any part of the Equipment at a public or private sale for cash or credit with the privilege of purchasing the Equipment. The proceeds from any sale, lease or other disposition of the Equipment are defined as either: (a) If sold or otherwise disposed of, the cash proceeds less the Fair Market Value of the Equipment at the expiration of the Initial Term less the Default Costs; or (b) if leased, the present value (discounted at 3 percent (3%) over the U.S. Treasury Notes of comparable maturity to the term of the re-lease) of the rentals for a term not to exceed the Initial Term, less the Default Costs. Any proceeds will be applied against liquidated damages and any other sums due to Lessor from Lessee. However, Lessee is liable to Lessor for, and Lessor may recover, the amount by which the proceeds are less than the liquidated damages and other sums due to Lessor from Lessee. 14. Additional Provisions. 14.1 Board Attendance. One representative of Lessor will have the right to attend Lessee's corporate Board of Directors meetings and Lessee will give Lessor reasonable notice in advance of any special Board of Directors meeting, which notice will provide an agenda of the subject matter to be discussed at such board meeting. Lessee will provide Lessor with a certified copy of the minutes of each Board of 2 Directors meeting within thirty (30) days following the date of such meeting held during the term of this Master Lease. 14.2 Financial Statements. As soon as practicable at the end of each month (and in any event within thirty (30) days), Lessee will provide to Lessor the same information which Lessee provides to its Board of Directors, but which will include not less than a monthly income statement, balance sheet and statement of cash flows prepared in accordance with generally accepted accounting principles, consistently applied (the "Financial Statements"). As soon as practicable at the end of each fiscal year, Lessee will provide to Lessor audited Financial Statements setting forth in comparative form the corresponding figures for the fiscal year (and in any event within ninety (90) days), and accompanied by an audit report and opinion of the independent certified public accountants selected by Lessee. Lessee will promptly furnish to Lessor any additional information (including, but not limited to, tax returns, income statements, balance sheets and names of principal creditors) as Lessor reasonably believes necessary to evaluate Lessee's continuing ability to meet financial obligations. After the effective date of the initial registration statement covering a public offering of Lessee's securities, the term "Financial Statements" will be deemed to refer to only those statements required by the Securities and Exchange Commission. 14.3 Obligation to Lease Additional Equipment. Upon notice to Lessee, Lessor will not be obligated to lease any Equipment which would have a Commencement Date after said notice if: (i) Lessee is in default under this Master Lease or any Schedule; (ii) Lessee is in default under any loan agreement, the result of which would allow the lender or any secured party to demand immediate payment of any material indebtedness; (iii) there is a material adverse change in Lessee's credit standing; or (iv) Lessor determines (in reasonable good faith) that Lessee will be unable to perform its obligations under this Master Lease or any Schedule. 14.4 Merger and Sale Provisions. Lessee will notify Lessor of any proposed Merger at least sixty (60) days prior to the closing date. Lessor may, in its discretion, either (i) consent to the assignment of the Master Lease and all relevant Schedules to the successor entity, or (ii) terminate the Lease and all relevant Schedules. If Lessor elects to consent to the assignment, Lessee and its successor will sign the assignment documentation provided by Lessor. If Lessor elects to terminate the Master Lease and all relevant Schedules, then Lessee will pay Lessor all amounts then due and owing and a termination fee equal to the present value (discounted at ?%) of the remaining Rent for the balance of the Initial Term(s) of all Schedules, and will return the Equipment in accordance with Section 9. Lessor hereby consents to any Merger in which the acquiring entity has a Moody's Bond Rating of BA3 or better or a commercially acceptable equivalent measure of creditworthiness as reasonably determined by Lessor. 14.5 Entire Agreement. This Master Lease and associated Schedules and Summary Equipment Schedules supersede all other oral or written agreements or understandings between the parties concerning the Equipment including, for example, purchase orders. ANY AMENDMENT OF THIS MASTER LEASE OR A SCHEDULE, MAY ONLY BE ACCOMPLISHED BY A WRITING SIGNED BY THE PARTY AGAINST WHOM THE AMENDMENT IS SOUGHT TO BE ENFORCED. 14.6 No Waiver. No action taken by Lessor or Lessee will be deemed to constitute a waiver of compliance with any representation, warranty or covenant contained in this Master Lease or a Schedule. The waiver by Lessor or Lessee of a breach of any provision of this Master Lease or a Schedule will not operate or be construed as a waiver of any subsequent breach. 14.7 Binding Nature. Each Schedule is binding upon, and inures to the benefit of Lessor and its assigns. LESSEE MAY NOT ASSIGN ITS RIGHTS OR OBLIGATIONS. 14.8 Survival of Obligations. All agreements, obligations including, but not limited to those arising under Section 6.2, representations and warranties contained in this Master Lease, any Schedule, Summary Equipment Schedule or in any document delivered in connection with those agreements are for the benefit of Lessor and any Assignee or Secured Party and survive the execution, delivery, expiration or termination of this Master Lease. 14.9 Notices. Any notice, request or other communication to either party by the other will be given in writing and deemed received upon the earlier of actual receipt or three days after mailing if mailed postage prepaid by regular or airmail to Lessor (to the attention of "the Comdisco Venture Group") or Lessee, at the address set out in the Schedule or, one day after it is sent by courier or on the same day as sent via facsimile transmission, provided that the original is sent by personal delivery or mail by the receiving party. 14.10 Applicable Law. THIS MASTER LEASE HAS BEEN, AND EACH SCHEDULE WILL HAVE BEEN MADE, EXECUTED AND DELIVERED IN THE STATE OF ILLINOIS FOR ALL PURPOSES IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO CONFLICT OF LAW PROVISIONS. NO RIGHTS OR REMEDIES REFERRED TO IN ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE WILL BE CONFERRED ON LESSEE UNLESS EXPRESSLY GRANTED IN THIS MASTER LEASE OR A SCHEDULE. 14.11 Severability. If any one or more of the provisions of this Master Lease or any Schedule is for any reason held invalid, illegal or unenforceable, the remaining provisions of this Master Lease and any such Schedule will be unimpaired, and the invalid. Illegal or unenforceable provision replaced by a mutually acceptable valid, legal and enforceable provision that is closest to the original intention of the parties. 14.12 Counterparts. This Master Lease and any Schedule may be executed in any number of counterparts, each of which will be deemed an original, but all such counterparts together constitute one and the same instrument. If Lessor grants a security interest in all or any part of a Schedule, the Equipment or sums payable thereunder, only that counterpart Schedule marked "Secured Party's Original" can transfer Lessor's rights and all other counterparts will be marked "Duplicate." 14.13 Licensed Products. Lessee will obtain no title to Licensed Products which will at all times remain the property of the owner of the Licensed Products. A license from the owner may be required and it is Lessee's responsibility to obtain any required license before the use of the Licensed Products. Lessee agrees to treat the Licensed Products as confidential information of the owner, to observe all copyright restrictions, and not to reproduce or sell the Licensed Products. 14.14 Secretary's Certificate. Lessee will, upon execution of this Master Lease, provide Lessor with a secretary's certificate of incumbency and authority. Upon the execution of each Schedule with a purchase price in excess of $1,000,000, Lessee will provide Lessor with an opinion from Lessee's counsel in a form acceptable to Lessor regarding the representations and warranties in Section 8. 14.15 Electronic Communications. Each of the parties may communicate with the other by electronic means under mutually agreeable terms. 14.16 Landlord/Mortgagee Waiver. Lessee agrees to provide Lessor with a Landlord/Mortgagee Waiver with respect to the Equipment. Such waiver shall be in a form satisfactory to Lessor. 14.17 Equipment Procurement Charges/Progress Payments. Lessee hereby agrees that Lessor shall not, by virtue of its entering into this Master Lease, be required to remit any payments to any manufacturer or other third party until Lessee accepts the Equipment subject to this Master Lease. 14.18 Definitions. Advance - means the amount due to Lessor by Lessee upon Lessee's execution of - ------- each Schedule. Assignee - means an entity to whom Lessor has sold or assigned its rights as - -------- owner and Lessor of Equipment. Casualty Loss - means the irreparable loss or destruction of Equipment. - ------------- Casualty Value - means the greater of the aggregate Rent remaining to be paid - -------------- for the balance of the lease term or the Fair Market Value of the Equipment immediately prior to the Casualty Loss. However, if a Casualty Value Table is attached to the relevant Schedule its terms will control. Commencement Date - is defined in each Schedule. - ----------------- Default Costs - means reasonable attorney's fees and remarketing costs resulting - ------------- from a Lessee default or Lessor's enforcement of its remedies. Delivery Date - means date of delivery of Inventory Equipment to Lessee's - ------------- address. Equipment - means the property described on a Summary Equipment Schedule and any - --------- replacement for that property required or permitted by this Master Lease or a Schedule. Event of Default - means the events described In Subsection 13.1. - ---------------- Fair Market Value - means the aggregate amount which would be obtainable in an - ----------------- arm's-length transaction between an informed and willing buyer/user and an informed and willing seller under no compulsion to sell. Initial Term - means the period of time beginning on the first day of the first - ------------ full Rent Interval following the Commencement Date for all items of Equipment and continuing for the number of Rent Intervals indicated on a Schedule. Interim Rent - means the pro-rata portion of Rent due for the period from the - ------------ Commencement Date through but not including the first day of the first full Rent Interval included in the Initial Term. Late Charge - means the lesser of five percent (5%) of the payment due or the - ----------- maximum amount permitted by the law of the state where the Equipment is located. Licensed Products - means any software or other licensed products attached to - ----------------- the Equipment. Like Equipment - means replacement Equipment which is lien free and of the same - -------------- model, type, configuration and manufacture as Equipment. -3- Merger - means any consolidation or merger of the Lessee with or into any other - ------ corporation or entity, any sale or conveyance of all or substantially all of the assets or stock of the Lessee by or to any other person or entity in which Lessee is not the surviving entity. Notice period - means not less than ninety (90) days nor more than twelve (12) - ------------- months prior to the expiration of the lease term. Owner - means the owner of Equipment. - ----- Rent - means the rent Lessee will pay for each item of Equipment expressed in a - ---- Summary Equipment Schedule either as a specific amount or an amount equal to the amount which Lessor pays for an item of Equipment multiplied by a lease rate factor plus all other amounts due to Lessor under this Master Lease or a Schedule. Rent Interval - means a full calendar month or quarter as indicated on a - -------------- Schedule. Schedule - means either an Equipment Schedule or a Licensed Products Schedule - -------- which incorporates all of the terms and conditions of this Master Lease. Secured Party - means an entity to whom Lessor has granted a security interest - ------------- for the purpose of securing a loan. Summary Equipment Schedule - means a certificate provided by Lessor summarizing - -------------------------- all of the Equipment for which Lessor has received Lessee approved vendor Invoices, purchase documents and/or evidence of delivery during a calendar quarter which will incorporate all of the terms and conditions of the related Schedule and this Master Lease and will constitute a separate lease for the equipment leased thereunder. IN WITNESS WHEREOF, the parties hereto have executed this Master Lease on or as of the day and year first above written. AGILE SOFTWARE CORPORATION COMDISCO, INC., as Lessee as Lessor By: /s/ By: /s/ --------------------------------- --------------------------------- Title: President and CEO Title: ------------------------------ ------------------------------ Date: 9/22/95 ------------------------------- -4- EQUIPMENT SCHEDULE VL-1 DATED AS OF September 19, 1995 TO MASTER LEASE AGREEMENT DATED AS OF September 18, 1995 (THE "MASTER LEASE") LESSEE: AGILE SOFTWARE CORPORATION LESSOR: COMDISCO, INC. Admin. Contact/Phone No.: Address for all Notices: - ------------------------ ----------------------- Mr. Bryan D. Stolle, CEO (408)271-4851 6111 North River Road Rosemont, Illinois 60018 Attn.: Venture Group Address for Notices: - ------------------- Two North First Street San Jose, CA 95113 Attn.: Mr. Bryan D. Stolle, CEO Central Billing Location: Rent Interval: Monthly - ------------------------ ------------- same as above Attn.: Lessee Reference No.:_____________ (26 digits maximum) Location of Equipment: Initial Term: Thirty-six (36) - --------------------- ------------ same as above (Number of Rent Intervals) Lease Rate Factor: 3.22% ----------------- Attn.: EQUIPMENT (as defined below): Advance: $4,025.00 ------- Equipment specifically approved by Lessor, which shall be delivered to and accepted by Lessee during the period September 18, 1995 through September 1, 1996 ("Equipment Delivery Period"), for which Lessor receives vendor invoices approved for payment, up to an aggregate purchase price of $125,000 ("Commitment Amount"); excluding custom use equipment, leasehold improvements, installation costs and delivery costs, rolling stock, special tooling, hand held items, molds and fungible items. In no event shall any software exceed twenty-five percent (25%) of Lessor's aggregate cost hereunder. 1. Equipment Purchase This Schedule contemplates Lessor's acquisition of Equipment for lease to Lessee, either by one of the first three categories listed below or by providing Lessee with Equipment from the fourth category, in a value up to the Commitment Amount referred to on the face of this schedule. If the Equipment acquired is of category (i), (ii) or (iii) below, the effectiveness of this Schedule as it relates to those items of Equipment is contingent upon Lessee's acknowledgment at the time Lessor acquires the Equipment that Lessee has either received or approved the relevant purchase documentation between vendor and Lessor for that Equipment. Lessor will finance only the aquisition of individual items of Equipment with a cost to Lessor of more than $500.00. (i) NEW ON-ORDER EQUIPMENT. Lessor will purchase new Equipment which is specifically approved by Lessor. (ii) SALE-LEASEBACK EQUIPMENT. Any in-place Equipment installed at Lessee's site and to which Lessee has clear title and ownership may be considered by Lessor for inclusion under this Lease (the "Sale- Leaseback Transaction"). Any request for a Sale-Leaseback Transaction must be submitted to Lessor in writing (along with accompanying evidence of Lessee's Equipment ownership satisfactory to Lessor for all Equipment submitted) no later than September 18, 1995*. Lessor will not perform a Sale-Leaseback Transaction for any request or accompanying Equipment ownership documents which arrive after the date marked above by an asterisk (*). Further, any sale-leaseback Equipment will be placed on lease subject to: (1) Lessor prior approval of the Equipment; and (2) if approved, at Lessor's actual net appraised Equipment value pursuant to the schedule below: ORIGINAL EQUIPMENT INVOICE PERCENT OF ORIGINAL MANUFACTURER'S DATE NET EQUIPMENT COST PAID BY LESSOR -------------------------- --------------------------------- Between 1/1/95 and 09/18/95 100% (iii) USED ON-ORDER EQUIPMENT. Lessor will purchase used Equipment which is obtained from a third party by Lessee for its use subject to Lessor's prior approval of the Equipment and at Lessor's appraised value for such used Equipment. (iv) INVENTORY EQUIPMENT. Upon Lessee's request, Lessor may supply new or used Equipment from its inventory at rates provided by Lessor. 2. Commencement Date The Commencement Date for each item of new on-order or used on-order Equipment will be the date Lessee approves the vendor invoice. The Commencement Date for sale-leaseback Equipment shall be the date Lessor tenders the purchase price, and the Commencement Date for inventory Equipment shall be the Delivery Date. Lessor will summarize all approved invoices, purchase documentation and evidence of delivery, as applicable, received in the same calendar quarter into a Summary Equipment Schedule in the form attached to this Schedule as Exhibit 1, and the Initial Term will begin the first day of the calendar quarter thereafter. Each Summary Equipment Schedule will contain the Equipment location, description, serial number(s) and cost and will incorporate the terms and conditions of the Master Lease and this Schedule and will constitute a separate lease. 3. Option to Extend So long as no Event of Default has occurred and is continuing hereunder, and upon written notice no earlier than twelve (12) months and no later than ninety (90) days prior to the expiration of the Initial Term of a Summary Equipment Schedule, Lessee will have the right to extend the Initial Term of such Summary Equipment Schedule for a period of one (1) year. In such event, the rent to be paid during said extended period shall be mutually agreed upon and if the parties cannot mutually agree, then the Summary Equipment Schedule shall continue in full force and effect pursuant to the existing terms and conditions until terminated in accordance with its terms. The Summary Equipment Schedule will continue in effect following said extended period until terminated by either party upon not less than ninety (90) days prior written notice, which notice shall be effective as of the date of receipt. 4. Purchase Option So long as no Event of Default has occurred and is continuing hereunder, and upon written notice no earlier than twelve (12) months and no later than ninety (90) days prior to the expiration of the Initial Term or the extended term of the applicable Summary Equipment Schedule, Lessee will have the option at the expiration of the Initial Term of the Summary Equipment Schedule to purchase all, but not less than all, of the Equipment listed therein for a purchase price and upon terms and conditions to be mutually agreed upon by the parties following Lessee's written notice, plus any taxes applicable at time of purchase. Said purchase price shall be paid to Lessor at least thirty (30) days before the expiration date of the Initial Term or extended term. Title to the equipment shall automatically pass to Lessee upon payment in full of the purchase price but, in no event, earlier than the expiration of the fixed Initial Term or extended term, if applicable. If the parties are unable to agree on the purchase price or the terms and conditions with respect to said purchase, then the Summary Equipment Schedule with respect to this Equipment shall remain in full force and effect. Notwithstanding the exercise by Lessee of this option and payment of the purchase price, until all obligations under the applicable Summary Equipment Schedule have been fulfilled, it is agreed and understood that Lessor shall retain a purchase money security interest in the Equipment listed therein and the Summary Equipment Schedule shall constitute a Security Agreement under the Uniform Commercial Code of the state in which the Equipment is located. 5. Special Terms The terms and conditions of the Lease as they pertain to this Schedule are hereby modified and amended as follows: A. Section 14.16 Delete this Section in its entirety. Master Lease: This Schedule is issued pursuant to the Lease identified on page 1 of this Schedule. All of the terms and conditions of the Lease are incorporated in and made a part of this Schedule as if they were expressly set forth in this Schedule. The parties hereby reaffirm all of the terms and conditions of the Lease (including, without limitation, the representations and warranties set forth in Section 8) except as modified herein by this schedule. This Schedule may not be amended or rescinded except by a writing signed by both parties. AGILE SOFTWARE CORPORATION COMDISCO, INC. as Lessee as Lessor By: /s/ By: /s/ ---------------------------- ---------------------------- Title: President & CEO Title: ------------------------- ------------------------- Date: 9/18/95 Date: 7/22/96 -------------------------- ------------------------- EXHIBIT 1 SUMMARY EQUIPMENT SCHEDULE -------------------------- This Summary Equipment Schedule dated XXXX is executed pursuant to Equipment Schedule No. X to the Master Lease Agreement dated XXXX between Comdisco, Inc. ("Lessor") and XXXX ("Lessee"). All of the terms, conditions, representations and warranties of the Master Lease Agreement and Equipment Schedule No. X are incorporated herein and made a part hereof, and this Summary Equipment Schedule constitutes a Schedule for the Equipment on the attached invoices. 1. For Period Beginning: And Ending: -------------------- ---------- 2. Initial Term Starts on: Initial Term: ---------------------- ------------ (Number of Rent Intervals) 3. Total Summary Equipment Cost: ---------------------------- 4. Lease Rate Factor: ----------------- 5. Rent: ---- 6. Acceptance Doc Type: ------------------- EQUIPMENT SCHEDULE VL-2 DATED AS OF March 1, 1996 TO MASTER LEASE AGREEMENT DATED AS OF September 18, 1995 (THE "MASTER LEASE") LESSEE: AGILE SOFTWARE CORPORATION LESSOR: COMDISCO, INC. Admin. Contact/Phone No.: Address for all Notices: - ------------------------ ----------------------- Mr. Bryan D. Stolle, CEO (408)271-4851 6111 North River Road Rosemont, Illinois 60018 Attn.: Venture Group Address for Notices: - ------------------- Two North First Street San Jose, CA 95113 Attn.: Mr. Bryan D. Stolle, CEO Central Billing Location: Rent Interval: Monthly - ------------------------ ------------- same as above Attn.: Lessee Reference No.:______________ (26 digits maximum) Location of Equipment: Initial Term: Forty-two (42) - --------------------- ------------ same as above (Number of Rent Intervals) Lease Rate Factor: 2.75% ----------------- Attn.: EQUIPMENT (as defined below): Advance: $15,537.50 ------- Equipment specifically approved by Lessor, which shall be delivered to and accepted by Lessee during the period March 1, 1996 through June 15, 1997 ("Equipment Delivery Period"), for which Lessor receives vendor invoices approved for payment, up to an aggregate purchase price of $565,000 ("Commitment Amount"); excluding custom use equipment, leasehold improvements, installation costs and delivery costs, rolling stock, special tooling, hand held items, molds and fungible items. In no event shall any software exceed twenty percent (20%) of Lessor's aggregate cost hereunder. 1. Equipment Purchase This Schedule contemplates Lessor's acquisition of Equipment for lease to Lessee, either by one of the first three categories listed below or by providing Lessee with Equipment from the fourth category, in a value up to the Commitment Amount referred to on the face of this schedule. If the Equipment acquired is of category (i), (ii) or (iii) below, the effectiveness of this Schedule as it relates to those items of Equipment is contingent upon Lessee's acknowledgment at the time Lessor acquires the Equipment that Lessee has either received or approved the relevant purchase documentation between vendor and Lessor for that Equipment. (i) NEW ON-ORDER EQUIPMENT. Lessor will purchase new Equipment which is specifically approved by Lessor. (ii) SALE-LEASEBACK EQUIPMENT. Any in-place Equipment installed at Lessee's site and to which Lessee has clear title and ownership may be considered by Lessor for inclusion under this Lease (the "Sale- Leaseback Transaction"). Any request for a Sale-Leaseback Transaction must be submitted to Lessor in writing (along with accompanying evidence of Lessee's Equipment ownership satisfactory to Lessor for all Equipment submitted) no later than April 1, 1996*. Lessor will not perform a Sale-Leaseback Transaction for any request or accompanying Equipment ownership documents which arrive after the date marked above by an asterisk (*). Further, any sale- leaseback Equipment will be placed on lease subject to: (1) Lessor prior approval of the Equipment; and (2) if approved, at Lessor's actual net appraised Equipment value pursuant to the schedule below: ORIGINAL EQUIPMENT INVOICE PERCENT OF ORIGINAL MANUFACTURER'S DATE NET EQUIPMENT COST PAID BY LESSOR -------------------------- --------------------------------- Between 01/02/96 and 04/01/96 100% (iii) USED ON-ORDER EQUIPMENT. Lessor will purchase used Equipment which is obtained from a third party by Lessee for its use subject to Lessor's prior approval of the Equipment and at Lessor's appraised value for such used Equipment. (iv) INVENTORY EQUIPMENT. Upon Lessee's request, Lessor may supply new or used Equipment from its inventory at rates provided by Lessor. 2. Commencement Date The Commencement Date for each item of new on-order or used on-order Equipment will be the date Lessee approves the vendor invoice. The Commencement Date for sale-leaseback Equipment shall be the date Lessor tenders the purchase price, and the Commencement Date for inventory Equipment shall be the Delivery Date. Lessor will summarize all approved invoices, purchase documentation and evidence of delivery, as applicable, received in the same calendar quarter into a Summary Equipment Schedule in the form attached to this Schedule as Exhibit 1, and the Initial Term will begin the first day of the calendar quarter thereafter. Each Summary Equipment Schedule will contain the Equipment location, description, serial number(s) and cost and will incorporate the terms and conditions of the Master Lease and this Schedule and will constitute a separate lease. 3. Option to Extend So long as no Event of Default has occurred and is continuing hereunder, and upon written notice no earlier than twelve (12) months and no later than ninety (90) days prior to the expiration of the Initial Term of a Summary Equipment Schedule, Lessee will have the right to extend the Initial Term of such Summary Equipment Schedule for a period of one (1) year. In such event, the rent to be paid during said extended period shall be mutually agreed upon and if the parties cannot mutually agree, then the Summary Equipment Schedule shall continue in full force and effect pursuant to the existing terms and conditions until terminated in accordance with its terms. The Summary Equipment Schedule will continue in effect following said extended period until terminated by either party upon not less than ninety (90) days prior written notice, which notice shall be effective as of the date of receipt. 4. Purchase Option So long as no Event of Default has occurred and is continuing hereunder, and upon written notice no earlier than twelve (12) months and no later than ninety (90) days prior to the expiration of the Initial Term or the extended term of the applicable Summary Equipment Schedule, Lessee will have the option at the expiration of the Initial Term of the Summary Equipment Schedule to purchase all, but not less than all, of the Equipment listed therein for a purchase price and upon terms and conditions to be mutually agreed upon by the parties following Lessee's written notice, plus any taxes applicable at the time of purchase. Said purchase price shall be paid to Lessor at least thirty (30) days before the expiration date of the Initial Term or extended term. Title to the Equipment shall automatically pass to Lessee upon payment in full of the purchase price but, in no event, earlier than the expiration of the fixed Initial Term or extended term, if applicable. If the parties are unable to agree on the purchase price or the terms and conditions with respect to said purchase, then the Summary Equipment Schedule with respect to this Equipment shall remain in full force and effect. Notwithstanding the exercise by Lessee of this option and payment of the purchase price, until all obligations under the applicable Summary Equipment Schedule have been fulfilled, it is agreed and understood that Lessor shall retain a purchase money security interest in the Equipment listed therein and the Summary Equipment Schedule shall constitute a Security Agreement under the Uniform Commercial Code of the state in which the Equipment is located. 5. Special Terms The terms and conditions of the Lease as they pertain to this Schedule are hereby modified and amended as follows: A. Section 14.16 Delete this Section in its entirety. Master Lease: This Schedule is issued pursuant to the Lease identified on page 1 of this Schedule. All of the terms and conditions of the Lease are incorporated in and made a part of this Schedule as if they were expressly set forth in this Schedule. The parties hereby reaffirm all of the terms and conditions of the Lease (including, without limitation, the representations and warranties set forth in Section 8) except as modified herein by this schedule. This Schedule may not be amended or rescinded except by a writing signed by both parties. AGILE SOFTWARE CORPORATION COMDISCO, INC. as Lessee as Lessor By: /s/ By: /s/ James P. Labe --------------------------- ------------------------------------ Title: President & CEO Title: President, Venture Lease Division ------------------------ --------------------------------- Date: 3/6/96 Date: ------------------------- ---------------------------------- EXHIBIT 1 SUMMARY EQUIPMENT SCHEDULE -------------------------- This Summary Equipment Schedule dated XXXX is executed pursuant to Equipment Schedule No. X to the Master Lease Agreement dated XXXX between Comdisco, Inc. ("Lessor") and XXXX ("Lessee"). All of the terms, conditions, representations and warranties of the Master Lease Agreement and Equipment Schedule No. X are incorporated herein and made a part hereof, and this Summary Equipment Schedule constitutes a Schedule for the Equipment on the attached invoices. 1. For Period Beginning: And Ending: -------------------- ---------- 2. Initial Term Starts on: Initial Term: ---------------------- ------------ (Number of Rent Intervals) 3. Total Summary Equipment Cost: ---------------------------- 4. Lease Rate Factor: ----------------- 5. Rent: ---- 6. Acceptance Doc Type: ------------------- EQUIPMENT SCHEDULE VL-3 DATED AS OF February 3, 1997 TO MASTER LEASE AGREEMENT DATED AS OF September 18, 1995 (THE "MASTER LEASE") LESSEE: AGILE SOFTWARE CORPORATION LESSOR: COMDISCO, INC. Admin. Contact/Phone No.: Address for all Notices: - ------------------------ ----------------------- Paula Davis 6111 North River Road Office Manager Rosemont, Illinois 60018 (408) 975-3929 Attn.: Venture Group Address for Notices: - ------------------- One Almaden Blvd, 12th Floor San Jose, CA 95113 Attn.: Mr. Bryan D. Stolle, CEO Central Billing Location: Rent Interval: Monthly - ------------------------ ------------- same as above Attn.: Lessee Reference No.: _______________ (26 digits maximum) Location of Equipment: Initial Term: Forty-two (42) - --------------------- ------------ same as above (Number of Rent Intervals) Lease Rate Factor: 2.72% ----------------- Attn.: EQUIPMENT (as defined below): Advance: $20,400 ------- Equipment specifically approved by Lessor, which shall be delivered to and accepted by Lessee during the period February 3, 1997 through December 15, 1997 ("Equipment Delivery Period"), for which Lessor receives vendor invoices approved for payment, up to an aggregate purchase price of $750,000 ("Commitment Amount"); excluding custom use equipment, leasehold improvements, installation costs and delivery costs, rolling stock, special tooling, hand held items, molds and fungible items. In no event shall any software exceed twenty percent (20%) of Lessor's aggregate cost hereunder. 1. Equipment Purchase This Schedule contemplates Lessor's acquisition of Equipment for lease to Lessee, either by one of the first three categories listed below or by providing Lessee with Equipment from the fourth category, in a value up to the Commitment Amount referred to on the face of this Schedule. If the Equipment acquired is of category (i), (ii) or (iii) below, the effectiveness of this Schedule as it relates to those items of Equipment is contingent upon Lessee's acknowledgment at the time Lessor acquires the Equipment that Lessee has either received or approved the relevant purchase documentation between vendor and Lessor for that Equipment. (i) NEW ON-ORDER EQUIPMENT. Lessor will purchase new Equipment which is specifically approved by Lessor. (ii) SALE-LEASEBACK EQUIPMENT. Any in-place Equipment installed at Lessee's site and to which Lessee has clear title and ownership may be considered by Lessor for inclusion under this Lease (the "Sale- Leaseback Transaction"). Any request for a Sale-Leaseback Transaction must be submitted to Lessor in writing (along with accompanying evidence of Lessee's Equipment ownership satisfactory to Lessor for all Equipment submitted) no later than April 3, 1997*. Lessor will not perform a Sale-Leaseback Transaction for any request or accompanying Equipment ownership documents which arrive after the date marked above by an asterisk (*). Further, any sale-leaseback Equipment will be placed on lease subject to: (1) Lessor prior approval of the Equipment; and (2) if approved, at Lessor's actual net appraised Equipment value pursuant to the schedule below: ORIGINAL EQUIPMENT INVOICE PERCENT OF ORIGINAL MANUFACTURER'S DATE NET EQUIPMENT COST PAID BY LESSOR -------------------------- --------------------------------- Between 08/01/96 and 02/03/97 100% (iii) USED ON-ORDER EQUIPMENT. Lessor will purchase used Equipment which is obtained from a third party by Lessee for its use subject to Lessor's prior approval of the Equipment and at Lessor's appraised value for such used Equipment. (iv) INVENTORY EQUIPMENT. Upon Lessee's request, Lessor may supply new or used Equipment from its inventory at rates provided by Lessor. 2. Commencement Date The Commencement Date for each item of new on-order or used on-order Equipment will be the date Lessee approves the vendor invoice. The Commencement Date for sale-leaseback Equipment shall be the date Lessor tenders the purchase price, and the Commencement Date for inventory Equipment shall be the Delivery Date. Lessor will summarize all approved invoices, purchase documentation and evidence of delivery, as applicable, received in the same calendar month into a Summary Equipment Schedule in the form attached to this Schedule as Exhibit 1, and the Initial Term will begin the first day of the calendar month thereafter. Each Summary Equipment Schedule will contain the Equipment location, description, serial number(s) and cost and will incorporate the terms and conditions of the Master Lease and this Schedule and will constitute a separate lease. 3. Option to Extend So long as no Event of Default has occurred and is continuing hereunder, and upon written notice no earlier than twelve (12) months and no later than ninety (90) days prior to the expiration of the Initial Term of a Summary Equipment Schedule, Lessee will have the right to extend the Initial Term of such Summary Equipment Schedule for a period of one (1) year. In such event, the rent to be paid during said extended period shall be mutually agreed upon and if the parties cannot mutually agree, then the Summary Equipment Schedule shall continue in full force and effect pursuant to the existing terms and conditions until terminated in accordance with its terms. The Summary Equipment Schedule will continue in effect following said extended period until terminated by either party upon not less than ninety (90) days prior written notice, which notice shall be effective as of the date of receipt. 4. Purchase Option So long as no Event of Default has occurred and is continuing hereunder, and upon written notice no earlier than twelve (12) months and no later than ninety (90) days prior to the expiration of the Initial Term or the extended term of the applicable Summary Equipment Schedule, Lessee will have the option at the expiration of the Initial Term of the Summary Equipment Schedule to purchase all, but not less than all, of the Equipment listed therein for a purchase price, not to exceed 12.5% of the original Equipment cost and upon terms and conditions to be mutually agreed upon by the parties following Lessee's written notice, plus any taxes applicable at the time of purchase. Said purchase price shall be paid to Lessor at least thirty (30) days before the expiration date of the Initial Term or extended term. Title to the Equipment shall automatically pass to Lessee upon payment in full of the purchase price but, in no event, earlier than the expiration of the fixed Initial Term or extended term, if applicable. If the parties are unable to agree on the purchase price or the terms and conditions with respect to said purchase, then the Summary Equipment Schedule with respect to this Equipment shall remain in full force and effect. Notwithstanding the exercise by Lessee of this option and payment of the purchase price, until all obligations under the applicable Summary Equipment Schedule have been fulfilled, it is agreed and understood that Lessor shall retain a purchase money security interest in the Equipment listed therein and the Summary Equipment Schedule shall constitute a Security Agreement under the Uniform Commercial Code of the state in which the Equipment is located. 5. Special Terms The terms and conditions of the Lease as they pertain to this Schedule are hereby modified and amended as follows: A. Section 14.16 Delete this Section in its entirety. Master Lease: This Schedule is issued pursuant to the Lease identified on page 1 of this Schedule. All of the terms and conditions of the Lease are incorporated in and made a part of this Schedule as if they were expressly set forth in this Schedule. The parties hereby reaffirm all of the terms and conditions of the Lease (including, without limitation, the representations and warranties set forth in Section 8) except as modified herein by this schedule. This Schedule may not be amended or rescinded except by a writing signed by both parties. AGILE SOFTWARE CORPORATION COMDISCO, INC. as Lessee as Lessor By: /s/ [SIGNATURE ILLEGIBLE]^^ By: /s/ James P. Labe -------------------------------- ------------------------------- JAMES P. LABE Title: President Title: PRESIDENT VENTURE LEASE, ----------------------------- ---------------------------- DIVISION ---------------------------- Date: 2-1-97 Date: ------------------------------ ------------------------------ EXHIBIT 1 SUMMARY EQUIPMENT SCHEDULE -------------------------- This Summary Equipment Schedule dated XXXX is executed pursuant to Equipment Schedule No. X to the Master Lease Agreement dated XXXX between Comdisco, Inc. ("Lessor") and XXXX ("Lessee"). All of the terms, conditions, representations and warranties of the Master Lease Agreement and Equipment Schedule No. X are incorporated herein and made a part hereof, and this Summary Equipment Schedule constitutes a Schedule for the Equipment on the attached invoices. 1. For Period Beginning: And Ending: -------------------- ---------- 2. Initial Term Starts on: Initial Term: ---------------------- ------------ (Number of Rent Intervals) 3. Total Summary Equipment Cost: ---------------------------- 4. Lease Rate Factor: ----------------- 5. Rent: ---- 6. Acceptance Doc Type: ------------------- EQUIPMENT SCHEDULE VL-4 DATED AS OF November 7, 1997 TO MASTER LEASE AGREEMENT DATED AS OF September 18, 1995 (THE "MASTER LEASE") LESSEE: AGILE SOFTWARE CORPORATION LESSOR: COMDISCO, INC. Admin. Contact/Phone No.: Address for all Notices: - ------------------------ ----------------------- Mr. Bryan D. Stolle, CEO (408)271-4851 6111 North River Road Rosemont, Illinois 60018 Attn.: Venture Group Address for Notices: - ------------------- One Almaden Blvd., 12th Floor San Jose, CA 95113 Attn.: Mr. Bryan D. Stolle, CEO Central Billing Location: Rent Interval: Monthly - ------------------------ ------------- same as above Attn.: Lessee Reference No.:_____________ (26 digits maximum) Location of Equipment: Initial Term: Forty-two (42) - --------------------- ------------ same as above (Number of Rent Intervals) Lease Rate Factor: 2.74% ----------------- Attn.: EQUIPMENT (as defined below): Advance: $8,220.00 ------- Equipment specifically approved by Lessor, which shall be delivered to and accepted by Lessee during the period November 7, 1997 through November 7, 1998 ("Equipment Delivery Period"), for which Lessor receives vendor invoices approved for payment, up to an aggregate purchase price of $300,000 ("Commitment Amount"); excluding custom use equipment, leasehold improvements, installation costs and delivery costs, rolling stock, special tooling, hand held items, molds and fungible items. In no event shall any software exceed twenty percent (20%) of Lessor's aggregate cost hereunder. 1. Equipment Purchase This Schedule contemplates Lessor's acquisition of Equipment for lease to Lessee, either by one of the first three categories listed below or by providing Lessee with Equipment from the fourth category, in a value up to the Commitment Amount referred to on the face of this schedule. If the Equipment acquired is of category (i), (ii) or (iii) below, the effectiveness of this Schedule as it relates to those items of Equipment is contingent upon Lessee's acknowledgment at the time Lessor acquires the Equipment that Lessee has either received or approved the relevant purchase documentation between vendor and Lessor for that Equipment. (i) NEW ON-ORDER EQUIPMENT. Lessor will purchase new Equipment which is specifically approved by Lessor. (ii) SALE-LEASEBACK EQUIPMENT. Any in-place Equipment installed at Lessee's site and to which Lessee has clear title and ownership may be considered by Lessor for inclusion under this Lease (the "Sale- Leaseback Transaction"). Any request for a Sale-Leaseback Transaction must be submitted to Lessor in writing (along with accompanying evidence of Lessee's Equipment ownership satisfactory to Lessor for all Equipment submitted) no later than December 8, 1997*. Lessor will not perform a Sale-Leaseback Transaction for any request or accompanying Equipment ownership documents which arrive after the date marked above by an asterisk (*). Further, any sale- leaseback Equipment will be placed on lease subject to: (1) Lessor prior approval of the Equipment; and (2) if approved, at Lessor's actual net appraised Equipment value pursuant to the schedule below: ORIGINAL EQUIPMENT INVOICE PERCENT OF ORIGINAL MANUFACTURER'S DATE NET EQUIPMENT COST PAID BY LESSOR -------------------------- --------------------------------- Between 8/8/97 and 11/7/97 100% (iii) USED ON-ORDER EQUIPMENT. Lessor will purchase used Equipment which is obtained from a third party by Lessee for its use subject to Lessor's prior approval of the Equipment and at Lessor's appraised value for such used Equipment. (iv) INVENTORY EQUIPMENT. Upon Lessee's request, Lessor may supply new or used Equipment from its inventory at rates provided by Lessor. 2. Commencement Date The Commencement Date for each item of new on-order or used on-order Equipment will be the date Lessee approves the vendor invoice. The Commencement Date for sale-leaseback Equipment shall be the date Lessor tenders the purchase price, and the Commencement Date for inventory Equipment shall be the Delivery Date. Lessor will summarize all approved invoices, purchase documentation and evidence of delivery, as applicable, received in the same calendar month into a Summary Equipment Schedule in the form attached to this Schedule as Exhibit 1, and the Initial Term will begin the first day of the calendar month thereafter. Each Summary Equipment Schedule will contain the Equipment location, description, serial number(s) and cost and will incorporate the terms and conditions of the Master Lease and this Schedule and will constitute a separate lease. 3. Option to Extend So long as no Event of Default has occurred and is continuing hereunder, and upon written notice no earlier than twelve (12) months and no later than ninety (90) days prior to the expiration of the Initial Term of a Summary Equipment Schedule, Lessee will have the right to extend the Initial Term of such Summary Equipment Schedule for a period of one (1) year. In such event, the rent to be paid during said extended period shall be mutually agreed upon and if the parties cannot mutually agree, then the Summary Equipment Schedule shall continue in full force and effect pursuant to the existing terms and conditions until terminated in accordance with its terms. The Summary Equipment Schedule will continue in effect following said extended period until terminated by either party upon not less than ninety (90) days prior written notice, which notice shall be effective as of the date of receipt. 4. Purchase Option So long as no Event of Default has occurred and is continuing hereunder, and upon written notice no earlier than twelve (12) months and no later than ninety (90) days prior to the expiration of the Initial Term or the extended term of the applicable Summary Equipment Schedule, Lessee will have the option at the expiration of the Initial Term of the Summary Equipment Schedule to purchase all, but not less than all, of the Equipment listed therein for a purchase price not to exceed 12.5% of the original Equipment cost and upon terms and conditions to be mutually agreed upon by the parties following Lessee's written notice, plus any taxes applicable at time of purchase. Said purchase price shall be paid to Lessor at least thirty (30) days before the expiration date of the Initial Term or extended term. Title to the Equipment shall automatically pass to Lessee upon payment in full of the purchase price but, in no event, earlier than the expiration of the fixed Initial Term or extended term, if applicable. If the parties are unable to agree on the purchase price or the terms and conditions with respect to said purchase, then the Summary Equipment Schedule with respect to this Equipment shall remain in full force and effect. Notwithstanding the exercise by Lessee of this option and payment of the purchase price, until all obligations under the applicable Summary Equipment Schedule have been fulfilled, it is agreed and understood that Lessor shall retain a purchase money security interest in the Equipment listed therein and the Summary Equipment Schedule shall constitute a Security Agreement under the Uniform Commercial Code of the state in which the Equipment is located. 5. Special Terms The terms and conditions of the Lease as they pertain to this Schedule are hereby modified and amended as follows: A. Section 14.16 Delete this Section in its entirety. Master Lease: This Schedule is issued pursuant to the Lease identified on page 1 of this Schedule. All of the terms and conditions of the Lease are incorporated in and made a part of this Schedule as if they were expressly set forth in this Schedule. The parties hereby reaffirm all of the terms and conditions of the Lease (including, without limitation, the representations and warranties set forth in Section 8) except as modified herein by this Schedule. This Schedule may not be amended or rescinded except by a writing signed by both parties. AGILE SOFTWARE CORPORATION COMDISCO, INC. as Lessee as Lessor By: /s/ By:_____________________________ ----------------------------- Title: President/CEO Title:__________________________ -------------------------- Date: 11/10/97 Date:___________________________ --------------------------- EXHIBIT 1 SUMMARY EQUIPMENT SCHEDULE -------------------------- This Summary Equipment Schedule dated XXXX is executed pursuant to Equipment Schedule No. X to the Master Lease Agreement dated XXXX between Comdisco, Inc. ("Lessor") and XXXX ("Lessee"). All of the terms, conditions, representations and warranties of the Master Lease Agreement and Equipment Schedule No. X are incorporated herein and made a part hereof, and this Summary Equipment Schedule constitutes a Schedule for the Equipment on the attached invoices. 1. For Period Beginning: And Ending: -------------------- ---------- 2. Initial Term Starts on: Initial Term: ---------------------- ------------ (Number of Rent Intervals) 3. Total Summary Equipment Cost: ---------------------------- 4. Lease Rate Factor: ----------------- 5. Rent: ---- 6. Acceptance Doc Type: ------------------- EQUIPMENT SCHEDULE VL-5 DATED AS OF February 23, 1998 TO MASTER LEASE AGREEMENT DATED AS OF September 18, 1995 (THE "MASTER LEASE") LESSEE: AGILE SOFTWARE CORPORATION LESSOR: COMDISCO, INC. Admin. Contact/Phone No.: Address for all Notices: - ------------------------ ----------------------- Mr. Thomas P. Shanahan, CFO (408)975-3974 6111 North River Road Rosemont, Illinois 60018 Attn.: Venture Group Address for Notices: - ------------------- One Almaden Blvd, 12th Floor San Jose, CA 95113 Attn.: Mr. Thomas P. Shanahan, CFO Central Billing Location: Rent Interval: Monthly - ------------------------ ------------- same as above Attn.: Lessee Reference No.:_______________ (26 digits maximum) Location of Equipment: Initial Term: Forty-two (42) - --------------------- ------------ same as above (Number of Rent Intervals) Lease Rate Factor: 2.8053% ----------------- Attn.: EQUIPMENT (as defined below): Advance: $56,106.00 ------- (Consisting of Lessee's first and last monthly lease payments) Equipment specifically approved by Lessor, which shall be delivered to and accepted by Lessee during the period February 23, 1998 through February 23, 1999 ("Equipment Delivery Period"), for which Lessor receives vendor invoices approved for payment, up to an aggregate purchase price of $1,000,000 ("Commitment Amount"); excluding custom use equipment, leasehold improvements, installation costs and delivery costs, rolling stock, special tooling, hand held items, molds and fungible items. In no event shall any software exceed thirty percent (30%) of Lessor's aggregate cost hereunder. 1. Equipment Purchase This Schedule contemplates Lessor's acquisition of Equipment for lease to Lessee, either by one of the first three categories listed below or by providing Lessee with Equipment from the fourth category, in a value up to the Commitment Amount referred to on the face of this Schedule. If the Equipment acquired is of category (i), (ii) or (iii) below, the effectiveness of this Schedule as it relates to those items of Equipment is contingent upon Lessee's acknowledgment at the time Lessor acquires the Equipment that Lessee has either received or approved the relevant purchase documentation between vendor and Lessor for that Equipment. (i) NEW ON-ORDER EQUIPMENT. Lessor will purchase new Equipment which is specifically approved by Lessor. (ii) SALE-LEASEBACK EQUIPMENT. Any in-place Equipment installed at Lessee's site and to which Lessee has clear title and ownership may be considered by Lessor for inclusion under this Lease (the "Sale- Leaseback Transaction"). Any request for a Sale-Leaseback Transaction must be submitted to Lessor in writing (along with accompanying evidence of Lessee's Equipment ownership satisfactory to Lessor for all Equipment submitted) no later than March___, 1998*. Lessor will not perform a Sale-Leaseback Transaction for any request or accompanying Equipment ownership documents which arrive after the date marked above by an asterisk (*). Further, any sale- leaseback Equipment will be placed on lease subject to: (1) Lessor prior approval of the Equipment; and (2) if approved, at Lessor's actual net appraised Equipment value pursuant to the schedule below: ORIGINAL EQUIPMENT INVOICE PERCENT OF ORIGINAL MANUFACTURER'S DATE NET EQUIPMENT COST PAID BY LESSOR -------------------------- --------------------------------- Between 11/25/97 and 2/23/98 100% (iii) USED ON-ORDER EQUIPMENT. Lessor will purchase used Equipment which is obtained from a third party by Lessee for its use subject to Lessor's prior approval of the Equipment and at Lessor's appraised value for such used Equipment. (iv) INVENTORY EQUIPMENT. Upon Lessee's request, Lessor may supply new or used Equipment from its inventory at rates provided by Lessor. 2. Commencement Date The Commencement Date for each item of new on-order or used on-order Equipment will be the date Lessee approves the vendor invoice. The Commencement Date for sale-leaseback Equipment shall be the date Lessor tenders the purchase price, and the Commencement Date for inventory Equipment shall be the Delivery Date. Lessor will summarize all approved invoices, purchase documentation and evidence of delivery, as applicable, received in the same calendar month into a Summary Equipment Schedule in the form attached to this Schedule as Exhibit 1, and the Initial Term will begin the first day of the calendar month thereafter. Each Summary Equipment Schedule will contain the Equipment location, description, serial number(s) and cost and will incorporate the terms and conditions of the Master Lease and this Schedule and will constitute a separate lease. 3. Option to Extend So long as no Event of Default has occurred and is continuing hereunder, and upon written notice no earlier than twelve (12) months and no later than ninety (90) days prior to the expiration of the Initial Term of a Summary Equipment Schedule, Lessee will have the right to extend the Initial Term of such Summary Equipment Schedule for a period of one (1) year. In such event, the rent to be paid during said extended period shall be mutually agreed upon and if the parties cannot mutually agree, then the Summary Equipment Schedule shall continue in full force and effect pursuant to the existing terms and conditions until terminated in accordance with its terms. The Summary Equipment Schedule will continue in effect following said extended period until terminated by either party upon not less than ninety (90) days prior written notice, which notice shall be effective as of the date of receipt. 4. Purchase Option So long as no Event of Default has occurred and is continuing hereunder, and upon written notice no earlier than twelve (12) months and no later than ninety (90) days prior to the expiration of the Initial Term or the extended term of the applicable Summary Equipment Schedule, Lessee will have the option at the expiration of the Initial Term of the Summary Equipment Schedule to purchase all, but not less than all, of the Equipment listed therein for a purchase price not to exceed 15.0% of the original Equipment cost and upon terms and conditions to be mutually agreed upon by the parties following Lessee's written notice, plus any taxes applicable at time of purchase. Said purchase price shall be paid to Lessor at least thirty (30) days before the expiration date of the Initial Term or extended term. Title to the Equipment shall automatically pass to Lessee upon payment in full of the purchase price but, in no event, earlier than the expiration of the fixed Initial Term or extended term, if applicable. If the parties are unable to agree on the purchase price or the terms and conditions with respect to said purchase, then the Summary Equipment Schedule with respect to this Equipment shall remain in full force and effect. Notwithstanding the exercise by Lessee of this option and payment of the purchase price, until all obligations under the applicable Summary Equipment Schedule have been fulfilled, it is agreed and understood that Lessor shall retain a purchase money security interest in the Equipment listed therein and the Summary Equipment Schedule shall constitute a Security Agreement under the Uniform Commercial Code of the state in which the Equipment is located. 5. Technology Exchange Option If Lessee is not in default, and there is no material adverse change in Lessee's credit, on or after the expiration of the 12th month of any Summary Equipment Schedule, Lessee shall have the option to replace any of the Equipment subject to such summary Equipment Schedule with new technology equipment ("New Technology Equipment") utilizing the following guidelines: A. Equipment being replaced with New Technology Equipment shall have an aggregate original cost equal to or greater than $20,000 and be comprised of full configurations of equipment. B. This technology Exchange Option shall be limited to a maximum in the aggregate of fifty percent (50%) of the original equipment cost and shall not apply to software. C. The cost of the New Technology Equipment must be equal to or greater than the original equipment cost of the replaced equipment, but in no event shall exceed 150% of the original equipment cost. D. The remaining lease payments applicable to the equipment being replaced by the New Technology Equipment will be discounted to present value at 6%. The wholesale market value of the equipment being replaced will be established by Comdisco based upon then current market conditions. Upon the return of the replaced equipment, the wholesale price will be deducted from the present value of the remaining rentals and the differential will be added to the cost of the New Technology Equipment in calculating the new rental. The lease for the New Technology Equipment will contain terms and conditions substantially similar to those for the replaced equipment and will have an Initial Term not less than the balance of the remaining Initial Term for the replaced equipment. 6. Option Amount So long as no Event of Default shall have occurred and is continuing and upon Lessee's request, subject to final review by Lessor, Lessor agrees to provide to Lessee an additional $1,000,000.00 of Equipment upon rates and terms to be negotiated. 7. Special Terms The terms and conditions of the Lease as they pertain to this Schedule are hereby modified and amended as follows: A. Section 14.16 Delete this Section in its entirety. Master Lease: This Schedule is issued pursuant to the Lease identified on page 1 of this Schedule. All of the terms and conditions of the Lease are incorporated in and made a part of this Schedule as if they were expressly set forth in this Schedule. The parties hereby reaffirm all of the terms and conditions of the Lease (including, without limitation, the representations and warranties set forth in Section 8) except as modified herein by this Schedule. This Schedule may not be amended or rescinded except by a writing signed by both parties. AGILE SOFTWARE CORPORATION COMDISCO, INC. as Lessee as Lessor By: /s/ By: /s/ James P. Labe --------------------------- ---------------------------------------- Title: CFO Title: President, Comdisco Ventures Division ------------------------ ------------------------------------- Date: 2-25-98 Date: Mar 6 1998 ------------------------ -------------------------------------- EXHIBIT 1 SUMMARY EQUIPMENT SCHEDULE -------------------------- This Summary Equipment Schedule dated XXXX is executed pursuant to Equipment Schedule No. X to the Master Lease Agreement dated XXXX between Comdisco, Inc. ("Lessor") and XXXX ("Lessee"). All of the terms, conditions, representations and warranties of the Master Lease Agreement and Equipment Schedule No. X are incorporated herein and made a part hereof, and this Summary Equipment Schedule constitutes a Schedule for the Equipment on the attached invoices. 1. For Period Beginning: And Ending: -------------------- ---------- 2. Initial Term Starts on: Initial Term: ---------------------- ------------ (Number of Rent Intervals) 3. Total Summary Equipment Cost: ---------------------------- 4. Lease Rate Factor: ----------------- 5. Rent: ---- 6. Acceptance Doc Type: ------------------- EX-10.9 10 SERIES A PREFERRED STOCK PURCHASE AGREEMENT EXHIBIT 10.9 SERIES A PREFERRED STOCK PURCHASE AGREEMENT THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT ("Agreement") is made as of April 7, 1995 by and between Agile Software Corporation, a California corporation (the "Company"), and the investors listed on Schedule A hereto, each of which is herein referred to individually as an "Investor" and collectively the "Investors". THE PARTIES HEREBY AGREE AS FOLLOWS: 1. Purchase and Sale of Series A Preferred Stock. The Investors --------------------------------------------- agree to purchase at the Closing and the Company agrees to sell and issue to the Investors at the Closing, up to 1,500,000 shares of Series A Preferred Stock (collectively, the "Series A Shares"). 1.1 Closing: Subsequent Closings. The purchase and sale of the Series ---------------------------- A Shares shall take place at the offices of Brobeck, Phleger & Harrison, 2200 Geng Road, Palo Alto, California, at 2:00 p.m., on April 7, 1995, or at such other time and place as the Company and the Investors hereto mutually agree upon orally or in writing (which time and place are designated as the "Closing"). At the Closing, the Company shall deliver to the Investors shares of Series A Preferred Stock against delivery to the Company by the Investors of a check or wire transfer, payable to the Company's order, in the amount set forth beside such Investor's name on Schedule A. The Company may sell additional Series A Shares to such purchasers as it shall select. 2. Representations and Warranties of the Investors. Each Investor ----------------------------------------------- hereby severally, but not jointly, represents and warrants that: 2.1 Authorization. All action on the part of such Investor necessary ------------- for the authorization, execution, delivery and performance of this Agreement and purchase of the Series A Shares has been taken or will be taken prior to the Closing. 2.2 Purchase Entirely for Own Account. This Agreement is made with --------------------------------- such Investor in reliance upon such Investor's representation to the Company, which, by such Investor's execution of this Agreement, such Investor hereby confirms that the Series A Shares purchased by such Investor and any stock into which such Series A Shares may be converted (collectively, the "Securities") will be acquired for investment for such Investor's own account, and not with a view to the resale or distribution of any part thereof unless such resale or distribution is in compliance with the Securities Act of 1933, as amended (the "Act"), and any rules or regulations promulgated thereunder, and, except as provided above, that such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, each Investor further represents that such Investor does not have any contract, 1 undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Securities. Each Investor represents that it has full power and authority to enter into this Agreement. 2.3 Disclosure of Information. Such Investor believes it has received ------------------------- all the information it considers necessary or appropriate for deciding whether to purchase the Series A Shares. Such Investor further represents that such Investor has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Series A Shares. Such Investor is aware that investment in the Company is speculative and involves a high degree of risk. Such Investor, in evaluating the merits of an investment in the Company, has relied on the advice of its own personal tax and legal counsel, and is not relying on the Company or its counsel for an evaluation of the tax, legal or other consequences of an investment in the Company. 2.4 Investment Experience. Such Investor is an experienced investor --------------------- in securities of emerging growth high technology companies 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 A Shares. 2.5 Restricted Securities. Such Investor understands that the --------------------- Securities 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 not be resold without registration under the Act, except in certain limited circumstances. In this connection, such Investor represents that such Investor is familiar with SEC Rule 144 promulgated by the Securities and Exchange Commission, as presently in effect, and understands the resale limitations imposed thereby and by the Act. 2.6 Further Limitations on Disposition. Without in any way limiting ---------------------------------- the representations set forth above, such Investor further agrees that such Investor will not make any disposition of all or any portion of the Securities unless and until the transferee and any subsequent transferee has agreed in writing for the benefit of the Company to be bound by the terms of this Agreement, as amended, provided and to the extent such instruments are then applicable and: (a) There is then in effect a Registration Statement under the Act covering such proposed disposition and such disposition is made in accordance with such Registration Statement; or (b) Such Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the 2 circumstances surrounding the proposed disposition, and if reasonably requested by the Company, such Investor shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of such Securities under the Act. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances. 2.7 Legends. It is understood that the certificates evidencing the ------- Securities may bear one or all of the following legends: (a) "THE SECURITIES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH SECURITIES, OR DELIVERY OF AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH THE ACT OR UNLESS SOLD IN FULL COMPLIANCE WITH RULE 144 UNDER THE ACT." (b) Any legend required by the laws of the State of California, including any legend required by the California Department of Corporations and Sections 417 and 418 of the Code or any other legends required by applicable state securities or blue sky laws. 3. Commissioner of Corporations. ---------------------------- 3.1 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 FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM 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. 4. Conditions of the Company's Obligations at Closing. The -------------------------------------------------- obligations of the Company to each Investor under this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions by that Investor: 3 4.1 Representations and Warranties. The representations and ------------------------------ warranties of each Investor contained in Section 2 shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the Closing. 4.2 Payment of Purchase Price. The Investors shall have delivered the ------------------------- purchase price for the Series A Shares specified in Section 1.2, as applicable. 4.3 State Qualifications. The Commissioner of Corporations of the -------------------- State of California shall have issued a permit qualifying the offer and sale to the Investors of the Securities or such offer and sale shall be exempt from such qualification under the California Corporate Securities Law of 1968, as amended. 4.4 Amended and Restated Articles of Incorporation. The Secretary of ---------------------------------------------- State of the State of California shall have filed and cleared the Amended and Restated Articles of Incorporation in substantially the form attached hereto as Exhibit A. - --------- 4.5 Investors' Rights Agreement. Each of the Investors shall have --------------------------- executed a copy of the Investors' Rights Agreement in substantially the form attached hereto as Exhibit B. --------- 5. Miscellaneous. ------------- 5.1 Survival of Warranties. The warranties, representations and ---------------------- covenants of the Company and the Investors contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of the Investors or the Company. 5.2 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 the 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. 5.3 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. 5.4 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 5.5 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. 5.6 Notices. Unless otherwise provided, any notice required or ------- permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified or upon deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party on the signature page hereof, or at such other address as such party may designate by ten (10) days' advance written notice to the other parties. If to the Company, a copy of any notice shall be sent in the same manner to (a) Agile Software Corporation, 1816 Marlyn Way, San Jose, CA 95125 Attention: President and (b) Brobeck, Phleger & Harrison, 2200 Geng Road, Palo Alto, California 94303, Attention: Margaret E. Nibbi, Esq. 5.7 Finder's Fee. Each party represents that it neither is nor will ------------ be obligated for any finders' fee or commission in connection with this transaction. 5.8 Expenses. Each party shall pay all costs and expenses that it -------- incurs with respect to the negotiation, execution, delivery and performance of this Agreement. 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 attorney's fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 5.9 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 A Shares. Any amendment or waiver effected in accordance with this paragraph shall be binding upon all the Investors and the Company. 5.10 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. 5 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. AGILE SOFTWARE CORPORATION By: /s/ Bryan D. Stolle ------------------------------- Bryan D. Stolle President and Chief Executive Officer Signature Page to Agile Software Corporation Series A Preferred Stock Purchase Agreement EX-10.10 11 SERIES B PREFERRED STOCK PURCHASE AGREEMENT EXHIBIT 10.10 SERIES B PREFERRED STOCK PURCHASE AGREEMENT ------------------------ THIS SERIES B PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 2nd day of June, 1995, by and among Agile Software Corporation, a California corporation (the "Company"), and Mohr, Davidow Ventures IV, L.P., a Delaware limited partnership (the "Investor"). THE PARTIES HEREBY AGREE AS FOLLOWS: 1. Purchase and Sale of Stock. --------------------------- 1.1 Sale and Issuance of Series B Preferred Stock. --------------------------------------------- (a) The Company shall adopt and file with the Secretary of State of California on or before the Closing (as defined below) the Second Amended and Restated Articles of Incorporation in the form attached hereto as Exhibit A (the --------- "Restated Articles"). (b) Subject to the terms and conditions of this Agreement, the Investor agrees to purchase at the Closing and the Company agrees to sell and issue to the Investor at the Closing, 2,825,000 shares of the Company's Series B Preferred Stock (the "Series B Preferred Stock") at a purchase price of $0.354 per share, for an aggregate purchase price of $1,000,050.00. 1.2 Closing. The purchase and sale of the Series B Preferred Stock ------- shall take place at the offices of Brobeck, Phleger & Harrison, Two Embarcadero Place, 2200 Geng Road, Palo Alto, California, at 11:00 A.M., on June 2, 1995, or at such other time and place as the Company and Investor mutually agree upon orally or in writing (which time and place are designated as the "Closing"). At the Closing, the Company shall deliver to the Investor a certificate representing the Series B Preferred Stock that the Investor is purchasing against payment of the purchase price therefor by check or wire transfer to an account specified by the Company. 2. Representations and Warranties of the Company. The Company --------------------------------------------- hereby represents and warrants to the Investor that, except as set forth on a Schedule of Exceptions (the "Schedule of Exceptions") furnished the Investor and special counsel for the Investor, specifically identifying the relevant subparagraph hereof, which exceptions shall be deemed to be representations and warranties as if made hereunder: 2.1 Organization, Good Standing and Qualification. The Company is a --------------------------------------------- corporation duly organized, validly existing and in good standing under the laws of the State of California and has all requisite corporate power and authority to carry on its business as now conducted and as proposed to be conducted in its Business Plan dated as of April 1995 ("Business Plan"). The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties. 2.2 Capitalization and Voting Rights. The authorized capital of the -------------------------------- Company consists of or will consist of prior to the Closing: (i) Preferred Stock. 6,000,000 shares of Preferred Stock (the --------------- "Preferred Stock"), of which 1,500,000 shares have been designated Series A Preferred Stock (the "Series A Preferred Stock"), 1,240,000 of which are outstanding, and 3,000,000 of which have been designated Series B Preferred Stock, of which 2,825,000 will be sold pursuant to this Agreement. The rights, privileges and preferences of the Series A Preferred Stock and Series B Preferred Stock will be as stated in the Company's Restated Articles. (ii) Common Stock. 10,000,000 shares of common stock ("Common ------------ Stock"), of which 1,990,000 shares are issued and outstanding. (iii) The outstanding shares of Series A Preferred Stock and Common Stock are owned by the shareholders in the numbers specified in Exhibit C --------- hereto. (iv) The outstanding shares of Series A Preferred Stock and Common Stock are all duly and validly authorized and issued, fully paid and nonassessable, and were issued in accordance with the registration or qualification provisions of the Securities Act of 1933, as amended (the "Act") and any relevant state securities laws or pursuant to valid exemptions therefrom. (v) Except for (A) the conversion privileges of the Series A Preferred Stock and Series B Preferred Stock, (B) the rights provided in Section 2 of the Amended and Restated Investors' Rights Agreement (the "Investors' Rights Agreement"), the form of which is attached hereto as Exhibit B, and (C) --------- currently outstanding options to purchase 60,000 shares of Common Stock granted to directors and an advisor pursuant to the 1995 Stock Option Plan (the "Option Plan"), there are not outstanding any options, warrants, rights (including conversion or preemptive rights) or agreements for the purchase or acquisition from the Company of any shares of its capital stock. The Company has reserved 3,000,000 shares of Series B Preferred Stock for issuance hereunder and 4,500,000 shares of Common Stock for issuance upon conversion of the Series A and Series B Preferred Stock. In addition to the aforementioned options, the Company has reserved an additional 940,000 shares of its Common Stock for issuance upon exercise of options to be granted in the future under the Option Plan. The Company is not a party or subject to any agreement or understanding, and, to the best of 2. the Company's knowledge, there is no agreement or understanding between any persons and/or entities, which affects or relates to the voting or giving of written consents with respect to any security or by a director of the Company. 2.3 Subsidiaries. The Company does not presently own or control, ------------ directly or indirectly, any interest in any other corporation, association, or other business entity. The Company is not a participant in any joint venture, partnership, or similar arrangement. 2.4 Authorization. All corporate action on the part of the Company, ------------- its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement, the Investors' Rights Agreement and the Co-Sale Agreement, the form of which is attached hereto as Exhibit E, 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 B Preferred Stock being sold hereunder and the Common Stock issuable upon conversion of the Series B Preferred Stock has been taken or will be taken prior to the Closing, and this Agreement, the Investors' Rights Agreement and the Co- Sale Agreement 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 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 Investors' Rights Agreement may be limited by applicable federal or state securities laws. 2.5 Valid Issuance of Preferred and Common Stock. --------------------------------------------- The Series B Preferred Stock that is being purchased by the Investor hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid, and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under this Agreement and the Investors' Rights Agreement and under applicable state and federal securities laws. The Common Stock issuable upon conversion of the Series B Preferred Stock purchased under this Agreement has been duly and validly reserved for issuance and, upon issuance in accordance with the terms of the Restated Articles, will be duly and validly issued, fully paid, and nonassessable and will be free of restrictions on transfer other than restrictions on transfer under this Agreement and the Investors' Rights Agreement and under applicable state and federal securities laws. 2.6 Governmental Consents. No consent, approval, order or --------------------- authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, 3. the Investors' Rights Agreement and the Co-Sale Agreement, except for the filing pursuant to Section 25102(f) of the California Corporate Securities Law of 1968, as amended, and the rules thereunder, which filing will be effected within fifteen (15) days of the sale of the Series B Preferred Stock hereunder. 2.7 Litigation. There is no action, suit, proceeding or ---------- investigation pending or currently threatened against the Company that questions the validity of this Agreement, the Investors' Rights Agreement or the Co-Sale Agreement, or the right of the Company to enter into such agreements, or to consummate the transactions contemplated hereby or thereby, or that might result, either individually or in the aggregate, in any material adverse changes in the assets, condition, affairs or prospects of the Company, financially or otherwise, or any change in the current equity ownership of the Company. The foregoing includes, without limitation, actions, suits, proceedings or investigations, pending or threatened, involving the prior employment of any of the Company's employees, their use in connection with the Company's business of any information or techniques allegedly proprietary to any of their former employers, or their obligations under any agreements with prior employers. The Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company currently pending or that the Company intends to initiate. 2.8 Proprietary Information and Inventions Agreement. Each employee, ------------------------------------------------ officer and consultant of the Company has executed a Proprietary Information and Inventions Agreement in the form provided to special counsel to the Investor. 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. 2.9 Patents and Trademarks. To the best of its knowledge (but ---------------------- without having conducted any special investigation or patent search), the Company has sufficient title to and ownership of all patents, trademarks, service marks, trade names, copyrights, trade secrets, information, proprietary rights and processes necessary for its business as now conducted and as proposed to be conducted as described in the Business Plan without any conflict with or infringement of the rights of others. There are no outstanding options, licenses, or agreements of any kind relating to the foregoing, nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, proprietary rights and processes of any other person or entity. 2.10 Compliance with Other Instruments. ---------------------------------- (a) The Company is not in violation or default in any material respect of any provision of its Restated Articles or Bylaws, or in any material respect of any instrument, judgment, order, writ, decree or contract to which it is a party or by which it 4. is bound, or, to the best of its knowledge, of any provision of any federal or state statute, rule or regulation applicable to the Company. The execution, delivery and performance of this Agreement, the Investors' Rights Agreement and the Co-Sale Agreement, and the consummation of the transactions contemplated hereby and thereby will not result in any such violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument, judgment, order, writ, decree or contract or an event that results in the creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license, authorization, or approval applicable to the Company, its business or operations or any of its assets or properties. 2.11 Agreements; Action. ------------------- (a) Except for agreements explicitly contemplated hereby, by the Investors' Rights Agreement and the Co-Sale Agreement, there are no agreements, understandings or proposed transactions between the Company and any of its officers, directors, affiliates, or any affiliate thereof. (b) There are no agreements, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Company is a party or by which it is bound that may involve (i) obligations (contingent or otherwise) of, or payments to the Company in excess of, $10,000, (ii) the license of any patent, copyright, trade secret or other proprietary right to or from the Company, or (iii) provisions restricting or affecting the development, manufacture or distribution of the Company's products or services. (c) The Company has not (i) declared or paid any dividends or authorized or made any distribution upon or with respect to any class or series of its capital stock, (ii) incurred any indebtedness for money borrowed or any other liabilities individually in excess of $10,000 or, in the case of indebtedness and/or liabilities individually less than $10,000, in excess of $25,000 in the aggregate, (iii) except with respect to the purchase of shares of stock of the Company by employees, officers or directors, made any loans or advances to any person, other than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business. (d) For the purposes of subsections (b) and (c) above, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar mounts of such subsections. 5. 2.12 Related-Party Transactions. Except with respect to the purchase -------------------------- of shares of stock of the Company, no employee, officer, or director of the Company or member of his or her immediate family is indebted to the Company, nor is the Company indebted (or committed to make loans or extend or guarantee credit) to any of them. To the best of the Company's knowledge, none of said employees, officers or directors, or any members of their immediate families, have any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company, except that Bryan Stolle owns 400 shares and Matthias Moran owns 3,000 shares of the common stock of Sherpa Corporation, and employees, officers and directors of the Company may own stock in publicly traded companies that may compete with the Company. To the best of the Company's knowledge, no employee, officer or director or any member of their immediate families, is, directly or indirectly, interested in any material contract with the Company other than as a shareholder in the Company. The Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation. 2.13 Permits. The Company has all franchises, permits, licenses, and ------- any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could materially and adversely affect the business, properties, prospects, or financial condition of the Company, and the Company believes it can obtain, without undue burden or expense, any similar authority for the conduct of its business as planned to be conducted. The Company is not in default in any material respect under any of such franchises, permits, licenses, or other similar authority. 2.14 Disclosure. The Company has fully provided the Investor with all ---------- the information that the Investor has requested for deciding whether to purchase the Series B Preferred Stock. To the best of its knowledge, neither this Agreement, the Investors' Rights Agreement, the Co-Sale Agreement, nor any other statements or certificates made or delivered in connection herewith or therewith 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. 2.15 Registration Rights. Except as provided in the Investors' Rights ------------------- Agreement, the Company has not granted or agreed to grant any registration rights, including piggyback rights, to any person or entity. 2.16 Corporate Documents. Except for amendments necessary to satisfy ------------------- representations and warranties or conditions contained herein (the form of which amendments has been approved by the Investor), the Restated Articles and Bylaws of the Company are in the form previously provided to special counsel for the Investor. 2.17 Section 83(b) Elections. To the best of the Company's knowledge, ----------------------- all individuals who have purchased shares of the Company's Common Stock have timely 6. filed elections under Section 83(b) of the Internal Revenue Code of 1986, as amended, and any analogous provisions of applicable state tax laws. 2.18 Employees. To the best of the Company's knowledge, no employee --------- or consultant of the Company is in violation of any term of any employment, employment contract, patent disclosure agreement or any other contract or agreement relating to the relationship of any such person with the Company or any other party because of the nature of the business conducted or to be conducted by the Company. The Company does not have any collective bargaining agreements covering any of its employees. Except for the Option Plan, the Company has no employee benefit plans presently in-force with respect to profit- sharing, pensions, stock options, or other stock benefits. The Company is not aware of any key employee of the Company who has any plans to terminate his or her employment with the Company. 2.19 Offering. Subject to the accuracy of the Investor's -------- representations in Section 3 of this Agreement and in written responses to the Company's inquiries, the offer, sale and issuance of the Series B Preferred Stock to be issued in conformity with the terms of this Agreement and the issuance of the Common Stock to be issued upon conversion of the Series B Preferred Stock constitute transactions exempt from the registration requirements of Section 5 of the Act. 2.20 Corporate Records. The minute books of the Company made ----------------- available to the Investor contain a complete summary of all meetings or actions by written consent of directors and shareholders since the time of incorporation of the Company and reflect all transactions referred to in such minutes accurately in all material respects. 2.21 Arbitration. Each employee of the Company has agreed in writing ----------- that all disputes that arise under the terms of the Proprietary Information and Inventions Agreement, the Restricted Stock Purchase Agreement(s) or the Employment Agreement entered into between each employee and the Company shall be resolved through final and binding arbitration. 3. Representations and Warranties of the Investor. The Investor ---------------------------------------------- hereby represents and warrants that: 3.1 Authorization. Such Investor has full power and authority to ------------- enter into this Agreement, the Investors' Rights Agreement and the Co-Sale Agreement, and each such agreement constitutes its valid and legally binding obligation, enforceable in accordance with its terms. 3.2 Purchase Entirely for Own Account. This Agreement is made with --------------------------------- such Investor in reliance upon such Investor's representation to the Company, which by such Investor's execution of this Agreement such Investor hereby confirms, that the 7. Series B Preferred Stock to be received by such Investor and the Common Stock issuable upon conversion thereof (collectively, the "Securities") will be acquired for investment for such Investor'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 such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, such Investor further represents that such Investor 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. 3.3 Disclosure of Information. Such Investor believes it has received ------------------------- all the information it considers necessary or appropriate for deciding whether to purchase the Series B Preferred Stock. Such Investor 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 B 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 the Investor to rely thereon. 3.4 Investment Experience. Such Investor 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 B Preferred Stock. If other than an individual, Investor also represents it has not been organized for the purpose of acquiring the Series B Preferred Stock. 3.5 Accredited Investor. Such Investor is an "accredited investor" ------------------- within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of Regulation D, as presently in effect. 3.6 Restricted Securities. Such Investor 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 Act, only in certain limited circumstances. In this connection, such Investor represents that it is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Act. 3.7 Further Limitations on Disposition. Without in any way limiting ---------------------------------- the representations set forth above, such Investor further agrees not to make any disposition of all or any portion of the Securities unless and until the transferee has agreed in writing for the benefit of the Company to be bound by this Section 3 and the Investors' 8. Rights Agreement provided and to the extent this Section 3 and such agreement are then applicable; and: (a) There is then in effect a Registration Statement under the Act coveting such proposed disposition and such disposition is made in accordance with such Registration Statement; or (b) (i) Such Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (ii) if reasonably requested by the Company, such Investor 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 Act. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances. (c) Notwithstanding the provisions of paragraphs (a) and (b) above, no such registration statement or opinion of counsel shall be necessary for a transfer by an Investor that is a partnership to a partner of such partnership or a retired partner of such partnership who retires after the date hereof, or to the estate of any such partner or retired partner or the transfer by gift, will or intestate succession of any partner to his or her spouse or to the siblings, lineal descendants or ancestors of such partner or his or her spouse, if the transferee agrees in writing to be subject to the terms hereof to the same extent as if he or she were an original Investor hereunder. 3.8 Legends. It is understood that the certificates evidencing the ------- Securities may bear one or all of the following legends: (a) "These securities have not been registered under the Securities Act of 1933, as amended. They may not be sold, offered for sale, pledged or hypothecated in the absence of a registration statement in effect with respect to the securities under such Act or an opinion of counsel satisfactory to the Company that such registration is not required or unless sold pursuant to Rule 144 of such Act." (b) Any legend required by the laws of the State of California, including any legend required by the California Department of Corporations and Sections 417 and 418 of the California Corporations Code. 4. California Commissioner of Corporations. ---------------------------------------- 4.1 Corporate Securities Law. THE SALE OF THE SECURITIES THAT 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 9. OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM 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. 5. Conditions of Investor's Obligations at Closing. The obligations ----------------------------------------------- of the Investor under subsection 1.1(b) of this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions: 5.1 Representations and Warranties. The representations and ------------------------------ warranties of the Company contained in Section 2 shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of such Closing. 5.2 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 Closing. 5.3 Compliance Certificate. The President of the Company shall ---------------------- deliver to the Investor at the Closing a certificate stating that the conditions specified in Sections 5.1 and 5.2 have been fulfilled and stating that there shall have been no adverse change in the business, affairs, operations, properties, assets or condition of the Company since the date of the Business Plan. 5.4 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 Securities pursuant to this Agreement shall be duly obtained and effective as of the Closing. 5.5 Proceedings and Documents. All corporate and other proceedings in ------------------------- connection with the transactions contemplated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to Investor's special counsel, and they shall have received all such counterpart original and certified or other copies of such documents as they may reasonably request. 5.6 Bylaws. The Bylaws of the Company shall provide that the Board of ------ Directors of the Company shall consist of not less than five (5) or more than seven (7) persons, which number shall not be changed by an amendment to the Restated Articles ' or the Bylaws without the consent of a majority of the Series A Preferred Stock and Series B Preferred Stock then outstanding. 10. 5.7 Opinion of Company Counsel. The Investor shall have received from -------------------------- Brobeck, Phleger & Harrison, counsel for the Company, an opinion, dated as of the Closing, in the form attached hereto as Exhibit D. --------- 5.8 Investors' Rights Agreement. The Company, the Investor and each --------------------------- of the holders of Series A Preferred Stock shall have entered into the Investors' Rights Agreement in the form attached hereto as Exhibit B. --------- 5.9 Co-Sale Agreement. Bryan D. Stolle, Matthias F. Moran, Joseph ----------------- Fazio, and Carlos Camacho shall each have entered into a Co-Sale Agreement in the form attached hereto as Exhibit E. --------- 6. Conditions of the Company's Obligations at Closing. The -------------------------------------------------- obligations of the Company to the Investor under this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions by the Investor, the waiver of which shall not be effective against the Company unless in writing and signed on behalf of the Company: 6.1 Representations and Warranties. The representations and ------------------------------ warranties of the Investor contained in Section 3 shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the Closing. 6.2 Payment of Purchase Price. The Investor shall have delivered the ------------------------- purchase price specified in Section 1.2. 6.3 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 pursuant to this Agreement shall be duly obtained and effective as of the Closing. 7. Miscellaneous. ------------- 7.1 Survival of Warranties. The warranties, representations and ---------------------- covenants of the Company and Investor contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of the Investor or the Company. 7.2 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 11. rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 7.3 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. 7.4 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. 7.5 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. 7.6 Notices. Unless otherwise provided, any notice required or ------- permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified or upon deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party on the signature page hereof, or at such other address as such party may designate by ten (10) days' advance written notice to the other parties. 7.7 Finder's Fee. Each party represents that it neither is nor will ------------ be obligated for any finders' fee or commission in connection with this transaction. The Investor agrees to indemnify and to 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 such Investor or any of its officers, partners, employees, or representatives is responsible. The Company agrees to indemnify and hold harmless the Investor 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. 7.8 Expenses. Irrespective of whether the Closing is effected, the -------- Company shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement. If the Closing is effected, the Company shall, at the Closing, reimburse the reasonable fees of special counsel for the Investor, not to exceed $5,000, and shall, upon receipt of a bill therefor, reimburse the reasonable out of pocket expenses of such counsel. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the Investors' Rights Agreement, the Co- Sale Agreement or the Restated Articles, the prevailing party shall 12. be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 7.9 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 Common Stock issued or issuable upon conversion of the Series B Preferred Stock. 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. 7.10 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. 7.11 Aggregation of Stock. All shares of the Preferred Stock held or -------------------- acquired by affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement. 7.12 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. 13. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. AGILE SOFTWARE CORPORATION By: /s/ Bryan D. Stolle ----------------------------------------- Bryan D. Stolle President and Chief Executive Officer Address: 2 North First Street San Jose, California 95125 INVESTOR: MOHR, DAVIDOW VENTURES IV, LP., a Delaware limited partnership By: Fourth MDV Partners, a Delaware limited liability company Its General Partner By: /s/ ------------------------------------ Nancy J. Schoendorf, Member Address: 3000 Sand Hill Road Building 1, Suite 240 Menlo Park, California 94025 SIGNATURE PAGE TO PREFERRED STOCK PURCHASE AGREEMENT EX-10.11 12 SERIES C PREFERRED STOCK PURCHASE AGREEMENT EXHIBIT 10.11 SERIES C PREFERRED STOCK PURCHASE AGREEMENT ------------------------ THIS SERIES C PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 16th day of January, 1996, by and among Agile Software Corporation, a California corporation (the "Company") and the investors listed on Schedule A hereto (the "Investors" or, individually, an "Investor"). ---------- THE PARTIES HEREBY AGREE AS FOLLOWS: 1. Purchase and Sale of Stock. -------------------------- 1.1 Sale and Issuance of Series C Preferred Stock. --------------------------------------------- (a) The Company shall adopt and file with the Secretary of State of California on or before the Closing (as defined below) the Third Amended and Restated Articles of Incorporation in the form attached hereto as Exhibit A (the --------- "Restated Articles"). (b) Subject to the terms and conditions of this Agreement, each Investor agrees, severally, to purchase at the Closing and the Company agrees to sell and issue to each Investor at the Closing that number of shares of the Company's Series C Preferred Stock (the "Series C Preferred Stock") set forth opposite each Investor's name on Schedule A hereto for the purchase price set ---------- forth thereon. 1.2 Closing. The purchase and sale of the Series C Preferred Stock ------- shall take place at the offices of Brobeck, Phleger & Harrison, Two Embarcadero Place, 2200 Geng Road, Palo Alto, California, at 2:00 P.M., on January 16, 1996, or at such other time and place as the Company and the Investors mutually agree upon orally or in writing (which time and place are designated as the "Closing"). At the Closing, the Company shall deliver to each Investor a certificate representing the number of shares of Series C Preferred Stock that each such Investor is purchasing against payment of the purchase price therefor by check or wire transfer to an account specified by the Company. 2. Representations and Warranties of the Company. The Company hereby --------------------------------------------- represents and warrants to the Investors that, except as set forth on a Schedule of Exceptions (the "Schedule of Exceptions") furnished the Investors and special counsel for the Investors, specifically identifying the relevant subparagraph hereof, which exceptions shall be deemed to be representations and warranties as if made hereunder: 2.1 Organization, Good Standing and Qualification. The Company is a ---------------------------------------------- corporation duly organized, validly existing and in good standing under the laws of the State of California and has all requisite corporate power and authority to carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties. 2.2 Capitalization and Voting Rights. The authorized capital of the -------------------------------- Company consists of or will consist of prior to the Closing: (i) Preferred Stock. 12,500,000 shares of Preferred Stock (the --------------- "Preferred Stock"), of which 1,500,000 shares have been designated Series A Preferred Stock (the "Series A Preferred Stock"), 1,232,500 of which are issued and outstanding, of which 3,000,000 have been designated Series B Preferred Stock (the "Series B Preferred Stock"), 2,937,995 of which are issued and outstanding, of which 4,000,000 have been designated Series C Preferred Stock (the "Series C Preferred Stock"), 3,500,000 of which will be sold pursuant to this Agreement and of which 4,000,000 shares have been designated Series C1 Preferred Stock (the "Series C1 Preferred Stock"), none of which are issued and outstanding. The respective rights, privileges and preferences of the Series A, Series B, Series C and Series C1 Preferred Stock will be as stated in the Company's Restated Articles. (ii) Common Stock. 25,000,000 shares of common stock ("Common ------------ Stock"), of which 2,072,025 shares are issued and outstanding. (iii) The outstanding shares of Series A and Series B Preferred Stock and of Common Stock are owned by the shareholders in the numbers specified in Exhibit C hereto. --------- (iv) The outstanding shares of Series A and Series B Preferred Stock and of Common Stock are all duly and validly authorized and issued, fully paid and nonassessable, and were issued in accordance with the registration or qualification provisions of the Securities Act of 1933, as amended (the "Act") and any relevant state securities laws or pursuant to valid exemptions therefrom. (v) Except for (A) the conversion privileges of the Series A, Series B, Series C and Series C1 Preferred Stock, (B) the rights provided in Section 2 of the Second Amended and Restated Investors' Rights Agreement (the "Investors' Rights Agreement"), the form of which is attached hereto as Exhibit ------- B, (C) a warrant to purchase 41,111 shares of Series B Preferred Stock and (D) - - currently outstanding options to purchase 302,500 shares of Common Stock granted to certain officers, directors and/or advisors of the Company pursuant to the 1995 Stock Option Plan (the "Option Plan"), there are not outstanding any options, warrants, rights (including conversion or preemptive rights) or agreements for the purchase or acquisition from the Company of 2. any shares of its capital stock. The Company has reserved 4,000,000 shares of Series C and Series C1 Preferred Stock for issuance hereunder and 12,500,000 shares of Common Stock for issuance upon conversion of the Series A, Series B, Series C and Series C1 Preferred Stock. In addition to the aforementioned options, the Company has reserved an additional 1,222,500 shares of its Common Stock for issuance upon exercise of options to be granted in the future under the Option Plan. The Company is not a party or subject to any agreement or understanding, and, to the best of the Company's knowledge, there is no agreement or understanding between any persons and/or entities, which affects or relates to the voting or giving of written consents with respect to any security or by a director of the Company. 2.3 Subsidiaries. The Company does not presently own or control, ------------ directly or indirectly, any interest in any other corporation, association, or other business entity. The Company is not a participant in any joint venture, partnership, or similar arrangement. 2.4 Authorization. All corporate action on the part of the Company, ------------- its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement, the Investors' Rights Agreement and the Amended and Restated Co-Sale Agreement (the "Co-Sale Agreement"), the form of which is attached hereto as Exhibit F 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 C Preferred Stock being sold hereunder and the Common Stock issuable upon conversion of the Series C Preferred Stock has been taken or will be taken prior to the Closing, and this Agreement, the Investors' Rights Agreement and the Co-Sale Agreement 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 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 Investors' Rights Agreement may be limited by applicable federal or state securities laws. 2.5 Valid Issuance of Preferred and Common Stock. -------------------------------------------- The Series C Preferred Stock that is being purchased by the Investors hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid, and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under this Agreement and the Investors' Rights Agreement and under applicable state and federal securities laws. The Common Stock issuable upon conversion of the Series C Preferred Stock purchased under this Agreement has been duly and validly reserved for issuance and, upon issuance in accordance with the terms of the Restated Articles, will be duly and validly issued, fully paid, and nonassessable and 3. will be free of restrictions on transfer other than restrictions on transfer under this Agreement and the Investors' Rights Agreement and under applicable state and federal securities laws. 2.6 Governmental Consents. No consent, approval, order or --------------------- authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, the Investors' Rights Agreement or the Co-Sale Agreement, except for the filing pursuant to Section 25102(f) of the California Corporate Securities Law of 1968, as amended, and the rules thereunder, which filing will be effected within fifteen (15) days of the sale of the Series C Preferred Stock hereunder. 2.7 Litigation. There is no action, suit, proceeding or ---------- investigation pending or currently threatened against the Company that questions the validity of this Agreement, the Investors' Rights Agreement or the Co-Sale Agreement, or the right of the Company to enter into such agreements, or to consummate the transactions contemplated hereby or thereby, or that might result, either individually or in the aggregate, in any material adverse changes in the assets, condition, affairs or prospects of the Company, financially or otherwise, or any change in the current equity ownership of the Company. The foregoing includes, without limitation, actions, suits, proceedings or investigations, pending or threatened, involving the prior employment of any of the Company's employees, their use in connection with the Company's business of any information or techniques allegedly proprietary to any of their former employers, or their obligations under any agreements with prior employers. The Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company currently pending or that the Company intends to initiate. 2.8 Proprietary Information and Inventions Agreement. Each employee, ------------------------------------------------ officer and consultant of the Company has executed a Proprietary Information and Inventions Agreement in the form provided to special counsel to the Investors. 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. 2.9 Patents and Trademarks. To the best of its knowledge (but ---------------------- without having conducted any special investigation or patent search), the Company has sufficient title to and ownership of all patents, trademarks, service marks, trade names, copyrights, trade secrets, information, proprietary rights and processes necessary for its business as now conducted and as proposed to be conducted without any conflict with or infringement of the rights of others. There are no outstanding options, licenses, or agreements of any kind relating to the foregoing, nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to the patents, 4. trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, proprietary rights and processes of any other person or entity. 2.10 Compliance with Other Instruments. The Company is not in --------------------------------- violation or default in any material respect of any provision of its Restated Articles or Bylaws, or in any material respect of any instrument, judgment, order, writ, decree or contract to which it is a party or by which it is bound, or, to the best of its knowledge, of any provision of any federal or state statute, rule or regulation applicable to the Company. The execution, delivery and performance of this Agreement, the Investors' Rights Agreement and the Co- Sale Agreement, and the consummation of the transactions contemplated hereby and thereby will not result in any such violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument, judgment, order, writ, decree or contract or an event that results in the creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license, authorization, or approval applicable to the Company, its business or operations or any of its assets or properties. 2.11 Agreements: Action. ------------------ (a) Except for agreements explicitly contemplated hereby, by the Investors' Rights Agreement and the Co-Sale Agreement, there are no agreements, understandings or proposed transactions between the Company and any of its officers, directors, affiliates or any affiliate thereof. (b) There are no agreements, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Company is a party or by which it is bound that may involve (i) obligations (contingent or otherwise) of, or payments to the Company in excess of, $10,000, (ii) the license of any patent, copyright, trade secret or other proprietary right to or from the Company, or (iii) provisions restricting or affecting the development, manufacture or distribution of the Company's products or services. (c) The Company has not (i) declared or paid any dividends or authorized or made any distribution upon or with respect to any class or series of its capital stock, (ii) incurred any indebtedness for money borrowed or any other liabilities individually in excess of $20,000 or, in the case of indebtedness and/or liabilities individually less than $20,000, in excess of $50,000 in the aggregate, (iii) except with respect to the purchase of shares of stock of the Company by employees, officers or directors, made any loans or advances to any person, other than ordinary advances for travel expenses or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business. 5. (d) For the purposes of subsections (b) and (c) above, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections. 2.12 Related-Party Transactions. Except with respect to the purchase -------------------------- of shares of stock of the Company, no employee, officer, or director of the Company or member of his or her immediate family is indebted to the Company, nor is the Company indebted (or committed to make loans or extend or guarantee credit) to any of them. To the best of the Company's knowledge, none of said founders, officers or directors, or any members of their immediate families, has any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company, except that Bryan Stolle owns 400 shares and Matthias Moran owns 3,000 shares of the common stock of Sherpa Corporation, and employees, officers and directors of the Company may own stock in publicly traded companies that may compete with the Company. To the best of the Company's knowledge, no employee, officer or director or any member of their immediate families, is, directly or indirectly, interested in any material contract with the Company other than as a shareholder in the Company. The Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation. 2.13 Permits. The Company has all franchises, permits, licenses and ------- any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could materially and adversely affect the business, properties, prospects, or financial condition of the Company, and the Company believes it can obtain, without undue burden or expense, any similar authority for the conduct of its business as planned to be conducted. The Company is not in default in any material respect under any of such franchises, permits, licenses or other similar authority. 2.14 Disclosure. The Company has fully provided the Investors with ---------- all the information that the Investors have requested for deciding whether to purchase the Series C Preferred Stock. To the best of its knowledge, neither this Agreement, the Investors' Rights Agreement, the Co-Sale Agreement, nor any other statements or certificates made or delivered in connection herewith or therewith 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. 2.15 Registration Rights. Except as provided in the Investors' ------------------- Rights Agreement, the Company has not granted or agreed to grant any registration rights, including piggyback rights, to any person or entity. 6. 2.16 Corporate Documents. Except for amendments necessary to satisfy ------------------- representations and warranties or conditions contained herein (the form of which amendments has been approved by the Investors), the Restated Articles and the Bylaws of the Company are in the form previously provided to special counsel for the Investors. 2.17 Section 83(b) Elections. To the best of the Company's ----------------------- knowledge, all individuals who have purchased shares of the Company's Common Stock have timely filed elections under Section 83(b) of the Internal Revenue Code of 1986, as amended, and any analogous provisions of applicable state tax laws. 2.18 Employees. To the best of the Company's knowledge, no employee --------- or consultant of the Company is in violation of any term of any employment, employment contract, patent disclosure agreement or any other contract or agreement relating to the relationship of any such person with the Company or any other party because of the nature of the business conducted or to be conducted by the Company. The Company does not have any collective bargaining agreements covering any of its employees. Except for the Option Plan, the Company has no employee benefit plans presently in force with respect to profit- sharing, pensions, stock options or other stock benefits. The Company is not aware of any key employee of the Company who has any plans to terminate his or her employment with the Company. 2.19 Offering. Subject to the accuracy of the Investors' -------- representations in Section 3 of this Agreement and in written responses to the Company's inquiries, the offer, sale and issuance of the Series C Preferred Stock to be issued in conformity with the terms of this Agreement and the issuance of the Common Stock to be issued upon conversion of the Series C Preferred Stock constitute transactions exempt from the registration requirements of Section 5 of the Act. 2.20 Corporate Records. The minute books of the Company made ----------------- available to the Investors contain a complete summary of all meetings or actions by written consent of directors and shareholders since the time of incorporation of the Company and reflect all transactions referred to in such minutes accurately in all material respects. 2.21 Arbitration. Each employee of the Company has agreed in writing ----------- that all disputes that arise under the terms of the Proprietary Information and Inventions Agreement, the Restricted Stock Purchase Agreement(s) or the Employment Agreement entered into between each employee and the Company shall be resolved through final and binding arbitration. 3. Representations and Warranties of the Investors. Each Investor ----------------------------------------------- hereby represents and warrants that: 7. 3.1 Authorization. The Investor has full power and authority to ------------- enter into this Agreement, the Investors' Rights Agreement and the Co-Sale Agreement, and each such agreement constitutes its valid and legally binding obligation, enforceable in accordance with its terms. 3.2 Purchase Entirely for Own Account. This Agreement is made with --------------------------------- such Investor in reliance upon such Investor's representation to the Company, which by such Investor's execution of this Agreement such Investor hereby confirms, that the Series C Preferred Stock to be received by such Investor and the Common Stock issuable upon conversion thereof (collectively, the "Securities") will be acquired for investment for such Investor'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 such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, such Investor further represents that such Investor 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. 3.3 Disclosure of Information. Such Investor believes it has ------------------------- received all the information it considers necessary or appropriate for deciding whether to purchase the Series C Preferred Stock. Such Investor 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 C 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 each Investor to rely thereon. 3.4 Investment Experience. Such Investor 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 C Preferred Stock. If other than an individual, such Investor also represents it has not been organized for the purpose of acquiring the Series C Preferred Stock. 3.5 Accredited Investor. Such Investor is an "accredited investor" ------------------- within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of Regulation D, as presently in effect. 3.6 Restricted Securities. Such Investor 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 8. securities may be resold without registration under the Act, only in certain limited circumstances. In this connection, such Investor represents that it is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Act. 3.7 Further Limitations on Disposition. Without in any way limiting ---------------------------------- the representations set forth above, such Investor further agrees not to make any disposition of all or any portion of the Securities unless and until the transferee has agreed in writing for the benefit of the Company to be bound by this Section 3 and the Investors' Rights Agreement provided and to the extent this Section 3 and such agreement are then applicable; and: (a) There is then in effect a Registration Statement under the Act covering such proposed disposition and such disposition is made in accordance with such Registration Statement; or (b) (i) Such Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (ii) if reasonably requested by the Company, such Investor 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 Act. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances. (c) Notwithstanding the provisions of paragraphs (a) and (b) above, no such registration statement or opinion of counsel shall be necessary for a transfer by an Investor that is a partnership to a partner of such partnership or a retired partner of such partnership who retires after the date hereof, or to the estate of any such partner or retired partner or the transfer by gift, will or intestate succession of any partner to his or her spouse or to the siblings, lineal descendants or ancestors of such partner or his or her spouse, if the transferee agrees in writing to be subject to the terms hereof to the same extent as if he or she were an original Investor hereunder. 3.8 Legends. It is understood that the certificates evidencing the ------- Securities may bear one or all of the following legends: (a) "These securities have not been registered under the Securities Act of 1933, as amended. They may not be sold, offered for sale, pledged or hypothecated in the absence of a registration statement in effect with respect to the securities under such Act or an opinion of counsel satisfactory to the Company that such registration is not required or unless sold pursuant to Rule 144 of such Act." 9. (b) Any legend required by the laws of the State of California, including any legend required by the California Department of Corporations and Sections 417 and 418 of the California Corporations Code. 4. California Commissioner of Corporations. --------------------------------------- 4.1 Corporate Securities Law. THE SALE OF THE SECURITIES THAT 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 FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM 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. 5. Conditions of Investors' Obligations at Closing. ----------------------------------------------- The obligations of the Investors under subsection 1.1(b) of this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions: 5.1 Representations and Warranties. The representations and ------------------------------ warranties of the Company contained in Section 2 shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of such Closing. 5.2 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 Closing. 5.3 Compliance Certificate. The President of the Company shall ---------------------- deliver to the Investors at the Closing a certificate stating that the conditions specified in Sections 5.1 and 5.2 have been fulfilled and stating that there shall have been no adverse change in the business, affairs, operations, properties, assets or condition of the Company since the date of this Agreement. 5.4 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 Securities pursuant to this Agreement shall be duly obtained and effective as of the Closing. 5.5 Proceedings and Documents. All corporate and other proceedings ------------------------- in connection with the transactions contemplated at the Closing and all documents 10. incident thereto shall be reasonably satisfactory in form and substance to Investors' special counsel, and they shall have received all such counterpart original and certified or other copies of such documents as they may reasonably request. 5.6 Opinion of Company Counsel. The Investors shall have received -------------------------- from Brobeck, Phleger & Harrison, counsel for the Company, an opinion, dated as of the Closing, in the form attached hereto as Exhibit D. --------- 5.7 Investors' Rights Agreement. The Company, each Investor and a --------------------------- majority of the holders of the Series A and Series B Preferred Stock, taken together as a whole and not as separate series, shall have entered into the Investors' Rights Agreement in the form attached hereto as Exhibit B. 5.8 Co-Sale Agreement. Each of the Founders (as defined in the Co- ----------------- Sale Agreement) and the Investors shall have entered into the Co-Sale Agreement. 5.9 Board of Directors. As of the Closing, the Company's Board of ------------------ Directors shall consist of Cheryl Breetwor, Mike Moritz, Nancy Schoendorf, Tom Shanahan and Bryan Stolle. 6. Condition of the Company's Obligations at Closing. The ------------------------------------------------- obligations of the Company to the Investors under this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions by the Investors, the waiver of which shall not be effective against the Company unless in writing and signed on behalf of the Company: 6.1 Representations and Warranties. The representations and ------------------------------ warranties of each Investor contained in Section 3 shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the Closing. 6.2 Payment of Purchase Price. Each Investor shall have delivered ------------------------- the purchase price specified in Section 1.1(b). 6.3 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 pursuant to this Agreement shall be duly obtained and effective as of the Closing. 6.4 Waivers of Right of First Offer. Each Major Investor (as ------------------------------- defined in the Investors' Rights Agreement) shall have waived the right of first offer granted to such Investor pursuant to the Amended and Restated Investors' Rights Agreement dated June 2, 1995. 11. 7. Miscellaneous. ------------- 7.1 Survival of Warranties. The warranties, representations and ---------------------- covenants of the Company and each Investor contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of such Investor or the Company. 7.2 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. 7.3 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. 7.4 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. 7.5 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. 7.6 Notices. Unless otherwise provided, any notice required or ------- permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified or upon deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party on the signature page hereof, or at such other address as such party may designate by ten (10) days' advance written notice to the other parties. 7.7 Finder's Fee. Each party represents that it neither is nor will ------------ be obligated for any finders' fee or commission in connection with this transaction. The Investor agrees to indemnify and to 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 such Investor or any of its officers, partners, employees or representatives is responsible. 12. The Company agrees to indemnify and hold harmless each Investor 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. 7.8 Expenses. Irrespective of whether the Closing is effected, the -------- Company shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement. If the Closing is effected, the Company shall, at the Closing, reimburse the reasonable fees and, upon receipt of a bill therefor, out-of-pocket expenses of special counsel for the Investor, not to exceed $5,000. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the Investors' Rights Agreement, the Co-Sale Agreement or the Restated Articles, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 7.9 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 Common Stock issued or issuable upon conversion of the Series C Preferred Stock. 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. 7.10 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. 7.11 Aggregation of Stock. All shares of the Preferred Stock held or -------------------- acquired by affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement. 7.12 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. IN WITNESS WHEREOF, the parties have executed this Agreement as of 13. the date first above written. AGILE SOFTWARE CORPORATION By: /s/ Bryan D. Stolle --------------------------------------- Bryan D. Stolle President and Chief Executive Officer Address: 2 North First Street San Jose, California 95125 INVESTORS: SEQUOIA CAPITAL VI SEQUOIA TECHNOLOGY PARTNERS VI SEQUOIA 1995 By:____________________________________ , General Partner Address: 3000 Sand Hill Road Building 4, Suite 280 Menlo Park, CA 94025 [SIGNATURE PAGE TO PREFERRED STOCK PURCHASE AGREEMENT] EX-10.12 13 SERIES D PREFERRED STOCK PURCHASE AGREEMENT EXHIBIT 10.12 SERIES D PREFERRED STOCK PURCHASE AGREEMENT ------------------------ THIS SERIES D PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 6th day of February, 1997, by and among Agile Software Corporation, a California corporation (the "Company") and the investors listed on Schedule A hereto (the "Investors" or, individually, an "Investor"). ---------- THE PARTIES HEREBY AGREE AS FOLLOWS: 1. Purchase and Sale of Stock. -------------------------- 1.1 Sale and Issuance of Series D Preferred Stock. --------------------------------------------- (a) The Company shall adopt and file with the Secretary of State of California on or before the Closing (as defined below) the Fourth Amended and Restated Articles of Incorporation in the form attached hereto as Exhibit A (the --------- "Restated Articles"). (b) Subject to the terms and conditions of this Agreement, each Investor agrees, severally, to purchase at the Closing and the Company agrees to sell and issue to each Investor at the Closing that number of shares of the Company's Series D Preferred Stock (the "Series D Preferred Stock") set forth opposite each Investor's name on Schedule A hereto for the purchase price set ---------- forth thereon. 1.2 Closing. The purchase and sale of the Series D Preferred Stock ------- shall take place at the offices of Brobeck, Phleger & Harrison LLP, Two Embarcadero Place, 2200 Geng Road, Palo Alto, California, at 1:00P.M., on February 6, 1997, or at such other time and place as the Company and the Investors mutually agree upon orally or in writing (which time and place are designated as the "Closing"). At the Closing, the Company shall deliver to each Investor a certificate representing the number of shares of Series D Preferred Stock that each such Investor is purchasing against payment of the purchase price therefor by check or wire transfer to an account specified by the Company. 2. Representations and Warranties of the Company. The Company --------------------------------------------- hereby represents and warrants to the Investors that, except as set forth on a Schedule of Exceptions (the "Schedule of Exceptions") furnished the Investors and special counsel for the Investors, specifically identifying the relevant subparagraph hereof, which exceptions shall be deemed to be representations and warranties as if made hereunder: 2.1 Organization, Good Standing and Qualification. The Company is a --------------------------------------------- corporation duly organized, validly existing and in good standing under the laws of the State of California and has all requisite corporate power and authority to carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties. 2.2 Capitalization and Voting Rights. The authorized capital of the -------------------------------- Company consists of or will consist of prior to the Closing: (i) Preferred Stock. 15,500,000 shares of Preferred Stock (the --------------- "Preferred Stock"), of which 1,500,000 shares have been designated Series A Preferred Stock (the "Series A Preferred Stock"), 1,232,500 of which are issued and outstanding, of which 3,000,000 have been designated Series B Preferred Stock (the "Series B Preferred Stock"), 2,937,995 of which are issued and outstanding, of which 4,000,000 have been designated Series C Preferred Stock (the "Series C Preferred Stock"), 3,575,000 of which are issued and outstanding, of which 4,000,000 shares have been designated Series C1 Preferred Stock (the "Series C1 Preferred Stock"), none of which are issued and outstanding, of which 1,500,000 have been designated Series D Preferred Stock (the "Series D Preferred Stock"), none of which are issued and outstanding and 1,350,000 of which will be sold pursuant to this Agreement, and of which 1,500,000 shares have been designated Series D1 Preferred Stock (the "Series D1 Preferred Stock"), none of which are issued and oustanding. The respective rights, privileges and preferences of the Series A, Series B, Series C, Series C1, Series D and Series D1 Preferred Stock will be as stated in the Company's Restated Articles. (ii) Common Stock. 25,000,000 shares of common stock ("Common ------------ Stock"), of which 2,853,775 shares are issued and outstanding. (iii) The outstanding shares of Series A, Series B and Series C Preferred Stock and of Common Stock are owned by the shareholders in the numbers specified in Exhibit C hereto. --------- (iv) The outstanding shares of Series A, Series B and Series C Preferred Stock and of Common Stock are all duly and validly authorized and issued, fully paid and nonassessable, and were issued in accordance with the registration or qualification provisions of the Securities Act of 1933, as amended (the "Securities Act") and any relevant state securities laws or pursuant to valid exemptions therefrom. (v) Except for (A) the conversion privileges of the Series A, Series B, Series C, Series C1, Series D and Series D1 Preferred Stock, (B) the rights provided in Section 2 of the Third Amended and Restated Investors' Rights Agreement (the "Investors' Rights Agreement"), the form of which is attached hereto as Exhibit B, (C) a warrant to purchase 41,111 shares of Series B --------- Preferred Stock, (D) a warrant to purchase 35,312 shares of Series C Preferred Stock, and (E) currently outstanding options to purchase 55,500 shares of Common Stock granted to certain officers, directors and/or advisors of the Company pursuant to the 1995 Stock Option Plan (the "Option Plan"), there are not outstanding any options, warrants, rights (including conversion or preemptive rights or rights of first refusal) or 2. agreements for the purchase or acquisition from the Company of any shares of its capital stock. The Company has reserved 1,500,000 shares of Series D Preferred Stock for issuance hereunder and 15,500,000 shares of Common Stock for issuance upon conversion of the Series A, Series B, Series C, Series C1, Series D and Series D1 Preferred Stock. In addition to the aforementioned options, the Company has reserved an additional 627,750 shares of its Common Stock for issuance upon exercise of options to be granted in the future under the Option Plan. The Company is not a party or subject to any agreement or understanding, and, to the best of the Company's knowledge, there is no agreement or understanding between any persons and/or entities, which affects or relates to the voting or giving of written consents with respect to any security or by a director of the Company. 2.3 Subsidiaries. The Company does not presently own or control, ------------ directly or indirectly, any interest in any other corporation, association, or other business entity. The Company is not a participant in any joint venture, partnership, or similar arrangement. 2.4 Authorization. All corporate action on the part of the Company, ------------- its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement, the Investors' Rights Agreement and the Second Amended and Restated Co-Sale Agreement (the "Co-Sale Agreement"), the form of which is attached hereto as Exhibit F, 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 Closing, and this Agreement, the Investors' Rights Agreement and the Co- Sale Agreement 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 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 Investors' Rights Agreement may be limited by applicable federal or state securities laws. 2.5 Valid Issuance of Preferred and Common Stock. -------------------------------------------- The Series D Preferred Stock that is being purchased by the Investors hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid, and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under this Agreement and the Investors' Rights Agreement and under applicable state and federal securities laws. The Common Stock issuable upon conversion of the Series D Preferred Stock purchased under this Agreement has been duly and validly reserved for issuance and, upon issuance in accordance with the terms of the Restated Articles, will be duly and validly issued, fully paid, and nonassessable and will be free of restrictions on transfer other than restrictions on transfer under this Agreement and the Investors' Rights Agreement and under applicable state and federal securities laws. 3. 2.6 Governmental Consents. No consent, approval, order or --------------------- authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, the Investors' Rights Agreement or the Co-Sale Agreement, except for the filing pursuant to Section 25102(f) of the California Corporate Securities Law of 1968, as amended, and the rules thereunder, which filing will be effected within fifteen (15) days of the sale of the Series D Preferred Stock hereunder. 2.7 Litigation. There is no action, suit, proceeding or ---------- investigation pending or currently threatened against the Company that questions the validity of this Agreement, the Investors' Rights Agreement or the Co-Sale Agreement, or the right of the Company to enter into such agreements, or to consummate the transactions contemplated hereby or thereby, or that might result, either individually or in the aggregate, in any material adverse changes in the assets, condition, affairs or prospects of the Company, financially or otherwise, or any change in the current equity ownership of the Company. The foregoing includes, without limitation, actions, suits, proceedings or investigations, pending or threatened, involving the prior employment of any of the Company's employees, their use in connection with the Company's business of any information or techniques allegedly proprietary to any of their former employers, or their obligations under any agreements with prior employers. The Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company currently pending or that the Company intends to initiate. 2.8 Proprietary Information and Inventions Agreement. Each employee, ------------------------------------------------ officer and consultant of the Company has executed a Proprietary Information and Inventions Agreement in the form provided to special counsel to the Investors. 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. 2.9 Patents and Trademarks. To the best of its knowledge (but ---------------------- without having conducted any special investigation or patent search), the Company has sufficient title to and ownership of all patents, trademarks, service marks, trade names, copyrights, trade secrets, information, proprietary rights and processes necessary for its business as now conducted and as proposed to be conducted without any conflict with or infringement of the rights of others. There are no outstanding options, licenses, or agreements of any kind relating to the foregoing, nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, proprietary rights and processes of any other person or entity. 2.10 Compliance with Other Instruments. The Company is not in --------------------------------- violation or default in any material respect of any provision of its Restated Articles or Bylaws, or in any material respect of any instrument, judgment, order, writ, decree or contract to which it is a party or by which it is bound, or, to the best of its knowledge, of any provision of any federal or state statute, rule or regulation applicable to the Company. The execution, delivery and 4. performance of this Agreement, the Investors' Rights Agreement and the Co-Sale Agreement, and the consummation of the transactions contemplated hereby and thereby will not result in any such violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument, judgment, order, writ, decree or contract or an event that results in the creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license, authorization, or approval applicable to the Company, its business or operations or any of its assets or properties. 2.11 Agreements; Action. ------------------ (a) Except for agreements explicitly contemplated hereby, by the Investors' Rights Agreement and the Co-Sale Agreement, there are no agreements, understandings or proposed transactions between the Company and any of its officers, directors, affiliates or any affiliate thereof. (b) There are no agreements, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Company is a party or by which it is bound that may involve (i) obligations (contingent or otherwise) of, or payments to the Company in excess of, $10,000, (ii) the license of any patent, copyright, trade secret or other proprietary right to or from the Company, or (iii)provisions restricting or affecting the development, manufacture or distribution of the Company's products or services. (c) The Company has not (i) declared or paid any dividends or authorized or made any distribution upon or with respect to any class or series of its capital stock, (ii) incurred any indebtedness for money borrowed or any other liabilities individually in excess of $20,000 or, in the case of indebtedness and/or liabilities individually less than $20,000, in excess of $50,000 in the aggregate, (iii) except with respect to the purchase of shares of stock of the Company by employees, officers or directors, made any loans or advances to any person, other than ordinary advances for travel expenses or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business. (d) For the purposes of subsections (b) and (c) above, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections. 2.12 Related-Party Transactions. Except with respect to the purchase -------------------------- of shares of stock of the Company, no employee, officer, or director of the Company or member of his or her immediate family is indebted to the Company, nor is the Company indebted (or committed to make loans or extend or guarantee credit) to any of them. To the best of the Company's knowledge, none of said founders, officers or directors, or any members of their immediate families, has any direct or indirect ownership interest in any firm or corporation with 5. which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company, except that Bryan Stolle owns 400 shares and Matthias Moran owns 3,000 shares of the common stock of Sherpa Corporation, and employees, officers and directors of the Company may own stock in publicly traded companies that may compete with the Company. To the best of the Company's knowledge, no employee, officer or director or any member of their immediate families, is, directly or indirectly, interested in any material contract with the Company other than as a shareholder in the Company. The Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation. 2.13 Permits. The Company has all franchises, permits, licenses and ------- any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could materially and adversely affect the business, properties, prospects, or financial condition of the Company, and the Company believes it can obtain, without undue burden or expense, any similar authority for the conduct of its business as planned to be conducted. The Company is not in default in any material respect under any of such franchises, permits, licenses or other similar authority. 2.14 Disclosure. The Company has fully provided the Investors with ---------- all the information that the Investors have requested for deciding whether to purchase the Series D Preferred Stock. To the best of its knowledge, neither this Agreement, the Investors' Rights Agreement, the Co-Sale Agreement, nor any other statements or certificates made or delivered in connection herewith or therewith 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. 2.15 Registration Rights. Except as provided in the Investors' Rights ------------------- Agreement, the Company has not granted or agreed to grant any registration rights, including piggyback rights, to any person or entity. 2.16 Corporate Documents. Except for amendments necessary to satisfy ------------------- representations and warranties or conditions contained herein (the form of which amendments has been approved by the Investors), the Restated Articles and the Bylaws of the Company are in the form previously provided to special counsel for the Investors. 2.17 Section 83(b) Elections. To the best of the Company's knowledge, ----------------------- all individuals who have purchased shares of the Company's Common Stock have timely filed elections under Section 83(b) of the Internal Revenue Code of 1986, as amended, and any analogous provisions of applicable state tax laws. 2.18 Employees. To the best of the Company's knowledge, no employee --------- or consultant of the Company is in violation of any term of any employment, employment contract, patent disclosure agreement or any other contract or agreement relating to the relationship of any such person with the Company or any other party because of the nature of the business conducted or to be conducted by the Company. The Company does not have any collective 6. bargaining agreements covering any of its employees. Except for the Option Plan, the Company has no employee benefit plans presently in force with respect to profit-sharing, pensions, stock options or other stock benefits. The Company is not aware of any key employee of the Company who has any plans to terminate his or her employment with the Company. 2.19 Offering. Subject to the accuracy of the Investors' -------- representations in Section 3 of this Agreement and in written responses to the Company's inquiries, the offer, sale and issuance of the Series D Preferred Stock to be issued in conformity with the terms of this Agreement and the issuance of the Common Stock to be issued upon conversion of the Series D Preferred Stock constitute transactions exempt from the registration requirements of Section 5 of the Securities Act. 2.20 Corporate Records. The minute books of the Company made ----------------- available to the Investors contain a complete summary of all meetings or actions by written consent of directors and shareholders since the time of incorporation of the Company and reflect all transactions referred to in such minutes accurately in all material respects. 2.21 Arbitration. Each employee of the Company has agreed in writing ----------- that all disputes that arise under the terms of the Proprietary Information and Inventions Agreement, the Restricted Stock Purchase Agreement(s) or the Employment Agreement entered into between each employee and the Company shall be resolved through final and binding arbitration. 3. Representations and Warranties of the Investors. Each Investor ----------------------------------------------- hereby represents and warrants that: 3.1 Authorization. The Investor has full power and authority to ------------- enter into this Agreement, the Investors' Rights Agreement and the Co-Sale Agreement, and each such agreement constitutes its valid and legally binding obligation, enforceable against such Investor in accordance with its terms. 3.2 Purchase Entirely for Own Account. This Agreement is made with --------------------------------- such Investor in reliance upon such Investor's representation to the Company, which by such Investor's execution of this Agreement such Investor hereby confirms, that the Series D Preferred Stock to be received by such Investor and the Common Stock issuable upon conversion thereof (collectively, the "Securities") will be acquired for investment for such Investor'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 such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, such Investor further represents that such Investor 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. 3.3 Disclosure of Information. Such Investor believes it has ------------------------- received all the information it considers necessary or appropriate for deciding whether to purchase the Series D 7. Preferred Stock. Such Investor 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 each Investor to rely thereon. 3.4 Investment Experience. Such Investor 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 Investor also represents it has not been organized for the purpose of acquiring the Series D Preferred Stock. 3.5 Accredited Investor. Such Investor is an "accredited investor" ------------------- within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of Regulation D, as presently in effect. 3.6 Restricted Securities. Such Investor 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, only in certain limited circumstances. In this connection, such Investor 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. 3.7 Further Limitations on Disposition. Without in any way limiting ---------------------------------- the representations set forth above, such Investor further agrees not to make any disposition of all or any portion of the Securities unless and until the transferee has agreed in writing for the benefit of the Company to be bound by this Section 3 and the Investors' Rights Agreement provided and to the extent this Section 3 and such agreement are then applicable; and: (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 Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (ii) if reasonably requested by the Company, such Investor 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. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances. 8. (c) Notwithstanding the provisions of paragraphs (a) and (b) above, no such registration statement or opinion of counsel shall be necessary for a transfer by an Investor that is a partnership to a partner of such partnership or a retired partner of such partnership who retires after the date hereof, or to the estate of any such partner or retired partner or the transfer by gift, will or intestate succession of any partner to his or her spouse or to the siblings, lineal descendants or ancestors of such partner or his or her spouse, if the transferee agrees in writing to be subject to the terms hereof to the same extent as if he or she were an original Investor hereunder. 3.8 Legends. It is understood that the certificates evidencing the ------- Securities may bear one or all of the following legends: (a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT." (b) Any legend required by the laws of the State of California, including any legend required by the California Department of Corporations and Sections 417 and 418 of the California Corporations Code. 4. California Commissioner of Corporations. ---------------------------------------- 4.1 Corporate Securities Law. THE SALE OF THE SECURITIES THAT 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 FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM 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. 5. Conditions of Investors' Obligations at Closing. The obligations ----------------------------------------------- of the Investors under subsection 1.1(b) of this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions: 5.1 Representations and Warranties. The representations and ------------------------------ warranties of the Company contained in Section 2 shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of such Closing. 9. 5.2 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 Closing. 5.3 Compliance Certificate. The President of the Company shall ---------------------- deliver to the Investors at the Closing a certificate stating that the conditions specified in Sections 5.1 and 5.2 have been fulfilled and stating that there shall have been no adverse change in the business, affairs, operations, properties, assets or condition of the Company since the date of this Agreement. 5.4 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 Securities pursuant to this Agreement shall be duly obtained and effective as of the Closing. 5.5 Proceedings and Documents. All corporate and other proceedings ------------------------- in connection with the transactions contemplated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to Investors' special counsel, and they shall have received all such counterpart original and certified or other copies of such documents as they may reasonably request. 5.6 Opinion of Company Counsel. The Investors shall have received -------------------------- from Brobeck, Phleger & Harrison LLP, counsel for the Company, an opinion, dated as of the Closing, in the form attached hereto as Exhibit D. --------- 5.7 Investors' Rights Agreement. The Company, each Investor and a --------------------------- majority of the holders of the Series A, Series B and Series C Preferred Stock, taken together as a whole and not as separate series, shall have entered into the Investors' Rights Agreement in the form attached hereto as Exhibit B. --------- 5.8 Co-Sale Agreement. Each of the Founders (as defined in the Co- ----------------- Sale Agreement) and the Investors shall have entered into the Co-Sale Agreement. 5.9 Board of Directors. As of the Closing, the Company's Board of ------------------ Directors shall consist of Mike Moritz, James Patterson, Nancy Schoendorf, Tom Shanahan and Bryan Stolle. 6. Conditions of the Company's Obligations at Closing. The -------------------------------------------------- obligations of the Company to the Investors under this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions by the Investors, the waiver of which shall not be effective against the Company unless in writing and signed on behalf of the Company: 10. 6.1 Representations and Warranties. The representations and ------------------------------ warranties of each Investor contained in Section 3 shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the Closing. 6.2 Payment of Purchase Price. Each Investor shall have delivered ------------------------- the purchase price specified in Section 1.1(b). 6.3 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 pursuant to this Agreement shall be duly obtained and effective as of the Closing. 6.4 Waivers of Right of First Offer. Each Major Investor (as defined ------------------------------- in the Investors' Rights Agreement shall have waived the right of first offer granted to such Investor pursuant to the Second Amended and Restated Investors' Rights Agreement, dated January 16, 1996. 7. Miscellaneous. ------------- 7.1 Survival of Warranties. The warranties, representations and ---------------------- covenants of the Company and each Investor contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of such Investor or the Company. 7.2 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. 7.3 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. 7.4 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. 7.5 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. 11. 7.6 Notices. Unless otherwise provided, any notice required or ------- permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified or upon deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party on the signature page hereof, or at such other address as such party may designate by ten (10) days' advance written notice to the other parties. 7.7 Finder's Fee. Each party represents that it neither is nor will ------------ be obligated for any finders' fee or commission in connection with this transaction. Each Investor agrees to indemnify and to 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 such Investor or any of its officers, partners, employees or representatives is responsible. The Company agrees to indemnify and hold harmless each Investor 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. 7.8 Expenses. Irrespective of whether the Closing is effected, the -------- Company shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement. If the Closing is effected, the Company shall, at the Closing, reimburse the reasonable fees and, upon receipt of a bill therefor, out-of-pocket expenses of special counsel for the Investors, not to exceed $5,000. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the Investors' Rights Agreement, the Co-Sale Agreement or the Restated Articles, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 7.9 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 Common Stock issued or issuable upon conversion of the Series D Preferred Stock. 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. 7.10 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 this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. 12. 7.11 Aggregation of Stock. All shares of the Preferred Stock held or -------------------- acquired by affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement. 7.12 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. 13. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. AGILE SOFTWARE CORPORATION By: /s/ Bryan D. Stolle ---------------------------------------------- Bryan D. Stolle President and Chief Executive Officer Address: One Almaden Boulevard, 12th Floor San Jose, California 95113 INVESTORS: SEQUOIA CAPITAL VI SEQUOIA TECHNOLOGY PARTNERS VI SEQUOIA 1995 By: /s/ ---------------------------------------------- Michael Mortiz, General Partner MOHR, DAVIDOW VENTURES IV, L.P. By: Fourth MDV Partners, L.L.C., General Partner By: /s/ ---------------------------------------------- Nancy Schoendorf, Member MDV IV Entrepreneurs' Network Fund, L.P. By: Fourth MDV Partners, L.L.C., General Partner By: /s/ ---------------------------------------------- Nancy Schoendorf, Member [SIGNATURE PAGE TO PREFERRED STOCK PURCHASE AGREEMENT] EX-10.13 14 SERIES E PREFERRED STOCK PURCHASE AGREEMENT EXHIBIT 10.13 SERIES E PREFERRED STOCK PURCHASE AGREEMENT ------------------------ THIS SERIES E PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 14th day of November 1997, by and among Agile Software Corporation, a California corporation (the "Company") and the investors listed on Schedule A hereto (the "Investors" or, individually, an "Investor"). ---------- THE PARTIES HEREBY AGREE AS FOLLOWS: 1. Purchase and Sale of Stock. -------------------------- 1.1 Sale and Issuance of Series E Preferred Stock. --------------------------------------------- (a) The Company shall adopt and file with the Secretary of State of California on or before the Closing (as defined below) the Fifth Amended and Restated Articles of Incorporation in the form attached hereto as Exhibit A (the --------- "Restated Articles"). (b) Subject to the terms and conditions of this Agreement, each Investor agrees, severally, to purchase at the Closing and the Company agrees to sell and issue to each Investor at the Closing that number of shares of the Company's Series E Preferred Stock (the "Series E Preferred Stock") set forth opposite each Investor's name on Schedule A hereto for the purchase price set ---------- forth thereon. 1.2 Closing. The purchase and sale of the Series E Preferred Stock ------- shall take place at the offices of Brobeck, Phleger & Harrison LLP, Two Embarcadero Place, 2200 Geng Road, Palo Alto, California, at 1:00 P.M., on November 14, 1997, or at such other time and place as the Company and the Investors mutually agree upon orally or in writing (which time and place are designated as the "Closing"). At the Closing, the Company shall deliver to each Investor a certificate representing the number of shares of Series E Preferred Stock that each such Investor is purchasing against payment of the purchase price therefor by check or wire transfer to an account specified by the Company. 2. Representations and Warranties of the Company. The Company --------------------------------------------- hereby represents and warrants to the Investors that, except as set forth on a Schedule of Exceptions (the "Schedule of Exceptions") furnished to the Investors specifically identifying the relevant subparagraph hereof, which exceptions shall be deemed to be representations and warranties as if made hereunder: 2.1 Organization, Good Standing and Qualification. The Company is a --------------------------------------------- corporation duly organized, validly existing and in good standing under the laws of the State of California and has all requisite corporate power and authority to carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties. 2.2 Capitalization and Voting Rights. The authorized capital of the -------------------------------- Company consists of or will consist of prior to the Closing: (i) Preferred Stock. 17,500,000 shares of Preferred Stock (the --------------- "Preferred Stock"), of which 1,500,000 shares have been designated Series A Preferred Stock (the "Series A Preferred Stock"), 1,232,500 of which are issued and outstanding, of which 3,000,000 shares have been designated Series B Preferred Stock (the "Series B Preferred Stock"), 2,937,995 of which are issued and outstanding, of which 4,000,000 shares have been designated Series C Preferred Stock (the "Series C Preferred Stock"), 3,575,000 of which are issued and outstanding, of which 4,000,000 shares have been designated Series C1 Preferred Stock (the "Series C1 Preferred Stock"), none of which are issued and outstanding, of which 1,500,000 shares have been designated Series D Preferred Stock (the "Series D Preferred Stock"), 1,350,000 of which are issued and outstanding, of which 1,500,000 shares have been designated Series D1 Preferred Stock (the "Series D1 Preferred Stock"), none of which are issued and outstanding, of which 1,000,000 shares have been designated Series E Preferred Stock (the "Series E Preferred Stock"), none of which are issued and outstanding and 1,000,000 of which will be sold pursuant to this Agreement, and of which 1,000,000 shares have been designated Series E1 Preferred Stock (the "Series E1 Preferred Stock"), none of which are issued and outstanding. The respective rights, privileges and preferences of the Series A, Series B, Series C, Series C1, Series D, Series D1, Series E and Series E1 Preferred Stock will be as stated in the Company's Restated Articles. (ii) Common Stock. 25,000,000 shares of common stock ("Common ------------ Stock"), of which 3,230,275 shares are issued and outstanding. (iii) The outstanding shares of Series A, Series B, Series C and Series D Preferred Stock and of Common Stock are owned by the shareholders in the numbers specified in Exhibit C hereto. --------- (iv) The outstanding shares of Series A, Series B, Series C and Series D Preferred Stock and of Common Stock are all duly and validly authorized and issued, fully paid and nonassessable, and were issued in accordance with the registration or qualification provisions of the Securities Act of 1933, as amended (the "Securities Act") and any relevant state securities laws or pursuant to valid exemptions therefrom. (v) Except for (A) the conversion privileges of the Series A, Series B, Series C, Series C1, Series D, Series D1, Series E and Series E1 Preferred Stock, (B) the rights provided in Section 2 of the Fourth Amended and Restated Investors' Rights Agreement (the "Investors' Rights Agreement"), the form of which is attached hereto as Exhibit B, (C) a warrant to purchase 41,111 --------- shares of Series B Preferred Stock, (D) a warrant to purchase 2. 35,313 shares of Series C Preferred Stock, (E) a warrant to purchase 4,049 shares of Series D Preferred Stock and (F), currently outstanding options to purchase 772,250 shares of Common Stock granted to certain officers, directors, employees, consultants and/or advisors of the Company pursuant to the 1995 Stock Option Plan (the "Option Plan"), there are not outstanding any options, warrants, rights (including conversion or preemptive rights or rights of first refusal) or agreements for the purchase or acquisition from the Company of any shares of its capital stock. The Company has reserved 1,000,000 shares of Series E Preferred Stock for issuance hereunder and 11,000,000 shares of Common Stock for issuance upon conversion of the Series A, Series B, Series C, Series C1, Series D, Series D1, Series E and Series E1 Preferred Stock. In addition to the aforementioned options, the Company has reserved an additional 52,000 shares of its Common Stock for issuance upon exercise of options to be granted in the future under the Option Plan. The Company is not a party or subject to any agreement or understanding, and, to the best of the Company's knowledge, there is no agreement or understanding between any persons and/or entities, which affects or relates to the voting or giving of written consents with respect to any security or by a director of the Company. 2.3 Subsidiaries. The Company is the sole shareholder in Agile ------------ Software International Corporation, a Delaware corporation, incorporated on June 12, 1997. The Company does not presently own or control, directly or indirectly, any interest in any other corporation, association, or business entity. The Company is not a participant in any joint venture, partnership or similar arrangement. 2.4 Authorization. All corporate action on the part of the Company, ------------- its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement, the Investors' Rights Agreement and the Third Amended and Restated Co-Sale Agreement (the "Co-Sale Agreement"), the form of which is attached hereto as Exhibit E, 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 E Preferred Stock being sold hereunder and the Common Stock issuable upon conversion of the Series E and/or Series E1 Preferred Stock has been taken or will be taken prior to the Closing, and this Agreement, the Investors' Rights Agreement and the Co-Sale Agreement 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 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 Investors' Rights Agreement may be limited by applicable federal or state securities laws. 2.5 Valid Issuance of Preferred and Common Stock. The Series E -------------------------------------------- Preferred Stock that is being purchased by the Investors hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable, and will be free of restrictions on 3. transfer other than restrictions on transfer under this Agreement and the Investors' Rights Agreement and under applicable state and federal securities laws. The Common Stock issuable upon conversion of the Series E Preferred Stock purchased under this Agreement, or issuable upon conversion of the Series E1 Preferred Stock, has been duly and validly reserved for issuance and, upon issuance in accordance with the terms of the Restated Articles, will be duly and validly issued, fully paid, and nonassessable and will be free of restrictions on transfer other than restrictions on transfer under this Agreement and the Investors' Rights Agreement and under applicable state and federal securities laws. 2.6 Governmental Consents. No consent, approval, order or --------------------- authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, the Investors' Rights Agreement or the Co-Sale Agreement, except for the filing pursuant to Section 25102(f) of the California Corporate Securities Law of 1968, as amended, and the rules thereunder, which filing will be effected within fifteen (15) days of the sale of the Series E Preferred Stock hereunder. 2.7 Litigation. There is no action, suit, proceeding or ---------- investigation pending or currently threatened against the Company that questions the validity of this Agreement, the Investors' Rights Agreement or the Co-Sale Agreement, or the right of the Company to enter into such agreements, or to consummate the transactions contemplated hereby or thereby, or that might result, either individually or in the aggregate, in any material adverse changes in the assets, condition, affairs or prospects of the Company, financially or otherwise, or any change in the current equity ownership of the Company. The foregoing includes, without limitation, actions, suits, proceedings or investigations, pending or threatened, involving the prior employment of any of the Company's employees, their use in connection with the Company's business of any information or techniques allegedly proprietary to any of their former employers, or their obligations under any agreements with prior employers. The Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company currently pending or that the Company intends to initiate. 2.8 Proprietary Information and Inventions Agreement. Each employee, ------------------------------------------------ officer and consultant of the Company has executed a Proprietary Information and Inventions Agreement in the form previously provided to counsel to certain of the Investors. 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. 2.9 Patents and Trademarks. To the best of its knowledge (but ---------------------- without having conducted any special investigation or patent search), the Company has sufficient title to and ownership of all patents, trademarks, service marks, trade names, copyrights, trade 4. secrets, information, proprietary rights and processes necessary for its business as now conducted and as proposed to be conducted without any conflict with or infringement of the rights of others. There are no outstanding options, licenses, or agreements of any kind relating to the foregoing, nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, proprietary rights and processes of any other person or entity. 2.10 Compliance with Other Instruments. The Company is not in ---------------------------------- violation or default in any material respect of any provision of its Restated Articles or Bylaws, or in any material respect of any instrument, judgment, order, writ, decree or contract to which it is a party or by which it is bound, or, to the best of its knowledge, of any provision of any federal or state statute, rule or regulation applicable to the Company. The execution, delivery and performance of this Agreement, the Investors' Rights Agreement and the Co- Sale Agreement, and the consummation of the transactions contemplated hereby and thereby will not result in any such violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument, judgment, order, writ, decree or contract or an event that results in the creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties. 2.11 Agreements; Action. ------------------ (a) Except for agreements explicitly contemplated hereby, by the Investors' Rights Agreement and the Co-Sale Agreement, there are no agreements, understandings or proposed transactions between the Company and any of its officers, directors, affiliates or any affiliate thereof. (b) There are no agreements, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Company is a party or by which it is bound that may involve (i) obligations (contingent or otherwise) of, or payments to the Company in excess of, $10,000, (ii) the license of any patent, copyright, trade secret or other proprietary right to or from the Company or (iii) provisions restricting or affecting the development, manufacture or distribution of the Company's products or services. (c) The Company has not (i) declared or paid any dividends or authorized or made any distribution upon or with respect to any class or series of its capital stock, (ii) incurred any indebtedness for money borrowed or any other liabilities individually in excess of $20,000 or, in the case of indebtedness and/or liabilities individually less than $20,000, in excess of $50,000 in the aggregate, (iii) except with respect to the purchase of shares of stock of the Company by employees, officers or directors, made any loans or advances to any person, other than ordinary advances for travel expenses or (iv) sold, exchanged or otherwise 5. disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business. (d) For the purposes of subsections (b) and (c) above, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections. 2.12 Related-Party Transactions. Except with respect to the purchase -------------------------- of shares of stock of the Company, no employee, officer or director of the Company or member of his or her immediate family is indebted to the Company, nor is the Company indebted (or committed to make loans or extend or guarantee credit) to any of them. To the best of the Company's knowledge, none of said founders, officers or director, or any members of their immediate families, has any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company, except that Bryan Stolle owns 400 shares and Matthias Moran owns 3,000 shares of the common stock of Sherpa Corporation, and employees, officers and directors of the Company may own stock in publicly traded companies that may compete with the Company. To the best of the Company's knowledge, no employee, officer or director or any member of their immediate families is, directly or indirectly, interested in any material contract with the Company other than as a shareholder in the Company. The Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation. 2.13 Permits. The Company has all franchises, permits, licenses and ------- any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could materially and adversely affect the business, properties, prospects or financial condition of the Company, and the Company believes it can obtain, without undue burden or expense, any similar authority for the conduct of its business as planned to be conducted. The Company is not in default in any material respect under any of such franchises, permits, licenses or other similar authority. 2.14 Disclosure. The Company has fully provided the Investors with ---------- all the information that the Investors have requested for deciding whether to purchase the Series E Preferred Stock. To the best of its knowledge, neither this Agreement, the Investors' Rights Agreement, the Co-Sale Agreement nor any other statements or certificates made or delivered in connection herewith or therewith 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. 2.15 Registration Rights. Except as provided in the Investors' ------------------- Rights Agreement, the Company has not granted or agreed to grant any registration rights, including piggyback rights, to any person or entity. 6. 2.16 Corporate Documents. Except for amendments necessary to satisfy ------------------- representations and warranties or conditions contained herein (the form of which amendments has been approved by the Investors), the Restated Articles and the Bylaws of the Company are in the form previously provided to counsel to certain of the Investors. 2.17 Section 83(b) Elections. To the best of the Company's ----------------------- knowledge, all individuals who have purchased shares of the Company's Common Stock have timely filed elections under Section 83(b) of the Internal Revenue Code of 1986, as amended, and any analogous provisions of applicable state tax laws. 2.18 Employees. To the best of the Company's knowledge, no employee --------- or consultant of the Company is in violation of any term of any employment, employment contract, patent disclosure agreement or any other contract or agreement relating to the relationship of any such person with the Company or any other party because of the nature of the business conducted or to be conducted by the Company. The Company does not have any collective bargaining agreements covering any of its employees. Except for the Option Plan, the Company has no employee benefit plans presently in force with respect to profit- sharing, pensions, stock options or other stock benefits. The Company is not aware of any key employee of the Company who has any plans to terminate his or her employment with the Company. 2.19 Offering. Subject to the accuracy of the Investors' -------- representations in Section 3 of this Agreement and in written responses to the Company's inquiries, the offer, sale and issuance of the Series E Preferred Stock to be issued in conformity with the terms of this Agreement and the issuance of the Common Stock to be issued upon conversion of the Series E and/or Series E1 Preferred Stock constitute transactions exempt from the registration requirements of Section 5 of the Securities Act. 2.20 Corporate Records. The minute books of the Company made ----------------- available to the Investors contain a complete summary of all meetings or actions by written consent of directors and shareholders since the time of incorporation of the Company and reflect all transactions referred to in such minutes accurately in all material respects. 2.21 Arbitration. Each employee of the Company has agreed in writing ----------- that all disputes that arise under the terms of the Proprietary Information and Inventions Agreement, the Restricted Stock Purchase Agreement(s) or the Employment Agreement entered into between each employee and the Company shall be resolved through final and binding arbitration. 3. Representations and Warranties of the Investors. Each Investor ----------------------------------------------- hereby represents and warrants that: 3.1 Authorization. The Investor has full power and authority to ------------- enter into this Agreement, the Investors' Rights Agreement and the Co-Sale Agreement, and each such 7. agreement constitutes its valid and legally binding obligation, enforceable against such Investor in accordance with its terms. 3.2 Purchase Entirely for Own Account. This Agreement is made with --------------------------------- such Investor in reliance upon such Investor's representation to the Company, which by such Investor's execution of this Agreement such Investor hereby confirms, that the Series E Preferred Stock to be received by such Investor and the Common Stock issuable upon conversion thereof (collectively, the "Securities") will be acquired for investment for such Investor'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 such Investor has no present intention of selling, granting any participation in or otherwise distributing the same. By executing this Agreement, such Investor further represents that such Investor 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. 3.3 Disclosure of Information. Such Investor believes it has ------------------------- received all the information it considers necessary or appropriate for deciding whether to purchase the Series E Preferred Stock. Such Investor 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 E 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 each Investor to rely thereon. 3.4 Investment Experience. Such Investor 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 E Preferred Stock. If other than an individual, such Investor also represents it has not been organized for the purpose of acquiring the Series E Preferred Stock. 3.5 Accredited Investor. Such Investor is an "accredited investor" ------------------- within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of Regulation D, as presently in effect. 3.6 Restricted Securities. Such Investor 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 only in certain limited circumstances. In this connection, such Investor 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. 8. 3.7 Further Limitations on Disposition. Without in any way limiting ---------------------------------- the representations set forth above, such Investor further agrees not to make any disposition of all or any portion of the Securities unless and until the transferee has agreed in writing for the benefit of the Company to be bound by this Section 3 and the Investors' Rights Agreement provided and to the extent this Section 3 and such agreement are then applicable; and: (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 Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (ii) if reasonably requested by the Company, such Investor 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. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances. (c) Notwithstanding the provisions of paragraphs (a) and (b) above, no such registration statement or opinion of counsel shall be necessary for a transfer by an Investor that is a partnership to a partner of such partnership or a retired partner of such partnership who retires after the date hereof, or to the estate of any such partner or retired partner or the transfer by gift, will or intestate succession of any partner to his or her spouse or to the siblings, lineal descendants or ancestors of such partner or his or her spouse, if the transferee agrees in writing to be subject to the terms hereof to the same extent as if he or she were an original Investor hereunder. 3.8 Legends. It is understood that the certificates evidencing the ------- Securities may bear one or all of the following legends: (a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT." (b) Any legend required by the laws of the State of California, including any legend required by the California Department of Corporations and Sections 417 and 418 of the California Corporations Code. 3.9 Company Counsel. Each Investor acknowledges and agrees that, --------------- with respect to the Agreement and the transactions contemplated thereby, Brobeck, Phleger & 9. Harrison LLP has served as counsel to the Company and has not represented any Investor. The Investors acknowledge and agree that they have not retained legal counsel to represent them as a group, but rather each Investor has relied upon separate counsel for advice with respect to the Agreement and the transactions contemplated thereby. The Investors further acknowledge and agree that certain of them have previously been represented by Brobeck, Phleger & Harrison LLP for legal advice, and to the extent conflicts of interest, if any, arise from such relationship, each Investor hereby waives such conflict by signing below. 4. California Commissioner of Corporations. ---------------------------------------- 4.1 Corporate Securities Law. THE SALE OF THE SECURITIES THAT 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 FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM 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. 5. Conditions of Investors' Obligations at Closing. The obligations ----------------------------------------------- of the Investors under subsection 1.l(b) of this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions: 5.1 Representations and Warranties. The representations and ------------------------------ warranties of the Company contained in Section 2 shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of such Closing. 5.2 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 Closing. 5.3 Compliance Certificate. The President of the Company shall ---------------------- deliver to the Investors at the Closing a certificate stating that the conditions specified in Sections 5.1 and 5.2 have been fulfilled and stating that there shall have been no adverse change in the business, affairs, operations, properties, assets or condition of the Company since the date of this Agreement. 5.4 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 Securities pursuant to this Agreement shall be duly obtained and effective as of the Closing. 10. 5.5 Proceedings and Documents. All corporate and other proceedings ------------------------- in connection with the transactions contemplated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to the Investors, and they shall have received all such counterpart original and certified or other copies of such documents as they may reasonably request. 5.6 Opinion of Company Counsel. The Investors shall have received -------------------------- from Brobeck, Phleger & Harrison LLP, counsel for the Company, an opinion, dated as of the Closing, in the form attached hereto as Exhibit D. --------- 5.7 Investors' Rights Agreement. The Company, each Investor and a --------------------------- majority of the holders of the Series A, Series B, Series C and Series D Preferred Stock, taken together as a whole and not as separate series, shall have entered into the Investors' Rights Agreement in the form attached hereto as Exhibit B. - --------- 5.8 Co-Sale Agreement. Each of the Founders (as defined in the Co- ----------------- Sale Agreement) and the Investors shall have entered into the Co-Sale Agreement. 5.9 Board of Directors. As of the Closing, the Company's Board of ------------------ Directors shall consist of Mike Moritz, James Patterson, Nancy Schoendorf, Tom Shanahan and Bryan Stolle. 6. Conditions of the Company's Obligations at Closing. The -------------------------------------------------- obligations of the Company to the Investors under this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions by the Investors, the waiver of which shall not be effective against the Company unless in writing and signed on behalf of the Company: 6.1 Representations and Warranties. The representations and ------------------------------ warranties of each Investor contained in Section 3 shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the Closing. 6.2 Payment of Purchase Price. Each Investor shall have delivered ------------------------- the purchase price specified in Section 1.l(b). 6.3 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 pursuant to this Agreement shall be duly obtained and effective as of the Closing. 6.4 Waivers of Right of First Offer. Each Major Investor (as defined ------------------------------- in the Investors' Rights Agreement) shall have waived the right of first offer granted to such Investor pursuant to the Third Amended and Restated Investors' Rights Agreement, dated February 6, 1997. 11. 7. Miscellaneous. -------------- 7.1 Survival of Warranties. The warranties, representations and ---------------------- covenants of the Company and each Investor contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of such Investor or the Company. 7.2 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. 7.3 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. 7.4 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. 7.5 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. 7.6 Notices. Unless otherwise provided, any notice required or ------- permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified or upon deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party on the signature page hereof, or at such other address as such party may designate by ten (10) days' advance written notice to the other parties. 7.7 Finder's Fee. Each party represents that it neither is nor will ------------ be obligated for any finders' fee or commission in connection with this transaction. Each Investor agrees to indemnify and to 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 such Investor or any of its officers, partners, employees or representatives is responsible. 12. The Company agrees to indemnify and hold harmless each Investor 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. 7.8 Expenses. Irrespective of whether the Closing is effected, the -------- Company shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the Investors' Rights Agreement, the Co-Sale Agreement or the Restated Articles, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 7.9 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 Common Stock issued or issuable upon conversion of the Series E Preferred Stock. 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. 7.10 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 this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. 7.11 Aggregation of Stock. All shares of the Preferred Stock held -------------------- or acquired by affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement. 7.12 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. 13. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. AGILE SOFTWARE CORPORATION By: /s/ Bryan D. Stolle -------------------------------------- Bryan D. Stolle President and Chief Executive Officer Address: One Almaden Boulevard, 12 Floor San Jose, California 95113 INVESTORS: SEQUOIA CAPITAL VI SEQUOIA TECHNOLOGY PARTNERS VI SQP 1997 SEQUOIA 1997 By: /s/ -------------------------------------- General Partner SEQUOIA CAPITAL GROWTH FUND SEQUOIA TECHNOLOGY PARTNERS III By: /s/ -------------------------------------- General Partner EX-10.14 15 SERIES F PREFERRED STOCK PURCHASE AGREEMENT EXHIBIT 10.14 SERIES F PREFERRED STOCK PURCHASE AGREEMENT ------------------------ THIS SERIES F PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 4th day of June, 1998, by and among Agile Software Corporation, a California corporation (the "Company") and the investors listed on Schedule A hereto (collectively, the "Investors," individually, an ---------- "Investor"). THE PARTIES HEREBY AGREE AS FOLLOWS: 1. Purchase and Sale of Stock. --------------------------- 1.1 Sale and Issuance of Series F Preferred Stock. ---------------------------------------------- (a) The Company shall adopt and file with the Secretary of State of California on or before the Closing (as defined below) the Sixth Amended and Restated Articles of Incorporation in the form attached hereto as Exhibit A (the --------- "Restated Articles"). (b) Subject to the terms and conditions of this Agreement, each Investor agrees, severally, to purchase at the Closing, and the Company agrees to sell and issue to each Investor at the Closing, that number of shares of the Company's Series F Preferred Stock (the "Series F Preferred Stock") set forth opposite each Investor's name on Schedule A hereto for the purchase price set ---------- forth thereon. 1.2 Closing. The purchase and sale of the Series F Preferred Stock ------- shall take place at the offices of Brobeck, Phleger & Harrison LLP, Two Embarcadero Place, 2200 Geng Road, Palo Alto, California, at 1:00 P.M., on June 4, 1998, or at such other time and place as the Company and the Investors mutually agree upon orally or in writing (which time and place are designated as the "Closing"). At the Closing, the Company shall deliver to each Investor a certificate representing the number of shares of Series F Preferred Stock that each such Investor is purchasing against payment of the purchase price therefor by check or wire transfer to an account specified by the Company. 2. Representations, Warranties and Covenants of the Company. The -------------------------------------------------------- Company hereby represents, warrants and covenants to the Investors that, except as set forth on a Schedule of Exceptions (the "Schedule of Exceptions") furnished to the Investors specifically identifying the relevant subparagraph hereof, which exceptions shall be deemed to be representations and warranties as if made hereunder: 2.1 Organization, Good Standing and Qualification. The Company is a --------------------------------------------- corporation duly organized, validly existing and in good standing under the laws of the State of California and has all requisite corporate power and authority to carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified to transact business and is in good standing in, each jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties. 2.2 Capitalization and Voting Rights. The authorized capital of the -------------------------------- Company consists of or will consist of prior to the Closing: (i) Preferred Stock. 21,055,556 shares of Preferred Stock --------------- (the "Preferred Stock"), of which 1,500,000 shares have been designated Series A Preferred Stock (the "Series A Preferred Stock"), 1,232,500 of which are issued and outstanding, of which 3,000,000 shares have been designated Series B Preferred Stock (the "Series B Preferred Stock"), 2,937,995 of which are issued and outstanding, of which 4,000,000 shares have been designated Series C Preferred Stock (the "Series C Preferred Stock"), 3,575,000 of which are issued and outstanding, of which 4,000,000 shares have been designated Series C1 Preferred Stock (the "Series C1 Preferred Stock"), none of which are issued and outstanding, of which 1,500,000 shares have been designated Series D Preferred Stock (the "Series D Preferred Stock"), 1,350,000 of which are issued and outstanding, of which 1,500,000 shares have been designated Series D1 Preferred Stock (the "Series D1 Preferred Stock"), none of which are issued and outstanding, of which 1,000,000 shares have been designated Series E Preferred Stock (the "Series E Preferred Stock"), 1,000,000 of which are issued and outstanding, of which 1,000,000 shares have been designated Series E1 Preferred Stock (the "Series E1 Preferred Stock"), none of which are issued and outstanding, of which 1,777,778 shares have been designated Series F Preferred Stock (the "Series F Preferred Stock"), none of which are issued and outstanding and 1,777,778 of which will be sold pursuant to this Agreement, and of which 1,777,778 shares have been designated Series F1 Preferred Stock (the "Series F1 Preferred Stock"), none of which are issued and outstanding. The respective rights, privileges and preferences of the Series A, Series B, Series C, Series C1, Series D, Series D1, Series E, Series E1, Series F and Series F1 Preferred Stock will be as stated in the Company's Restated Articles. (ii) Common Stock 29,000,000 shares of common stock ("Common ------------ Stock"), of which 3,997,566 shares are issued and outstanding. (iii) The outstanding shares of Series A, Series B, Series C, Series D and Series E Preferred Stock and of Common Stock are owned by the shareholders in the numbers specified in Exhibit C hereto. --------- (iv) The outstanding shares of Series A, Series B, Series C, Series D and Series E Preferred Stock and of Common Stock are all duly and validly authorized and issued, fully paid and nonassessable, and were issued in accordance with the registration or qualification provisions of the Securities Act of 1933, as amended (the "Securities Act") and any relevant state securities laws or pursuant to valid exemptions therefrom. (v) Except for (A) the conversion privileges of the Series A, Series B, Series C, Series C1, Series D, Series D1, Series E, Series El, Series F and Series F1 Preferred Stock, (B) the rights provided in Section 2 of the Fifth Amended and Restated Investors' Rights Agreement (the "Investors' Rights Agreement"), the form of which is attached hereto as Exhibit ------- 2. B, (C) a warrant to purchase 41,111 shares of Series B Preferred Stock, (D) a - - warrant to purchase 35,313 shares of Series C Preferred Stock, (E) a warrant to purchase 4,049 shares of Series D Preferred Stock, (F)a warrant to purchase 17,828 shares of Series D Preferred Stock and (G) currently outstanding options to purchase 554,500 shares of Common Stock granted to certain officers, directions, employees, consultants and/or advisors of the Company pursuant to the 1995 Stock Option Plan, as amended (the "Option Plan"), there are not outstanding any options, warrants, rights (including conversion or preemptive rights or rights of first refusal) or agreements for the purchase or acquisition from the Company of any Shares of its capital stock. The Company has reserved 1,777,778 shares of Series F Preferred Stock for issuance hereunder and 12,777,778 shares of Common Stock for issuance upon conversion of the Series A, Series B, Series C, Series C1, Series D, Series D1, Series E, Series El, Series F and Series F1 Preferred Stock. In addition to the aforementioned options, the Company has reserved an additional 550,209 shares of Common Stock for issuance upon exercise of options to be granted in the future under the Option Plan and 79,000 shares of Common Stock for issuance to certain executive officers and key employees of the Company pursuant to compensatory direct stock issuances. The Company is not a party or subject to any agreement or understanding, and, to the best of the Company's knowledge, there is no agreement or understanding between any persons and/or entities, which affects or relates to the voting or giving of written consents with respect to any security or by a director of the Company. 2.3 Subsidiaries. The Company is the sole shareholder in Agile ------------ Software International Corporation, a Delaware corporation, incorporated on June 12, 1997. The Company does not presently own or control, directly or indirectly, any interest in any other corporation, association or business entity. The Company is not a participant in any joint venture, partnership or similar arrangement. 2.4 Authorization. All corporate action on the part of the Company, ------------- its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement, the Investors' Rights Agreement and the Fourth Amended and Restated Co-Sale Agreement (the "Co-Sale Agreement"), the form of which is attached hereto as Exhibit E, 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 F Preferred Stock being sold hereunder and the Common Stock issuable upon conversion of the Series F and/or Series F1 Preferred Stock has been taken or will be taken prior to the Closing, and this Agreement, the Investors' Rights Agreement and the Co-Sale Agreement 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 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 Investors' Rights Agreement may be limited by applicable federal or state securities laws. 2.5 Valid Issuance of Preferred and Common Stock. The Series F -------------------------------------------- Preferred Stock that is being purchased by the Investors hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly 3. and validly issued, fully paid and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under this Agreement and the Investors' Rights Agreement and under applicable state and federal securities laws. The Common Stock issuable upon conversion of the Series F Preferred Stock purchased under this Agreement, or issuable upon conversion of the Series F1 Preferred Stock, has been duly and validly reserved for issuance and, upon issuance in accordance with the terms of the Restated Articles, will be duly and validly issued, fully paid, and nonassessable and will be free of restrictions on transfer other than restrictions on transfer under this Agreement and the Investors' Rights Agreement and under applicable state and federal securities laws. 2.6 Governmental Consents. No consent, approval, order or --------------------- authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, the Investors' Rights Agreement or the Co-Sale Agreement, except for the filing pursuant to Section 25102(f) of the California Corporate Securities Law of 1968, as amended, and the rules thereunder, which filing will be effected within 15 days of the sale of the Series F Preferred Stock hereunder. 2.7 Litigation. There is no action, suit, proceeding or investigation ---------- pending or currently threatened against the Company that questions the validity of this Agreement, the Investors' Rights Agreement or the Co-Sale Agreement, or the right of the Company to enter into such agreements, or to consummate the transactions contemplated hereby or thereby, or that might result, either individually or in the aggregate, in any material adverse changes in the assets, condition, affairs or prospects of the Company, financially or otherwise, or any change in the current equity ownership of the Company. The foregoing includes, without limitation, actions, suits, proceedings or investigations, pending or threatened, involving the prior employment of any of the Company's employees, their use in connection with the Company's business of any information or techniques allegedly proprietary to any of their former employers, or their obligations under any agreements with prior employers. The Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company currently pending or that the Company intends to initiate. 2.8 Proprietary Information and Inventions Agreement. Each employee, ------------------------------------------------ officer and consultant of the Company has executed a Proprietary Information and Inventions Agreement in the form previously provided to counsel to certain of the Investors. 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. 2.9 Patents and Trademarks. To the best of its knowledge (but ---------------------- without having conducted any special investigation or patent search), the Company has sufficient title to and ownership of all patents, trademarks, service marks, trade names, copyrights, trade secrets, information, proprietary rights and processes necessary for its business as now conducted and as proposed to be conducted without any conflict with or infringement of the rights of others. There are no outstanding options, licenses or agreements of any kind relating to the foregoing, nor is 4. the Company bound by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, proprietary rights and processes of any other person or entity. 2.10 Compliance with Other Instruments. The Company is not in --------------------------------- violation or default in any material respect of any provision of its Restated Articles or Bylaws, or in any material respect of any instrument, judgment, order, writ, decree or contract to which it is a party or by which it is bound, or, to the best of its knowledge, of any provision of any federal or state statute, rule or regulation applicable to the Company. The execution, delivery and performance of this Agreement, the Investors' Rights Agreement and the Co- Sale Agreement, and the consummation of the transactions contemplated hereby and thereby will not result in any such violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument, judgment, order, writ, decree or contract or an event that results in the creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties. 2.11 Agreements; Action. ------------------- (a) Except for agreements explicitly contemplated hereby, by the Investors' Rights Agreement and the Co-Sale Agreement, there are no agreements, understandings or proposed transactions between the Company and any of its officers, directors, affiliates or any affiliate thereof. (b) There are no agreements, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Company is a party or by which it is bound that may involve (i) obligations (contingent or otherwise) of, or payments to the Company in excess of, $10,000, (ii) the license of any patent, copyright, trade secret or other proprietary right to or from the Company or (iii) provisions restricting or affecting the development, manufacture or distribution of the Company's products or services. (c) The Company has not (i) declared or paid any dividends or authorized or made any distribution upon or with respect to any class or series of its capital stock, (ii) incurred any indebtedness for money borrowed or any other liabilities individually in excess of $20,000 or, in the case of indebtedness and/or liabilities individually less than $20,000, in excess of $50,000 in the aggregate, (iii) except with respect to the purchase of shares of stock of the Company by employees, officers or directors, made any loans or advances to any person, other than ordinary advances for travel expenses or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business. (d) For the purposes of subsections (b) and (c) above, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are 5. affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections. 2.12 Related-Party Transactions. Except with respect to the purchase -------------------------- of shares of stock of the Company, no employee, officer or director of the Company or member of his or her immediate family is indebted to the Company, nor is the Company indebted (or committed to make loans or extend or guarantee credit) to any of them. To the best of the Company's knowledge, none of said founders, officers or directors, or any members of their immediate families, has any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company, except that Bryan Stolle owns 400 shares and Matthias Moran owns 3,000 shares of the common stock of Sherpa Corporation, and employees, officers and directors of the Company may own stock in publicly traded companies that may compete with the Company. To the best of the Company's knowledge, no employee, officer or director or any member of their immediate families is, directly or indirectly, interested in any material contract with the Company other than as a shareholder in the Company. The Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation. 2.13 Permits. The Company has all franchises, permits, licenses and ------- any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could materially and adversely affect the business, properties, prospects or financial condition of the Company, and the Company believes it can obtain, without undue burden or expense, any similar authority for the conduct of its business as planned to be conducted. The Company is not in default in any material respect under any of such franchises, permits, licenses or other similar authority. 2.14 Disclosure. The Company has fully provided the Investors with ---------- all the information that the Investors have requested for deciding whether to purchase the Series F Preferred Stock. To the best of its knowledge, neither this Agreement, the Investors' Rights Agreement, the Co-Sale Agreement nor any other statements or certificates made or delivered in connection herewith or therewith 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. 2.15 Registration Rights. Except as provided in the Investors' ------------------- Rights Agreement, the Company has not granted or agreed to grant any registration rights, including piggyback rights, to any person or entity. 2.16 Corporate Documents. Except for amendments necessary to satisfy ------------------- representations and warranties or conditions contained herein (the form of which amendments has been approved by the Investors), the Restated Articles and the Bylaws of the Company are in the form previously provided to counsel to certain of the Investors. 2.17 Section 83(b) Elections. To the best of the Company's ----------------------- knowledge, all individuals who have purchased shares of the Company's Common Stock have timely filed 6. elections under Section 83(b) of the Internal Revenue Code of 1986, as amended, and any analogous provisions of applicable state tax laws. 2.18 Employees. To the best of the Company's knowledge, no employee --------- or consultant of the Company is in violation of any term of any employment, employment contract, patent disclosure agreement or any other contract or agreement relating to the relationship of any such person with the Company or any other party because of the nature of the business conducted or to be conducted by the Company. The Company does not have any collective bargaining agreements covering any of its employees. Except for the Option Plan, the Company has no employee benefit plans presently in force with respect to profit- sharing, pensions, stock options or other stock benefits. The Company is not aware of any key employee of the Company who has any plans to terminate his or her employment with the Company. 2.19 Offering. Subject to the accuracy of the Investors' -------- representations in Section 3 of this Agreement and in written responses to the Company's inquiries, the offer, sale and issuance of the Series F Preferred Stock to be issued in conformity with the terms of this Agreement and the issuance of the Common Stock to be issued upon conversion of the Series F and/or Series F1 Preferred Stock constitute transactions exempt from the registration requirements of Section 5 of the Securities Act. 2.20 Corporate Records. The minute books of the Company made ----------------- available to the Investors contain a complete summary of all meetings or actions by written consent of directors and shareholders since the time of incorporation of the Company and reflect all transactions referred to in such minutes accurately in all material respects. 2.21 Arbitration. Each employee of the Company has agreed in writing ----------- that all disputes that arise under the terms of the Proprietary Information and Inventions Agreement, the Restricted Stock Purchase Agreement(s) or the Employment Agreement entered into between each employee and the Company shall be resolved through final and binding arbitration. 2.22 Board of Directors Visitation. So long as Integral Capital ----------------------------- Partners IV, L.P. (including any affiliated entities or persons) holds at least 50% (as adjusted for any subsequent stock splits, stock combinations, recapitalizations or the like) of the Series F Preferred Stock purchased by it hereunder (or the Common Stock issuable upon conversion thereof or the Series F1 Preferred Stock issuable upon conversion of the Series F Preferred Stock), it shall (i) receive notice of each regular meeting of the Company's Board of Directors, (ii) be entitled to attend such meetings in a visiting, non-voting capacity and (iii) the Company shall distribute to it the board packages prepared in connection with each such meeting at the same time as such board packages are distributed to the other members of the Board of Directors of the Company. 2.23 Real Property Holding Corporation. The Company covenants that --------------------------------- it will operate in a manner such that it will not become a "United States real property holding corporation" as that term is defined in Section 897(c)(2) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder ("FIRPTA"). The Company agrees to make determinations as to its status as a USRPHC, and will file statements concerning those 7. determinations with the Internal Revenue Service, in the manner and at the times required under Reg (S) 1.897-2(h), or any supplementary or successor provision thereto. Within 30 days of a request from an Investor or any of its partners, the Company will inform the requesting party, in the manner set forth in Reg. (S) 1.897-2(h)(1)(iv) or any supplementary or successor provision thereto, whether that party's interest in the Company constitutes a United States real property interest (within the meaning of Internal Revenue Code Section 897(c)(1) and the regulations thereunder) and whether the Company has provided to the Internal Revenue Service all required notices as to its USRPHC status. 3. Representations and Warranties of the Investors. Each Investor ----------------------------------------------- hereby represents and warrants that: 3.1 Authorization. The Investor has full power and authority to ------------- enter into this Agreement, the Investors' Rights Agreement and the Co-Sale Agreement, and each such agreement constitutes its valid and legally binding obligation, enforceable against such Investor in accordance with its terms. 3.2 Purchase Entirely for Own Account. This Agreement is made with --------------------------------- such Investor in reliance upon such Investor's representation to the Company, which by such Investor's execution of this Agreement such Investor hereby confirms, that the Series F Preferred Stock to be received by such Investor and the Common Stock or Series F1 Preferred Stock issuable upon conversion thereof (collectively, the "Securities") will be acquired for investment for such Investor'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 such Investor has no present intention of selling, granting any participation in or otherwise distributing the same. By executing this Agreement, such Investor further represents that such Investor 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. 3.3 Disclosure of Information. Such Investor believes it has ------------------------- received all the information it considers necessary or appropriate for deciding whether to purchase the Series F Preferred Stock. Such Investor 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 F 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 each Investor to rely thereon. 3.4 Investment Experience. Such Investor 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 F Preferred Stock. If other than an individual, such Investor also represents it has not been organized for the purpose of acquiring the Series F Preferred Stock. 8. 3.5 Accredited Investor. Such Investor is an "accredited investor" ------------------- within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of Regulation D, as presently in effect. 3.6 Restricted Securities. Such Investor 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 only in certain limited circumstances. In this connection, such Investor 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. 3.7 Further Limitations on Disposition. Without in any way limiting ---------------------------------- the representations set forth above, such Investor further agrees not to make any disposition of all or any portion of the Securities unless and until the transferee has agreed in writing for the benefit of the Company to be bound by this Section 3 and the Investors' Rights Agreement provided and to the extent this Section 3 and such agreement are then applicable; and; (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 Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition and (ii) if reasonably requested by the Company, such Investor 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. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances. (c) Notwithstanding the provisions of paragraphs (a) and (b) above, no such registration statement or opinion of counsel shall be necessary for a transfer by an Investor that is a partnership to a partner of such partnership or a retired partner of such partnership who retires after the date hereof, or to the estate of any such partner or retired partner or the transfer by gift, will or intestate succession of any partner to his or her spouse or to the siblings, lineal descendants or ancestors of such partner or his or her spouse, if the transferee agrees in writing to be subject to the terms hereof to the same extent as if he or she were an original Investor hereunder. 3.8 Legends. It is understood that the certificates evidencing the ------- Securities may bear one or all of the following legends: (a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION 9. STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT." (b) Any legend required by the laws of the State of California, including any legend required by the California Department of Corporations and Sections 417 and 418 of the California Corporations Code. 3.9 Company Counsel. Each Investor acknowledges and agrees that, --------------- with respect to the Agreement and the transactions contemplated thereby, Brobeck, Phleger & Harrison LLP has served as counsel to the Company and has not represented any Investor. The Investors acknowledge and agree that they have not retained legal counsel to represent them as a group, but rather each Investor has relied upon separate counsel for advice with respect to the Agreement and the transactions contemplated thereby. The Investors further acknowledge and agree that certain of them have previously been represented by Brobeck, Phleger & Harrison LLP for legal advice, and to the extent conflicts of interest, if any, arise from such relationship, each Investor hereby waives such conflict by signing below. 4. California Commissioner of Corporations. ---------------------------------------- 4.1 Corporate Securities Law. THE SALE OF THE SECURITIES THAT 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 FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM 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. 5. Conditions of Investors' Obligations at Closing. The obligations ----------------------------------------------- of the Investors under subsection 1.1(b) of this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions: 5.1 Representations and Warranties. The representations and ------------------------------ warranties of the Company contained in Section 2 shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of such Closing. 5.2 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 Closing. 10. 5.3 Compliance Certificate. The President of the Company shall ---------------------- deliver to the Investors at the Closing a certificate stating that the conditions specified in Sections 5.1 and 5.2 have been fulfilled and stating that there shall have been no adverse change in the business, affairs, operations, properties, assets or condition of the Company since the date of this Agreement. 5.4 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 Securities pursuant to this Agreement shall be duly obtained and effective as of the Closing. 5.5 Proceedings and Documents. All corporate and other proceedings ------------------------- in connection with the transactions contemplated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to the Investors, and they shall have received all such counterpart original and certified or other copies of such documents as they may reasonably request. 5.6 Opinion of Company Counsel. The Investors shall have received -------------------------- from Brobeck, Phleger & Harrison LLP, counsel for the Company, an opinion, dated as of the Closing, in the form attached hereto as Exhibit D. --------- 5.7 Investors' Rights Agreement. The Company, each Investor and a --------------------------- majority of the holders of the Series A, Series B, Series C, Series D and Series E Preferred Stock, taken together as a whole and not as separate series, shall have entered into the Investors' Rights Agreement in the form attached hereto as Exhibit B. - --------- 5.8 Co-Sale Agreement. Each of the Founders (as defined in the Co- ----------------- Sale Agreement), the Company and the Investors (as defined in the Co-Sale Agreement) shall have entered into the Co-Sale Agreement. 5.9 Board of Directors. As of the Closing, the Company's Board of ------------------ Directors shall consist of Mike Moritz, James Patterson, Nancy Schoendorf, Tom Shanahan and Bryan Stolle. 5.10 Minimum Investment. A minimum of $10,000,000 shall have been ------------------ raised by the Company in connection with the sale of its Series F Preferred Stock according to the terms of this Agreement. 6. Conditions of the Company's Obligations at Closing. The -------------------------------------------------- obligations of the Company to the Investors under this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions by the Investors, the waiver of which shall not be effective against the Company unless in writing and signed on behalf of the Company: 11. 6.1 Representations and Warranties. The representations and ------------------------------ warranties of each Investor contained in Section 3 shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the Closing. 6.2 Payment of Purchase Price. Each Investor shall have delivered ------------------------- the purchase price specified in Section 1. l(b). 6.3 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 pursuant to this Agreement shall be duly obtained and effective as of the Closing. 6.4 Waivers of Right of First Offer. Each Major Investor (as defined ------------------------------- in the Investors' Rights Agreement) shall have waived the right of first offer granted to such Investor pursuant to the Fourth Amended and Restated Investors' Rights Agreement, dated November 14, 1997. 7. Miscellaneous. -------------- 7.1 Survival of Warranties. The warranties, representations and ---------------------- covenants of the Company and each Investor contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of such Investor or the Company. 7.2 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. 7.3 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. 7.4 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. 7.5 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. 12. 7.6 Notices. Unless otherwise provided, any notice required or ------- permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified or upon deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party on the signature page hereof, or at such other address as such party may designate by ten days' advance written notice to the other parties. 7.7 Finder's Fee. Each party represents that it neither is nor will ------------ be obligated for any finders' fee or commission in connection with this transaction. Each Investor agrees to indemnify and to 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 such Investor or any of its officers, partners, employees or representatives is responsible. The Company agrees to indemnify and hold harmless each Investor 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. 7.8 Expenses. Irrespective of whether the Closing is effected, the -------- Company shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the Investors' Rights Agreement, the Co-Sale Agreement or the Restated Articles, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 7.9 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 Common Stock issued or issuable upon conversion of the Series F Preferred Stock. 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. 7.10 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 this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. 7.11 Aggregation of Stock. All shares of the Preferred Stock held or -------------------- acquired by affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement. 13. 7.12 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. 14. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. AGILE SOFTWARE CORPORATION By: /s/ Bryan D. Stolle --------------------------------------- Bryan D. Stolle President and Chief Executive Officer Address: One Almaden Boulevard, 12th Floor San Jose, California 95113 [SIGNATURE PAGE TO PREFERRED STOCK PURCHASE AGREEMENT] 15 EX-23.1 16 CONSENT OF PRICEWATERHOUSECOOPERS LLP Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the use in this Registration Statement on Form S-1 of our report dated May 28, 1999 relating to the consolidated financial statements of Agile Software Corporation, which appears in such Registration Statement. We also consent to the reference to us under the heading "Experts" in such Registration Statement. PricewaterhouseCoopers LLP San Jose, California August 2, 1999 -----END PRIVACY-ENHANCED MESSAGE-----