Document:

exv10w11

 

Exhibit 10.11

e-business Hosting Agreement

This e-business Hosting Agreement (“Agreement”) between International Business Machines Corporation
(“IBM”) and Successfactors (“Customer”), sets forth the terms and conditions under which IBM will
provide web hosting and related services (“Services”) to Customer. The Agreement includes the terms
and conditions and the documents referenced herein (“Base Terms”), e-business hosting services
order forms accepted by IBM (“Order Forms”), and applicable attachments referenced in Exhibit A of
such Order Forms (“Attachments”) including Attachments for Services options selected by Customer
(“Service Option Attachments”). In the event of a conflict between the Base Terms and an Attachment
or an Order Form, the Base Terms will prevail, except where an Attachment, Order Form, or a
provision contained therein expressly states that it will prevail over the Base Terms.

1.0  Definitions

	a.	 	“Acceptable Use Policy” means the Acceptable Use Policy for IBM e-business Services, located
on the Internet at www.ibm.com/services/e-business/aup.html, as of the Effective Date, and any
subsequent modification in accordance with Section 12.2 below.

	b.	 	“Affiliates” means entities that control, are controlled by, or are under common control with
a party to this Agreement.

	c.	 	“Base Components” means the hardware and software that IBM makes available, if any, as
specified in Order Forms and associated Service Option Attachments.

	d.	 	“Content” means information, software, and data that Customer provides, including, without
limitation, any hypertext markup language files, scripts, programs, recordings, sound, music,
graphics, images, applets or servlets that Customer or its Subcontractors or Services
Recipients create, install, upload or transfer in or through the e-business Hosting
Environment and/or Customer Components.

	e.	 	“Content Administrator” means an employee or Subcontractor of Customer who is authorized by
Customer to install, upload and/or maintain Content using a User Identification.

	f.	 	“Customer Components” means the hardware, software and other products, data and Content that
Customer provides, including those specified in Service Option Attachments.

	g.	 	“e-business Hosting Environment” means the Base Components and the IBM provided Internet
access bandwidth, collectively.
	 
	h.	 	“IBM e-business Hosting Center” means a facility used by IBM to provide Services.
	 
	i.	 	“Internet” means the public worldwide network of TCP/IP-based networks.

	j.	 	“Materials” means literary or other works of authorship (such as programs, program listings,
programming tools, documentation, reports, drawings and similar works) that IBM may deliver to
Customer as part of Services. “Materials” does not include licensed program products available
under their own license agreements or Base Components.

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	k.	 	“Required Consents” means any consents or approvals required to give IBM and its
Subcontractors the right or license to access, use and/or modify in electronic form and in
other forms, including derivative works, the Customer Components, without infringing the
ownership or intellectual property rights of the providers, licensors, or owners of such
Customer Components.

	l.	 	“Service Option Ready Date” means the date that IBM has notified Customer that IBM has
completed the implementation activities specified in an applicable Service Option Attachment.

	m.	 	“Services Recipients” means any entities or individuals receiving or using the Services, or
the results or products of the Services.

	n.	 	“Service Option Attachment Start Date” means the day after the date of the last signature on
an Order Form authorizing the Services under an applicable Service Option Attachment.

	o.	 	“Subcontractor” means a contractor, vendor, agent, or consultant selected and retained by IBM
or Customer, respectively.
	 
	p.	 	“TCP/IP” means Transmission Control Protocol/Internet Protocol.

	q.	 	“User Identification” or “ID” means a string of characters that uniquely identifies a Content
Administrator.

2.0  IBM Services Responsibilities

IBM will perform the Services described in applicable Attachments.

3.0  Term and Termination

3.1  Term

This Agreement will be effective beginning on 12:01 a.m., Eastern Time, on the day after the date
of last signature to these Base Terms (“Effective Date”) and ending on the expiration and/or
termination of all Service Option Attachments, unless the Agreement is terminated earlier in
accordance with the terms herein. The term of each Service Option Attachment is as specified on the
applicable Order Form.

3.2   Renewal

Upon the expiration of the then-current term, each Service Option Attachment will renew
automatically for an additional one year term unless either party notifies the other party that it
has elected to terminate such Service Option Attachment. Such notification must be in writing at
least thirty (30) days prior to the end of the then-current term for the applicable Service Option
Attachment.

3.3   Termination for Cause

Customer or IBM may terminate this Agreement for material breach of this Agreement by the

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other upon written notice containing the specific nature and dates of the material breach. The
breaching party will have thirty (30) days from receipt of notice to cure such breach, except for
nonpayment by Customer, which must be cured within five (5) business days from receipt of notice.
If such breach has not been timely cured, then the non-breaching party may immediately terminate
this Agreement upon written notice.

3.4   Termination for Convenience

Customer may terminate this Agreement (including all Service Option Attachments) or any Service
Option Attachment (with the exception of any Service Option Attachment that is a prerequisite for
the provision of Services under a non-terminated Service Option Attachment) for convenience by:

	a.	 	providing at least one month’s prior written notice to IBM; and

	 
	b.	 	paying as an early termination charge for each Service Option Attachment to be terminated,
the amount specified in such Service Option Attachment or, if no amount is specified, an
amount equal to one months’ charges of the applicable monthly recurring charge of such Service
Option Attachment. Such termination charges only apply upon early termination of an initial
term of any Service Option Attachment and do not apply to any renewal term.

3.5   Effect of Termination

Upon the date of termination, all Customer payment obligations accrued hereunder through the date
of termination will become due and payable. The termination of selected Service Option Attachments
will not affect Customer’s obligation to pay charges under other Service Option Attachments.

4.0   Charges and Payment

4.1  Charges

Charges for applicable Services will be specified in Service Option Attachments and Order Forms.
Charges can be specified as one-time, installment, recurring, or usage. IBM will invoice such
Charges when they begin or are due as set forth in Service Option Attachments.

4.2   Payment

IBM invoices will specify the amount due. Notwithstanding the terms on an invoice, payment is due
and payable thirty (30) days after Customer’s receipt of an invoice from IBM. Customer agrees to
pay accordingly, including any late payment fees. Payment will be made in United States dollars.

4.3   Taxes

Customer will pay or provide appropriate exemption documentation for all taxes, duties, levies, and
any other fees (except for taxes based upon IBM’s net income) related to the Services imposed by
any governmental authorities. Charges specified herein (including in an Order Form) are exclusive
of any such taxes, duties, levies or fees.

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4.4   Late Payment Fees

If any payment is not received by IBM by the payment due date, the late payment fee will be the
lesser of: 1) one and one-half percent (1.5%) of such overdue payment per every thirty (30) day
period or portion thereof; or 2) the maximum amount permissible by applicable law.

5.0   Warranties and Disclaimers

5.1  IBM Representations and Warranties

IBM represents and warrants that:

	a.	 	it will perform the Services using reasonable care and skill and in accordance with the
applicable Service Option Attachments; and

	b.	 	it has the requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement.

5.2   Exclusivity of Warranties

THE WARRANTIES IN SECTION 5.1 ARE THE EXCLUSIVE WARRANTIES FROM IBM. THEY REPLACE ALL OTHER
WARRANTIES, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, AND FITNESS
FOR A PARTICULAR PURPOSE.

5.3   Security

	a.	 	Customer acknowledges that IBM offers numerous security options, specified in Service Option
Attachments. It is the Customer’s responsibility to select, on an Order Form, the set of
security options that it determines meet Customer’s needs. IBM will implement such selected
security options as specified in the applicable Service Option Attachment.

	b.	 	Customer acknowledges that IBM does not control the transfer of data over telecommunications
facilities, including the Internet. IBM does not warrant secure operation of the Services or
that it will be able to prevent third party disruptions of the e-business Hosting Environment
or Customer Components.

	c.	 	Customer agrees that IBM shall have no liability for any provision of security-related
services or advice that IBM may voluntarily provide outside the scope of selected Service
Option Attachments.

5.4   Other Disclaimers

	a.	 	IBM does not warrant uninterrupted or error-free operation of any Service or that IBM will
correct all defects.

	b.	 	IBM does not make any representation or warranty with respect to Customer’s responsibilities
set forth in Section 10.5.

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	c.	 	IBM provides Materials, non-IBM products, and non-IBM services WITHOUT WARRANTIES OF ANY
KIND. However, non-IBM manufacturers, suppliers, or publishers may provide their own
warranties to you, and IBM agrees to pass on such warranties to the extent that it is
permitted to do so. IBM shall not be responsible for enforcement of any of these third party
warranties.

6.0   Confidentiality

All information exchanged between the parties is non-confidential. If either or both parties
require the exchange of confidential information, such information will be exchanged under the
terms and conditions of a separate written confidentiality agreement. With respect to any
confidential information contained in or traveling through the e-business Hosting Environment or
Customer Components, as is contemplated herein, the provisions of Sections 5, 8, and 9 herein will
prevail to the extent of any inconsistent provisions in the confidentiality agreement.

7.0   Indemnification

7.1  Indemnification by IBM

If a third party claims that Materials or Base Components IBM provides to Customer infringe that
party’s patent or copyright, IBM will defend the Customer and its employees, officers, and
directors against that claim at IBM’s expense and pay all costs, damages, and reasonable attorneys’
fees that a court finally awards (or which IBM agrees in any final settlement), provided that
Customer:

	a.	 	promptly notifies IBM in writing of the claim; and

	b.	 	allows IBM to control, and cooperates with IBM in, the defense and any related settlement
negotiations at IBM’s expense as described above. If such a claim is made or appears likely to
be made, Customer agrees to permit IBM to enable Customer to continue to use the Materials or
Base Components, or to modify them, or replace them with non-infringing Materials or Base
Components that are at least functionally equivalent. If IBM determines that none of these
alternatives is reasonably available, Customer agrees to return the Materials or Base
Components (if in Customer’s possession) to IBM on IBM’s written request. IBM will give
Customer a credit equal to the amount Customer paid IBM for the applicable Materials or for
use of the applicable Base Components up to a maximum of twelve months of applicable charges.
This is IBM’s entire obligation to Customer with regard to any claim of infringement.
Notwithstanding the foregoing, IBM is not responsible for third party claims based on:

	 	1.	 	anything Customer provides which is incorporated into the Materials;
	 
	 	2.	 	Customer’s modification of the Materials;
	 
	 	3.	 	the combination, operation, or use of the Materials with any product, data, or
apparatus that IBM did not provide; or
	 
	 	4.	 	non-IBM hardware, software, or data, including those that may be in the Base
Components.

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7.2   Indemnification by Customer

	a.	 	Customer will defend IBM and its Affiliates and their employees, officers, and directors, at
Customer’s expense, and pay all costs, damages, and reasonable attorneys’ fees that a court
finally awards (or which Customer agrees in any final settlement) for any third party claim:

	 	1.	 	that Content or Customer’s use of the Services violates Customer’s obligation in
Sections 10.2(b) and 10.4 (b);
	 
	 	2.	 	that Customer Components infringe that party’s patent or copyright;
	 
	 	3.	 	that is brought by a Services Recipient and to the extent the claim is related,
directly or indirectly, to the Services; or
	 
	 	4.	 	arising out of or related to a mechanics’ lien Customer is required to cancel and
discharge pursuant to this Agreement.

	b.	 	For indemnification under this Section 7.2, IBM will:

	 	1.	 	promptly notify Customer in writing of the claim; and
	 
	 	2.	 	allow Customer to control, and will cooperate with Customer in, the defense and any
related settlement negotiations.

8.0   Limitation of IBM’s Liability

Circumstances may arise where, because of a default on IBM’s part or other liability, Customer is
entitled to recover damages from IBM. Regardless of the basis on which Customer is entitled to
claim damages from IBM (including fundamental breach, negligence, misrepresentation, or other
contract or tort claim), IBM is liable for no more than:

	a.	 	indemnification payments as provided in Section 7.1;

	b.	 	damages for bodily injury (including death) and damage to real property and tangible personal
property; and

	c.	 	the amount of any other actual direct damages, up to the greater of $100,000 or the charges
paid by Customer to IBM for the Services in the twelve (12) months immediately preceding the
accrual of the first claim related to the Services. The foregoing limit also applies to any of
IBM’s Affiliates and Subcontractors. It is the cumulative maximum for which IBM and its
Affiliates and Subcontractors are collectively responsible. Under no circumstances is IBM, its
Affiliates or its Subcontractors liable for any of the following:

	 	1.	 	third party claims against Customer for damages (other than those expressly provided in
Subsections 8.0(a) and 8.0(b)); or
	 
	 	2.	 	loss of, or damage to, Customer’s or any other entity’s records or data.

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9.0   Disclaimer of Consequential Damages

In no event will either party be liable to the other for special, incidental, or indirect damages
or for any consequential damages (including lost profits or savings), even if they are informed of
the possibility; provided that this Section 9 does not apply to Customer’s failure to pay any
amounts owing to IBM under this Agreement (including amounts owing for Services that would have
been rendered but for Customer’s breach of this Agreement).

10.0   Other Customer Obligations

10.1  Services Support

Customer will comply with its responsibilities to support the Services as specified in applicable
Attachments. Such obligations are to be performed at no charge to IBM. IBM’s obligations are
contingent on Customer meeting such support obligations.

10.2   Representations and Warranties

Customer represents and warrants that:

	a.	 	it has the requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement; Customer has no contractual or other obligation that (i)
restricts or prohibits Customer’s execution or performance of this Agreement, or (ii) Customer
will breach in connection with the execution or performance of this Agreement; and

	b.	 	its use of the Services and all Content will comply with the Acceptable Use Policy.

10.3   Suspected Violations

IBM reserves the right to investigate potential violations of the representations and warranties in
Subsection 10.2(b). If IBM reasonably determines that a breach of any such warranty has occurred,
then IBM may, in its sole discretion:

	a.	 	restrict Customer’s access to the Services;
	 
	b.	 	remove or require removal of any offending Content;
	 
	c.	 	terminate this Agreement for cause; and/or
	 
	d.	 	exercise other rights and remedies, at law or in equity.

Except in an emergency or as may otherwise be required by law, before undertaking the activities in
Subsection 10.3(a) or 10.3(b), IBM will attempt to notify Customer by any reasonably practical
means under the circumstances, such as, without limitation, by telephone or e-mail.

Customer will promptly notify IBM of any event or circumstance related to this Agreement,
Customer’s use of the Services, or Content of which Customer becomes aware that could lead to a
claim or demand against IBM and Customer will provide all relevant information relating to

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such event or circumstance to IBM at IBM’s request.

10.4   Customer Components

	a.	 	Customer (or its Affiliates or third parties) retains all right, title, and interest or
license in and to the Customer Components.

	b.	 	Customer hereby grants to IBM, its Affiliates and Subcontractors all rights and licenses to,
or agrees to promptly obtain and keep in effect Required Consents for all Customer Components,
necessary for IBM to perform all of its obligations as set forth in this Agreement. Upon
request, Customer will provide to IBM evidence of any such rights, licenses, or Required
Consents. IBM will be relieved of its obligations to the extent that they are affected by
Customer’s failure to promptly obtain and provide to IBM any such rights, licenses, or
Required Consents. IBM will adhere to reasonable terms and conditions pertaining to Customer
Components as notified in writing to IBM.

	c.	 	IBM agrees not to remove or alter any copyright or other proprietary notice on or in any
Customer Component without Customer’s consent.

10.5   Capacity Planning

Customer acknowledges it is its responsibility to determine whether the Services, e-business
Hosting Environment, Customer Components and their combination will meet Customer’s capacity,
performance, or scalability needs. Customer is responsible for planning for and requesting changes
to the e-business Hosting Environment, including any additional capacity required to support
anticipated peaks in demand that may significantly increase Web site hits, transaction volumes, or
otherwise increase system resource utilization.

10.6   Content

Customer is solely responsible for:

	a.	 	all Content including, without limitation, its selection, creation, design, licensing,
installation, accuracy, maintenance, testing, backup and support;

	b.	 	all copyright, patent and trademark clearances in all applicable jurisdictions and usage
agreements for any and all Content;

	c.	 	the selection of controls on the access and use of Content; and

	d.	 	the selection, management and use of any public and private keys and digital certificates it
may use with the Services.

11.0   Other License and Rights

11.1  License for Base Components

	a.	 	IBM (or its Affiliates or subcontractors) retains all right, title, and interest in Base
Components.

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	b.	 	IBM grants Customer a nonexclusive, nontransferable, revocable license to access and use the
Base Components solely in connection with the Services as provided under this Agreement.
Customer agrees not to download or otherwise copy, reverse assemble, reverse compile,
decompile, or otherwise translate the software portions of the Base Components, other than to
make one copy for backup purposes.

	c.	 	If IBM provides as a Base Component a Microsoft Corporation product, the terms and conditions
of the Microsoft Customer License Terms will also apply for such products. Such Terms are
located on the Internet at http://www-3.ibm.com/services/e-business/hosting/
microsoftlicense.html.

	d.	 	Customer agrees not to remove or alter any copyright or other proprietary notice on or in any
Base Component without IBM’s consent.

11.2   No Sale or Lease of Goods

As between Customer and IBM, IBM retains all right, title and interest in the Base Components. No
goods are sold or leased by IBM under this Agreement. If Customer desires to purchase or lease
goods from IBM, such purchase or lease will be governed by a separate mutually acceptable written
agreement between Customer and IBM or an IBM Affiliate.

11.3   No Lease of Real Property

This Agreement is a services agreement and not a lease of any real property.

12.0   Changes

12.1  Services

IBM, in its reasonable discretion, may change the prices, terms and conditions of applicable
Attachments, upon at least ninety (90) days prior notice to Customer. Such changes are not
retroactive and will apply on the effective date of a new order or renewal unless such change was
the result of:

	a.	 	law, regulation, or similar governmental action;
	 
	b.	 	a ruling by a court of competent jurisdiction; or
	 
	c.	 	changes in the method of service delivery that affect similar IBM e-business hosting
customers.

Changes as a result of a, b, or c above will be effective on the date IBM specified in the notice.
Any changes in price will apply on the effective date of a new order or renewal. Customer may
terminate this Agreement (or the affected Service Option Attachments) without the payment of
termination charges if such change has a material adverse effect on the Customer’s use of the
Services and Customer gives IBM notice within 90 days of the effective date of the modification.

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12.2   Acceptable Use Policy

IBM, in its reasonable discretion, may modify the Acceptable Use Policy upon thirty (30) days’
notice to Customer. Except when such modification is required by law, regulation, or similar
governmental action, or a ruling by a court of competent jurisdiction, Customer may terminate this
Agreement (or the affected Service Option Attachments) without the payment of termination charges
if such modification has a material adverse effect on the Customer’s use of the Services and
Customer gives IBM notice within 90 days of the effective date of the modification.

12.3   Amendments

Except for changes pursuant to Sections 12.1 and 12.2, this Agreement may be amended only by a
writing signed by authorized representatives of both parties.

13.0   General

13.1  Headings

The headings of the various sections of this Agreement have been inserted for convenience only and
shall not affect the interpretation of this Agreement.

13.2   Survival

Any of these terms and conditions which by their nature extend beyond the Agreement termination or
expiration remain in effect until fulfilled, including, without limitation, Sections 3.5, 4, 5, 6,
7, 8, 9, 10.2, 10.3, 10.6, 11.2, 11.3, and 13, and apply to both Customer’s and IBM’s respective
successors and assignees.

13.3   Choice of Law

This Agreement will be governed by the substantive laws of the State of California without regard
for its conflict of laws provisions.

13.4   Waiver of Jury Trial

The parties waive any right to a jury trial in any proceeding arising out of or related to this
Agreement.

13.5   Severability

If any provision of this Agreement shall be held by a court of competent jurisdiction to be
invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining
provisions of this Agreement shall in no way be affected or impaired thereby, so long as the
remaining provisions of this Agreement still express the original intent of the parties. If the
original intent of the parties can not be preserved, this Agreement shall either be renegotiated or
terminated.

13.6   Publicity and Trademarks

Neither party grants the other the right to use its or any of its Affiliates’ trademarks, trade
names,

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or other designations in any promotion, publication, or Web site without prior written consent.
Except as may be required by law or as may be required by IBM to perform the Services, neither
party may disclose to any third party the terms and conditions of this Agreement, without prior
written consent.

13.7   No Third-Party Beneficiaries

Except as expressly provided in Section 7, this Agreement does not create any intended third party
beneficiary rights.

13.8   Personnel

Each party is responsible for the supervision, direction, and control of its respective personnel.
IBM reserves the right to determine the assignment of its personnel. IBM may subcontract portions
of the Services to Subcontractors and Affiliates selected by IBM.

13.9   No Agency

This Agreement does not create an agency, joint venture, or partnership between the parties.

13.10  Assignment

Neither party may assign this Agreement, in whole or in part, without the prior written consent of
the other. Any attempt to do so is void. Neither party will unreasonably withhold such consent. The
assignment of this Agreement, in whole or in part, to any Affiliates in the United States or to a
successor organization by merger or acquisition does not require the consent of the other. IBM is
also permitted to assign its rights to payments under this Agreement without obtaining Customer’s
consent. It is not considered an assignment for IBM to divest a portion of its business in a manner
that similarly affects all of its customers.

13.11   No Resale

Customer shall not resell the Services, in whole or in part. This does not prevent Customer from
making their Content available to Customer’s end users.

13.12   Risk of Loss

Risk of loss for all Base Components shall at all times remain with IBM. Risk of loss for all
Customer Components shall at all times remain with Customer.

13.13   Force Majeure

Except for payment obligations hereunder, neither party is responsible to fulfill its obligations
to the extent due to causes beyond its control.

13.14   Actions Period

Neither party will bring a legal action related to this Agreement more than two years after the
cause of action accrued.

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13.15   Waiver

The failure of one party to insist upon strict adherence to any term of this Agreement on any
occasion shall not be considered a waiver, nor shall it deprive that party of the right to insist
later on adherence thereto. Any waiver must be in writing and signed by an authorized
representative of the waiving party.

13.16   Freedom of Action

Each party is free to enter into similar agreements with others.

13.17   Limitation of Licenses

Each of us grants only the licenses or rights expressly specified herein. No other licenses or
rights (including licenses or rights under patents) are granted, either directly, by implication,
estoppel, or otherwise,

13.18   Data Protection

Customer agrees to allow IBM and its Affiliates to store and use Customer’s contact information,
including names, phone numbers, and e-mail addresses. anywhere they do business. Such information
will be processed and used in connection with our business relationship, and may be provided to
contractors acting on IBM’s behalf, Business Partners (certain organizations who have signed
agreements with IBM to promote, market, and support certain products and services), and assignees
of IBM and Affiliates for uses consistent with Customer’s business relationship with IBM, including
communicating with Customer (for example, for processing orders, for promotions, and for marketing
research). For personal information processed by IBM on Customer’s behalf as part of the Services,
IBM will act in accordance with Customer’s instructions by following such processing and security
obligations as are contained in this Agreement. Customer also confirms that Customer is solely
responsible for ensuring that any processing and security obligations comply with applicable data
protection laws. Customer’s contact information shall not be considered personal information
processed on Customer’s behalf. This Section does not apply to Customer’s customer information.

13.19   Geographic Scope

Although it is possible that Services Recipients outside of the United States of America may access
Customer’s Web site, IBM’s delivery of the Services will only occur within the United States of
America, and IBM’s obligations hereunder are valid only in the United States of America.

13.20   Notices

Any notices required or permitted hereunder will be effective upon receipt and will be personally
delivered; mailed via the postal service; sent by reliable overnight courier, or transmitted by
confirmed facsimile. Except for notices under Section 10.3, all notices will be in writing and
addressed to the applicable party’s designated representative at the address specified in this
Agreement. Except as to notices permitted or required under Sections 3 or 7, the parties agree that
electronic mail messages sent between them using security procedures sufficient to

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reasonably authenticate them will be deemed writings. In addition, IBM may provide notice under
Section 12.2 by a posting to the Web site identified in Section 1.0 (a).

 

Customer and IBM agree that this Agreement, including these Base Terms and applicable Attachments
and Order Forms, is the complete agreement between the parties relating to the subject matter
hereof. This Agreement replaces and supersedes any other prior or contemporaneous agreements or
communications between the parties related to the subject matter hereof.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Agreed and Accepted:	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Successfactors	 	 	 	International Business Machines Corporation
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ R. Womack
	 	 
	 	By:
	 	/s/ Justin Goudan
	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Customer Authorized Signature
	 	 	 	 	 	Authorized Signature	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 
	Randy Womack

	 	6/30/03
	 	Justin J. Goudan
	 	6/30/03
	 	 
	 	 	 	 	 
	Name (type or print)

	 	Date
	 	Name (type or print)
	 	Date	 	 
	 
	 	 	 	 	 	 	 	 
	VP of Operations /CFO

	 	 	 	Sales Manager	 	 	 	 
	 	 	 	 	 
	Title

	 	 	 	Title	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Customer number:

	 	 	 	Agreement number.	 	 	 	 
	Customer address:
	 	 	 	 	 	 	 	 
	 

	 	 	 	Engagement number:
	 	 	 	 
	 

	 	 	 	IBM contract representative:
	 		 	 
	 

	 	 	 	IBM Service identifier, USFV5
	 	 	 	 

After signing, please return a copy of this Agreement to the following address.

IBM Global Services, Harborview Plaza, 3031 North Rocky Point Drive West, Tampa,

FL 33807

Attention: Order Fulfillment Services

13exv10w12

 

Exhibit
10.12

SUCCESS ACQUISITION CORPORATION

SERIES E PREFERRED STOCK PURCHASE AGREEMENT

May 19, 2006

 

 

SUCCESS ACQUISITION CORPORATION

SERIES E PREFERRED STOCK PURCHASE AGREEMENT

     This Series E Preferred Stock Purchase Agreement (this “Agreement”) is made as of May 19,
2006, by and among Success Acquisition Corporation, a Delaware corporation (the “Company”) and the
purchasers of the Company’s Series E Preferred Stock listed on Exhibit A hereto who are
signatories to this Agreement (the “Purchasers”).

     In consideration of the mutual promises and covenants herein, the receipt and sufficiency are
hereby acknowledged, the parties hereto agree as follows:

SECTION 1

Authorization and Sale of Series E Preferred Stock

          1.1 Authorization of Series E Preferred Stock. The Company has authorized the sale
and issuance to the Purchasers of up to 5,203,500 shares of its Series E Preferred Stock, par value
$0.001 per share (referred to herein as the “Series E Preferred Stock” or the “Shares”), having the
rights, preferences, privileges and restrictions as set forth in the Sixth Amended and Restated
Certificate of Incorporation in substantially the form attached hereto as Exhibit B (the
"Restated Certificate”).

          1.2 Sale and Issuance of Series E Preferred Stock. Subject to the terms and
conditions hereof, the Company will issue and sell to the Purchasers and the Purchasers will buy
that number of Shares set forth opposite each Purchaser’s name on the Schedule of Purchasers
attached hereto as Exhibit A at a per share purchase price of $4.80446 (the “Per Share
Price”) for the consideration specified opposite the name of each Purchaser in the Schedule of
Purchasers. The Company’s agreements with each of the Purchasers are separate agreements, and the
sale of the Shares to each Purchaser is a separate sale.

SECTION 2

Closing Dates; Delivery

          2.1 Closing. The Closing of the purchase and sale of the Shares shall take place at
the offices of Fenwick & West LLP, 801 California Avenue, Mountain View, California, at 10:00 a.m.,
on May 19, 2006, or at such other time and place as the Company and Purchasers who have agreed to
purchase a majority of the Shares listed on Exhibit A mutually agree upon, determine (which
time and place are designated as the “Closing”). At the Closing, the Company shall deliver to each
applicable Purchaser a certificate or certificates representing the Series E Preferred Stock that
such Purchaser is purchasing against payment of the purchase price therefor by check, wire
transfer, cancellation of indebtedness or any combination thereof at the Closing.

 

 

          2.2 Delivery and Payment. At the Closing, the Company will deliver to each Purchaser
a certificate or certificates, registered in the Purchaser’s name, representing the number of
Shares to be purchased by the Purchaser at the Closing, against payment of the purchase price
therefor, by check payable to the Company, by wire transfer per the Company’s instructions, by the
forgiveness of the indebtedness of the Company, such other consideration as may be set forth in the
Schedule of Purchasers, or by a combination of the foregoing.

SECTION 3

Representations and Warranties of the Company

     Except as set forth as an exception on a Schedule of Exceptions attached hereto as Exhibit
C delivered by the Company to the Purchasers at the Closing (which exceptions will be deemed to
be a representation and warranty hereunder), the Company represents and warrants to the Purchasers
that as of the date of each such closing at which the Purchasers consummate their purchase of
Shares hereunder as follows:

          3.1 Organization and Standing; Certificate of Incorporation and Bylaws. The
Company is a corporation duly organized and existing under, and by virtue of, the laws of the State
of Delaware and is in good standing under such laws. The Company has requisite corporate power and
authority to own and operate its properties and assets and to carry on its business as presently
conducted. The Company is duly qualified and is authorized to do business and is in good standing
in each jurisdiction in which the failure to be so qualified to business would have a material
adverse effect on the business or financial condition of the Company. The Company has made
available to the Purchasers copies of its Certificate of Incorporation, Bylaws and its minute
books. Said copies are true, correct and complete and reflect all amendments now in effect.

          3.2 Corporate Power. The Company has all requisite legal and corporate power and
authority to execute and deliver this Agreement and the Investment Agreements, to sell and issue
the Shares hereunder, to issue the underlying Common Stock (the “Conversion Stock”) in accordance
with the provisions of the Restated Certificate, and to carry out and perform its obligations under
the terms of the this Agreement and the Investment Agreements.

          3.3 Subsidiaries. The Company has no subsidiaries or affiliated companies and does
not otherwise own or control, directly or indirectly, any equity interest in any corporation,
association or business entity.

          3.4 Capitalization. The authorized capital stock of the Company will, upon the filing
of the Restated Certificate, consist of: (a) 50,000,000 shares of Common Stock, par value $0.001,
and 32,742,579 shares of Preferred Stock, 10,650,000 of which have been designated Series A
Preferred Stock, 7,751,935 of which have been designated as Series B Preferred Stock, 4,416,961 of
which have been designated as Series C Preferred Stock, 4,523,683 of which have been designated
Series D Preferred Stock and 5,400,000 of which have been designated Series E Preferred Stock. As
of the Closing, the total number of outstanding shares of Common Stock is 5,353,660, the total
number of outstanding shares of Series A Preferred Stock is 10,650,000, the total number of
outstanding shares of Series B Preferred Stock is 7,751,935, the total number of

-2-

 

outstanding
shares of Series C Preferred Stock is 4,416,961 and the total number of outstanding shares of
Series D Preferred Stock is 4,523,683. Upon the filing of the Restated Certificate and immediately
prior to the Closing, no shares of Series E Preferred Stock were outstanding. The Preferred Stock
shall have the rights, preferences, privileges and restrictions set forth in the Restated
Certificate. All currently outstanding shares of Common Stock and Preferred Stock have been duly
authorized and validly issued, are fully paid and nonassessable, and have been issued in compliance
with applicable securities laws. The Company has reserved 5,203,500 shares of Series E Preferred
Stock for issuance hereunder and 5,203,500 shares of Common Stock for issuance upon conversion of
the Preferred Stock. The Company has reserved 13,589,628 shares of Common Stock for issuance under
the Company’s 2001 Stock Option Plan (the “Plan”), pursuant to which (i) options to purchase
3,977,181 shares of Common Stock are outstanding, (ii) 4,657,867 shares have been issued upon the
exercise of options granted thereunder, and (iii) 4,954,580 shares remain available for grant.
Except as set forth above and as provided in the Company’s Restated Certificate, there are no
options, warrants or other rights to purchase or acquire any of the Company’s authorized and
unissued capital stock or any securities convertible into or ultimately exchangeable for any shares
of the Company’s capital stock. Apart from the exceptions noted herein or in the Schedule of
Exceptions, and except for rights of first refusal held by the Company to purchase shares of its
stock issued under the Plan, no shares of the Company’s outstanding capital stock, or stock
issuable upon exercise or exchange of any outstanding options, warrants or rights, or other stock
issuable by the Company, are subject to any preemptive rights, rights of first refusal or other
rights to purchase such stock (whether in favor of the Company or any other person), pursuant to
any agreement or commitment of the Company.

          3.5 Authorization. All corporate action on the part of the Company, its directors and
stockholders necessary for (i) the authorization, execution, delivery and performance of this
Agreement and the Investment Agreements by the Company, (ii) the authorization, sale, issuance and
delivery of the Shares and the Conversion Stock and the performance of the Company’s obligations
under this Agreement and the Investment Agreements (iii) the filing of the Restated Certificate,
has been taken or will be taken prior to the Closing. This Agreement and the Investment
Agreements, when executed and delivered by the Company, shall constitute valid and binding
obligations of the Company, enforceable in accordance with their terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies; provided,
however, that the Company makes no representation as to the enforceability of the
indemnification provisions contained in the Investor Rights Agreement. The Shares, when issued in
compliance with the provisions of this Agreement, will be validly issued, fully paid and
nonassessable, and will have the rights, preferences, privileges and restrictions described in the
Restated Certificate; the Conversion Stock has been duly and validly reserved and, when issued in
compliance with the provisions of the Restated Certificate, will be validly issued, fully paid and
nonassessable; and the Shares and the Conversion Stock will be free of any liens or encumbrances
(assuming the Purchaser takes the Shares with no notice thereof) other than any liens or
encumbrances created by or imposed upon the holders; provided, however, that the
Shares and the Conversion Stock may be subject to restrictions on transfer under state or federal
securities laws and restrictions set forth in the Investor Rights Agreement. Except as set forth
in the Investment Agreements and Exhibit C, the issuance of the Shares is not subject to
any preemptive rights or rights of first refusal. Based in part upon the representations of the
Purchasers in this
Agreement and subject to the provisions of Section 3.15

-3-

 

below, the Shares and the Conversion
Stock will be issued in compliance with all applicable federal and state securities laws.

          3.6 Proprietary Rights. The Company has title and ownership of, or full legal right
to use, all patents, trademarks, service marks, trade names, copyrights, trade secrets,
information, proprietary rights and processes necessary for its business as now conducted and as
proposed to be conducted without any conflict with or infringement of the rights of others. There
are no outstanding options, licenses, or agreements of any kind relating to the foregoing, nor is
the Company bound by or a party to any options, licenses or agreements of any kind with respect to
the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes of any other person or entity. The Company has not
received any communications alleging that the Company has violated or, by conducting its business
as currently conducted, would violate any of the patents, trademarks, service marks, trade names,
copyrights or trade proprietary rights of any other person or entity.

          3.7 Title to Properties and Assets; Liens, etc.

               (a) The Company has good and marketable title to its properties and assets, and good title to
its leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance, or
charge or claim of any third party whatsoever, other than those resulting from taxes which have not
yet become delinquent. All facilities, machinery, equipment, fixtures, vehicles and other
properties owned, leased or used by the Company are in good operating condition and repair and are
reasonably fit and usable for the purposes for which they are being used.

               (b) Without limitation to the foregoing, with regard to all assets which the Company acquired
through foreclosure of a security interest granted by SuccessFactors.com, Inc. in favor of Sand
Hill Capital II, LP (“Sand Hill”), the Company obtained good and marketable title to such assets,
free and clear of all liens, claims and interests (including interests subordinate to the lien of
Sand Hill and of all ownership interests of SuccessFactors.com, Inc. and its predecessor entities
Austin-Hayne Corporation and Success Factor Systems, Inc.) at a foreclosure sale conducted for Sand
Hill by Auctionet.com, Incorporated (the “Sand Hill Foreclosure”) on May 31, 2001. The Sand Hill
Foreclosure was a duly noticed and properly conducted public foreclosure pursuant to the then
operative provisions of Division 9 of the California Uniform Commercial Code. In connection with
the Sand Hill Foreclosure, the Company did not agree with any person or pay or give anything of
value to any person to induce such person to refrain or withdraw from bidding on any assets sold at
the Sand Hill Foreclosure. The Company has previously provided Perkins Coie LLP, special counsel
to certain of the Purchasers (“Perkins”) with true and complete copies of all documents in its
possession (i) granting Sand Hill the security interest foreclosed at the Sand Hill Foreclosure,
(ii) all notices of default related to the Sand Hill Foreclosure generated by or for Sand Hill, and
(iii) all transaction documents pursuant to which the Company claims to have acquired its interest
in any assets sold at the Sand Hill Foreclosure.

               (c) Without limitation to the foregoing, with regard to all assets which the Company acquired
from Comdisco, Inc. (“Comdisco”) following the exercise by Comdisco of a security interest granted
by eAlity, Inc., dba Vita Systems, Inc. (“eAlity”) in favor of Comdisco (the “Comdisco
Foreclosure”), the Company obtained good and marketable title to such assets, free and
clear of all liens, claims and interests (including interests subordinate to the lien of
Comdisco and of

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all ownership interests of eAlity) pursuant to that certain Secured Party Asset
Sale Agreement dated as of August 6, 2001, by and between Comdisco and the Company. In connection
with the Comdisco Foreclosure, the Company did not agree with any person or pay or give anything of
value to any person to induce such person to refrain or withdraw from bidding on, or to withdraw
any alternative offer to purchase, any assets sold at the Comdisco Foreclosure. The Company has
previously provided Perkins with true and complete copies of all documents in its possession (i)
granting Comdisco the security interest foreclosed at the Comdisco Foreclosure, (ii) all notices of
default related to the Comdisco Foreclosure generated by or for Comdisco, and (iii) all transaction
documents pursuant to which the Company claims to have acquired its interest in any assets sold at
the Comdisco Foreclosure.

          3.8 Litigation. There are no actions, suits, proceedings or investigations pending
or, to the Company’s knowledge, threatened in writing against the Company or its properties before
any court or governmental agency. There is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate. Without limitation to the
foregoing, except as set forth in the Schedule of Exceptions, the Company has not received any
demand, claim or other communication asserting, with regard to any person from whom the Company has
acquired assets (including SuccessFactors.com, Inc. and eAlity, Inc. (dba Vita Systems, Inc.))
(each person from which the Company claims to have acquired assets, a “Predecessor”) that (i) any
transaction under which the Company acquired assets from such Predecessor is avoidable under any
theory or (ii) the Company is liable under any theory for any debt or other obligation of such
Predecessor. In addition, except as set forth in the Schedule of Exceptions, no third party has
contested the validity of the Sand Hill Foreclosure or the Comdisco Foreclosure nor is the Company
aware of any basis for any such claim or contest.

          3.9 Material Liabilities. The Company has no liabilities or obligations, absolute or
contingent, which are reasonably expected to exceed $50,000 individually or $100,000 in the
aggregate and which are not disclosed in Exhibit C.

          3.10 Material Agreements. All of the contracts and agreements with expected receipts
or expenditures in excess of $180,000 or involving a license or grant of rights to or from the
Company involving patents, copyrights, trademarks, or other proprietary information applicable to
the current business of the Company or relating to compensation plans or arrangements with
employees (other than with respect to such employees’ salaries or grants of options pursuant to the
Company’s 2001 Stock Option Plan), to which the Company is a party and which are in effect as of
the Closing are listed on Exhibit C. All such contracts and agreements are valid, binding
and in full force and effect in all material respects, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, and the Company has not received any
indication of an intention to terminate any such contract or agreement by any of the parties to any
such contract or agreement.

          3.11 Compliance with Other Instruments, None Burdensome. The Company is not in
violation of: any term of its Restated Certificate or Bylaws, in any material respect; any term or
provision of any mortgage, indebtedness, indenture, contract, agreement, instrument, judgment or
decree; and, to its knowledge, is not in violation of any order, statute, rule or regulation
applicable to
the Company. The execution, delivery and performance of and compliance with this Agreement
and

-5-

 

the Investment Agreements, and the issuance of the Shares and the Conversion Stock, have not
resulted and will not result in any violation of, or materially conflict with, or constitute a
default under, the Company’s Restated Certificate or Bylaws and have not and will not result in any
material violation of, or materially conflict with, or constitute a material default under, any of
its agreements nor result in the creation of any mortgage, pledge, lien, encumbrance or charge upon
any of the properties or assets of the Company.

          3.12 Employees. To the Company’s knowledge, no employee or consultant of the Company
is in violation of any term of any employment contract, non-disclosure agreement or any other
similar contract or agreement relating to the relationship of such employee with the Company, any
former employer or any other party. The Company does not have any collective bargaining agreement
covering any of its employees. The Company does not believe it is or will be necessary to utilize
any inventions of any of its employees made prior to or outside the scope of their employment by
the Company. To its knowledge, the Company has complied with all applicable state and federal laws
related to employment. Each employee, officer and consultant of the Company has executed a copy of
the Company’s standard confidential information and invention assignment agreement. The Company is
not aware that any employee or consultant of the Company is obligated under any agreement
(including licenses, covenants or commitments of any nature) or subject to any judgment, decree or
order of any court or administrative agency, or any other restriction that would interfere with the
use of his or her best efforts to carry out his or her duties for the Company or to promote the
interests of the Company or that would conflict with the Company’s business as proposed to be
conducted.

          3.13 Registration Rights; Voting. Except as set forth in the Investor Rights
Agreement, the Company is not under any contractual obligation to register under the Securities Act
of 1933, as amended (the “Securities Act"), any of its presently outstanding securities or any of
its securities which may hereafter be issued. To the Company’s knowledge, except as contemplated
in the Voting Agreement, no stockholder of the Company has entered into any agreements with respect
to the voting of capital stock of the Company.

          3.14 Governmental Consent. No consent, approval or authorization of or registration,
qualification, designation, declaration or filing with any governmental authority on the part of
the Company is required in connection with the valid execution and delivery of the Investment
Agreements, or the offer, sale or issuance of the Shares or the Conversion Stock, or the
consummation of any other transaction contemplated hereby, except (i) the filing of the Restated
Certificate in the office of the Delaware Secretary of State prior to the Closing and (ii) the
qualification (or taking of such action as may be necessary to secure an exemption from
qualification, if available) of the offer and sale of the Shares and the Conversion Stock under
applicable federal and Blue Sky laws, which filings and qualifications, if required, will be
accomplished in a timely manner.

          3.15 Offering. Subject to the accuracy of the Purchaser’s representations in Section
4 hereof, the offer, sale and issuance of the Shares and the Conversion Stock constitute
transactions exempt from the registration requirements of Section 5 of the Securities Act.

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          3.16 Brokers or Finders. Neither the Company nor the Purchaser, as a result of any
action taken by the Company, have incurred or will incur, directly or indirectly, any liability for
brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this
Agreement or the transactions contemplated hereby.

          3.17 Employee Benefit Plans. The Company does not have any Employee Benefit Plan as
defined in the Employee Retirement Income Security Act of 1974.

          3.18 Labor Agreements and Actions; Employee Compensation. The Company is not bound by
or subject to any contract, commitment or arrangement with any labor union, and no labor union has
requested or, to the best of the Company’s knowledge, has sought to represent any of the employees
of the Company. There is no strike or other labor dispute involving the Company pending, or to the
best of the Company’s knowledge, threatened, that could have a material adverse effect on the
assets, properties, financial condition, operating results, or business of the Company, nor is the
Company aware of any labor organization activity involving its employees. To the best of its
knowledge, the Company has complied in all material respects with applicable state and federal
equal employment opportunity and other laws related to employment. Other than the Company’s 2001
Stock Option Plan and any grants of options thereunder, the Company is not a party to any
employment contract, deferred compensation agreement, bonus plan, incentive plan, profit sharing
plan, retirement agreement, or other employee compensation agreement.

          3.19 Full Disclosure. To the Company’s knowledge and belief, this Agreement, the
Exhibits hereto, the other Investment Agreements and any certificate expressly delivered by the
Company to the Purchasers or their attorneys or agents in connection herewith or therewith or with
the transactions contemplated hereby or thereby, neither contain any untrue statement of a material
fact nor, to the Company’s knowledge and belief, omit to state a material fact necessary in order
to make the statements contained herein or therein not misleading. To the Company’s knowledge and
belief, there are no facts which (individually or in the aggregate) materially adversely affect the
business, assets, liabilities, financial condition or operations of the Company that have not been
set forth in the Agreement, the Exhibits hereto, the other Investment Agreements or in other
documents expressly delivered to Purchasers or their attorneys or agents in connection herewith.

          3.20 Qualified Small Business Stock. The Company qualifies as a “Qualified Small
Business” as defined in Section 1202(d) of the Internal Revenue Code of 1986, as amended (the
"Code”). The Company shall comply with the reporting and record keeping requirements of Section
1202 of the Code, any regulations promulgated thereunder and any similar state laws and
regulations. In addition, within ten days after a Purchaser’s written request therefor, the
Company shall deliver to such Purchaser a written statement indicating whether such Purchaser’s
interest in the Company constitutes “qualified small business stock” as defined in Section 1202(c)
of the Code.

          3.21 Small Business Concern. The Company is a “Small Business Concern” within the
meaning of 15 U.S.C. §662(5), that is Section 103(5) of the Small Business Investment Act of 1958,
as amended, and the regulations thereunder, including 13 C.F.R. §107 (the “SBIC Act”), and meets
the applicable size eligibility criteria set forth in 13 C.F.R. §121.301(c)(1) or the industry
standard covering the industry in which the Company is primarily engaged as set forth in 13

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C.F.R
§121.301(c)(2). The Company does not presently engage in any activities for which a small
business investment company is prohibited from providing funds by the SBIC Act.

          3.22 Insurance. The Company has fire and casualty insurance policies with coverage
customary for companies similarly situated to the Company.

          3.23 Financial Statements. The Company has delivered to each Purchaser its unaudited
consolidated financial statement as at and for the fiscal year ended December 31, 2005 (including
balance sheet, statement of cash flows, and statement of operations) and the three-month period
ended March 31, 2006 (including balance sheet and statement of operations) (all such financial
statements being collectively referred to herein as the Financial Statements). The Financial
Statements (i) are in accordance with the books and records of the Company and (ii) reflect all
transactions entered into by the Company in all material respects. Except as set forth in the
Financial Statements, the Company has no material liabilities, contingent or otherwise, other than
(a) liabilities incurred in the ordinary course of business subsequent to December 31, 2005, and
each of which that are reasonably expected to exceed $50,000 individually or $100,000 in the
aggregate are set forth in the Schedule of Exceptions, and (b) obligations under contracts and
commitments incurred in the ordinary course of business and not required under generally accepted
accounting principles to be reflected in the Financial Statements which, in both cases,
individually or in the aggregate, are not material to the financial conditions or operating results
of the Company. Except as disclosed in the Financial Statements, the Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation.

          3.24 Changes. Since December 31, 2005 there has not been:

               (a) any change in the assets, liabilities, financial condition or operating results of the
Company from that reflected in the Financial Statements, except changes in the ordinary course of
business that have not been, in the aggregate, materially adverse;

               (b) any damage, destruction or loss, whether or not covered by insurance, materially and
adversely affecting the material assets or properties, financial condition, operating results,
prospects or business of the Company (as such business is presently conducted and as it is proposed
to be conducted);

               (c) any waiver by the Company of a valuable right or of a material debt owed to it;

               (d) any satisfaction or discharge of any lien, claim or encumbrance or payment of any
obligation by the Company, except in the ordinary course of business and that is not material to
the assets, properties, financial condition, operating results or business of the Company (as such
business is presently conducted and as it is proposed to be conducted);

               (e) any material change or amendment to a material contract or arrangement by which the
Company or any of its assets or properties is bound or subject;

               (f) any material change in any compensation arrangement or agreement with any employee;

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               (g) any sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or
other intangible assets;

               (h) any resignation or termination of employment of any key officer of the Company; and the
Company, to its knowledge, does not know of the impending resignation or termination of employment
of any such officer;

               (i) receipt of notice that there has been a loss of, or material order cancellation by, any
major customer of the Company;

               (j) any mortgage, pledge, transfer of a security interest in, or lien, created by the Company,
with respect to any of its material intellectual property rights or any other material properties
or assets, except liens for taxes not yet due or payable;

               (k) any loans or guarantees made by the Company to or for the benefit of its employees,
officers or directors, or any members of their immediate families, other than travel advances and
other advances made in the ordinary course of its business;

               (l) any declaration, setting aside or payment or other distribution in respect of any of the
Company’s capital stock, or any direct or indirect redemption, purchase or other acquisition of any
of such stock by the Company;

               (m) to the Company’s knowledge, any other event or condition of any character that might
materially and adversely affect the assets, properties, financial condition, operating results or
business of the Company (as such business is presently conducted and as it is proposed to be
conducted); or

               (n) any agreement or commitment by the Company to do any of the things described in this
Section 3.24.

          3.25 Tax Returns and Payments. The Company has timely filed all tax returns and
reports required by law. All tax returns and reports of the Company are true and correct in all
material respects. The Company has paid all taxes and other assessments due, except those, if any,
currently being contested by it in good faith which are listed in the Schedule of Exceptions.

SECTION 4

Representations and Warranties of the Purchasers

     Each Purchaser hereby severally represents and warrants to the Company as follows:

          4.1 Preexisting Relationship with Company; Business and Financial Experience; Accredited
Investor. It either (i) has a preexisting business and/or personal relationship with the
Company and/or its officers, directors or controlling persons, or (ii) by reason of its business or
financial experience or
the business or financial experience of its professional advisors who are unaffiliated with
the Company and who are not compensated by the Company, has the capacity to protect its own
interests in connection with the purchase of the Shares and underlying

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Conversion Stock. It is an
“accredited investor” within the meaning of Rule 501(a) of Regulation D under the Securities Act.

          4.2 Investment Intent; Blue Sky. It is acquiring the Shares and the underlying
Conversion Stock for investment for its own account, not as a nominee or agent, and not with a view
to, or for resale in connection with, any distribution thereof. It understands that the issuance
of the Shares and the underlying Conversion Stock has not been, and will not be, registered under
the Securities Act by reason of a specific exemption from the registration provisions of the
Securities Act, the availability of which depends upon, among other things, the bona fide nature of
the Purchaser’s investment intent and the accuracy of the Purchaser’s representations as expressed
herein. The Purchaser’s address set forth on the Schedule of Purchasers attached hereto as
Exhibit A represents the Purchaser’s true and correct state of domicile, upon which the
Company may rely for the purpose of complying with applicable “Blue Sky” laws.

          4.3 Rule 144. It acknowledges that the Shares and the underlying Conversion Stock
must be held indefinitely unless subsequently registered under the Securities Act or unless an
exemption from such registration is available. It is aware of the provisions of Rule 144
promulgated under the Securities Act which permit limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among other things, the
existence of a public market for the shares, the availability of certain current public information
about the Company, the resale occurring not less than one year after a party has purchased and paid
for the security to be sold, the sale being effected through a “broker’s transaction” or in a
transaction directly with a “market maker,” and the number of shares being sold during any
three-month period not exceeding specified limitations.

          4.4 No Public Market. It understands that no public market now exists for any of the
securities issued by the Company and that the Company has made no assurances that a public market
will ever exist for the Company’s securities.

          4.5 Restrictions on Transfer; Restrictive Legends. It understands that the transfer
of the Shares and the Conversion Stock is restricted by applicable state and federal securities
laws and by the provisions of the Investor Rights Agreement, and that the certificates representing
the Shares and the Conversion Stock will be imprinted with legends restricting transfer except in
compliance therewith.

          4.6 Access to Data. It has had an opportunity to discuss the Company’s business,
management and financial affairs with the Company’s management. It has also had an opportunity to
ask questions of officers of the Company. It understands that such discussions, as well as any
written information issued by the Company, were intended to describe certain aspects of the
Company’s business and prospects but were not a thorough or exhaustive description. The foregoing,
however, does not limit or modify the representations and warranties of the Company in Section 3 of
this Agreement or the right of the Purchasers to rely thereon.

          4.7 Authorization. All action on the part of the Purchaser’s members, partners, board
of directors, and stockholders, as applicable, necessary for the authorization, execution, delivery
and performance of the this Agreement and the Investment Agreements by the Purchaser, the purchase
of and payment for the Shares and the Conversion Stock and the performance of all of

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the
Purchaser’s obligations under the Investment Agreements has been taken or will be taken prior to
the Closing. This Agreement and the Investment Agreements, when executed and delivered by the
Purchaser, shall constitute valid and binding obligations of the Purchaser, enforceable in
accordance with their terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific performance, injunctive
relief or other equitable remedies; provided, however, that the Purchaser makes no
representation as to the enforceability of the indemnification provisions contained in the Investor
Rights Agreement.

          4.8 Brokers or Finders. The Company has not and will not incur, directly or
indirectly, as a result of any action taken by the Purchaser, any liability for brokerage or
finders’ fees or agents’ commissions or any similar charges in connection with this Agreement or
the transactions contemplated hereby.

          4.9 Tax Liability. It has reviewed with its own tax advisors the tax consequences of
the transactions contemplated by this Agreement. It relies solely on such advisors and not on any
statements or representations of the Company or any of the Company’s agents with respect to such
tax consequences. It understands that it, and not the Company, shall be responsible for its own
tax liability that may arise as a result of the transactions contemplated by this Agreement.

SECTION 5

Conditions to Closing of the Purchasers

     Each Purchaser’s obligation to purchase the Shares is, unless waived by the Purchaser, subject
to the fulfillment as of the date of Closing of the following conditions:

          5.1 Representations and Warranties Correct. The representations and warranties made
by the Company in Section 3 hereof shall be true and correct in all respects as of the date of the
Closing.

          5.2 Consents, Permits, and Waivers. The Company shall have obtained any and all
consents, permits and waivers necessary or appropriate for consummation of the transactions
contemplated by the Agreement and the Investment Agreements.

          5.3 Covenants. All covenants, agreements and conditions contained in this Agreement
to be performed or complied with by the Company on or prior to the Closing shall have been
performed or complied with in all respects.

          5.4 Blue Sky. The Company shall have obtained all necessary Blue Sky law permits and
qualifications, or have the availability of exemptions therefrom, required by any state for the
offer and sale of the Shares and the underlying Conversion Stock.

          5.5 Restated Certificate. The Restated Certificate shall have been filed in the
office of the Delaware Secretary of State.

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          5.6 Compliance Certificate. The Company shall have delivered to Purchasers a
Compliance Certificate, executed by the Chief Executive Officer of the Company, dated the date of
the Closing, to the effect that the conditions specified in Sections 5.1, 5.2, 5.3 and 5.5 have
been satisfied.

          5.7 Officer’s Certificate. Purchasers shall have received from a duly authorized
officer of the Company, a certificate having attached thereto (i) the Company’s Certificate of
Incorporation as in effect at the time of the Closing, (ii) the Company’s Bylaws as in effect at
the time of the Closing, (iii) resolutions approved by the Board of Directors authorizing the
transactions contemplated hereby, (iv) resolutions approved by the Company’s stockholders
authorizing the filing of the Restated Charter, and (v) good standing certificates (including tax
good standing) with respect to the Company from the applicable authority(ies) in Delaware,
California and any other jurisdiction in which the Company is qualified to do business, dated a
recent date before the Closing.

          5.8 Investor Rights Agreement. The Company and the Purchasers shall have executed and
delivered the Investor Rights Agreement in substantially the form attached hereto as Exhibit
D.

          5.9 Voting Agreement. The Company, each other Purchaser and certain holders of the
Company’s Common Stock shall have executed and delivered the Voting Agreement in substantially the
form of Exhibit E.

          5.10 Co-Sale Agreement. The Company, each other Purchaser and certain holders of the
Company’s Common Stock shall have executed and delivered the Co-Sale Agreement in substantially the
form of Exhibit F.

          5.11 Authorized Directors. The authorized number of directors of the Company shall be
five (5) and shall, at the Closing, include Lars Dalgaard, David Strohm, David Whorton, Eric Dunn
and Bill McGlashan.

          5.12 Opinion of Company Counsel. Each purchaser shall have received from Fenwick &
West, LLP, counsel for the Company, an opinion dated as of the Closing, substantially in the form
attached as Exhibit G.

          5.13 Indemnification Agreements. The Company shall have entered into
Indemnification Agreements in the form attached hereto as Exhibit H with each of Granite
Global Ventures II L.P., GGV II Entrepreneurs Fund, Canaan Equity III L.P. and Canaan Equity III
Entrepreneurs LLC.

SECTION 6

Conditions to Closing of the Company

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     The Company’s obligation to sell and issue the Shares is, unless waived by the Company,
subject to the fulfillment as of the date of Closing of the following conditions:

          6.1 Representations and Warranties Correct. The representations made in Section 4
hereof by the Purchasers shall be true and correct in all respects as of the date of Closing.

          6.2 Covenants. All covenants, agreements and conditions contained in this Agreement
to be performed or complied with by the Purchasers on or prior to the date of Closing shall have
been performed or complied with in all respects.

          6.3 Blue Sky. The Company shall have obtained all necessary Blue Sky law permits and
qualifications or have the availability of exemptions therefrom, required by any state for the
offer and sale of the Shares and the underlying Conversion Stock.

          6.4 Restated Certificate. The Restated Certificate shall have been filed in the
office of the Delaware Secretary of State.

          6.5 Investor Rights Agreement. The Purchasers shall have executed and delivered the
Investor Rights Agreement in substantially the form attached hereto as Exhibit D.

          6.6 Voting Agreement. The Purchasers and certain holders of the Company’s Common
Stock, shall have executed and delivered the Voting Agreement in substantially the form of
Exhibit E.

          6.7 Co-Sale Agreement. The Purchasers and certain holders of the Company’s Common
Stock shall have executed and delivered the Co-Sale Agreement in substantially the form of
Exhibit F.

SECTION 7

Post Closing Covenants

          7.1 Directors’ and Officers’ Insurance. The Company shall continue to maintain directors’
and officers’ insurance from a recognized insurer, approved by the Company’s Board of Directors
(including a majority of the directors elected by the holders of the Preferred Stock), in an amount
reasonably acceptable to the Company’s Board of Directors (including a majority of the directors
elected by the holders of the Preferred Stock).

          7.2 Vesting of Stock Options. Unless otherwise approved by the Company’s Board of
Directors (including a majority of the directors elected by the holders of the Preferred Stock),
all stock option grants shall be subject to four year vesting with 25% of the shares subject to the
option to vest on the first anniversary date of the option grant and an additional 2.0833% of the
shares subject to the option to vest at the end of each full succeeding month thereafter until all
shares subject to the option are fully
vested; provided, that refresh grants shall vest on a monthly basis; provided, further, that
all unvested shares shall be purchasable by the Company at cost upon termination of optionee’s
employment or services for any reason.

-13-

 

SECTION 8

Miscellaneous

          8.1 Governing Law. This Agreement shall be governed in all respects by the internal
laws of the State of California without regard to conflict of laws provisions.

          8.2 Successors and Assigns. Except as otherwise provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties hereto; provided, however, that the
rights of a Purchaser to purchase the Shares shall not be assignable without the consent of the
Company.

          8.3 Entire Agreement; Amendment. The Investment Agreements constitute the full and
entire understanding and agreement among the parties with regard to the subjects hereof and
thereof, and no party shall be liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or therein. Except as
expressly provided herein, neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the holders of at least a
majority of the Shares.

          8.4 Notices. All notices and other communications required or permitted hereunder
shall be in writing and shall be mailed by registered or certified mail, postage prepaid, delivered
by a nationally recognized overnight courier, sent by facsimile transmission, or by hand or by
messenger, addressed:

               i. if to a Purchaser, to the address or facsimile number listed after such Purchaser’s name on
the Schedule of Purchasers attached hereto as Exhibit A or at such other address as such
Purchaser shall have furnished to the Company.

               ii. if to the Company, to:

Success Acquisition Corporation

999 Baker Way, Suite 500

San Mateo, California 94404

Attn: Lars Dalgaard, President

Facsimile Number: (650) 645-2099

or at such other address as the Company shall have furnished to the Purchasers, with a copy to:

-14-

 

Fenwick & West LLP

Silicon Valley Center

801 California Street

Mountain View, CA 94041

Attn: William Schreiber, Esq.

Facsimile Number: (650) 938-5200

Each such notice or other communication shall for all purposes of this Agreement be treated as
effective or having been given (i) when received if delivered personally, (ii) if sent by
facsimile, the first business day after the date of confirmation that the facsimile has been
successfully transmitted to the facsimile number for the party notified, (iii) if sent by mail, at
the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained
receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iv)
one day after deposit with a nationally recognized overnight courier, specifying next day delivery.

          8.5 Delays or Omissions. Except as expressly provided herein, no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach or default of another
party under this Agreement, shall impair any such right, power or remedy of such party nor shall it
be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in
any similar breach or default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any party of any breach
or default under this Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this Agreement or by law or
otherwise afforded to any party, shall be cumulative and not alternative.

          8.6 Expenses. The Company shall pay all costs and expenses that it incurs with
respect to the negotiation, execution, delivery and performance of the Investment Agreements. The
Company shall, at the Closing, reimburse Granite Global Ventures its costs and expenses (including
reasonable attorney’s fees) incurred in connection with the transactions contemplated hereby,
including the negotiation, execution, delivery and performance of the Investment Agreements and all
other documents evidencing the transactions contemplated herein, and in connection with the
enforcement of rights and remedies of the Purchasers hereunder and under the Investment Agreements
and all other documents evidencing the transactions contemplated herein, up to $25,000.

          8.7 Indemnification by the Company. The Company agrees to indemnify and hold each
Purchaser harmless against any loss, liability, damage or expense (including reasonable legal fees
and costs) which such Purchasers may suffer, sustain or become subject to as a result of or in
connection with the breach by the Company of any representation, warranty, covenant or agreement of
the Company contained in this Agreement or the other Investment Agreements.

          8.8 Attorneys’ Fees. In the event that any dispute among the parties to this
Agreement should result in litigation, the prevailing party in such dispute shall be entitled to
recover from the losing party all fees, costs and expenses of enforcing any right of such
prevailing party under or with respect to this Agreement, including without limitation, such
reasonable fees and

-15-

 

expenses of attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.

          8.9 Exculpation Among Purchasers. Each Purchaser acknowledges that it is not relying
upon any person, firm, or corporation, other than the Company in making its investment or decision
to invest in the Company.

          8.10 Survival. The representations, warranties, covenants and agreements made herein
shall survive the closing of the transactions contemplated hereby. All statements as to factual
matters contained in any certificate or other instrument delivered by or on behalf of the Company
pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder solely as of the date of such certificate
or instrument.

          8.11 Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be an original, and all of which together shall constitute one instrument.

          8.12 Severability. In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision, which shall be replaced with an
enforceable provision closest in intent and economic effect as the severed provision;
provided that no such severability shall be effective if it materially changes the economic
benefit of this Agreement to any party.

          8.13 Titles and Subtitles. The titles and subtitles used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting this Agreement.

[Remainder of Page Intentionally Left Blank]

-16-

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set
forth above.

	 	 	 	 	 	 	 	 	 	 	 
	COMPANY	 	PURCHASERS
	 
	 	 	 	 	 	 	 	 	 	 
	SUCCESS ACQUISITION CORPORATION,	 	EMERGENCE CAPITAL PARTNERS, L.P.

a Delaware corporation

By: Emergence Equity Partners, L.L.C.

Its: General Partner
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Lars Dalgaard
 

Lars Dalgaard,

President and Chief Executive Officer
	 	 
	 	By:
	 	/s/ Jason Green
 

Jason Green, Managing Member
	 	 

	 	 	 	 	 
	 	EMERGENCE CAPITAL ASSOCIATES, L.P.

By: Emergence Equity Partners, L.L.C.

Its: General Partner 	 
	 	 	 
	 	 	 
	 	By:  	                                              /s/ Jason Green
 	 
	 	 	Jason Green, Managing Member 	 
	 	 	 	 
	 
	 	EMERGENCE CAPITAL PARTNERS SBIC, L.P.

By: Emergence Equity Partners, Inc.

Its: General Partner

 	 
	 	By:  	/s/ Jason Green
 	 
	 	 	Jason Green, President 	 

 

 

	 	 	 	 	 
	 	CVP SBIC, L.P.

By:   CV SBIC, Inc.

Its:   General Partner 	 
	 
	 	 	 
	 	By:  	                                                     /s/ Eric Dunn
 	 
	 	 	Eric Dunn, Principal 	 
	 	 	 	 
	 
	 	CARDINAL VENTURE AFFILIATES, L.P.

By: Cardinal Ventures, LLC

Its: General Partner
 	 
	 
	 	By:  	/s/ Eric Dunn
 	 
	 	 	Eric Dunn, Principal 	 
	 	 	 	 
	 
	 	TPG VENTURES, L.P.

By: TPG Ventures Genpar, L.P.

By: TPG Ventures Advisors, LLC
 	 
	 
	 
	 	By:  	/s/ Jeffery D. Ekberg
 	 
	 	 	Jeffery D. Ekberg, Vice President 	 
	 
	 	GREYLOCK EQUITY LIMITED

PARTNERSHIP

By: Greylock Equity GP Limited

Partnership, its General Partner

 	 
	 	By:  	/s/ Donald A. Sullivan
 	 
	 	 	Name:  	Donald A. Sullivan 	 
	 	 	Title:  	Administrative Partner

 

 

	 	 	 	 	 
	 	MAPACHE INVESTMENTS, L.P. 	 
	 
	 	 	 
	 	By:  	                                                     /s/ David Strohm
 	 
	 	 	David Strohm, General Partner
 	 
	 	 	 
	 	/s/ David Strohm
 	 
	 	DAVID STROHM 	 	 
	 
	 	 	 
	 	                                                         /s/ John V. Balen
 	 
	 	JOHN V. BALEN 	 
	 	 	 
	 
	 	 	 
	 	                                                          /s/ Deepak Kamra
 	 
	 	DEEPAK KAMRA 	 
	 
	 	 	 
	 	                                                          /s/ Eric A. Young
 	 
	 	ERIC A. YOUNG 	 
	 
	 	 	 
	 	                                                          /s/ David Whorton
 	 
	 	DAVID WHORTON

 

 

	 	 	 	 	 
	 	
GRANITE GLOBAL VENTURES II L.P.

By:   Granite Global Ventures II L.L.C.,
its General Partner 	 
	 
	 	 	 
	 	By:  	                                                     /s/ Glenn Solomon
 	 
	 	 	Glenn Solomon 	 
	 	 	
Managing Director 	 
	 
	 
	 	GGV II ENTREPRENEURS FUND L.P.

By: Granite Global Ventures II L.L.C.,
its General Partner
 	 
	 
	 
	 	By:  	/s/ Glenn Solomon
 	 
	 	 	Glenn Solomon 	 
	 	 	Managing Director 

 

 

	 	 	 	 	 
	 	CANAAN EQUITY III L.P.

By: Canaan Equity Partners III LLC 	 
	 
	 	By:  	/s/ Deepak Kamra
 	 
	 	 	Member/Manager 	 
	 
	 	CANAAN EQUITY III  ENTREPRENEURS LLC

By: Canaan Equity Partners III LLC 	 
	 
	 
	 	By:  	/s/ Deepak Kamra
 	 
	 	 	Manager

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