Document:

Exhibit 10.9

 

BLADELOGIC, INC.

 

FOURTH AMENDED AND RESTATED
STOCKHOLDERS’ AGREEMENT

 

This
Fourth Amended and Restated Stockholders’ Agreement (the “Agreement”) is
made as of this 24th day of June, 2005 by and among BladeLogic, Inc., a
Delaware corporation (the “Company”), Dev Ittycheria, Vijay Manwani,
Steve Kokinos, Thomas Kraus and Vance Loiselle (the “Founders”), the
investors listed on Exhibit A hereto (the “Series A Investors”), the
investors listed on Exhibit C hereto (the “Series B Investors”), the investors
listed on Exhibit D hereto (the “Series C Investors”), the investors
listed on Exhibit E hereto (the “Series D Investors”, and together with
the Series A Investors, Series B Investors and Series C Investors, the “Institutional
Investors”), the Stockholders named on Exhibit B hereto and the other
holders of capital stock of the Company who become party to this Agreement from
time to time. Reference is made to (i) the Stockholders’ Agreement (the “Original
Agreement”), dated as of September 6, 2001, by and among the Company and
the stockholders named therein, (ii) the Amended and Restated Stockholders’
Agreement (the “Amended Agreement”), dated May 15, 2002, by and among
the Company and the stockholders named therein, (iii) the Second Amended and
Restated Stockholders’ Agreement (the “Second Amended Agreement”), dated
December 20, 2002, by and among the Company and the stockholders named therein,
and (iv) the Third Amended and Restated Stockholders’ Agreement (the “Existing
Agreement”), dated May 25, 2004, by and among the Company and the
stockholders named therein.

 

WHEREAS,
contemporaneously with the execution and delivery of the Original Agreement,
the Company and the Series A Investors entered into a Common Stock and Series A
Preferred Stock Purchase Agreement, dated as of September 6, 2001 (as in effect
from time to time, the “Series A Purchase Agreement”), in connection
with the issuance and sale by the Company to the Series A Investors of
(a) certain shares (the “Investors’ Common Shares”) of the Company’s
Common Stock, $0.001 par value per share (the “Common Stock”), and (b)
certain shares of the Company’s Series A Redeemable Preferred Stock, $0.001 par
value per share (the “Series A Preferred Stock”); and

 

WHEREAS,
subsequent to the execution and delivery of the Original Agreement and prior to
the execution and delivery of the Amended Agreement, the stockholders listed on
Exhibit B received shares of Common Stock upon the liquidation of Network
Shell, Inc. and became parties to the Original Agreement pursuant to several
joinder agreements; and

 

WHEREAS,
on May 15, 2002, the Company and certain of the Series B Investors entered into
a Series B Convertible Preferred Stock Purchase Agreement (as in effect from
time to time, the “First Series B Purchase Agreement”), in connection
with the issuance and sale by the Company to such Series B Investors of certain
shares of the Company’s Series B Convertible Preferred Stock, $.001 par value
per share (the “Series B Preferred Stock”); and

 

 

 

WHEREAS,
on December 20, 2002, the Company and certain of the Series B Investors entered
into a Series B Convertible Preferred Stock Purchase Agreement (the “Second
Series B Purchase Agreement”) in connection with the issuance and sale by
the Company to such Series B Investors of certain shares of the Series B Stock;
and

 

WHEREAS,
on May 25, 2004, the Company and certain of the Series C Investors entered into
a Series C Convertible Preferred Stock Purchase Agreement (the “Series C
Purchase Agreement”) in connection with the issuance and sale by the
Company to such Series C Investors of certain shares of the Series C Stock; and

 

WHEREAS,
contemporaneously with the execution and delivery of this Agreement, the Company
and certain of the Series D Investors have entered into a Series D Convertible
Preferred Stock Purchase Agreement, dated as of the date hereof (as in effect
from time to time, the “Series D Purchase Agreement”), in connection
with the issuance and sale by the Company to such Series D Investors of certain
shares of Series D Preferred Stock; and

 

WHEREAS,
it is a condition to the purchase by the Series D Investors pursuant to the
Series D Purchase Agreement that this Agreement be executed by the parties
hereto; and

 

WHEREAS,
in accordance with Section 17 of the Existing Agreement, the signatories to
this Agreement include (i) the Company, (ii) Institutional Investors holding at
least three-fifths of the issued and outstanding Shares then held by all
Institutional Investors and (iii) Stockholders holding at least a majority of
the issued and outstanding Common Stock then held by all Stockholders, which
persons are required by said Section 17 to amend and restate the Existing
Agreement;

 

NOW,
THEREFORE, in consideration of the mutual covenants herein contained and other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree to amend and restate the Existing
Agreement in its entirety as follows:

 

1.                                       Definitions. Certain capitalized terms are used in this Agreement as defined in the
preamble, recitals and sections of this Agreement. In addition, certain other
capitalized terms are used in this Agreement as specifically defined in this
Section 1 as follows:

 

“Affiliate”
means, with respect to any Person, any Person which, directly or indirectly,
controls, is controlled by or is under common control with such Person,
including, without limitation, any member or partner of such Person and any
venture capital fund now or hereafter existing which is controlled by or under
common control with one or more general partners of such Person.

 

“Certificate
of Incorporation” means the Fifth Amended and Restated Certificate of
Incorporation of the Company, and except as otherwise set forth herein, as from
time to time in effect.

 

“By-laws”
means the bylaws of the Company, and except as otherwise set forth herein, as
from time to time in effect.

 

2

 

“Equity Plan” shall mean the Company’s 2001
Stock Option and Grant Plan.

 

“Immediate
Family” means, with respect to any natural person, each of such person’s
spouse, father, mother, brothers, sisters, aunts, uncles, nieces, nephews and
lineal descendants and ancestors and, with respect to any other entity, the
current or former stockholders, partners or members of such entity.

 

“Initial
Public Offering” means the closing of a firm commitment underwritten public
offering of the Company yielding aggregate net proceeds to the Company of at
least $20,000,000 at a price per share of Common Stock of at least $3.75 (as
appropriately adjusted for stock splits, stock combinations, stock dividends
and recapitalizations).

 

“Offeree” means each Institutional Investor.

 

“Person”
means any individual, corporation, trust, partnership, joint venture, unincorporated
organization, government agency or any agency or political subdivision thereof,
or other entity.

 

“Preferred Stock” means the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock.

 

“Preferred
Vote” means the affirmative vote or written consent of the holders of at
least three-fifths of the outstanding shares of Preferred Stock voting as a
single class with each share of Preferred Stock having one vote (as
appropriately adjusted for stock splits, stock combinations, stock dividends,
recapitalizations, and similar events).

 

“Principal
Investor” means each of Bessemer Venture Partners V L.P., Battery Ventures
VI, L.P., JAFCO America Ventures and MK Capital SBIC, L.P., The Productivity Fund IV, L.P. or such
affiliates as may be designated by a Principal Investor from time to time.

 

“Qualified
Transferee” means any Person who is (a) an Institutional Investor,
(b) Affiliate, subsidiary, partner, member or stockholder of the
Institutional Investors or an account managed or advised by the manager or
adviser of such Institutional Investor, (c) a member of an Institutional
Investor’s Immediate Family receiving transferred rights by gift or bequest or
through inheritance, (d) a trust for the benefit of any member or members of an
Institutional Investor’s Immediate Family or (e) a trust in respect of which an
Institutional Investor serves as trustee, provided, however, that
the trust instrument governing such trust shall provide that such Institutional
Investor, as trustee, shall retain sole and exclusive control over the voting
and disposition of such Institutional Investor’s Shares until the termination
of this Agreement. Notwithstanding the foregoing, “Qualified Transferee”
includes only Persons to whom securities of the Company may lawfully be
transferred pursuant to exemptions from applicable federal and state securities
laws (with the burden of proving availability of such exemptions to be on the
Person proposing such transfer of such securities (or of rights to acquire such
securities)).

 

“Represented
Investors” means each of Bessemer Venture Partners V L.P., Battery Ventures
VI, L.P., JAFCO America Ventures and MK Capital SBIC, L.P. or such affiliates
as may be designated by a Represented Investor from time to time.

 

3

 

“Required
Investors” means, at any relevant time, the holders of at least
three-fifths of the Investors’ Common Shares then outstanding (including any
shares issued as a result of adjustments made pursuant to Section 9 hereof),
Series B Preferred Stock then outstanding (voting on an as converted basis),
Series C Preferred Stock then outstanding (voting on an as converted basis) and
Series D Preferred Stock then outstanding (voting on an as converted basis),
voting together as a single class.

 

“Shares”
means all or any portion of the shares (or any rights, options or warrants to
acquire any such shares) of Common Stock, Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock or any other capital stock of the Company owned by any Institutional
Investor or Stockholder, whether presently held or hereafter acquired.

 

“Stockholders”
means the Founders, the other holders of capital stock of the Company listed
from time to time on Exhibit B hereto and any holder of capital stock of the
Company that becomes party to this Agreement and their respective permitted
successors and assigns. Notwithstanding the foregoing, the Institutional
Investors are not Stockholders for purposes of this Agreement.

 

2.                                       Prohibited Transfers. No Institutional Investor or Stockholder shall
sell, assign, transfer, pledge, hypothecate, mortgage or dispose of, by gift or
otherwise, or in any way encumber, any Shares owned by such Stockholder or
Institutional Investor unless (a) such assignment, transfer, pledge,
hypothecation, mortgage, disposition or encumbrance is made in compliance with
the terms of this Agreement and (b) except as otherwise set forth
herein, the proposed purchaser, assignee, pledgee, mortgagee or other
transferee first agrees in writing to become party to this Agreement and to be
bound by all the terms and conditions hereof. Any attempted sale, assignment,
transfer, pledge, hypothecation, mortgage, disposition or encumbrance of any
Shares other than in accordance with this Agreement shall be null and void and
the Company shall not (i) recognize any such sale, assignment, transfer,
pledge, hypothecation, mortgage, disposition or encumbrance or
(ii) reflect in its stock register any change in registered ownership
pursuant thereto.

 

3.                                       Right of Refusal on Dispositions.

 

(a)                                  Except
as set forth in Section 5 hereof, no Stockholder shall sell, assign, transfer
or otherwise dispose of any Shares owned by such Stockholder to any Person
unless such Stockholder shall have (i) received a bona-fide arm’s-length
offer to purchase such Shares from such Person, (ii) submitted a written offer
(the “Offer”) to the Company and each of the Offerees and
(iii) complied with all other applicable provisions of this Section 3.
Each such notice and Offer shall (1) identify the Person to which the
Stockholder proposes to sell the Shares, (2) specify the material terms
and conditions, including price, of the proposed sale and (3) offer first
to the Company and then to the Offerees, the opportunity to purchase such
Shares on terms and conditions, including price, not less favorable to the
Company and the Offerees than the terms and conditions on which the Stockholder
proposes to sell such Shares to any other purchaser.

 

(b)                                 The
Company shall act upon the Offer as soon as practicable, in any event within 15
days after receipt thereof. In the event that the Company shall elect to
purchase 

 

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all or any portion of the shares subject to the Offer
(the “Offered Shares”), the Company shall notify in writing the
Stockholder that submitted the offer of the Company’s election to purchase,
which notice shall be delivered in accordance with Section 13 hereof to the
Stockholder that submitted the Offer at its address set forth in Exhibit B
hereto or at such other address furnished in accordance with Section 13
hereof and shall, when taken in connection with the Offer, be deemed to
constitute a valid, legally binding and enforceable agreement for the sale and
purchase of the Offered Shares covered thereby, subject to the provisions of
Section 3(d).

 

(c)                                  If
the Company does not so notify such Stockholder within 15 days after receipt of
the Offer or does not elect to purchase all the Offered Shares, the Offerees
shall have a second option to purchase any Offered Shares which are not
purchased by the Company (the “Remaining Shares”). Each Offeree shall
have the right to accept the Offer as to any number of the Remaining Shares; provided,
however, that except as provided in the last sentence of this
Section 3(c), such Offeree shall be entitled to purchase only up to that
number of Remaining Shares as shall be equal to the aggregate number of
Remaining Shares multiplied by a fraction, the numerator of which is the number
of shares of Common Stock then held by such Offeree (assuming the conversion
and exercise by such Offeree of all securities convertible into or exercisable
for Common Stock) and the denominator of which is the total number of shares of
Common Stock so held or so obtainable by all the Offerees (assuming the
conversion and exercise of all securities convertible into or exercisable for
Common Stock) (such number as to each Offeree being referred to as such Offeree’s
“Pro Rata Fraction”). Each Offeree shall have the right to transfer its
right to all or any portion of its Pro Rata Fraction to any Qualified
Transferee (provided that such Qualified Transferee agrees in writing to be
subject to the terms hereof to the same extent as if such Qualified Transferee
were an original Institutional Investor hereunder), in which case the term “Offeree”
in this Section 3 shall also mean each Qualified Transferee of such
Offeree as is appropriate. Each Offeree shall act upon the Offer as soon as
practicable, and in any event within 15 days after receipt thereof. In the
event that any Offeree shall elect to purchase all or any portion of the
Remaining Shares, such Offeree shall notify in writing the Stockholder that
submitted the Offer of such Offeree’s election to purchase, which notice shall
be delivered in accordance with Section 13 hereof to the Stockholder that
submitted the Offer at its address set forth in Exhibit B hereto or at such
other address furnished in accordance with Section 13 hereof and shall, when
taken in conjunction with the Offer, be deemed to constitute a valid, legally
binding and enforceable agreement for the sale and purchase of the Remaining
Shares covered thereby, subject to the provisions of Section 3(d) hereof,
to the extent of the number of Remaining Shares, if any, allocated to such
Offeree. If an Offeree does not so notify such Stockholder within 15 days after
receipt of the Offer, such Offeree shall be deemed to have elected not to
purchase any of the Remaining Shares. Upon the expiration of all applicable
periods under this Section 3, the number of Remaining Shares to be purchased by
each Offeree shall be determined as follows:

 

(i)                                     there
shall first be allocated to each Offeree a number of Remaining Shares equal to
the lesser of (1) the number of Remaining Shares as to 

 

5

 

which such Offeree accepted the Offer or (2) such
Offeree’s Pro Rata Fraction, and

 

(ii)                                  any
of the Remaining Shares not purchased pursuant to  clause (i) above shall be offered for
sale to those Offerees that exercised their right to purchase any of the
Remaining Shares (a “Purchasing Offeree”), in each case on a pro rata basis
calculated by dividing the Common Stock held by a Purchasing Offeree (assuming
conversion of all Shares held by such Purchasing Offeree) by the total number
of shares of Common Stock held by all of the Purchasing Offerees (assuming
conversion of all Shares held by such Purchasing Offerees), or in such other manner
as the Purchasing Offerees may agree among themselves.

 

(d)                                 In
the event that the Offerees and the Company, individually or collectively, do
not elect to purchase all the Offered Shares, the Offer shall be deemed to have
been accepted as to the Offered Shares to be purchased by the Company and the
Offerees and rejected as to any Offered Shares not purchased by the Company or
the Offerees, and the remaining Offered Shares may be sold by the Stockholder
who submitted the Offer at any time within 180 days after the expiration of the
15-day period for acceptance or rejection of the Offer; provided, however,
that the purchaser of such Offered Shares shall agree in writing to abide by
all of the provisions of this Agreement, except for Sections 3 through 5
hereof which shall no longer apply to such Offered Shares. Any such sale shall
be to the Person originally named in the Offer as the proposed purchaser and
shall not be at a price and upon other terms and conditions, if any, more
favorable to such purchaser than those specified in the Offer. Any Stockholder
proposing to sell any Shares after such 180-day period, or to a different
purchaser, or at a lower price, or on terms and conditions more favorable to
the purchaser than those specified in the Offer must first comply again with
the requirements of this Section 3.

 

(e)                                  The
Company shall be entitled to refuse to register the name of any transferee of
Offered Shares as an owner thereof on its records if such transferee acquired
such Offered Shares at a lower price or on terms more favorable to such
transferee than the price paid by, or the terms offered to, the Company and the
Offerees, and the Company may require a written statement from such transferee
of the price which the transferee paid for the Offered Shares and the terms of
the purchase.

 

4.                                       Right of Participation in Sales by Stockholders. If at any time any Stockholder (the “Selling
Stockholder”) wishes to sell, or otherwise dispose of, more than five
percent (5%) of the Shares owned by such Selling Stockholder to any Person,
including, without limitation, the Company and each Offeree that may have
elected to exercise its rights of first refusal set forth in Section 3
hereof (each such Person a “Purchaser”), in a transaction that is
subject to the provisions of Section 3 hereof, each Offeree that has not
elected to purchase any such Shares pursuant to Section 3 hereof shall
have the right to participate pro rata in such transaction and, accordingly,
shall have the right to require, as a condition to such sale or disposition,
that the Purchaser purchase from such Offeree at the same price per Share and
on the same terms and conditions as involved in such sale or disposition by
such Selling Stockholder, a number of shares of 

 

6

 

Common Stock equal to the number of Shares proposed to be sold or disposed
of by the Selling Stockholder multiplied by a fraction (i) the numerator of
which is the number of shares of Common Stock owned by such Offeree (assuming
the conversion and exercise by such Offeree of all securities convertible into
or exerciseable for Common Stock) and (ii) the denominator of which is the
number of shares of Common Stock owned by all Offerees selling stock pursuant
to this Section 4 plus the number of shares of Common Stock owned by the
Selling Stockholder (in all cases assuming the conversion of and exercise of
all securities convertible into or exerciseable for Common Stock). As soon as
practicable after receipt of the Offer made pursuant to Section 3 hereof and in
any event within 15 days after receipt of such Offer, each Offeree that
(a) has not elected to purchase any of the Offered Shares pursuant to
Section 3 hereof and (b) wishes to participate in any such sale or
disposition shall individually notify in writing the Selling Stockholder of
such Offeree’s election to participate in such sale or disposition, which
notice shall be delivered in accordance with Section 13 hereof to the Selling
Stockholder at its address set forth in Exhibit B hereto or at such other
address furnished in accordance with Section 13 hereof.

 

5.                                       Permitted Transfers. Anything herein to the contrary notwithstanding,
the provisions of Sections 3 and 4 hereof shall not apply to:

 

(a)                                  any
transfer of Shares by a Stockholder by gift or bequest or through inheritance
to, or for the benefit of, any member or members of such Stockholder’s
Immediate Family or a transfer of Shares by a Stockholder to a trust for the
benefit of any member or members of such Stockholder’s Immediate Family;

 

(b)                                 any
transfer of Shares by a Stockholder to a trust in respect of which such
Stockholder serves as trustee; provided, however, that the trust
instrument governing such trust shall provide that such Stockholder, as
trustee, shall retain sole and exclusive control over the voting and
disposition of such Shares until the termination of this Agreement;

 

(c)                                  any
transfer of Shares by a Stockholder to a limited partnership or limited
liability company all partners or members of which are members of the
Stockholder’s Immediate Family;

 

(d)                                 any
transfer of Shares by a Stockholder to an Affiliate of such Stockholder;

 

(e)                                  any
sale or transfer of Shares to the Company at a price that is less than or equal
to the original purchase price of such Shares in connection with the
termination of a Stockholder’s employment with the Company pursuant to a stock
restriction agreement between the Company and such Stockholder;

 

(f)                                    any
sale or transfer of Shares by a Stockholder to the Company pursuant to the
Equity Plan; and

 

(g)                                 any
sale of Common Stock to underwriters and/or the public in connection with a
registered public offering by the Company of its securities.

 

In the
event of any such transfer pursuant to clauses (a), (b), (c) or (d) of this
Section 5, the transferee of the Shares shall hold the Shares so acquired with
all the rights conferred by, and 

 

7

 

subject to all the restrictions imposed by, this
Agreement, and shall be required, as a condition of such transfer, to execute
and deliver to the Institutional Investors, the Stockholders and the Company an
agreement pursuant to which such transferee agrees to become party to this
Agreement and to be bound by all the terms and conditions hereof.

 

6.                                       Board of Directors.

 

(a)                                  The
Stockholders and Institutional Investors agree to vote all shares of Common
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock and any other shares of voting securities of the Company now owned or
hereafter acquired or controlled by them (collectively, the “Voting
Securities”), and otherwise to use their respective best efforts as
stockholders or directors of the Company, to cause and maintain the size of the
Board of Directors to be seven (7), and to cause and maintain the election to
the Board of Directors of the Company of:

 

(i)                                     four
persons, one designated by each of the Represented Investors (each a “Preferred
Director” and together, the “Preferred Directors”);

 

(ii)                                  one
person who is a “Common Member” (as defined below) of the Company (such person,
a “Common Director”), to be designated by the holders of a majority of
the shares of Common Stock then outstanding other than the Investors’ Common
Shares;

 

(iii)                               one
person unaffiliated with the Company to be designated by the mutual consent of
(1) the Required Investors and (2) the Management (the “Independent Director”);
and

 

(iv)                              the
Chief Executive Officer of the Company (the “CEO”).

 

The
following persons are “Common Members” for the purposes of being designated as
a Common Director: Dev Ittycheria and Vijay Manwani. “Management” for the
purposes of this Section 6 shall mean (i) Dev Ittycheria and Vijay Manwani, in
each case for as long as he is employed by the Company and (ii) the CEO, from
and after such time as neither Dev Ittycheria nor Vijay Manwani is employed by
the Company.

 

The
initial designees pursuant to clause (i) above shall be Robert P. Goodman,
David Tabors, Ullas Naik and Mark Terbeek. The initial designee pursuant to
clause (ii) above shall be Vijay Manwani and clause (iv) above shall be Dev
Ittycheria. The Independent Director designee pursuant to clause (iii) above
shall initially be Steven Walske.

 

(b)                                 In
the absence of any designation of a nominee for election to the Board of
Directors from the Represented Investors, the Required Investors, the
Management or the holders of Common Stock (as applicable), the director
previously designated by such person or persons and then serving shall be
reelected if still eligible to serve as provided herein.

 

8

 

(c)                                  No
party hereto shall vote to remove any member of the Board of Directors
designated in accordance with the procedures set forth in this Section 6; provided,
however, that if:

 

(i)                                     in
the case of any Preferred Director designated by any of the Represented
Investors, such Represented Investor votes to remove such director;

 

(ii)                                  in
the case of any Common Director, the holders of a majority of the shares of
Common Stock then outstanding (other than the Investors’ Common Shares) vote to
remove such director;

 

(iii)                               in
the case of the Independent Director, the (1) Required Investors and (2)
Management, respectively, vote to remove such director; and

 

(iv)                              in
the case of any director who is also the CEO, such Person shall have ceased to
be CEO;

 

then, in each such case, the parties to this Agreement
shall all vote to remove such director.

 

(d)                                 Any
vacancy on the Board of Directors created by the resignation, removal,
incapacity or death of any person designated under this Section 6 shall be
filled by another person who otherwise meets any applicable requirements under
Section 6(a) designated by:

 

(i)                                     in
the case of any Preferred Director designated by any Represented Investor, such
Represented Investor;

 

(ii)                                  in
the case of any Common Director, the holders of a majority of the shares of
Common Stock then outstanding (other than the Investors’ Common Shares);

 

(iii)                               in
the case of the Independent Director, the (1) Required Investors and (2)
Management, respectively; and

 

(iv)                              in
the case of any director who is also the CEO, the Board of Directors, which
person shall be the new CEO;

 

the Stockholders shall vote their respective Voting
Securities in accordance with such new designation, and any such vacancy shall
not be filled in the absence of a new designation in accordance with the
foregoing sentence.

 

(e)                                  The
Company shall reimburse each member of the Board of Directors who is not any
employee of the Company for all reasonable out-of-pocket expenses incurred by
such member in connection with his or her attendance at any meeting of the
Board of Directors.

 

9

 

7.                                       Covenants of the Company. The Company hereby covenants to the
Institutional Investors as follows:

 

7.1.                              Financial
and Other Information.

 

(a)                                  Accounts
and Reports. The Company will establish and maintain a standard system of
accounts in accordance with generally accepted accounting principles
consistently applied.

 

(b)                                 Annual
and Quarterly Financial Statements. The Company will deliver to each
Institutional Investor who, together with any of its affiliated Institutional
Investors, owns at least 1,500,000  shares of
Common Stock (assuming the conversion all securities convertible into Common
Stock held by such Institutional Investor) within one hundred twenty (120) days
after the end of each fiscal year a copy of the balance sheet of the Company as
of the end of such year, together with consolidated and consolidating
statements of income and of cash flows of the Company for such year, all in
reasonable detail, prepared in accordance with generally accepted accounting
principles, consistently applied, and certified in an audit report by
independent public accountants of national standing reasonably acceptable to the
Institutional Investors and selected by the Board of Directors of the Company. The
Company shall also deliver to each Institutional Investor who, together with
any of its affiliated Institutional Investors, owns at least 1,500,000 shares
of Common Stock (assuming the conversion all securities convertible into Common
Stock held by such Institutional Investor) within forty-five (45) days after
the end of each of the first three quarters of each fiscal year, a copy of the
unaudited consolidated balance sheet of the Company as of the end of such
quarter and unaudited consolidated statements of income and of cash flows of
the Company for the fiscal quarter and for the portion of the fiscal year
ending on the last day of such quarter, each of the foregoing balance sheets
and statements to set forth in comparative form the corresponding figures for
the same period of the prior fiscal year, and actual versus budgeted amounts,
to be in reasonable detail (provided, however, that such
financial statements are subject to year-end adjustments and may not contain
all footnotes required under generally accepted accounting principles) and to
be certified, subject to normal year-end audit adjustments, by the principal
financial officer of the Company as to their fair presentation in accordance
with generally accepted accounting principles as of their dates. Notwithstanding
anything to the contrary in this section and in addition to the rights
described above, any Institutional Investor may receive all financial
statements provided under this section as long as (i) such receipt of financial
statements is approved by the Board of Directors and (ii) such Institutional
Investor executes a nondisclosure agreement acceptable to the Company’s counsel.

 

(c)                                  Monthly
Financial Statements and Budgets. The Company will furnish to each
Institutional Investor who, together with any of its affiliated Institutional
Investors, holds at least 1,500,000 shares of Common Stock (assuming the
conversion all securities convertible into Common Stock held by such
Institutional Investor): (i) within thirty (30) days after the end of each
month, other than the last month of any fiscal quarter or of the fiscal year of
the Company, a copy of the unaudited consolidated balance sheet of the Company
as of the end of such month and unaudited consolidated statements of income 

 

10

 

and of cash flows of the Company for such month, each
of the foregoing balance sheets and statements to set forth in comparative form
the corresponding figures for the corresponding period during the prior fiscal
year and, in comparative form, the corresponding budgeted figures, to be in
reasonable detail, to be prepared in accordance with generally accepted
accounting principles, consistently applied, except that such financial
statements may not contain all footnotes required under generally accepted
accounting principles, and to be certified, subject to normal year-end audit
adjustments, by the principal financial officer of the Company as to their fair
presentation in accordance with generally accepted accounting principles as of
their dates; and (ii) to the extent provided to the Board of Directors, as soon
as possible, but in any event at least sixty (60) days prior to the beginning of
each fiscal year, a budget, prepared on a period by period basis with each
period including four or five weeks, and operating plan for such fiscal year,
each approved by the Company’s Board of Directors, including projected balance
sheets and statements of income and changes in financial condition of the
Company for such months. Notwithstanding anything to the contrary in this
section and in addition to the rights described above, any Institutional
Investor may receive all financial statements provided under this section as
long as (i) it is approved by the Board of Directors and (ii) such
Institutional Investor executes a nondisclosure agreement acceptable to the
Company’s counsel.

 

(d)                                 Visits
and Discussions Rights. The Company will permit each Institutional Investor
who, together with any of its affiliated Institutional Investors, holds more
than 1,500,000 shares of Common Stock (assuming the conversion all securities
convertible into Common Stock held by such Institutional Investor) and the
authorized representatives of each such Institutional Investor, at all
reasonable times during normal business hours following reasonable notice and
as often as reasonably requested, to visit and inspect, at the expense of such
Institutional Investor, any of the properties of the Company, including its
books and records and, subject to reasonable arrangements with any transfer
agents of the Company, lists of security holders, and to make extracts
therefrom and to discuss the affairs, finances, and accounts of the Company
with its officers; provided, however, that the Company shall not
be obligated under this Section 7.1(d) to provide information that a
majority of the Board of Directors (which majority must include a majority of the
Preferred Directors) determines in good faith is confidential and should not,
therefore, be disclosed.

 

(e)                                  Adverse
Change; Litigation. The Company will promptly advise each Institutional
Investor in writing of each suit or proceeding commenced or threatened against
the Company which, if adversely determined, would result in a material adverse
change in the condition or business, financial or otherwise, of the Company.

 

(f)                                    Other
Information. The Company will also furnish to each Institutional Investor
with reasonable promptness, such other information and data with respect to the
Company as such Institutional Investor may from time to time reasonably
request, which information will not be used for any purpose by such
Institutional Investor other than to evaluate his involvement in the Company
and shall be subject to the confidentiality provisions of Section 11 of this
Agreement.

 

11

 

(g)                                 Termination
of Obligations. The foregoing obligations of the Company pursuant to this
Section 7.1 shall terminate upon the closing of any firm commitment
underwritten public offering of the Company’s Common Stock or at such time as
the Company becomes subject to the reporting provisions of the Securities
Exchange Act of 1934, as amended.

 

7.2.                              Insurance.
The Company will keep all its insurable properties properly insured against
loss or damage by fire and other risks; maintain public liability insurance
against claims for personal injury, death or property damage suffered by others
upon or in or about any premises occupied by it or arising from equipment owned
by the Company and leased to and located upon or in or about any premises
occupied by any other Person; maintain all such worker’s compensation or
similar insurance as may be required under the laws of any state or
jurisdiction in which it may be engaged in business; and maintain such other
insurance as is usually maintained by Persons engaged in the same or similar
business as is the Company. All such insurance shall be maintained against such
risks and in at least such amounts as such insurance is usually carried by
Persons engaged in the same or similar businesses, and all insurance herein
provided for shall be effected and maintained in force under a policy or
policies issued by insurers of recognized responsibility, except that the
Company may effect worker’s compensation or similar insurance in respect of
operations in any state or other jurisdiction either through an insurance fund
operated by such state or other jurisdiction or by causing to be maintained a
system or systems of self-insurance which is in accord with applicable laws. The
Company’s executive officers shall periodically report to the Board of
Directors on the status of the insurance coverage of the Company, including the
status of such insurance provided for in Section 7.11.

 

7.3.                              Payment
of Taxes; Filings; Corporate Existence. The Company will:

 

(a)                                  pay
and discharge promptly, or cause to be paid and discharged promptly, when due
and payable, all taxes, assessments and governmental charges or levies imposed
upon it or upon its income or upon any of its property, real, personal and
mixed, or upon any part thereof, as well as all claims of any kind (including
claims for labor, materials and supplies) which, if unpaid might by law become
a lien or charge upon its property; provided, however, that the
Company shall not be required to pay any tax, assessment, charge, levy or claim
if the amount, applicability or validity thereof shall currently be contested
in good faith by appropriate proceedings and if the Company shall have set
aside on its books reserves (classified to the extent required by generally
accepted accounting principles) deemed by it adequate with respect thereto; and
provided further, that the Company shall have no obligation to make any
payments under this paragraph (a) with respect to property subject to leases
pursuant to the terms of which the lessees thereof have undertaken to make such
payments;

 

(b)                                 do
or cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence, rights and franchises; provided, however,
that nothing in this paragraph (b) shall (i) prevent the abandonment or
termination of the Company’s authorization to do business in any foreign state
or jurisdiction if, in the opinion of the Company’s Board of Directors, such
abandonment or termination is in the interest of the Company and not
disadvantageous in any material respect to the holders of 

 

12

 

the Shares or (ii) require compliance with any law so
long as the validity or applicability thereof shall be disputed or contested in
good faith;

 

(c)                                  maintain
and keep, or cause to be maintained and kept, its properties in good repair,
working order and condition, and from time to time make, or cause to be made,
all repairs, renewals and replacements which in the opinion of the Company are
necessary and proper so that the business carried on in connection therewith
may be properly and advantageously conducted at all times; and

 

(d)                                 make
all filings with the Internal Revenue Service required to maintain the
classification of the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock and Common Stock to be, or
which has been, purchased by the Institutional Investors as “qualified small
business stock” as such term is defined in Section 1202(c) of the Internal
Revenue Code of 1986, as amended (the “Code”).

 

7.4.                              Employee
Agreements. The Company shall cause all employees who have access to
proprietary information of the Company to execute a Proprietary Information,
Nonsolicitation and Inventions Agreement (including an agreement by employees
not to solicit other employees of the Company). The Company shall cause all key
employees (as determined by the Board of Directors including at least one
Preferred Director) to execute, in addition to such Proprietary Information,
Nonsolicitation and Inventions Agreement, a Noncompetition Agreement. To the
extent the Chief Executive Officer of the Company shall determine that it is
advisable to require a consultant engaged by the Company to execute a
Proprietary Information and Inventions Agreement or another similar agreement
in light of the term and subject matter of such consultant’s engagement, such consultant
shall execute a Proprietary Information and Inventions Agreement or other
similar agreement in favor of the Company in such form as the Chief Executive
Officer shall designate.

 

7.5.                              Dealings
with Affiliates and Others. Other than ordinary and usual compensation
arrangements, the Company shall not enter into any transaction, including,
without limitation, any loans or extensions of credit or royalty agreements,
with any officers or directors of the Company, or with any holder of one
percent (1%) or more of the outstanding shares of any class or series of the
capital stock of the Company, nor shall the Company enter into any transaction
on terms less favorable to the Company than the Company would be able to obtain
in a transaction with a Person or entity unaffiliated with the Company with any
member of the respective families of such officers, directors or stockholders,
or with any corporation or other entity directly or indirectly controlled by
one or more of such officers, directors or stockholders or members of their
families, without the approval of a majority of the disinterested members of
the Board of Directors, which majority must include all disinterested Preferred
Directors.

 

7.6.                              Change
in Nature of Business. The Company shall not make, nor permit any
subsidiary to make, any material change in the nature of its business as
carried on at the date hereof or as contemplated in written materials delivered
to the Institutional Investors prior to the date hereof without the approval of
a majority of the Board of Directors, which majority must include the Preferred
Directors.

 

13

 

7.7.                              Key-Man
Life Insurance. The Company will use its best efforts to obtain and keep in
force key-man life insurance on each of Dev Ittycheria and Vijay Manwani and
within thirty (30) days of the appointment of any Chief Executive Officer who
is not a Founder, on such Chief Executive Officer, in each case in the amount
of $1,000,000, respectively, with the proceeds payable to the Company.

 

7.8.                              Equity
Plans.

 

(a)                                  The
Company shall reserve 8,700,000 shares of its Common Stock for issuance to
employees and consultants of the Company pursuant to the Equity Plan, as
appropriately adjusted for the issuance of shares under the Equity Plan since
September 6, 2001.

 

(b)                                 Unless
otherwise agreed by the Board of Directors (including a majority of the
Preferred Directors), all options granted to employees under the Equity Plan
shall become exercisable to the extent of twenty-five percent (25%) of the
amount of grant on the first anniversary of grant, with monthly vesting
thereafter over the subsequent three (3) years; provided, however,
that in the case of a prepurchase of Shares by an employee of the Company, the
Company shall have the right upon termination of employment of such employee to
repurchase any unvested Shares then owned by such employee, at a price equal to
the purchase price of such Shares issuable upon the exercise of such options.

 

(c)                                  The
Company shall not increase the number of shares of Common Stock reserved for
issuance under the Equity Plan or any similar plan without the approval of a
majority of the Board of Directors (which majority must include a majority of
the Preferred Directors).

 

(d)                                 The
Company will require, as a condition of exercise of stock options or issuance
of any stock pursuant to the Equity Plan, that each option holder or
stockholder, who will hold 3% or more of the outstanding Common Stock upon
exercise of the option or upon issuance of the stock, become a party to this
Agreement as a “Stockholder.”

 

7.9.                              Underwriters
or Acquisition Advisers. Any underwriters or acquisition advisers retained
by the Company must be approved by the Board of Directors (including a majority
of the Preferred Directors).

 

7.10.                        Redemption
and Repurchase of Other Stock. Without the approval of holders of a
majority of the Board of Directors (which majority must include the Preferred
Directors), the Company shall not redeem or repurchase or otherwise acquire for
value any shares of its capital stock (or rights, options or warrants to
purchase such shares) or other equity interests, except for (i) the redemption
by the Company of the Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock or Series D Preferred Stock pursuant to the Company’s
Certificate of Incorporation and (ii) the repurchase of Common Stock issued to
the Company’s employees or consultants pursuant to the Equity Plan or pursuant
to any other agreement to repurchase such shares approved by the Board of
Directors of the Company.

 

14

 

7.11.                        Director
and Officers Insurance. The Company shall use its best efforts to procure
and keep in force, and shall pay for, Director and Officers Insurance in an amount
and on terms acceptable to a majority of the Preferred Directors.

 

7.12.                        Qualified
Small Business. The Company shall submit to the Investors and to the
Internal Revenue Service any reports that may be required under Section
1202(d)(1)(c) of the Code and the Regulations promulgated thereunder. In
addition, within ten (10) days after an Investor’s written request therefor,
the Company shall deliver to such Investor a written statement indicating
whether such Investor’s interest in the Company constitutes “qualified small
business stock” as defined in Section 1202(c) of the Code. Except as otherwise
permitted under this Agreement, the Company shall not make any purchases of its
securities, amend its Certificate of Incorporation or By-laws, or take any other
action, in any event in a manner which would jeopardize the status of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and the Common Stock purchased by the Institutional
Investors as “qualified small business stock” under Section 1202(c) of the
Code.

 

7.13.                        IPO
Allocation Rights. The Company shall use its best efforts to cause the
underwriters to allocate an aggregate amount equal to two percent (2%) of the
total number of shares sold in the first registered public offering of
securities of the Company to or as directed by each of Bessemer Venture
Partners V, L.P., Battery Ventures VI, L.P., JAFCO America Ventures and MK
Capital SBIC, L.P.; provided, however, that the registration
statement relating to such first registered public offering is initially filed
with the Securities and Exchange Commission at least  twelve
(12) months  following the date hereof. If the
initial filing occurs within twelve (12) months of the date hereof, Bessemer
Venture Partners V, L.P., Battery Ventures VI, L.P., JAFCO America Ventures and
MK Capital SBIC, L.P. shall each be entitled to purchase or direct the purchase
of such shares in a private placement closing simultaneously with such first
registered public offering, at a price per share equal to eighty percent (80%)
of the final price to the public in such public offering, but otherwise on the
same terms as the purchasers in the public offering (to the extent
practicable).

 

Notwithstanding
the foregoing, all action taken pursuant to this Section 7.13 shall be made in
accordance with all federal and state securities laws, including, without
limitation, Rule 134 of the Securities Act of 1933, as amended, and all
applicable rules and regulations promulgated by the National Association of
Securities Dealers, Inc. and other such self-regulating organizations.

 

8.                                       Preemptive Rights.

 

(a)                                  Except
as provided in Section 8(f), the Company shall not issue or sell any of its
equity securities (including securities convertible into equity securities)
(collectively, the “Future Shares”) to any Person without first
providing each holder of Preferred Stock (each a “Holder”) the right to
subscribe for its Proportionate Percentage (as defined in Section 8(d)) of such
Future Shares at the same price and on the same terms (including the method of
purchase; provided, however, that the Holders shall have the
option of purchasing Future Shares with cash, regardless of the method of
purchase offered to such Person) as shall be offered to such third party and
which shall have been specified by the Company in a writing delivered to each
Holder (the “Proposal”). The 

 

15

 

Proposal by its terms shall remain open and
irrevocable for a period of 20 days from the date it is delivered by the
Company to each Holder (the “Future  Shares Exercise Period”). The
Proposal shall also certify that the Company either (a) has received a firm
offer from a prospective purchaser, who shall be identified in such
certification, so that the Company in good faith believes a binding agreement
of sale is obtainable for consideration having a fair market, cash equivalent
or present value set forth in such certification; or (b) intends in good faith
to make an offering of its securities at the price and on the terms set forth
in such certification.

 

(b)                                 Notice
of each Holder’s acceptance, in whole or in part, of the Proposal made pursuant
to Section 8(a) hereof shall be evidenced by a writing signed by such Holder
delivered to the Company prior to the end of the Future Shares Exercise Period
setting forth that portion of the Future Shares, as the case may be, which the
Holder elects to purchase (the “Notice of Purchase”). If a Holder does
not deliver such written notice within the Future Shares Exercise Period, such
Holder shall be deemed to have elected not to purchase all or any part of such
Future Shares.

 

(c)                                  In
the event that the Holders elect not to purchase all of the Future Shares
available to them during a particular Future Shares Exercise Period, the
Company shall have 120 days from the expiration of the Future Shares Exercise
Period to offer and sell any part of such Future Shares available but not
elected to be purchased by the Holders (the “Refused Future Shares”) and
that portion of the Future Shares not subject to purchase by the Holders
(collectively with the Refused Future Shares, the “Remaining Future Shares”)
to any other Person(s), but only upon terms and conditions in all respects
(including, without limitation, price, seniority, dividends and liquidation,
redemption and conversion rights) which are no more favorable to such other
Person(s) or less favorable to the Company than those set forth in the
Proposal; provided, however, that such sale be to the same
Person(s) or their affiliates identified in the Proposal, if so identified
pursuant to Section 8(a). In the event that the Company so sells the Remaining
Future Shares to such other Person(s), the sale to each Holder of the Future
Shares in respect of which a Notice of Purchase was delivered to the Company by
such Holder shall occur upon the closing of the sale to such other Person(s) of
Remaining Future Shares (which closing shall include full payment to the
Company). If there are no Refused Future Shares, the sale of such Future Shares
to such Holder and the sale of Remaining Shares to any other Persons shall
occur within 20 days of the expiration of the Future Shares Exercise Period. In
any event, the sale to such Holder of such Future Shares shall be on the terms
specified in the Proposal. Any Remaining Future Shares not purchased by such
other Person(s) within such 120-day period shall remain subject to this Section
8.

 

(d)                                 The
term “Proportionate Percentage” shall mean, as to any Holder, that
percentage figure which expresses the ratio which (i) the aggregate number of
shares of Common Stock then (a) outstanding and owned by such Holder and (b)
issuable upon conversion or exercise of securities which are convertible into
or exercisable for Common Stock outstanding and owned by such Holder bears to
(ii) the aggregate number of shares of Common Stock (a) outstanding and owned
by all stockholders and (b) issuable upon conversion or exercise of options,
warrants, other securities and other 

 

16

 

rights which are convertible into or exercisable for
Common Stock outstanding and owned by all holders.

 

(e)                                  For
purposes solely of the computation required under Section 8(d), Holders shall
be treated as having converted or exercised all options, warrants, other
securities and other rights which are convertible into or exercisable for
shares of Common Stock at the rate at which such securities are convertible
into or exercisable for Common Stock at the time of such computation.

 

(f)                                    Notwithstanding
anything in Section 8(a) to the contrary, a Holder shall not be entitled to any
preemptive rights under this Agreement in connection with any issuance of
shares of Common Stock: (i) to employees, officers, directors, consultants,
vendors and advisors of the Company under the Equity Plan or any stock option
plan (including any increase in the number of shares available under the Equity
Plan), stock purchase or bonus arrangement, or grant which is approved by a
majority of the Board of Directors (which majority must include a majority of
the Preferred Directors); (ii) to underwriters and/or the public pursuant to an
Initial Public Offering; (iii) in connection with the acquisition of another
corporation or other business entity by the Company by merger, stock purchase,
purchase of substantially all assets or other reorganization whereby the
Company owns, upon consummation of such acquisition, greater than fifty percent
(50%) of the voting power to elect the directors of such corporation or other
business entity, provided that such acquisition is approved by a Preferred
Vote; (iv) in any merger or consolidation of the Company, provided that such
merger or consolidation is approved by a Preferred Vote; (v) pursuant to a
stock split, stock dividend or similar event; (vi) in connection with the
acquisition of certain technology or license approved by a majority of the
Board of Directors, which majority must include a majority of the Preferred
Directors; (vii) to a non-financial corporation in connection with a license,
distribution, development, foundry or similar “corporate partner” agreement,
the terms of which are approved by the majority of the Board of Directors,
which majority must include a majority of the Preferred Directors; (viii) to
financial institutions and leasing companies in connection with borrowing or
lease financing arrangements of the Company, provided that such issuances and
grants are approved by a majority of the Board of Directors, which majority
must include at least one Preferred Director; (ix) upon conversion of shares of
Series B Preferred Stock; (x) pursuant to the First Series B Purchase Agreement
prior to the date hereof; (xi) pursuant to the Second Series B Purchase
Agreement prior to the date hereof; (xii) upon conversion of shares of Series C
Preferred Stock; (xiii) pursuant to the Series C Purchase Agreement prior to
the date hereof; (xiv) upon conversion of shares of Series D Preferred Stock or
(xv) pursuant to the Series D Purchase Agreement.

 

9.                                       Anti-Dilution. If the Company shall issue any Additional Stock (as defined in Section
10.1 hereof) after the date hereof involving the issuance of shares of Common
Stock (whether as part of a unit with shares of Series A Preferred Stock or
other security, or in connection with the exercise of an option, warrant or
other right to purchase Common Stock or the conversion of a security
convertible into Common Stock) in a transaction or series of related
transactions occurring within 6 months of each other in which the total consideration
is at least $100,000, where the total consideration received or receivable is
less than “ B “ (as defined below) (a 

 

17

 

“Dilutive Event”), the Company shall concurrently with such event
issue additional shares of Common Stock to each holder of Series A Preferred
Stock (“Series A Holder”) for cash in an amount equal to the par value
of such shares (the “Anti-Dilutional Shares”) according to the following
formula:

 

 

where y is the number of Anti-Dilutional
Shares to be issued to the Series A Holder, N
is the number of Investor Common Shares originally purchased by the Series A
Holder under the Series A Purchase Agreement and A
is the following fraction:

 

 

where M is the number of fully diluted
shares of Common Stock outstanding or issuable upon conversion or exchange of
any outstanding convertible or exchangeable securities or exercise of any
outstanding options or warrants prior to the Dilutive Event, P is the number of such shares
issued or deemed to be issued in the Dilutive Event, D
is the amount of money raised (before expenses) in the Dilutive Event and B is the base price per share (which
shall initially be $0.49); provided, however, that no
Anti-Dilutional Shares shall be issued to a Series A Holder in respect of any
transaction subject to Section 8(a) unless such Series A Holder shall have
purchased at least its full Proportionate Percentage (or such lesser percentage
as determined by majority of the Board of Directors which majority must include
a majority of the Preferred Directors) of Additional Stock issued in such
transaction. Following any issuance of Anti-Dilutional Shares under this
Section 9, B shall be reset to be equal
to the product of B (prior to the Dilutive
Event giving rise to such issuance) and A (in the
Dilutive Event giving rise to such issuance) and N
shall become the number of shares of Common Stock held by the Series A Holder
immediately following such issuance of Anti-Dilutional Shares. N and B
shall be equitably adjusted to reflect stock splits, reverse splits,
recapitalizations and similar changes to the Common Stock occurring after the
date of this Agreement.

 

9.1.                              “Additional
Stock” shall mean:

 

(a)                                  The
issuance of Common Stock for cash by the Company, in which case the
consideration for such Common Stock shall be deemed to be the amount of cash
paid therefor before deducting any reasonable discounts, commissions or other
expenses allowed, paid or incurred by the Company for any underwriting or
otherwise in connection with the issuance and sale thereof;

 

18

 

(b)                                 The
issuance of Common Stock for a consideration in whole or in part other than
cash, in which case the fair value of such consideration is to be determined by
the Board of Directors irrespective of any accounting treatment;

 

(c)                                  The
issuance of Shares of Common Stock upon exercise (i) of options to purchase or
rights to subscribe for Common Stock, (ii) of securities by their terms
convertible into or exchangeable for Common Stock, or (iii) of options to
purchase or rights to subscribe for such convertible or exchangeable securities, in which case the total consideration per share shall
include the aggregate consideration paid upon issuance or grant of such option,
right or security plus the consideration, if any, paid upon exercise,
conversion or exchange thereof.

 

provided, however, that
Additional Stock shall not include shares of Common Stock:

 

(a)                                  issuable
or issued to employees, officers, directors, consultants, vendors and advisors
of the Company under the Equity Plan or any stock option plan (including any
increase in the number of shares available under the Equity Plan), stock
purchase or bonus arrangement, or grant which is approved by a majority of the
Board of Directors, which majority must include a majority of the Preferred
Directors; or

 

(b)                                 issued:
(i) to underwriters and/or the public pursuant to an Initial Public Offering;
(ii) in connection with the acquisition of another corporation or other
business entity by the Company by merger, stock purchase, purchase of
substantially all assets or other reorganization whereby the Company owns, upon
consummation of such acquisition, greater than fifty percent (50%) of the
voting power to elect the directors of such corporation or other business
entity, provided that such acquisition is approved by a Preferred Vote; (iii)
in any merger or consolidation of the Company, provided that such merger or
consolidation is approved by a Preferred Vote; (iv) pursuant to a stock split,
stock dividend or similar event; (v) in connection with the acquisition of
certain technology or license approved by a majority of the Board of Directors,
which majority must include a majority of the Preferred Directors; (vi) to a
non-financial corporation in connection with a license, distribution,
development, foundry or similar “corporate partner” agreement, the terms of
which are approved by the majority of the Board of Directors, which majority
must include a majority of the Preferred Directors; (vii) to financial
institutions and leasing companies in connection with borrowing or lease
financing arrangements of the Company, provided that such issuances and grants
are approved by a majority of the Board of Directors, which majority must include
at least one Preferred Director; (viii) upon conversion of shares of Series B
Preferred Stock; (ix) pursuant to the First Series B Purchase Agreement prior
to the date hereof; (x) pursuant to the Second Series B Purchase Agreement
prior to the date hereof; (xi) upon conversion of shares of Series C Preferred
Stock; (xii) pursuant to the Series C Purchase Agreement prior to the date
hereof; (xii) upon conversion of shares of Series D Preferred Stock or (xiv)
pursuant to the Series D Purchase Agreement.

 

10.                                 Lock-up Agreements. If reasonably requested by the Company and the
managing underwriter, each party to this Agreement (for purposes of this
Section 10, a “Locked-Up Holder”) agrees to enter into lock-up
agreements (the “Lock-up Agreements”) pursuant to which 

 

19

 

it will not, for a period of no more than 180 days following the effective
date of the first registration statement for a public offering of the Company’s
securities, offer, sell or otherwise dispose of the Registrable Securities or
other equity securities of the Company other than to its members or partners,
as the case may be, except the Registrable Securities sold pursuant to such
registration statement, without the prior consent of the Company and the
underwriter, provided that the officers, directors and all holders of more than
five percent (5%) of the shares of Common Stock (calculated for the purpose as
if all securities convertible into or exercisable for Common Stock, directly or
indirectly, are so converted or exercised) of the Company enter into Lock-up
Agreements for the same period and on the same terms. The Lock-up Agreements
shall provide that the provisions thereof may be waived with the consent of the
Company and the managing underwriter, provided  that with the
exception of the release of any Locked-Up Holder from the provisions of the
Lock-up Agreement for reasons of financial hardship, which release shall
prohibit the disposition of equity securities of the Company by such Locked-Up Holder
in excess of $50,000, any release from the provisions of the Lock-up Agreement
shall be allocated pro rata among all Holders.

 

11.                                 Confidentiality. Each of the parties to this agreement covenants and agrees that such
party shall maintain the confidentiality of all confidential and proprietary
information of the Company acquired by such party, and before exercising rights
hereunder, first shall execute a non-disclosure agreement in form acceptable to
counsel for the Company. Notwithstanding the preceding sentence, each party may
(1) disclose such information to the extent required by law or governmental
order or regulation, or when required by a subpoena or other process, provided
that such party first gives the Company advance notice of such disclosure as
soon as practicable, (2) disclose such information to the extent necessary to
enforce this Agreement, (3) disclose such information to its attorneys,
accountants, consultants and other professionals to the extent necessary to
obtain their services in connection with its investment in the Company,
provided that the requirements of this subsection shall in turn be binding on
any such attorney, accountant, consultant or other professional, or (4)
disclose such information as may be required by any prospective purchaser of
any Shares from such party, provided that such prospective purchaser shall
first execute a non-disclosure agreement in form acceptable to counsel for the
Company. Notwithstanding the foregoing, nothing herein shall be deemed to
require any Institutional Investor to execute a non-disclosure agreement. An
Institutional Investor may also disclose such information to any Affiliate of
such Institutional Investor provided that the requirements of this subsection
shall in turn be binding on any such affiliate, partner, member, shareholder or
subsidiary of such Institutional Investor and further provided that such
partner, member, shareholder or subsidiary agrees in writing to be bound by the
provisions of this subsection.

 

12.                                 Termination. This Agreement, and the respective rights and obligations of the parties
hereto, shall terminate upon the completion of (i) an Initial Public Offering,
(ii) a sale, lease or other disposition of all or substantially all of the
assets of the Company, or (iii) a merger, consolidation, stock purchase, or
similar transaction in which the holders of a majority of the Common Stock
immediately prior to the completion of such transaction do not hold at least
50% of the voting securities of the surviving or resulting entity immediately
following the completion of such transaction.

 

13.                                 Notices. All notices, requests, consents and demands shall be in writing and
shall be personally delivered (effective upon receipt), mailed, postage prepaid
(effective three business 

 

20

 

days after dispatch), telecopied or telegraphed (effective upon receipt of
the telecopy in complete, readable form), or sent via a reputable overnight
courier service (effective the following business day), to the Company at:

 

BladeLogic, Inc.

95 Mt. Bethel Road

Warren, NJ 07059

Attn: Chief Executive Officer

Fax number: 
(908) 842-0400

 

with a copy sent at the same time and by the same
means to:

 

Jeffrey C. Hadden, P.C.

Goodwin Procter LLP

Exchange Place

Boston, Massachusetts 
02109

Fax number: 
(617) 523-1231

 

or to each Institutional Investor at its address set
out on Exhibit A or Exhibit C (as applicable) hereto with a copy to:

 

In the case of Bessemer Venture Partners or Battery
Ventures entities:

 

Gregory E. Moore, Esq.

Ropes & Gray

One International Place

Boston, Massachusetts 
02110

Fax number: 
(617) 951-7050

 

In the case of JAFCO America Ventures entities:

 

McDermott, Will & Emery

28 State Street

Boston, Massachusetts 
02108

Fax number: (617) 535-3800

 

In the case of MK Capital SBIC, L.P. and/or MK
Capital, L.P.:

 

Peter I. Mason

Stacey E. Komon

Freeborn & Peters LLP

311 South Wacker Drive,
Suite 3000

Chicago, Illinois 60606

Fax number:  (312) 360-6570

 

or such other address as may be furnished in writing to
the other parties hereto.

 

21

 

14.                                 Specific Performance. The rights of the parties under this Agreement
are unique and, accordingly, the parties shall, in addition to such other
remedies as may be available to any of them at law or in equity, have the right
to enforce their rights hereunder by actions for specific performance to the
extent permitted by law.

 

15.                                 Legend. Each certificate representing any share of Preferred Stock or Common
Stock held by any Institutional Investor or Stockholder shall bear on its face
a legend indicating the existence of this Agreement and of the restrictions
imposed hereby.

 

16.                                 Entire Agreement. This Agreement and the other Transaction Documents (as defined in the
Series A Purchase Agreement, First Series B Purchase Agreement,
Second Series B Purchase Agreement, Series C Purchase Agreement and Series D
Purchase Agreement) constitute the entire understanding of the parties with
respect to the subject matter hereof and thereof and supersede any and all
prior understandings and agreements, whether written or oral, with respect to
such subject matter.

 

17.                                 Waivers and Further Agreements. Neither this Agreement nor any provision hereof
may be waived, modified, terminated or amended except by a written agreement
signed by (i) the Company, (ii) Institutional Investors holding at least
three-fifths of the issued and outstanding Shares then held by all
Institutional Investors (assuming the conversion and exercise of all securities
and other rights convertible into or exercisable for such shares and excluding
Series A Preferred Stock but including the Investors’ Common Shares and any
shares issued as a result of adjustments made pursuant to Section 9 hereof),
and (iii) Stockholders holding at least a majority of the issued and
outstanding Common Stock then held by all Stockholders; provided, however, that
no amendment or waiver of any term or condition of this Agreement that
adversely affects the rights of any Principal Investor without similarly
adversely affecting the rights of the other Principal Investors shall be
effective without the prior written consent of such adversely affected
Principal Investor. For purposes of clarity, the pre-emptive rights contained
in Section 8 may not be waived as to any Principal Investor except in writing
by such Principal Investor.

 

18.                                 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, legal representatives, successors, permitted assigns and permitted
transferees except as may be expressly provided otherwise herein.

 

19.                                 Severability. In case any one or more of the provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement and such invalid, illegal or unenforceable
provision shall be reformed and construed so that it will be valid, legal, and
enforceable to the maximum extent permitted by law.

 

20.                                 Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same agreement.

 

21.                                 Section Headings. The headings contained in this Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this
Agreement.

 

22

 

22.                                 Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts as such laws
apply to agreements between residents of Massachusetts.

 

23.                                 Publicity. The Company shall not use any Institutional Investor’s name, logo or other
identifying mark or otherwise refer to such Institutional Investor in any press
release, website or other promotional material without the prior written
permission of such Institutional Investor.

 

24.                                 Aggregation of Institutional Investors. For purposes of this Agreement, each Principal
Investor and all Institutional Investors affiliated with such Principal
Investor shall be treated as a collective, having rights as if it owned the
aggregate Shares owned by it and its affiliated Institutional Investors, and
the allocation among such Principal Investor and its affiliated Institutional
Investors of additional or new securities to be issued by the Company shall be
determined by such Principal Investor.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

23

 

IN
WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed by its duly authorized officer as an agreement under seal as of the
date first above written.

 

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  BLADELOGIC,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dev Ittycheria

  	
   

  
	
   

  	
   

  	
  Name:
  

  	
  Dev
  Ittycheria

  
	
   

  	
   

  	
  Title:
  

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FOUNDERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Dev Ittycheria

  	
   

  
	
   

  	
  Dev
  Ittycheria

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Vijay Manwani

  	
   

  
	
   

  	
  Vijay
  Manwani

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Steve
  Kokinos

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Thomas
  Kraus

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Vance Loiselle

  	
   

  
	
   

  	
  Vance
  Loiselle

  
					

 

 

[Stockholders’ Agreement]

 

	
   

  	
  INSTITUTIONAL INVESTORS:

  
	
   

  	
   

  
	
   

  	
  MK Capital SBIC, L.P.,

  
	
   

  	
  a Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  MK Capital Management SBIC, LLC,

  
	
   

  	
   

  	
  a Delaware limited liability company,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  MK Capital Company,

  
	
   

  	
   

  	
   

  	
  a Delaware corporation,

  
	
   

  	
   

  	
   

  	
  its Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Mark Terbeek

  	
   

  
	
   

  	
   

  	
   

  	
  Name: 

  	
  Mark Terbeek

  	
   

  
	
   

  	
   

  	
   

  	
  Its: 

  	
  Partner

  	
   

  
							

 

	
   

  	
  MK Capital, L.P.,

  
	
   

  	
  a Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  MK Capital Management, LLC,

  
	
   

  	
   

  	
  a Delaware limited liability company,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  MK Capital Company,

  
	
   

  	
   

  	
   

  	
  a Delaware corporation,

  
	
   

  	
   

  	
   

  	
  its Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Mark Terbeek

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Mark Terbeek

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
  Partner

  	
   

  
							

 

 

[Stockholders’ Agreement]

 

 

	
   

  	
  BESSEMER
  VENTURE PARTNERS V L.P.

  
	
   

  	
  BESSEC
  VENTURES V L.P.

  
	
   

  	
  BVE
  2001 LLC

  
	
   

  	
  BVE
  2001(Q) LLC

  
	
   

  	
  BIP
  2001 L.P.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  Deer
  V & Co. LLC, General Partner and

  
	
   

  	
   

  	
  Managing
  Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ J. Edmond Colloton

  	
   

  
	
   

  	
   

  	
  J.
  Edmond Colloton, Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BATTERY
  VENTURES VI, L.P.

  
	
   

  	
  By:  Battery Partners VI, LLC,

  
	
   

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ David Tabors

  	
   

  
	
   

  	
  Name:
  

  	
  David
  Tabors

  
	
   

  	
  Title:
  

  	
  Member
  Manager

  
	
   

  	
   

  
	
   

  	
  BATTERY
  INVESTMENT PARTNERS VI, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ David Tabors

  	
   

  
	
   

  	
  Name:

  	
  David
  Tabors

  
	
   

  	
  Title:
  

  	
  Member
  Manager

  
								

 

 

[Stockholders’ Agreement]

 

 

	
   

  	
  JAFCO AMERICA TECHNOLOGY FUND III, 

  L.P.

  
	
   

  	
  JAFCO AMERICA TECHNOLOGY CAYMAN 

  FUND III, L.P.

  
	
   

  	
  JAFCO USIT FUND III, L.P.

  
	
   

  	
  JAFCO AMERICA TECHNOLOGY AFFILIATES 

  FUND III, L.P.

  
	
   

  	
  By: 

  	
  JAV
  Management Associates III, L.L.C.

  
	
   

  	
  Its:
  

  	
  Managing
  Member

  
	
   

  	
  By: 

  	
  /s/ Andrew P. Goldfarb

  	
   

  
	
   

  	
   

  	
  Name:
  

  	
  Andrew
  P. Goldfarb

  
	
   

  	
   

  	
  Title:
  

  	
  Managing
  Member

  
						

 

 

 

[Stockholders’ Agreement]

 

	
   

  	
  ARDENT
  RESEARCH PARTNERS, LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Francis
  J. Saldutti

  
	
   

  	
  General
  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ARDENT
  RESEARCH PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Francis
  J. Saldutti

  
	
   

  	
  General
  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MYRIAD
  INVESTMENTS, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven C. Walske

  	
   

  
	
   

  	
  Steven
  C. Walske

  
	
   

  	
  Managing
  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VENTECH,
  LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Gerardo
  Rosenkranz

  
	
   

  	
  Member

  
	
   

  	
   

  
	
   

  	
  BLADE
  PARTNERS

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Jeffrey
  C. Hadden

  
	
   

  	
  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  2000
  EXCHANGE PLACE FUND, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Jeffrey
  C. Hadden

  
	
   

  	
  Managing
  Member

  
							

 

 

 

	
   

  	
  THE
  PRODUCTIVITY FUND IV, L.P.

  
	
   

  	
   

  
	
   

  	
  By: First Analysis Management Company IV,
  L.L.C.,

  
	
   

  	
  Its: General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bret R. Maxwell

  	
   

  
	
   

  	
  Bret
  R. Maxwell

  
	
   

  	
  Managing
  Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE
  PRODUCTIVITY FUND IV ADVISORS FUND, L.P.

  
	
   

  	
  By: First Analysis Management Company IV,
  L.L.C.,

  
	
   

  	
  Its: General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bret R. Maxwell

  	
   

  
	
   

  	
  Bret R. Maxwell

  
	
   

  	
  Managing Member

  

 

 

Exhibit A

 

SERIES A INVESTORS

 

	
  Name

  	
   

  
	
  Bessemer Venture
  Partners V L.P.

  c/o Bessemer Venture
  Partners

  1865 Palmer Avenue

  Larchmont, NY  10583

  Attention:  J. Edmond Colloton

   

  Bessec Ventures V L.P.

  c/o Bessemer Venture
  Partners

  1865 Palmer Avenue

  Larchmont, NY  10583

  Attention: J. Edmond
  Colloton

   

  BVE 2001 LLC

  c/o Bessemer Venture
  Partners

  1865 Palmer Avenue

  Larchmont, NY  10583

  Attention:  J. Edmond Colloton

   

  BVE 2001(Q) LLC

  c/o Bessemer Venture
  Partners

  1865 Palmer Avenue

  Larchmont, NY  10583

  Attention:  J. Edmond Colloton

   

  BIP 2001 L.P.

  c/o Bessemer Venture
  Partners

  1865 Palmer Avenue

  Larchmont, NY  10583

  Attention:  J. Edmond Colloton

   

  Battery Ventures VI,
  L.P.

  c/o BatteryVentures

  20 William Street,
  Suite 200

  Wellesley, MA  02481

  Attention:  David Tabors

   

  Battery Investment
  Partners VI, LLC

  c/o Battery Ventures

  20 William Street,
  Suite 200

  Wellesley, MA 02481

  Attention:  David Tabors

   

  	
   

  

 

 

 

Exhibit B

 

STOCKHOLDERS

 

18 ARHAT MICROVENTURES

Kevin Batt

Rong Ling Chen

Chieh-Wei Chien

Paul Hammond

Barbara Kraus

Claudette Kraus

Ilse Kraus

Manfred Kraus

Steve Lien

Michael Nakamura

Eric Parsons

Richard Lee

Anthony Roaque

Tim Sullivan

 

 

Exhibit C

 

SERIES B INVESTORS

 

	
  Name

  	
   

  
	
  Bessemer Venture
  Partners V L.P.

  c/o Bessemer Venture
  Partners

  1865 Palmer Avenue

  Larchmont, NY  10583

  Attention: J. Edmund Colloton

   

  Bessec Ventures V L.P.

  c/o Bessemer Venture
  Partners

  1865 Palmer Avenue

  Larchmont, NY  10583

  Attention:  J. Edmund Colloton

   

  BVE 2001 LLC

  c/o Bessemer Venture
  Partners

  1865 Palmer Avenue

  Larchmont, NY  10583

  Attention:  J. Edmund Colloton

   

  BVE 2001(Q) LLC

  c/o Bessemer Venture
  Partners

  1865 Palmer Avenue

  Larchmont, NY  10583

  Attention:  J. Edmund Colloton

   

  BIP 2001 L.P.

  c/o Bessemer Venture
  Partners

  1865 Palmer Avenue

  Larchmont, NY  10583

  Attention:  J. Edmund Colloton

   

  Battery Ventures VI,
  L.P.

  c/o BatteryVentures

  20 William Street,
  Suite 200

  Wellesley, MA  02481

  Attention:  David Tabors

   

  Battery Investment
  Partners VI, LLC

  c/o Battery Ventures

  20 William Street,
  Suite 200

  Wellesley, MA 02481

  Attention:  David Tabors

  	
   

  

 

 

 

 

Ardent Research Partners,
L.P.

153 E. 53rd
Street

New York, NY 10022

Attention:  Francis J. Saldutti

 

Ardent Research Partners,
Ltd.

153 E. 53rd
Street

New York, NY 10022

Attention:  Francis J. Saldutti

 

Myriad Investments LLC

164 Chestnut Hill Road

Chestnut Hill, MA 02467

Attention:  Jennifer M. Walske

 

Ventech LLC

60 Arch Street, 2nd
Floor

Greenwich, CT 06830

Attention:  Gerardo Rosenkranz

 

Blade Partners

c/o Goodwin Procter LLP

Exchange Place

Boston, MA 02109

Attention:  Jeffrey C. Hadden, P.C.

 

2000 Exchange Place Fund,
LLC

c/o Goodwin Procter LLP

Exchange Place

Boston, MA 02109

Attention:  Jeffrey C. Hadden, P.C.

 

JAFCO America Technology
Fund III, L.P.

c/o
Globespan Capital Partners

One Boston Place

Suite 2810

Boston, MA 02108

Attention:  Ullas Naik

 

JAFCO America Technology
Cayman Fund III, L.P.

c/o
Globespan Capital Partners

One Boston Place

Suite 2810

Boston, MA 02108

 

 

 

Attention:  Ullas Naik

 

JAFCO USIT Fund III, L.P.

c/o
Globespan Capital Partners

One Boston Place

Suite 2810

Boston, MA 02108

Attention:  Ullas Naik

 

JAFCO America Technology
Affiliates Fund III, L.P.

c/o
Globespan Capital Partners

One Boston Place

Suite 2810

Boston, MA 02108

Attention:  Ullas Naik

 

 

 

Exhibit D

 

SERIES C INVESTORS

 

	
  Name

  	
   

  
	
  MK Capital SBIC, L.P.

  c/o MK Capital

  233 South Wacker Drive

  The Sears Tower

  Suite 9700

  Chicago, IL  60606

   

  MK Capital, L.P.

  c/o MK Capital

  233 South Wacker Drive

  The Sears Tower

  Suite 9700

  Chicago, IL  60606

   

  Bessemer Venture
  Partners V L.P.

  c/o Bessemer Venture
  Partners

  1865 Palmer Avenue

  Larchmont, NY  10583

  Attention: J. Edmund
  Colloton

   

  Bessec Ventures V L.P.

  c/o Bessemer Venture
  Partners

  1865 Palmer Avenue

  Larchmont, NY  10583

  Attention:  J. Edmund Colloton

   

  BVE 2001 LLC

  c/o Bessemer Venture
  Partners

  1865 Palmer Avenue

  Larchmont, NY  10583

  Attention:  J. Edmund Colloton

   

  BVE 2001(Q) LLC

  c/o Bessemer Venture
  Partners

  1865 Palmer Avenue

  Larchmont, NY  10583

  Attention:  J. Edmund Colloton

   

  BIP 2001 L.P.

  c/o Bessemer Venture
  Partners

  1865 Palmer Avenue

  	
   

  

 

 

Larchmont, NY  10583

Attention:  J. Edmund Colloton

 

Battery Ventures VI, L.P.

c/o BatteryVentures

20 William Street, Suite
200

Wellesley, MA  02481

Attention:  David Tabors

 

Battery Investment
Partners VI, LLC

c/o Battery Ventures

20 William Street, Suite
200

Wellesley, MA 02481

Attention:  David Tabors

 

JAFCO America Technology
Fund III, L.P.

c/o
Globespan Capital Partners

One Boston Place

Suite 2810

Boston, MA 02108

Attention:  Ullas Naik

 

JAFCO America Technology
Cayman Fund III, L.P.

c/o
Globespan Capital Partners

One Boston Place

Suite 2810

Boston, MA 02108

Attention:  Ullas Naik

 

JAFCO USIT Fund III, L.P.

c/o
Globespan Capital Partners

One Boston Place

Suite 2810

Boston, MA 02108

Attention:  Ullas Naik

 

JAFCO America Technology
Affiliates Fund III, L.P.

c/o
Globespan Capital Partners

One Boston Place

Suite 2810

Boston, MA 02108

Attention:  Ullas Naik

 

The
Productivity Fund IV, L.P.

233
South Wacker Drive

 

 

 

The
Sears Tower, 95th Floor

Suite
9700

Chicago,
IL  60606

 

The Productivity Fund IV Advisors Fund, L.P.

233
South Wacker Drive

The
Sears Tower, 95th Floor

Suite
9700

Chicago,
IL  60606

 

 

Exhibit E

 

SERIES D INVESTORS

	
  Name

  	
   

  
	
  MK Capital SBIC, L.P.

  c/o MK Capital

  233 South Wacker Drive

  The Sears Tower

  Suite 9700

  Chicago, IL  60606

   

  MK Capital, L.P.

  c/o MK Capital

  233 South Wacker Drive

  The Sears Tower

  Suite 9700

  Chicago, IL  60606

   

  Bessemer Venture
  Partners V L.P.

  c/o Bessemer Venture
  Partners

  1865 Palmer Avenue

  Larchmont, NY  10583

  Attention: J. Edmund
  Colloton

   

  Bessec Ventures V L.P.

  c/o Bessemer Venture
  Partners

  1865 Palmer Avenue

  Larchmont, NY  10583

  Attention:  J. Edmund Colloton

   

  BVE 2001 LLC

  c/o Bessemer Venture
  Partners

  1865 Palmer Avenue

  Larchmont, NY  10583

  Attention:  J. Edmund Colloton

   

  BVE 2001(Q) LLC

  c/o Bessemer Venture
  Partners

  1865 Palmer Avenue

  Larchmont, NY  10583

  Attention:  J. Edmund Colloton

   

  BIP 2001 L.P.

  c/o Bessemer Venture
  Partners

  1865 Palmer Avenue

   

  	
   

  

 

 

 

 

 

Larchmont, NY  10583

Attention:  J. Edmund Colloton

 

Battery Ventures VI, L.P.

c/o BatteryVentures

20 William Street, Suite
200

Wellesley, MA  02481

Attention:  David Tabors

 

Battery Investment
Partners VI, LLC

c/o Battery Ventures

20 William Street, Suite
200

Wellesley, MA 02481

Attention:  David Tabors

 

JAFCO America Technology
Fund III, L.P.

c/o
Globespan Capital Partners

One Boston Place

Suite 2810

Boston, MA 02108

Attention:  Ullas Naik

 

JAFCO America Technology
Cayman Fund III, L.P.

c/o
Globespan Capital Partners

One Boston Place

Suite 2810

Boston, MA 02108

Attention:  Ullas Naik

 

JAFCO USIT Fund III, L.P.

c/o
Globespan Capital Partners

One Boston Place

Suite 2810

Boston, MA 02108

Attention:  Ullas Naik

 

JAFCO America Technology
Affiliates Fund III, L.P.

c/o
Globespan Capital Partners

One Boston Place

Suite 2810

Boston, MA 02108

Attention:  Ullas Naik

 

The Productivity Fund IV, L.P.

233
South Wacker Drive

 

 

 

The
Sears Tower, 95th Floor

Suite
9700

Chicago,
IL  60606

 

The Productivity Fund IV
Advisors Fund, L.P.

233
South Wacker Drive

The
Sears Tower, 95th Floor

Suite
9700

Chicago,
IL  60606Exhibit 10.10

 

EMPLOYMENT
AGREEMENT

 

This AGREEMENT (the “Agreement”) is made as of
September 6, 2001 (the “Effective Date”), by and between Netblades, Inc., a
Delaware corporation with its headquarters located in Lexington, Massachusetts
(the “Employer”), and Dev Ittycheria (the “Executive”). In consideration of the
mutual covenants contained in this Agreement, the Employer and the Executive
agree as follows:

 

1.                                       Employment. The Employer agrees to employ the Executive and the Executive agrees to
be employed by the Employer on the terms and conditions set forth in this
Agreement.

 

2.                                       Capacity. The Executive shall initially serve the Employer as co-founder,
President and Chief Executive Officer, subject to appointment to such office by
the Board of Directors of the Employer (the “Board of Directors”), which
appointment shall not be unreasonably withheld or delayed, and as a member of
the Board of Directors, subject to election by the shareholders of the Employer.
The Executive shall also serve the Employer in such other or additional offices
as the Executive may be requested to serve by the Board of Directors, subject
to the provisions of Section 6 hereof. In such capacity or capacities, the
Executive shall perform such services and duties in connection with the
business, affairs and operations of the Employer as may be assigned or
delegated to the Executive from time to time by or under the authority of the
Board of Directors.

 

3.                                       Term.
Subject to the provisions of Section 6, the term of employment pursuant to this
Agreement (the “Term”) shall be four (4) years from the Effective Date and
shall be renewed automatically for periods of one (1) year commencing at the
fourth anniversary of the Effective Date and on each subsequent anniversary
thereafter, unless either the Executive or the Employer gives written notice to
the other not less than thirty (30) days prior to the date of any such
anniversary of such party’s election not to extend the Term.

 

4.                                       Compensation and Benefits. The regular compensation and benefits payable to
the Executive under this Agreement shall be as follows:

 

(a)                                  Salary.
For all services rendered by the Executive under this Agreement, the Employer
shall pay the Executive a salary (the “Salary”) at the annual rate of One
Hundred Eighty Thousand Dollars ($180,000.00), subject to increase from time to
time in the discretion of the Board of Directors or the Compensation Committee
of the Board of Directors (the “Compensation Committee”). The Salary shall be
payable in periodic installments in accordance with the Employer’s usual
practice for its senior executives.

 

(b)                                 Bonus.
The Executive shall be entitled to participate in any annual incentive program
established by the Board of Directors or the Compensation Committee with such
terms as may be established in the sole discretion of the Board of Directors or
Compensation Committee.

 

1

 

(c)                                  Regular
Benefits. The Executive shall also be entitled to participate in any
employee benefit plans, medical insurance plans, life insurance plans,
disability income plans, retirement plans, vacation plans, expense
reimbursement plans and other benefit plans which the Employer may from time to
time have in effect for similarly situated senior executives. Such participation
shall be subject to the terms of the applicable plan documents, generally
applicable policies of the Employer, applicable law and the discretion of the
Board of Directors, the Compensation Committee or any administrative or other
committee provided for in or contemplated by any such plan. Nothing contained
in this Agreement shall be construed to create any obligation on the part of
the Employer to establish any such plan or to maintain the effectiveness of any
such plan which may be in effect from time to time.

 

(d)                                 Taxation
of Payments and Benefits. The Employer shall undertake to make deductions,
withholdings and tax reports with respect to payments and benefits under this
Agreement to the extent that it reasonably and in good faith believes that it is
required to make such deductions, withholdings and tax reports. Payments under
this Agreement shall be in amounts net of any such deductions or withholdings. Nothing
in this Agreement shall be construed to require the Employer to make any
payments to compensate the Executive for any adverse tax effect associated with
any payments or benefits or for any deduction or withholding from any payment
or benefit.

 

(e)                                  Exclusivity
of Salary and Benefits. The Executive shall not be entitled to any payments
or benefits other than those described in or provided under this Agreement or
the Stock Purchase and Stock Restriction Agreement dated August 7, 2001 (the “Stock
Agreement”).

 

5.                                       Extent of Service. During the Executive’s employment under this
Agreement, the Executive shall, subject to the direction and supervision of the
Board of Directors, devote the Executive’s full business time, best efforts and
business judgment, skill and knowledge to the advancement of the Employer’s
interests and to the discharge of the Executive’s duties and responsibilities
under this Agreement. The Executive shall not engage in any other business
activity, except as may be approved by the Board of Directors; provided that nothing in this
Agreement shall be construed as preventing the Executive from engaging in
religious, charitable or other community or non-profit activities that do not
impair the Executive’s ability to fulfill the Executive’s duties and
responsibilities under this Agreement.

 

6.                                       Termination and Termination Benefits. Notwithstanding the provisions of Section 3, the
Executive’s employment under this Agreement shall terminate under the following
circumstances set forth in this Section 6.

 

(a)                                  Termination
by the Executive. The Executive’s employment under this Agreement may be
terminated by the Executive by written notice to the Board of Directors
(specifying whether such termination is for Good Reason) at least thirty (30)
days prior to such termination. If the Executive terminates his employment for
Good Reason (as defined below), such written notice shall so specify, and
Executive shall be entitled to Termination Benefits as provided in Section 6(d)
hereof.

 

“Good Reason”
means the occurrence of any of the following events:  (i) a substantial adverse change in the
nature or scope of the Executive’s responsibilities, 

 

2

 

authorities, powers,
functions or duties; (ii) a reduction in the Executive’s annual base salary
except for across-the-board salary reductions similarly affecting all or
substantially all management employees; or (iii) the relocation of the offices
at which the Executive is principally employed to a location more than 50 miles
from such offices; or (iv) any material breach of any provision of this
Agreement by Employer.

 

Good
Reason will not exist unless the Executive has provided the Employer with
reasonable notice and an opportunity to cure any of the events listed in (i),
(ii) and (iv) above and the Employer has failed to cure within a reasonable
period, but in any event not more than 30 days after receiving such notice.

 

(b)                                 Termination
by the Employer Without Cause. Subject to the payment of Termination
Benefits pursuant to Section 6(d), the Executive’s employment under this
Agreement may be terminated by the Employer without cause upon written notice
to the Executive by a vote of the Board of Directors.

 

(c)                                  Termination
by the Employer for Cause. The Executive’s employment under this Agreement
may be terminated for cause without further liability on the part of the
Employer effective immediately upon a vote of the Board of Directors and
written notice to the Executive. Only the following shall constitute “cause”
for such termination:

 

(i)                                     the
commission of any act by the Executive constituting material financial
dishonesty against the Employer (which act would be chargeable as a crime under
applicable law);

 

(ii)                                  the
Executive’s engaging in any other act of dishonesty, fraud, intentional
misrepresentation, moral turpitude, illegality or harassment which would, as
determined in good faith by the Board: 
(A) materially adversely affect the business or the reputation of the
Employer with its current or prospective customers, suppliers, lenders and/or
other third parties with whom it does or might do business; or (B) expose the
Employer to a risk of civil or criminal legal damages, liabilities or
penalties;

 

(iii)                               the
repeated failure by the Executive to follow the reasonable directives of the
Board of Directors;

 

(iv)                              any
gross negligence, material misconduct or material, willful and deliberate
non-performance of duty by the Executive in connection with the business
affairs of the Employer; or

 

(v)                                 any
material breach of any provision of this Agreement by the Executive which, in
the case of a breach that is capable of being cured, is not corrected after
notice and a reasonable opportunity to cure (which period shall in no event be
less than 21 days).

 

(d)                                 Certain
Termination Benefits. Unless otherwise specifically provided in this
Agreement or otherwise required by law, all compensation and benefits payable
to the Executive under this Agreement shall terminate on the date of
termination of the Executive’s 

 

3

 

employment under
this Agreement. Notwithstanding the foregoing, in the event of termination of
the Executive’s employment with the Employer pursuant to Section 6(a) (for Good
Reason only) or 6(b), the Employer shall provide to the Executive the following
termination benefits (“Termination Benefits”):

 

(i)                                     continuation
of the Executive’s Salary at the rate then in effect pursuant to Section 4(a);
and

 

(ii)                                  continuation
of the Executive’s rights to all benefits identified in Section 4(c) as if the
Executive were employed on a full-time basis.

 

The
Termination Benefits set forth in (i) and (ii) above shall continue effective
until the later of (A) six (6) months after the date of termination or (B) a
number of days equal to 25% of the time between the date of termination and the
fourth anniversary of this Agreement. Payment of Termination Benefits may be
conditioned upon receipt by the Employer of a general release of claims by the
Executive in a form reasonably satisfactory to the Employer.

 

(e)                                  Disability.
If in the judgment of the Board of Directors the Executive shall be disabled so
as to be unable to perform the essential functions of the Executive’s then
existing position or positions under this Agreement with or without reasonable
accommodation, the Board of Directors may remove the Executive from any
responsibilities and/or reassign the Executive to another position with the
Employer for the remainder of the Term or during the period of such disability.
Notwithstanding any such removal or reassignment, the Executive shall continue
to receive the Executive’s full Salary (less any disability pay or sick pay
benefits to which the Executive may be entitled under the Employer’s policies)
and benefits under Section 4 of this Agreement (except to the extent that the
Executive may be ineligible for one or more such benefits under applicable plan
terms) for a period of time equal to the lesser of (i) six (6) months or (ii)
the remainder of the Term.

 

7.                                       Confidential Information, Noncompetition and
Cooperation.

 

(a)                                  Confidential
Information and Noncompetition. The Executive has entered into the Employer’s
Agreement Concerning Confidentiality, Inventions, Documents, Nonsolicitation
and Unfair Competition on the date hereof, a copy of which is attached to this
Agreement.

 

(b)                                 Litigation
and Regulatory Cooperation. During and after the Executive’s employment,
the Executive shall cooperate reasonably with the Employer in the defense or
prosecution of any claims or actions now in existence or which may be brought
in the future against or on behalf of the Employer which relate to events or
occurrences that transpired while the Executive was employed by the Employer. The
Executive’s reasonable cooperation in connection with such claims or actions
shall include, but not be limited to, being available to meet with counsel to
prepare for discovery or trial and to act as a witness on behalf of the
Employer at mutually convenient times. During and after the Executive’s
employment, the Executive also shall cooperate reasonably with the Employer in
connection with any investigation or review of any federal, state or local
regulatory authority as any such investigation or review relates to events or
occurrences that transpired while the Executive was 

 

4

 

employed by the
Employer. The Employer shall reimburse the Executive for any reasonable out-of-pocket
expenses incurred in connection with the Executive’s performance of obligations
pursuant to this Section 7(b).

 

(c)                                  Injunction.
The Executive agrees that it would be difficult to measure any damages caused
to the Employer which might result from any breach by the Executive of the
promises set forth in this Section 7, and that in any event money damages would
be an inadequate remedy for any such breach. Accordingly, subject to Section 8
of this Agreement, the Executive agrees that if the Executive breaches, or
proposes to breach, any portion of this Agreement, the Employer shall be
entitled, in addition to all other remedies that it may have, to seek an
injunction or other appropriate equitable relief to restrain any such breach.

 

8.                                       Arbitration of Disputes. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof or the Stock Agreement or the
breach thereof, or otherwise arising out of the Executive’s employment or the
termination of that employment (including, without limitation, any claims of
unlawful employment discrimination whether based on age or otherwise) shall, to
the fullest extent permitted by law, be settled by arbitration in any forum and
form agreed upon by the parties or, in the absence of such an agreement, under
the auspices of the American Arbitration Association (“AAA”) in Boston,
Massachusetts in accordance with the Employment Dispute Resolution Rules of the
AAA, including, but not limited to, the rules and procedures applicable to the
selection of arbitrators. In the event that any person or entity other than the
Executive or the Employer may be a party with regard to any such controversy or
claim, such controversy or claim shall be submitted to arbitration subject to
such other person or entity’s agreement. Judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction thereof. This
Section 8 shall be specifically enforceable. Notwithstanding the foregoing,
this Section 8 shall not preclude either party from pursuing a court action for
the sole purpose of obtaining a temporary restraining order or a preliminary
injunction in circumstances in which such relief is appropriate; provided that any other relief shall
be pursued through an arbitration proceeding pursuant to this Section 8. The
Employer shall pay all administrative fees and arbitrator’s fees and expenses
related to any arbitration. Each party shall pay the cost of his or its own
legal fees and expenses in connection with any arbitration or litigation
provided that if the Executive prevails in such arbitration or litigation, the
Employer shall reimburse the Executive for all reasonable legal fees and
expenses incurred by the Executive in connection with the arbitration or
litigation.

 

9.                                       Consent to Jurisdiction. To the extent that any court action is permitted
consistent with or to enforce Section 8 of this Agreement, the parties hereby
consent to the jurisdiction of the Superior Court of the Commonwealth of Massachusetts
and the United States District Court for the District of Massachusetts. Accordingly,
with respect to any such court action, the Executive (a) submits to the
personal jurisdiction of such courts; (b) consents to service of process; and
(c) waives any other requirement (whether imposed by statute, rule of court, or
otherwise) with respect to personal jurisdiction or service of process.

 

10.                                 Integration. This Agreement, together with the Agreement Concerning Confidentiality,
Inventions, Documents, Nonsolicitation and Unfair Competition between the
Executive and the Employer and the Stock Restriction Agreement between the
Executive and the Employer, each of even date herewith, constitutes the entire
agreement between the parties with 

 

5

 

respect to the subject matter hereof and supersedes all prior agreements
between the parties with respect to any related subject matter.

 

11.                                 Assignment; Successors and Assigns, etc. Neither the Employer nor the Executive may make
any assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other party; provided that the Employer may assign
its rights under this Agreement without the consent of the Executive in the
event that the Employer shall effect a reorganization, consolidate with or
merge into any other corporation, partnership, organization or other entity, or
transfer all or substantially all of its properties or assets to any other
corporation, partnership, organization or other entity. This Agreement shall
inure to the benefit of and be binding upon the Employer and the Executive,
their respective successors, executors, administrators, heirs and permitted
assigns.

 

12.                                 Enforceability. If any portion or provision of this Agreement (including, without
limitation, any portion or provision of any section of this Agreement) shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.

 

13.                                 Waiver. No waiver of any provision hereof shall be effective unless made in
writing and signed by the waiving party. The failure of any party to require
the performance of any term or obligation of this Agreement, or the waiver by
any party of any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.

 

14.                                 Notices. Any notices, requests, demands and other communications provided for by
this Agreement shall be sufficient if in writing and delivered in person or
sent by a nationally recognized overnight courier service or by registered or
certified mail, postage prepaid, return receipt requested, to the Executive at
the last address the Executive has filed in writing with the Employer or, in
the case of the Employer, at its main offices, attention of the Board of
Directors, and shall be effective on the date of delivery in person or by
courier or three (3) days after the date mailed.

 

15.                                 Amendment. This Agreement may be amended or modified only by a written instrument
signed by the Executive and by a duly authorized representative of the
Employer.

 

16.                                 Governing Law. This is a Massachusetts contract and shall be construed under and be
governed in all respects by the laws of the Commonwealth of Massachusetts,
without giving effect to the conflict of laws principles of such Commonwealth. With
respect to any disputes concerning federal law, such disputes shall be
determined in accordance with the law as it would be interpreted and applied by
the United States Court of Appeals for the First Circuit.

 

17.                                 Counterparts. This Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be taken to be an original; but such
counterparts shall together constitute one and the same document.

 

6

 

IN WITNESS WHEREOF, this Agreement has been executed
as a sealed instrument by the Employer, by its duly authorized officer, and by
the Executive, as of the Effective Date.

 

 

	
   

  	
  NETBLADES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Vijay Manwani

  	
   

  
	
   

  	
   

  	
  Name: Vijay Manwani

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Dev Ittycheria

  	
   

  
	
   

  	
  Dev Ittycheria

  
					

 

7

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