FIRST AMENDMENT TO EXCLUSIVITY AGREEMENT
This First Amendment to Exclusivity Agreement (this "Amendment") is entered into as of July 8, 2022 (the "Amendment Date"), by and between:
Pinnacle Venture Fund II LP, a Delaware limited partnership, with its principal office at 2400 Sand Hill Road, Suite 310, Menlo Park, CA 94025 (the "Investor");
and
Verdana Software, Inc., a Delaware corporation, with its principal office at 1175 NW Couch Street, Suite 800, Portland, OR 97209 (the "Company").
The Investor and the Company are each individually referred to herein as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, the Parties entered into that certain Exclusivity Agreement, dated as of May 12, 2022 (the "Exclusivity Agreement"), in connection with a proposed minority growth equity investment by the Investor in the Company in the form of a purchase of Series D Preferred Stock of the Company for an aggregate purchase price of Sixty Million Dollars ($60,000,000) (the "Proposed Transaction");
WHEREAS, pursuant to Section 2(a) of the Exclusivity Agreement, the exclusivity period commenced on May 12, 2022 and is currently scheduled to expire on July 11, 2022 (the "Original Expiration Date"), representing an initial exclusivity term of sixty (60) days from the date of the Exclusivity Agreement;
WHEREAS, since the execution of the Exclusivity Agreement, the Parties have been engaged in ongoing due diligence and negotiation of the definitive transaction documents for the Proposed Transaction, including a Series D Preferred Stock Purchase Agreement, an Amended and Restated Investors' Rights Agreement, and related ancillary agreements and instruments, and the Parties desire additional time to continue such negotiations, complete remaining due diligence workstreams, and finalize the definitive documentation in connection with the Proposed Transaction; and
WHEREAS, the Parties wish to amend the Exclusivity Agreement to extend the exclusivity period through August 15, 2022, on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
Section 1. Definitions.
Capitalized terms used but not otherwise defined in this Amendment shall have the respective meanings ascribed to such terms in the Exclusivity Agreement, and all references in the Exclusivity Agreement to "this Agreement" shall, unless the context otherwise requires, be deemed to refer to the Exclusivity Agreement as amended by this Amendment. In addition to the foregoing, the following terms shall have the meanings set forth below for purposes of this Amendment:
(a) "Extended Expiration Date" means August 15, 2022.
(b) "Original Expiration Date" means July 11, 2022, which is the date on which the exclusivity period under the Exclusivity Agreement was scheduled to expire prior to giving effect to this Amendment.
Section 2. Amendment to Exclusivity Period.
2.1 Extension of Exclusivity Period. Section 2(a) of the Exclusivity Agreement is hereby amended to delete the reference to "July 11, 2022" appearing therein as the expiration date of the exclusivity period and to replace such date with "August 15, 2022." As so amended, the exclusivity period under the Exclusivity Agreement shall commence on May 12, 2022 and shall expire at 11:59 p.m. (Pacific Time) on the Extended Expiration Date of August 15, 2022, unless earlier terminated in accordance with the terms of the Exclusivity Agreement or further extended by mutual written agreement of the Parties.
2.2 Conforming References. All references in the Exclusivity Agreement to the expiration date, termination date, or end date of the exclusivity period, or to any date derived therefrom, shall be deemed to refer to August 15, 2022, unless further amended by a subsequent written instrument duly executed by each of the Parties. For the avoidance of doubt, any provisions of the Exclusivity Agreement that reference the duration or length of the exclusivity period shall be read to reflect the extended exclusivity period as modified by this Section 2.
2.3 Continuation of Exclusivity Obligations. During the period from and including July 11, 2022 through and including August 15, 2022, the Company shall continue to be bound by all exclusivity obligations set forth in the Exclusivity Agreement, including without limitation the covenants set forth in Section 3 of the Exclusivity Agreement not to, directly or indirectly, (i) solicit, initiate, facilitate, or knowingly encourage any inquiry, proposal, or offer from any third party relating to any competing financing transaction, equity investment, debt financing (other than ordinary-course working capital facilities), merger, consolidation, business combination, acquisition, recapitalization, reorganization, or similar transaction involving the Company or any material portion of its assets or equity securities, (ii) participate or engage in any discussions or negotiations with any third party concerning any such competing transaction, (iii) provide any non-public or confidential information or data concerning the Company or its business, operations, assets, liabilities, financial condition, or prospects to any third party in connection with any such competing transaction, or (iv) enter into any agreement, arrangement, or understanding (whether binding or non-binding, and whether written or oral) with any third party with respect to any such competing transaction. The foregoing obligations shall remain in effect on the same terms and conditions as set forth in the Exclusivity Agreement, as if such obligations had originally been stated to apply through and including August 15, 2022, and the extension of the exclusivity period pursuant to this Amendment shall not be deemed to modify, limit, or otherwise affect the scope or application of any such obligation.
Section 3. Ratification; No Other Amendments.
3.1 Ratification. Except as expressly amended, modified, or supplemented by this Amendment, the Exclusivity Agreement shall remain in full force and effect in accordance with its terms and is hereby ratified and confirmed in all respects by each of the Parties. Without limiting the generality of the foregoing, all rights, remedies, obligations, covenants, conditions, representations, and warranties of the Parties under the Exclusivity Agreement, including the confidentiality obligations, expense reimbursement provisions, and termination provisions contained therein, shall continue in full force and effect as originally stated, subject only to the modifications expressly set forth in this Amendment.
3.2 Limited Amendment. This Amendment shall not constitute an amendment, modification, or waiver of any provision of the Exclusivity Agreement except as expressly set forth herein. No failure or delay by either Party in exercising any right, power, or remedy under the Exclusivity Agreement or this Amendment shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power, or remedy preclude any other or further exercise thereof or the exercise of any other right, power, or remedy.
3.3 Entire Agreement with Respect to Extension. The Exclusivity Agreement, as amended by this Amendment, constitutes the entire agreement between the Parties with respect to the subject matter hereof and thereof and supersedes all prior and contemporaneous discussions, negotiations, understandings, and agreements (whether written or oral) between the Parties with respect to the extension of the exclusivity period contemplated hereby. There are no representations, warranties, covenants, or undertakings with respect to the subject matter of this Amendment other than those expressly set forth or referred to herein.
Section 4. Representations and Acknowledgments.
4.1 Power and Authority. Each Party hereby represents and warrants to the other Party that such Party has the requisite power and authority to execute and deliver this Amendment and to perform its obligations hereunder, and that this Amendment constitutes the legal, valid, and binding obligation of such Party, enforceable against such Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and similar laws affecting creditors' rights generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
4.2 Due Authorization. Each Party hereby represents and warrants to the other Party that the execution, delivery, and performance of this Amendment by such Party has been duly authorized by all necessary action on the part of such Party. In the case of the Investor, this Amendment has been duly authorized by Pinnacle Capital Management LLC, a Delaware limited liability company, in its capacity as the general partner of the Investor, and the person executing this Amendment on behalf of the Investor has been duly authorized to do so. In the case of the Company, this Amendment has been duly authorized by the board of directors of the Company, and the person executing this Amendment on behalf of the Company has been duly authorized to do so by resolutions duly adopted by the board of directors of the Company.
4.3 Good Faith Negotiations; No Commitment. The Parties hereby acknowledge and agree that, as of the Amendment Date, the Parties are continuing in good faith to negotiate the terms and conditions of the Proposed Transaction, including the definitive transaction documentation and related ancillary agreements. Notwithstanding the foregoing, the Parties further acknowledge and agree that this Amendment does not constitute, and shall not be deemed to constitute, a commitment, obligation, or agreement by either Party to consummate the Proposed Transaction or to enter into any definitive agreement with respect thereto. Each Party's decision to consummate the Proposed Transaction shall be subject to, among other things, the satisfactory completion of due diligence, the negotiation and execution of mutually acceptable definitive documentation, and the receipt of all necessary approvals and consents, all in the sole discretion of each Party.
Section 5. Governing Law.
This Amendment shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Each of the Parties hereby irrevocably submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or, if the Court of Chancery declines to accept jurisdiction, any state or federal court sitting in Wilmington, Delaware) for the purpose of any action, suit, or proceeding arising out of or relating to this Amendment, and each of the Parties hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, or otherwise, any claim that it is not personally subject to the jurisdiction of the above-named courts, that any such action, suit, or proceeding is brought in an inconvenient forum, or that the venue of any such action, suit, or proceeding is improper.
Section 6. Counterparts.
This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, and all of which taken together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by facsimile or by electronic transmission in portable document format (PDF) or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document shall be effective as delivery of a manually executed counterpart of this Amendment.
Section 7. Miscellaneous.
7.1 Notices. All notices, requests, demands, consents, waivers, and other communications required or permitted to be given under this Amendment shall be in writing and shall be given in accordance with the notice provisions set forth in Section 8(a) of the Exclusivity Agreement; provided, however, that for purposes of this Amendment and the Exclusivity Agreement as amended hereby, notices shall be addressed as follows:
If to the Investor:
Pinnacle Venture Fund II LP 2400 Sand Hill Road, Suite 310 Menlo Park, CA 94025
Attention: Marcus Trejo, Partner, Head of Growth Equity
with a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 101 Montgomery Street, Suite 3500 San Francisco, CA 94104
Attention: Harrison Wexford
If to the Company:
Verdana Software, Inc. 1175 NW Couch Street, Suite 800 Portland, OR 97209
Attention: Sandra Mikkelsen, General Counsel
with a copy (which shall not constitute notice) to:
Langford Price & Associates LLP 1000 SW Broadway, Suite 1600 Portland, OR 97205
Attention: Jonathan Hale
7.2 Severability. If any term, provision, covenant, or restriction of this Amendment is held by a court of competent jurisdiction or other governmental authority to be invalid, void, or unenforceable, the remainder of the terms, provisions, covenants, and restrictions of this Amendment shall remain in full force and effect and shall in no way be affected, impaired, or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such a determination, the Parties shall negotiate in good faith to modify this Amendment so as to effect the original intent of the Parties as closely as possible in a manner that is acceptable and valid and enforceable under applicable law.
7.3 Headings. The section headings and captions contained in this Amendment are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Amendment or any provision hereof.
[Signature Page Follows]
SIGNATURE PAGE TO FIRST AMENDMENT TO EXCLUSIVITY AGREEMENT
IN WITNESS WHEREOF, the Parties have caused this First Amendment to Exclusivity Agreement to be duly executed and delivered as of the Amendment Date first written above.
PINNACLE VENTURE FUND II LP
By: Pinnacle Capital Management LLC, its General Partner
By: ________
Name: Marcus Trejo
Title: Partner, Head of Growth Equity
Date: July 8, 2022
VERDANA SOFTWARE, INC.
By: ________
Name: Raj Anand
Title: Chief Executive Officer
Date: July 8, 2022