-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A56LrvLWzhr5CF4TptThHZoJh5JpyHAXyj36LAQsR+uT3fySOMuKLi+ybi9wBend 4VTE/I+InF4c1rnTja56Dw== 0000891618-99-001770.txt : 19990427 0000891618-99-001770.hdr.sgml : 19990427 ACCESSION NUMBER: 0000891618-99-001770 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 20 FILED AS OF DATE: 19990423 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JUNIPER NETWORKS INC CENTRAL INDEX KEY: 0001043604 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 770422528 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 333-76681 FILM NUMBER: 99600330 BUSINESS ADDRESS: STREET 1: 385 RAVENDALE DR CITY: MOUNTAIN VIEW STATE: CA ZIP: 94043 BUSINESS PHONE: 6505268000 MAIL ADDRESS: STREET 1: 385 RAVENDALE DR CITY: MOUNTAIN VIEW STATE: CA ZIP: 94043 S-1/A 1 AMENDMENT NO. 1 TO FORM S-1 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 23, 1999 REGISTRATION NO. 333-76681 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ JUNIPER NETWORKS, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 3661 77-042528 (STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
385 RAVENDALE DRIVE MOUNTAIN VIEW, CALIFORNIA 94043 (650) 526-8000 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ------------------------ SCOTT KRIENS PRESIDENT AND CHIEF EXECUTIVE OFFICER JUNIPER NETWORKS, INC. 385 RAVENDALE DRIVE MOUNTAIN VIEW, CALIFORNIA 94043 (650) 526-8000 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ------------------------ COPIES TO: LARRY W. SONSINI NORA L. GIBSON JUDITH MAYER O'BRIEN TAMARA L. TOMPKINS BRUCE MCNAMARA ELISA S. LEE W. BRIAN KINARD BROBECK PHLEGER & HARRISON LLP WILSON SONSINI GOODRICH & ROSATI ONE MARKET PROFESSIONAL CORPORATION SPEAR STREET TOWER 650 PAGE MILL ROAD SAN FRANCISCO, CALIFORNIA 94105 PALO ALTO, CALIFORNIA 94304-1050 (415) 442-0900 (650) 493-9300
------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. ------------------------ If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, check the following box. [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] ------------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth the costs and expenses, other than underwriting discounts and commissions, payable by us in connection with the sale of common stock being registered. All amounts are estimates except the SEC registration fee and the NASD filing fee and the Nasdaq National Market listing fee. None of such expenses will be borne by selling stockholders.
AMOUNT TO BE PAID ---------- SEC registration fee........................................ $19,460 NASD filing fee............................................. 7,500 Nasdaq National Market listing fee.......................... 5,000 Printing and engraving expenses............................. * Legal fees and expenses..................................... * Accounting fees and expenses................................ * Blue Sky qualification fees and expenses.................... 3,000 Transfer Agent and Registrar fees........................... * Miscellaneous fees and expenses............................. * ------- Total.............................................. $ * =======
- --------------- * To be supplied by amendment. ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 145 of the Delaware General Corporation Law permits a corporation to include in its charter documents, and in agreements between the corporation and its directors and officers, provisions expanding the scope of indemnification beyond that specifically provided by the current law. Article Eighth of our Amended and Restated Certificate of Incorporation provides for the indemnification of directors and officers to the fullest extent permissible under Delaware law. Article VI of our Bylaws provides for the indemnification of officers, directors and third parties acting on behalf of Juniper Networks if such person acted in good faith and in a manner reasonably believed to be in and not opposed to our best interest, and, with respect to any criminal action or proceeding, the indemnified party had no reason to believe his or her conduct was unlawful. We have entered into indemnification agreements with our directors and executive officers, in addition to indemnification provided for in our Bylaws, and intend to enter into indemnification agreements with any new directors and executive officers in the future. The indemnification agreements may require us, among other things, to indemnify our directors and officers against certain liabilities that may arise by reason of their status or service as directors and officers (other than liabilities arising from willful misconduct of culpable nature), to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified, and to obtain directors and officers' insurance, if available on reasonable terms. Reference is also made to Section 8 of the Underwriting Agreement contained in Exhibit 1.1 hereto, indemnifying officers and directors of Juniper Networks against certain liabilities. II-1 3 ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES Since inception, we have issued unregistered securities to a limited number of persons as described below: 1. On February 6, 1996, we sold 4,050,000 shares of our common stock for an aggregate purchase price of $8,910.00. 2. On April 15, 1996 we sold 225,000 shares of our common stock for an aggregate purchase price of $2,002.50. 3. On June 12, 1996 we sold 450,000 shares of our common stock for an aggregate purchase price of $20,025.00. 4. From inception through March 31, 1999 (the most recent practicable date), we granted stock options and restricted stock purchase rights to purchase an aggregate of 14,966,447 shares of our common stock at prices ranging from $0.11 to $14.00 per share to employees, consultants and directors pursuant to our 1996 Stock Plan. 5. From inception through March 31, 1999 (the most recent practicable date), we issued and sold an aggregate of 10,367,409 shares of our common stock to employees, consultants and directors for aggregate consideration of $2,022,816.00 pursuant to exercise of options granted under our 1996 Stock Plan. 6. From inception through March 31, 1999, we issued an aggregate of 111,283 shares of our common stock under our 1996 Stock Plan to consultants in consideration for past services rendered for an aggregate value of $74,365.00. 7. On June 11, 1996 and September 23, 1997, we sold 1,578,418 and 165,333 shares of Series A Preferred Stock, respectively, for $1.00 per share to a group of private investors for an aggregate purchase price of $1,743,751. 8. On June 11, 1996, we sold 6,328,123 shares of Common Stock for $0.44 per share to a group of private investors for an aggregate purchase price of $281,249.90. 9. On August 5, 1996 and November 8, 1996, we sold 3,818,017 shares of our Series B Preferred Stock for $2.40 per share to a group of private investors for an aggregate purchase price of $9,163,240.80. 10. On December 16, 1996, in connection with an equipment lease, we issued a warrant to purchase 83,333 shares of our Series B Preferred Stock at an exercise price of $2.40 per share. 11. On December 30, 1996, we issued 3,958 shares of Series B Preferred Stock at $2.40 per share to two consultants of Juniper as consideration for past services rendered. 12. On June 18, 1997, in connection with a lease agreement, we issued a warrant to a lessor of real property to purchase 10,000 shares of our Series B Preferred Stock at an exercise price of $2.40 per share. 13. On July 1, 1997 and September 30, 1997, we sold 5,151,178 shares of our Series C Preferred Stock at $8.93 per share to a group of private investors for an aggregate purchase price of $46,000,020. 14. On September 30, 1997, in connection with an equipment lease, we issued a warrant to purchase 23,516 shares of our Series C Preferred Stock at an exercise price of $8.93 per share. 15. On March 3, 1999, we issued 130,000 shares of common stock to an employee at an exercise price of $9.90 per share pursuant to a restricted stock purchase agreement. II-2 4 16. On March 16, 1999, we sold 500,000 shares of our Series D Preferred Stock and 2,580,000 shares of Series D1 Preferred Stock both for $11.03 per share to a private investor for an aggregate purchase price of $33,972,400. For additional information concerning these equity investment transactions, reference is made to the information contained under the caption "Certain Transactions" in the form of prospectus included herein. Except as indicated above, none of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering, and we believe that each transaction was exempt from the registration requirements of the Securities Act by virtue of Section 4(2) thereof, Regulation D promulgated thereunder or Rule 701 pursuant to compensatory benefit plans and contracts relating to compensation as provided under such Rule 701. The recipients in such transactions represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates and instruments issued in such transactions. All recipients had adequate access, through their relationships with us, to information about us. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (A) INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT - ------- ----------------------- 1.1* Form of Underwriting Agreement. 3.1 Amended and Restated Certificate of Incorporation of the Registrant. 3.2 Form of Amended and Restated Certificate of Incorporation of the Registrant to be effective upon the closing of the offering made pursuant to this Registration Statement. 3.3 Amended and Restated Bylaws of the Registrant. 4.1* Form of Registrant's Common Stock certificate. 4.2 Warrant to purchase shares of Series B Preferred Stock of the Registrant issued to Venture Lending & Leasing, Inc. 4.3 Warrant to purchase shares of Series B Preferred Stock of the Registrant issued to At Home Corporation. 4.4 Warrant to purchase shares of Series C Preferred Stock of the Registrant issued to Venture Lending & Lending, Inc. 4.5 Warrant to purchase shares of Series C Preferred Stock of the Registrant issued to Venture Lending & Lending, Inc. 4.6 Third Amended and Restated Registration Rights Agreement dated March 9, 1999. 5.1* Opinion of Wilson Sonsini Goodrich & Rosati Professional Corporation. 10.1 Form of Indemnification Agreement entered into by the Registrant with each of its directors and executive officers. 10.2 Amended and Restated 1996 Stock Plan. 10.3 1999 Employee Stock Purchase Plan. 10.4 Sublease between Trident Microsystems, Inc. and the Registrant dated July 1, 1998. 10.5 Sublease between At Home Corporation and the Registrant dated June 4, 1998. 10.6 Severance Agreement between Scott Kriens and the Registrant dated October 1, 1996. 10.7 Change of Control Agreement between Marcel Gani and the Registrant dated February 18, 1997.
II-3 5
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT - ------- ----------------------- 10.8+ Agreement for ASIC Design and Purchase of Products by and between IBM Microelectronics and the Registrant dated August 26, 1997. 10.8.1+ Amendment One to Agreement for ASIC Design and Purchase of Products by and between IBM Microelectronics and the Registrant dated January 5, 1998. 10.8.2+ Amendment Two to Agreement for ASIC Design and Purchase of Products by and between IBM Microelectronics and the Registrant dated March 2, 1998. 10.9+ Standard Manufacturing Agreement by and among Solectron California Corporation, Fine Pitch Technology Inc. and the Registrant dated June 10, 1998. 21.1* Subsidiaries of Registrant 23.1** Consent of Ernst & Young LLP, independent auditors (see page II-6 of the Registration Statement). 23.2* Consent of Counsel. Reference is made to Exhibit 5.1. 24.1** Power of Attorney (see page II-5). 27.1** Financial Data Schedule.
- --------------- * To be filed by amendment. ** Previously filed. + Confidential treatment requested as to certain portions of this exhibit. (B) FINANCIAL STATEMENT SCHEDULES Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto. ITEM 17. UNDERTAKINGS We hereby undertake to provide to the Underwriters at the closing specified in the Underwriting Agreement certificates in such denominations and registered in such names as required by the Underwriters to permit prompt delivery to each purchaser. Insofar as indemnification by us for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the provisions referenced in Item 14 of this Registration Statement or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer, or controlling person of Juniper Networks in the successful defense of any action, suit or proceeding) is asserted by a director, officer or controlling person in connection with the securities being registered hereunder, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. We hereby undertake that: (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of Prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of Prospectus filed by us pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. II-4 6 (2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of Prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-5 7 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1993, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF MOUNTAIN VIEW, STATE OF CALIFORNIA, ON THE 23RD DAY OF APRIL, 1999. JUNIPER NETWORKS, INC. By * ------------------------------------ Scott Kriens President and Chief Executive Officer PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED:
SIGNATURE TITLE DATE --------- ----- ---- * President and Chief Executive April 23, 1999 - --------------------------------------------------- Officer and Chairman of the Scott Kriens Board (Principal Executive Officer) * Chief Technical Officer and Vice April 23, 1999 - --------------------------------------------------- Chairman of the Board Pradeep Sindhu /s/ MARCEL GANI Chief Financial Officer April 23, 1999 - --------------------------------------------------- (Principal Financial and Marcel Gani Accounting Officer) * Director April 23, 1999 - --------------------------------------------------- William R. Hearst III * Director April 23, 1999 - --------------------------------------------------- Vinod Khosla * Director April 23, 1999 - --------------------------------------------------- C. Richard Kramlich * Director April 23, 1999 - --------------------------------------------------- William Stensrud *By: /s/ MARCEL GANI Attorney-in-fact April 23, 1999 ---------------------------------------------- Marcel Gani
II-6 8 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT ------- ----------------------- 1.1* Form of Underwriting Agreement. 3.1 Amended and Restated Certificate of Incorporation of the Registrant. 3.2 Form of Amended and Restated Certificate of Incorporation of the Registrant to be effective upon the closing of the offering made pursuant to this Registration Statement. 3.3 Amended and Restated Bylaws of the Registrant. 4.1* Form of Registrant's Common Stock certificate. 4.2 Warrant to purchase shares of Series B Preferred Stock of the Registrant issued to Venture Lending & Leasing, Inc. 4.3 Warrant to purchase shares of Series B Preferred Stock of the Registrant issued to At Home Corporation. 4.4 Warrant to purchase shares of Series C Preferred Stock of the Registrant issued to Venture Lending & Lending, Inc. 4.5 Warrant to purchase shares of Series C Preferred Stock of the Registrant issued to Venture Lending & Lending, Inc. 4.6 Third Amended and Restated Registration Rights Agreement dated March 9, 1999. 5.1* Opinion of Wilson Sonsini Goodrich & Rosati Professional Corporation. 10.1 Form of Indemnification Agreement entered into by the Registrant with each of its directors and executive officers. 10.2 Amended and Restated 1996 Stock Plan. 10.3 1999 Employee Stock Purchase Plan. 10.4 Sublease between Trident Microsystems, Inc. and the Registrant dated July 1, 1998. 10.5 Sublease between At Home Corporation and the Registrant dated June 4, 1998. 10.6 Severance Agreement between Scott Kriens and the Registrant dated October 1, 1996. 10.7 Change of Control Agreement between Marcel Gani and the Registrant dated February 18, 1997. 10.8+ Agreement for ASIC Design and Purchase of Products by and between IBM Microelectronics and the Registrant dated August 26, 1997. 10.8.1+ Amendment One to Agreement for ASIC Design and Purchase of Products by and between IBM Microelectronics and the Registrant dated January 5, 1998. 10.8.2+ Amendment Two to Agreement for ASIC Design and Purchase of Products by and between IBM Microelectronics and the Registrant dated March 2, 1998. 10.9+ Standard Manufacturing Agreement by and among Solectron California Corporation, Fine Pitch Technology Inc. and the Registrant dated June 10, 1998. 21.1* Subsidiaries of Registrant 23.1** Consent of Ernst & Young LLP, independent auditors (see page II-6 of the Registration Statement). 23.2* Consent of Counsel. Reference is made to Exhibit 5.1. 24.1** Power of Attorney (see page II-5). 27.1** Financial Data Schedule.
- --------------- * To be filed by amendment. ** Previously filed. + Confidential treatment requested as to certain portions of this exhibit. EX-3.1 2 AMENDED CERTIFICATE OF INCORPORATION 1 EXHIBIT 3.1 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF JUNIPER NETWORKS, INC. FIRST. The name of this corporation is Juniper Networks, Inc. SECOND. The address of the corporation's registered office in the State of Delaware is 1209 Orange Street, Wilmington, County of New Castle, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company. THIRD. The purpose of this corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH. This corporation is authorized to issue two classes of shares, to be designated "Common Stock" and "Preferred Stock," respectively. The total number of shares which this corporation authorized to issue is 85,039,059 shares. The number of shares of Common Stock this corporation is authorized to issue is 71,000,000 shares, with the par value of $.00001, and the number of shares of Preferred Stock this corporation is authorized to issue is 14,039,059 shares, with the par value of $.00001. 1. Designation of Series. There are hereby provided five series of Preferred Stock; one series designated Series A Preferred Stock (the "Series A Preferred"), one series designated Series B Preferred (the "Series B Preferred"), one series designated Series C Preferred Stock (the "Series C Preferred"), one Series designated Series D Preferred Stock (the "Series D Preferred") and one designated Series D1 Preferred Stock (the "Series D1 Preferred"). 2. Number of Shares. The number of shares constituting the Series A Preferred is fixed at 1,743,751 shares, the number of shares constituting the Series B Preferred is fixed at 3,915,308 shares, the number of shares constituting the Series C Preferred is fixed at 5,200,000 shares, the number of shares constituting the Series D Preferred is fixed at 600,000 and the number of shares constituting the Series D1 Preferred is fixed at 2,580,000. 3. Dividend Provisions. The holders of shares of the Preferred Stock shall be entitled to receive non-cumulative dividends, out of any assets legally available therefor, prior and in preference to any declaration or payment of any dividend (payable other than in Common Stock of this corporation) on the Common Stock of this corporation. The dividend rate for the Series A Preferred is $0.05 per annum on 2 each outstanding share of Series A Preferred whenever funds are legally available therefor, payable annually when and as declared by the Board of Directors. The dividend rate for the Series B Preferred is $0.12 per annum on each outstanding share of Series B Preferred whenever funds are legally available therefor, payable annually when and as declared by the Board of Directors. The dividend rate for the Series C Preferred is $0.45 per annum on each outstanding share of Series C Preferred whenever funds are legally available therefor, payable annually when and as declared by the Board of Directors. The dividend rate for the Series D Preferred is $0.55 per annum on each outstanding share of Series D Preferred whenever funds are legally available therefore, payable annually when and as declared by the Board of Directors. The dividend rate for the Series D1 Preferred is $0.55 per annum on each outstanding share of Series D1 Preferred whenever funds are legally available therefore, payable annually when and as declared by the Board of Directors. Dividends, if paid must be paid on, or, if declared and set apart for payment on, must be declared and set apart for payment on all outstanding series of Preferred Stock contemporaneously, and if less than full dividends are paid on or declared and set apart for payment on all outstanding series, then the same percentage of the respective dividend rate on each outstanding series of Preferred Stock shall be paid on or declared and set apart. In the event that the Board of Directors shall declare dividends in excess of such amount, any such dividends shall be paid on a pro rata basis on the outstanding Common Stock and the Preferred Stock (with the outstanding Preferred Stock sharing in such dividend on an as converted into Common Stock basis). 4. Liquidation Preference. a. In the event of any liquidation, dissolution or winding up of this corporation, either voluntary or involuntary, the holders of shares of Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of this corporation to the holders of the Common Stock, by reason of their ownership thereof, an amount per share equal to the sum of (i)$1.00 for each outstanding share of Series A Preferred, $2.40 for each outstanding share of Series B Preferred, $8.93 for each outstanding share of Series C Preferred, $11.03 for each outstanding share of Series D Preferred and $11.03 for each outstanding share of Series D1 Preferred (each, the "Original Issue Price" for the applicable Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred and Series D1 Preferred); and (ii) all declared and unpaid dividends with respect to such shares. b. If upon the occurrence of such event, the assets and the funds thus distributed among the holders of the Preferred Stock shall be insufficient to permit the payment to such holders of the full preferential amount, then the entire assets of this corporation legally available for distribution shall be distributed ratably to the holders of all series of the Preferred Stock in proportion to the Original Issue Price of the respective series of Preferred Stock held by such holders. c. Upon the completion of a distribution required by paragraph (b) of this Section 4, if assets remain in this corporation, the holders of Common Stock shall be entitled to receive all the remaining assets of the corporation. -2- 3 d. A consolidation or merger of this corporation with or into any other corporation or corporations, or the conveyance of all or substantially all of the assets of this corporation, shall be deemed to be a liquidation, dissolution or winding up within the meaning of this Section 4. (i)Any of such transactions shall not be deemed to be a liquidation, dissolution or winding up within the meaning of this Section 4 if the holders of the voting equity securities of the corporation immediately prior to any of such transactions hold more than 50% of the outstanding voting equity securities of the entity surviving such merger or consolidation or the entity purchasing such assets. (ii) In any of such events, if the consideration received by the corporation is other than cash, its value will be deemed its fair market value. Any securities shall be valued as follows: (A) Securities not subject to investment letter or other similar restrictions on free marketability: (1) If traded on a securities exchange or through the Nasdaq National Market, the value shall be deemed to be the average of the closing prices of the securities on such exchange over the thirty-day period ending three (3) days prior to the closing; (2) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty-day period ending three (3) days prior to the closing; and (3) If there is no active public market, the value shall be the fair market value thereof, as mutually determined by the corporation and the holders of at least a majority of the voting power of all then outstanding shares of Preferred Stock. (B) The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder's status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in (A)(1), (2) or (3) to reflect the approximate fair market value thereof, as mutually determined by the corporation and the holders of at least a majority of the voting power of all then outstanding shares of such Preferred Stock. (iii) In the event the requirements of this Section 4(d) are not complied with, this corporation shall forthwith either: (A) cause such closing to be postponed until such time as the requirements of this Section 4 have been complied with; or (B) cancel such transaction, in which event the rights, preferences and privileges of the holders of the Preferred Stock shall revert to and be the same as such rights, preferences and privileges existing immediately prior to the date of the first notice referred to in Section 4(d)(iv) hereof. -3- 4 (iv) The corporation shall give each holder of record of Preferred Stock written notice of such impending transaction not later than ten (10) days prior to the stockholders' meeting called to approve such transaction, or ten (10) days prior to the closing of such transaction, whichever is earlier, and shall notify such holders in writing of the final approval of such transaction. The first of such notices shall describe the material terms and conditions of the impending transaction and the provisions of this Section 4, and the corporation shall thereafter give such holders prompt notice of any material changes. The transaction shall in no event take place sooner than ten (10) days after the corporation has given the first notice provided for herein or sooner than two (2) days after the corporation has given notice of any material changes provided for herein; provided, however, that such periods may be shortened upon the written consent of the holders of Preferred Stock that are entitled to such notice rights or similar notice rights and that represent at least a majority of the voting power of all then outstanding shares of such Preferred Stock. e. As authorized by Section 402.5(c) of the California Corporations Code, the provisions of Sections 502 and 503 of the California Corporations Code shall not apply with respect to repurchase by the corporation of shares of Common Stock issued to or held by employees, officers, directors or consultants of the corporation or its subsidiaries upon termination of their employment or services pursuant to an agreement providing for the right of such repurchase. 5. Redemption. The Preferred Stock shall not be redeemable. 6. Conversion. The holders of the Preferred Stock shall have conversion rights as follows (the "Conversion Rights"): a. Right to Convert. (i)Subject to subparagraph (c) of this Section 6, each share of Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share, at the office of this corporation or any transfer agent for the Preferred Stock, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Original Issue Price (as defined in Section 4(a) hereof) of the Preferred Stock by the then effective conversion price, as last adjusted and then currently in effect. The initial conversion price per share at which shares of Common Stock shall be issuable upon conversion of shares of Series A Preferred after the date hereof shall be $0.44 (the "Series A Conversion Price"). The initial conversion price per share at which shares of Common Stock shall be issuable upon conversion of shares of Series B Preferred after the date hereof shall be $1.07 (the "Series B Conversion Price"). The initial conversion price per share at which shares of Common Stock shall be issuable upon conversion of shares of Series C Preferred after the date hereof shall be $3.97 (the "Series C Conversion Price"). The initial conversion price per share at which shares of Common Stock shall be issuable upon conversion of shares of Series D Preferred after the date hereof shall be $11.03 (the "Series D Conversion Price"). The initial conversion price per share at which shares of Common Stock shall be issuable upon conversion of shares -4- 5 of Series D1 after the date hereof shall be $11.03 (the "Series D1 Conversion Price"). Notwithstanding the foregoing, Series A Conversion Price, Series B Conversion Price , Series C Conversion Price, Series D Conversion Price and Series D1 Conversion Price shall be subject to adjustment as set forth in subparagraph (d) of this Section 6 and in addition, the Series D1 Conversion Price shall be subject to adjustment as set forth in subparagraph (c) of this Section 6. (ii) Each share of Preferred Stock shall automatically be converted into shares of Common Stock at the then effective Conversion Price of the applicable series immediately upon (a) the closing of the issuance of shares following the effectiveness of a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), (other than a registration statement relating solely to the sale of securities to employees of the corporation or a registration relating solely to a transaction pursuant to Rule 145 promulgated by the Securities and Exchange Commission under the Securities Act), pursuant to a firm commitment underwriting and covering the offer and sale of this corporation's Common Stock at a price per share not less than three times the Series A Conversion Price or the Series B Conversion Price or at a price per share of not less than one and a half times the Series C Conversion Price or at a price per share of not less than one times the Series D Conversion Price or the Series D1 Conversion Price (subject to appropriate adjustment in the event of stock splits, stock dividends or similar events), as the case may be, the aggregate proceeds to this corporation of which would, at the public offering price, exceed $10,000,000, or (b) the affirmative vote of the holders of sixty-six and two thirds (66 2/3) of the shares of Preferred Stock outstanding at the time of such vote. b. Mechanics of Conversion. Before any holder of Preferred Stock shall be entitled to receive shares of Common Stock issuable upon conversion of such Preferred Stock, such holder shall surrender the certificate or certificates therefor, duly endorsed, at the office of this corporation or of any transfer agent for the Preferred Stock. In the case of a voluntary conversion, such holder shall give written notice by mail, postage prepaid, to this corporation at its principal corporate office, of the election to convert the same and shall state therein the name or names in which the certificate or certificates for shares of Common Stock are to be issued. In the case of an automatic conversion, certificates of Common Stock shall be issuable upon surrender of the Preferred Stock in the name of the holder of such Preferred Stock, unless the holder provides this corporation with prior written instructions to issue such shares in one or more different names. This corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Preferred Stock, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made (i) in the case of voluntary conversion, immediately prior to the close of business on the date of such surrender of the shares of Preferred Stock to be converted, and (ii) in the case of automatic conversion, such conversion shall occur on the consummation of the event causing the conversion; and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. c. Adjustment to Series D1 Conversion Price. If within one hundred eighty (180) days after the Original Issue Date the corporation files a registration statement with the Securities and Exchange Commission ("SEC") covering an underwritten initial public offering (a "Qualifying -5- 6 Registration Statement"), the Series D1 Conversion Price (as set forth in Section 6a(i) hereof) shall be modified to equal eighty-five percent (85%) of the initial public offering price. If the corporation files a Qualifying Registration Statement with the SEC between 180 days and one year of the Original Issue Date, the Series D1 Conversion Price (as set forth in Section 6a(i) hereof) shall be modified to equal seventy-five percent (75%) of the initial public offering price. If the corporation files its Registration Statement with the SEC between one year and fifteen (15) months from the Original Issue Date, the Series D1 Conversion Price (as set forth in Section 6a(i) hereof) shall be modified to equal sixty-five (65%) of the initial public offering price. If the corporation files its Registration Statement with the SEC after fifteen (15) months from the Original Issue Date, there shall be no adjustment to the Series D1 Conversion Price under this subparagraph (c). d. Adjustments to Conversion Price for Diluting Issues. (i)Special Definitions. For purposes of this Section 6(c), the following definitions shall apply: (A) 'Options' shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities. (B) 'Original Issue Date' shall mean the date on which the first share of the Series D1 Preferred Stock was first issued. (C) 'Convertible Securities' shall mean any evidences of indebtedness, shares (other than the Preferred Stock) or other securities convertible into or exchangeable for Common Stock. (D) 'Additional Shares of Common Stock' shall mean all shares of Common Stock issued (or, pursuant to Section 6(c)(ii), deemed to be issued) by the corporation after the Original Issue Date, other than shares of Common Stock issued or issuable at any time: (1) upon conversion of the Preferred Stock into Common Stock; (2) to officers, directors, and employees of, and consultants to, the corporation pursuant to plans, arrangements or agreements approved by the Board of Directors; (3) as a dividend or distribution on Preferred Stock or any event for which adjustment is made pursuant to Section 6(d) hereof; (4) by way of dividend or other distribution on shares of Common Stock excluded from the definition Additional Shares of Common Stock by the foregoing clauses (1), (3) or this clause (4) or on shares of Common Stock so excluded; or (5) the issuance of shares of Common Stock or Preferred Stock or warrants to purchase shares of Common Stock or Preferred Stock convertible into -6- 7 shares of Common Stock in conjunction with equipment leases or other commercial financing transactions approved by the Board of Directors, and the issuance of stock upon exercise of such warrants. (ii) No Adjustment of Conversion Price.. No adjustment in the then applicable Conversion Price of a share of Preferred Stock shall be made in respect of the issuance of Additional Shares of Common Stock unless the consideration per share for an Additional Share of Common Stock issued or deemed to be issued by the corporation is less then the respective Conversion Price in effect on the date of, and immediately prior to such issue, for such share of Preferred Stock. (iii) Deemed Issue of Additional Shares of Common Stock. Except as otherwise provided in Section 6C(ii), in the event the corporation at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto without regard to any provisions contained therein for a subsequent adjustment of such number) of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided that Additional Shares of Common Stock shall not be deemed to have been issued with respect to the Preferred Stock unless the consideration per share (determined pursuant to Section 6C(iv) hereof) of such Additional Shares of Common Stock would be less than the then applicable Conversion Price of Preferred Stock in effect on the date of and immediately prior to such issue, or such record date, as the case may be, and provided further that in any such case in which Additional Shares of Common Stock are deemed to be issued: (A) no further adjustment in the Conversion Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities; (B) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase in the consideration payable to the corporation, or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities; (C) upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if: -7- 8 (1) in the case of Convertible Securities or Options for Common Stock, the only Additional Shares of Common Stock issued were shares of Common Stock, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the corporation for the issue of all such Options, whether or not exercised, plus the consideration actually received by the corporation upon such exercise, or for the issue of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by the corporation upon such conversion or exchange, and (2) in the case of Options for Convertible Securities, only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the corporation for the Additional Shares of Common Stock deemed to have been then issued was the consideration actually received by the corporation for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the corporation upon the issue of the Convertible Securities with respect to which such Options were actually exercised; (D) no readjustment pursuant to Sections 5(c)(ii) (B) or 5(c)(ii)(C) above shall have the effect of increasing the Conversion Price to an amount which exceeds the lower of (i) the Conversion Price on the original adjustment date or (ii) the Conversion Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date; and (E) in the case of any Options which expire by their terms not more than 30 days after the date of issue thereof, no adjustment of the Conversion Price shall be made until the expiration or exercise of all such Options. (iv) Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock. In the event this corporation shall issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 6(c)(ii)) without consideration or for a consideration per share less than the Conversion Price in effect on the date of and immediately prior to such issue, but excluding shares for which an adjustment is made pursuant to paragraph (d) below, then and in such event, the then applicable Conversion Price, as the case may be, shall be reduced, concurrently with such issue, to a price (calculated to the nearest cent) determined by multiplying such Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of shares of Common Stock which the aggregate consideration received by the corporation for the total number of Additional Shares of Common Stock so issued would purchase at such Conversion Price; and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of such Additional Shares of Common Stock so issued; and provided further that, for the purposes of this Section 6(c)(iv), all shares of Common Stock issuable upon conversion of outstanding Options, Convertible Securities and the Preferred Stock shall be deemed to be outstanding, and immediately after any Additional Shares of Common Stock are deemed issued pursuant to Section 6(c)(iii), such Additional Shares of Common Stock shall be deemed to be outstanding. -8- 9 (v)Determination of Consideration. For purposes of this Section 6(c), the consideration received by the corporation for the issue of any Additional Shares of Common Stock shall be computed as follows: (A) Cash and Property: Such consideration shall: (1) insofar as it consists of cash, be computed at the aggregate amount of cash received by the corporation excluding amounts paid or payable for accrued interest or accrued dividends; (2) insofar as it consists of property other than cash, be computed at the fair value thereof at the time of such issue, as determined in good faith by the Board; and (3) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (1) and (2) above, as determined in good faith by the Board. (B) Options and Convertible Securities. The consideration per share received by the corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Section 6(c)(ii), relating to Options and Convertible Securities, shall be determined by dividing (1) the total amount, if any, received or receivable by the corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities by (2) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities. e. Adjustments to Conversion Price for Certain Other Events. (i) Adjustments for Subdivisions, Combinations or Consolidation of Common Stock. In the event the outstanding shares of Common Stock shall be subdivided (by stock split, stock dividend, or otherwise), into a greater number of shares of Common Stock, the Conversion Price then in effect shall, concurrently with the effectiveness of such subdivision, be proportionately decreased. In the event the outstanding shares of Common Stock shall be combined -9- 10 or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, the Conversion Price then in effect shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased. (ii) Adjustments for Other Distributions. In the event the corporation at any time or from time to time makes, or fixes a record date for the determination of holders of Common Stock entitled to receive any distribution payable in securities of the corporation other than shares of Common Stock and other than as otherwise adjusted in this Section 6, then and in each such event provision shall be made so that the holders of Preferred Stock shall receive upon conversion thereof, in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the corporation which they would have received had their respective Preferred Stock been converted into Common Stock on the date of such event and had they thereafter, during the period from the date of such event to and including the date of conversion, retained such securities receivable by them as aforesaid during such period, subject to all other adjustments called for during such period under this Section 6 with respect to the rights of the holders of the Preferred Stock. (iii) Adjustments for Reclassification, Exchange and Substitution. If the Common Stock issuable upon conversion of any series of the Preferred Stock shall be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, recapitalization, reclassification or otherwise (other than a subdivision or combination of shares provided for above), the Conversion Price then in effect shall, concurrently with the effectiveness of such reorganization or reclassification, be proportionately adjusted such that the respective Preferred Stock shall be convertible into, in lieu of the number of shares of Common Stock which the holders would otherwise have been entitled to receive, a number of shares of such other class or classes of stock equivalent to the number of shares of Common Stock that would have been subject to receipt by the holders upon conversion of the respective series of Preferred Stock immediately before that change. f. No Impairment. This corporation will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by this corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 5 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Preferred Stock against impairment. g. No Fractional Shares and Certificate as to Adjustments. (i) No fractional shares shall be issuable upon conversion of any shares(s) of Preferred Stock; and the number of shares of Common Stock to be issued shall be rounded down to the nearest whole share. If any fractional interest in a share of Common Stock would, except -10- 11 for the provisions of this subparagraph (f), be deliverable upon conversion of the Preferred Stock then being converted by a stockholder, this corporation shall pay to the holders of such converted stock an amount in cash equal to the current market value of such fractional interest, as determined by the Board of Directors. (ii) Upon the occurrence of each adjustment or readjustment of the Conversion Price pursuant to this Section 6, this corporation, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Preferred Stock a certificate of its Chief Financial Officer setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. This corporation shall, upon the written request at any time of any holder of Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustment and readjustment, (B) the Conversion Price at the time in effect, and (C) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of Preferred Stock. h. Notices of Record Date. In the event of any taking by this corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, this corporation shall mail to each holder of Preferred Stock, at least 10 days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right. i. Reservation of Stock Issuable Upon Conversion. This corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the conversion of the shares of the Preferred Stock such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Preferred Stock, this corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. j. Notices. Any notice required by the provisions of this Section 6 to be given to the holders of shares of Preferred Stock shall be deemed given three (3) days after deposit in the United States first class, certified or registered mail, postage prepaid, and addressed to each holder of record at his address appearing on the books of this corporation. -11- 12 7. Voting Rights. a. Except as otherwise required by law or Section 8 hereof, the holder of each share of Common Stock issued and outstanding shall have one vote and the holder of each share of Preferred Stock shall be entitled to the number of votes equal to the number of shares of Common Stock into which such respective share of Preferred Stock could be converted at the record date for determination of the stockholders entitled to vote on such matters, or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited, such votes to be counted together with all other shares of stock of the corporation having general voting power and not separately as a class. Holders of Common Stock and Preferred Stock shall be entitled to notice of any stockholders' meeting in accordance with the By-laws of the corporation. All holders of Preferred Stock shall be entitled to vote on all matters upon which the holders of Common Stock are entitled to vote. Fractional votes by the holders of Preferred Stock shall not, however, be permitted and any fractional voting rights shall (after aggregating all shares into which shares of Preferred Stock held by each holder could be converted) be rounded to the nearest whole number. 8. Covenants. a. In addition to any other rights provided by law, this corporation shall not, without first obtaining the affirmative vote or written consent of the holders of not less than a majority of the outstanding shares of all series of Preferred Stock, voting together as a class: (i)amend or repeal any provision of, or add any provision to, this corporation's Certificate of Incorporation if such action would materially and adversely alter or change the preferences, rights, privileges or powers of, or the restrictions provided for the benefit of, any Preferred Stock or; (ii) effect a merger or consolidation of the corporation with or into any other corporation or corporations or a sale of all or substantially all of the assets of the corporation unless then stockholders of the corporation immediately prior to such transaction hold more than 50% of the outstanding equity securities (assuming conversion of any shares of Preferred Stock) of the entity surviving such merger or consolidation or the entity purchasing such assets. b. In addition to any other rights provided by law, this corporation shall not, without first obtaining the affirmative vote or written consent of the holders of not less than a sixty-six and two-thirds (66 2/3) of such outstanding shares of all series of Preferred Stock, voting together as a class: (i) authorize, issue or obligate itself to issue shares of any equity security, including securities exercisable or exchangeable for or convertible into equity securities, having any preference or priority superior to or on a parity with any preference or priority of the Preferred Stock. -12- 13 9. Status of Converted Stock. In case any shares of Preferred Stock shall be converted pursuant to Section 6 hereof, the shares so converted shall be canceled and shall not be reissuable. FIFTH. The Board of Directors, by vote of a majority of the whole Board, shall have the power to adopt, amend or repeal the bylaws of the corporation, but any bylaw adopted by the Board may be amended or repealed by the stockholders. SIXTH. Meetings of stockholders may be held within or without the State of Delaware, as the bylaws may provide. The books of the corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the bylaws of the corporation. Elections of directors need not be by written ballot except and to the extent provided in the bylaws of the corporation. SEVENTH. At all elections of directors of the corporation, each holder of stock or of any class or series of stock shall be entitled to as many votes as shall equal the number of votes which such stockholder would be entitled to cast for the election of directors with respect to his or her shares of stock multiplied by the number of directors to be elected, and may cast all of such votes for, or for any two or more of them as such stockholder may see fit. EIGHTH. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as the same exists or may hereafter be amended. If the Delaware General Corporation Law is amended after approval by the stockholders of this Article EIGHTH to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended. Any repeal or modification of this Article EIGHTH shall not adversely affect any right or protection of a director of the corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification. NINTH. The Corporation is to have perpetual existence. -13- EX-3.2 3 POST EFFECTIVE CERTIFIACTE OF INCORPORATION 1 EXHIBIT 3.2 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF JUNIPER NETWORKS, INC. Juniper Networks, Inc., a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), hereby certifies that: A. The name of this Corporation is Juniper Networks, Inc. B. The date of filing of this Corporation's original Certificate of Incorporation with the Secretary of State of Delaware was April __, 1999. C. Pursuant to Sections 241 and 245 of the Delaware General Corporation law, this Restated Certificate of Incorporation restates, integrates and amends the provisions of the Corporation's Amended and Restated Certificate of Incorporation as follows: FIRST: The name of this Corporation is Juniper Networks, Inc. SECOND: The address of the Corporation's registered office in the State of Delaware is 1209 Orange Street, Wilmington, County of New Castle, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company. THIRD: The purpose of this Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH: This Corporation is authorized to issue two classes of shares to be designated, respectively, Common Stock and Preferred Stock. The total number of shares of Common Stock which this corporation is authorized to issue is 200,000,000, with a par value of $0.00001, and the total number of shares of Preferred Stock which this corporation is authorized to issue is 10,000,000, with a par value of $0.00001. The Preferred Stock may be issued from time to time in one or more series pursuant to a resolution or resolutions providing for such issue duly adopted by the Board of Directors (authority to do so being hereby expressly vested in the Board). The Board of Directors is further authorized to determine or alter the rights, preferences, privileges and restrictions granted to or imposed upon any wholly unissued series of Preferred Stock and, to fix the number of shares of any such series of Preferred Stock and the designation of any such series of Preferred Stock. The Board of Directors is authorized, within the limits and restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series, to increase or decrease (but not below the number of shares thereof then outstanding) the number of shares of any such series subsequent to the issue of shares of that series, to determine the designation of any series, and to fix the number of shares of any series. FIFTH: The Corporation is to have perpetual existence. SIXTH: Elections of directors need not be by written ballot unless a stockholder demands election by written ballot at the meeting and before voting begins or unless the Bylaws of the Corporation shall so provide. 2 SEVENTH: The management of the business and the conduct of the affairs of the Corporation shall be vested in its Board of Directors. The number of directors which shall constitute the whole Board of Directors shall be designated in the Bylaws of the Corporation. The Board of Directors shall be divided into three classes designated as Class I, Class II, and Class III, respectively. Directors shall be assigned to each class in accordance with a resolution or resolutions adopted by the Board of Directors. At the first annual meeting of stockholders following the date hereof, the term of office of the Class I directors shall expire, and Class I directors shall be elected for a full term of three years. At the second annual meeting of stockholders following the date hereof, the term of office of the Class II directors shall expire, and Class II directors shall be elected for a full term of three years. At the third annual meeting of stockholders following the date hereof, the term of office of the Class III directors shall expire, and Class III directors shall be elected for a full term of three years. At each succeeding annual meeting of stockholders, directors shall be elected for a full term of three years to succeed the directors of the class whose terms expire at such annual meeting. Notwithstanding the foregoing provisions of this Article, each director shall serve until his or her successor is duly elected and qualified or until his or her death, resignation, or removal. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. Any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal, or other causes shall be filled by either (i) the affirmative vote of the holders of a majority of the voting power of the then-outstanding shares of voting stock of the Corporation entitled to vote generally in the election of directors (the "Voting Stock") voting together as a single class; or (ii) by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors. Newly created directorships resulting from any increase in the number of directors shall, unless the Board of Directors determines by resolution that any such newly created directorship shall be filled by the stockholders, be filled only by the affirmative vote of the directors then in office, even though less than a quorum of the Board of Directors. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until such director's successor shall have been elected and qualified. The affirmative vote of sixty-six and two-thirds percent (66-2/3%) of the voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required for the adoption, amendment or repeal of the following sections of the Corporation's Bylaws by the stockholders of the Corporation: 2.2 (Annual Meeting) and 2.3 (Special Meeting). No action shall be taken by the stockholders of the Corporation except at an annual or special meeting of the stockholders called in accordance with the Bylaws. Any director, or the entire Board of Directors, may be removed from office at any time (i) with cause by the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of the Voting Stock, voting together as a single class; or (ii) without cause by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the then-outstanding shares of the Voting Stock. -2- 3 EIGHTH: A. To the fullest extent permitted by the Delaware General Corporation Law as the same exists or as may hereafter be amended, a director of the Corporation or any subsidiary of the Corporation shall not be personally liable to the Corporation or its stockholders and shall otherwise be indemnified by the Corporation for monetary damages for breach of fiduciary duty as a director of the Corporation, any predecessor of the Corporation or any subsidiary of the Corporation. B. The Corporation shall indemnify to the fullest extent permitted by law any person made or threatened to be made a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that he, his testator or intestate is or was a director or officer of the Corporation, any predecessor of the Corporation or any subsidiary of the Corporation or serves or served at any other enterprise as a director or officer at the request of the Corporation, any predecessor to the Corporation or any subsidiary of the Corporation. C. Neither any amendment nor repeal of this Article EIGHTH, nor the adoption of any provision of the Corporation's Certificate of Incorporation inconsistent with this Article EIGHTH, shall eliminate or reduce the effect of this Article EIGHTH, in respect of any matter occurring, or any action or proceeding accruing or arising or that, but for this Article EIGHTH, would accrue or arise, prior to such amendment, repeal, or adoption of an inconsistent provision. NINTH: Notwithstanding any other provisions of this Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of the Voting Stock required by law, this Certificate of Incorporation or any rights of designation of Preferred Stock conferred on the Board of Directors pursuant to Article FOURTH, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the then-outstanding shares of the Voting Stock, voting together as a single class, shall be required to alter, amend or repeal Article SEVENTH or this Article NINTH. TENTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, except as provided in Article NINTH of this Certificate, and all rights conferred upon the stockholders herein are granted subject to this right. ELEVENTH: In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, alter, amend or repeal the Bylaws of the Corporation. TWELFTH: Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside of the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation. THIRTEENTH: Advance written notice of new business and stockholder nominations for the election of directors shall be given in the manner and to the extent provided in the Bylaws of the Corporation. FOURTEENTH: Stockholders shall not be entitled to cumulative voting rights for the election of directors. -3- 4 This Amended and Restated Certificate of Incorporation has been duly adopted by the stockholders of the Corporation in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware, as amended. IN WITNESS WHEREOF, Juniper Networks, Inc. has caused this Amended and Restated Certificate of Incorporation to be signed by Scott Kriens, its President, and attested by Judith M. O'Brien, its Secretary, this ____ day of __________, 1999. JUNIPER NETWORKS, INC. _______________________________________ Scott Kriens, President Attested: _______________________________________ Judith M. O'Brien, Secretary -4- EX-3.3 4 AMENDED AND RESTATED BYLAWS 1 EXHIBIT 3.3 BYLAWS OF JUNIPER NETWORKS, INC. A DELAWARE CORPORATION 2 TABLE OF CONTENTS
PAGE ---- ARTICLE I CORPORATE OFFICES......................................................................1 1.1 REGISTERED OFFICE.................................................................1 1.2 OTHER OFFICES.....................................................................1 ARTICLE II MEETINGS OF STOCKHOLDERS..............................................................1 2.1 PLACE OF MEETINGS.................................................................1 2.2 ANNUAL MEETING....................................................................1 2.3 SPECIAL MEETING...................................................................1 2.4 NOTICE OF STOCKHOLDERS' MEETINGS..................................................2 2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS...................2 2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE......................................3 2.7 QUORUM............................................................................3 2.8 ADJOURNED MEETING; NOTICE.........................................................4 2.9 VOTING............................................................................4 2.10 WAIVER OF NOTICE..................................................................4 2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING...........................4 2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS.......................5 2.13 PROXIES...........................................................................5 2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE.............................................6 2.15 CONDUCT OF BUSINESS...............................................................6 ARTICLE III DIRECTORS............................................................................6 3.1 POWERS............................................................................6 3.2 NUMBER............................................................................7 3.3 CLASSES OF DIRECTORS..............................................................7 3.4 RESIGNATION AND VACANCIES.........................................................7 3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE..........................................8 3.6 REGULAR MEETINGS..................................................................8 3.7 SPECIAL MEETINGS; NOTICE..........................................................8 3.8 QUORUM............................................................................9 3.9 WAIVER OF NOTICE..................................................................9 3.10 ADJOURNED MEETING; NOTICE.........................................................9 3.11 CONDUCT OF BUSINESS...............................................................9 3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING................................10 3.13 FEES AND COMPENSATION OF DIRECTORS...............................................10 3.14 REMOVAL OF DIRECTORS.............................................................10
-i- 3 TABLE OF CONTENTS (CONTINUED)
PAGE ---- ARTICLE IV COMMITTEES...........................................................................10 4.1 COMMITTEES OF DIRECTORS..........................................................10 4.2 COMMITTEE MINUTES................................................................11 4.3 MEETINGS AND ACTION OF COMMITTEES................................................11 ARTICLE V OFFICERS..............................................................................12 5.1 OFFICERS.........................................................................12 5.2 APPOINTMENT OF OFFICERS..........................................................12 5.3 REMOVAL AND RESIGNATION OF OFFICERS..............................................12 5.4 CHAIRMAN OF THE BOARD............................................................12 5.5 CHIEF EXECUTIVE OFFICER..........................................................13 5.6 PRESIDENT........................................................................13 5.7 VICE PRESIDENT...................................................................13 5.8 SECRETARY........................................................................13 5.9 CHIEF FINANCIAL OFFICER..........................................................14 5.10 ASSISTANT SECRETARY..............................................................14 5.11 AUTHORITY AND DUTIES OF OFFICERS.................................................15 ARTICLE VI INDEMNITY............................................................................15 6.1 THIRD PARTY ACTIONS..............................................................15 6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION....................................15 6.3 SUCCESSFUL DEFENSE...............................................................16 6.4 DETERMINATION OF CONDUCT.........................................................16 6.5 PAYMENT OF EXPENSES IN ADVANCE...................................................16 6.6 INDEMNITY NOT EXCLUSIVE..........................................................16 6.7 INSURANCE INDEMNIFICATION........................................................17 6.8 THE CORPORATION..................................................................17 6.9 EMPLOYEE BENEFIT PLANS...........................................................17 6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES......................17 ARTICLE VII RECORDS AND REPORTS.................................................................18 7.1 MAINTENANCE AND INSPECTION OF RECORDS............................................18 7.2 INSPECTION BY DIRECTORS..........................................................18 7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS...................................18 ARTICLE VIII GENERAL MATTERS....................................................................19 8.1 CHECKS...........................................................................19 8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS.................................19
-ii- 4 TABLE OF CONTENTS (CONTINUED)
PAGE ---- 8.3 STOCK CERTIFICATES; PARTLY PAID SHARES...........................................19 8.4 SPECIAL DESIGNATION ON CERTIFICATES..............................................20 8.5 LOST CERTIFICATES................................................................20 8.6 CONSTRUCTION; DEFINITIONS........................................................20 8.7 DIVIDENDS........................................................................20 8.8 FISCAL YEAR......................................................................21 8.9 SEAL.............................................................................21 8.10 TRANSFER OF STOCK................................................................21 8.11 STOCK TRANSFER AGREEMENTS........................................................21 8.12 REGISTERED STOCKHOLDERS..........................................................21 ARTICLE IX AMENDMENTS...........................................................................22 ARTICLE X DISSOLUTION...........................................................................22 ARTICLE XI CUSTODIAN............................................................................22 11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES......................................22 11.2 DUTIES OF CUSTODIAN..............................................................23 ARTICLE XII LOANS TO OFFICERS...................................................................23
-iii- 5 BYLAWS OF JUNIPER NETWORKS, INC. ARTICLE I CORPORATE OFFICES 1.1 REGISTERED OFFICE The registered office of the Corporation shall be 1209 Orange Street, in the City of Wilmington, County of New Castle, State of Delaware, 19801. The name of the registered agent of the Corporation at such location is The Corporation Trust Company. 1.2 OTHER OFFICES The board of directors may at any time establish other offices at any place or places where the Corporation is qualified to do business. ARTICLE II MEETINGS OF STOCKHOLDERS 2.1 PLACE OF MEETINGS Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the board of directors. In the absence of any such designation, stockholders' meetings shall be held at the registered office of the Corporation. 2.2 ANNUAL MEETING The annual meeting of stockholders shall be held each year on a date and at a time designated by the board of directors. At the meeting, directors shall be elected and any other proper business may be transacted. 2.3 SPECIAL MEETING A special meeting of the stockholders may be called at any time by the (i) board of directors, (ii) the chairman of the board, (iii) the president, or (iv) the chief executive officer. Prior to such time as a Registration Statement regarding the sale of the Corporation's Common Stock to the public is declared effective by the Securities and Exchange Commission, a special meeting of the stockholders may be called at any time by one or more stockholders holding a majority of the outstanding voting shares. If a special meeting is called by any person other than the board of directors, the request shall be in writing, specifying the time of such meeting and the general nature of the business proposed to 6 be transacted, and shall be delivered personally or sent by registered mail or by telegraphic or other facsimile transmission to the chairman of the board, the president, any vice president, or the secretary of the corporation. No business may be transacted at such special meeting otherwise than specified in such notice. The officer receiving the request shall cause notice to be promptly given to the stockholders entitled to vote, in accordance with the provisions of Sections 2.4 and 2.5 of this Article II, that a meeting will be held at the time requested by the person or persons who called the meeting, not less than thirty-five (35) nor more than sixty (60) days after the receipt of the request. If the notice is not given within twenty (20) days after the receipt of the request, the person or persons requesting the meeting may give the notice. Nothing contained in this paragraph of this Section 2.3 shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the board of directors may be held. 2.4 NOTICE OF STOCKHOLDERS' MEETINGS All notices of meetings with stockholders shall be in writing and shall be sent or otherwise given in accordance with Section 2.6 of these Bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. 2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS To be properly brought before an annual meeting or special meeting, nominations for the election of director or other business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (b) otherwise properly brought before the meeting by or at the direction of the board of directors, or (c) otherwise properly brought before the meeting by a stockholder. For such nominations or other business to be considered properly brought before the meeting by a stockholder, such stockholder must have given timely written notice and in proper form of his intent to bring such business before such meeting. To be timely, such stockholder's notice must be delivered to or mailed and received by the secretary of the Corporation not less than one hundred twenty (120) days prior to the date of the Corporation's proxy statement released to stockholders in connection with the Corporation's previous year's annual meeting of stockholders. To be in proper form, a stockholder's notice to the secretary shall set forth: (i) the name and address of the stockholder who intends to make the nominations, propose the business, and, as the case may be, the name and address of the person or persons to be nominated or the nature of the business to be proposed; -2- 7 (ii) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and, if applicable, intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice or introduce the business specified in the notice; (iii) if applicable, a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (iv) such other information regarding each nominee or each matter of business to be proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the nominee been nominated, or intended to be nominated, or the matter been proposed, or intended to be proposed by the board of directors; and (v) if applicable, the consent of each nominee to serve as director of the Corporation if so elected. The chairman of the meeting may refuse to acknowledge the nomination of any person or the proposal of any business not made in compliance with the foregoing procedure. 2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE Written notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation. An affidavit of the secretary or an assistant secretary or of the transfer agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. 2.7 QUORUM The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the Certificate of Incorporation. If, however, such quorum is not present or represented at any meeting of the stockholders, then either (i) the chairman of the meeting, or (ii) the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed. -3- 8 When a quorum is present or represented at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which, by express provisions of the statutes or of the Certificate of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of the question. 2.8 ADJOURNED MEETING; NOTICE When a meeting is adjourned to another time or place, unless these Bylaws otherwise require, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. 2.9 VOTING The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Sections 2.12 and 2.14 of these Bylaws, subject to the provisions of Sections 217 and 218 of the General Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgors and joint owners of stock and to voting trusts and other voting agreements). Except as may be otherwise provided in the Certificate of Incorporation, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder. 2.10 WAIVER OF NOTICE Whenever notice is required to be given under any provision of the General Corporation Law of Delaware or of the Certificate of Incorporation or these Bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice unless so required by the Certificate of Incorporation or these Bylaws. 2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING Notwithstanding the following provisions of this Section 2.11, effective upon the listing of the Common Stock of the Corporation on the Nasdaq Stock Market and the registration of any class of securities of the Corporation pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the stockholders of the Corporation may not take action by written consent without a meeting but must take any such actions at a duly called annual or special meeting. Except as otherwise provided in this Section 2.11, any action required by this chapter to be taken at any annual or special meeting of stockholders of a Corporation, or any action that may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice, and without a vote if a consent in writing, setting forth the action so taken, is -4- 9 signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. If the action which is consented to is such as would have required the filing of a certificate under any section of the General Corporation Law of Delaware if such action had been voted on by stockholders at a meeting thereof, then the certificate filed under such section shall state, in lieu of any statement required by such section concerning any vote of stockholders, that written notice and written consent have been given as provided in Section 228 of the General Corporation Law of Delaware. 2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action. If the board of directors does not so fix a record date, the fixing of such record date shall be governed by the provisions of Section 213 of the General Corporation Law of Delaware. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. 2.13 PROXIES Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him by a written proxy, signed by the stockholder and filed with the secretary of the Corporation, but no such proxy shall be voted or acted upon after 3 years from its date, unless the proxy provides for a longer period. A proxy shall be deemed signed if the stockholder's name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission or otherwise) by the stockholder -5- 10 or the stockholder's attorney-in-fact. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212(c) of the General Corporation Law of Delaware. 2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE The officer who has charge of the stock ledger of a Corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The stock ledger shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of stockholders or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders and of the number of shares held by each such stockholder. 2.15 CONDUCT OF BUSINESS Meetings of stockholders shall be presided over by the chairman of the board, if any, or in his absence by the president, or in his absence by a vice president, or in the absence of the foregoing persons by a chairman designated by the board of directors, or in the absence of such designation by a chairman chosen at the meeting. The secretary shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting. The chairman of any meeting of stockholders shall determine the order of business and the procedures at the meeting, including such matters as the regulation of the manner of voting and conduct of business. ARTICLE III DIRECTORS 3.1 POWERS Subject to the provisions of the General Corporation Law of Delaware and any limitations in the Certificate of Incorporation or these Bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the Corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board of directors. -6- 11 3.2 NUMBER The authorized number of directors of the Corporation shall be seven (7). No reduction of the authorized number of directors shall have the effect of removing any director before that director's term of office expires. 3.3 CLASSES OF DIRECTORS At such time as a Registration Statement regarding the sale of the Corporation's Common Stock to the public is declared effective by the Securities and Exchange Commission, the Directors shall be divided into three classes designated as Class I, Class II and Class III, respectively. Directors shall be assigned to each class in accordance with a resolution or resolutions adopted by the Board of Directors. At the first annual meeting of stockholders following the closing of the Initial Public Offering, the term of office of the Class I Directors shall expire and Class I Directors shall be elected for a full term of three years. At the second annual meeting of stockholders following the closing of the Initial Public Offering, the term of office of the Class II Directors shall expire and Class II Directors shall be elected for a full term of three years. At the third annual meeting of stockholders following the closing of the Initial Public Offering, the term of office of the Class III Directors shall expire and Class III Directors shall be elected for a full term of three years. At each succeeding annual meeting of stockholders, Directors shall be elected for a full term of three years to succeed the Directors of the class whose terms expire at such annual meeting. Notwithstanding the foregoing provisions of this Article, each Director shall serve until his successor is duly elected and qualified or until his earlier death, resignation or removal. No decrease in the number of Directors constituting the Board of Directors shall shorten the term of any incumbent Director. 3.4 RESIGNATION AND VACANCIES Any director may resign at any time upon written notice to the Corporation. Stockholders may remove directors with or without cause. Any vacancy occurring in the board of directors with or without cause may be filled by a majority of the remaining members of the board of directors, although such majority is less than a quorum, or by a plurality of the votes cast at a meeting of stockholders, and each director so elected shall hold office until the expiration of the term of office of the director whom he has replaced. Unless otherwise provided in the Certificate of Incorporation or these Bylaws: (i) Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. -7- 12 (ii) Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the Certificate of Incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected. If at any time, by reason of death or resignation or other cause, the Corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the General Corporation Law of Delaware. If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole board (as constituted immediately prior to any such increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least 10% of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the General Corporation Law of Delaware as far as applicable. 3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE The board of directors of the Corporation may hold meetings, both regular and special, either within or outside the State of Delaware. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. 3.6 REGULAR MEETINGS Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. 3.7 SPECIAL MEETINGS; NOTICE Special meetings of the board of directors for any purpose or purposes may be called at any time by the chairman of the board, the president, any vice president, the secretary or any two directors. -8- 13 Notice of the time and place of special meetings shall be delivered personally or by telephone to each director or sent by first-class mail or telegram, charges prepaid, addressed to each director at that director's address as it is shown on the records of the Corporation. If the notice is mailed, it shall be deposited in the United States mail at least 4 days before the time of the holding of the meeting. If the notice is delivered personally or by telephone or by telegram, it shall be delivered personally or by telephone or to the telegraph company at least 48 hours before the time of the holding of the meeting. Any oral notice given personally or by telephone may be communicated either to the director or to a person at the office of the director who the person giving the notice has reason to believe will promptly communicate it to the director. The notice need not specify the purpose or the place of the meeting, if the meeting is to be held at the principal executive office of the Corporation. 3.8 QUORUM At all meetings of the board of directors, a majority of the authorized number of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation. 3.9 WAIVER OF NOTICE Whenever notice is required to be given under any provision of the General Corporation Law of Delaware or of the Certificate of Incorporation or these Bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors, or members of a committee of directors, need be specified in any written waiver of notice unless so required by the Certificate of Incorporation or these Bylaws. 3.10 ADJOURNED MEETING; NOTICE If a quorum is not present at any meeting of the board of directors, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. 3.11 CONDUCT OF BUSINESS Meetings of the board of directors shall be presided over by the chairman of the board, if any, or in his absence by the chief executive officer, or in their absence by a chairman chosen at the meeting. The secretary shall act as secretary of the meeting, but in his absence the chairman of the -9- 14 meeting may appoint any person to act as secretary of the meeting. The chairman of any meeting shall determine the order of business and the procedures at the meeting. 3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the board of directors, or of any committee thereof, may be taken without a meeting if all members of the board or committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the board or committee. 3.13 FEES AND COMPENSATION OF DIRECTORS Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. 3.14 REMOVAL OF DIRECTORS Unless otherwise restricted by statute, by the Certificate of Incorporation or by these Bylaws, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. If at any time a class or series of shares is entitled to elect one or more directors, the provisions of this Article 3.14 shall apply to the vote of that class or series and not to the vote of the outstanding shares as a whole. ARTICLE IV COMMITTEES 4.1 COMMITTEES OF DIRECTORS The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, with each committee to consist of one or more of the directors of the Corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors or in the Bylaws of the Corporation, shall have and may exercise -10- 15 all the powers and authority of the board of directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) amend the Certificate of Incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) of the General Corporation Law of Delaware, fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation), (ii) adopt an agreement of merger or consolidation under Sections 251 or 252 of the General Corporation Law of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, (iv) recommend to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or (v) amend the Bylaws of the Corporation; and, unless the board resolution establishing the committee, the Bylaws or the Certificate of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger pursuant to Section 253 of the General Corporation Law of Delaware. 4.2 COMMITTEE MINUTES Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. 4.3 MEETINGS AND ACTION OF COMMITTEES Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of Article III of these Bylaws, Section 3.5 (place of meetings and meetings by telephone), Section 3.6 (regular meetings), Section 3.7 (special meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of notice), Section 3.10 (adjournment and notice of adjournment), Section 3.11 (conduct of business) and 3.12 (action without a meeting), with such changes in the context of those Bylaws as are necessary to substitute the committee and its members for the board of directors and its members; provided, however, that the time of regular meetings of committees may also be called by resolution of the board of directors and that notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The board of directors may adopt rules for the government of any committee not inconsistent with the provisions of these Bylaws. -11- 16 ARTICLE V OFFICERS 5.1 OFFICERS The officers of the Corporation shall be a chief executive officer, one or more vice presidents, a secretary and a chief financial officer. The Corporation may also have, at the discretion of the board of directors, a chairman of the board, a president, a chief operating officer, one or more executive, senior or assistant vice presidents, assistant secretaries and any such other officers as may be appointed in accordance with the provisions of Section 5.2 of these Bylaws. Any number of offices may be held by the same person. 5.2 APPOINTMENT OF OFFICERS Except as otherwise provided in this Section 5.2, the officers of the Corporation shall be appointed by the board of directors, subject to the rights, if any, of an officer under any contract of employment. The board of directors may appoint, or empower an officer to appoint, such officers and agents of the business as the Corporation may require (whether or not such officer or agent is described in this Article V), each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these Bylaws or as the board of directors may from time to time determine. Any vacancy occurring in any office of the Corporation shall be filled by the board of directors or may be filled by the officer, if any, who appointed such officer. 5.3 REMOVAL AND RESIGNATION OF OFFICERS Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the board of directors at any regular or special meeting of the board or, except in the case of an officer chosen by the board of directors, by any officer upon whom such power of removal may be conferred by the board of directors or, in the case of an officer appointed by another officer, by such other officer. Any officer may resign at any time by giving written notice to the Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party. 5.4 CHAIRMAN OF THE BOARD The chairman of the board, if such an officer be elected, shall, if present, preside at meetings of the board of directors and exercise and perform such other powers and duties as may from time to time be assigned to him by the board of directors or as may be prescribed by these Bylaws. If there -12- 17 is no chief executive officer, then the chairman of the board shall also be the chief executive officer of the Corporation and shall have the powers and duties prescribed in Section 5.5 of these Bylaws. 5.5 CHIEF EXECUTIVE OFFICER The Chief Executive Officer of the Corporation shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and the officers of the Corporation. He or she shall preside at all meetings of the stockholders and, in the absence or nonexistence of a Chairman of the Board at all meetings of the Board of Directors. He or she shall have the general powers and duties of management usually vested in the chief executive officer of a Corporation, including general supervision, direction and control of the business and supervision of other officers of the Corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or these Bylaws. The Chief Executive Officer shall, without limitation, have the authority to execute bonds, mortgages and other contracts requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. 5.6 PRESIDENT Subject to such supervisory powers as may be given by these Bylaws or the Board of Directors to the Chairman of the Board or the Chief Executive Officer, if there be such officers, the president shall have general supervision, direction and control of the business and supervision of other officers of the Corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or these Bylaws. In the event a Chief Executive Officer shall not be appointed, the President shall have the duties of such office. 5.7 VICE PRESIDENT In the absence or disability of the president, the vice presidents, if any, in order of their rank as fixed by the board of directors or, if not ranked, a vice president designated by the board of directors, shall perform all the duties of the chief executive officer and when so acting shall have all the powers of, and be subject to all the restrictions upon, the chief executive officer. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the board of directors, these Bylaws, the chief executive officer or the chairman of the board. 5.8 SECRETARY The secretary shall keep or cause to be kept, at the principal executive office of the Corporation or such other place as the board of directors may direct, a book of minutes of all meetings and actions of directors, committees of directors, and stockholders. The minutes shall -13- 18 show the time and place of each meeting, whether regular or special (and, if special, how authorized and the notice given), the names of those present at directors' meetings or committee meetings, the number of shares present or represented at stockholders' meetings, and the proceedings thereof. The secretary shall keep, or cause to be kept, at the principal executive office of the Corporation or at the office of the Corporation's transfer agent or registrar, as determined by resolution of the board of directors, a share register, or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates evidencing such shares, and the number and date of cancellation of every certificate surrendered for cancellation. The secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the board of directors required to be given by law or by these Bylaws. He shall keep the seal of the Corporation, if one be adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the board of directors or by these Bylaws. 5.9 CHIEF FINANCIAL OFFICER The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares. The books of account shall at all reasonable times be open to inspection by any director. The chief financial officer shall deposit all money and other valuables in the name and to the credit of the Corporation with such depositaries as may be designated by the board of directors. He shall disburse the funds of the Corporation as may be ordered by the board of directors, shall render to the chief executive officer and directors, whenever they request it, an account of all of his transactions as treasurer and of the financial condition of the Corporation, and shall have such other powers and perform such other duties as may be prescribed by the board of directors or these Bylaws. 5.10 ASSISTANT SECRETARY The assistant secretary, or, if there is more than one, the assistant secretaries in the order determined by the stockholders or board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors or the stockholders may from time to time prescribe. -14- 19 5.11 AUTHORITY AND DUTIES OF OFFICERS In addition to the foregoing authority and duties, all officers of the Corporation shall respectively have such authority and perform such duties in the management of the business of the Corporation as may be designated from time to time by the board of directors or the stockholders. ARTICLE VI INDEMNITY 6.1 THIRD PARTY ACTIONS The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by an agent of the Corporation), or is or was serving at the request of the Corporation, any predecessor of the Corporation, or any subsidiary of the Corporation, as a director or officer of another corporation, partnership, joint venture trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, any predecessor of the Corporation, or any subsidiary of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of the Corporation, any predecessor of the Corporation, or any subsidiary of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. The Corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by an agent of the Corporation), or is or was serving at the request of the Corporation, any predecessor of the Corporation, or any subsidiary of the Corporation, as an employee or agent of another corporation, partnership, joint venture trust or other enterprise, against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, any predecessor of the Corporation, or any subsidiary of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of the Corporation, any predecessor of the Corporation, or any subsidiary of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. 6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation, any predecessor of the Corporation, or any subsidiary of the Corporation, to procure a judgment in its favor by reason of the fact that he is or was a director or officer of Corporation, any predecessor of the Corporation, or any subsidiary of the Corporation, or is or was serving at the request of the Corporation, any predecessor of the Corporation, or any subsidiary of the Corporation, as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in manner he reasonably believed to be in or not opposed to the best interests of the Corporation, any predecessor of the Corporation, or any subsidiary of the Corporation, and except -15- 20 that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation, any predecessor of the Corporation, or any subsidiary of the Corporation, unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper. The Corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation, any predecessor of the Corporation, or any subsidiary of the Corporation, to procure a judgment in its favor by reason of the fact that he is or was an employee or agent of the Corporation, any predecessor of the Corporation, or any subsidiary of the Corporation, or is or was serving at the request of the Corporation, any predecessor of the Corporation, or any subsidiary of the Corporation, as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorney's fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in manner he reasonably believed to be in or not opposed to the best interests of the Corporation, any predecessor of the Corporation, or any subsidiary of the Corporation, and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation, any predecessor of the Corporation, or any subsidiary of the Corporation, unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper. 6.3 SUCCESSFUL DEFENSE To the extent that a director, officer, employee or agent of the Corporation, any predecessor of the Corporation, or any subsidiary of the Corporation, has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 6.1 and 6.2, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. 6.4 DETERMINATION OF CONDUCT Any indemnification under Sections 6.1 and 6.2 (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that the indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections 6.1 and 6.2. Such determination shall be made (1) by the board of Directors or the Executive Committee by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) or if such quorum is not obtainable or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders. 6.5 PAYMENT OF EXPENSES IN ADVANCE Expenses incurred in defending a civil or criminal action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article VI. 6.6 INDEMNITY NOT EXCLUSIVE The indemnification and advancement of expenses provided or granted pursuant to the other subsections of this section shall not be deemed exclusive of any other rights or limiting any other rights to which those seeking indemnification or advancement of expenses may be entitled under any by-law, certificate of incorporation, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another while holding such office. -16- 21 6.7 INSURANCE INDEMNIFICATION The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, any predecessor of the Corporation, or any subsidiary of the Corporation, or is or was serving at the request of the Corporation, as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article VI. 6.8 THE CORPORATION For purposes of this Article VI, references to "the Corporation" shall include, in addition to the resulting Corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under and subject to the provisions of this Article VI (including, without limitation the provisions of Section 6.4) with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. 6.9 EMPLOYEE BENEFIT PLANS For purposes of this Article VI, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article VI. 6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES The indemnification and advanced of expenses provided by, or granted pursuant to, this Article VI shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. -17- 22 ARTICLE VII RECORDS AND REPORTS 7.1 MAINTENANCE AND INSPECTION OF RECORDS The Corporation shall, either at its principal executive office or at such place or places as designated by the board of directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these Bylaws as amended to date, accounting books, and other records. Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the Corporation's stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person's interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the Corporation at its registered office in Delaware or at its principal place of business. 7.2 INSPECTION BY DIRECTORS Any director shall have the right to examine the Corporation's stock ledger, a list of its stockholders and its other books and records for a purpose reasonably related to his position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the Corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper. 7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS The chairman of the board, the chief executive officer, any vice president, the chief financial officer, the secretary or assistant secretary of this Corporation, or any other person authorized by the board of directors or the chief executive officer or a vice president, is authorized to vote, represent, and exercise on behalf of this Corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this Corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority. -18- 23 ARTICLE VIII GENERAL MATTERS 8.1 CHECKS From time to time, the board of directors shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the Corporation, and only the persons so authorized shall sign or endorse those instruments. 8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS The board of directors, except as otherwise provided in these Bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the board of directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount. 8.3 STOCK CERTIFICATES; PARTLY PAID SHARES The shares of a corporation shall be represented by certificates, provided that the board of directors of the Corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the board of directors, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the Corporation by the chairman or vice-chairman of the board of directors, or the president or vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of such Corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. The Corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, upon the books and records of the Corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend -19- 24 on fully paid shares, the Corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon. 8.4 SPECIAL DESIGNATION ON CERTIFICATES If the Corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and"or rights shall be set forth in full or summarized on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and"or rights. 8.5 LOST CERTIFICATES Except as provided in this Section 8.5, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Corporation and cancelled at the same time. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares. 8.6 CONSTRUCTION; DEFINITIONS Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the Delaware General Corporation Law shall govern the construction of these Bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term "person" includes both a Corporation and a natural person. 8.7 DIVIDENDS The directors of the Corporation, subject to any restrictions contained in the Certificate of Incorporation, may declare and pay dividends upon the shares of its capital stock pursuant to the General Corporation Law of Delaware. Dividends may be paid in cash, in property, or in shares of the Corporation's capital stock. -20- 25 The directors of the Corporation may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Corporation, and meeting contingencies. 8.8 FISCAL YEAR The fiscal year of the Corporation shall be fixed by resolution of the board of directors and may be changed by the board of directors. 8.9 SEAL The Corporation may adopt a corporate seal, which may be altered at pleasure, and may use the same by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. 8.10 TRANSFER OF STOCK Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction in its books. 8.11 STOCK TRANSFER AGREEMENTS The Corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not prohibited by the General Corporation Law of Delaware. 8.12 REGISTERED STOCKHOLDERS The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner, shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. -21- 26 ARTICLE IX AMENDMENTS The original or other Bylaws of the Corporation may be adopted, amended or repealed by the stockholders entitled to vote; provided, however, that the Corporation may, in its Certificate of Incorporation, confer the power to adopt, amend or repeal Bylaws upon the directors. The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal Bylaws. ARTICLE X DISSOLUTION If it should be deemed advisable in the judgment of the board of directors of the Corporation that the Corporation should be dissolved, the board, after the adoption of a resolution to that effect by a majority of the whole board at any meeting called for that purpose, shall cause notice to be mailed to each stockholder entitled to vote thereon of the adoption of the resolution and of a meeting of stockholders to take action upon the resolution. At the meeting a vote shall be taken for and against the proposed dissolution. If a majority of the outstanding stock of the Corporation entitled to vote thereon votes for the proposed dissolution, then a certificate stating that the dissolution has been authorized in accordance with the provisions of Section 275 of the General Corporation Law of Delaware and setting forth the names and residences of the directors and officers shall be executed, acknowledged, and filed and shall become effective in accordance with Section 103 of the General Corporation Law of Delaware. Upon such certificate's becoming effective in accordance with Section 103 of the General Corporation Law of Delaware, the Corporation shall be dissolved. ARTICLE XI CUSTODIAN 11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES The Court of Chancery, upon application of any stockholder, may appoint one or more persons to be custodians and, if the Corporation is insolvent, to be receivers, of and for the Corporation when: (i) at any meeting held for the election of directors the stockholders are so divided that they have failed to elect successors to directors whose terms have expired or would have expired upon qualification of their successors; or -22- 27 (ii) the business of the Corporation is suffering or is threatened with irreparable injury because the directors are so divided respecting the management of the affairs of the Corporation that the required vote for action by the board of directors cannot be obtained and the stockholders are unable to terminate this division; or (iii) the Corporation has abandoned its business and has failed within a reasonable time to take steps to dissolve, liquidate or distribute its assets. 11.2 DUTIES OF CUSTODIAN The custodian shall have all the powers and title of a receiver appointed under Section 291 of the General Corporation Law of Delaware, but the authority of the custodian shall be to continue the business of the Corporation and not to liquidate its affairs and distribute its assets, except when the Court of Chancery otherwise orders and except in cases arising under Sections 226(a)(3) or 352(a)(2) of the General Corporation Law of Delaware. ARTICLE XII LOANS TO OFFICERS The Corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the Corporation or of its subsidiaries, including any officer or employee who is a Director of the Corporation or its subsidiaries, whenever, in the judgment of the Board of Directors, such loan, guarantee or assistance may reasonably be expected to benefit the Corporation. The loan, guarantee or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the Corporation. Nothing in this Bylaw shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the Corporation at common law or under any statute. -23- EX-4.2 5 WARRANT TO PURCHASE SHARES, SERIES B, VENTURE 1 EXHIBIT 4.2 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND ARE "RESTRICTED SECURITIES" AS DEFINED IN RULE 144 PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT (i) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE ACT OR (ii) IN COMPLIANCE WITH RULE 144, OR (iii) PURSUANT TO AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION OR COMPLIANCE IS NOT REQUIRED AS TO SAID SALE, OFFER OR DISTRIBUTION. WARRANT TO PURCHASE A MAXIMUM OF 83,333 SHARES OF SERIES B PREFERRED STOCK OF JUNIPER NETWORKS, INC. (Void after December 15, 2003) This certifies that VENTURE LENDING & LEASING, INC., a Maryland corporation, or assigns (the "Holder"), for value received, is entitled to purchase from Juniper Networks, Inc. a California corporation (the "Company"), Eighty Three Thousand Three Hundred Thirty-Three (83,333) fully paid and nonassessable shares of the Company's Series B Preferred Stock ("Preferred Stock") for cash at a price of Two and 40/100 Dollars ($2.40) per share (the "Stock Purchase Price") at any time or from time to time up to and including 5:00 p.m. (Pacific time) on December 15, 2003 (the "Expiration Date"), upon surrender to the Company at its principal office at 3260 Jay Street, Santa Clara, California 95054 (or at such other location as the Company may advise Holder in writing) of this Warrant properly endorsed with the Form of Subscription attached hereto duly filled in and signed and upon payment in cash or by check of the aggregate Stock Purchase Price for the number of shares for which this Warrant is being exercised determined in accordance with the provisions hereof. The Stock Purchase Price and the number of shares purchasable hereunder are subject to adjustment as provided in Section 4 of this Warrant. This Warrant is subject to the following terms and conditions: 1. Exercise; Issuance of Certificates; Payment for Shares. (a) Unless an election is made pursuant to clause (b) of this Section 1, this Warrant shall be exercisable at the option of the Holder, at any time or from time to time, on or before the Expiration Date for all or any portion of the shares of Preferred Stock (but not for a fraction of a share) which may be purchased hereunder for the Stock Purchase Price multiplied by the number of shares to be purchased. In the event, however, that pursuant to the Company's Articles of Incorporation, as amended, an event causing automatic conversion of the Company's Preferred Stock shall have occurred prior to the exercise of this Warrant, in whole or in part, then this Warrant shall be exercisable for the number of shares of Common Stock of the Company 2 into which the Preferred Stock not purchased upon any prior exercise of the Warrant would have been so converted (and, where the context requires, reference to "Preferred Stock" shall be deemed to include such Common Stock). The Company agrees that the shares of Preferred Stock purchased under this Warrant shall be and are deemed to be issued to the holder hereof as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares. Subject to the provisions of Section 2, certificates for the shares of Preferred Stock so purchased, together with any other securities or property to which the Holder hereof is entitled upon such exercise, shall be delivered to the Holder hereof by the Company at the Company's expense within a reasonable time after the rights represented by this Warrant have been so exercised. Except as provided in clause (b) of this Section 1, in case of a purchase of less than all the shares which may be purchased under this Warrant, the Company shall cancel this Warrant and execute and deliver a new Warrant or Warrants of like tenor for the balance of the shares purchasable under the Warrant surrendered upon such purchase to the Holder hereof within a reasonable time. Each stock certificate so delivered shall be in such denominations of Preferred Stock as may be requested by the Holder hereof and shall be registered in the name of such Holder or such other name as shall be designated by such Holder, subject to the limitations contained in Section 2. (b) The Holder, in lieu of exercising this Warrant by the payment of the Stock Purchase Price pursuant to the clause (a) of this Section 1, may elect, at any time on or before the Expiration Date, to receive that number of shares of Preferred Stock equal to the quotient of: (i) the difference between (A) the Per Share Price (as hereinafter defined) of the Preferred Stock, less (B) the Stock Purchase Price then in effect, multiplied by the number of shares of Preferred Stock the Holder would otherwise have been entitled to purchase hereunder pursuant to clause (a) of this Section 1 (or such lesser number of shares as the Holder may designate in the case of a partial exercise of this Warrant); over (ii) the Per Share Price. (c) For purposes of clause (b) of this Section 1, "Per Shares Price" means: (i) if the Company's Common Stock is then listed or admitted to trading on any national securities exchange or traded on any national market system, the average of the closing bid and asked prices of the Company's Common Stock as reported on such exchange or market system for the ten (10) consecutive trading days prior to the date of the Holder's election to convert hereunder; (ii) if this Warrant is being converted in conjunction with a public offering of stock, the price to the public per share pursuant to the offering; or (iii) if no shares of the Company's Common Stock are listed or admitted to trading on any national securities exchange or traded on any national market system, the price per share which the Company would obtain from a willing buyer for shares sold by the Company from authorized but unissued shares as such price shall be determined in good faith by the Company's Board of Directors. 2. Limitation on Transfer. (a) The Warrant and the Preferred Stock shall not be transferable except upon the conditions specified in this Section 2, which conditions are intended to insure compliance with the provisions of the 2 3 Securities Act. Each holder of this Warrant or the Preferred Stock issuable hereunder will cause any proposed transferee of the Warrant or Preferred Stock to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Section 2. (b) Each certificate representing (i) this Warrant, (ii) the Preferred Stock, (iii) shares of the Company's Common Stock issued upon conversion of the Preferred Stock and (iv) any other securities issued in respect of the Preferred Stock or Common Stock issued upon conversion of the Preferred Stock upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall (unless otherwise permitted by the provisions of this Section 2 or unless such securities have been registered under the Securities Act or sold under Rule 144) be stamped or otherwise imprinted with a legend substantially in the following form set forth on the first page of this Warrant. (c) The Holder of this Warrant and each person to whom this Warrant is subsequently transferred represents and warrants to the Company (by acceptance of such transfer) that it will not transfer the Warrant (or securities issuable upon exercise hereof unless a registration statement under the Securities Act was in effect with respect to such securities at the time of issuance thereof) except pursuant to (i) an effective registration statement under the Securities Act, (ii) Rule 144 under the Securities Act (or any other rule under the Securities Act relating to the disposition of securities), or (iii) an opinion of counsel, reasonably satisfactory to counsel for the Company, that an exemption from such registration is available. 3. Shares to be Fully Paid; Reservation of Shares. The Company covenants and agrees that all shares of Preferred Stock which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and free from all preemptive rights of any shareholder and free of all taxes, liens and charges with respect to the issue thereof. The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved, for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant, a sufficient number of shares of authorized but unissued Preferred Stock, or other securities and property, when and as required to provide for the exercise of the rights represented by this Warrant. The Company will take all such action as may be necessary to assure that such shares of Preferred Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any domestic securities exchange upon which the Preferred Stock may be listed. The Company will not take any action which would result in any adjustment of the Stock Purchase Price (as defined in Section 4 hereof) (i) if the total number of shares of Preferred Stock issuable after such action upon exercise of all outstanding warrants, together with all shares of Preferred Stock then outstanding and all shares of Preferred Stock then issuable upon exercise of all options and upon the conversion of all convertible securities then outstanding, would exceed the total number of shares of Preferred Stock then authorized by the Company's Articles of Incorporation, or (ii) if the total number of shares of Common Stock issuable after such action upon the conversion of all such shares of 3 4 Preferred Stock together with all shares of Common Stock then outstanding and then issuable upon exercise of all options and upon the conversion of all convertible securities then outstanding would exceed the total number of shares of Common Stock then authorized by the Company's Articles of Incorporation. 4. Adjustment of Stock Purchase Price Number of Shares. The Stock Purchase Price and the number of shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 4. Upon each adjustment of the Stock Purchase Price, the Holder of this Warrant shall thereafter be entitled to purchase, at the Stock Purchase Price resulting from such adjustment, the number of shares obtained by multiplying the Stock Purchase Price in effect immediately prior to such adjustment by the number of shares purchasable pursuant hereto immediately prior to such adjustment, and dividing the product thereof by the Stock Purchase Price resulting from such adjustment. 4.1 Subdivision or Combination of Stock. In case the Company shall at any time subdivide its outstanding shares of Preferred Stock into a greater number of shares, the Stock Purchase Price in effect immediately prior to such subdivision shall be proportionately reduced, and conversely, in case the outstanding shares of Preferred Stock of the Company shall be combined into a smaller number of shares, the Stock Purchase Price in effect immediately prior to such combination shall be proportionately increased. 4.2 Dividends in Preferred Stock, Other Stock, Property, Reclassification. If at any time or from time to time the holders of Preferred Stock (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received or become entitled to receive, without payment therefor, (a) Preferred Stock, or any shares of stock or other securities whether or not such securities are at any time directly or indirectly convertible into or exchangeable for Preferred Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution, or (b) any cash paid or payable otherwise than as a cash dividend, or (c) Preferred Stock or other or additional stock or other securities or property (including cash) by way of spinoff, split-up, reclassification, combination of shares or similar corporate rearrangement, (other than shares of Preferred Stock issued as a stock split, adjustments in respect of which shall be covered by the terms of Section 4.1 above), then and in each such case, the Holder hereof shall, upon the exercise of this Warrant, be entitled to receive, in addition to the number of shares of Preferred Stock receivable thereupon, and without payment of any additional consideration therefore, the amount of stock and other securities and property (including cash in the cases referred to in clauses (b) and (c) above) which such Holder would hold on the date of such exercise had he been the holder of record of such Preferred Stock as of the date on which holders of Preferred Stock 4 5 received or became entitled to receive such shares and/or all other additional stock and other securities and property. 4.3 Reorganization, Reclassification, Consolidation, Merger or Sale. If any capital reorganization of the capital stock of the Company, or any consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets to another corporation shall be effected in such a way that holders of Preferred Stock shall be entitled to receive stock, securities or assets with respect to or in exchange for Preferred Stock, then, as a condition of such reorganization, reclassification, consolidation, merger or sale, lawful and adequate provisions shall be made whereby the holder hereof shall thereafter have the right to purchase and receive (in lieu of the shares of the Preferred Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby) such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Preferred Stock equal to the number of shares of such stock immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby. In any such case, appropriate provision shall be made with respect to the rights and interests of the holder of this Warrant to the end that the provisions hereof (including, without limitation, provisions for adjustments of the Stock Purchase Price and of the number of shares purchasable and receivable upon the exercise of this Warrant) shall thereafter be applicable, as nearly as may be possible, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company will not effect any such consolidation, merger or sale unless, prior to the consummation thereof, the successor corporation (if other than the Company) resulting from such consolidation or the corporation purchasing such assets shall assume by written instrument, executed and mailed or delivered to the registered Holder hereof at the last address of such Holder appearing on the books of the Company, the obligation to deliver to such Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to purchase. 4.4 Sale or Issuance Below Purchase Price. If the Company shall at any time or from time to time issue or sell any of its Common Stock, Preferred Stock, options to acquire (or rights to acquire such options), or any other securities convertible into or exercisable for Common Stock, for a consideration per share less than the Stock Purchase Price in effect immediately prior to the time of such issue or sale, the Stock Purchase Price then in effect and then applicable for any subsequent period or periods shall be adjusted to a price determined by dividing (i) an amount equal to the sum of (x) the number of shares of Common Stock outstanding immediately prior to such issue or sale multiplied by the Stock Purchase Price then in effect and (y) the consideration, if any, received by the Company upon such issue or sale, by (ii) the total number of shares of Common Stock outstanding immediately after such issue or sale. For purposes of this Section 4.4, all shares of Common Stock issuable upon the exercise and/or conversion of all outstanding warrants (including this Warrant), options and convertible securities shall be deemed to be outstanding. The foregoing notwithstanding, no adjustment shall be made pursuant to this Section 4.4 on account of a given sale to the extent that (a) the Stock Purchase Price is adjusted pursuant to 5 6 any other Section of this Warrant or (b) the conversion price of the Preferred Stock is decreased pursuant to the terms thereof. 4.5 Notice of Adjustment. Upon any adjustment of the Stock Purchase Price, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the registered holder of this Warrant at the address of such holder as shown on the books of the Company. The notice shall be signed by the Company's chief financial officer and shall state the Stock Purchase Price resulting from such adjustment and the increase or decrease, if any, in the number of shares purchasable at such price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. 4.6 Other Notices. If at any time: (a) the Company shall declare any cash dividend upon its Preferred Stock; (b) the Company shall declare any dividend upon its Preferred Stock payable in stock or make any special dividend or other distribution to the holders of its Preferred Stock; (c) the Company shall offer for subscription pro rata to the holders of its Preferred Stock any additional shares of stock of any class or other rights; (d) there shall be any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another corporation; (e) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Company; or (f) the Company shall take or propose to take any other action, notice of which is actually provided to holders of the Preferred Stock; then, in any one or more of said cases, the Company shall give, by first class mail, postage prepaid, addressed to the holder of this Warrant at the address of such holder as shown on the books of the Company, (i) at least 20 day's prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, or other action and (ii) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, or other action, at least 20 day's written notice of the date when the same shall take place. Any notice given in accordance with the foregoing clause (i) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders 6 7 of Preferred Stock shall be entitled thereto. Any notice given in accordance with the foregoing clause (ii) shall also specify the date on which the holders of Preferred Stock shall be entitled to exchange their Preferred Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, or other action as the case may be. 4.7 Certain Events. If any change in the outstanding Preferred Stock of the Company or any other event occurs as to which the other provisions of this Section 4 are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the Holder of the Warrant in accordance with the essential intent and principles of such provisions, then the Board of Directors of the Company shall make an adjustment in the number and class of shares available under the Warrant, the Stock Purchase Price and/or the application of such provisions, in accordance with such essential intent and principles, so as to protect such purchase rights as aforesaid. The adjustment shall be such as will give the Holder of the Warrant upon exercise for the same aggregate Stock Purchase Price the total number, class and kind of shares as he would have owned had the Warrant been exercised prior to the event and had he continued to hold such shares until after the event requiring adjustment. 5. Issue Tax. The issuance of certificates for shares of Preferred Stock upon the exercise of the Warrant shall be made without charge to the Holder of the Warrant for any issue tax in respect thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and deliver of any certificate in a name other than that of the then Holder of the Warrant being exercised. 6. Closing of Books. The Company will at no time close its transfer books against the transfer of any Warrant or of any shares of Preferred Stock issued or issuable upon the exercise of any warrant in any manner which interferes with the timely exercise of this Warrant. 7. No Voting or Dividend Rights; Limitation of Liability. Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the right to vote or to consent as a shareholder in respect of meetings of shareholders for the election of directors of the Company or any other matters or any rights whatsoever as a shareholder of the Company. No dividends or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby or the shares purchasable hereunder until, and only to the extent that, this Warrant shall have been exercised. No provisions hereof, in the absence of affirmative action by the holder to purchase shares of Preferred Stock, and no mere enumeration herein of the rights or privileges of the Holder hereof, shall give rise of any liability of such Holder for the Stock Purchase Price or as a shareholder of the Company, whether such liability is asserted by the Company or by its creditors. 8. Amendment of Articles of Incorporation. Unless the holder of this Warrant consents thereto in writing, the Company shall not amend its Articles of Incorporation prior to the exercise of this Warrant if the Preferred Stock would be adversely affected by such amendment. 7 8 9. Registration Rights. The Holder hereof shall be entitled, with respect to the shares of Preferred Stock issued upon exercise hereof or the shares of Common Stock or other securities issued upon conversion of such Preferred Stock as the case may be, to all of the registration rights set forth in the First Amended Registration Rights Agreement dated as of August 5, 1996 to the same extent and on the same terms and conditions as possessed by the Series B Holders thereunder. The Company shall take such action as may be reasonably necessary to assure that the granting of such registration rights to the Holder does not violate the provisions of such agreement or any of the Company's charter documents or rights of prior grantees of registration rights. 10. Rights and Obligations Survive Exercise of Warrant. The rights and obligations of the Company, of the Holder of this Warrant and of the holder of shares of Preferred Stock issued upon exercise of this Warrant, contained in Sections 6, 8 and 9 shall survive the exercise of this Warrant. 11. Modification and Waiver. This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought. 12. Notices. Any notice, request or other document required or permitted to be given or delivered to the holder hereof or the Company shall be deemed to have been given (i) upon receipt if delivered personally or by courier (ii) upon confirmation of receipt if by telecopy or (iii) three business days after deposit in the United States mail, with postage prepaid and certified or registered, to each such holder at its address as shown on the books of the Company or to the Company at the address indicated therefor in the first paragraph of this Warrant. 13. Binding Effect on Successors. This Warrant shall be binding upon any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets. All of the obligations of the Company relating to the Preferred Stock issuable upon the exercise of this Warrant shall survive the exercise and termination of this Warrant. All of the covenants and agreements of the Company shall inure to the benefit of the successors and assign of the holder hereof. The Company will, at the time of the exercise of this Warrant, in whole or in part, upon request of the Holder hereof but at the Company's expense, acknowledge in writing its continuing obligation to the Holder hereof in respect of any rights (including, without limitation, any right to registration of the shares of Common Stock) to which the holder hereof shall continue to be entitled after such exercise in accordance with this Warrant; provided, that the failure of the holder hereof to make any such request shall not affect the continuing obligation of the Company to the Holder hereof in respect of such rights. 14. Descriptive Headings and Governing Law. The descriptive headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of California. 8 9 15. Lost Warrants or Stock Certificates. The Company represents and warrants to the Holder hereof that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of any Warrant or stock certificate and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant or stock certificate, the Company at its expense will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate. 16. Fractional Shares. No fractional shares shall be issued upon exercise of this Warrant. The Company shall, in lieu of issuing any fractional share, pay the holder entitled to such fraction a sum in cash equal to such fraction multiplied by the then effective Stock Purchase Price. 17. Representations of Holder. With respect to this Warrant, Holder represents and warrants to the Company as follows: 17.1 Experience. It is experienced in evaluating and investing in companies engaged in businesses similar to that of the Company; it understands that investment in the Warrant involves substantial risks; it has made detailed inquiries concerning the Company, its business and services, its officers and its personnel; the officers of the Company have made available to Holder any and all written information it has requested; the officers of the Company have answered to Holder's satisfaction all inquiries made by it; in making this investment it has relied upon information made available to it by the Company; and it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of investment in the Company and it is able to bear the economic risk of that investment. 17.2 Investment. It is acquiring the Warrant for investment for its own account and not with a view to, or for resale in connection with, any distribution thereof. It understands that the Warrant, the shares of Preferred Stock issuable upon exercise thereof and the shares of Common Stock issuable upon conversion of the Preferred Stock, have not been registered under the Securities Act of 1933, as amended, nor qualified under applicable state securities laws. 17.3 Rule 144. It acknowledges that the Warrant, the Preferred Stock and the Common Stock must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. It has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act. 17.4 Access to Data. It has had an opportunity to discuss the Company's business, management and financial affairs with the Company's management and has had the opportunity to inspect the Company's facilities. 18. Additional Representations and Covenants of the Company. The Company hereby represents, warrants and agrees as follows: 9 10 18.1 Corporate Power. The Company has all requisite corporate power and corporate authority to issue this Warrant and to carry out and perform its obligations hereunder. 18.2 Authorization. All corporate action on the part of the Company, its directors and shareholders necessary for the authorization, execution, delivery and performance by the Company of this has been taken. This Warrant is a valid and binding obligation of the Company, enforceable in accordance with its terms. 18.3 Offering. Subject in part to the truth and accuracy of Holder's representations set forth in Section 17 hereof, the offer, issuance and sale of the Warrant is, and the issuance of Preferred Stock upon exercise of the Warrant and the issuance of Common Stock upon conversion of the Preferred Stock will be exempt from the registration requirements of the Securities Act, and are exempt from the qualification requirements of any applicable state securities laws; and neither the Company nor anyone acting on its behalf will take any action hereafter that would cause the loss of such exemptions. 18.4 Stock Issuance. Upon exercise of the Warrant, the Company will use its best efforts to cause stock certificates representing the shares of Preferred Stock purchased pursuant to the exercise to be issued in the individual names of Holder, its nominees or assignees, as appropriate at the time of such exercise. Upon conversion of the shares of Preferred Stock to shares of Common Stock, the Company will issue the Common Stock in the individual names of Holder, its nominees or assignees, as appropriate. 18.5 Articles and By-Laws. The Company has provided Holder with true and complete copies of the Company's Articles or Certificate of Incorporation, By-Laws, and each Certificate of Determination or other charter document setting forth any rights, preferences and privileges of Company's capital stock, each as amended and in effect on the date of issuance of this Warrant. 18.6 Conversion of Preferred Stock. As of the date hereof, each share of the Preferred Stock is convertible into one share of the Common Stock. 18.7 Financial and Other Reports. From time to time up to the earlier of the Expiration Date or the complete exercise of this Warrant, the Company shall furnish to Holder (i) within 120 days after the close of each fiscal year of the Company an audited balance sheet and statement of changes in financial position at and as of the end of such fiscal year, together with an audited statement of income for such fiscal year; (ii) within 45 days after the close of each fiscal quarter of the Company, an unaudited balance sheet and statement of cash flows at and as of the end of such quarter, together with an unaudited statement of income for such quarter; and (iii) promptly after sending, making available, or filing, copies of all reports, proxy statements, and financial statements that the Company sends or makes available 10 11 to its shareholders and all registration statements and reports that the Company files with the SEC or any other governmental or regulatory authority. IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its officers, thereunto duly authorized this 16 day of December. JUNIPER NETWORKS, INC. By: [illegible] -------------------------- Title: COO ----------------------- 11 EX-4.3 6 WARRANT TO PURCHASE SHARES, AT HOME CORPORATION 1 EXHIBIT 4.3 THIS WARRANT AND THE SECURITIES SUBJECT TO THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO THESE SECURITIES OR (II) THERE IS AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT AN EXEMPTION THEREFROM IS AVAILABLE. THIS WARRANT MUST BE SURRENDERED TO THE COMPANY PRIOR TO ANY TRANSFER OF ANY INTEREST IN SUCH WARRANT. WARRANT TO PURCHASE SERIES B PREFERRED STOCK OF JUNIPER NETWORKS, INC. ISSUANCE DATE: June 23, 1997 EXPIRATION DATE: June 23, 2002 This certifies that @Home Network or its permitted assigns (the "Warrantholder"), is entitled, subject to the terms set forth below, to purchase from Juniper Networks, Inc., a California corporation, (the "Company") up to 10,000 shares (which number is subject to adjustment as provided herein) of fully paid and nonassessable Series B Preferred Stock of the Company at the purchase price of $2.40 per share, subject to adjustment as provided herein, (the "Purchase Price") at any time or from time to time through the earlier of June 23, 2002 or the effective date of the Company's initial underwritten public offering of the Company's equity securities pursuant to a registration statement under the Act. Such price and number of shares are subject to adjustment as provided in Section 2 of this Warrant. This Warrant is issued pursuant to the Warrantholder's sublease of certain office space to the Company. 1. Definitions. As used in this Warrant, the following terms, unless the context otherwise requires, have the following meanings: a. "Company" includes any entity which shall succeed to or assume obligations of the Company under this Warrant. b. "Stock," when used with reference to shares of stock of the Company, means shares of Series B Preferred Stock of the Company, as presently defined in the Company's Amended 2 and Restated Articles of Incorporation, and stock of any other class into which those shares may hereafter be changed. c. "Shares" shall mean the shares of Stock purchasable hereunder and shall include all shares of securities into which the Shares purchasable hereunder may be converted or changed. d. "Warrantholder," "holder of Warrant," "holder," or similar terms when the context refers to a holder of this Warrant, mean any person who shall at the time be the registered holder of this Warrant. 2. Adjustment of Purchase Price and Number of Shares. The number and kind of securities purchasable upon the exercise of this Warrant and the Purchase Price shall be subject to adjustment from time to time upon the occurrence of certain events, as follows: a. Reclassification. In case of any reclassification or change of outstanding securities of the class issuable upon exercise of this Warrant (other than upon any consolidation or merger of the Company with or into another corporation unless the Company is the surviving corporation, or upon the sale of all or substantially all of the assets of the Company) then, and in any such case, the holder of this Warrant, upon the exercise hereof at any time after the consummation of such reclassification or change shall be entitled to receive in lieu of each share of Stock theretofore issuable upon exercise of this Warrant, the kind and amount of shares of stock, other securities, money and property received upon such reclassification or change by a holder of one share of Stock. The provisions of this subsection (a) shall similarly apply to successive reclassifications or changes. b. Subdivision or Combination of Stock. If the Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine its Stock, the Purchase Price shall be proportionately decreased in the case of a subdivision or increased in the case of a combination or the conversion ratio adjusted. c. Stock Dividends. If the Company at any time while this Warrant is outstanding shall pay a dividend with respect to Stock payable in Stock, or make any other distribution of Stock with respect to Stock (except any distribution specifically provided for in the foregoing subsections (a) or (b)), then the Purchase Price shall be adjusted, effective from and after the date of determination of shareholders entitled to receive such dividend or distribution, to that price determined by multiplying the Purchase Price in effect immediately prior to such date of determination by a fraction, (a) the numerator of which shall be the total number of shares of Stock outstanding immediately prior to such dividend or distribution, and (b) the denominator of which shall be the total number of shares of Stock outstanding immediately after such dividend or distribution. d. Non-Cash Dividends. If the Company at any time while this Warrant is outstanding shall pay a dividend with respect to Stock payable in securities other than Stock or other -2- 3 non-cash property, or make any other distribution of such securities or property with respect to Stock (except any distribution specifically provided for in the foregoing subsections (a) or (b)), then this Warrant shall represent the right to acquire upon exercise of this Warrant such securities or property which a holder of Stock would have been entitled to receive upon such dividend or distribution, without the payment by the holder of this Warrant of any additional consideration for such securities or property. e. Adjustment of Number of Shares. Upon each adjustment in the Purchase Price, the number of Shares shall be adjusted, to the nearest whole share, to the product obtained by multiplying the number of Shares purchasable immediately prior to such adjustment in the Purchase Price by a fraction, the numerator of which shall be the Purchase Price immediately prior to such adjustment and the denominator of which shall be the Purchase Price immediately thereafter. f. Series B Preferred Stock. In the event shares of Series B Preferred Stock are no longer outstanding, whether by repurchase of such shares by the Company, conversion of such shares into the Company's common stock ("Common Stock"), or otherwise (each a "Terminal Event"), this Warrant shall be exercisable into that number of shares of Common Stock into which the Stock would have been convertible immediately prior to the Terminal Event. (g) Notice of Adjustments. Whenever the Purchase Price shall be adjusted pursuant to Section 2 hereof, the Company shall issue a certificate signed by its chief financial officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated and the Purchase Price or Prices after giving effect to such adjustment, and the securities or other property for which this Warrant may then be exercised, and shall cause a copy of such certificate to be mailed (by first class mail, postage prepaid) to the holder of this Warrant. 3. Exercise Provisions. a. Manner of Exercise. This Warrant may be exercised in part or in whole only by the holder of this Warrant surrendering to the Company at its principal office in California, this Warrant, together with the exercise form attached to this Warrant duly executed by the holder together with payment to the Company in the amount obtained by multiplying the Purchase Price by the number of shares of Stock designated in the exercise form. Payment may be in cash or by cashier's or certified bank check payable to the order of the Company. b. Partial Exercise. On any partial exercise, the Company shall promptly issue and deliver to the holder of this Warrant a new Warrant or Warrants of like tenor in the name of that holder providing for the right to purchase that number of shares of Stock as to which this Warrant has not been exercised. c. Net Exercise Rights. Notwithstanding the payment provisions set forth in this Section 3, the holder may elect to receive shares of Warrant Stock equal to the value (as determined below) of this Warrant by surrender of this Warrant at the principal office of the Company together -3- 4 with notice of such election, in which event the Company shall issue to the holder the number of shares of Series B Preferred Stock determined by use of the following formula: X = Y(A-B) ------ A Where: X = the number of shares of Series B Preferred Stock to be issued to the holder. Y = the number of shares of Series B Preferred Stock subject to this Warrant. A = the Fair Market Value (as defined below) of one (1) share of Series B Preferred Stock. B = the per share Purchase Price pursuant to this Warrant. For purposes of this Section 3, fair market value of a share as of a particular date shall mean: 1) If the Company's registration statement under the Act, covering its initial underwritten public offering of stock, has been declared effective by the Securities and Exchange Commission, then the fair market value of a share shall be the closing price (the last reported sales price, if not so reported, the average of the last reported bid and asked prices) of the Company's stock as of the last business day immediately prior to the exercise of this Warrant. 2) If such a registration statement has not been declared effective, or if it has been declared effective but the offering is not consummated in accordance with the terms of the underwriting agreement between the Company and its underwriters relating to such registration statement, then as determined in good faith by the Company's Board of Directors upon a review of relevant factors. 4. Delivery of Stock Certificates. Within a reasonable time after full or partial exercise of this Warrant, the Company at its expense will cause to be issued in the name of and delivered to the holder of this Warrant, a certificate or certificates for the number of fully paid and nonassessable shares of Stock to which that holder shall be entitled upon such exercise, together with any other securities and property to which that holder is entitled upon such exercise under the terms of this Warrant. No fractional shares will be issued upon exercise of rights to purchase under this Warrant. If upon any exercise of this Warrant a fraction of a share results, the Company will pay the cash value of that fractional share, calculated on the basis of the closing market price (last trade regular way if the Stock is traded on the New York or American Stock Exchange, and if not so traded, the last sale price or mean of the bid and asked prices as reported by NASDAQ) as of the date of exercise, or, if the Stock is not publicly traded, then on the basis of the Company's good faith determination of the fair market value of the Stock. 5. Compliance with Securities Act; Disposition of Shares of Common Stock. -4- 5 a. Compliance with Securities Act. The holder of this Warrant, by acceptance hereof, agrees that this Warrant and the Shares to be issued upon exercise hereof are being acquired for investment and that he will not offer, sell or otherwise dispose of this Warrant or any Shares to be issued upon exercise hereof except under circumstances which will not result in a violation of the Act. Upon exercise of this Warrant, the holder hereof shall confirm in writing, in a form satisfactory to the Company, that the Shares are being acquired for investment and not with a view toward distribution or resale (unless sale of the Shares has been registered under the Act). Any proposed transferee of this Warrant or the Shares (except a transferee of the Shares in a registered public offering) will be required to agree to the provisions of this Section 5. Certifi cates representing all Shares (unless registered under the Act) shall be stamped or imprinted with a legend in substantially the following form: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO THESE SECURITIES OR (II) THERE IS AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT AN EXEMPTION THEREFROM IS AVAILABLE. THIS CERTIFICATE MUST BE SURRENDERED TO THE COMPANY PRIOR TO ANY TRANSFER OF ANY INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE. b. Notice of Proposed Transfers. Prior to any proposed transfer of this Warrant or any of the Shares, unless there is in effect a registration statement under the Act covering the proposed transfer, the holder thereof shall give written notice (the "Notice") to the Company of such holder's intention to make such transfer. The Notice shall describe the manner and circumstances of the proposed transfer in sufficient detail. If requested by the Company prior to the transfer being effected, the holder shall provide to the Company a written opinion of legal counsel who shall be reasonably satisfactory to the Company, addressed to the Company and reasonably satisfactory in form and substance to the Company's counsel, to the effect that the proposed transfer of the Warrant or the Shares may be effected without registration under the Act. The holder of such securities shall be entitled to transfer such securities in accordance with the terms of the Notice only after the Company has consented in writing to such transfer. Each warrant or stock certificate evidencing the securities so transferred shall bear the appropriate restrictive legend set forth above, except that such certificate shall not bear such restrictive legend if in the opinion of counsel for the Company such legend is not required in order to establish compliance with any provisions of the securities laws. Transfer of the Warrant is further restricted by Section 6(e) hereof. 6. Miscellaneous Provisions. -5- 6 a. Reservation of Stock. The Company covenants that it will at all times reserve and keep available, solely for issuance upon exercise of this Warrant, all shares of Stock or other securities from time to time issuable upon exercise of this Warrant. b. Modification. This Warrant and any of its terms may be changed, waived, or terminated by a written instrument signed by the Company and the holders of the Warrants representing the right to acquire a majority of the shares of Stock then subject to issuance upon the exercise of the Warrants. c. Replacement. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of loss, theft, or destruction, on delivery of any indemnity agreement or bond reasonably satisfactory in form and amount to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company at its expense will execute and deliver, in lieu of this Warrant, a new Warrant of like tenor. d. Warrant Agent. The Company may, on written notice to the holder of this Warrant, appoint an agent having an office in California for the purposes of issuing Stock or other securities upon the exercise of this Warrant and of replacing or exchanging this Warrant, and after that appointment any such issuance, replacement, or exchange shall be made at that office by that agent. e. Nontransferability. This Warrant may not be transferred or assigned without the prior written consent of the Company except, subject to Section 5(a) and (b), in its entirety to one or more purchasers who agrees to be bound by all the terms hereof including this paragraph. f. Notices. Notices hereunder to the holder of this Warrant shall be sent by facsimile, certified or registered mail to the address and facsimile number given to the Company by such holder and shall be deemed given when so mailed or so transmitted. g. Governing Law. This Warrant shall be governed by the laws of the State of California as applied to contracts entered into in California between California residents. Dated: June 23, 1997 JUNIPER NETWORKS, INC. By: /s/ Scott Kriens ---------------------- Scott Kriens, President and Chief Executive Officer -6- 7 FORM OF EXERCISE (To be signed only upon exercise of Warrant) To: Juniper Networks, Inc. The undersigned Holder of the attached Warrant, hereby irrevocably elects to exercise the purchase right represented by this Warrant as follows: [ ] The undersigned elects to purchase for cash or check _______ full shares of Common Stock of SpectraNet International Corporation and herewith makes payment of $_____ for those shares; [ ] The undersigned elects to effect a net exercise of this Warrant, exercising this Warrant [ ] in full or [ ] as to the following gross number of shares: _________. The undersigned understands that the actual number of shares issuable will be determined in accordance with Sections 1.1 and 2 of this Warrant. The undersigned requests that the certificates for the shares be issued in the name of, and delivered to, ____________________________________________________*, whose address is ______________________________________________________________________________. Dated: ___________________ (Signature must conform in all respects to name of holder as specified on the face of the attached Warrant). ------------------------------------ Signature ------------------------------------ Address ------------------------------------ - -------- * If the stock is to be issued to anyone other than the registered Holder of this Warrant, this Notice of Exercise must be accompanied by an opinion of counsel to the effect that such transfer may be effected without compliance with the registration and prospectus delivery requirements of the Securities Act of 1933, as amended. EX-4.4 7 WARRANT TO PURCHASE 20,381 SHARES, VENTURE 1 EXHIBIT 4.4 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND ARE "RESTRICTED SECURITIES" AS DEFINED IN RULE 144 PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT (i) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE ACT OR (ii) IN COMPLIANCE WITH RULE 144, OR (iii) PURSUANT TO AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION OR COMPLIANCE IS NOT REQUIRED AS TO SAID SALE, OFFER OR DISTRIBUTION. WARRANT TO PURCHASE A MAXIMUM OF 20,381 SHARES OF SERIES C PREFERRED STOCK OF JUNIPER NETWORKS, INC. (Void after December 15, 2003) This certifies that VENTURE LENDING & LEASING II, INC., a Maryland corporation, or assigns (the "Holder"), for value received, is entitled to purchase from Juniper Networks, Inc. a California corporation (the "Company"), Twenty Thousand Three Hundred Eighty-one (20,381) fully paid and nonassessable shares of the Company's Series C Preferred Stock ("Preferred Stock") for cash at a price of Eight and 93/100 Dollars ($8.93) per share (the "Stock Purchase Price") at any time or from time to time up to and including 5:00 p.m. (Pacific time) on December 15, 2003 (the "Expiration Date"), upon surrender to the Company at its principal office at 385 Ravendale Drive, Mountain View, California 94043 (or at such other location as the Company may advise Holder in writing) of this Warrant properly endorsed with the Form of Subscription attached hereto duly filled in and signed and upon payment in cash or by check of the aggregate Stock Purchase Price for the number of shares for which this Warrant is being exercised determined in accordance with the provisions hereof. The Stock Purchase Price and the number of shares purchasable hereunder are subject to adjustment as provided in Section 4 of this Warrant. This Warrant is subject to the following terms and conditions: 1. Exercise; Issuance of Certificates; Payment for Shares. (a) Unless an election is made pursuant to clause (b) of this Section 1, this Warrant shall be exercisable at the option of the Holder, at any time or from time to time, on or before the Expiration Date for all or any portion of the shares of Preferred Stock (but not for a fraction of a share) which may be purchased hereunder for the Stock Purchase Price multiplied by the number of shares to be purchased. In the event, however, that pursuant to the Company's Articles of Incorporation, as amended, an event causing automatic conversion of the Company's Preferred Stock shall have occurred prior to the exercise of this Warrant, in whole or in part, then this Warrant shall be exercisable for the number of shares of Common Stock of the Company into which the Preferred Stock not purchased upon any prior exercise of the Warrant would have been so converted (and, where the context requires, reference to "Preferred Stock" shall be deemed to include such Common Stock). The Company agrees that the shares of Preferred Stock purchased under this Warrant shall be and are deemed to be issued to the holder hereof as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares. Subject to the provisions of Section 2, certificates for the shares of 2 Preferred Stock so purchased, together with any other securities or property to which the Holder hereof is entitled upon such exercise, shall be delivered to the Holder hereof by the Company at the Company's expense within a reasonable time after the rights represented by this Warrant have been so exercised. Except as provided in clause (b) of this Section 1, in case of a purchase of less than all the shares which may be purchased under this Warrant, the Company shall cancel this Warrant and execute and deliver a new Warrant or Warrants of like tenor for the balance of the shares purchasable under the Warrant surrendered upon such purchase to the Holder hereof within a reasonable time. Each stock certificate so delivered shall be in such denominations of Preferred Stock as may be requested by the Holder hereof and shall be registered in the name of such Holder or such other name as shall be designated by such Holder, subject to the limitations contained in Section 2. (b) The Holder, in lieu of exercising this Warrant by the payment of the Stock Purchase Price pursuant to clause (a) of this Section 1, may elect, at any time on or before the Expiration Date, to receive that number of shares of Preferred Stock equal to the quotient of: (i) the difference between (A) the Per Share Price (as hereinafter defined) of the Preferred stock, less (B) the Stock Purchase Price then in effect, multiplied by the number of shares of Preferred Stock the Holder would otherwise have been entitled to purchase hereunder pursuant to clause (a) of this Section 1 (or such lesser number of shares as the Holder may designate in the case of a partial exercise of this Warrant); over (ii) the Per Share Price. (c) For purposes of clause (b) of this Section 1, "Per Share Price" means: (i) if the Company's Common Stock is then listed or admitted to trading on any national securities exchange or traded on any national market system, the average of the closing bid and asked prices of the Company's Common Stock as reported on such exchange or market system for the ten (10) consecutive trading days prior to the date of the Holder's election to convert hereunder; (ii) if this Warrant is being converted in conjunction with a public offering of stock, the price to the public per share pursuant to the offering; or (iii) if no shares of the Company's Common Stock are listed or admitted to trading on any national securities exchange or traded on any national market system, the price per share which the Company would obtain from a willing buyer for shares sold by the Company from authorized but unissued shares as such price shall be determined in good faith by the Company's Board of Directors. 2. Limitation on Transfer. (a) The Warrant and the Preferred Stock shall not be transferable except upon the conditions specified in this Section 2 , which conditions are intended to insure compliance with the provisions of the Securities Act. Each holder of this Warrant or the Preferred Stock issuable hereunder will cause any proposed transferee of the Warrant or Preferred Stock to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Section 2. (b) Each certificate representing (i) this Warrant, (ii) the Preferred Stock, (iii) shares of the Company's Common Stock issued upon conversion of the Preferred Stock and (iv) any other securities issued in respect of the Preferred Stock or Common Stock issued upon conversion of the Preferred Stock upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall (unless otherwise permitted by the provisions of this Section 2 or unless such securities have been registered under the Securities Act or sold under Rule 144) be stamped or otherwise imprinted with a legend substantially in the following form set forth on the first page of this Warrant. 2 3 (c) The Holder of this Warrant and each person to whom this Warrant is subsequently transferred represents and warrants to the Company (by acceptance of such transfer) that it will not transfer the Warrant (or securities issuable upon exercise hereof unless a registration statement under the Securities Act was in effect with respect to such securities at the time of issuance thereof) except pursuant to (i) an effective registration statement under the Securities Act, (ii) Rule 144 under the Securities Act (or any other rule under the Securities Act relating to the disposition of securities), or (iii) an opinion of counsel, reasonably satisfactory to counsel for the Company, that an exemption from such registration is available. 3. Shares to be Fully Paid; Reservation of Shares. The Company covenants and agrees that all shares of Preferred Stock which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and free from all preemptive rights of any shareholder and free of all taxes, liens and charges with respect to the issue thereof. The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved, for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant, a sufficient number of shares of authorized but unissued Preferred Stock, or other securities and property, when and as required to provide for the exercise of the rights represented by this Warrant. The Company will take all such action as may be necessary to assure that such shares of Preferred Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any domestic securities exchange upon which the Preferred Stock may be listed. The Company will not take any action which would result in any adjustment of the Stock Purchase Price (as defined in Section 4 hereof) (i) if the total number of shares of Preferred Stock issuable after such action upon exercise of all outstanding warrants, together with all shares of Preferred Stock then outstanding and all shares of Preferred Stock then issuable upon exercise of all options and upon the conversion of all convertible securities then outstanding, would exceed the total number of shares of Preferred Stock then authorized by the Company's Articles of Incorporation, or (ii) if the total number of shares of Common Stock issuable after such action upon the conversion of all such shares of Preferred Stock together with all shares of Common Stock then outstanding and then issuable upon exercise of all options and upon the conversion of all convertible securities then outstanding would exceed the total number of shares of Common Stock then authorized by the Company's Articles of Incorporation. 4. Adjustment of Stock Purchase Price Number of Shares. The Stock Purchase Price and the number of shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 4. Upon each adjustment of the Stock Purchase Price, the Holder of this Warrant shall thereafter be entitled to purchase, at the Stock Purchase Price resulting from such adjustment, the number of shares obtained by multiplying the Stock Purchase Price in effect immediately prior to such adjustment by the number of shares purchasable pursuant hereto immediately prior to such adjustment, and dividing the product thereof by the Stock Purchase Price resulting from such adjustment. 4.1 Subdivision or Combination of Stock. In case the Company shall at any time subdivide its outstanding shares of Preferred Stock into a greater number of shares, the Stock Purchase Price in effect immediately prior to such subdivision shall be proportionately reduced, and conversely, in case the outstanding shares of Preferred Stock of the Company shall be combined into a smaller number of shares, the Stock Purchase Price in effect immediately prior to such combination shall be proportionately increased. 3 4 4.2 Dividends in Preferred Stock, Other Stock, Property, Reclassification. If at any time or from time to time the holders of Preferred Stock (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received or become entitled to receive, without payment therefor, (a) Preferred Stock, or any shares of stock or other securities whether or not such securities are at any time directly or indirectly convertible into or exchangeable for Preferred Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution, or (b) any cash paid or payable otherwise than as a cash dividend, or (c) Preferred Stock or other additional stock or other securities or property (including cash) by way of spinoff, split-up, reclassification, combination of shares or similar corporate rearrangement, (other than shares of preferred Stock issued as a stock split, adjustments in respect of which shall be covered by the terms of Section 4.1 above), then and in each such case, the Holder hereof shall, upon the exercise of this Warrant, be entitled to receive, in addition to the number of shares of Preferred Stock receivable thereupon, and without payment of any additional consideration therefore, the amount of stock and other securities and property (including cash in the cases referred to in clauses (b) and (c) above) which such Holder would hold on the date of such exercise had he been the holder of record of such Preferred Stock as of the date on which holders of Preferred Stock received or became entitled to receive such shares and/or all other additional stock and other securities and property. 4.3 Reorganization, Reclassification, Consolidation, Merger or Sale. If any capital reorganization of the capital stock of the Company, or any consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets to another corporation shall be effected in such a way that holders of Preferred Stock shall be entitled to receive stock, securities or assets with respect to or in exchange for Preferred Stock, then, as a condition of such reorganization, reclassification, consolidation, merger or sale, lawful and adequate provisions shall be made whereby the holder hereof shall thereafter have the right to purchase and receive (in lieu of the shares of the Preferred Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby) such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Preferred Stock equal to the number of shares of such stock immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby. In any such case, appropriate provision shall be made with respect to the rights and interests of the holder of this Warrant to the end that the provisions hereof (including, without limitation, provisions for adjustments of the Stock Purchase Price and of the number of shares purchasable and receivable upon the exercise of this Warrant) shall thereafter be applicable, as nearly as may be possible, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company will not effect any such consolidation, merger or sale unless, prior to the consummation thereof, the successor corporation (if other than the Company) resulting from such consolidation or the corporation purchasing such assets shall assume by written instrument, executed and mailed or delivered to the registered Holder hereof at the last address of such Holder appearing on the books of the Company, the obligation to deliver to such Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder maybe entitled to purchase. 5 4.4 Sale or Issuance Below Purchase Price. If the Company shall at any time or from time to time issue or sell any of its Common Stock, Preferred Stock, options to acquire (or rights to acquire such options), or any other securities convertible into or exercisable for Common Stock, for a consideration per share less than the Stock Purchase Price in effect immediately prior to the time of such issue or sale, the Stock Purchase Price then in effect and then applicable for any subsequent period or periods shall be adjusted to a price determined by dividing (i) an amount equal to the sum of (x) the number of shares of Common Stock outstanding immediately prior to such issue or sale multiplied by the Stock Purchase Price then in effect and (y) the consideration, if any, received by the Company upon such issue or sale, by (ii) the total number of shares of Common Stock outstanding immediately after such issue or sale. For purposes of this Section 4.4, all shares of Common stock issued or issuable (i) upon conversion of the Preferred Stock into Common Stock; (ii) upon exercise of options to officers, directors and employees of and consultants to, the corporation pursuant to plans, arrangements or agreements approved by the Board; (iii) as a dividend or distribution on Preferred Stock or Common Stock or any event for which adjustment is made; or (iv) upon exercise of any warrants to purchase shares of Common Stock or Preferred Stock convertible into shares of Common Stock in conjunction with equipment leases or other commercial financing transactions approved by the Board, shall be deemed to be outstanding. The foregoing notwithstanding, no adjustment shall be made pursuant to this Section 4.4 on account of a given sale to the extent that (a) the Stock Purchase Price is adjusted pursuant to any other section of this Warrant or (b) the conversion price of the Preferred Stock is decreased pursuant to the terms thereof. 4.5 Notice of Adjustment. Upon any adjustment of the Stock Purchase Price, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the registered holder of this Warrant at the address of such holder as shown on the books of the Company. The notice shall be signed by the Company's chief financial officer and shall state the Stock Purchase Price resulting from such adjustment and the increase or decrease, if any, in the number of shares purchasable at such price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. 4.6 Other Notices. If at any time: (a) the Company shall declare any cash dividend upon its Preferred Stock; (b) the Company shall declare any dividend upon its Preferred Stock payable in stock or make any special dividend or other distribution to the holders of its Preferred Stock; (c) the Company shall offer for subscription pro rata to the holders of its Preferred Stock any additional shares of stock of any class or other rights; (d) there shall be any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another corporation; (e) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Company; or 5 6 (f) the Company shall take or propose to take any other action, notice of which is actually provided to holders of the Preferred Stock; then, in any one or more of said cases, the Company shall give, by first class mail, postage prepaid, addressed to the holder of this Warrant at the address of such holder as shown on the books of the Company, (i) at least 20 day's prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, or other action and (ii) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, or other action, at least 20 day's written notice of the date when the same shall take place. Any notice given in accordance with the foregoing clause (i) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Preferred Stock shall be entitled thereto. Any notice given in accordance with the foregoing clause (ii) shall also specify the date on which the holders of Preferred Stock shall be entitled to exchange their Preferred Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, or other action as the case may be. 4.7 Certain Events. If any change in the outstanding Preferred Stock of the Company or any other event occurs as to which the other provisions of this Section 4 are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the Holder of the Warrant in accordance with the essential intent and principles of such provisions, then the Board of Directors of the Company shall make an adjustment in the number and class of shares available under the Warrant, the Stock Purchase Price and/or the application of such provisions, in accordance with such essential intent and principles, so as to protect such purchase rights as aforesaid. The adjustment shall be such as will give the Holder of the Warrant upon exercise for the same aggregate Stock Purchase Price the total number, class and kind of shares as he would have owned had the Warrant been exercised prior to the event and had he continued to hold such shares until after the event requiring adjustment. 5. Issue Tax. The issuance of certificates for shares of Preferred Stock upon the exercise of the Warrant shall be made without charge to the Holder of the Warrant for any issue tax in respect thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificates in a name other than that of the then Holder of the Warrant being exercised. 6. Closing of Books. The Company will at no time close its transfer books against the transfer of any Warrant or of any shares of Preferred Stock issued or issuable upon the exercise of any warrant in any manner which interferes with the timely exercise of this Warrant. 7. No Voting or Dividend Rights; Limitation of Liability. Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the right to vote or to consent as a shareholder in respect of meetings of shareholders for the election of directors of the Company or any other matters or any rights whatsoever as a shareholder of the Company. No dividends or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby or the shares purchasable hereunder, until, and only to the extent that, this Warrant shall have been exercised. No provisions hereof, in the absence of affirmative action by the holder to purchase shares of Preferred Stock, and no more enumeration herein of the 6 7 rights or privileges of the Holder hereof, shall give rise to any liability of such Holder for the Stock Purchase Price or as a shareholder of the Company, whether such liability is asserted by the Company or by its creditors. 8. [Intentionally omitted] 9. Registration Rights. The Holder hereof shall be entitled, with respect to the shares of Preferred Stock issued upon exercise hereof or the shares of Common Stock or other securities issued upon conversion of such Preferred Stock as the case may be, to all of the registration rights set forth in the First Amended Registration Rights Agreement dated as of August 5, 1996 to the same extent and on the same terms and conditions as possessed by the Series C Holders thereunder. The Company shall take such action as may be reasonably necessary to assure that the granting of such registration rights to the Holder does not violate the provisions of such agreement or any of the Company's charter documents or rights of prior grantees of registration rights. 10. Rights and Obligations Survive Exercise of Warrant. The rights and obligations of the Company, of the Holder of this Warrant and of the holder of shares of Preferred Stock issued upon exercise of this Warrant, contained in Sections 6, 8 and 9 shall survive the exercise of this Warrant. 11. Modification and Waiver. This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought. 12. Notices. Any notice, request or other document required or permitted to be given or delivered to the holder hereof or the Company shall be deemed to have been given (1) upon receipt if delivered personally or by courier (ii) upon confirmation of receipt if by telecopy or (iii) three business days after deposit in the United States mail, with postage prepaid and certified or registered, to each such holder at its address as shown on the books of the Company or to the Company at the address indicated therefor in the first paragraph of this Warrant. 13. Binding Effect on Successors. This Warrant shall be binding upon any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets. All of the obligations of the Company relating to the Preferred Stock issuable upon the exercise of this Warrant shall survive the exercise and termination of this Warrant. All of the covenants and agreements of the Company shall inure to the benefit of the successors and assign of the holder hereof. The Company will, at the time of the exercise of this Warrant, in whole or in part, upon request of the Holder hereof but at the Company's expense, acknowledge in writing its continuing obligation to the Holder hereof in respect of any rights (including, without limitation, any right to registration of the shares of Common Stock) to which the holder hereof shall continue to be entitled after such exercise in accordance with this Warrant; provided, that the failure of the holder hereof to make any such request shall not affect the continuing obligation of the Company to the Holder hereof in respect of such rights. 14. Descriptive Headings and Governing Law. The descriptive headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of California. 15. Lost Warrants or Stock Certificates. The Company represents and warrants to the Holder hereof that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of 7 8 any Warrant or stock certificate and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant or stock certificate, the Company at it expense will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate. 16. Fractional Shares. No fractional shares shall be issued upon exercise of this Warrant. The Company shall, in lieu of issuing any fractional share, pay the holder entitled to such fraction a sum in cash equal to such fraction multiplied by the then effective Stock Purchase Price. 17. Representing of Holder. With respect to this Warrant, Holder represents and warrants to the Company as follows: 17.1 Experience. It is experienced in evaluating and investing in companies engaged in businesses similar to that of the Company; it understands that investment in the Warrant involves substantial risks; it has made detailed inquiries concerning the Company, its business and services, its officers and its personnel; the officers of the Company have made available to Holder any and all written information it has requested; the officers of the Company have answered to Holder's satisfaction all inquiries made by it; in making this investment it has relied upon information made available to it by the Company; and it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of investment in the Company and it is able to bear the economic risk of that investment. 17.2 Investment. It is acquiring the Warrant for investment for its own account and not with a view to, or for resale in connection with, any distribution thereof. It understands that the Warrant, the shares of Preferred Stock issuable upon exercise thereof and the shares of Common Stock issuable upon conversion of the Preferred Stock, have not been registered under the Securities Act of 1933, as amended, nor qualified under applicable state securities laws. 17.3 Rule 144. It acknowledges that the Warrant, the Preferred Stock and the Common Stock must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. It has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act. 17.4 Access to Data. It has had an opportunity to discuss the Company's business, management and financial affairs with the Company's management and has had the opportunity to inspect the Company's facilities. 18. Additional Representations and Covenants of the Company. The Company hereby represents, warrants and agrees as follows: 18.1 Corporate Power. The Company has all requisite corporate power and corporate authority to issue this Warrant and to carry out and perform its obligations hereunder. 18.2 Authorization. All corporate action on the part of the Company, its directors and shareholder necessary for the authorization, execution, delivery and performance by the Company of this has been taken. This Warrant is a valid and binding obligation of the Company, enforceable in accordance with its terms. 18.3 Offering. Subject in part to the truth and accuracy of Holder's representations set forth in Section 17 hereof, the offer, issuance and sale of the Warrant is, and the issuance of Preferred Stock upon exercise 8 9 of the Warrant and the issuance of Common Stock upon conversion of the Preferred Stock will be exempt from the registration requirements of the Securities Act, and are exempt from the qualification requirements of any applicable state securities laws; and neither the Company nor anyone acting on its behalf will take any action hereafter that would cause the loss of such exemptions. 18.4 Stock Issuance. Upon exercise of the Warrant, the Company will use its best efforts to cause stock certificates representing the shares of Preferred Stock purchased pursuant to the exercise to be issued in the individual names of Holder, its nominees or assignees, as appropriate at the time of such exercise. Upon conversion of the shares of Preferred Stock to shares of Common Stock, the Company will issue the Common Stock in the individual names of Holder, its nominees or assignees, as appropriate. 18.5 Articles and By-Laws. The Company has provided Holder with true and complete copies of the Company's Articles or Certificate of Incorporation, By-Laws, and each Certificate of Determination or other charter document setting, forth any rights, preferences and privileges of Company's capital stock, each as amended and in effect on the date of issuance of this Warrant. 18.6 Conversion of Preferred Stock. As of the date hereof, each share of the Preferred Stock is convertible into one and one-half (1.50) shares of the Common Stock. 18.7 Financial and Other Reports. From time to time up to the earlier of the Expiration Date or the complete exercise of this Warrant, the Company shall furnish to Holder (i) within 120 days after the close of each fiscal year of the Company an audited balance sheet and statement of changes in financial position at and as of the end of such fiscal year, together with an audited statement of income for such fiscal year; (ii) within 45 days after the close of each fiscal quarter of the Company, an unaudited balance sheet and statement of cash flows at and as of the end of such quarter, together with an unaudited statement of income for such quarter; and (iii) promptly after sending, making available, or filing, copies of all reports, proxy statements, and financial statements that the Company sends or makes available to its shareholders and all registration statements and reports that the Company files with the SEC or any other governmental or regulatory authority. IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its officers, thereunto duly authorized this 30 day of September, 1997. JUNIPER NETWORKS, INC. By: /s/ Marcel Gani -------------------------- Title: CFO ----------------------- 9 EX-4.5 8 WARRANT TO PURCHASE 3,135 SHARES, VENTURE 1 EXHIBIT 4.5 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND ARE "RESTRICTED SECURITIES" AS DEFINED IN RULE 144 PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT (i) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE ACT OR (ii) IN COMPLIANCE WITH RULE 144, OR (iii) PURSUANT TO AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION OR COMPLIANCE IS NOT REQUIRED AS TO SAID SALE, OFFER OR DISTRIBUTION. WARRANT TO PURCHASE A MAXIMUM OF 3,135 SHARES OF SERIES C PREFERRED STOCK OF JUNIPER NETWORKS, INC. (Void after December 15, 2003) This certifies that VENTURE LENDING & LEASING, INC., a Maryland corporation, or assigns (the "Holder"), for value received, is entitled to purchase from Juniper Networks, Inc. a California corporation (the "Company"), Three Thousand One Hundred Thirty-five (3,135) fully paid and nonassessable shares of the Company's Series C Preferred Stock ("Preferred Stock") for cash at a price of Eight and 93/100 Dollars ($8.93) per share (the "Stock Purchase Price") at any time or from time to time up to and including 5:00 p.m. (Pacific time) on December 15, 2003 (the "Expiration Date"), upon surrender to the Company at its principal office at 385 Ravendale Drive, Mountain View, California 94043 (or at such other location as the Company may advise Holder in writing) of this Warrant properly endorsed with the Form of Subscription attached hereto duly filled in and signed and upon payment in cash or by check of the aggregate Stock Purchase Price for the number of shares for which this Warrant is being exercised determined in accordance with the provisions hereof. The Stock Purchase Price and the number of shares purchasable hereunder are subject to adjustment as provided in Section 4 of this Warrant. This Warrant is subject to the following terms and conditions: 1. Exercise; Issuance of Certificates; Payment for Shares. (a) Unless an election is made pursuant to clause (b) of this Section 1, this Warrant shall be exercisable at the option of the Holder, at any time or from time to time, on or before the Expiration Date for all or any portion of the shares of Preferred Stock (but not for a fraction of a share) which may be purchased hereunder for the Stock Purchase Price multiplied by the number of shares to be purchased. In the event, however, that pursuant to the Company's Articles of Incorporation, as amended, an event causing automatic conversion of the Company's Preferred Stock shall have occurred prior to the exercise of this Warrant, in whole or in part, then this Warrant shall be exercisable for the number of shares of Common Stock of the Company into which the Preferred Stock not purchased upon any prior exercise of the Warrant would have been so converted (and, where the context requires, reference to "Preferred Stock" shall be deemed to include such Common Stock). The Company agrees that the shares of Preferred Stock purchased under this Warrant shall be and are deemed to be issued to the holder hereof as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares. Subject to the provisions of Section 2, certificates for the shares of 2 Preferred Stock so purchased, together with any other securities or property to which the Holder hereof is entitled upon such exercise, shall be delivered to the Holder hereof by the Company at the Company's expense within a reasonable time after the rights represented by this Warrant have been so exercised. Except as provided in clause (b) of this Section 1, in case of a purchase of less than all the shares which may be purchased under this Warrant, the Company shall cancel this Warrant and execute and deliver a new Warrant or Warrants of like tenor for the balance of the shares purchasable under the Warrant surrendered upon such purchase to the Holder hereof within a reasonable time. Each stock certificate so delivered shall be in such denominations of Preferred Stock as may be requested by the Holder hereof and shall be registered in the name of such Holder or such other name as shall be designated by such Holder, subject to the limitations contained in Section 2. (b) The Holder, in lieu of exercising this Warrant by the payment of the Stock Purchase Price pursuant to clause (a) of this Section 1, may elect, at any time on or before the Expiration Date, to receive that number of shares of Preferred Stock equal to the quotient of: (i) the difference between (A) the Per Share Price (as hereinafter defined) of the Preferred Stock, less (B) the Stock Purchase Price then in effect, multiplied by the number of shares of Preferred Stock the Holder would otherwise have been entitled to purchase hereunder pursuant to clause (a) of this Section 1 (or such lesser number of shares as the Holder may designate in the case of a partial exercise of this Warrant); over (ii) the Per Share Price. (c) For purposes of clause (b) of this Section 1, "Per Share Price" means: (i) if the Company's Common Stock is then listed or admitted to trading on any national securities exchange or traded on any national market system, the average of the closing bid and asked prices of the Company's Common Stock as reported on such exchange or market system for the ten (10) consecutive trading days prior to the date of the Holder's election to convert hereunder; (ii) if this Warrant is being converted in conjunction with a public offering of stock, the price to the public per share pursuant to the offering; or (iii) if no shares of the Company's Common Stock are listed or admitted to trading on any national securities exchange or traded on any national market system, the price per share which the Company would obtain from a willing buyer for shares sold by the Company from authorized but unissued shares as such price shall be determined in good faith by the Company's Board of Directors. 2. Limitation on Transfer. (a) The Warrant and the Preferred Stock shall not be transferable except upon the conditions specified in this Section 2, which conditions are intended to insure compliance with the provisions of the Securities Act. Each holder of this Warrant or the Preferred Stock issuable hereunder will cause any proposed transferee of the Warrant or Preferred Stock to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Section 2. (b) Each certificate representing (i) this Warrant, (ii) the Preferred Stock, (iii) shares of the Company's Common Stock issued upon conversion of the Preferred Stock and (iv) any other securities issued in respect of the Preferred Stock or Common Stock issued upon conversion of the Preferred Stock upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall (unless otherwise permitted by the provisions of this Section 2 or unless such securities have been registered under the Securities Act or sold under Rule 144) be stamped or otherwise imprinted with a legend substantially in the following form set forth on the first page of this Warrant. 2 3 (c) The Holder of this Warrant and each person to whom this Warrant is subsequently transferred represents and warrants to the Company (by acceptance of such transfer) that it will not transfer the Warrant (or securities issuable upon exercise hereof unless a registration statement under the Securities Act was in effect with respect to such securities at the time of issuance thereof) except pursuant to (i) an effective registration statement under the Securities Act, (ii) Rule 144 under the Securities Act (or any other rule under the Securities Act relating to the disposition of securities), or (iii) an opinion of counsel, reasonably satisfactory to counsel for the Company, that an exemption from such registration is available. 3. Shares to be Fully Paid; Reservation of Shares. The Company covenants and agrees that all shares of Preferred Stock which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and free from all preemptive rights of any shareholder and free of all taxes, liens and charges with respect to the issue thereof. The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved, for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant, a sufficient number of shares of authorized but unissued Preferred Stock, or other securities and property, when and as required to provide for the exercise of the rights represented by this Warrant. The Company will take all such action as may be necessary to assure that such shares of Preferred Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any domestic securities exchange upon which the Preferred Stock may be listed. The Company will not take any action which would result in any adjustment of the Stock Purchase Price (as defined in Section 4 hereof) (i) if the total number of shares of Preferred Stock issuable after such action upon exercise of all outstanding warrants, together with all shares of Preferred Stock then outstanding and all shares of Preferred Stock then issuable upon exercise of all options and upon the conversion of all convertible securities then outstanding, would exceed the total number of shares of Preferred Stock then authorized by the Company's Articles of Incorporation, or (ii) if the total number of shares of Common Stock issuable after such action upon the conversion of all such shares of Preferred Stock together with all shares of Common Stock then outstanding and then issuable upon exercise of all options and upon the conversion of all convertible securities then outstanding would exceed the total number of shares of Common Stock then authorized by the Company's Articles of Incorporation. 4. Adjustment of Stock Purchase Price Number of Shares. The Stock Purchase Price and the number of shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 4. Upon each adjustment of the Stock Purchase Price, the Holder of this Warrant shall thereafter be entitled to purchase, at the Stock Purchase Price resulting from such adjustment, the number of shares obtained by multiplying the Stock Purchase Price in effect immediately prior to such adjustment by the number of shares purchasable pursuant hereto immediately prior to such adjustment, and dividing the product thereof by the Stock Purchase Price resulting from such adjustment. 4.1 Subdivision or Combination of Stock. In case the Company shall at any time subdivide its outstanding shares of Preferred Stock into a greater number of shares, the Stock Purchase Price in effect immediately prior to such subdivision shall be proportionately reduced, and conversely, in case the outstanding shares of Preferred Stock of the Company shall be combined into a smaller number of shares, the Stock Purchase Price in effect immediately prior to such combination shall be proportionately increased. 3 4 4.2 Dividends in Preferred Stock, Other Stock, Property, Reclassification. If at any time or from time to time the holders of Preferred Stock (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received or become entitled to receive, without payment therefor, (a) Preferred Stock, or any shares of stock or other securities whether or not such securities are at any time directly or indirectly convertible into or exchangeable for Preferred Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution, or (b) any cash paid or payable otherwise than as a cash dividend, or (c) Preferred Stock or other additional stock or other securities or property (including cash) by way of spinoff, split-up, reclassification, combination of shares or similar corporate rearrangement, (other than shares of Preferred Stock issued as a stock split, adjustments in respect of which shall be covered by the terms of Section 4.1 above), then and in each such case, the Holder hereof shall, upon the exercise of this Warrant, be entitled to receive, in addition to the number of shares of Preferred Stock receivable thereupon, and without payment of any additional consideration therefore, the amount of stock and other securities and property (including cash in the cases referred to in clauses (b) and (c) above) which such Holder would hold on the date of such exercise had he been the holder of record of such Preferred Stock as of the date on which holders of Preferred Stock received or became entitled to receive such shares and/or all other additional stock and other securities and property. 4.3 Reorganization, Reclassification, Consolidation, Merger or Sale. If any capital reorganization of the capital stock of the Company, or any consolidation or merger of the Company with another corporation, shall be effected in such a way that holders of Preferred Stock shall be entitled to receive stock, securities or assets with respect to or in exchange for Preferred Stock, then, as a condition of such reorganization, reclassification, consolidation, merger or sale, lawful and adequate provisions shall be made whereby the holder hereof shall thereafter have the right to purchase and receive (in lieu of the shares of the Preferred Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby) such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Preferred Stock equal to the number of shares of such stock immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby. In any such case, appropriate provision shall be made with respect to the rights and interests of the holder of this Warrant to the end that the provisions hereof (including, without limitation, provision for adjustments of the Stock Purchase Price and of the number of shares purchasable and receivable upon the exercise of this Warrant) shall thereafter be applicable, as nearly as may be possible, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company will not effect any such consolidation, merger or sale unless, prior to the consummation thereof, the successor corporation (if other than the Company) resulting from such consolidation or the corporation purchasing such assets shall assume by written instrument, executed and mailed or delivered to the registered Holder hereof at the last address of such Holder appearing on the books of the Company, the obligation to deliver to such Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to purchase. 4 5 4.4 Sale or Issuance Below Purchase Price. If the Company shall at any time or from time to time issue or sell any of its Common Stock, Preferred Stock, options to acquire (or rights to acquire such options), or any other securities convertible into or exercisable for Common Stock, for a consideration per share less than the Stock Purchase Price in effect immediately prior to the time of such issue or sale, the Stock Purchase Price then in effect and then applicable for any subsequent period or periods shall be adjusted to a price determined by dividing (i) an amount equal to the sum of (x) the number of shares of Common Stock outstanding immediately prior to such issue or sale multiplied by the Stock Purchase Price then in effect and (y) the consideration, if any, received by the Company upon such issue or sale, by (ii) the total number of shares of Common Stock outstanding immediately after such issue or sale. For purposes of this Section 4.4, all shares of Common Stock issued or issuable (i) upon conversion of the Preferred Stock into Common Stock; (ii) upon exercise of options to officers, directors and employees of and consultants to, the corporation pursuant to plans, arrangements or agreements approved by the Board; (iii) as a dividend or distribution on Preferred Stock or Common Stock or any event for which adjustment is made; or (iv) upon exercise of any warrants to purchase shares of Common Stock or Preferred Stock convertible into shares of Common Stock in conjunction with equipment leases or other commercial financing transactions approved by the Board, shall be deemed to be outstanding. The foregoing notwithstanding, no adjustment shall be made pursuant to this Section 4.4 on account of a given sale to the extent that (a) the Stock Purchase Price is adjusted pursuant to any other Section of this Warrant or (b) the conversion price of the Preferred Stock is decreased pursuant to the terms thereof. 4.5 Notice of Adjustment. Upon any adjustment of the stock Purchase Price, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the registered holder of this Warrant at the address of such holder as shown on the books of the Company. The notice shall be signed by the Company's chief financial officer and shall state the Stock Purchase Price resulting from such adjustment and the increase or decrease, if any, in the number of shares purchasable at such price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. 4.6 Other Notices. If at any time: (a) the Company shall declare any cash dividend upon its Preferred Stock; (b) the Company shall declare any dividend upon its Preferred Stock payable in stock or make any special dividend or other distribution to the holders of its Preferred Stock; (c) the Company shall offer for subscription pro rata to the holders of its Preferred Stock any additional shares of stock of any class or other rights; (d) there shall be any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another corporation; (e) there will be a voluntary dissolution, liquidation or winding-up of the Company; or 5 6 (f) the Company shall take or propose to take any other action, notice of which is actually provided to holders of the Preferred Stock; then, in any one or more of said cases, the Company shall give, by first class mail, postage prepaid, addressed to the holder of this Warrant at the address of such holder as shown on the books of the Company, (i) at least 20 day's prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, or other action and (ii) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, or other action, at least 20 day's written notice of the date when the same shall take place. Any notice given in accordance with the foregoing clause (i) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Preferred Stock shall be entitled thereto. Any notice given in accordance with the foregoing clause (ii) shall also specify the date on which the holders of Preferred Stock shall be entitled to exchange their Preferred Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, or other action as the case may be. 4.7 Certain Events. If any change in the outstanding Preferred Stock of the Company or any other event occurs as to which the other provisions of this Section 4 are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the Holder of the Warrant in accordance with the essential intent and principles of such provisions, then the Board of Directors of the Company shall make an adjustment in the number and class of shares available under the Warrant, the Stock Purchase Price and/or the application of such provisions, in accordance with such essential intent and principles, so as to protect such purchase rights as aforesaid. The adjustment shall be such as will give the Holder of the Warrant upon exercise for the same aggregate Stock Purchase Price the total number, class and kind of shares as he would have owned had the Warrant been exercised prior to the event and had he continued to hold such shares until after the event requiring adjustment. 5. Issue Tax. The issuance of certificates for shares of Preferred Stock upon the exercise of the Warrant shall be made without charge to the Holder of the Warrant for any issue tax in respect thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the then Holder of the Warrant being exercised. 6. Closing of Books. The Company will at no time close its transfer books against the transfer of any Warrant or of any shares of Preferred Stock issued or issuable upon the exercise of any warrant in any manner which interferes with the timely exercise of this Warrant. 7. No Voting or Dividend Rights; Limitation of Liability. Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the right to vote or to consent as a shareholder in respect of meetings of shareholders for the election of directors of the Company or any other matters or any rights whatsoever as a shareholder of the Company. No dividends or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby or the shares purchasable hereunder until, and only to the extent that, this Warrant shall have been exercised,. No provisions hereof, in the absence of affirmative action by the holder to purchase shares of Preferred Stock, and no mere enumeration herein of the 6 7 rights or privileges of the Holder hereof, shall give rise to any liability of such Holder for the Stock Purchase Price or as a shareholder of the Company, whether such liability is asserted by the Company or by its creditors. 8. [Intentionally omitted] 9. Registration Rights. The Holder hereof shall be entitled, with respect to the shares of Preferred Stock issued upon exercise hereof or the shares of Common Stock or other securities issued upon conversion of such Preferred Stock as the case may be, to all of the registration rights set forth in the First Amended Registration Rights Agreement dated as of August 5, 1996 to the same extent and or the same terms and conditions as possessed by the Series C Holders thereunder. The Company shall take such action as may be reasonably necessary to assure that the granting of such registration rights to the Holder does not violate the provisions of such agreement or any of the Company's charter documents or rights of prior grantees of registration rights. 10. Rights and Obligations Survive Exercise of Warrant. The rights and obligations of the Company, of the Holder of this Warrant and of the holder of shares of Preferred Stock issued upon exercise of this Warrant, contained in Sections 6, 8 and 9 shall survive the exercise of this Warrant. 11. Modification and Waiver. This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought. 12. Notices. Any notice, request or other document required or permitted to be given or delivered to the holder hereof or the Company shall be deemed to have been given (i) upon receipt if delivered personally or by courier (ii) upon confirmation of receipt if by telecopy or (iii) three business days after deposit in the United States mail, with postage prepaid and certified or registered, to each such holder at its address as shown on the books of the Company or to the Company at the address indicated therefor in the first paragraph of this Warrant. 13. Binding Effect on Successors. This Warrant shall be binding upon any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets. All of the obligations of the Company relating to the Preferred Stock issuable upon the exercise of this Warrant shall survive the exercise and termination of this Warrant. All of the covenants and agreements of the Company shall inure to the benefit of the successors and assign of the holder hereof. The Company will, at the time of the exercise of this Warrant, in whole or in part, upon request of the Holder hereof but at the Company's expense, acknowledge in writing its continuing obligation to the Holder hereof in respect of any rights (including, without limitation, any right to registration of the shares of Common Stock) to which the holder hereof shall continue to be entitled after such exercise in accordance with this Warrant; provided, that the failure of the holder hereof to make any such request shall not affect the continuing obligation of the Company to the Holder hereof in respect of such rights. 14. Descriptive Headings and Governing Law. The descriptive headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of California. 15. Lost Warrants or Stock Certificates. The Company represents and warrants to the Holder hereof that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of 7 8 any Warrant or stock certificate and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant or stock certificate, the Company at its expense will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate. 16. Fractional Shares. No fractional shares shall be issued upon exercise of this Warrant. The Company shall, in lieu of issuing any fractional share, pay the holder entitled to such fraction a sum in cash equal to such fraction multiplied by the then effective Stock Purchase Price. 17. Representations of Holder. With respect to this Warrant, Holder represents and warrants to the Company as follows: 17.1 Experience. It is experienced in evaluating and investing in companies engaged in businesses similar to that of the Company; it understands that investment in the Warrant involves substantial risks; it has made detailed inquiries concerning the Company, its business and services, its officers and its personnel; the officers of the Company have made available to Holder any and all written information it has requested; the officers of the Company have answered to Holder's satisfaction all inquiries made by it; in making this investment it has relied upon information made available to it by the Company; and it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of investment in the Company and it is able to bear the economic risk of that investment. 17.2 Investment. It is acquiring the Warrant for investment for its own account and not with a view to, or for resale in connection with, any distribution thereof. It understands that the Warrant, the shares of Preferred Stock issuable upon exercise thereof and the shares of Common Stock issuable upon conversion of the Preferred Stock, have not been registered under the Securities Act of 1933, as amended, nor qualified under applicable state securities laws. 17.3 Rule 144. It acknowledges that the Warrant, the Preferred Stock and the Common Stock must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. It has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act. 17.4 Access to Data. It has had an opportunity to discuss the Company's business, management and financial affairs with the Company's management and has had the opportunity to inspect the Company's facilities. 18. Additional Representations and Covenants of the Company. The Company hereby represents, warrants and agrees as follows: 18.1 Corporate Power. The Company has all requisite corporate power and corporate authority to issue this Warrant and to carry out and perform its obligations hereunder. 18.2 Authorization. All corporate action on the part of the Company, its directors and shareholders necessary for the authorization, execution, delivery and performance by the Company of this has been taken. This Warrant is a valid and binding obligation of the Company, enforceable in accordance with its terms. 18.3 Offering. Subject in part to the truth and accuracy of Holder's representations set forth in Section 17 hereof, the offer, issuance and sale of the Warrant is, and the issuance of Preferred Stock upon exercise 8 9 of the Warrant and the issuance of Common Stock upon conversion of the Preferred Stock will be exempt from the registration requirements of the Securities Act, and are exempt from the qualification requirements of any applicable state securities laws; and neither the Company nor anyone acting on its behalf will take any action hereafter that would cause the loss of such exemptions. 18.4 Stock Issuance. Upon exercise of the Warrant, the Company will use its best efforts to cause stock certificates representing the shares of Preferred Stock purchased pursuant to the exercise to be issued in the individual names of Holder, its nominees or assignees, as appropriate at the time of such exercise. Upon conversion of the shares of Preferred Stock to shares of Common Stock, the Company will issue the Common Stock in the individual names of Holder, its nominees or assignees, as appropriate. 18.5 Articles and By-Laws. The Company has provided Holder with true and complete copies of the Company's Articles or Certificate of Incorporation, By-Laws, and each Certificate of Determination or other charter document setting forth any rights, preferences and privileges of Company's capital stock, each as amended and in effect on the date of issuance of this Warrant. 18.6 Conversion of Preferred Stock. As of the date hereof, each share of the Preferred Stock is convertible into one and one-half (1.50) shares of the Common Stock. 18.7 Financial and Other Reports. From time to time up to the earlier of the Expiration Date or the complete exercise of this Warrant, the Company shall furnish to Holder (i) within 120 days after the close of each fiscal year of the Company an audited balance sheet and statement of changes in financial position at and as of the end of such fiscal year, together with an audited statement of income for such fiscal year; (ii) within 45 days after the close of each fiscal quarter of the Company, an unaudited balance sheet and statement of cash flows at and as of the end of such quarter, together with an unaudited statement of income for such quarter; and (iii) promptly after sending, making available, or filing, copies of all reports, proxy statements, and financial statements that the Company sends or makes available to its shareholders and all registration statements and reports that the Company files with the SEC or any other governmental or regulatory authority. IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its officers, thereunto duly authorized this 30 day of September, 1997. JUNIPER NETWORKS, INC. By: /s/ Marcel Gani ------------------------------------ TITLE: CFO --------------------------------- 9 EX-4.6 9 THIRD AMENDED REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT 4.6 JUNIPER NETWORKS, INC. THIRD AMENDED REGISTRATION RIGHTS AGREEMENT This Third Amended Registration Rights Agreement is made as of MARCH 9, 1999 (the "Agreement") by and between Juniper Networks, Inc., a Delaware corporation having its principal executive offices at 385 Ravendale Drive, Mountain View, CA 94043 (the "Company") and the persons and entities (the "Series A Holders") listed on Exhibit A to that certain Series A Preferred and Common Stock Purchase Agreement dated June 11, 1996 (the "Series A Agreement"), the persons and entities ("Series B Holders") listed on Exhibit A to that certain Series B Preferred Stock Purchase Agreement dated August 5, 1996 and November 8, 1996, and the holder of the Warrant issued in connection with an equipment lease (the "Series B Agreements") and the persons and entities (the "Series C Holders") listed on Exhibit A to that certain Series C Preferred Stock Purchase Agreement dated July 1,1997 and September 30, 1997, and the persons and entities (the "Series D and Series D1 Holders") listed on Exhibit A to that certain Series D and Series D1 Preferred Stock Purchase Agreement dated as of the date hereof (the "Series D and Series D1 Agreement" and together with the Series A Agreement, Series B Agreement and Series C Agreement, the "Purchase Agreements") (collectively the "Holders"), all such Holders being listed on Exhibit A attached hereto with the number of shares of the Company owned by each set forth opposite their name thereon. This Agreement amends in its entirety and supersedes in all respects the Second Amended Registration Rights Agreement dated July 1, 1997 between the Company and the Series A Holders, Series B Holders and Series C Holders (the "Second Amended Registration Rights Agreement"). WHEREAS, the Company granted the Series A Holders, Series B Holders and Series C Holders certain registration rights pursuant to the Second Amended Registration Rights Agreement which superseded and replaced in its entirety the First Amended Registration Rights Agreement dated July 1, 1997; and WHEREAS, the Company has agreed to grant the Series D and Series D1 Holder certain registration rights on a pari passu basis with the rights granted to the Series A Holders, Series B Holders and Series C Holders under the Second Amended Registration Rights Agreement which rights are being granted pursuant to this Agreement. NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth, the parties agree as follows: SECTION 1 1.1 CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have the following respective meanings: "Commission" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. 2 "Conversion Stock" shall mean the Common Stock issued or issuable pursuant to conversion of the Series A Preferred (as defined in this Section 1.1), Series B Preferred (as defined in this Section 1.1), Series C Preferred (as defined in this Section 1.1) or Series D and Series D1 Preferred (as defined in this Section 1.1). "Holders" shall mean any person who purchased shares of the Company's Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred or Series D1 Preferred or any person holding Registrable Securities to whom the rights under this Section 1 have been transferred in accordance with Section 1.11 hereof. "Initiating Holders" shall mean the Holders or transferees of the Holders under Section 1.11 hereof who, in the aggregate, are Holders of at least 40% of the Registrable Securities. "Registrable Securities" means (i) the Conversion Stock, (ii) the Common Stock issued to the Holders pursuant to the Series A Agreement (the "Purchased Common Stock") and (iii) any Common Stock of the Company issued or issuable in respect of the Purchased Common Stock or the Conversion Stock or other securities issued or issuable pursuant to the conversion of the Series A Preferred, the Series B Preferred, the Series C Preferred, the Series D Preferred or Series D1 Preferred or upon any stock split, stock dividend, recapitalization or similar event, or any Common Stock otherwise issued or issuable with respect to the Purchased Common Stock or the Series A Preferred or Series B Preferred or Series C Preferred or Series D Preferred or Series D1 Preferred; provided, however, that shares of Common Stock or other securities shall no longer be treated as Registrable Securities if (A) they have been sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction, (B) they have been sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act so that all transfer restrictions and restrictive legends with respect thereto are removed upon consummation of such sale, (C) in the case of a Holder who then holds less than one percent (1%) of the then outstanding Common Stock (determined on the basis of assumed conversion of all securities convertible into Common Stock), the shares are available for sale, in the opinion of counsel to the Company, without compliance with the registration and prospectus delivery requirements of the Securities Act so that all transfer restrictions and restrictive legends with respect thereto may be removed upon the consummation of such sale, or (D) they may be sold under Rule 144 (excluding 144A) of the Securities Act (as defined below) within a three month period. The terms "register," "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement. "Registration Expenses" shall mean all expenses incurred by the Company in complying with Sections 1.2, 1.3 and 1.4 hereof, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, normal audit expenses (but not including the expense of any special audits incident to or required by any such registration where the Company is not registering any of its securities, excluding the compensation of regular employees of the Company which shall be paid in any event by the Company) and the reasonable fees and disbursements of one counsel for all Holders. -2- 3 "Restricted Securities" shall mean the securities of the Company required to bear the legends set forth in Section 8.2 of the Series A Agreement and Series B Agreement, and Section 9.2 of the Series C Agreement and Series D Agreement. "Securities Act" shall mean the Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "Selling Expenses" shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the securities registered by the Holders. "Series A Preferred" shall mean the Series A Preferred Stock issued pursuant to the Series A Agreement. "Series B Preferred" shall mean the Series B Preferred Stock issued pursuant to the Series B Agreement and the Series B Preferred Stock issued pursuant to the exercise of the Warrant. "Series C Preferred" shall mean the Series C Preferred Stock issued pursuant to the Series C Agreement. "Series D Preferred" shall mean the Series D Preferred Stock issued pursuant to the Series D and Series D1 Agreement. "Series D1 Preferred" shall mean the Series D1 Preferred Stock issued pursuant to the Series D and Series D1 Agreement. "Warrants" shall mean the warrant to purchase 93,333 shares of Series B Preferred Stock and the warrant to purchase 23,516 shares of Series C Preferred Stock. 1.2 REQUESTED REGISTRATION. (a) Request for Registration. In case the Company shall receive from Initiating Holders a written request that the Company effect any registration, qualification or compliance with respect to not less than 20% of the shares of Registrable Securities then held by such Initiating Holders (or any lesser percentage if the reasonably anticipated aggregate price to the public of such shares, net of underwriting discounts and commissions, would exceed $10,000,000), the Company will: (i)promptly give written notice of the proposed registration, qualification or compliance to all other Holders and (ii) as soon as practicable, use its best efforts to effect such registration, qualification or compliance (including, without limitation, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the -3- 4 Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within 20 days after receipt of such written notice from the Company; Provided, however, that the Company shall not be obligated to take any action to effect any such registration, qualification or compliance pursuant to this Section 1.2: (A) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act; (B) (x) Prior to the earlier of June 30, 2002 or within twelve months after the effective date of the Company's initial registration statement relating to an underwritten public offering of the Company's securities filed under the Securities Act; or (y) Within six months after the effective date of any other registration statement relating to an underwritten public offering of the Company's securities filed under the Securities Act; (C) After the Company has effected one such registration pursuant to this subparagraph 1.2(a), and such registration has been declared or ordered effective; or (D) If the Company shall furnish to such Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company or its shareholders for a registration statement to be filed in the near future, then the Company's obligation to use its best efforts to register, qualify or comply under this Section 1.2 shall be deferred for a period not to exceed 180 days from the date of receipt of written request from the Initiating Holders; provided, however, that the Company shall not exercise such right more than once in any twelve month period. Subject to the foregoing clauses (A) through (D), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable, after receipt of the request or requests of the Initiating Holders. (b) Underwriting. If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as part of their request made pursuant to Section 1.2 hereof and the Company shall include such information in the written notice referred to in Section 1.2(a)(i) above. In such event, the right of any Holder to registration pursuant to Section 1.2 shall be conditioned upon such Holder's participation in the underwriting arrangements required by this Section 1.2, and the inclusion of such Holder's Registrable Securities in the underwriting to the extent requested shall be limited to the extent provided herein. The Company shall (together with all Holders proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by a majority in interest of the Initiating Holders, but subject to the Company's reasonable approval. Notwithstanding any other provision of this Section -4- 5 1.2, if the managing underwriter advises the Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the Registrable Securities to be included in such offering. The Company shall so advise all Holders of Registrable Securities and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all Holders thereof in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders at the time of filing the registration statement. No Registrable Securities excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares. If any Holder of Registrable Securities disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company, the managing underwriter and the Initiating Holders. The Registrable Securities and/or other securities so withdrawn shall also be withdrawn from registration, and such Registrable Securities shall not be transferred in a public distribution prior to 180 days after the effective date of such registration, or such other shorter period of time as the underwriters may reasonably require. If the underwriter has not limited the number of Registrable Securities to be underwritten, the Company may include securities for its own account or the account of others in such registration if the underwriter so agrees and the number of Registrable Securities which would otherwise have been included in such registration and underwriting will not thereby be limited. 1.3 COMPANY REGISTRATION. (a) Notice of Registration. If at any time or from time to time the Company shall determine to register any of its securities, either for its own account or the account of a security holder or holders, other than (i) a registration relating solely to employee benefit plans, (ii) a registration relating solely to a Commission Rule 145 transaction, and (iii) the Company's initial registration statement filed in connection with a firm commitment underwritten public offering filed with the Commission pursuant to the Securities Act, the Company will: (i) promptly give to each Holder written notice thereof, and (ii) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within 20 days after receipt of such written notice from the Company by any Holder. (b) Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 1.3(a)(i). In such event the right of any Holder to registration pursuant to Section 1.3 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of Registrable Securities in the underwriting to the extent provided herein. -5- 6 All Holders proposing to distribute their securities through such underwriting shall (together with the Company and the other holders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company. Notwithstanding any other provision of this Section 1.3, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the Registrable Securities to be included in such registration. In such event, the managing underwriter shall first limit or exclude up to all of the securities of holders (other than Holders) proposing to distribute their securities through such underwriting to be included in such registration and may thereafter limit or exclude up to all of the Registrable Securities to be included in such registration. The foregoing sentence notwithstanding, following the first such registration, the managing underwriter may limit the number of shares to be underwritten to not less than thirty (30%) of the shares included in the registration even if as a result the numbers of shares of securities offered by the Company is reduced. The Company shall so advise all Holders and other holders distributing their securities through such underwriting and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated first among all Holders and thereafter to other holders, all such allocations being made in proportion, as nearly as practicable, to the respective amounts of Registrable Securities and Common Stock held by such Holders and other holders at the time of filing the registration statement. To facilitate the allocation of shares in accordance with the above provisions, the Company may round the number of shares allocated to any Holder or holder to the nearest 100 shares. If any Holder or holder disapproves of the terms of any such underwriting, he may elect to withdraw therefrom by written notice to the Company and the managing underwriter. Any securities excluded or withdrawn from such underwriting shall be withdrawn from such registration, and shall not be transferred in a public distribution prior to 180 days after the effective date of the registration statement relating thereto, or such other shorter period of time as the underwriters may require. (c) Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 1.3 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. 1.4 REGISTRATION ON FORM S-3. (a) If any Holder or Holders request that the Company file a registration statement on Form S-3 (or any successor form to Form S-3) for a public offering of shares of the Registrable Securities, the reasonably anticipated aggregate price to the public of which would exceed $5,000,000, and the Company is a registrant entitled to use Form S-3 to register the Registrable Securities for such an offering, the Company shall use its best efforts to cause such Registrable Securities to be registered for the offering on such form; provided, however, that the Company shall not be required to effect more than one registration pursuant to this Section 1.4 in any 12-month period and not more than a total of three such registrations. The Company will (i) promptly give written notice of the proposed registration to all other Holders and (ii) as soon as practicable, use its best efforts to effect such registration (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable blue -6- 7 sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder of Holders joining in such request as are specified in a written request received by the Company within 20 days after receipt of such written notice from the Company. The substantive provisions of Section 1.2(b) shall be applicable to each registration initiated under this Section 1.4. (b) Notwithstanding the foregoing, the Company shall not be obligated to take any action pursuant to this Section 1.4 (i) in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act; (ii) if the Company, within ten days of the receipt of the request of the Initiating Holders, gives notice of its bona fide intention to effect the filing of a registration statement with the Commission within 90 days of receipt of such request (other than with respect to a registration statement relating to a Rule 145 transaction or an offering solely to employees); (iii) within twelve months after the effective date of a registration statement relating to an underwritten public offering of the Company's securities filed under the Securities Act or (iv) if the Company shall furnish to such Holder a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company or its shareholders for registration statements to be filed in the near future, then the Company's obligation to use its best efforts to file a registration statement shall be deferred for a period not to exceed 180 days from the receipt of the request to file such registration by such Holder; provided, however, that the Company will not exercise such right more than once in any twelve month period. 1.5 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the Closing Date, the Company shall not enter into any agreement granting any holder or prospective holder of any securities of the Company registration rights with respect to such securities unless (i) such new registration rights, including standoff obligations, are on a pari passu basis with those rights of the Holders hereunder or (ii) such new registration rights, including standoff obligations, are subordinate to the registration rights granted Holders hereunder. 1.6 EXPENSES OF REGISTRATION. (a) All Registration Expenses incurred in connection with (i) the registration pursuant to Section 1.2, and (ii) all registrations pursuant to Section 1.3, shall be borne by the Company. Unless otherwise stated, all Selling Expenses relating to securities registered on behalf of the Holders and all other Registration Expenses shall be borne by the Holders of such securities pro rata on the basis of the number of shares so registered. (b) All Registration Expenses and Selling Expenses incurred in connection with registrations pursuant to Section 1.4 shall be borne pro rata by the Holder or Holders requesting the registration on Form S-3 according to the number of Registrable Securities included in such registration. -7- 8 (c) The Company shall not be required to pay for expenses of any registration proceeding begun pursuant to Section 1.2, the request for which is subsequently withdrawn by the Initiating Holders for reasons other than a material adverse change in the business or financial condition of the Company occurring prior to the effectiveness of such registration statement, in which case, such expenses shall be borne by the Holders of Registrable Securities requesting such withdrawal, pro rata on the basis of the number of shares of Registrable Securities so included in the registration request unless the Holders of a majority of Registrable Securities agree to forfeit their right to one requested registration pursuant to Section 1.2 in which event such right shall be forfeited by all Holders. 1.7 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 1 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible: (a) Prepare and file with the Commission a registration statement with respect to such Registrable Securities and use its diligent best efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for up to 90 days or until the Holder or Holders have completed the distribution relating thereto provided however, that such ninety (90) day period shall be extended for a period of time equal to the period the Holder refrains from selling any securities included in such registration at the request of an underwriter. (b) Prepare and file with the Commission such amendments and supplements to such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement. (c) Furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them. (d) Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions. (e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement. (f) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to -8- 9 state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. (g) Cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar securities issued by the Company are then listed. (h) Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration. (i) Use its best efforts to furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to this Section 1, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Section 1, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as it customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities and (ii) a letter dated such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities. 1.8 INDEMNIFICATION. (a) To the extent permitted by law, the Company will indemnify each Holder, each of its officers and directors and partners, and each person controlling such Holder, within the meaning of Section 15 of the Securities Act, with respect to which registration, qualification or compliance has been effected pursuant to this Agreement, and each underwriter, if any, and each person who controls any underwriter within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages or liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation by the Company of any federal, state or common law rule or regulation applicable to the Company in connection with any such registration, qualification or compliance, and the Company will reimburse each such Holder, each of its officers and directors, and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, as such expenses are incurred, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the -9- 10 Company by an instrument duly executed by such Holder, controlling person or underwriter and stated to be specifically for use therein. (b) To the extent permitted by law, each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors and officers, each underwriter, if any, of the Company's securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, and each other such Holder, each of its officers and directors and each person controlling such Holder within the meaning of Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such Holders, such directors, officers, persons, underwriters or control persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, as such expenses are incurred, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder and stated to be specifically for use therein. Notwithstanding the foregoing, the liability of each Holder under this subsection (b) shall be limited in an amount equal to the public offering price of the shares sold by such Holder, unless such liability arises out of or is based on willful misconduct by such Holder. (c) Each party entitled to indemnification under this Section 1.8 (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party's expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 1 unless the failure to give such notice is materially prejudicial to an Indemnifying Party's ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matters as to which there is a conflict of interest or separate and different defenses. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. No Indemnified Party shall consent to entry of any judgment or enter into any settlement without the consent of each Indemnifying Party, which consent shall not be unreasonably withheld. -10- 11 (d) If the indemnification provided for in this Section 1.8 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage, or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other on connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. (e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control. 1.9 INFORMATION BY HOLDER. The Holder or Holders of Registrable Securities included in any registration shall furnish to the Company such information regarding such Holder or Holders, the Registrable Securities held by them and the distribution proposed by such Holder or Holders as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification or compliance referred to in this Section 1. 1.10 RULE 144 REPORTING. With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Restricted Securities to the public without registration, after such time as a public market exists for the Common Stock of the Company, the Company agrees to use its best efforts to: (a) Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date that the Company becomes subject to the reporting requirements of the Securities Act or the Securities Exchange Act of 1934, as amended. (b) File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Securities Exchange Act of 1934, as amended (at any time after it has become subject to such reporting requirements). (c) So long as a Holder owns any Restricted Securities, to furnish to the Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Securities Exchange Act of 1934 (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in the -11- 12 possession of or reasonably obtainable by the Company as a Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a Holder to sell any such securities without registration. 1.11 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to register securities granted Holders under Sections 1.2, 1.3 and 1.4 may be assigned to a transferee or assignee reasonably acceptable to the Company in connection with any transfer or assignment of Registrable Securities by a Holder provided that: (i) such transfer may otherwise be effected in accordance with applicable securities laws and (ii) such assignee or transferee acquires at least 1,125,000 shares of Registrable Securities (appropriately adjusted for stock splits, combinations, recapitalizations and the like effected after the date hereof). Notwithstanding the foregoing, the rights to cause the Company to register securities may be assigned to (A) any constituent partner, or retired partner, or to the estate of any of its partners or retired partners of a Holder or (B) to any wholly-owned (direct or indirect) subsidiary of the ultimate parent company of a Holder that is a corporation, without compliance with item (ii) above, provided written notice thereof is promptly given to the Company. 1.12 STANDOFF AGREEMENT. Each Holder agrees in connection with a public offering of the Company's securities that, upon request of the Company or the underwriters managing any underwritten offering of the Company's securities, not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Registrable Securities (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed 180 days) from the effective date of such registration as may be reasonably requested by the underwriters, provided that the executive officers and directors of the Company and any of their Affiliates (within the meaning of Rule 405 under the Securities Act) who own securities of the Company also agree to such restrictions. The shares held by all constituent partners of any entity holding registration rights hereunder shall be bound by this standoff agreement. 1.13 HOLDERS WHO MAY SELL. The rights to cause the Company to register securities granted to Holders under Sections 1.2, 1.3 and 1.4 shall terminate with regard to any Holders who can sell shares under Rule 144 (excluding 144A) within a three month period. SECTION 2 RIGHTS OF FIRST REFUSAL 2.1 COMPANY RIGHT OF FIRST REFUSAL. In the event that any Holder (a "Selling Shareholder") proposes to sell, transfer or otherwise dispose of or pledge, grant a security interest in or otherwise encumber (a "Transfer") any Registrable Securities (the "Transfer Shares"), owned as of the date hereof or hereafter acquired by such Selling Shareholder, to any proposed purchaser or transferee (each a "Transferee"), the Selling Shareholder shall first offer to the Company and the Company or its designee shall have a right to purchase up to all of such Transfer Shares (the "Company Right of First Refusal") on the terms and conditions described below, subject to the provision of Section 202 of the Delaware General Corporation Law. In the event that the Company's Board of Directors determines, in its sole discretion, that the Company is prohibited by law or by -12- 13 contract from exercising the Company Right of First Refusal, the Company may specify in the Company Election Notice (as defined below) another individual or entity as its designee to purchase such Transfer Shares upon the exercise of the Company Right of First Refusal; provided, however, that the designation of another person or entity to purchase such Transfer Shares pursuant to this Section 2.2(d) shall constitute a legally binding obligation of the Company to complete such purchase if its designee shall fail to do so. 2.2 PROCEDURE. (a) Each Selling Shareholder shall deliver a notice (the "Transfer Notice") to the Company, stating (i) such Selling Shareholder's bona fide intention to Transfer the Transfer Shares, (ii) the number of Transfer Shares to be transferred, (iii) the price and material terms and conditions upon which the proposed Transfer is to be made, and (iv) the identity of the Transferee. The Transfer Notice shall include a copy of any written proposal or letter of intent or other agreement relating to the proposed Transfer. (b) The Company or its designee shall indicate to the Selling Shareholder in writing (the "Company Election Notice") whether it elects to purchase any or all of the Shares to which the Transfer Notice refers at the price per share and on the terms and conditions specified in the Transfer Notice (i) within thirty (30) days after delivery of the Transfer Notice to the Company if such Transfer Notice is delivered prior to the closing of the Initial Public Offering or (ii) within ten (10) days after delivery of the Transfer Notice to the Company if such Transfer Notice is delivered after the closing of the Initial Public Offering. (c) In the event the Company or its designee elects to acquire Transfer Shares, out of funds legally available therefor, settlement thereof shall be made in cash within sixty (60) days after receipt of the Transfer Notice; provided, however, that if the terms of payment set forth in the Transfer Notice were other than cash against delivery or promissory notes payable over time, the Company or its designee shall pay in cash the fair market value of such consideration as determined by an investment banking firm mutually acceptable to the Selling Shareholder and the Company, which appraisal shall be final and binding upon the parties. 2.3 TRANSFER OF SHARES UPON FAILURE TO EXERCISE RIGHTS OF FIRST REFUSAL. In the event the Company or its assignee do not elect to acquire any of the Transfer Shares, the Selling Shareholder may, not later than ninety (90) days following expiration of the Company's time period within which to deliver the Company Election Notice, conclude a Transfer of any or all of the Transfer Shares covered by the Transfer Notice not purchased by the Company or its assignee on terms and conditions not materially more favorable to the Transferee than those described in the Transfer Notice. Any proposed Transfer on terms and conditions materially more favorable to the Transferee than those described in the Transfer Notice, as well as any subsequent proposed Transfer of any of the Transfer Shares by the Selling Shareholder, shall again be subject to the Company Right of First Refusal, and shall require compliance by the Selling Shareholder with the procedures described in this Article 2. 2.4 EFFECT ON TRANSFEREE. The Company Right of First Refusal shall not be binding upon any Transferee of Transfer Shares in a transaction which complies with this Article 2 other -13- 14 than (i) upon any other Holder acquiring Registrable Securities and (ii) any securities acquired pursuant to Section 2.7(v)(B) . 2.5 TRANSFER NULL AND VOID. Any sale or transfer, or purported sale or transfer, of securities of the Company shall be null and void unless the terms, conditions, and provisions hereof are strictly observed and followed. 2.6 LEGENDS. The certificates representing shares of stock of the Company owned by Holders shall bear on their face the following legend so long as the foregoing right of first refusal remains in effect: "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST REFUSAL IN FAVOR OF THE COMPANY AND/OR ITS ASSIGNEE(S), AS PROVIDED IN AN AGREEMENT BETWEEN THE COMPANY AND THE HOLDER OF THIS CERTIFICATE, WHICH IS AVAILABLE FOR REVIEW AT THE COMPANY." 2.7 EXEMPTION FROM RIGHT OF FIRST REFUSAL. The following Transfers shall be exempt from the provisions of this Right of First Refusal: (i) any Transfer approved by the Company; (ii) any sale pursuant to a bonafide underwritten public offering registered under the Securities Act; (iii) a transfer pursuant to and in accordance with the terms of any merger or consolidation or pursuant to a sale of all or substantially all of the stock or assets of the Company in each case where the Company is acquired by another corporation; (iv) a sale into any tender or exchange offer (A) which is made by or on behalf of the Company or (B) which is made by another person or group and is not opposed by the Company's Board of Directors; (v) transfers to (A) a general partner or limited partner of a Holder or (B) any wholly-owned (direct or indirect) subsidiary of the ultimate parent company of a Holder that is a corporation and which agrees in writing to be bound by the provisions hereof, provided that in each case, the Company is given written notice by the Holder promptly following such transfer of the name and address of such transferee; or (vi) provided that the Holder first notifies the Company in writing of such proposed sale, and the number of shares sold to any one purchaser does not constitute a "block" within the meaning of Rule 10b-18(a)(14), any sale made in compliance with Rule 144 in a broker's transaction within the meaning of Section 4(4) of the Act. SECTION 3 MISCELLANEOUS 3.1 GOVERNING LAW. This Agreement shall be governed in all respects by the internal laws of the State of Delaware. 3.2 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. -14- 15 3.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the full and entire understanding and agreement between 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 party against whom enforcement of any such amendment, waiver, discharge or termination is sought; provided, however, that holders of a majority of the Registrable Securities may, with the Company's prior written consent, waive, modify or amend on behalf of all holders, any provisions hereof. 3.4 NOTICES, ETC. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, or otherwise delivered by hand or by messenger, addressed (a) if to any holder of any Registrable Securities, at such address as such holder shall have furnished the Company in writing, or, until any such holder so furnishes an address to the Company, then to and at the address of the last holder of such shares who has so furnished an address to the Company or (b) if to the Company, one copy should be sent to its address set forth above and addressed to the attention of the Corporate Secretary, or at such other address as the Company shall have furnished to the holders. Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given when delivered if delivered personally or by messenger, or, if sent by mail, at the earlier of its receipt or 144 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. 3.5 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which may be executed by less than all parties to this Agreement, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument. 3.6 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. 3.7 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not considered in construing or interpreting this Agreement. -15- 16 The foregoing agreement is hereby executed as of the date first above written. "COMPANY" JUNIPER NETWORKS, INC. a Delaware corporation By: ------------------------------------------ Scott Kriens, President "HOLDERS" Kleiner Perkins Caufield & Byers VII By: ------------------------------------------ Title: ---------------------------------------- KPCB VII Founders Fund By: ------------------------------------------ Title: ---------------------------------------- KPCB Information Sciences Zaibatsu Fund II By: ------------------------------------------ Title: ---------------------------------------- WS Investments Company 96A By: ------------------------------------------ Judith M. O'Brien, General Partner [Signature Page Registration Rights Agreement] 17 Benchmark Capital Partners, L.P. By: Benchmark Capital Management Co., L.L.C. By: ------------------------------------------ Member Benchmark Founders' Fund, L.P. By: Benchmark Capital Management Co., L.L.C. By: ------------------------------------------ Member New Enterprise Associates VI, Limited Partnership By: NEA Partners, VI, Limited Partnership its General Partner By: ------------------------------------------ General Partner NEA Presidents Fund, L.P. By: NEA General Partners, L.P its General Partner By: ------------------------------------------ General Partner NEA Ventures 1996, L.P. By: ------------------------------------------ Vice President [Signature Page Registration Rights Agreement] 18 Crosspoint Venture Partners 1996 By: ------------------------------------------ Title: ----------------------------------------- Institutional Venture Partners VII, L.P. By: its General Partner, Institutional Venture Management VII By: ------------------------------------------ General Partner Institutional Venture Management VII, L.P. By: ------------------------------------------ General Partner IVP Founders Fund I, L.P. By: its General Partner, Institutional Venture Management VI By: ------------------------------------------ General Partner WS Investments Company 96B By: ------------------------------------------ Judith M. O'Brien, General Partner Larry W. Sonsini By: ------------------------------------------ Larry W. Sonsini [Signature Page Registration Rights Agreement] 19 Bradford C. O'Brien and Judith Mayer O'Brien, Trustees of the O'Brien Family Trust U/D/T dtd July 1, 1992 By: ------------------------------------------ Judith M. O'Brien, Trustee McQuillan Consulting Self-Employed Profit Sharing Plan By: ------------------------------------------ John McQuillan, Trustee Scott Kriens By: ------------------------------------------ Scott Kriens William Stensrud By: ------------------------------------------ William Stensrud Venture Lending & Leasing By: ------------------------------------------ By: ------------------------------------------ ---------------------------------------------- (print name of signatory) ---------------------------------------------- (title) [Signature Page Registration Rights Agreement] 20 3 Com Corporation By: ------------------------------------------ ---------------------------------------------- (print name of signatory) ---------------------------------------------- (title) ERICSSON BUSINESS NETWORKS AB By: ------------------------------------------ ---------------------------------------------- (print name of signatory) ---------------------------------------------- (title) Lucent Technologies, Inc. By: ------------------------------------------ ---------------------------------------------- (print name of signatory) ---------------------------------------------- (title) [Signature Page Registration Rights Agreement] 21 Newbridge Networks Corporation By: ------------------------------------------ ---------------------------------------------- (print name of signatory) ---------------------------------------------- (title) NORTHERN TELECOM LIMITED By: ------------------------------------------ Klaus M. Buechner Senior Vice President, Corporate Strategy & Alliances By: ------------------------------------------ Gordon Davis Assistant Secretary UUNET TECHNOLOGIES, INC. By: ------------------------------------------ ---------------------------------------------- (print name of signatory) ---------------------------------------------- (title) AT&T VENTURE FUND II, L.P. By: ------------------------------------------ Title: ----------------------------------------- [Signature Page Registration Rights Agreement] 22 ANSCHUTZ FAMILY INVESTMENT COMPANY LLC By: ------------------------------------------ Title: ----------------------------------------- "SERIES D AND SERIES D1 HOLDER" ERICSSON BUSINESS NETWORKS AB By: ------------------------------------------ ---------------------------------------------- (print name of signatory) ---------------------------------------------- (title) [Signature Page Registration Rights Agreement] 23 EXHIBIT A
COMMON SERIES A SERIES B SERIES C SERIES D SERIES D1 NAME STOCK PREFERRED PREFERRED PREFERRED PREFERRED PREFERRED ---- --------- --------- --------- --------- --------- --------- Kleiner Perkins Caufield & Byers VII 2,441,666 1,513,834 304,688 KPCB Founders Fund VII 266,667 165,333 KPCB Information Sciences Zaibatsu Fund II 69,444 43,056 7,812 New Enterprise Associates VI, Limited Partnership 1,214,583 NEA Presidents Fund, L.P. 31,250 NEA Ventures 1996, L.P. 4,167 Benchmark Capital Partners, L.P. 549,876 Benchmark Founders' Fund, L.P. 75,124 Crosspoint Venture Partners 1996 625,000 Institutional Venture Partners VII, L.P. 494,792 Institutional Venture Management VII, L.P. 18,229 IVP Founders Fund II, L.P. 7,813 WS Investments Company 96A 34,722 21,528 WS Investments Company 96B 8,334 Bradford C. O'Brien and 3,125 Judith Mayer O'Brien, Trustees of the O'Brien Family Trust, U/T/A dtd. 7/1/92 Larry W. Sonsini 3,125 McQuillan Consulting Self-Employed Profit 6,250 Sharing Plan Scott Kriens 364,683 William Stensrud 120,000 Venture Lending and Leasing 83,333 23,516 3Com Corporation 783,875 Ericsson 783,875 500,000 2,580,000 Lucent Technologies Inc. 783,875 Newbridge Networks Corporation 783,875 Northern Telecom Limited 783,875 UUNET Technologies Inc. 559,911 Anschutz Family Investment Company LLC 279,955 Crosspoint Venture Partners 1996 279,955 AT&T Venture Fund II, L.P. 111,982 @Home 10,000
EX-10.1 10 FORM OF INDEMNIFICATION AGREEMENT 1 EXHIBIT 10.1 JUNIPER NETWORKS, INC. INDEMNIFICATION AGREEMENT This Indemnification Agreement ("AGREEMENT") is entered into effective as of the ____ day of ____________, 1999 by and between Juniper Networks, Inc., a Delaware corporation (the "COMPANY") and Michael Thurk ("INDEMNITEE"). RECITALS A. The Company and Indemnitee recognize the continued difficulty in obtaining liability insurance for its directors, officers, employees, agents and fiduciaries, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance. B. The Company and Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting directors, officers, employees, agents and fiduciaries to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited. C. Indemnitee does not regard the current protection available as adequate under the present circumstances, and Indemnitee and other directors, officers, employees, agents and fiduciaries of the Company may not be willing to continue to serve in such capacities without additional protection. D. The Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, to serve the Company and, in part, in order to induce Indemnitee to continue to provide services to the Company, wishes to provide for the indemnification and advancing of expenses to Indemnitees to the maximum extent permitted by law. E. In view of the considerations set forth above, the Company desires that Indemnitee be indemnified by the Company as set forth herein. NOW, THEREFORE, the Company and Indemnitee hereby agree as follows: 1. Indemnification. (a) Indemnification of Expenses. The Company shall indemnify to the fullest extent permitted by law if Indemnitee was or is or becomes a party to or witness or other participant in, or are threatened to be made a party to or witness or other participant in, any threatened, pending or completed action, suit, proceeding or alternative dispute resolution mechanism, or any hearing, inquiry or investigation that Indemnitee in good faith believe might lead to the institution of any such action, suit, proceeding or alternative dispute resolution mechanism, whether civil, criminal, administrative, investigative or other (hereinafter a "CLAIM") by reason of (or arising in part out of) any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or any subsidiary of the Company, or is or was serving at the request of the Company 2 as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action or inaction on the part of Indemnitee while serving in such capacity (hereinafter an "INDEMNIFIABLE EVENT") against any and all expenses (including attorneys' fees and all other costs, expenses and obligations incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness in or participate in, any such action, suit, proceeding, alternative dispute resolution mechanism, hearing, inquiry or investigation), judgments, fines, penalties and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) of such Claim and any federal, state, local or foreign taxes imposed on Indemnitees as a result of the actual or deemed receipt of any payments under this Agreement (collectively, hereinafter "EXPENSES"), including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses. Such payment of Expenses shall be made by the Company as soon as practicable but in any event no later than twenty days after written demand by Indemnitees therefor is presented to the Company. (b) Reviewing Party. Notwithstanding the foregoing, (i) the obligations of the Company under Section 1(a) shall be subject to the condition that the Reviewing Party (as described in Section 10(e) hereof) shall not have determined (in a written opinion, in any case in which the Independent Legal Counsel referred to in Section 1(c) hereof is involved) that Indemnitee would not be permitted to be indemnified under applicable law, and (ii) the obligation of the Company to make an advance payment of Expenses to Indemnitee pursuant to Section 2(a) (an "EXPENSE ADVANCE") shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agree to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced or thereafter commence legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). The Indemnitee's obligation to reimburse the Company for any Expense Advance shall be unsecured and no interest shall be charged thereon. If there has not been a Change in Control (as defined in Section 10(c) hereof), the Reviewing Party shall be selected by the Board of Directors, and if there has been such a Change in Control (other than a Change in Control which has been approved by a majority of the Company's Board of Directors who were directors immediately prior to such Change in Control), the Reviewing Party shall be the Independent Legal Counsel referred to in Section 1(c) hereof. If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, including the legal or factual bases therefor, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee. -2- 3 (c) Change in Control. The Company agrees that if there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Company's Board of Directors who were directors immediately prior to such Change in Control) then, with respect to all matters thereafter arising concerning the rights of Indemnitees to payments of Expenses and Expense Advances under this Agreement or any other agreement or under the Company's Certificate of Incorporation or Bylaws as now or hereafter in effect, Independent Legal Counsel (as defined in Section 10(d) hereof) shall be selected by Indemnitees and approved by the Company (which approval shall not be unreasonably withheld). Such counsel, among other things, shall render its written opinion to the Company and Indemnitee as to whether and to what extent Indemnitee would be permitted to be indemnified under applicable law and the Company agrees to abide by such opinion. The Company agrees to pay the reasonable fees of the Independent Legal Counsel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto. (d) Mandatory Payment of Expenses. Notwithstanding any other provision of this Agreement other than Section 9 hereof, to the extent that Indemnitee has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any action, suit, proceeding, inquiry or investigation referred to in Section (1)(a) hereof or in the defense of any claim, issue or matter therein, Indemnitee shall be indemnified against all Expenses incurred by Indemnitee in connection therewith. 2. Expenses; Indemnification Procedure. (a) Advancement of Expenses. The Company shall advance all Expenses incurred by Indemnitee. The advances to be made hereunder shall be paid by the Company to Indemnitee as soon as practicable but in any event no later than twenty days after written demand by Indemnitee therefor to the Company. (b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition precedent to Indemnitee's right to be indemnified under this Agreement, give the Company notice in writing as soon as practicable of any Claim made against Indemnitee for which indemnification will or could be sought under this Agreement. Notice to the Company shall be directed to the Chief Executive Officer of the Company at the address shown on the signature page of this Agreement (or such other address as the Company shall designate in writing to Indemnitee). In addition, Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee's power. (c) No Presumptions; Burden of Proof. For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. In addition, neither the failure of the Reviewing Party to have made a determination as to whether Indemnitee has met any particular standard of conduct or had any particular belief, nor an actual determination by the Reviewing Party that Indemnitee has not met such standard of conduct or did not have such belief, prior to the commencement -3- 4 of legal proceedings by Indemnitee to secure a judicial determination that Indemnitee should be indemnified under applicable law, shall be a defense to Indemnitee's claim or create a presumption that Indemnitee has not met any particular standard of conduct or did not have any particular belief. In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proof shall be on the Company to establish that Indemnitee is not so entitled. (d) Notice to Insurers. If, at the time of the receipt by the Company of a notice of a Claim pursuant to Section 2(b) hereof, the Company has liability insurance in effect which may cover such Claim, the Company shall give prompt notice of the commencement of such Claim to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such action, suit, proceeding, inquiry or investigation in accordance with the terms of such policies. (e) Selection of Counsel. In the event the Company shall be obligated hereunder to pay the Expenses of any Claim, the Company shall be entitled to assume the defense of such Claim with counsel approved by Indemnitee, which approval shall not be unreasonably withheld, upon the delivery to Indemnitee of written notice of its election so to do. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same Claim; provided that, (i) Indemnitee shall have the right to employ Indemnitee's counsel in any such Claim at Indemnitee's expense and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there is a conflict of interest between the Company and Indemnitee in the conduct of any such defense, or (C) the Company shall not continue to retain such counsel to defend such Claim, then the fees and expenses of Indemnitee's counsel shall be at the expense of the Company. The Company shall have the right to conduct such defense as it sees fit in its sole discretion, including the right to settle any claim against Indemnitee without the consent of the Indemnitee. 3. Additional Indemnification Rights; Nonexclusivity. (a) Scope. The Company hereby agrees to indemnify Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company's Certificate of Incorporation, the Company's Bylaws or by statute. In the event of any change after the date of this Agreement in any applicable law, statute or rule which expands the right of a Delaware corporation to indemnify a member of its Board of Directors or an officer, employee, agent or fiduciary, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits afforded by such change. In the event of any change in any applicable law, statute or rule which narrows the right of a Delaware corporation to indemnify a member of its Board of Directors or an officer, employee, agent or fiduciary, such change, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties' rights and obligations hereunder except as set forth in Section 8(a) hereof. -4- 5 (b) Nonexclusivity. The indemnification provided by this Agreement shall be in addition to any rights to which Indemnitee may be entitled under the Company's Certificate of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterested directors, the General Corporation Law of the State of Delaware, or otherwise. The indemnification provided under this Agreement shall continue as to Indemnitee for any action Indemnitee took or did not take while serving in an indemnified capacity even though Indemnitee may have ceased to serve in such capacity. 4. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any Claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, Certificate of Incorporation, Bylaw or otherwise) of the amounts otherwise indemnifiable hereunder. 5. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses incurred in connection with any Claim, but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses to which Indemnitee is entitled. 6. Mutual Acknowledgement. Both the Company and Indemnitee acknowledge that in certain instances, Federal law or applicable public policy may prohibit the Company from indemnifying its directors, officers, employees, agents or fiduciaries under this Agreement or otherwise. Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company's right under public policy to indemnify Indemnitee. 7. Liability Insurance. The Company shall, from time to time, make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the officers and directors of the Company with coverage for losses from wrongful acts, or to ensure the Company's performance of its indemnification obligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurance coverage against the protection afforded by such coverage. In all policies of directors' and officers' liability insurance, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company's directors, if Indemnitee is a director; or of the Company's officers, if Indemnitee is not a director of the Company but is an officer; or of the Company's key employees, if Indemnitee is not an officer or director but is a key employee. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amount of coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or if Indemnitee is covered by similar insurance maintained by a subsidiary or parent of the Company. -5- 6 8. Exceptions. Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement: (a) Excluded Action or Omissions. To indemnify Indemnitee for Expenses resulting from acts, omissions or transactions for which Indemnitee is prohibited from receiving indemnification under this Agreement or applicable law; (b) Claims Initiated by Indemnitee. To indemnify or advance expenses to Indemnitee with respect to Claims initiated or brought voluntarily by Indemnitee and not by way of defense, except (i) with respect to actions or proceedings brought to establish or enforce a right to indemnification under this Agreement or any other agreement or insurance policy or under the Company's Certificate of Incorporation or Bylaws now or hereafter in effect relating to Claims for Indemnifiable Events, (ii) in specific cases if the Board of Directors has approved the initiation or bringing of such Claim, or (iii) as otherwise required under Section 145 of the Delaware General Corporation Law, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expense payment or insurance recovery, as the case may be; (c) Lack of Good Faith. To indemnify Indemnitee for any expenses incurred by Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by Indemnitee in such proceeding was not made in good faith or was frivolous; or (d) Claims Under Section 16(b). To indemnify Indemnitee for expenses and the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute. 9. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company against Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern. 10. Construction of Certain Phrases. (a) For purposes of this Agreement, references to the "Company" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a consti tuent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees, agents or fiduciaries, so that if Indemnitee is or was a director, officer, employee, agent or fiduciary of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with -6- 7 respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued. (b) For purposes of this Agreement, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; and references to "serving at the request of the Company" shall include any service as a director, officer, employee, agent or fiduciary of the Company which imposes duties on, or involves services by, such director, officer, employee, agent or fiduciary with respect to an employee benefit plan, its participants or its beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner "not opposed to the best interests of the Company" as referred to in this Agreement. (c) For purposes of this Agreement a "Change in Control" shall be deemed to have occurred if, on or after the date of this Agreement, (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company acting in such capacity or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing more than 50% of the total voting power represented by the Company's then outstanding Voting Securities, (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of (in one transaction or a series of related transactions) all or substantially all of the Company's assets. (d) For purposes of this Agreement, "Independent Legal Counsel" shall mean an attorney or firm of attorneys, selected in accordance with the provisions of Section 1(c) hereof, who shall not have otherwise performed services for the Company or Indemnitees within the last three years (other than with respect to matters concerning the rights of Indemnitees under this Agreement, or of other indemnitees under similar indemnity agreements). -7- 8 (e) For purposes of this Agreement, a "Reviewing Party" shall mean any appropriate person or body consisting of a member or members of the Company's Board of Directors or any other person or body appointed by the Board of Directors who is not a party to the particular Claim for which Indemnitee are seeking indemnification, or Independent Legal Counsel. (f) For purposes of this Agreement, "Voting Securities" shall mean any securities of the Company that vote generally in the election of directors. 11. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original. 12. Binding Effect; Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, assigns, including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company, spouses, heirs, and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all, or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. This Agreement shall continue in effect with respect to Claims relating to Indemnifiable Events regardless of whether Indemnitee continues to serve as a director, officer, employee, agent or fiduciary of the Company or of any other enterprise at the Company's request. 13. Attorneys' Fees. In the event that any action is instituted by Indemnitee under this Agreement or under any liability insurance policies maintained by the Company to enforce or interpret any of the terms hereof or thereof, Indemnitee shall be entitled to be paid all Expenses incurred by Indemnitee with respect to such action, regardless of whether Indemnitee is ultimately successful in such action, and shall be entitled to the advancement of Expenses with respect to such action, unless, as a part of such action, a court of competent jurisdiction over such action determines that each of the material assertions made by Indemnitee as a basis for such action was not made in good faith or was frivolous. In the event of an action instituted by or in the name of the Company under this Agreement to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all Expenses incurred by Indemnitee in defense of such action (including costs and expenses incurred with respect to Indemnitee's counterclaims and cross-claims made in such action), and shall be entitled to the advancement of Expenses with respect to such action, unless, as a part of such action, a court having jurisdiction over such action determines that each of Indemnitee's material defenses to such action was made in bad faith or was frivolous. 14. Notice. All notices and other communications required or permitted hereunder shall be in writing, shall be effective when given, and shall in any event be deemed to be given (a) five (5) days after deposit with the U.S. Postal Service or other applicable postal service, if delivered by first class mail, postage prepaid, (b) upon delivery, if delivered by hand, (c) one business day after the business day of deposit with Federal Express or similar overnight courier, freight prepaid, or (d) one day after the -8- 9 business day of delivery by facsimile transmission, if delivered by facsimile transmission, with copy by first class mail, postage prepaid, and shall be addressed if to Indemnitee, at the Indemnitee's address as set forth beneath Indemnitee's signature to this Agreement and if to the Company at the address of its principal corporate offices (attention: Secretary) or at such other address as such party may designate by ten days' advance written notice to the other party hereto. 15. Consent to Jurisdiction. The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the State of Delaware for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be commenced, prosecuted and continued only in the Court of Chancery of the State of Delaware in and for New Castle County, which shall be the exclusive and only proper forum for adjudicating such a claim. 16. Severability. The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. Furthermore, to the fullest extent possible, the provisions of this Agreement (including, without limitations, each portion of this Agreement containing any provision held to be invalid, void or otherwise unenforceable, that is not itself invalid, void or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable. 17. Choice of Law. This Agreement shall be governed by and its provisions construed and enforced in accordance with the laws of the State of Delaware, as applied to contracts between Delaware residents, entered into and to be performed entirely within the State of Delaware, without regard to the conflict of laws principles thereof. 18. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights. 19. Amendment and Termination. No amendment, modification, termination or cancellation of this Agreement shall be effective unless it is in writing signed by both the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 20. Integration and Entire Agreement. This Agreement sets forth the entire understanding between the parties hereto and supersedes and merges all previous written and oral negotiations, commitments, understandings and agreements relating to the subject matter hereof between the parties hereto. -9- 10 21. No Construction as Employment Agreement. Nothing contained in this Agreement shall be construed as giving Indemnitee any right to be retained in the employ of the Company or any of its subsidiaries. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. JUNIPER NETWORKS, INC. a Delaware corporation By: ________________________________ (signature) Name: ______________________________ Title:______________________________ Address: 385 Ravendale Drive Mountain View, CA 94043 AGREED TO AND ACCEPTED BY: ______________________________ Address: ______________________________ ______________________________ -10- EX-10.2 11 AMENDED 1996 STOCK PLAN 1 EXHIBIT 10.2 JUNIPER NETWORKS, INC. AMENDED AND RESTATED 1996 STOCK PLAN (As amended through April 19, 1999) 1. Purposes of the Plan. The purposes of this Stock Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees and Consultants of the Company and its Subsidiaries and to promote the success of the Company's business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant of an Option and subject to the applicable provisions of Section 422 of the Code and the regulations promulgated thereunder. Stock Purchase Rights may also be granted under the Plan. 2. Definitions. As used herein, the following definitions shall apply: (a) "Administrator" means the Board or any of its Committees appointed pursuant to Section 4 of the Plan. (b) "Applicable Laws" means the legal requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code and the applicable laws of any foreign country or jurisdiction where Options or Stock Purchase Rights are, or will be, granted under the Plan. (c) "Board" means the Board of Directors of the Company. (d) "Code" means the Internal Revenue Code of 1986, as amended. (e) "Committee" means a Committee appointed by the Board of Directors in accordance with Section 4 of the Plan. (f) "Common Stock" means the Common Stock of the Company. (g) "Company" means Juniper Networks, Inc., a Delaware corporation. (h) "Consultant" means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services to such entities. (i) "Continuous Status as an Employee or Consultant" means that the employment or consulting relationship with the Company, any Parent or Subsidiary is not interrupted or terminated. Continuous Status as an Employee or Consultant shall not be considered interrupted in the case of (i) any leave of absence approved by the Company (provided, however, that the Administrator shall be permitted to stop vesting on any leave of absence, on an individual, aggregate or policy basis, even if such leave of absence is approved by the Company) or (ii) transfers between locations of the Company 2 or between the Company, its Parent, any Subsidiary, or any successor. A leave of absence approved by the Company shall include sick leave, military leave, or any other personal leave approved by an authorized representative of the Company. For purposes of Incentive Stock Options, no such leave may exceed 90 days, unless reemployment upon expiration of such leave is guaranteed by statute or contract, including Company policies. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, on the 181st day of such leave any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option. (j) "Director" means a member of the Board of Directors of the Company. (k) "Employee" means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. The payment of a Director's fee by the Company shall not be sufficient to constitute "employment" by the Company. (l) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (m) "Fair Market Value" means, as of any date, the value of Common Stock determined as follows: (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination; or (iii) In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator. (n) "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code. (o) "Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock Option. (p) "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. (q) "Option" means a stock option granted pursuant to the Plan. -2- 3 (r) "Optioned Stock" means the Common Stock subject to an Option or a Stock Purchase Right. (s) "Optionee" means an Employee or Consultant who receives an Option or Stock Purchase Right. (t) "Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code. (u) "Plan" means this 1996 Stock Plan. (v) "Restricted Stock" means shares of Common Stock acquired pursuant to a grant of a Stock Purchase Right under Section 11 below. (w) "Section 16(b)" means Section 16(b) of the Securities Exchange Act of 1934, as amended. (x) "Share" means a share of the Common Stock, as adjusted in accordance with Section 12 below. (y) "Stock Purchase Right" means a right to purchase Common Stock pursuant to Section 11 below. (z) "Subsidiary" means a "subsidiary corporation," whether now or hereafter existing, as defined in Section 424(f) of the Code. 3. Stock Subject to the Plan. Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of Shares which may be subject to option and sold under the Plan is 19,187,500 Shares, plus an annual increase to be added on the first day of the Company's fiscal year beginning in 2000 equal to the lesser of (i) 3,000,000 shares, (ii) 5% of the outstanding shares on such date or (iii) a lesser amount determined by the Board. The Shares may be authorized but unissued, or reacquired Common Stock. If an Option or Stock Purchase Right expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an option exchange program, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have actually been issued under the Plan, upon exercise of either an Option or Stock Purchase Right, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if Shares of Restricted Stock are repurchased by the Company at their original purchase price, and the original purchaser of such Shares did not receive any benefits of ownership of such Shares, such Shares shall become available for future grant under the Plan. For purposes of the preceding sentence, voting rights shall not be considered a benefit of Share ownership. -3- 4 4. Administration of the Plan. (a) Procedure. (i) Multiple Administrative Bodies. The Plan may be administered by different Committees with respect to different groups of Service Providers. (ii) Section 162(m). To the extent that the Administrator determines it to be desirable to qualify Options granted hereunder as "performance-based compensation" within the meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee of two or more "outside directors" within the meaning of Section 162(m) of the Code. (iii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the requirements for exemption under Rule 16b-3. (iv) Other Administration. Other than as provided above, the Plan shall be administered by (A) the Board or (B) a Committee, which committee shall be constituted to satisfy Applicable Laws. (b) Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, including the approval, if required, of any stock exchange upon which the Common Stock is listed, the Administrator shall have the authority in its discretion: (i) to determine the Fair Market Value of the Common Stock, in accordance with Section 2(m) of the Plan; (ii) to select the Consultants and Employees to whom Options and Stock Purchase Rights may from time to time be granted hereunder; (iii) to determine whether and to what extent Options and Stock Purchase Rights or any combination thereof are granted hereunder; (iv) to determine the number of Shares to be covered by each such award granted hereunder; (v) to approve forms of agreement for use under the Plan; (vi) to determine the terms and conditions of any award granted hereunder; (vii) to determine whether and under what circumstances an Option may be settled in cash under subsection 9(f) instead of Common Stock; -4- 5 (viii) to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option has declined since the date the Option was granted; and (ix) to construe and interpret the terms of the Plan and awards granted pursuant to the Plan. (c) Effect of Administrator's Decision. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Optionees and any other holders of any Options or Stock Purchase Rights. 5. Eligibility. (a) Nonstatutory Stock Options and Stock Purchase Rights may be granted to Employees, Consultants and Directors. Incentive Stock Options may be granted only to Employees. An Employee or Consultant who has been granted an Option or Stock Purchase Right may, if otherwise eligible, be granted additional Options or Stock Purchase Rights. (b) Each Option shall be designated in the written option agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 5(b), Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted. (c) Neither the Plan nor any Option or Stock Purchase Right shall confer upon any Optionee any right with respect to continuation of his or her employment or consulting relationship with the Company, nor shall it interfere in any way with his or her right or the Company's right to terminate his or her employment or consulting relationship at any time, with or without cause. (d) The following limitations shall apply to grants of Options to Employees: (i) No Employee shall be granted, in any fiscal year of the Company, Options to purchase more than 1,000,000 Shares. (ii) In connection with his or her initial employment, an Employee may be granted Options to purchase up to an additional 2,000,000 Shares which shall not count against the limit set forth in subsection (i) above. (iii) The foregoing limitations shall be adjusted proportionately in connection with any change in the Company's capitalization as described in Section 12. -5- 6 (iv) If an Option is cancelled in the same fiscal year of the Company in which it was granted (other than in connection with a transaction described in Section 12), the cancelled Option shall be counted against the limit set forth in subsection (i) above. For this purpose, if the exercise price of an Option is reduced, such reduction will be treated as a cancellation of the Option and the grant of a new Option. 6. Term of Plan. The Plan shall become effective upon the earlier to occur of its adoption by the Board of Directors or its approval by the shareholders of the Company, as described in Section 18 of the Plan. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 14 of the Plan. 7. Term of Option. The term of each Option shall be the term stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof. In the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant thereof or such shorter term as may be provided in the Option Agreement. 8. Option Exercise Price and Consideration. (a) The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following: (i) In the case of an Incentive Stock Option (A) granted to an Employee who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant. (B) granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. (ii) In the case of a Nonstatutory Stock Option, the per Share exercise price shall be determined by the Administrator. In the case of a Nonstatutory Stock Option intended to qualify as "performance-based compensation" within the meaning of Section 162(m) of the Code, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. (b) The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant). Such consideration may consist of (1) cash, (2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares acquired upon exercise of an Option, have been owned by the Optionee for more than six months on the date of sur render, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price -6- 7 of the Shares as to which such Option shall be exercised, (5) delivery of a properly executed exercise notice together with such other documentation as the Administrator and a broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale or loan proceeds required to pay the exercise price, (6) any other consideration permitted by applicable law, or (7) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company. 9. Exercise of Option. (a) Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator, including performance criteria with respect to the Company and/or the Optionee, and as shall be permissible under the terms of the Plan. An Option may not be exercised for a fraction of a Share. An Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option by the person entitled to exercise the Option and full payment for the Shares with respect to which the Option is exercised has been received by the Company. Full payment may, as authorized by the Administrator, consist of any consideration and method of payment allowable under Section 8(b) hereof. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote, receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly upon exercise of the Option. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 12 hereof. Exercise of an Option in any manner shall result in a decrease in the number of Shares which thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. (b) Termination of Employment or Consulting Relationship. In the event of termination of an Optionee's Continuous Status as an Employee or Consultant (but not in the event of an Optionee's change of status from Employee to Consultant (in which case an Employee's Incentive Stock Option shall automatically convert to a Nonstatutory Stock Option on the date three (3) months and one day following such change of status) or from Consultant to Employee), such Optionee may, but only within such period of time as is determined by the Administrator, with such determination in the case of an Incentive Stock Option not exceeding thirty (30) days after the date of such termination (but in no event later than the expiration date of the term of such Option as set forth in the Option Agreement), exercise his or her Option to the extent that the Optionee was entitled to exercise it at the date of such termination. To the extent that the Optionee was not entitled to exercise the Option at the date of such -7- 8 termination, or if the Optionee does not exercise such Option to the extent so entitled within the time specified herein, the Option shall terminate. (c) Disability of Optionee. In the event of termination of an Optionee's Continuous Status as an Employee or Consultant as a result of his or her disability, the Optionee may, but only within ninety (90) days from the date of such termination (and in no event later than the expiration date of the term of such Option as set forth in the Option Agreement), exercise the Option to the extent otherwise entitled to exercise it at the date of such termination. If such disability is not a "disability" as such term is defined in Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such Incentive Stock Option shall automatically cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option on the day three months and one day following such termination. To the extent that the Optionee was not entitled to exercise the Option at the date of termination, or if the Optionee does not exercise such Option to the extent so entitled within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. (d) Death of Optionee. In the event of the death of an Optionee, the Option may be exercised at any time within ninety (90) days following the date of death (but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant) by the Optionee's estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent that the Optionee was entitled to exercise the Option on the date of death. If, at the time of death, the Optionee was not entitled to exercise his or her entire Option, the Shares covered by the unexercisable portion of the Option shall immediately revert to the Plan. If, after the Optionee's death, the Optionee's estate or a person who acquires the right to exercise the Option by bequest or inheritance does not exercise the Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. (e) Buyout Provisions. The Administrator may at any time offer to buy out for a payment in cash or Shares, an Option previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made. 10. Non-Transferability of Options and Stock Purchase Rights. Options and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. 11. Stock Purchase Rights. (a) Rights to Purchase. Stock Purchase Rights may be issued either alone, in addition to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the offeree in writing of the terms, conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to be paid, and the time within which such person must accept such offer, which shall in no event exceed thirty (30) days from the date upon -8- 9 which the Administrator makes the determination to grant the Stock Purchase Right. The offer shall be accepted by execution of a Restricted Stock purchase agreement in the form determined by the Administrator. Shares purchased pursuant to the grant of a Stock Purchase Right shall be referred to herein as "Restricted Stock." (b) Repurchase Option. Unless the Administrator determines otherwise, the Restricted Stock purchase agreement shall grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser's employment with the Company for any reason (including death or disability). The purchase price for Shares repurchased pursuant to the Restricted Stock purchase agreement shall be the original price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at such rate as the Administrator may determine. (c) Other Provisions. The Restricted Stock purchase agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion. In addition, the provisions of Restricted Stock purchase agreements need not be the same with respect to each purchaser. (d) Rights as a Shareholder. Once the Stock Purchase Right is exercised, the purchaser shall have rights equivalent to those of a shareholder and shall be a shareholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 12 of the Plan. 12. Adjustments Upon Changes in Capitalization or Merger. (a) Changes in Capitalization. Subject to any required action by the shareholders of the Company, the number of shares of Common Stock covered by each outstanding Option or Stock Purchase Right, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options or Stock Purchase Rights have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option or Stock Purchase Right, as well as the price per share of Common Stock covered by each such outstanding Option or Stock Purchase Right, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclas sification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company. The conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option or Stock Purchase Right. -9- 10 (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify the Optionee at least fifteen (15) days prior to such proposed action. To the extent it has not been previously exercised, the Option or Stock Purchase Right shall terminate immediately prior to the consummation of such proposed action. (c) Merger. In the event of a merger of the Company with or into another corporation, each outstanding Option or Stock Purchase Right may be assumed or an equivalent option or right may be substituted by such successor corporation or a parent or subsidiary of such successor corporation. If, in such event, an Option or Stock Purchase Right is not assumed or substituted, the Option or Stock Purchase Right shall terminate as of the date of the closing of the merger. For the purposes of this paragraph, the Option or Stock Purchase Right shall be considered assumed if, following the merger, the Option or Stock Purchase Right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option or Stock Purchase Right immediately prior to the merger, the consideration (whether stock, cash, or other securities or property) received in the merger by holders of Common Stock for each Share held on the effective date of the transaction (and if the holders are offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares). If such consideration received in the merger is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option or Stock Purchase Right, for each Share of Optioned Stock subject to the Option or Stock Purchase Right, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger. 13. Time of Granting Options and Stock Purchase Rights. The date of grant of an Option or Stock Purchase Right shall, for all purposes, be the date on which the Administrator makes the determination granting such Option or Stock Purchase Right, or such other date as is determined by the Administrator. Notice of the determination shall be given to each Employee or Consultant to whom an Option or Stock Purchase Right is so granted within a reasonable time after the date of such grant. 14. Amendment and Termination of the Plan. (a) Amendment and Termination. The Board may at any time amend, alter, suspend or discontinue the Plan, but no amendment, alteration, suspension or discontinuation shall be made which would impair the rights of any Optionee under any grant theretofore made, without his or her consent. In addition, to the extent necessary and desirable to comply with Rule 16b-3 under the Exchange Act or with Section 422 of the Code (or any other applicable law or regulation, including the requirements of the NASD or an established stock exchange), the Company shall obtain shareholder approval of any Plan amendment in such a manner and to such a degree as required. (b) Effect of Amendment or Termination. Any such amendment or termination of the Plan shall not affect Options or Stock Purchase Rights already granted, and such Options and Stock Purchase Rights shall remain in full force and effect as if this Plan had not been amended or terminated, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. -10- 11 15. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to the exercise of an Option or Stock Purchase Right unless the exercise of such Option or Stock Purchase Right and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the Shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. As a condition to the exercise of an Option or Stock Purchase Right, the Company may require the person exercising such Option or Stock Purchase Right to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned relevant provisions of law. 16. Reservation of Shares. The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. 17. Agreements. Options and Stock Purchase Rights shall be evidenced by written agreements in such form as the Administrator shall approve from time to time. 18. Shareholder Approval. Continuance of the Plan shall be subject to approval by the shareholders of the Company within twelve (12) months before or after the date the Plan is adopted. Such shareholder approval shall be obtained in the degree and manner required under Applicable Laws and the rules of any stock exchange upon which the Common Stock is listed. * * * * * -11- 12 PLAN HISTORY Initial Shares Granted 3,600,000 06/12/96 Additional Shares 1,150,000 01/16/97 Three for Two Stock Split 2,375,000 06/27/97 Additional Shares 2,000,000 11/19/97 Three for Two Stock Split 4,562,500 10/02/98 Additional Shares 3,000,000 11/12/98 Additional Shares 3,000,000 04/19/99 Annual Increase See Section 3 04/19/99
13 JUNIPER NETWORKS, INC. 1996 STOCK OPTION PLAN STOCK OPTION AGREEMENT Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option Agreement. I. NOTICE OF STOCK OPTION GRANT <> <> You have been granted an option to purchase Common Stock of the Company, subject to the terms and conditions of the Plan and this Option Agreement, as follows: Date of Grant: <> ------------------------------------------ Vesting Commencement Date: <> ------------------------------------------ Exercise Price Per Share <> ------------------------------------------ Total Number of Shares Granted: <> ------------------------------------------ Type of Option: __X__ Incentive Stock Option Nonstatutory Option _____ Nonstatutory Stock Option Term/Expiration Date: <> ------------------------------------------ Vesting Schedule:
You may exercise this Option, in whole or in part, according to the following vesting schedule: Twenty-five percent (25%) of the Shares subject to the Option shall vest twelve months after the Vesting Commencement Date, and 1/48th of the Shares subject to the Option shall vest thereafter on the monthly anniversary of the Vesting Commencement Date. II. AGREEMENT 1. Grant of Option. Juniper Networks, Inc., a Delaware corporation (the "Company"), hereby grants to the Optionee named in the Notice of Grant (the "Optionee"), an option (the "Option") to purchase the total number of shares of Common Stock (the "Shares") set forth in the 14 Notice of Grant, at the exercise price per share set forth in the Notice of Grant (the "Exercise Price") subject to the terms, definitions and provisions of the 1996 Stock Option Plan (the "Plan") adopted by the Company, which is incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option Agreement. If designated in the Notice of Grant as an Incentive Stock Option ("ISO"), this Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code. Nevertheless, to the extent that it exceeds the $100,000 rule of Code Section 422(d), this Option shall be treated as a Nonstatutory Stock Option ("NSO"). 2. Exercise of Option. (a) Right to Exercise. This Option shall be exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Grant and with the applicable provisions of the Plan and this Option Agreement. In the event of Optionee's death, disability or other termination of the employment or consulting relationship, this Option shall be exercisable in accordance with the applicable provisions of the Plan and this Option Agreement. (b) Method of Exercise. This Option shall be exercisable by written notice (in the form attached as Exhibit A) which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised, and such other representations and agreements as to the holder's investment intent with respect to such shares of Common Stock as may be required by the Company pursuant to the provisions of the Plan. Such written notice shall be signed by the Optionee and shall be delivered in person or by certified mail to the Secretary of the Company. The written notice shall be accompanied by payment of the Exercise Price. This Option shall be deemed to be exercised upon receipt by the Company of such written notice accompanied by the Exercise Price. No Shares will be issued pursuant to the exercise of an Option unless such issuance and such exercise shall comply with all relevant provisions of law and the requirements of any stock exchange upon which the Shares may then be listed. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares. 3. Optionee's Representations. In the event the Shares purchasable pursuant to the exercise of this Option have not been registered under the Securities Act of 1933, as amended, at the time this Option is exercised, Optionee shall, if required by the Company, concurrently with the exercise of all or any portion of this Option, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit B. 4. Lock-Up Period. Optionee hereby agrees that if so requested by the Company or any representative of the underwriters (the "Managing Underwriter") in connection with any registration of the offering of any securities of the Company under the Securities Act, Optionee shall not sell or otherwise transfer any Shares or other securities of the Company during the 180-day period (or such longer period as may be requested in writing by the Managing Underwriter and agreed to in writing by the Company) (the "Market Standoff Period") following the effective date of a registration -2- 15 statement of the Company filed under the Securities Act; provided, however, that such restriction shall apply only to the first registration statement of the Company to become effective under the Securities Act that includes securities to be sold on behalf of the Company to the public in an underwritten public offering under the Securities Act. The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period. 5. Method of Payment. Payment of the Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee: (a) cash; (b) check; (c) surrender of other shares of Common Stock of the Company which (A) in the case of Shares acquired pursuant to the exercise of a Company option, have been owned by the Optionee for more than six (6) months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the Exercise Price of the Shares as to which the Option is being exercised; or (d) delivery of a properly executed exercise notice together with such other documentation as the Administrator and the broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale or loan proceeds required to pay the Exercise Price. 6. Restrictions on Exercise. This Option may not be exercised until such time as the Plan has been approved by the shareholders of the Company, or if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any applicable federal or state securities or other law or regulation, including any rule under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as promulgated by the Federal Reserve Board. 7. Termination of Relationship. In the event an Optionee's Continuous Status as an Employee or Consultant terminates, Optionee may, to the extent otherwise so entitled at the date of such termination (the "Termination Date"), exercise this Option for a period of thirty (30) days after Optionee's employment or consulting relationship with the Company terminates. To the extent that Optionee was not entitled to exercise this Option at the date of such termination, or if Optionee does not exercise this Option within the time specified herein, the Option shall terminate. If your status changes from Employee to Consultant or Consultant to Employee, this Option Agreement shall remain in effect. In no case may you exercise this Option after the Term/Expiration Date as provided above. 8. Disability of Optionee. Notwithstanding the provisions of Section 7 above, in the event of termination of an Optionee's consulting relationship or Continuous Status as an Employee as a result of his or her disability, Optionee may, but only within twelve (12) months from the date of such termination (and in no event later than the expiration date of the term of such Option as set -3- 16 forth in this Option Agreement), exercise the Option to the extent otherwise entitled to exercise it at the date of such termination; provided, however, that if such disability is not a "disability" as such term is defined in Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such Incentive Stock Option shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option on the day three months and one day following such termination. To the extent that Optionee was not entitled to exercise the Option at the date of termination, or if Optionee does not exercise such Option to the extent so entitled within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 9. Death of Optionee. In the event of termination of Optionee's Continuous Status as an Employee or Consultant as a result of the death of Optionee, the Option may be exercised at any time within twelve (12) months following the date of death (but in no event later than the date of expiration of the term of this Option as set forth in Section 11 below), by Optionee's estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent the Optionee could exercise the Option at the date of death. 10. Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by Optionee. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee. 11. Term of Option. This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term only in accordance with the Plan and the terms of this Option. The limitations set out in Section 7 of the Plan regarding Options designated as Incentive Stock Options and Options granted to more than ten percent (10%) shareholders shall apply to this Option. 12. Tax Consequences. Set forth below is a brief summary as of the date of this Option of some of the federal tax consequences of exercise of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES. (a) Exercise of ISO. If this Option qualifies as an ISO, there will be no regular federal income tax liability upon the exercise of the Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price will be treated as an adjustment to the alternative minimum tax for federal tax purposes and may subject the Optionee to the alternative minimum tax in the year of exercise. (b) Exercise of ISO Following Disability. If the Optionee's Continuous Status as an Employee or Consultant terminates as a result of disability that is not total and permanent disability as defined in Section 22(e)(3) of the Code, to the extent permitted on the date of termination, the Optionee must exercise an ISO within three months of such termination for the ISO to be qualified as an ISO. -4- 17 (c) Exercise of Nonstatutory Stock Option. There may be a regular federal income tax liability upon the exercise of a Nonstatutory Stock Option. The Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. If Optionee is an Employee or a former Employee, the Company will be required to withhold from Optionee's compensation or collect from Optionee and pay to the applicable taxing authorities an amount in cash equal to a percentage of this compensation income at the time of exercise, and may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise. (d) Disposition of Shares. In the case of an NSO, if Shares are held for at least one year, any gain realized on disposition of the Shares will be treated as long-term capital gain for federal income tax purposes. In the case of an ISO, if Shares transferred pursuant to the Option are held for at least one year after exercise and are disposed of at least two years after the Date of Grant, any gain realized on disposition of the Shares will also be treated as long-term capital gain for federal income tax purposes. If Shares purchased under an ISO are disposed of within such one-year period or within two years after the Date of Grant, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the difference between the Exercise Price and the lesser of (1) the Fair Market Value of the Shares on the date of exercise, or (2) the sale price of the Shares. Any additional gain will be taxed as capital gain, short-term or long-term depending on the period that the ISO Shares were held. (e) Notice of Disqualifying Disposition of ISO Shares. If the Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (1) the date two years after the Date of Grant, or (2) the date one year after the date of exercise, the Optionee shall immediately notify the Company in writing of such disposition. Optionee agrees that Optionee may be subject to income tax withholding by the Company on the compensation income recognized by the Optionee. 13. Entire Agreement; Governing Law. The Plan is incorporated herein by reference. The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee's interest except by means of a writing signed by the Company and Optionee. This agreement is governed by Delaware law except for that body of law pertaining to conflict of laws. JUNIPER NETWORKS, INC. a Delaware corporation By: --------------------------------------- Marcel Gani, Chief Financial Officer OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE OPTION HEREOF IS EARNED ONLY BY CONTINUING -5- 18 CONSULTANCY OR EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE. Optionee acknowledges receipt of a copy of the Plan and represents that he is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof. Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option. Optionee further agrees to notify the Company upon any change in the residence address indicated below. Dated: ------------------------ ------------------------------------ <> -6- 19 EXHIBIT A 1996 STOCK OPTION PLAN EXERCISE NOTICE Juniper Networks, Inc. 385 Ravendale Drive Mountain View, CA 94043 Attention: Secretary RE: <> 1. Exercise of Option. Effective as of today, ___________, ____, the undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase _________ shares of the Common Stock (the "Shares") of Juniper Networks, Inc. (the "Company") under and pursuant to the 1996 Stock Option Plan (the "Plan") and the [ ] Incentive [ ] Nonstatutory Stock Option Agreement dated <> (the "Option Agreement"). 2. Representations of Optionee. Optionee acknowledges that Optionee has received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions. 3. Rights as Shareholder. Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 12 of the Plan. Optionee shall enjoy rights as a shareholder until such time as Optionee disposes of the Shares or the Company and/or its assignee(s) exercises the Right of First Refusal hereunder. Upon such exercise, Optionee shall have no further rights as a holder of the Shares so purchased except the right to receive payment for the Shares so purchased in accordance with the provisions of this Agreement, and Optionee shall forthwith cause the certificate(s) evidencing the Shares so purchased to be surrendered to the Company for transfer or cancellation. 4. Right of First Refusal. Before any Shares may be sold or transferred (including transfer by operation of law), such Shares shall first be offered to the Company (the "Right of First Refusal"). (a) In the event the Purchaser wishes to sell the Shares, Purchaser shall deliver a notice ("Notice") to the Company stating (A) his bona fide intention to sell or transfer such Shares, -7- 20 (B) the number of such Shares to be sold or transferred, (C) the price for which he proposes to sell or transfer such Shares, and (D) the name of the proposed purchaser or transferee. (b) Within thirty (30) days after receipt of the Notice, the Company or its assignee may elect to purchase all or none of the Shares to which the Notice refers, at the price per Share specified in the Notice. The purchase of the Shares in either such event shall occur at a closing held at the Company's principal office at a mutually agreed upon time which in no event shall be more than thirty (30) days following the end of the time period in which the Company had to elect to purchase such Shares. (c) If all of the Shares to which the Notice refers are not elected to be purchased, as provided in Section 3(b) hereof, Purchaser may sell the Shares to any person named in the Notice at the price specified in the Notice or at a higher price, provided that such sale or transfer is consummated within sixty (60) days of the date of said Notice to the Company, and provided, further, that any such sale is in accordance with all the terms and conditions hereof. (d) Termination of Restrictions. Notwithstanding the provisions of Section 3(b) above, the Company's Right of First Refusal shall terminate immediately as to all Shares upon the occurrence of the first to occur of the following events: (i)the acquisition of the Company by another entity by means of the merger or consolidation of the Company with or into another corporation in which the stockholders of the Company own less that 50% of the voting securities of the surviving entity, (ii) the sale of all or substantially all of the assets of the Company, or (iii) the date upon which a public market exists for the Company's capital stock (or any other stock issued to purchasers in exchange for the Shares purchased under this Agreement). For the purpose of this Agreement, a "Public Market" shall be deemed to exist if (i) such stock is listed on a national securities exchange (as that term is used in the Securities Exchange Act of 1934) or (ii) such stock is traded on the over-the-counter market and prices are published daily on business days in a recognized financial journal. (e) Assignment. Whenever the Company shall have the right to purchase Shares under this Section 3, the Company may designate and assign one or more employees, officers, directors or shareholders of the Company or other persons or organizations to exercise all of the Company's purchase rights under this Agreement and purchase all of such Shares; provided that if the fair market value of the Shares to be purchased on the date of such designation or assignment (the "Repurchase FMV") exceeds the purchase price of the Shares (determined as described hereinabove) to be purchased, then each such designee or assignee shall pay the Company cash equal to the difference between the Repurchase FMV and the purchase price of the Shares which such designee or assignee shall have the right to purchase. (f) Exempt Transfers. The provisions of this Section 3 shall not apply to a transfer of any Shares by Purchaser, either during his lifetime or on death by will or intestacy to his ancestors, descendants or spouse, or any custodian or trustee for the account of Purchaser or -8- 21 Purchaser's ancestors, descendants or spouse; provided, in each such case that the transferee shall receive and hold such Shares subject to all of the provisions of this Section 3 and there shall be no further transfer of such Shares except in accordance herewith. 5. Tax Consultation. Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee's purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice. 6. Restrictive Legends and Stop-Transfer Orders. (a) Legends. Optionee understands and agrees that the Company shall cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws: THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES. (b) Stop-Transfer Notices. Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate "stop transfer" instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records. (c) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred. 7. Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the -9- 22 successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon Optionee and his or her heirs, executors, administrators, successors and assigns. 8. Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by Optionee or by the Company forthwith to the Company's Board of Directors or the committee thereof that administers the Plan, which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Board or committee shall be final and binding on the Company and on Optionee. 9. Governing Law; Severability. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware excluding that body of law pertaining to conflicts of law. Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable. 10. Notices. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed to the other party at its address as shown below beneath its signature, or to such other address as such party may designate in writing from time to time to the other party. 11. Further Instruments. The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement. 12. Delivery of Payment. Optionee herewith delivers to the Company the full Exercise Price for the Shares. 13. Entire Agreement. The Plan and Notice of Grant/Option Agreement are incorporated herein by reference. This Agreement, the Plan, the Option Agreement and the Investment Representation Statement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee's interest except by means of a writing signed by the Company and Optionee. Submitted by: Accepted by: OPTIONEE: Juniper Networks, Inc. - ----------------------------- ------------------------------------------ <> Marcel Gani, Chief Financial Officer Address: 385 Ravendale Drive Mountain View, CA 94043 -10- 23 EXHIBIT B INVESTMENT REPRESENTATION STATEMENT OPTIONEE : <<1>> COMPANY : JUNIPER NETWORKS, INC. SECURITY : COMMON STOCK AMOUNT : ____________ SHARES In connection with the purchase of the above-listed Securities, the undersigned Optionee represents to the Company the following: (a) Optionee is aware of the Company's business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Optionee is acquiring these Securities for investment for Optionee's own account only and not with a view to, or for resale in connection with, any "distribution" thereof within the meaning of the Securities Act of 1933, as amended (the "Securities Act"). (b) Optionee acknowledges and understands that the Securities constitute "restricted securities" under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Optionee's investment intent as expressed herein. In this connection, Optionee understands that, in the view of the Securities and Exchange Commission, the statutory basis for such exemption may be unavailable if Optionee's representation was predicated solely upon a present intention to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one year or any other fixed period in the future. Optionee further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Optionee further acknowledges and understands that the Company is under no obligation to register the Securities. Optionee understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company and any other legend required under applicable state securities laws. (c) Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of "restricted securities" acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to the Optionee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of -11- 24 Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited "broker's transaction" or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of certain public information about the Company, (3) the amount of Securities being sold during any three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable. In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than one year after the later of the date the Securities were sold by the Company or the date the Securities were sold by an affiliate of the Company, within the meaning of Rule 144; and, in the case of acquisition of the Securities by an affiliate, or by a non-affiliate who subsequently holds the Securities less than two years, the satisfaction of the conditions set forth in sections (1), (2), (3) and (4) of the paragraph immediately above. (d) Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Optionee understands that no assurances can be given that any such other registration exemption will be available in such event. Signature of Optionee: ----------------------------- <> Date: ----------------------- -12- EX-10.3 12 JUNIPER NETWORKS 1999 EMPLOYEE STOCK PURCHASE PLAN 1 EXHIBIT 10.3 JUNIPER NETWORKS, INC. 1999 EMPLOYEE STOCK PURCHASE PLAN 1. Purpose. The purpose of the Plan is to provide employees of the Company and its Designated Subsidiaries with an opportunity to purchase Common Stock of the Company through accumulated payroll deductions. It is the intention of the Company to have the Plan qualify as an "Employee Stock Purchase Plan" under Section 423 of the Internal Revenue Code of 1986, as amended. The provisions of the Plan, accordingly, shall be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code. 2. Definitions. (a) "Board" shall mean the Board of Directors of the Company. (b) "Code" shall mean the Internal Revenue Code of 1986, as amended. (c) "Common Stock" shall mean the Common Stock of the Company. (d) "Company" shall mean Juniper Networks, Inc., and any Designated Subsidiary of the Company. (e) "Compensation" shall mean all base straight time gross earnings and commissions, exclusive of payments for overtime, shift premium, incentive compensation, incentive payments, bonuses, sales commission, and other compensation. (f) "Designated Subsidiary" shall mean any Subsidiary which has been designated by the Board from time to time in its sole discretion as eligible to participate in the Plan. (g) "Employee" shall mean any individual who is an Employee of the Company for tax purposes whose customary employment with the Company is at least twenty (20) hours per week and more than five (5) months in any calendar year. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company. Where the period of leave exceeds 90 days and the individual's right to reemployment is not guaranteed either by statute or by contract, the employment relationship shall be deemed to have terminated on the 91st day of such leave. (h) "Enrollment Date" shall mean the first day of each Offering Period. (i) "Exercise Date" shall mean the last day of each Offering Period. (j) "Fair Market Value" shall mean, as of any date, the value of Common Stock determined as follows: 2 (1)If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day on the date of such determination, as reported in The Wall Street Journal or such other source as the Board deems reliable; or (2)If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean of the closing bid and asked prices for the Common Stock on the date of such determination, as reported in The Wall Street Journal or such other source as the Board deems reliable; or (3)In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Board. (k) "Offering Period" shall mean a period of approximately six (6) months during which an option granted pursuant to the Plan may be exercised, commencing on the first Trading Day on or after February 1 and terminating on the last Trading Day in the period ending the following July 31, or commencing on the first Trading Day on or after August 1 and terminating on the last Trading Day in the period ending the following March 31; provided, however, that the first Offering Period under the Plan shall commence with the first Trading Day on or after the date on which the Securities and Exchange Commission declares the Company's Registration Statement effective and ending on the last Trading Day on or before July 31, 2000 and the second Offering Period shall commence with the first Trading Day on or after February 1, 2000 and ending on the last Trading Day on or before July 31, 2000. The duration of Offering Periods may be changed pursuant to Section 4 of this Plan. (l) "Plan" shall mean this Employee Stock Purchase Plan. (m) "Purchase Price" shall mean an amount equal to 85% of the Fair Market Value of a share of Common Stock on the Enrollment Date or on the Exercise Date, whichever is lower; provided, however, that the Purchase Price may be adjusted by the Board pursuant to Section 20. (n) "Reserves" shall mean the number of shares of Common Stock covered by each option under the Plan which have not yet been exercised and the number of shares of Common Stock which have been authorized for issuance under the Plan but not yet placed under option. (o) "Subsidiary" shall mean a corporation, domestic or foreign, of which not less than 50% of the voting shares are held by the Company or a Subsidiary, whether or not such corporation now exists or is hereafter organized or acquired by the Company or a Subsidiary. (p) "Trading Day" shall mean a day on which national stock exchanges and the Nasdaq System are open for trading. 3. Eligibility. (a) Any Employee who shall be employed by the Company on a given Enrollment Date shall be eligible to participate in the Plan. -2- 3 (b) Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an option under the Plan (i) to the extent that, immediately after the grant, such Employee (or any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company and/or hold outstanding options to purchase such stock possessing five percent (5%) or more of the total combined voting power or value of all classes of the capital stock of the Company or of any Subsidiary, or (ii) to the extent that his or her rights to purchase stock under all employee stock purchase plans of the Company and its subsidiaries accrues at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of stock (determined at the fair market value of the shares at the time such option is granted) for each calendar year in which such option is outstanding at any time. 4. Offering Periods. The Plan shall be implemented by consecutive Offering Periods with a new Offering Period commencing on the first Trading Day on or after February 1 and August 1 each year, or on such other date as the Board shall determine, and continuing thereafter until terminated in accordance with Section 20 hereof; provided, however, that the first Offering Period under the Plan shall commence with the first Trading Day on or after the date on which the Securities and Exchange Commission declares the Company's Registration Statement effective and ending on the last Trading Day on or before July 31, 2000 and the second Offering Period shall commence with the first Trading Day on or after February 1, 2000 and ending on the last Trading Day on or before July 31, 2000. The Board shall have the power to change the duration of Offering Periods (including the commencement dates thereof) with respect to future offerings without stockholder approval if such change is announced at least five (5) days prior to the scheduled beginning of the first Offering Period to be affected thereafter. 5. Participation. (a) An eligible Employee may become a participant in the Plan by completing a subscription agreement authorizing payroll deductions in the form of Exhibit A to this Plan and filing it with the Company's payroll office on or prior to the applicable Enrollment Date. (b) Payroll deductions for a participant shall commence on the first payroll following the Enrollment Date and shall end on the last payroll in the Offering Period to which such authorization is applicable, unless sooner terminated by the participant as provided in Section 10 hereof. 6. Payroll Deductions. (a) At the time a participant files his or her subscription agreement, he or she shall elect to have payroll deductions made on each pay day during the Offering Period in an amount not exceeding ten percent (10%) of the Compensation which he or she receives on each pay day during the Offering Period. (b) All payroll deductions made for a participant shall be credited to his or her account under the Plan and shall be withheld in whole percentages only. A participant may not make any additional payments into such account. (c) A participant may discontinue his or her participation in the Plan as provided in Section 10 hereof, or may increase or decrease the rate of his or her payroll deductions during the -3- 4 Offering Period by completing or filing with the Company a new subscription agreement authorizing a change in payroll deduction rate. The Board may, in its discretion, limit the number of participation rate changes during any Offering Period. The change in rate shall be effective with the first full payroll period following five (5) business days after the Company's receipt of the new subscription agreement. A participant's subscription agreement shall remain in effect for successive Offering Periods unless terminated as provided in Section 10 hereof. (d) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's payroll deductions may be decreased to zero percent (0%) at any time during an Offering Period. Payroll deductions shall recommence at the rate provided in such participant's subscription agreement at the beginning of the first Offering Period which is scheduled to end in the following calendar year, unless terminated by the participant as provided in Section 10 hereof. (e) At the time the option is exercised, in whole or in part, or at the time some or all of the Company's Common Stock issued under the Plan is disposed of, the participant must make adequate provision for the Company's federal, state, or other tax withholding obligations, if any, which arise upon the exercise of the option or the disposition of the Common Stock. At any time, the Company may, but shall not be obligated to, withhold from the participant's compensation the amount necessary for the Company to meet applicable withholding obligations, including any withholding required to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Common Stock by the Employee. 7. Grant of Option. On the Enrollment Date of each Offering Period, each eligible Employee participating in such Offering Period shall be granted an option to purchase on the Exercise Date of such Offering Period (at the applicable Purchase Price) up to a number of shares of the Company's Common Stock determined by dividing such Employee's payroll deductions accumulated prior to such Exercise Date and retained in the Participant's account as of the Exercise Date by the applicable Purchase Price; provided that in no event shall an Employee be permitted to purchase during any twelve (12) month period more than one thousand (1,000) shares (subject to any adjustment pursuant to Section 19), and provided further that such purchase shall be subject to the limitations set forth in Sections 3(b) and 12 hereof. Exercise of the option shall occur as provided in Section 8 hereof, unless the participant has withdrawn pursuant to Section 10 hereof. The Option shall expire on the last day of the Offering Period. 8. Exercise of Option. Unless a participant withdraws from the Plan as provided in Section 10 hereof, his or her option for the purchase of shares shall be exercised automatically on the Exercise Date, and the maximum number of full shares subject to option shall be purchased for such participant at the applicable Purchase Price with the accumulated payroll deductions in his or her account. No fractional shares shall be purchased; any payroll deductions accumulated in a participant's account which are not sufficient to purchase a full share shall be retained in the participant's account for the subsequent Offering Period, subject to earlier withdrawal by the participant as provided in Section 10 hereof. Any other monies left over in a participant's account after the Exercise Date shall be returned to the participant. During a participant's lifetime, a participant's option to purchase shares hereunder is exercisable only by him or her. -4- 5 9. Delivery. As promptly as practicable after each Exercise Date on which a purchase of shares occurs, the Company shall arrange the delivery to each participant, as appropriate, the shares purchased upon exercise of his or her option. 10. Withdrawal. (a) A participant may withdraw all but not less than all the payroll deductions credited to his or her account and not yet used to exercise his or her option under the Plan at any time by giving written notice to the Company in the form of Exhibit B to this Plan. All of the participant's payroll deductions credited to his or her account shall be paid to such participant promptly after receipt of notice of withdrawal and such participant's option for the Offering Period shall be automatically terminated, and no further payroll deductions for the purchase of shares shall be made for such Offering Period. If a participant withdraws from an Offering Period, payroll deductions shall not resume at the beginning of the succeeding Offering Period unless the participant delivers to the Company a new subscription agreement. (b) A participant's withdrawal from an Offering Period shall not have any effect upon his or her eligibility to participate in any similar plan which may hereafter be adopted by the Company or in succeeding Offering Periods which commence after the termination of the Offering Period from which the participant withdraws. 11. Termination of Employment. Upon a participant's ceasing to be an Employee for any reason, he or she shall be deemed to have elected to withdraw from the Plan and the payroll deductions credited to such participant's account during the Offering Period but not yet used to exercise the option shall be returned to such participant or, in the case of his or her death, to the person or persons entitled thereto under Section 15 hereof, and such participant's option shall be automatically terminated. The preceding sentence notwithstanding, a participant who receives payment in lieu of notice of termination of employment shall be treated as continuing to be an Employee for the participant's customary number of hours per week of employment during the period in which the participant is subject to such payment in lieu of notice. 12. Interest. No interest shall accrue on the payroll deductions of a participant in the Plan. 13. Stock. (a) Subject to adjustment upon changes in capitalization of the Company as provided in Section 19 hereof, the maximum number of shares of the Company's Common Stock which shall be made available for sale under the Plan shall be five hundred thousand (500,000) shares, plus an annual increase to be added on the first day of the Company's fiscal year beginning in 2000 equal to the lesser of (i) 500,000 shares, (ii) 1% of the outstanding shares on such date or (iii) a lesser amount determined by the Board. If, on a given Exercise Date, the number of shares with respect to which options are to be exercised exceeds the number of shares then available under the Plan, the Company shall make a pro rata allocation of the shares remaining available for purchase in as uniform a manner as shall be practicable and as it shall determine to be equitable. -5- 6 (b) The participant shall have no interest or voting right in shares covered by his option until such option has been exercised. (c) Shares to be delivered to a participant under the Plan shall be registered in the name of the participant or in the name of the participant and his or her spouse. 14. Administration. The Plan shall be administered by the Board or a committee of members of the Board appointed by the Board. The Board or its committee shall have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility and to adjudicate all disputed claims filed under the Plan. Every finding, decision and determination made by the Board or its committee shall, to the full extent permitted by law, be final and binding upon all parties. 15. Designation of Beneficiary. (a) A participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the participant's account under the Plan in the event of such participant's death subsequent to an Exercise Date on which the option is exercised but prior to delivery to such participant of such shares and cash. In addition, a participant may file a written designation of a beneficiary who is to receive any cash from the participant's account under the Plan in the event of such participant's death prior to exercise of the option. If a participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective. (b) Such designation of beneficiary may be changed by the participant at any time by written notice. In the event of the death of a participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant's death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate. 16. Transferability. Neither payroll deductions credited to a participant's account nor any rights with regard to the exercise of an option or to receive shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 15 hereof) by the participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering Period in accordance with Section 10 hereof. 17. Use of Funds. All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions. 18. Reports. Individual accounts shall be maintained for each participant in the Plan. Statements of account shall be given to participating Employees at least annually, which statements -6- 7 shall set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased and the remaining cash balance, if any. 19. Adjustments Upon Changes in Capitalization, Dissolution, Liquidation, Merger or Asset Sale. (a) Changes in Capitalization. Subject to any required action by the stockholders of the Company, the Reserves, the maximum number of shares each participant may purchase per Offering Period (pursuant to Section 7), as well as the price per share and the number of shares of Common Stock covered by each option under the Plan which has not yet been exercised shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration". Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an option. (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Offering Period then in progress shall be shortened by setting a new Exercise Date (the "New Exercise Date"), and shall terminate immediately prior to the consummation of such proposed dissolution or liquidation, unless provided otherwise by the Board. The New Exercise Date shall be before the date of the Company's proposed dissolution or liquidation. The Board shall notify each participant in writing, at least ten (10) business days prior to the New Exercise Date, that the Exercise Date for the participant's option has been changed to the New Exercise Date and that the participant's option shall be exercised automatically on the New Exercise Date, unless prior to such date the participant has withdrawn from the Offering Period as provided in Section 10 hereof. (c) Merger or Asset Sale. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, each outstanding option shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the option, the Offering Period then in progress shall be shortened by setting a new Exercise Date (the "New Exercise Date"). The New Exercise Date shall be before the date of the Company's proposed sale or merger. The Board shall notify each participant in writing, at least ten (10) business days prior to the New Exercise Date, that the Exercise Date for the participant's option has been changed to the New Exercise Date and that the participant's option shall be exercised automatically on the New Exercise Date, unless prior to such date the participant has withdrawn from the Offering Period as provided in Section 10 hereof. -7- 8 20. Amendment or Termination. (a) The Board of Directors of the Company may at any time and for any reason terminate or amend the Plan. Except as provided in Section 19 hereof, no such termination can affect options previously granted, provided that an Offering Period may be terminated by the Board of Directors on any Exercise Date if the Board determines that the termination of the Offering Period or the Plan is in the best interests of the Company and its stockholders. Except as provided in Section 19 and Section 20 hereof, no amendment may make any change in any option theretofore granted which adversely affects the rights of any participant. To the extent necessary to comply with Section 423 of the Code (or any other applicable law, regulation or stock exchange rule), the Company shall obtain shareholder approval in such a manner and to such a degree as required. (b) Without stockholder consent and without regard to whether any participant rights may be considered to have been "adversely affected," the Board (or its committee) shall be entitled to change the Offering Periods, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a participant in order to adjust for delays or mistakes in the Company's processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each participant properly correspond with amounts withheld from the participant's Compensation, and establish such other limitations or procedures as the Board (or its committee) determines in its sole discretion advisable which are consistent with the Plan. (c) In the event the Board determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Board may, in its discretion and, to the extent necessary or desirable, modify or amend the Plan to reduce or eliminate such accounting consequence including, but not limited to: (1) altering the Purchase Price for any Offering Period including an Offering Period underway at the time of the change in Purchase Price; (2) shortening any Offering Period so that Offering Period ends on a new Exercise Date, including an Offering Period underway at the time of the Board action; and (3) allocating shares. Such modifications or amendments shall not require stockholder approval or the consent of any Plan participants. 21. Notices. All notices or other communications by a participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof. 22. Conditions Upon Issuance of Shares. Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant -8- 9 thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law. 23. Term of Plan. The Plan shall become effective upon the earlier to occur of its adoption by the Board of Directors or its approval by the stockholders of the Company. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 20 hereof. -9- 10 EXHIBIT A JUNIPER NETWORKS, INC. 1999 EMPLOYEE STOCK PURCHASE PLAN SUBSCRIPTION AGREEMENT _____ Original Application Enrollment Date: _____________ _____ Change in Payroll Deduction Rate _____ Change of Beneficiary(ies) 1. _____________________________________ hereby elects to participate in the Juniper Networks, Inc., 1999 Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") and subscribes to purchase shares of the Company's Common Stock in accordance with this Subscription Agreement and the Employee Stock Purchase Plan. 2. I hereby authorize payroll deductions from each paycheck in the amount of ____% of my Compensation on each payday (from 1 to 10%) during the Offering Period in accordance with the Employee Stock Purchase Plan. (Please note that no fractional percentages are permitted.) 3. I understand that said payroll deductions shall be accumulated for the purchase of shares of Common Stock at the applicable Purchase Price determined in accordance with the Employee Stock Purchase Plan. I understand that if I do not withdraw from an Offering Period, any accumulated payroll deductions will be used to automatically exercise my option. 4. I have received a copy of the complete Employee Stock Purchase Plan. I understand that my participation in the Employee Stock Purchase Plan is in all respects subject to the terms of the Plan. I understand that my ability to exercise the option under this Subscription Agreement is subject to stockholder approval of the Employee Stock Purchase Plan. 5. Shares purchased for me under the Employee Stock Purchase Plan should be issued in the name(s) of (Employee or Employee and Spouse only):____________________________. 6. I understand that if I dispose of any shares received by me pursuant to the Plan within 2 years after the Enrollment Date (the first day of the Offering Period during which I purchased such shares), I will be treated for federal income tax purposes as having received ordinary income at the time of such disposition in an amount equal to the excess of the fair market value of the shares at the time such shares were purchased by me over the price which I paid for the shares. I hereby agree to notify the Company in writing within 30 days after the date of any disposition of shares and I will make adequate provision for Federal, state or other tax withholding obligations, if any, which arise upon the disposition of the Common Stock. The Company may, but will not be obligated to, withhold from my compensation the amount A-1 11 necessary to meet any applicable withholding obligation including any withholding necessary to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Common Stock by me. If I dispose of such shares at any time after the expiration of the 2-year holding period, I understand that I will be treated for federal income tax purposes as having received income only at the time of such disposition, and that such income will be taxed as ordinary income only to the extent of an amount equal to the lesser of (1) the excess of the fair market value of the shares at the time of such disposition over the purchase price which I paid for the shares, or (2) 15% of the fair market value of the shares on the first day of the Offering Period. The remainder of the gain, if any, recognized on such disposition will be taxed as capital gain. 7. I hereby agree to be bound by the terms of the Employee Stock Purchase Plan. The effectiveness of this Subscription Agreement is dependent upon my eligibility to participate in the Employee Stock Purchase Plan. 8. In the event of my death, I hereby designate the following as my beneficiary(ies) to receive all payments and shares due me under the Employee Stock Purchase Plan: NAME: (Please print)__________________________________________________________ (First) (Middle) (Last) __________________________ _______________________________________ Relationship _______________________________________ (Address) Employee's Social Security Number: _______________________________________ Employee's Address: _______________________________________ _______________________________________ _______________________________________ A-2 12 I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME. Dated:_______________ _______________________________________ Signature of Employee _______________________________________ Spouse's Signature (If beneficiary other than spouse) A-3 13 EXHIBIT B JUNIPER NETWORKS, INC. 1999 EMPLOYEE STOCK PURCHASE PLAN NOTICE OF WITHDRAWAL The undersigned participant in the Offering Period of the Juniper Networks, Inc., 1999 Employee Stock Purchase Plan which began on ___________, ______ (the "Enrollment Date") hereby notifies the Company that he or she hereby withdraws from the Offering Period. He or she hereby directs the Company to pay to the undersigned as promptly as practicable all the payroll deductions credited to his or her account with respect to such Offering Period. The undersigned understands and agrees that his or her option for such Offering Period will be automatically terminated. The undersigned understands further that no further payroll deductions will be made for the purchase of shares in the current Offering Period and the undersigned shall be eligible to participate in succeeding Offering Periods only by delivering to the Company a new Subscription Agreement. Name and Address of Participant: _______________________________________ _______________________________________ _______________________________________ Signature: _______________________________________ Date:__________________________________ B-1 EX-10.4 13 SUBLEASE, TRIDENT MICROSYSTEMS 1 EXHIBIT 10.4 SUB-SUBLEASE THIS SUB-SUBLEASE (this "Sub-Sublease") is entered into as of the 1st day of July, 1998, by and between (i) Trident Microsystems, Inc., a California Corporation ("Trident"), and (ii) Juniper Networks, Inc. a California Corporation ("Juniper"). A. Pursuant to that certain Lease dated September 21, 1989 (the "Master Lease"), by and between Spieker Properties, L.P., a California limited partnership, Successor-in-Interest to Mountain View Industrial Associates, a California Partnership ("Master Landlord"), as landlord, and Network Computing Devices, Inc., a California corporation ("NCD"), as tenant, and the First Addendum to Lease dated December 2, 1991 between Mountain View Industrial Associates, a California Partnership ("Master Landlord"), as landlord, and Network Computing Devices, Inc., a California corporation ("NCD"), as tenant and the Second Addendum to Lease Dated August 20, 1993 between Mountain View Industrial Associates, a California Partnership ("Master Landlord"), as landlord, and Network Computing Devices, Inc., a California corporation ("NCD"), as tenant and the Third Addendum to Lease Dated October 22, 1993 between Mountain View Industrial Associates, a California Partnership ("Master Landlord"), as landlord, and Network Computing Devices, Inc., a California corporation ("NCD"), as tenant NCD is leasing from Master Landlord a building located at 370/380 Bernardo Avenue, Mountain View, California. A copy of the Master Lease and Addendums 1, 2, and 3 is attached hereto as "Exhibit A" and incorporated herein by this reference. B. Pursuant to that certain Sublease Agreement dated October 24, 1995 (the "Sublease"), NCD subleased to Trident the premises covered by the Master Lease consisting of approximately 27,444 rentable square feet as more particularly described in the Sublease (the "Subleased Premises"). A copy of the Sublease is attached hereto as "Exhibit B". C. Juniper desires to sub-sublease the 27,444 rentable square foot Premises beginning with a portion of the Subleased premises consisting of approximately 17,950 rentable square feet from Trident and Trident desires to sub-sublease a portion of the Subleased Premises to Juniper, on the terms, covenants and conditions contained herein. NOW, THEREFORE, in consideration of the mutual covenants and promises of the parties contained herein, the parties hereto agree as follows: 1. SUB-SUBLEASE. Trident subleases to Juniper and Juniper hires from Trident a portion of the Subleased Premises, outlined on "Exhibit C" hereto as the "Initial Premises". The Initial Premises shall be delivered to Juniper on the Commencement Date and Juniper by acceptance and delivery thereof, acknowledges the same to be in good order and repair and in a tenantable condition, subject to Juniper's rights and Trident's obligations per Paragraph 7 herein. 1 2 2. EXPANSION SPACE. On January 1, 1999 and continuing through June 30, 2000, Trident subleases to Juniper and Juniper hires from Trident the balance of the Subleased Premises consisting of approximately 9,494 square feet bringing the total square footage sub-subleased to 27,444 rentable square feet described on Exhibit C hereto as the "Expansion Space". Trident may, by giving Juniper sixty (60) days prior written notice to January 1, 1999, delay delivery of the Expansion Space up to April 1, 1999. Juniper shall not be liable for rent on the Expansion Premises until such time as Trident delivers possession of the Expansion Premises. 3. TERM. The term of this Sub-Sublease shall commence on September 1, 1998 (the "Commencement Date") and shall expire on June 20, 2000, unless sooner terminated as hereafter provided or as provided in the Master Lease (the "Term"). Trident may, by giving Juniper written notice by August 1, 1998, delay delivery of the Initial Premises up to October 1, 1998. Notwithstanding the foregoing, Juniper agrees that in the event of the failure or inability of Trident for any reason to deliver possession of the Initial Premises on or before the Commencement Date: (i) Trident shall not be liable for any damage caused thereby, (ii) this Sub-Sublease shall not be void or voidable provided, however, that if Trident fails to deliver the Initial Premises to Juniper by November 1, 1998 then Juniper shall have the right, exercisable by written notice to Trident, to terminate this Sub-Sublease; (iii) Juniper shall not be liable for rent until such time as Trident delivers possession of the Initial Premises to Juniper; and (iv) the Term shall not be extended by any such delay. Notwithstanding anything to the contrary contained herein, if for any reason. Trident fails to deliver possession of the Expansion Space by April 1, 1999 then the amount of Base Rent payable under this Sub-Sublease shall be decreased by twenty five percent (25%). The Term of this Sub-Sublease shall earlier terminate in the event of the earlier termination for any cause whatsoever of the Sublease or of the Master Lease. 4. EARLY ACCESS. Provided Juniper does not interfere with Trident's occupancy of the Subleased Premises, Trident grants Juniper the right to access the Initial Premises prior to the commencement date in order to prepare the Initial Premises for Juniper's occupancy. During this early access period Juniper shall not be obligated to pay base rent or triple net expenses. This same early access to be granted at a later appropriate date for the Expansion Space. 5. RENT. (a) BASE RENT. Juniper shall pay to Trident during the Term as base rent for the Initial Premises the sum of Forty Thousand Three Hundred Eighty Seven Dollars ($40,387.00) per month, which amount shall be prorated for each fractional month during the Term. Beginning with the commencement of Expansion Premises the base rent shall increase to Sixty One Thousand Seven Hundred Forth Nine Dollars ($61,749.00). The amounts payable pursuant to this Paragraph 5(a) are hereinafter referred to as "Base Rent". Juniper shall pay to Trident upon execution of this Sub-Sublease, in addition to the Deposit set forth in Section 5(e) below, the first month's Base Rent in the amount of $40,387.00. 2 3 (b) OTHER EXPENSES. In addition to the above rent Juniper shall be responsible for its pro-rata share for the Subleased Premises triple net expenses applicable to the term of this Sub-Sublease, including but not limited to, real property taxes, fire and extended insurance and common area maintenance expenses and other expenses set forth in the Master Lease. It is also agreed that Juniper shall reimburse Trident, on a pro-rata per square foot basis, for all utility costs from Sub-Sublease commencement until Juniper takes occupancy of the entire Premises; provided that unless and until the Expansion Space is delivered to Juniper, Trident shall be responsible for its pro-rata share of the triple net expenses of the Expansion Space. (c) PAYMENT. Base Rent and any other charges payable by Juniper to Trident under this Sub-Sublease shall be paid to Trident at the place set forth as Trident's address for notices hereunder, or at such other place as Trident may from time to time designate by notice to Juniper. All such payments shall be made (i) with respect to Base Rent, on the first day of each calendar month during the Term of this Sub-Sublease (except that the Base Rent for the first month of the Term shall be due upon execution of this Sub-Sublease), without prior notice or demand thereof and without any deductions or offsets whatsoever; and (ii) with respect to all other payments, five (5) days prior to the date such payments are due to NCD under the Sublease, or if no regular due date is specified under the Sublease, as specified in Trident's written notice to Juniper. All such amounts shall be prorated as appropriate. (d) LATE PAYMENTS. If any installment of Base Rent or any other amount due from Juniper under this Sub-Sublease shall not be received by Trident within five (5) days after the date the same is due and payable, Juniper shall pay to Trident a late charge equal to six percent (6%) of such unpaid amounts. Acceptance of such late charges by Trident shall in no event constitute a waiver of Juniper's default with respect to such overdue amount nor shall such acceptance prevent Trident from exercising any of the other rights and remedies granted to Trident hereunder. (e) DEPOSIT. Upon the execution of this Sub-Sublease, Juniper shall pay to Trident the sum of Forty Thousand Three Hundred Eighty Seven Dollars ($40,387.00) (the "Deposit") to be held as a non-interest bearing security deposit for the full and faithful performance of each of Juniper's obligations under this Sub-Sublease. Upon commencement of the Expansion Premises Juniper shall pay to Trident Twenty One Thousand Three Hundred Sixty Two Dollars ($21,362.00) bringing the total Deposit to Sixty One Thousand Seven Hundred Forty Nine Dollars ($61,749.00). In the event Juniper fails to perform or observe any of the provisions of the Sub-Sublease to be performed or observed by Juniper, then, at the option of Trident, Trident may apply the Deposit or any portion thereof as may be necessary to remedy any default in the payment of rent or otherwise remedy any nonperformance by Juniper, and Juniper shall forthwith upon demand restore the Deposit to the original amount specified. Any remaining portion of the Deposit shall be returned to Juniper within thirty (30) days of the date of termination of this Sub-Sublease, provided that Juniper shall have vacated the Sub-Subleased Premises in accordance with each and every term and condition of this Sub-Sublease. 3 4 6. USE. Juniper shall use the Sub-Subleased Premises only for purposes allowed under the Master Lease and the Sublease and for no other purpose. Juniper shall not do or suffer anything to be done upon the Sub-Subleased Premises which will cause injury to the Sub-Subleased Premises. Juniper shall comply with all federal, state, and local laws, ordinances, regulations and standards relating to its use of the Sub-Subleased Premises and its use, storage, sale and disposal of hazardous or toxic substances, as such terms are defined in any such federal, state, or local law, ordinance, regulation or standard. Juniper shall not use or bring onto the Sub-Subleased Premises any hazardous or toxic substance. Juniper shall provide immediate notice to Trident if a release of any hazardous or toxic substance occurs or will occur within, on or under the Sub-Subleased Premises (whether by air, water, or other means of transmission) during Juniper's tenancy of the Sub-Subleased Premises. Failure to so provide such notice to Trident shall, at Trident's election, constitute a default under this Sub-Sublease. The Parties hereto shall indemnify, defend and hold harmless each other from and against any and all cost, expense (including attorneys' or consultants' fees), damage, liability or loss incurred in connection with the release, use, storage or disposal of a hazardous or toxic substance on or about the Sub-Subleased Premises by them, or their employees, agents, contractors, or invitees. 7. CONDITION OF PREMISES. Prior to the Sub-Sublease commencements, Trident, at Trident's sole cost and expense, shall deliver the Initial Premises and the Expansion Premises to Juniper in good condition and repair, including but not limited to, roof, plumbing, sprinklers, electrical, mechanical systems and parking lot. If during the initial one hundred twenty (120) days of Juniper's occupancy of either phase, a problem relative to the condition of the above mentioned items is discovered, Juniper shall provide Trident with written notification of said problem and Trident, at Trident's sole cost, shall repair said problem. 8. TRIDENT'S TENANT IMPROVEMENT WORK. (a) Prior to Initial Premises commencement, Trident, at Trident's sole cost and expense, shall perform the following work: 1. Demise the Initial Premises from the Expansion Space; 2. Replace stained or damaged ceiling tiles; 3. Shampoo carpets and clean and wax tile floors; and 4. Remove all items belonging to Trident from the Initial Premises. (b) Prior to Expansion Space commencement Trident, at Trident's sole cost and expense, shall perform the following work: 1. Replace stained of damaged ceiling tiles; 2. Shampoo carpets and clean and wax tile floors; 3. Remove all items belonging to Trident from the Expansion Space; and 4. Remove the demising structures that separate the Initial Premises and the Expansion Space at the time Juniper takes the Expansion Space. 4 5 9. SUB-SUBLEASE SUBJECT TO MASTER LEASE/SUBLEASE. This Sub-Sublease shall be subject to all of the terms and conditions of the Sublease with the exception of those items excluded pursuant to Paragraph 10(a) below, and from and after the Commencement Date Juniper covenants to perform all of the obligations of "Sublessee" with regard to the Sub-Subleased Premises under the Sublease accruing or required to be performed from and after the Commencement Date, to the extent said terms and conditions are consistent with the provisions of this Sub-Sublease, and only except as otherwise limited by Paragraph 10(a) below. Trident shall be responsible for all of the obligations of "Sublessee" under the Sublease accruing or required to be performed prior to the Commencement Date. This Sub-Sublease shall be subject to all the terms and conditions of the Master Lease with the exception of those items excluded pursuant to Paragraph 10(a). By agreeing to perform the duties of "Sublessee" with regard to the Sub-Subleased Premises, Jupiter also is agreeing for the benefit of Trident, during the term of this Sub-Sublease to perform all the obligations of Trident with regard to the Sub-Subleased Premises under the Master Lease (which obligations Trident has assumed pursuant to Paragraph 2.1 of the Sublease). 10. INCORPORATION OF SUBLEASE. (a) EXCLUSIONS. Except as otherwise provided in this Sub-Sublease, all of the terms and conditions of the Sublease are incorporated herein as terms and conditions of this Sub-Sublease, with references therein to "Sublessor" and "Sublessee" to be deemed to mean and refer to, respectively, Trident and Juniper herein, and with references therein to "Sublease" to mean this Sub-Sublease, and along with the sections and paragraphs set out in this Sub-Sublease, shall be the complete terms and conditions of this Sub-Sublease; provided, however, (i) the following paragraphs of the Sublease are not incorporated herein: 3.1, 3.2, 3.4, 5 & 7 for the purposes of incorporation the terms and provisions of the Master Lease and the Sublease into this Sub-Sublease, the following Master Lease provisions are hereby amended as follows (references are to paragraphs in the Master Lease): Master Lessor, NCD and Trident shall be named as additional insured on the liability insurance. The three day cure period provided for any monetary default is reduced to two (2) days. The thirty (30) day cure period provided for any non-monetary default is reduced to twenty-five (25) days. The addresses for notices shall be set out on the signature page hereto. (b) RECOURSE TO MASTER LANDLORD. Notwithstanding Paragraph 8(a) & 8(b) hereof, it is understood and agreed that Trident shall have no obligation or responsibility to provide or perform any service, maintenance utility, repair, alteration or other similar obligation which is the obligation of Master Landlord or NCD to provide or perform pursuant to the terms of the Master Lease or Sublease. If Juniper shall notify Trident that Master Landlord or NCD is not supplying services to the Subleased Premises as required under the Master Lease or Sublease, Trident will promptly request Master Landlord or NCD, as appropriate, to perform such services. Trident shall in no event be liable to Juniper nor shall Juniper's obligations under this Sub-Sublease be impaired or reduced or the performance thereof excused because of any failure or delay on Master Landlord's or 5 6 NCD's part in providing any such services or in making any repairs or alterations, or in performing or observing any similar obligation Master Landlord under the Master Lease or NCD under the Sublease. IF NCD shall default in its obligation to provide services or make repairs as required under the Sublease to the Subleased Premises, Trident at Juniper's request shall exercise reasonable efforts to enforce Trident's rights against NCD (or to cause NCD to enforce its rights against Master Landlord with respect to such service or repairs) but Trident shall have no obligation to bring any legal action or proceeding against NCD. Notwithstanding the foregoing, (i) if as a result of NCD's or Master Landlord's failure to provide services or make repairs as required under the Sublease Juniper's use of the Subleased Premises is materially and adversely affected for a period of thirty (30) or more days, and (ii) if Trident fails to bring a legal action against NCD for such failure within ten (10) days after Juniper's written request to do so; then Juniper may elect to terminate this Sub-Sublease provided it provides Trident with written notice of such termination within thirty (30) days after the later to occur of (i) and (ii) above. (c) JUNIPER HAS READ MASTER LEASE AND SUBLEASE. Juniper hereby acknowledges that it has read and is familiar with the terms of the Master Lease and Sublease, and agrees that this Sub-Sublease is subordinate and subject to the Master Lease and Sublease. 11. ASSIGNMENT AND SUBLETTING. Juniper shall not sublet the Sub-Subleased Premises or assign this Sub-Sublease without the prior written consent of Master Landlord and NCD, to the extent such consent is required under the Master Lease or Sublease. Juniper shall not sublet the Subleased Premises or assign this Sub-Sublease without the prior written consent of Trident, which shall not be unreasonably withheld. In the event of sublease profit, the profit would first go to cover all costs (including, but not limited to, tenant improvement work, legal fees, real estate commissions and advertising fees) then shall be split 50/50 between Trident and Juniper, or per the terms of the Master Lease. 12. REAL ESTATE BROKERS. Upon execution of this Sub-Sublease, Trident shall pay Colliers Parrish International, Inc. a licensed Real Estate broker, fees set forth in a separate agreement. 13. MISCELLANEOUS. (a) Notices. All notices or demands of any kind required or desired to be given by Trident to Juniper or Juniper to Trident hereunder shall be in writing and shall be sent by hand delivery or by a nationally recognized courier service, in which event they shall be deemed given when the same are received, or by depositing such notices or demands in the United States mail, certified or registered, postage prepaid, return receipt requested (unless return receipt indicates not delivered), in which event it shall be deemed give seventy-two (72) hours after such deposit. All notices or demands shall be addressed to Trident or Juniper, as the case may be, at the address set forth after the signatures to this Sub-Sublease. 6 7 (b) ENTIRE AGREEMENT. This Sub-Sublease represents the entire agreement between the parties to this Sub-Sublease and supersedes all prior agreements between the parties, whether written or oral. There are no representations between Trident and Juniper other than those contained in this Sub-Sublease. Any agreement hereafter made shall be ineffective to change, modify, waive or discharge this Sub-Sublease in whole or in part unless such agreement is in writing and signed by the party against whom enforcement of the change, modification, waiver or discharge is sought. (c) SUCCESSORS AND ASSIGNS. The terms, covenants and conditions contained in this Sub-Sublease shall, subject to the provisions of this Sub-Sublease relating to assignment and subletting, apply to, be binding upon and inure to the benefit of the heirs, successors and assigns of the parties hereto. (d) WAIVERS. No delay or omission in the exercise of any right or remedy of Trident upon any default by Juniper shall impair such right or remedy or be construed as a waiver of such default. The receipt and acceptance by Trident of delinquent rents or charges, or the acceptance of partial payments of such rents or charges, shall not constitute a waiver of any other default. No act or conduct of Trident, including, without limitation, the acceptance of keys to the Subleased Premises, shall constitute an acceptance of the surrender of the Subleased Premises by Juniper before the expiration of or sooner termination of the Term. Only a written notice from Trident to Juniper shall constitute acceptance of the surrender of the Subleased Premises and accomplish a termination of this Sub-Sublease. (e) TIME OF ESSENCE. Time is of the essence of this Sub-Sublease. (f) ATTORNEY'S FEES. If any party commences an action against the other party arising out of or in connection with this Sub-Sublease, the prevailing party shall be entitled to recover from the nonprevailing party the cost and expenses of such action, including reasonable attorneys' fees and court costs. The "prevailing party" will be determined by the court before whom the action was brought based upon the assessment of which party's major arguments or positions taken in the suit or proceeding could fairly be said to have prevailed over the other party's major arguments or positions on major disputed issues in the court's decision. (g) COUNTERPARTS. This Sub-Sublease may be executed in counterparts, each of which shall constitute an original and shall be binding upon all parties, their successors and permitted assigns. 14. SURRENDER. Juniper's obligation with regard to the surrender of the Sub-Subleased Premises shall be deemed satisfied so long as Juniper surrenders possession of the Sub-Subleased Premises in the same condition as it receives them, reasonable wear and tear and damage caused by casualty excepted. 7 8 ================================================================================ 15. SIGNAGE. Juniper may replace all of Trident's existing signage with its own signage, the design of which shall be subject to prior approval of Trident and Spieker Properties. 16. CONDITION PRECEDENT. Notwithstanding Paragraph 3 hereof, the Commencement Date of this Sub-Sublease shall not occur until the Master Landlord and NCD have consented to this Sub-Sublease in writing. In the event that such consents are not obtained within sixty (60) days after the execution of this Sub-Sublease, Juniper, at Juniper's sole volition, may terminate this Sub-Sublease, and this Sub-Sublease shall have no further force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Sub-Sublease as of the date first above written. JUNIPER NETWORKS, INC. TRIDENT MICROSYSTEMS, INC. BY: /s/ Marcel Gani By: /s/ [SIGNATURE ILLEGIBLE] ------------------------- ------------------------- Title: CFO Title: CEO ---------------------- ---------------------- Date: July 1, 1998 Date: 7/10/98 ---------------------- ---------------------- BY: /s/ Scott Kriens By: /s/ [SIGNATURE ILLEGIBLE] ------------------------------- ------------------------------ Title: CEO Title: CEO ---------------------------- --------------------------- Date: 7/1/98 Date: 7-10-98 ---------------------------- --------------------------- Address For Notices: Address For Notices: 385 Ravendale Avenue 189 North Bernardo Avenue Mountain View, CA 94043 Mountain View, CA 94043 Attn.: Chief Financial Officer Attn.: Chief Financial Officer 8 9 [SPALLINO REID LETTERHEAD] SUBLEASE Sublandlord: Subject Property: Network Computing Devices, Inc. 370 and 380 North Bernardo Avenue, a California corporation Mountain View, CA 94043 Subtenant: Trident Microsystems, Inc. Date: October 24, 1995 a California corporation 1. PARTIES This Sublease is made and entered into as of October 24, 1995, by and between Network Computing Devices, Inc. a California corporation ("Sublandlord"), and Trident Microsystems, Inc., a California corporation ("Subtenant"), under the Master Lease dated September 21, 1989, between Mountain View Industrial Associates, a California Partnership, as "Landlord", and Network Computing Devices, Inc. a California corporation "Tenant," and the First Addendum to the Lease dated December 2, 1991 between Mountain View Industrial Associates, a California Partnership "Landlord," and Network Computing Devices, Inc. a California corporation "Tenant," and the Second Addendum to the Lease dated August 20, 1993 between Mountain View Industrial Associates, a California Partnership "Landlord," and Network Computing Devices, Inc. a California corporation "Tenant," and the Third Addendum to the Lease dated October 22, 1993 between Mountain View Industrial Associates, a California Partnership "Landlord," and Network Computing Devices, Inc. a California corporation "Tenant". A copy of the Master Lease and Addendums 1, 2 and 3 are attached hereto as Attachment I and incorporated herein by this reference. 2. PROVISIONS CONSTITUTING SUBLEASE: 2.1 This Sublease is subject to all of the terms and conditions of the Master Lease. Subtenant hereby assumes and agrees to perform all of the obligations of "Tenant" under the Master Lease to the extent said obligations apply to the sublicensed premises and any Direct Operating Expenses relating to the sublicensed premises. Sublandlord hereby agrees to cause Landlord under the Master Lease to perform all of the obligations of Landlord thereunder to the extent said obligations apply to the subleased premises and Subtenant's use of the common areas and Outside Areas. Subtenant shall not commit or permit to be committed on the subleased premises or on any other portion of the Project any act or omission which violates any term or conditions of the Master Lease. Except to the extent waived or consented to in writing by the other party or parties hereto who are affected thereby, neither of the parties hereto will, by renegotiation of the Master Lease, assignment, subletting, default or any other voluntary action, avoid or seek to avoid the observance or performance of the terms to be observed or performed hereunder by such party, but will at all times in good faith assist in carrying out all the terms of this Sublease and in taking all such action as may be necessary or appropriate to protect the rights of the other party or parties hereto who are affected thereby against impairment. Nothing contained in this Section 2.1 or elsewhere in this Sublease shall prevent or prohibit Sublandlord (a) from exercising its right to terminate the Master Lease pursuant to the terms thereof or (b) from assigning its interest in this Sublease. 2.2 All of the terms and conditions contained in the Master Lease are incorporated herein and the terms and conditions specifically set forth in this Sublease shall constitute the complete terms and conditions of this Sublease. 2.3 The parties agree that the terms of Addendum Number 2 and Addendum Number 3 shall not apply to this transaction. Further, the parties agree that Section 33.1 of the Master Lease is hereby deleted. 3. SUBLEASED PREMISES AND RENT: 3.1 Subleased premises: 10 6. NOTICES: All notices, demands, consents and approvals which may or are required to be given by Subtenant to the Landlord shall be given in the manner provided in the Master Lease, and at the addresses shown on the signature page hereof. Sublandlord shall notify Subtenant of any Event of Default under the Master Lease, or of any other event of which Sublandlord has actual knowledge which will impair Subtenant's ability to conduct its normal business at the subleased premises, as soon as reasonably practicable following Sublandlord's receipt of notice from the Landlord of an Event of Default or actual knowledge of such impairment. If Sublandlord elects to terminate the Master Lease, Sublandlord shall so notify Subtenant by giving at least 30 days notice prior to the effective date of such termination. 7. BROKER FEE: Upon execution of the Sublease, Sublandlord shall pay Spallino Reid Corporate Real Estate Services, a licensed real estate broker, fees set forth in a separate agreement between Sublandlord and Broker. 8. COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT: Subtenant shall be responsible for the installation and cost of any and all improvements, alterations or other work required on or to the subleased premises or to any other portion of the property and/or building of which the subleased premises are a part, required or reasonably necessary because of: (1) Subtenant's use of the subleased premises or any portion thereof: (2) the use by a Subtenant by reason of assignment or sublease; or (3) both, including any improvements, alterations or other work required under the Americans With Disabilities Act of 1990 ("ADA"). Any pre-existing conditions of non-compliance with respect to ADA shall not be the responsibility of Subtenant during the Sublease term. However, Subtenant shall be responsible for any required ADA improvements required as a result of tenant improvements to the subleased premises made or installed by Subtenant. Compliance with the provisions of this Section 8 shall be a condition of Sublandlord granting its consent to any assignment or Sublease of all or a portion of this Sublease and the subleased premises described in this Sublease. 9. HAZARDOUS MATERIALS: Subtenant shall not cause or permit any Hazardous Materials to be released from or about the subleased premises, including, without limitation, releases into the groundwater, soils, or air underlying, adjacent to or in the vicinity of the Project. Subtenant shall provide Sublandlord with at least five (5) days prior written notice before bringing, using or storing any Hazardous Materials on the subleased premises. Subtenant, at its sole expense shall comply with all applicable governmental rules, regulations, codes, ordinances, statutes, directives and other requirements (collectively, "Laws") respecting Hazardous materials in connection with Sublessee's activities and the activities of its agents, employees, contractors and invitees on or about the subleased premises. Subtenant at its sole cost, shall perform all investigations, clean-up and other response actions which may be required of Subtenant by any governmental authority in, on, or about the Project in connection with Subtenant's use of the subleased premises and the activities of Subtenant, and Subtenant's agents, employees, contractors and invitees on or about the subleased premises. Sublandlord shall indemnify, protect, defend and hold harmless Subtenant from and against all costs (including, but not limited to, environmental response costs), expenses, claims, judgements, losses, demands, liabilities, causes of action, governmental directives, proceedings or hearings, including Subtenant's attorneys and experts fees and costs, relating to or arising in connection with any Hazardous Materials present on or about the premises prior to Subtenant's occupation of the subleased premises. To the extent any of the other provisions stated herein or in the definitive lease agreement conflict with the provisions of this Section 9, the provisions pursuant to "Toxic Materials" contained in the "Master Lease" shall be controlling. 11 10. RENT ABATEMENT AND DAMAGES TO PERSONAL PROPERTY In the event Sublandlord, pursuant to the terms of the Master Lease, is entitled to and receives rent abatement, then to the extent such rent abatement affects the subleased premises, Subtenant shall be entitled to rent abatement in an amount that the net rentable area of the subleased premises bears to the total net rentable area of the Master Lease, and only to the extent any such abatement applies to the sublease term. In addition, any amounts paid or credited to Sublandlord under the terms of the Master Lease for damage to personal property shall be credited to Subtenant, subject to the same limitations set forth above. THE TERMS OF THE MASTER LEASE SHALL APPLY TO AND CONTROL THE TRANSACTION. Sublandlord: NETWORK COMPUTING DEVICES, INC. a California corporation. By: /s/ [illegible] Date: 12-6-95 ---------------------- ------------------- Subtenant: TRIDENT MICROSYSTEMS, INC., a California corporation. By: /s/ [illegible] Date: 12-6-95 ---------------------- ------------------- 12 ATTACHMENT I MASTER LEASE AND ADDENDUM 1, 2 AND 3 MASTER LANDLORD CONSENT The undersigned, Master Landlord under the Master Lease attached as Attachment I, hereby consents to the subletting of the subleased premises described herein on the terms and conditions contained in this Sublease. This Consent shall apply only to this Sublease and shall not be deemed to be a consent to any other Sublease. Master Landlord: MOUNTAIN VIEW INDUSTRIAL ASSOCIATES, a California Partnership. By: Date: -------------------------- --------------------------- ATTORNMENT AGREEMENT Subtenant shall attorn to Master Landlord and perform all of this Subtenant's obligations under the Sublease directly to Master Landlord as if Master Landlord were the Sublandlord under the Sublease. If Subtenant is not, at the time of the notice, in default, Master Landlord shall continue to recognize the estate of Subtenant created under the Sublease. If Subtenant is not in default, the Sublease shall continue with the same force and effect as if Master Landlord and Sublandlord had entered into a lease on the same provisions as those contained in the Sublease. Subtenant: TRIDENT MICROSYSTEMS, INC., a California Corporation. By: Date: -------------------------- --------------------------- 13 [SPIEKER LOGO} December 12, 1995 Mr. Jack Bradley Network Computing Devices, Inc. 350 North Bernardo Avenue Mountain View, CA 94043 Re: Lease Agreement for Premises located at 370 North Bernardo Avenue, Mountain View Dear Mr. Bradley In response to your request to sublease, pursuant to Paragraph 17 or your Lease Agreement, Spieker Properties (Landlord) hereby consents to the subleasing of your Premises located at 370 North Bernardo Avenue, Mountain View, which contains approximately 27,444 rentable square feet of space by NETWORK COMPUTING DEVICES, INC. (Tenant) to TRIDENT MICROSYSTEMS, INC. (Subtenant). This consent in no way obligates Landlord to Subtenant with regard to this Sublease Agreement, and in no way releases Tenant from their obligations under the Lease. The Lease shall remain in full force and effect, and Landlord shall not be obligated to recognize or be bound by any terms or conditions of the sublease. The Lease shall, at all times, supersede any and all terms and conditions of the Sublease Agreement. Please remember that if the Subtenant should wish to make any alterations or tenant improvements to the Premises, Landlord reserves the right under Paragraph 9 - Alterations, of the Lease Agreement, to require Network Computing Devices, as Tenant, to remove said alterations upon the expiration or sooner termination of the Term and to restore the Premises to their original condition. Please signify your agreement and understanding of the above terms and conditions by signing below on all three (3) copies. Also, please have your subtenant indicate its agreement and understanding of the above terms and conditions by signing below. Please return one signed letter to Spieker Properties at 2180 Sand Hill Road, Suite #200, Menlo Park, California 94025. Very truly yours, /s/ Patricia A. Messer Patricia A. Messer Project Director "TENANT" "SUBTENANT" NETWORK COMPUTING DEVICES, INC. TRIDENT MICROSYSTEMS, INC. By: /s/ [SIGNATURE ILLEGIBLE] By: /s/ [SIGNATURE ILLEGIBLE] ------------------------------- ------------------------------- CFO CFO Its: ------------------------------ Its: ------------------------------ 12/13/95 12/13/95 Date: ----------------------------- Date: ----------------------------- EX-10.5 14 SUBLEASE, AT HOME CORPORATION 1 EXHIBIT 10.5 SUBLEASE THIS SUBLEASE ("Sublease") is dated as of June 5, 1997, and is made by and between AT HOME CORPORATION, a Delaware corporation ("Sublessor"), and JUNIPER NETWORKS, INC., a California corporation ("Sublessee"). Sublessor and Sublessee hereby agree as follows: 1. Recitals: This Sublease is made with reference to the fact that Spieker Properties, L.P., a California limited partnership ("Master Lessor"), as Landlord, and Sublessor, as Tenant, entered that certain Lease, dated as of December 13, 1995 ("Master Lease"), with respect to that certain real property commonly known as 385 Ravendale Drive, Mountain View, California ("Premises"), as more particularly described in the Master Lease. A copy of the Master Lease is attached hereto as Exhibit "A" and incorporated by reference herein. 2. Premises: Sublessor hereby subleases to Sublessee, and Sublessee hereby subleases from Sublessor, the entire Premises, consisting of approximately thirty-two thousand nine hundred eight (32,908) square feet ("Subleased Premises"), being a portion of that certain two (2)- building project comprised of approximately sixty-six thousand eight hundred forty (66,840) square feet and more commonly known as 355-385 Ravendale Drive, Mountain View, California ("Property"). The Subleased Premises and the Property are more particularly described on Exhibit "B" attached hereto and incorporated by reference herein. 3. Term: A. Term. The term of this Sublease ("Term") shall be commence on the later of (i) July 1, 1997; or (ii) the date that Sublessor delivers possession of the Subleased Premises (excluding, if necessary, the Retained Space, as defined in Paragraph 3.B. below) in the condition required by this Sublease ("Commencement Date") and terminate on December 31, 2001 ("Termination Date"), unless this Sublease is sooner terminated pursuant to its terms or the Master Lease is sooner terminated pursuant to its terms. If Sublessor fails to deliver the Subleased Premises (excluding the Retained Space) in the condition required by this Sublease by September 1, 1997, Sublessee shall have the right to terminate this Sublease, and Sublessor shall return to Sublessee all sums paid by Sublessee to Sublessor in connection with its execution of this Sublease. B. Retained Space. Sublessor and Sublessee acknowledge that, while Sublessor intends to vacate the Subleased Premises by June 30, 1997, it may be necessary for Sublessor to retain possession of a portion of the Subleased Premises after that date for the purpose of storing workstations and similar personal property (collectively, "Personal Property"). Sublessor and Sublessee agree that the following conditions shall govern any occupancy of the Subleased Premises by Sublessor after June 30, 1997: (i) Portion of Subleased Premises to be Retained. Commencing on the Commencement Date, Sublessor shall be entitled to retain possession of a portion of the Subleased 2 Premises for the purpose of storing the Personal Property ("Retained Space"). Sublessor shall have the right to designate a reasonable amount of contiguous square footage comprising the Retained Space, and Sublessee shall have the right to designate the location of the Retained Space, which designation shall be reasonable. During the period that Sublessor stores the Personal Property in the Retained Space, Sublessor shall (i) keep the Retained Space in good condition and repair, and surrender the Retained Space to Sublessee in "broom clean" condition; and (ii) use reasonable good faith efforts to minimize any disruption to or interference with Sublessee's use of or access to the remainder of the Subleased Premises. Also during such period, Sublessee shall use reasonable good faith efforts to minimize any disruption to or interference with Sublessor's use of or access to the Retained Space. Sublessor shall vacate the Retained Space by July 31, 1997. (ii) Security Precautions. Sublessor and Sublessee acknowledge that neither party will be responsible for erecting demising walls separating the Retained Space from the remainder of the Subleased Premises, and that neither the Retained Space nor the remainder of the Subleased Premises will be securely demised. Sublessor and Sublessee shall abide by the reasonable security precautions established by the other party, and neither party shall enter the space of the other unless accompanied by an employee of the other. Sublessor shall have the right to enter the Subleased Premises during normal business hours to the extent necessary for access to and from the Retained Space. C. No Option to Extend. The parties acknowledge that Sublessee has no option to extend the Term of this Sublease. D. Early Access. Provided that Sublessee does not materially interfere with the conduct of Sublessor's business on the Subleased Premises, Sublessee shall have the right to enter the Subleased Premises for the two (2)- week period immediately prior to the Commencement Date for the purpose of preparing the Subleased Premises for Sublessee's occupancy. Sublessee shall not be liable for the payment of Monthly Base Rent or Additional Rent during the early access period, but all other terms and conditions of this Sublease shall apply. 4. Rent: A. Monthly Base Rent. Except as otherwise provided herein, Sublessee shall pay to Sublessor as monthly base rent ("Monthly Base Rent") for the Subleased Premises equal monthly installments as follows:
Months Rent/S.F./Month Rent/Month ------ --------------- ---------- 01 - 12 $1.65 $54,298.20 13 - 24 $1.70 $55,943.60
-2- 3 25 - 36 $1.75 $57,589.00 37 - 48 $1.80 $59,234.40 49 - ex- $1.85 $60,879.80 piration
As used herein, the word "month" shall mean a period beginning on the first (1st) day of a month and ending on the last day of that month. Monthly Base Rent shall be paid on or before the first (1st) day of each month. Rent (as defined in Paragraph 4.B. below) for any period during the term hereof which is for less than one month of the Term shall be a prorata portion of the monthly installment based on a thirty (30)-day month. Except as otherwise provided herein, Rent shall be payable without notice or demand and without any deduction, offset, or abatement, in lawful money of the United States of America. Rent shall be paid directly to Sublessor at 425 Broadway, Redwood City, California 94063, or such other address as may be designated in writing by Sublessor. B. Additional Rent. All monies required to be paid by Sublessee under this Sublease (excluding Monthly Base Rent pursuant to Paragraph 4.A), including any amounts payable by Sublessor to Master Lessor under the Master Lease (including, without limitation, Basic Operating Costs, as defined in Section 7 of the Master Lease), shall be deemed additional rent ("Additional Rent"). Monthly Base Rent and Additional Rent hereinafter collectively shall be referred to as "Rent." Sublessee and Sublessor agree, as a material part of the consideration given by Sublessee to Sublessor for this Sublease, that, with respect to the period arising from and after the Commencement Date, Sublessee shall pay all costs, expenses, taxes, insurance, maintenance and other charges of every kind and nature arising in connection with the Sublease, the Master Lease or the Subleased Premises, such that Sublessor shall receive, as a net consideration for this Sublease, the Monthly Base Rent payable under Paragraph 4. A. hereof; provided, however, that all such costs, expenses, taxes, insurance, maintenance and other charges shall be equitably prorated to reflect the Commencement Date and the Termination Date of this Sublease. In no event shall Sublessee's obligation to pay for the foregoing charges exceed the amount attributable to the Subleased Premises, subject, however, to Sublessor's obligations hereunder with respect to the Retained Space. Sublessee shall be entitled to all credits, if any, given by Master Lessor to Sublessor for Sublessor's overpayment of any of the foregoing charges. C. Payment of First Month's Rent. Upon execution hereof by Sublessee, Sublessee shall pay to Sublessor the sum of Fifty-Four Thousand Two Hundred Ninety-Eight and 20/100 Dollars ($54,298.20), which shall constitute Monthly Base Rent for the first month of the Term. If the Commencement Date falls on a day other than the first day of a calendar month, any excess attributable to the first month of the Term shall be credited to Monthly Base Rent for the second month of the Term. -3- 4 5. Security Deposit: Upon execution hereof, Sublessee shall deposit with Sublessor, in cash, the sum of Sixty Thousand Eight Hundred Eighty and No/100 Dollars ($60,880.00), as security for the performance by Sublessee of the terms and conditions of this Sublease. If Sublessee fails to pay Rent or other charges due hereunder (beyond applicable notice and cure periods) or otherwise defaults (beyond applicable notice and cure periods) with respect to any provision of this Sublease, then Sublessor may draw upon, use, apply or retain all or any portion of the security deposit for the payment of any Rent or other charge in default, for the payment of any other sum which Sublessor has become obligated to pay by reason of Sublessee's default, or to compensate Sublessor for any loss or damage which Sublessor has suffered thereby. If Sublessor so uses or applies all or any portion of the security deposit, then Sublessee shall, within ten (10) days after demand therefor, deposit cash with Sublessor in the amount required to restore the deposit to the full amount stated above. Upon the expiration or earlier termination of this Sublease, Sublessor shall return to Sublessee (without interest) so much of the security deposit as has not been applied by Sublessor pursuant to this Paragraph, or which is not otherwise required to cure Sublessee's defaults. 6. Late Charge: If Sublessee fails to pay Sublessor any amount due hereunder on or before the date when such payment is due, Sublessee shall pay to Sublessor upon demand a late charge equal to five percent (5%) of the delinquent amount, pursuant to the provisions of Section 26.D of the Master Lease. The parties agree that the foregoing late charge represents a reasonable estimate of the cost and expense which Sublessor will incur in processing each delinquent payment. Sublessor's acceptance of any interest or late charge shall not waive Sublessee's default in failing to pay the delinquent amount. Sublessor and Sublessee acknowledge that Rent is due and payable to Sublessor not later than three (3) days prior to the first day of each calendar month during the Term, and that Sublessee's failure to pay Rent by such date shall subject Sublessee to payment of the aforementioned late charge. 7. Repairs: Sublessor shall deliver the Subleased Premises to Sublessee in "broom clean" condition. Except as set forth in this Paragraph and in Paragraph 14 below, Sublessor shall have no obligation whatsoever to make or pay the cost of any alterations, improvements or repairs to the Subleased Premises, including, without limitation. any improvement or repair required to comply with any law, regulation, building code or ordinance (including, without limitation, the Americans With Disabilities Act of 1990 ("ADA"), except as provided in Addendum Paragraph 4 of the Master Lease for the period commencing with the Commencement Date of the Master Lease and ending with the day prior to the Commencement Date of this Sublease, any violation of which shall be Sublessor's obligation, which violation Sublessor shall cure at Sublessor's expense within a reasonable period after receipt of written notice of same from Sublessee. Except to the extent caused by the negligence or willful misconduct of Sublessor, its agents, employees, contractors or invitees, for which Sublessor shall be responsible, at no cost to Sublessee, for the performance of any repairs required as a result thereof, Sublessee shall look solely to Master Lessor for performance of any repairs required to be performed by Master Lessor under the terms of the Master Lease; provided, however, that if Master Lessor shall fail to perform any of its obligations -4- 5 in accordance with the terms of the Master Lease (including, without limitation, the failure to make required repairs), Sublessor, upon receipt of written notice from Sublessee, shall diligently attempt to enforce all obligations of Master Lessor under the Master Lease (without requiring Sublessor to spend more than a nominal sum, which nominal sum shall be limited to all costs associated with the preparation of and transmittal to Master Lessor of documentation from Sublessor or Sublessor's attorneys detailing the obligations to be performed by Master Lessor under the Master Lease). If, after receipt of written request from Sublessee, Sublessor shall fail or refuse to take action for the enforcement of Sublessor's rights against Master Lessor with respect to the Subleased Premises ("Action"), Sublessee shall have the right to take such Action in its own name, and for that purpose and only to such extent, all of the rights of Sublessor as Tenant under the Master Lease hereby are conferred upon and assigned to Sublessee, and Sublessee hereby is subrogated to such rights to the extent that the same shall apply to the Subleased Premises. If any such Action against Master Lessor in Sublessee's name shall be barred by reason of lack of privity, nonassignability or otherwise, Sublessee may take such Action in Sublessor's name; provided that Sublessee has obtained the prior written consent of Sublessor, which consent shall not be unreasonably withheld, and, provided further, that Sublessee shall indemnify, protect, defend by counsel reasonably satisfactory to Sublessor and hold Sublessor harmless from and against any and all liability, loss, claims, demands, suits, penalties or damage (including, without being limited to, reasonable attorneys' fees and expenses) which Sublessor may incur or suffer by reason of such Action, except for any such liability, loss, claims, demands, suits, penalties or damage which Sublessor may incur or suffer by reason of Sublessor's negligent acts or omissions. 8. Indemnity: A. Sublessee's Indemnity. Except to the extent caused by Sublessor's negligence or willful misconduct during the period that Sublessor occupies the Retained Space, and except to the extent caused by Sublessor's sole active negligence or willful misconduct at any time after Sublessor has vacated the Retained Space, Sublessee shall indemnify, protect, defend with counsel reasonably acceptable to Sublessor and hold Sublessor harmless against any and all claims, liabilities, judgments, causes of action, damages, costs, and expenses (including reasonable attorneys' and experts' fees), caused by or arising in connection with: (i) the use, occupancy or condition of the Subleased Premises; (ii) the negligence or willful misconduct of Sublessee or its employees, contractors, agents or invitees; (iii) a breach of Sublessee's obligations under this Sublease; or (iv) a breach of Sublessee's obligations under the Master Lease to the extent incorporated herein by this Sublease. B. Sublessor's Indemnity. Except to the extent caused by Sublessee's negligence or willful misconduct, Sublessor shall indemnify, protect, defend with counsel reasonably acceptable to Sublessor and hold Sublessor harmless against any and all claims, liabilities, judgments, causes of action, damages, costs, and expenses (including reasonable attorneys' and experts' fees), caused by or arising in connection with: (i) a breach of Sublessor's obligations under this Sublease; or (ii) a breach of Sublessor's obligations as Tenant under the Master Lease to the -5- 6 extent those obligations are not the obligations of Sublessee under this Sublease; or (iii) the sole active negligence or willful misconduct of Sublessor, its employees, contractors, agents or invitees occurring on or about the Subleased Premises. 9. Right to Cure Defaults: A. Sublessor's Right. If Sublessee fails to pay any sum of money to Sublessor (beyond applicable notice and cure periods), or fails to perform (beyond applicable notice and cure periods) any other act on its part to be performed hereunder, then Sublessor may, but shall not be obligated to, make such payment or perform such act. All such sums paid, and all costs and expenses of performing any such act, shall be deemed Additional Rent payable by Sublessee to Sublessor upon demand. In addition, Sublessee shall pay to Sublessor interest on all amounts due, at the rate of twelve percent (12%) per annum or the maximum rate allowed by law, whichever is less (the "Interest Rate"), from the due date to and including the date of the payment, from the date of the expenditure until repaid. B. Sublessee's Right. If Sublessor fails to perform any act on its part to be performed hereunder within a reasonable time after its receipt of written request from Sublessee, but in no event longer than thirty (30) days after Sublessor's receipt of such request (except that if such default cannot be cured within said thirty (30)-day period, this period shall be extended for an additional reasonable time, provided that Sublessor commences to cure such default within such thirty (30)-day period and proceeds diligently thereafter to effect such cure as quickly as possible), then Sublessee shall be entitled, at Sublessee's sole option, to cure such default. Nothing in the foregoing sentence shall be deemed to waive any rights Sublessee may have at law or in equity in the event of such default by Sublessor. 10. Assignment and Subletting: Except in accordance with the terms of Section 21 of the Master Lease, Sublessee may not assign this Sublease, sublet the Subleased Premises, transfer any interest of Sublessee therein, or permit any use of the Subleased Premises by another parry ("Transfer"), without the prior written consent of Sublessor, which shall not be unreasonably withheld, and Master Lessor. A consent to one Transfer shall not be deemed to be a consent to any subsequent Transfer. Any Transfer without such consent shall be void and shall, at the option of Sublessor, terminate this Sublease. As a condition of granting its consent to any assignment or subletting, Sublessor may require that Sublessee pay to Sublessor, as Additional Rent, fifty percent (50%) of all Excess Rents received by Sublessee. As used herein, the term "Excess Rents" shall mean all Rents and other consideration payable by a subtenant or assignee to Sublessee in connection with the Transfer, less the cost incurred by Sublessee as set forth in Addendum Paragraph 14 of the Master Lease. Sublessor's waiver or consent to any assignment or subletting shall be ineffective unless set forth in writing, and Sublessee shall not be relieved from any of its obligations under this Sublease, unless the consent expressly so provides. Notwithstanding anything to the contrary contained in this Sublease or in the Master Lease, at Sublessor's sole option, Sublessor shall have the right to terminate this Sublease if Sublessee requests Sublessor's -6- 7 consent to an assignment of this Sublease or a sublet of fifty percent (50%) or more of the square footage comprising the Subleased Premises. 11. Use: Sublessee may use the Subleased Premises only for the uses set forth in the Basic Lease Information and in Section 4 of the Master Lease and for no other purpose. With respect to Hazardous Materials as defined in the Master Lease, Sublessee shall comply with the provisions of Section 4.B and Addendum Paragraph 6.A of the Master Lease. Within twenty (20) days after receipt of demand from Sublessor, Sublessee shall pay to Sublessor all taxes or charges imposed by applicable governmental authorities against the Subleased Premises or Sublessor (including, without limitation, assessments imposed as a consequence of the storage, use, release or disposal of Hazardous Materials by Sublessee in or about the Subleased Premises). Sublessee shall not do or permit anything to be done in or about the Subleased Premises which would (i) injure the Subleased Premises, or (ii) impair the efficient operation of the Subleased Premises or the sprinkler systems, heating ventilating or air conditioning equipment, or utilities systems located therein. Sublessee shall not store any materials, supplies, finished or unfinished products, or articles of any nature outside of the Subleased Premises. For purposes of this Sublease and Sections 4 and 5 of the Master Lease, Sublessee shall comply with all reasonable rules and regulations promulgated from time to time by Master Lessor. Sublessor shall have no right to promulgate any such rules and regulations. 12. Effect of Conveyance: As used in this Sublease, the term "Sublessor" means the holder of the lessee's interest under the Master Lease. In the event of any transfer of said lessee's interest, Sublessor shall be and hereby is entirely relieved of all covenants and obligations of Sublessor hereunder first accruing from and after the date of such transfer, and it shall be deemed and construed, without further agreement between the parties, that the transferee has assumed and shall carry out all covenants and obligations thereafter to be performed by Sublessor hereunder. Sublessor shall transfer and deliver any security of Sublessee to the transferee of said lessee's interest in the Master Lease, and only thereupon shall Sublessor be discharged from any further liability with respect thereto. 13. Acceptance: By taking possession of the Subleased Premises, Sublessee shall conclusively be deemed to have accepted the Subleased Premises in their as-is, then-existing condition, except as otherwise set forth in Paragraphs 3 and 14 hereof. 14. Improvements: No alterations or improvements shall be made to the Subleased Premises, except in accordance with this Sublease and the Master Lease, and with the prior written consent, when required, of both Master Lessor and Sublessor. Sublessor shall not be required to provide a tenant improvement allowance to Sublessee in connection with Sublessee's construction of any improvements to the Subleased Premises. Sublessor shall use reasonable efforts, however, to cooperate with Sublessee to obtain Master Lessor's consent to Sublessee's proposed alterations to the Subleased Premises, including the removal of certain perimeter offices and creation of an assembly area. -7- 8 15. Limitation of Liability: Except to the extent of the negligence or willful misconduct of Sublessor, its agents, employees, contractors or invitees during the period that Sublessor occupies the Retained Space, and except to the extent of the sole active negligence or willful misconduct of Sublessor, its agents, employees, contractors or invitees at any time after Sublessor has vacated the Retained Space, Sublessor shall not be liable to Sublessee for: (i) failure or interruption of any utility system or service, or (ii) failure of Master Lessor to maintain the Subleased Premises as may be required under the Master Lease. In no event shall Sublessee be entitled to terminate this Sublease except as otherwise expressly provided in this Sublease. In the event that Sublessor is entitled to an abatement of rent under the terms of the Master Lease, Sublessee shall be entitled to a proportionate share of abatement of Rent under this Sublease. Sublessor and Sublessee are corporations, and the obligations of Sublessor and Sublessee hereunder shall not constitute the personal obligations of the officers, directors, trustees, partners, joint venturers, members, owners, stockholders or other principals or representatives of the corporations. 16. Default: Sublessee shall be in material default of its obligations under this Sublease if Sublessee is responsible for the occurrence of any of the events of default set forth in Section 26.A of the Master Lease. 17. Remedies: In the event of any default by Sublessee under this Sublease (including, without limitation, a default pursuant to Section 26.A of the Master Lease), Sublessor shall have all remedies provided by applicable law, including, without limitation, all rights pursuant to Section 26.B of the Master Lease and under California Civil Code Sections 1951.2 and 1951.4. Sublessor may resort to its remedies cumulatively or in the alternative. 18. Surrender: On or before the expiration of this Sublease, Sublessee shall remove all of its trade fixtures and shall surrender the Subleased Premises to Sublessor in the condition received from Sublessor, casualty, condemnation, Hazardous Materials not stored, used released or disposed of by Sublessee or its agents, employees, contractors or invitees, alterations with respect to which Sublessor or Master Lessor have not required removal and reasonable wear and tear excepted. If the Subleased Premises are not so surrendered, then Sublessee shall be liable to Sublessor for all costs incurred by Sublessor in returning the Subleased Premises to the required condition, plus interest thereon at the Interest Rate. Sublessee shall indemnify, defend with counsel reasonably acceptable to Sublessor, protect and hold harmless Sublessor against any and all claims, liabilities, judgments, causes of action, damages, costs, and expenses (including attorneys' and experts' fees) resulting from Sublessee's delay in surrendering the Subleased Premises in the condition required. 19. Estoppel Certificates: Within ten (10) days after demand by Sublessor, Sublessee shall execute and deliver to Sublessor an estoppel certificate (i) certifying that this Sublease is unmodified and in full force and effect or, if modified, the nature of such modification; (ii) stating the date to which Rent and other charges are paid in advance; (iii) acknowledging that there are no -8- 9 uncured defaults, or the nature of any such uncured defaults, on the part of the Sublessor; and (iv) certifying such other information as may be required by Sublessor. 20. Broker: Sublessor and Sublessee each represent to the other that they have dealt with no real estate brokers, finders, agents or salesmen other than Colliers Parrish International, Inc., representing both Sublessor and Sublessee in connection with this transaction. Each party agrees to hold the other party harmless from and against all claims for brokerage commissions, finder's fees, or other compensation made by any other agent, broker, salesman or finder as a consequence of said party's actions or dealings with such agent, broker, salesman, or finder. 21. Notices: Unless five (5) days' prior written notice is given in the manner set forth in this Paragraph, the address of each party for all purposes connected with this Sublease shall be that address set forth below their signatures at the end of this Sublease. The address for Master Lessor shall be as set forth in the Master Lease. All notices, demands, or communications in connection with this Sublease shall be considered received when (i) personally delivered; or (ii) if properly addressed and either sent by nationally recognized overnight courier or deposited in the mail (registered or certified, return receipt requested, and, postage prepaid), on the date shown on the return receipt for acceptance or rejection. All notices given to the Master Lessor under the Master Lease shall be considered received only when delivered in accordance with the Master Lease to all parties hereto at the address set forth below their signatures at the end of this Sublease. 22. Severability: If any term of this Sublease is held to be invalid or unenforceable by any court of competent jurisdiction, then the remainder of this Sublease shall remain in full force and effect to the fullest extent possible under the law, and shall not be affected or impaired. 23. Amendment: This Sublease may not be amended except by the written agreement of all parties hereto. 24. Attorneys' Fees: If either party brings any action or legal proceeding with respect to this Sublease, the prevailing party shall be entitled to recover reasonable attorneys' fees, experts' fees, and court costs. Notwithstanding the foregoing and in addition thereto, Sublessor, upon written request to Sublessee, shall be entitled to prompt receipt from Sublessee, for each breach hereof, of such reasonable attorneys' fees (but not less than Fifty Dollars ($50.00)), as may be incurred in connection with each notice or demand delivered to Sublessee. Sublessee agrees that such sum constitutes reimbursement to Sublessor of the reasonable cost of the preparation and delivery of each notice caused by Sublessee's breach. 25. Other Sublease Terms: A. Incorporation By Reference. The terms and conditions of this Sublease shall include various Sections of the Master Lease, which, except to the extent such terms are in conflict -9- 10 with any of the other terms of this Sublease (in which event the other terms of this Sublease shall control), are incorporated into this Sublease as if fully set forth, except that: (i) each reference in such incorporated Sections to "Lease" shall be deemed a reference to "Sublease"; (ii) each reference to the "Premises" shall be deemed a reference to the "Subleased Premises"; (iii) each reference to "Landlord" and "Tenant" shall be deemed a reference to "Sublessor" and "Sublessee", respectively (except as otherwise expressly set forth below); (iv) with respect to work, services, repairs, restoration, provision of insurance or the performance of any other obligation of Master Lessor under the Master Lease, the sole obligation of Sublessor shall be as set forth in Paragraph 7 hereof; (v) with respect to any obligation of Sublessee to be performed under this Sublease, wherever the Master Lease grants to Sublessor a specified number of days to perform its obligations under the Lease, Sublessee shall have three (3) fewer days to perform the obligation, including, without limitation, curing any defaults, except as otherwise expressly set forth in this Sublease; and (vi) with respect to any approval required to be obtained from the "Landlord" under the Master Lease, such consent must be obtained from both the Master Lessor and the Sublessor, and the approval of Sublessor may be withheld if, despite Sublessor's reasonable efforts, the Master Lessor's consent is not obtained. The following Sections of the Master Lease are hereby incorporated into this Sublease: Basic Lease Information Sections Project Description, Building Description, Premises, Permitted Use, Occupancy Density and Tenant's Proportionate Share; Section 2.A, except that the first and second sentences of Section 2.A hereby are deleted; Sections 4 and 5; Section 7, except that all references to "Landlord" in Sections 7.A., B., D., E. and in the last full paragraph of Section 7 shall mean only Master Lessor; Sections 8.A and 8.B., except that references to "Landlord" in Section 8.A shall mean only Master Lessor; Section 9; Section 10, except that references to "Landlord" in Section 10 shall mean only Master Lessor; Sections 12 through 18; Sections 21 through 23; Section 24, except that (i) references to "Landlord" in the second sentence of Section 24.A -10- 11 and in Sections 24.B through E shall mean only Master Lessor; and (ii) with respect to "Tenant's" right to terminate under Section 24.C, Sublessee shall not exercise such right without the prior written consent of Sublessor, which shall not be unreasonably withheld or delayed; Sections 25 through 31; Sections 32, except that the addresses for notices to Sublessor and Sublessee shall be as set forth beneath the signature lines in this Sublease; Sections 33 and 34; Section 35, except that this provision shall not be applicable to Sublessee's obligation to pay Rent hereunder; Sections 36 and 37; Additional Paragraphs 39 and 40; Addendum Paragraphs 2, 4, 6, 7, 8 and 9 (except that references to "Landlord" in Sections 2, 4. 6.B., 7, 8 and 9 shall mean only Master Lessor), 10 (except that references to "Landlord" shall mean only Master Lessor), 11 (except that the reference to "Landlord's property insurance policy" in line 4 of this paragraph shall mean only Master Lessor), 12, 14, 15, and 16; and Exhibits A, B and C. B. Sublessee's Obligations: This Sublease is and all times shall be subject and subordinate to the Master Lease and the rights of Master Lessor thereunder. Sublessee hereby expressly agrees: (i) to comply with all provisions of the Master Lease incorporated by reference herein, except to the extent inconsistent with the terms of this Sublease; (ii) to perform all the obligations on the part of the "Tenant" to be performed under the terms of the Master Lease during the term of this Sublease incorporated by reference herein. except to the extent inconsistent with the terms of this Sublease; and (iii) to hold Sublessor free and harmless of and from all liability, judgments, costs, damages, claims, demands, and expenses (including reasonable attorneys' and experts' fees) arising out of Sublessee's failure to comply with or to perform Sublessee's obligations hereunder or the obligations of the "Tenant" under the Master Lease as herein provided or to act or omit to act in any manner which will constitute a breach of the Master Lease. 26. Condition Precedent: This Sublease and Sublessor's and Sublessee's obligations hereunder are conditioned upon having obtained the written consent of the Master Lessor. If Sublessor has not obtained Master Lessor's consent within forty-five (45) days after the date of Sublessor's execution of this Sublease, either party may terminate this Sublease, and Sublessor -11- 12 shall return to Sublessee all sums paid by Sublessee to Sublessor in connection with its execution of this Sublease. Sublessor shall use reasonable efforts to obtain Master Lessor's consent within the time period set forth herein. 27. Parking: Sublessee shall have the right to the non-exclusive use of one hundred thirty-eight (138) Property parking spaces in the common area surrounding the Subleased Premises; provided, however, that during any period of shared occupancy pursuant to Paragraph 3.B, Sublessor and Sublessee shall share such parking on the basis that is proportionate to the square footage of the Subleased Premises that each party then is occupying. 28. Signage: Sublessee may erect signs on the Subleased Premises conforming to all legal requirements with the prior written approval of Sublessor, which approval shall not be unreasonably withheld, subject to the provisions of Section 13 of the Master Lease. Upon termination of the Sublease, Sublessee shall remove all signage and repair all damage caused by the removal. 29. Board Approval: Sublessee represents and warrants to Sublessor that Sublessee's Board of Directors has reviewed and approved the Master Lease and this Sublease, and has authorized Sublessee's execution hereof. 30. Sublessor's Representations and Warranties: To the best of Sublessor's knowledge, Sublessor represents and warrants with respect to the Subleased Premises that: A. The copy of the Master Lease attached hereto is a true and correct copy thereof. B. Sublessor has not previously subleased or otherwise transferred any interest in the Subleased Premises. C. Sublessor has not previously provided the Master Lessor with any notice of default D. The Master Lease is in full force and effect, and there exists under the Master Lease no default or event of default by either Master Lessor or Sublessor, nor has there occurred any event which, with the giving of notice or passage of time or both, could constitute such a default or event of default. E. There are no pending or threatened actions, suits or proceedings before any court or administrative agency against Sublessor or against Master Lessor or third parties which could, in the aggregate, adversely affect the Subleased Premises or any part thereof or the ability of Master Lessor to perform its obligations under the Master Lease or of Sublessor to perform its obligations under this Sublease, and Sublessor is not aware of any facts which might result in any such actions, suits or proceedings. -12- 13 31. Sublessor's Obligations. Sublessor shall perform all of its obligations under the Master Lease to the extent that Sublessee has not agreed to perform such obligations under this Sublease. 32. Amendment or Modification of Master Lease: This Sublease shall be subject to, and Sublessee accepts this Sublease subject to, any amendments, modifications or supplements to the Master Lease hereafter made, provided that Sublessor shall not enter any amendment, modification or supplement that would materially adversely affect the use by Sublessee of the Subleased Premises in accordance with the terms hereof, increase the obligations of Sublessee or decrease its rights hereunder, lengthen the Term or increase the Rent required to be paid by Sublessee hereunder. Sublessor shall provide written notice to Sublessee of any permitted amendment, modification or supplement to the Master Lease. 33. Notice Received from Master Lessor. Sublessor shall promptly deliver to Sublessee by facsimile, if possible, copies of any notices of default received from Master Lessor. 34. Termination: Sublessor shall not voluntarily terminate the Master Lease during the Term unless and until the Master Lessor has agreed in writing to (i) release Sublessor from all obligations and liabilities under the Master Lease; and (ii) continue this Sublease in full force and effect as a direct lease between Master Lessor and Sublessee upon and subject to all of the terms, covenants and conditions of this Sublease for the balance of the Term hereof. If Master Lessor so consents, Sublessee shall attorn to Master Lessor in connection with any such voluntary termination and shall execute an attornment agreement in such form as may reasonably be requested by Master Lessor. 35. Assignment of Indemnities: To the extent assignable, Sublessor shall assign to Sublessee any warranties given and indemnities made by Master Lessor under the Master Lease. 36. Insurance: With respect to the insurance Sublessee will carry for the Subleased Premises, Sublessee shall have the option to (i) increase the fire legal liability coverage it otherwise is required to carry hereunder, and (ii) increase its overall liability limits coverage from One Million Dollars ($1,000,000.00) to Two Million Dollars ($2,000,000.00), and Sublessor shall reimburse Sublessee for the cost thereof on a yearly basis, in an amount not to exceed Two Thousand Five Hundred Dollars ($2,500.00) per year, within thirty (30) days after receipt of the insurance company's invoice therefor. 37. Surrender Obligation: A. Mater Lease Restoration Obligation. Notwithstanding anything to the contrary contained in this Sublease or the Master Lease, if, upon the expiration or earlier termination of this Sublease, Master Lessor requires that the Subleased Premises be restored to its condition as of the Commencement Date of the Master Lease, Sublessee shall be responsible for the performance -13- 14 of and payment of the costs of such restoration, unless it is determined by the parties that Sublessor has not fully disclosed to Sublessee all of the alterations constructed by Sublessor in the Subleased Premises prior to the Commencement Date of this Sublease, in which case Sublessor shall be responsible for reimbursing Sublessee for the cost of the restoration related to such undisclosed alterations (unless Master Lessor does not require their restoration). For purposes of establishing the foregoing exception to Sublessee's performance and payment obligations upon surrender, attached hereto and incorporated by reference herein are Exhibit C, a floor plan showing the interior of the Subleased Premises as of the date that Sublessor executed the Master Lease, and Exhibit D, showing the interior layout of the Subleased Premises as of the date of execution by Sublessor and Sublessee of this Sublease. These Exhibits shall be used as a historical reference for purposes of demonstrating the alterations that Sublessor constructed within the Subleased Premises prior to the Commencement Date of this Sublease. Sublessee's performance and payment obligations with respect to the restoration and the exception thereto hereinafter shall be referred to as the "Master Lease Restoration Obligations". B. Obligation if Sublease Extended. Notwithstanding the foregoing, if Sublessor properly exercises its option to extend the term of the Master Lease for an additional three (3) years, and Sublessee and Sublessor concurrently enter an agreement permitting Sublessee to sublease the Subleased Premises for the additional three (3)- year period (notwithstanding the provisions of Paragraph 3.C. above), upon the expiration or earlier termination of the extended Sublease term, Sublessee shall be responsible for the Master Lease Restoration Obligations. C. Obligation if Sublease Not Extended. Notwithstanding the foregoing, if Sublessor properly exercises its option to extend the term of the Master Lease for an additional three (3)- year period, and, upon the expiration of the Term of this Sublease, either Sublessor will reoccupy the Subleased Premises or Sublessor will sublease the Subleased Premises to any person or entity other than Sublessee, Sublessee shall not be responsible for the Master Lease Restoration Obligations, but Sublessee shall be responsible for the performance of and the payment of the cost of restoring the Subleased Premises to the condition required by Paragraph 18 of this Sublease, as evidenced by Exhibit D. D. Notice. If Master Lessor notifies Sublessor, rather than notifying Sublessee directly, regarding the work constituting the Master Lease Restoration Obligations, Sublessor promptly shall notify Sublessee of such obligations, and Sublessee promptly shall comply with Master Lessor's directive. [SIGNATURES ON NEXT PAGE) -14- 15 IN WITNESS WHEREOF, the parties have executed this Sublease as of the day and year first above written. SUBLESSEE: SUBLESSOR: JUNIPER NETWORKS, INC., AT HOME CORPORATION, a California corporation a Delaware corporation By: /s/ MARCEL GANI By: /s/ DAVID PINE -------------------------------- ---------------------------------- Printed Printed Name: MARCEL GANI Name: DAVID PINE ------------------------------ -------------------------------- Its: CFO Its: VICE PRESIDENT, GENERAL COUNSEL ------------------------------- --------------------------------- Address: 385 Ravendale Drive Address: 425 Broadway Mountain View, CA 94043 Redwood City, CA 94063 Telephone: 408 327-9827 Telephone: 415 569-5218 ------------------------- --------------------------- -15- 16 CONSENT TO SUBLEASE Master Lessor, hereby acknowledges receipt of a copy of this Sublease, and consents to this Sublease. By this consent, Master Lessor shall not be deemed in any way to have entered into the Sublease or to have consented to any further assignment or sublease. MASTER LESSOR: SPIEKER PROPERTIES, L.P., a California limited partnership By: ------------------------------ Its: ----------------------------- Address: 2180 Sand Hill Road, Ste. 200 Menlo Park, CA 94025 Telephone: ---------------------------------- -16- 17 [@HOME NETWORK LETTERHEAD] June 3, 1997 Mr. Marcel Gani Vice President, Finance & CFO Juniper Networks, Inc. 3260 Jay Street Santa Clara, California 95054 RE: LETTER AGREEMENT REGARDING FURNITURE AND OTHER PERSONAL PROPERTY Dear Mr. Gani: This letter agreement ("Agreement") will set forth our mutual understanding with respect to certain personal property currently located at 385 Ravendale Drive, Mountain View, California ("Subleased Premises"), which Subleased Premises is the subject of that certain sublease ("Sublease") entered between At Home Corporation ("At Home") and Juniper Networks, Inc. ("Juniper") as of today's date. Capitalized terms not defined herein shall have the meaning set forth in the Sublease. On the Commencement Date of the Sublease, there shall be present on the Subleased Premises fifty-two (52) cubicles, the existing wiring and security system for the Subleased Premises (collectively, "Cubes and Wiring") and certain office furniture located in the Premises and more particularly described on Schedule 1, attached hereto and incorporated by reference herein ("Office Furniture"). The cost of the Cubes and Wiring and the Office Furniture (collectively, "Personal Property") shall be One Hundred Eighty Thousand and No/100 Dollars ($180,000.00). The cost of the Personal Property shall be paid by Juniper on an amortized basis over the first twelve (12) months of the Term, so that on the Commencement Date and on the first day of each of the eleven (11) months thereafter, Juniper shall pay to At Home, with each installment of Rent, the sum of Fifteen Thousand and No/100 Dollars ($15,000.00). Notwithstanding the foregoing, Sublessor shall credit against the foregoing monthly obligation due from Sublessee, commencing with the first month of the Term until recovered in full, the sum of Twenty Thousand and No/100 Dollars ($20,000.00, which sum 18 Mr. Marcel Gani June 3, 1997 Page 2 shall serve as reimbursement to Sublessee for restoring the NOC room to its condition existing as of the Commencement Date of the Master Lease. Effective as of the Commencement Date, At Home conveys to Juniper all of its right, title and interest in and to the Personal Property. At Home represents and warrants to Juniper, to the best of At Home's knowledge, that it is conveying title to the Personal Property to Juniper free and clear of any liens or encumbrances. Juniper shall take delivery of the Personal Property in its "as-is, where-is" condition. At Home shall have no obligation to repair or replace any item of Personal Property, and At Home makes no representation or warranty of any kind with respect to the Personal Property, including, without limitation, the condition or fitness of the Personal Property for Juniper's proposed or actual use thereof. Juniper shall indemnify, defend with counsel reasonably acceptable to At Home, protect and hold harmless At Home from and against any and all liabilities, judgments, causes of action, damages, costs and expenses (including, without limitation, reasonable attorneys' and experts' fees), caused by or arising in connection with the condition or use by Juniper of the Personal Property from and after the date of delivery of the Personal Property by At Home to Juniper, Juniper shall have the both the right and obligation to remove the Personal Property from the Subleased Premises upon the expiration or earlier termination of the Sublease. This Agreement shall be governed by and construed in accordance with the laws of the State of California. Any waiver by either party of any breach of any term or condition of this Agreement shall not operate as a waiver of any other breach of such term or condition or of any other term or condition nor shall any failure to enforce such provision hereof operate as a waiver of such provision or of any other provision hereof, nor constitute nor be deemed as a waiver or release of any other party for anything arising out of, connected with or based upon this Agreement. The parties each agree to execute and deliver such other documents, certificates and agreements, and to take such other actions, as may be reasonably necessary or appropriate to carry out and further the purposes of this Agreement. In the event of any litigation involving the parties to this Agreement to enforce any provision of this Agreement, to enforce any remedy available upon default under this Agreement, or seeking a declaration of the rights 19 Mr. Marcel Gani June 3, 1997 Page 3 of either party under this Agreement, the prevailing party shall be entitled to recover from the other party such attorneys' fees and costs as may reasonably be incurred, as awarded by the court hearing the matter. If any term, covenant, condition or provision of this Agreement, or the application thereof to any person or circumstance, shall to any extent be held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, covenants, conditions or provisions of this Agreement, or the application thereof to any person or circumstance, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. This Agreement constitutes the entire agreement of the parties with respect to the Personal Property, and supersedes all prior or contemporaneous agreements, oral or written, concerning the subject matter hereof. If the terms and conditions of this Agreement are satisfactory, please indicate your acknowledgment and agreement by executing a copy of this Agreement where indicated below. Very truly yours, AT HOME CORPORATION, a Delaware corporation By: /s/ David Pine ------------------------------------- David Pine Vice President and General Counsel ACKNOWLEDGED AND AGREED: JUNIPER NETWORKS, INC., a California corporation By: /s/ Marcel Gani ----------------------------- Its: CFO ---------------------------- Date: 06/05/97 --------------------------- 20 LEASE DATE: December 13, 1995 TENANT: At Home Corporation, a Delaware corporation ADDRESS OF TENANT: 385 Ravendale Drive Mountain View, California LANDLORD: Spieker Properties, L.P., a California limited partnership ADDRESS OF LANDLORD: 2180 Sand Hill Road, #200, Menlo Park, CA 94025 Project Description: That two (2) building project totaling 66,840 square feet commonly known as 355 - 385 Ravendale Drive, Mountain View, California. The project is outlined in green on Exhibit A. Building Description: That 32,908 square foot, one-story building known as 385 Ravendale Drive, Mountain View, California. The building is outlined in blue on Exhibit A. Premises: That approximately 32,908 square feet of rentable area commonly known as 385 Ravendale Drive, Mountain View, California. The demised premises is outlined in red on exhibit A. Permitted Use: Tenant's use of the Premises shall include general office, marketing, sales, research and development, storage and all other legally related uses. Occupancy Density: 3.3 per 1,000 square feet. Scheduled Term Commencement Date: January 1, 1996 Length of Term: Seventy-Two (72) months Rent: Base Rent: see addendum 1 $__________________ Estimated First Year Basic Operating Costs $4,228.68 per month Security Deposit: Thirty-Nine Thousand Four Hundred Eighty Nine Dollars and Sixty Cents ($39,489.60). Tenant's Proportionate Share: Of Building: 100% Of Project: 49.23% The foregoing Basic Lease information is incorporated into and made part of this Lease. Each reference in this lease to any Basic Lease information shall mean the respective information above and shall be construed to incorporate all of the terms provided under the particular Lease paragraph pertaining to such information. In the event of any conflict between the Basic Lease Information and the lease, the latter shall control. EXHIBIT "A" -1- 21 TABLE OF CONTENTS Page Basic Lease Information.............................................. 1 Table of Contents.................................................... 2 1. Premises............................................................. 3 2. Possession and Lease Commencement.................................... 3 3. Term................................................................. 3 4. Use.................................................................. 3 5. Rules and Regulations................................................ 4 6. Rent................................................................. 4 7. Basic Operating Cost................................................. 4 8. Insurance and Indemnification........................................ 5 9. Waiver of Subrogation................................................ 6 10. Landlord's Repairs and Services...................................... 6 11. Tenant's Repairs..................................................... 6 12. Alterations.......................................................... 6 13. Signs................................................................ 7 14. Inspection/Posting Notices........................................... 7 15. Utilities............................................................ 7 16. Subordination........................................................ 7 17. Financial Statements................................................. 8 18. Estoppel Certificate................................................. 8 19. Security Deposit..................................................... 8 20. Tenant's Remedies.................................................... 8 21. Assignment and Subletting............................................ 8 22. Quiet Enjoyment...................................................... 9 23. Condemnation......................................................... 9 24. Casualty Damage...................................................... 9 25. Holding Over......................................................... 10 26. Default.............................................................. 10 27. Liens................................................................ 11 29. Transfers by Landlord................................................ 11 30. Right of Landlord to Perform Tenant's Covenants...................... 12 31. Waiver............................................................... 12 32. Notices.............................................................. 12 33. Attorney's Fees...................................................... 12 34. Successors and Assigns............................................... 12 35. Force Majeure........................................................ 12 36. Miscellaneous........................................................ 12 37. Additional Provisions................................................ 13 EXHIBIT "A" Site Plan EXHIBIT "B" Floor Plan EXHIBIT "C" Legal Description Page 2 22 LEASE THIS LEASE is made as of the 12th day of December, 1995, between Spieker Properties L.P., a California limited partnership (hereinafter called "Landlord") and At Home Corporation, a Delaware corporation (hereinafter called "Tenant"). PREMISES 1. Landlord leases to Tenant and tenant leases from Landlord, upon the terms and conditions hereafter set forth, those premises (the "Premises") outlined in red on Exhibit "A" and described in the Basic Lease information. The Premises may be all or part of the building (the "Building") or of the project (the "project") which may consist of more than one building. The Building and Project are outlined in blue and green respectively on Exhibit "A". POSSESSION AND LEASE COMMENCEMENT 2. A. In the event this Lease pertains to a Premises in which the interior improvements have already been constructed (existing improvements), the provisions of this subparagraph 2.A. shall apply and the Term Commencement Date shall be the later of (1) the earlier of the date on which (a) Tenant takes possession of some or all of the Premises, or (b) Landlord delivers the Premises to Tenant, (2) or one day after Landlord delivers to Tenant a fully executed Lease Termination Agreement from Network Computing Devices whereby Network Computing Devices relinquishes all rights, title, and interest to Premises, (3) if for any reason Landlord cannot deliver possession of the Premises to Tenant on the Scheduled Term Commencement Date, Landlord shall not be subject to any liability therefor, nor shall Landlord be in default hereunder, and Tenant agrees to accept possession of the Premises at such time as Landlord is able to deliver the same, which date shall then be deemed the Term Commencement Date. Tenant shall not be liable for any Rent for any period prior to delivery of the Premises. Tenant acknowledges that it has inspected and accepts the Premises in their present condition as suitable for the purpose for which the Premises are leased. Tenant agrees that said Premises and other improvements are in good and satisfactory condition as of when possession was taken. Tenant further acknowledges that no representations as to the condition or repair of the Premises, nor promises to alter, remodel, or improve the Premises have been made by Landlord, unless such are expressly set forth in this Lease or the Addendum hereto. Tenant shall, upon demand, execute and deliver to Landlord a letter of acceptance of delivery of the Premises. Premises shall be delivered to Tenant in broom clean condition. TERM 3. The Term of this Lease shall commence on the Term Commencement Date and continue in full force and effect for the number of months specified as the Length and Term in the Basic Lease Information or until this Lease is terminated as otherwise provided herein. If the Term Commencement Date is a date other than the first day of the calendar month, the Term shall be the number of months of the Length of Term in addition to the remainder of the calendar month following the Term Commencement Date. USE 4. A. Tenant shall use the Premises for the Permitted Use and for no other use or purpose without prior written consent of Landlord. No increase in the Occupant Density of the Premises shall be made without the prior written consent of Landlord. Tenant and its employees, customers, visitors, and licensees shall have the non-exclusive right to use, in common with other parties occupying the Buildings or Project, the parking areas and driveways of the Project, subject to such reasonable rules and regulations as Landlord may from time to time prescribe and deliver to Tenant. B. Tenant shall not permit any odors, smoke, dust, gas, substances, noise or vibrations to emanate from the Premises, nor take any action which would constitute a nuisance or would unreasonably disturb, obstruct or endanger any other tenants of the Building or Project in which the Premises are situated or unreasonably interfere with their use of their respective premises. Tenant shall not receive, store or otherwise handle any product, material or merchandise which is toxic, harmful, explosive, highly inflammable or combustible other than customary amounts of office and janitorial supplies used in accordance with all applicable laws. Storage outside the Premises of materials, vehicles or any other items Landlord deems objectionable is prohibited without Landlord's prior written consent. Tenant shall not use or allow the Premises to be used for any improper, immoral, unlawful or objectionable purpose, nor shall Tenant cause or maintain or permit any nuisance in, on or about the Premises. Tenant shall not commit or suffer the commission of any waste in, on or about the Premises. Tenant shall not allow any sale by auction upon the Premises, or place any loads upon the floors, walls or ceilings which endanger the structure, or place any harmful liquids in the drainage system of the Building or Project. No waste, materials or refuse shall be dumped upon or permitted to remain outside the Premises except in trash containers placed inside exterior enclosures designated for that purpose by Landlord. Page 3 23 C. Tenant shall not use the Premises or permit anything to be done in or about the Premises which will in any way conflict with any law, statute, ordinance or governmental rule or regulation now in force or which may hereafter be enacted or promulgated. Tenant shall at its sole cost and expense obtain any and all licenses or permits necessary for Tenant's use of the Premises. Tenant shall promptly comply with the requirements of any board of five underwriters or other similar body now or hereafter constituted relating to or affecting the use or occupancy of the Premises. The judgment of any court of competent jurisdiction or the admission of Tenant in any actions against Tenant, whether Landlord be a party thereto or not, that Tenant has so violated any such law, statute, ordinance, rule, regulation or requirement, shall be conclusive of such violation as between Landlord and Tenant. Tenant shall not do or permit anything to be done in, on or about the Premises or bring or keep anything which will in any way increase the rate of any insurance upon the Premises, Building or Project, or upon any contents therein or cause a cancellation of said insurance or otherwise affect said insurance in any manner. Tenant shall indemnify Landlord and hold Landlord harmless against any loss, expense, damage, attorneys' fees or liability arising out of the failure of Tenant to comply with any applicable law or comply with the requirements as set forth herein. RULES AND 5. Tenant and Tenant's agents, employees, and invitees REGULATIONS shall faithfully observe and comply with any rules and regulations Landlord may from time to time prescribe in writing and delivered to Tenant for the purpose of maintaining the proper care, cleanliness, safety, traffic flow and general order of the Premises or Project. Landlord shall not be responsible to Tenant for the non-compliance by any other tenant or occupant of the Building or Project with any of the rules and regulations. RENT 6. Tenant shall pay to Landlord, without demand throughout the term, Rent as specified in the Basic Lease information, payable in monthly installments in advance on or before the first day of each calendar month, in lawful money of the United States, without deduction or offset whatsoever to Landlord at the address specified in the Basic Lease Information or to such other firm or to such other place as Landlord may from time to time designate in writing. Rent for the first full month of the Term shall be paid by Tenant upon Tenant's execution of this Lease. If the obligation for payment of Rent commences on other than the first day of a month, then Rent shall be prorated and the prorated installment shall be paid on the first day of the calendar month next succeeding the Term Commencement Date. See Addendum #1. BASIC 7. A. BASIC OPERATING COST. In addition to the Base Rent OPERATING required to be paid hereunder, Tenant shall pay as COSTS additional Rent, Tenant's Proportionate Share, as defined in the Basic Lease Information, of Basic Operating Cost in the manner set forth below. Basic Operating Cost shall mean all expenses and costs of every kind and nature which Landlord shall pay or become obligated to pay, or would be required to pay if the Project were fully occupied, because of or in connection with the management, maintenance, preservation and operation of the Project and its supporting facilities servicing the Project (determined in accordance with generally accepted accounting principles, consistently applied) including, but not limited to, the following: (1) All real estate taxes, possessory interest taxes, business or license taxes or fees, service payment in lieu of such taxes or fees, annual or periodic license or use fees, excises, transit charges, housing fund assessments, open space charge, assessments, levies, fees or charges, general and special, ordinary and extraordinary, unforeseen as well as foreseen, of any kind (including fees "in-lieu" of any such tax or assessment) which are assessed, levied, charged, confirmed, or imposed by any public authority upon the Project, its operations or the rent (or any portion or component thereof), except (a) inheritance or estate taxes imposed upon or assessed against the Project, or any part thereof or interest therein, and (b) taxes computed on the basis of the net income of Landlord or the owner of any interest therein. See Addendum #7. (2) All insurance premiums and costs, including, but not limited to, any deductible amounts, premiums and cost of fire, casualty and liability coverage, rental abatement and special hazard insurance applicable to the Project and Landlord's personal property used in connection therewith; provided, however, that Landlord may, but shall not be obligated to, carry special landlord insurance covering losses caused by casualty not insured under standard fire and extended coverage insurance. (3) Repairs, replacements and general maintenance for the Premises, Building and Project (except for those repairs expressly the responsibility of Landlord, those repairs paid for by proceeds of insurance or by Tenant or other third parties and alterations attributable solely to tenants of the Project other than Tenant). (4) All maintenance, janitorial and service agreements and costs of supplies and equipment used in maintaining the Premises, Building and Project and the equipment therein and the adjacent sidewalks, driveways, parking and service areas, including, without limitation, alarm service, window cleaning, elevator maintenance, Building exterior maintenance and landscaping. (5) Utilities which benefit all or a portion of the Premises. (6) A management and accounting cost recovery equal to three percent (3%) of Base Rent. See Addendum #8. In the event that the Project is not fully occupied during any fiscal year of the Term as determined by Landlord, an adjustment shall be made in computing the Basic Operating Cost for such year so that Basic Operating Cost shall be computed as though the building had been one hundred percent (100%) occupied; provided, however, that in no event shall Landlord be entitled to collect in excess of one hundred percent (100%) of the total Basic Operating Cost from all of the tenants in the Project including Tenant. Page 4 24 All costs and expenses shall be determined in accordance with generally accepted accounting principles which shall be consistently applied. Basic Operating Cost shall not include specific costs incurred for the account of, separately billed to and paid by specific tenants. Notwithstanding anything herein to the contrary, any instance wherein Landlord, at Landlord's sole but reasonable discretion, deems Tenant to be responsible for any amounts greater than its Proportionate Share. Landlord shall have the right to allocate costs in any manner Landlord deems appropriate. B. PAYMENT OF ESTIMATED BASIC OPERATING COST. "Estimated Basic Operating Cost" for any particular year shall mean Landlord's estimate of the Basic Operating Cost for such fiscal year made prior to commencement of such fiscal year as hereinafter provided. Landlord shall have the right from time to time to revise its fiscal year and interim accounting periods so long as the periods as so revised are reconciled with prior periods in accordance with generally accepted accounting principles applied in a consistent manner. During the last month of each fiscal year during the Term, or as soon thereafter as practicable, Landlord shall give Tenant written notice of the Estimated Basic Operating Cost for ensuing fiscal year. Tenant shall pay Tenant's Proportionate Share of the Estimated Basic Operating Costs with installments of Base Rent for the fiscal year to which the Estimated Basic Operating costs applies in monthly installments on the first day of each calendar month during such year, in advance. If at any time during the course of the fiscal year, Landlord determines that Basic Operating Cost will apparently vary from the then Estimated Basic Operating Cost by more than ten percent (10%), Landlord may, by written notice to Tenant, revise the Estimated Basic Operating Cost for the balance of such fiscal year and Tenant shall pay Tenant's Proportionate Share of the Estimated Basic Operating Cost as to revised for the balance of the then current fiscal year on the first of each calendar month thereafter. C. COMPUTATION OF BASIC OPERATING COST ADJUSTMENT. "Basic Operating Cost Adjustment" shall mean the difference between Estimated Basic Operating Cost and Basic Operating Cost for any fiscal year determined as hereinafter provided. Within one hundred twenty (120) days after the end of each fiscal year, as determined by Landlord, or as soon thereafter as practicable, Landlord shall deliver to Tenant a statement of Basic Operating Cost for the fiscal year just ended accompanied by a computation of Basic Operating Cost Adjustment. If such statement shows that Tenant's payment based upon Estimated Basic Operating Cost is less than Tenant's Proportionate Share of Basic Operating Cost, then Tenant shall pay to Landlord the difference within twenty (20) days after receipt of such statement. If such statement shows that Tenant's payments of Estimated Basic Operating Cost exceed Tenant's Proportionate Share of Basic Operating Costs, then (provided that Tenant is not in default under this Lease), Landlord shall pay to Tenant the difference within twenty (20) days of such statement. If this Lease has been terminated or the Term hereof has expired prior to the date of such statement, then the Basic Operating Cost Adjustment shall be paid by the appropriate party within twenty (20) days after the date of delivery of the statement. Should this Lease commence or terminate at any time other than the first day of the fiscal year, Tenant's Proportionate Share of the Basic Operating Cost adjustment shall be prorated by reference to the exact number of calendar days during such fiscal year for which Tenant is obligated to pay Base Rent. D. NET LEASE. This shall be a net Lease and Base Rent shall be paid to Landlord absolutely net of all costs and expenses except as herein provided. The provisions for payment of Basic Operating Cost and the Basic Operating Cost Adjustment are intended to pass on to tenant and reimburse Landlord for all costs and expenses of the nature described in Paragraph 7.A. incurred in connection with ownership and operation of the Building or Project and such additional facilities now and in subsequent years as may be determined by Landlord to be necessary to the Building or Project. E. TENANT AUDIT. Tenant shall have the right, at Tenant's expense and upon not less than five (5) days prior written notice to Landlord, to review at reasonable times, in Landlord's office, Landlord's books and records applicable to Tenant's Lease for purposes of verifying Landlord's calculation of the Basic Operating Cost and Basic Operating Cost Adjustment. In the event that Tenant shall dispute the amount set forth in any statement provided by Landlord under Paragraph 7.B. or 7.C. above, Tenant shall have the right, not later than twenty (20) days following the receipt of such statement to cause Landlord's books and records with respect to such fiscal year to be audited by an accountant selected by Tenant and subject to Landlord's reasonable right of approval. The Basic Operating Cost Adjustment shall be appropriately adjusted on the basis of such audit. If such audit discloses a liability for a refund in excess of ten percent (10%) of Tenant's Proportionate Share of the Basic Operating Cost Adjustment previously reported, the cost of such audit shall be borne by Landlord; otherwise, the cost of such audit shall be paid by Tenant. If Tenant shall not request an audit in accordance with the provisions of this Paragraph 7.E. within forty-five (45) days of receipt of Landlord's statement provided pursuant to Paragraph 7.B. or 7.C., such statement shall be final and binding for all purposes hereof. INSURANCE AND 8. A. CASUALTY INSURANCE. Landlord agrees to maintain INDEMNIFICATION insurance insuring the Buildings of the Project of which the Premises are a part, against fire, lightning, extended coverage, vandalism and malicious mischief in an amount not less than the full replacement cost thereof. Such insurance shall be for the sole benefit of Landlord and under its sole control. Landlord shall not be obligated to insure any furniture, equipment, machinery, goods or supplies not covered by this Lease which Tenant may keep or maintain in the Premises or any leasehold improvements, additions or alterations which Tenant may make upon the Premises. B. LIABILITY INSURANCE. Tenant shall purchase at its own expense and keep in force during this Lease a policy or policies of comprehensive liability insurance, including personal injury and property damage, in the amount of not less than Five Hundred Thousand Dollars ($500,000.00) for property damage and Two Million Dollars ($2,000,000.00) per occurrence for personal injuries or deaths of persons occurring in or Page 5 25 about the Premises and Project. Said policies shall (1) name Landlord and, if applicable, its agent, and any party holding an interest to which this Lease may be subordinated as additional insureds, (2) be issued by an insurance company acceptable to Landlord and licensed to do business in the State of California, and (3) provide that said insurance shall not be canceled unless thirty (30) days prior written notice shall have been given to Landlord. Said policy or policies or certificates thereof shall be delivered to Landlord by Tenant upon commencement of the Lease and upon each renewal of said insurance. C. INDEMNIFICATION. Landlord shall not be liable to Tenant for any loss or damage to person or property caused by theft, fire, act of God, acts of a public enemy, riot, strike, insurrection, war, court order, requisition or order of governmental body or authority or for any damage or inconvenience which may arise through repair or alteration of any part of the Building or Project or failure to make any such repair except as expressly otherwise provided in Paragraphs 10 and 12. Tenant shall indemnify Landlord and hold Landlord harmless from any and all loss, cost, damage, injury or expense arising out of or related to (1) claims of injury to or death of persons or damage to property occurring or resulting directly or indirectly from the use or occupancy of the Premises or from activities of Tenant its agents, servants, employees or invitees in or about the Premises or Project (2) claims for work or labor performed or for materials or supplies furnished to or at the request of Tenant or in connection with performance of any work done for the account of Tenant within the Premises or Project and (3) claims arising from any breach or default on the part of Tenant in the performance of any covenant contained in this Lease. Such indemnity shall include without limitation the obligation to provide all reasonable costs of defense against any such claims including any action or proceeding brought against Landlord. The foregoing indemnity shall not be applicable to claims arising from the sole negligence or willful misconduct of Landlord, or Landlord's agent, employees or contractors. The provisions of this paragraph shall survive the expiration or termination of this Lease with respect to any claims or liability occurring prior to such expiration or termination. See Addendum #9. WAIVER OF SUBROGATION 9. To the extent permitted by law and without affecting the coverage provided by insurance required to be maintained hereunder, Landlord and Tenant each waive any right to recover against the other (a) damages for injury to or death of persons, (b) damages to property, (c) damages to the Premises or any part thereof, or (d) claims arising by reason of the foregoing, except to the extent the claims in (a), (b), (c), or (d) are caused by the negligence or willful misconduct of Landlord or Tenant as applicable. This provision is intended to waive fully, and for the benefit of each party, any rights and/or claims which might give rise to a right of subrogation on any insurance carrier. The coverage obtained by each party pursuant to this Lease shall include, without limitation, a waiver of subrogation by the carrier which conforms to the revisions of this paragraph. LANDLORD'S REPAIRS AND SERVICES 10. Landlord shall at Landlord's expense maintain the structural soundness of the roof, foundations and exterior walls of the Building in good repair, reasonable wear and tear excepted. The term "walls" as used herein shall not include windows, glass or plate glass, doors, special store fronts or office entries. The term "roof" as used herein shall not include skylights, smoke hatches or roof vents. Landlord shall perform on behalf of Tenant and other tenants of the Project the maintenance of the public and common areas of the Project including, but not limited to, the landscaped areas, parking areas, driveways, the truck staging areas, rail spur areas, fire sprinkler systems, sanitary and storm sewer lines, utility services, electric and telephone equipment servicing the Building(s), exterior lighting, and anything which affects the operation and exterior appearance of the Project, which determination shall be at Landlord's sole but reasonable discretion. Tenant shall reimburse Landlord for all such costs described in the preceding sentence in accordance with Paragraph 7. Any damage caused by or repairs necessitated by any act of Tenant may be repaired by Landlord at Landlord's option and at Tenant's expense. Tenant shall immediately give Landlord written notice of any defect or need of repairs after which Landlord shall have reasonable opportunity to repair same. Landlord shall commence to proceed with repairs within ten (10) days after receiving notice. Landlord's liability with respect to any defects, repairs or maintenance for which Landlord is responsible under any of the provisions of this Lease shall be limited to the cost of such repairs of maintenance. See Addendum #10. TENANT'S REPAIRS 11. Tenant shall, at Tenant's expense, maintain all parts of the Premises in a good clean and secure condition promptly making all necessary repairs and replacements including, but not limited to, all windows, glass, doors, and any special office entries, walls and wall finishes, floor covering, heating, ventilating and air conditioning systems, truck doors, dock bumpers, dock plates and levelers, roofing except for structural aspects thereof, plumbing work and fixtures, down spouts, skylights, smoke hatches and roof vents. Tenant shall at Tenant's expense also perform necessary pest extermination and regular removal of trash and debris. Tenant shall, at its own expense, enter into a regularly scheduled preventive maintenance/service contract with a maintenance contractor for servicing all hot water, heating and air conditioning systems and equipment within or serving the Premises. The maintenance contractor and the contract must be approved by Landlord. The service contract must include all services as often as is necessary to maintain the equipment in good working order, and must become effective and a copy thereof delivered to Landlord within thirty (30) days of the Term Commencement Date. Tenant shall not damage any demising wall or disturb the integrity and support provided by any demising wall and shall, at its sole expense, immediately repair any damage to any demising wall caused by Tenant or its employees, agents or invitees. See Addendum #11. ALTERATIONS 12. Tenant shall not make, or allow to be made, any alterations or physical additions in, about or to the Premises without obtaining the prior written consent of Landlord, which consent shall not be unreasonably withheld with respect to proposed alterations and additions which (a) comply with all applicable laws, ordinances, rules and regulations, (b) are in Landlord's option compatible with the Project and its Page 6 26 mechanical, plumbing, electrical, and heating/ventilation/ air conditioning systems, and (c) in Landlord's opinion will not interfere with the use and occupancy of any other portion of the Building or Project by any other tenant or its invitees. Specifically, but without limiting the generality of the foregoing, Landlord shall have the right of consent for all plans and specifications for the proposed alterations or additions, construction means and methods, any contractor or subcontractor to be employed on the work of alterations or additions, and the time for performance of such work. Tenant shall also supply to Landlord any documents and information reasonably requested by Landlord in connection with its consideration of a request for approval hereunder. Tenant must have Landlord's written approval and all appropriate permits and licenses prior to the commencement of said alterations and additions. All alterations and additions permitted hereunder shall be made and performed by Tenant without cost or expense to Landlord including any costs or expenses which Landlord may incur in electing to have an outside agency review said plans and specifications. Landlord shall have the right to require Tenant to remove any or all alterations, additions, improvements and partitions made by Tenant and restore the Premises to their original condition by the termination of this Lease, by lapse of time or otherwise, all at Tenant's expense. All such removals and restoration shall be accomplished in a good workmanlike manner so as not to cause any damage to the Premises or Project whatsoever. If Landlord so elects, such alterations, physical additions or improvements shall become the property of Landlord and surrendered to Landlord upon the termination of this Lease by lapse of time or otherwise; provided, however, that this clause shall not apply to trade fixtures or furniture owned by Tenant. In addition to and wholly apart from its obligation to pay Tenant's Proportionate Share of Basic Operating Costs, tenant shall be responsible for and shall pay prior to delinquency any taxes or governmental service fees, possessory interest taxes, fees or charges in lieu of any such taxes, capital levies, or other charges imposed upon, levied with respect to or assessed against its personal property, on the value of its alterations, additions or improvements and on its interest pursuant to this Lease. To the extent that any such taxes are not separately assessed or billed to Tenant, Tenant shall pay the amount thereof as invoiced to Tenant by Landlord. See Addendum #2. SIGNS 13. All signs, notices and graphics of every kind or character, visible in or from public view or corridors, the common areas or the exterior of the Premises, shall be subject to Landlord's prior written approval, which Landlord shall have the right to withhold in its absolute and sole discretion. Tenant shall not place or maintain any banners whatsoever or any window decor in or on any exterior window or window fronting upon any common areas or service area or upon any truck doors or main doors without Landlord's prior written approval which Landlord shall have the right to grant or withhold in its absolute and sole discretion. Any installation of signs or graphics on or about the Premises and Project shall be subject to any applicable governmental laws, ordinances, regulations and to any other requirements imposed by Landlord. Tenant shall remove all such signs and graphics by the termination of this Lease. Such installations and removals shall be made in such manner as to avoid injury to or defacement of the Premises, Building or Project and any other improvements contained therein, and Tenant shall repair any injury or defacement including, without limitation, discoloration caused by such installation or removal. INSPECTION/ POSTING NOTICES 14. After reasonable prior written notice, except in emergencies where no such notice shall be required, Landlord, its agents and representatives, shall have the right to enter the Premises to inspect the same, to clean, to perform such work as may be permitted or required hereunder, to make repairs or alterations to the Premises or Project or to other tenant spaces therein, to deal with emergencies, to post such notices as may be permitted or required by law to prevent the perfection of liens against Landlord's interest in the Project or to exhibit the Premises to prospective tenants (during the last six (6) months of the term only), purchasers, encumbrances or others, or for any other purpose as Landlord may deem necessary or desirable; provided, however, that Landlord shall not unreasonably interfere with Tenant's business operations. Tenant shall not be entitled to any abatement of Rent by reason of the exercise of any such right of entry. Six months prior to the end of the Lease, Landlord shall have the right to erect on the Premises and/or Project a suitable sign indicating that the Premises are available for lease. Tenant shall meet with Landlord for a joint inspection of the Premises at the time of vacating. In the event of Tenant's failure to give such notice or participate in such joint inspection, Landlord's inspection at or after Tenant's vacating the Premises shall conclusively be deemed correct for purposes of determining Tenant's responsibility for repairs and restoration. UTILITIES 15. Tenant shall pay for all water, gas, heat, air conditioning, light, power, telephone, sewer, sprinkler charges and other utilities and services used on or from the Premises, together with any taxes, penalties, surcharges or the like pertaining thereto, and maintenance charges for utilities and shall furnish all electric light bulbs, ballasts and tubes. If any such services are not separately metered to Tenant, Tenant shall pay a reasonable proportion, as determined by Landlord, of all charges jointly serving other premises. Landlord shall not be liable for any damages directly or indirectly resulting from nor shall the Rent or any monies owed Landlord under this Lease herein reserved be abated by reason of (a) the installation, use or interruption of use of any equipment used in connection with the furnishing of any of the foregoing utilities and services, (b) failure to furnish or delay in furnishing any such utilities or services when such failure or delay is caused by acts of God or the elements, labor disturbances of any character, any other accidents or other conditions beyond the reasonable control of Landlord, or (c) the limitation, curtailment, rationing or restriction on use of water, electricity, gas or any other form of energy or any other service or utility whatsoever serving the Premises or Project. Landlord shall be entitled to cooperate voluntarily and in a reasonable manner in the efforts of national, state or local governmental agencies or utility suppliers in reducing energy or other resource consumption. The obligations to make services available hereunder shall be subject to the limitations of any such voluntary, reasonable program. SUBORDINATION 16. This Lease shall be subject and subordinate at all times to (a) all ground leases or underlying leases which may now exist or hereafter be executed affecting the Premises and/or the land upon which the Premises and Project are situated, or both, and (b) any mortgage or deed of trust which may now exist or be placed upon said Project, land, ground leases or underlying leases, or Landlord's interest or estate in any of Page 7 27 said items, which is specified as security. Notwithstanding the foregoing, Landlord shall have the right to subordinate or cause to be subordinated any such ground leases or underlying leases or any such liens to this Lease. In the event that any ground lease or underlying lease terminates for any reason or any mortgage or deed of trust is foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any subordination, attorn to and become the Tenant of the successor in interest to Landlord at the option of such successor in interest. Tenant shall execute and deliver, upon demand by Landlord and in the form requested by Landlord, any additional documents evidencing the priority of subordination of this Lease with respect to any such ground leases or underlying leases or any such mortgage or deed of trust. SEE ADDENDUM # 12. FINANCIAL STATEMENTS 17. At the request of Landlord, Tenant shall provide to Landlord its current financial statements or other information discussing financial worth which Landlord shall use solely for purposes of this Lease and in connection with the ownership, management and disposition of the property subject hereto. ESTOPPEL CERTIFICATES 18. Tenant agrees from time to time within ten business (10) days after request of Landlord, to deliver to Landlord, or Landlord's designee, and estoppel certificate stating that this Lease is in full force and effect, the date to which rent has been paid, the unexpired portion of this Lease and such other matters pertaining to this Lease as may be reasonably requested by Landlord. Failure by Tenant to execute and deliver such certificate shall constitute an acceptance of the Premises and acknowledgment by Tenant that the statements included are true and correct without exception. Landlord and Tenant intend that any statement delivered pursuant to this paragraph may be relied upon by any mortgagee, beneficiary, purchaser or prospective purchaser of the Project or any interest therein. The parties agree that Tenant's obligation to furnish such estoppel certificates in a timely fashion is a material inducement for Landlord's execution of the Lease. SECURITY DEPOSIT 19. Tenant agrees to deposit with Landlord upon execution of this Lease, a Security Deposit as stated in the Basic Lease Information which sum shall be held by Landlord, without obligation for interest, as security for the performance of Tenant's covenants and obligations under this Lease, it being expressly understood and agreed that such deposit is not an advance rental deposit or a measure of damages incurred by Landlord in case of Tenant's default. Upon the occurrence of any event of default by Tenant beyond the applicable notice and cure period, Landlord may, from time to time, without prejudice to any other remedy provided herein or provided by law, use such funds to the extent necessary to make good any arrears of Rent or other payments due to Landlord hereunder, and any other damage, injury, expense or liability caused by such event of default, and Tenant shall pay to Landlord, on demand, the amount so applied in order to restore the Security Deposit to its original amount. SEE ADDENDUM #3 AND #13. TENANT'S REMEDIES 20. Tenant shall look solely to Landlord's interest in the Project for recovery of any judgment from Landlord. Landlord, or if Landlord is a partnership, its partners whether general or limited, or if it is a corporation, its directors, officers or shareholders, shall never be personally liable for any such judgment. Any lien obtained to enforce any such judgment and any levy of execution thereon shall be subject and subordinate to any lien, mortgage or deed of trust on the Project. ASSIGNMENT AND SUBLETTING 21. A. Tenant shall not assign or sublet the Premises or any part thereof without Landlord's prior written approval except as provided herein. If Tenant desires to assign this Lease or sublet any or all of the Premises, Tenant shall give Landlord written notice forty-five (45) days prior to the anticipated effective date of the assignment or sublease. Landlord shall then have a period of twenty (20) days following receipt of such notice to notify Tenant in writing that Landlord elects either (1) to terminate this Lease as to the space so affected as of the date so requested by Tenant, or (2) to permit Tenant to assign this Lease or sublet such space, subject, however, to Landlord's prior written approval of the proposed assignee or subtenant and of any related documents or agreements associated with the assignment or sublease, such consent not to be unreasonably withheld so long as the use of the Premises by such proposed assignee or subtenant would be a Permitted Use and would not in Landlord's opinion increase Occupant Density of the Project, the proposed assignee or subtenant is of sound financial condition. If Landlord should fail to notify Tenant in writing of such election within said period, Landlord shall be deemed to have waived option (1) above, but written approval by Landlord of the proposed assignee or subtenant shall be required. Failure by Landlord to approve a proposed assignee or subtenant shall not cause a termination of this Lease. D. If Tenant is a corporation, a transfer of corporate shares by sale, assignment, bequest, inheritance, operation of law or other disposition (including such a transfer to or by a receiver or trustee in federal or state bankruptcy, insolvency or other proceedings), so as to result in a change in the present control of such corporation or any of its parent corporations by the person or persons owning a majority of said corporate shares, shall constitute an assignment for purposes of this paragraph. SEE ADDENDUM #15. Page 8 28 E. If Tenant is a partnership, joint venture or other unincorporated business form, a transfer of the interest of persons, firms or entities responsible for managerial control of Tenant by sale, assignment, bequest, inheritance, or operation of law or other disposition, so as to result in a change in the present control of said entity and/or a change in the identity of the persons responsible for the general credit obligations of said entity shall constitute an assignment for all purposes of this paragraph. F. No assignment or subletting by Tenant shall relieve Tenant of any obligations under this Lease. Any assignment or subletting which conflicts with the provisions hereof shall be void. SEE ADDENDUM #16. QUIET ENJOYMENT 22. Landlord represents that it has full right and authority to enter into this Lease and that Tenant, upon paying the Rent and performing its other covenants and agreements herein set forth, shall peaceably and quietly have, hold and enjoy the Premises for the Term hereof without hindrance or molestation from Landlord, subject to the terms and provisions of this Lease. CONDEMNATION 23. A. If the whole, or any substantial portion of the Project of which the Premises are a part, should be taken or condemned for any public use under governmental law, ordinance, or regulation, or by right of eminent domain, or by private purchase in lieu thereof, and the taking would prevent or materially interfere with the Permitted Use of the Premises, this Lease shall terminate and the Rent shall be abated during the unexpired portion of this lease, effective when the physical taking of said Premises shall have occurred. B. If a portion of the Project of which the Premises are a part should be taken or condemned for any public use under any governmental law, ordinance, or regulation, or by right of eminent domain, or by private purchase in lieu thereof, and this Lease is not terminated as provided in subparagraph 23.A. above, this Lease shall not terminate, but the Rent payable hereunder during the unexpired portion of the Lease shall be reduced to such extent as may be fair and reasonable under all of the circumstances. C. Landlord shall be entitled to any and all payment, income, rent, award, or any interest therein whatsoever which may be paid or made in connection with such taking or conveyance and Tenant shall have no claim against Landlord or otherwise for the value of any unexpired portion of this Lease. Notwithstanding the foregoing paragraph, any compensation specifically awarded Tenant for loss of business. Tenant's personal property, moving cost or loss of goodwill, shall be and remain the property of Tenant. CASUALTY DAMAGE 24. A. If the Premises should be damaged or destroyed by fire, tornado or other casualty, Tenant shall give immediate written notice thereof to Landlord. Within thirty (30) days of such notice, Landlord shall notify Tenant whether in Landlord's opinion such repairs can be made either (1) within ninety (90) days, (2) in more than ninety (90) days, but in less than one hundred eighty (180) days, or (3) in more than one hundred eighty (180) days from the date of such notice; Landlord's determination shall be binding on Tenant. B. If the Premises should be damaged by fire, tornado or other casualty but only to such extent that rebuilding or repairs can in Landlord's estimation be completed within ninety (90) days after the date upon which Landlord is notified by Tenant of such damage, this Lease shall not terminate, and Landlord shall at its sole cost and expense thereupon proceed with reasonable diligence to rebuild and repair the Premises to substantially the condition in which they existed prior to such damage, except that Landlord shall not be required to rebuild, repair or replace any part of the partitions, fixtures, additions and other improvements which may have been placed in, on or about the Premises by Tenant. If the Premises are untenantable in whole or in part following such damage, the Rent payable hereunder during the period in which they are untenantable shall be reduced to such extent as may be fair and reasonable under all of the circumstances. C. If the Premises should be damaged by fire, tornado or other casualty but only to such extent that rebuilding or repairs can in Landlord's estimation be completed in more than ninety (90) days but in less than one hundred eighty (180) days, then Landlord shall have the option of either (1) terminating the Lease effective upon the date of the occurrence of such damage in which the Rent shall be abated during the unexpired portion of the Lease or (2) electing to rebuild or repair the Premises to substantially the condition in which they existed prior to such damage except that Landlord shall not be required to rebuild, repair or replace any part of the partitions, fixtures, additions and other improvements which may have been placed in, on or about the Premises by Tenant. If the Premises are untenantable in whole or in part following such damage, the Rent payable hereunder during the period in which they are untenantable shall be reduced to such extent as may be fair and reasonable under all of the circumstances. In the event that Landlord should fail to complete such repairs and rebuilding within one hundred eighty (180) days after the date upon which Landlord is notified by Tenant of such damage, such period of time to be extended for delays caused by the fault or neglect of Tenant or because of acts of God, acts of public agencies, labor disputes, strikes, fires, freight embargoes, rainy or stormy weather, inability to obtain materials, supplies or fuels, or delay of the contractors or subcontractors due to such causes or other contingencies beyond the reasonable control of Landlord, Tenant may at its option terminate this Lease by delivering thirty (30) days prior written notice of termination to Landlord as Tenant's exclusive remedy, whereupon all rights and obligations hereunder shall cease and terminate. D. If the Premises should be so damaged by fire, tornado or other casualty that rebuilding or repairs cannot in Landlord's estimation be completed within one hundred eighty (180) days after the date upon which Landlord is notified by Tenant of such damage, this Lease shall terminate, and the Rent shall be abated during the unexpired portion of this Lease, effective upon the date of the occurrence of such damage. E. Notwithstanding anything therein to the contrary, in the event that holder of any indebtedness secured by a mortgage or deed of trust covering the Premises requires that the insurance proceeds be applied to such indebtedness, then Landlord shall have the right to terminate this Lease by delivering written notice of Page 9 29 termination to Tenant within fifteen (15) days after such requirement is made by any such holder, whereupon all rights and obligations hereunder shall cease and terminate. F. The provision of Section 1942, Subdivision 2, and Section 1933, Subdivision 4, of the Civil Code of California is superseded by the foregoing. HOLDING OVER 25. If Tenant shall retain possession of the Premises or any portion thereof without Landlord's consent following the expiration of the Lease or sooner termination for any reason, then Tenant shall pay to Landlord for each day of such retention ONE HUNDRED FIFTY PERCENT (150%) the amount of the daily rental for the first month prior to the date of expiration or termination. Tenant shall also indemnify and hold Landlord harmless from any loss or liability resulting from delay by Tenant in surrendering the Premises, including, without limitation, any claims made by any succeeding tenant founded on such delay. Acceptance of Rent by Landlord following expiration or termination shall not constitute a renewal of this Lease, and nothing contained in this paragraph shall waive Landlord's right of reentry or any other right. Tenant shall be only a tenant at sufference, whether or not Landlord accepts any Rent from Tenant while Tenant is holding over without Landlord's written consent. Additionally, in the event that upon termination of the Lease. Tenant has not fulfilled its obligation with respect to repairs and cleanup of the Premises or any other Tenant obligations as set forth in this Lease, then Landlord shall have the right to perform any such obligations as it deems necessary at Tenant's sole cost and expense, and any time required by Landlord to complete such obligations shall be considered a period of holding over and the terms of this paragraph shall apply. DEFAULT 26. A. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an event of default on the part of Tenant: (1) ABANDONMENT. Vacation or abandonment of the Premises for a continuous period in excess of TWENTY (20) DAYS. Tenant waives any right of notice Tenant may have under section 1951.3 of the Civil Code of the State of California, the terms of this subparagraph 26A being deemed such notice to Tenant as required by said Section 1951.3. (2) NONPAYMENT OF RENT. Failure to pay any installment of Rent or any other amount due and payable hereunder upon the date when said payment is due, such failure continuing without cure by payment of the delinquent Rent and late charge or other obligations for a period of five (5) days after written notice and demand; provided, however, that except as expressly otherwise provided herein. Landlord shall not be required to provide such notice more than twice during any calendar year of the Term, the third such nonpayment constituting default for all purposes hereof without requirements of notice. (3) OTHER OBLIGATIONS. Failure to perform any obligations, agreement or covenant under this Lease other than those matters specified in subparagraphs (1) and (2) of this subparagraph 26A, such failure continuing for fifteen (15) days after written notice of such failure, or such longer period as necessary to remedy such default, provided that Tenant shall continuously and diligently pursue such remedy at all times until such default is cured. (4) GENERAL ASSIGNMENT. A general assignment by Tenant for the benefit of creditors. (5) BANKRUPTCY. The filing of any voluntary petition in bankruptcy by Tenant, or the filing of an involuntary petition by Tenant's creditors, which involuntary petition remains undischarged for a period of thirty (30) days. In the event that under applicable law, the trustee in bankruptcy or Tenant has the right to affirm this Lease and continue to perform the obligations of tenant hereunder, such trustee or Tenant shall, in such time period as may be permitted by the bankruptcy court having jurisdiction, cure all defaults of Tenant hereunder outstanding as of the date of the affirmance of this Lease and provide to Landlord such adequate assurances as may be necessary to ensure Landlord of the continued performance of Tenant's obligations under this Lease. (6) RECEIVERSHIP. The employment of a receiver to take possession of substantially all of Tenant's assets of the Premises, if such attachment or other seizure remains undismissed or undischarged for a period of ten (10) days after the levy thereof. (7) ATTACHMENT. The attachment, execution or other judicial seizure of all or substantially all of Tenant's assets of the Premises, if such attachment or other seizure remains undismissed or undischarged for a period of ten (10) days after the levy thereof. B. REMEDIES UPON DEFAULT. (1) RENT. All failures to pay any monetary obligation to be paid by Tenant under this Lease shall be construed as obligations for payment of Rent. (2) TERMINATION. In the event of the occurrence of any event of default, Landlord shall have the right, with or without notice or demand, to immediately terminate this Lease, and at any time thereafter recover possession of the Premises or any part thereof and expel and remove therefrom Tenant and any other person occupying the same, by any lawful means, and again repossess and enjoy the Premises without prejudice to any of the remedies that Landlord may have under this Lease, or at law or equity by reason of Tenant's default or of such termination. (3) CONTINUATION AFTER DEFAULT. Even though Tenant has breached this Lease and/or abandoned the Premises, this Lease shall continue in effect for so long as Landlord does not terminate Tenant's right to possession under Paragraph 26.B.(2) hereof, and Landlord may enforce all its rights and remedies under this Page 10 30 Lease, including, but without limitation, the right to recover Rent as it becomes due, and Landlord, without terminating this Lease, may exercise all of the rights and remedies of a Landlord under Section 1951.4 of the Civil Code of the State of California or any successor code section. Acts of maintenance preservation or efforts to lease the Premises or the appointment of a receiver upon application of Landlord to protect Landlord's interest under this Lease shall not constitute an election to terminate Tenant's right to possession. C. DAMAGES UPON TERMINATION. Should Landlord terminate this Lease pursuant to the provisions of Paragraph 26.B.(2) hereof, Landlord shall have all the rights and remedies of a Landlord provided by Section 1951.2 of the Civil Code of the State of California, or successor code sections. Upon such termination, in addition to any other rights and remedies to which Landlord may be entitled under applicable law, Landlord shall be entitled to recover from Tenant: (1) the worth at the time of award of the unpaid Rent and other amounts which had been earned at the time of termination, (2) the worth at the time of award of the amount by which the unpaid Rent which would have been earned after termination until the time of award exceeds the amount of such Rent loss that the Tenant proves could have been reasonably avoided, (3) the worth at the time of award of the amount by which the unpaid Rent for the balance of the term after the time of award exceeds the amount of such Rent loss that the Tenant proves could be reasonably avoided, and (4) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under the lease or which, in the ordinary course of things, would be likely to result therefrom. The "worth at the time of award" of the amounts referred to in (1) and (2) above shall be computed with interest at the maximum rate allowed by law. The "worth at the time of award" of the amount referred to in (3) above shall be computed by discounting such amount at the Federal Discount Rate of the Federal Reserve Bank of San Francisco at the time of the award plus one percent (1%). D. LATE CHARGE. In addition to its other remedies, Landlord shall have the right without notice or demand to add to the amount of any payment required to be made by Tenant hereunder, and which is not paid on or before the date the same is due, an amount equal to five percent (5%) of the delinquency for each month or portion thereof that the delinquency remains outstanding to compensate Landlord for the loss of the use of the amount not paid and the administrative costs caused by the delinquency, the parties agreeing that Landlord's damage by virtue of such delinquencies would be difficult to compute and the amount stated herein represents a reasonable estimate thereof. E. REMEDIES CUMULATIVE. All rights, privileges and elections or remedies of the parties are cumulative and not alternative to the extent permitted by law and except as otherwise provided herein. LIENS 27. Tenant shall keep the premises free from liens arising out of or related to work performed, materials or supplies furnished or obligations incurred by Tenant or in connection with work made, suffered or done by Tenant in or on the Premises or Project. In the event that Tenant shall not, within ten (10) days following the imposition of any such lien, cause the same to be released of record by payment or posting of a proper bond, Landlord shall have, in addition to all other remedies provided herein and by law, the right, but not the obligation, to cause the same to be released by such means as it shall deem proper, including payment of the claim giving rise to such lien. All sums paid by Landlord on behalf of Tenant and all expenses incurred by Landlord in connection therefore shall be payable to Landlord by Tenant on demand with interest at the rate of 12%. Landlord shall have the right at all times to post and keep posted on the Premises any notices permitted or required by law, or which Landlord shall deem proper, for the protection of Landlord, the Premises, the Project and any other party having an interest herein, from mechanics' and materialmen's liens, and Tenant shall give Landlord not less than ten (10) business days prior written notice of the commencement of any work in the Premises or Project which could lawfully give rise to a claim for mechanics' or materialmen's lien. TRANSFERS BY LANDLORD 29. In the event of a sale or conveyance by Landlord of the Project, and the express assumption in writing of the obligations of Landlord hereunder by such succeeding owner, the same shall operate to release Landlord from any future liability upon any of the covenants or conditions, express or implied, herein contained in favor of Tenant, and in such event Tenant agrees to look solely to the responsibility of the successor in interests of Landlord in and to this Lease. This Lease shall not be affected by any such sale and Tenant agrees to attorn to the purchaser or assignee. RIGHT OF Page 11 31 LANDLORD TO 30. All covenants and agreements to be performed by PERFORM Tenant under any of the terms of this Lease shall TENANT'S be performed by Tenant, at Tenant's sole cost and COVENANTS expense, and without any abatement of Rent. If Tenant shall fail to pay any sum of money other than Rent, required to be paid by it hereunder, or shall fail to perform any other act on its part to be performed hereunder, and such failure shall continue for ten (10) days after notice thereof by Landlord. Landlord may, but shall not be obligated to do so, and without waiving or releasing Tenant from any obligations of the Tenant, make any such payment or perform any such act on the Tenant's part to be made or performed. All sums so paid by Landlord and all necessary incidental costs together with interest thereon at the rate of 12% from the date of such payment by the Landlord shall be payable to Landlord on demand, and Tenant covenants to pay such sums, and Landlord shall have, in addition to any other right or remedy of Landlord, the same right and remedies in the event of the nonpayment thereof by Tenant as in the case of default by Tenant in the payment of Rent. WAIVER 31. If either Landlord or Tenant waives the performance of any term, covenant or condition contained in this Lease, such waiver shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein. The acceptance of rent by Landlord shall not constitute a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, regardless of Landlord's knowledge of such preceding breach at the time Landlord accepted such Rent. Failure by Landlord to enforce any of the terms, covenants or conditions of this Lease for any length of time shall not be deemed to waive or to decrease the right of Landlord to insist thereafter upon strict performance by Tenant. Waiver of Landlord of any term, covenant or condition contained in this Lease may only be made by a written document signed by Landlord. NOTICES 32. Each provision of this Lease or of any applicable governmental laws, ordinances, regulations and other requirements with reference to the sending, mailing or delivery of any notice or the making of any payment by Landlord or Tenant to the other shall be deemed to be complied with when and if the following steps are taken: A. All Rent and other payments required to be made by Tenant to Landlord hereunder shall be payable to Landlord at the address set forth in the Basic Lease Information, or at such other address as Landlord may specify from time to time by written notice delivered in accordance herewith. Tenant's obligation to pay Rent and any other amounts to Landlord under the terms of this Lease shall not be deemed satisfied until such Rent and other amounts have been actually received by Landlord. B. All notices, demands, consents and approvals which may or are required to be given by either party to the other hereunder shall be in writing and shall be deemed to have been fully given when deposited in the United States mail, certified or registered, postage prepaid, and addressed to the party to be notified at the address for such party specified in the Basic Lease Information or to such other place as the party to be notified may from time to time designate by at least fifteen (15) days notice to the notifying party. Tenant appoints as its agent to receive the service of all default notices and notice of commencement of unlawful detainer proceedings the person in charge of or apparently in charge of or occupying the Premises at the time, and, if there is no such person, then such service may be made by attaching the same on the main entrance of the Premises. ATTORNEYS' 33. In the event either party places the enforcement of FEES this Lease, or any part thereof, or the collection of any Rent due, or to become due hereunder, or recovery of the possession of the Premises in the hands of an attorney or files suit upon the same, the prevailing party shall recover its reasonable attorneys' fees and court costs. SUCCESSORS 34. This Lease shall be binding upon and inure to the AND ASSIGNS benefit of Landlord, its successors and assigns, and shall be binding upon and inure to the benefit of Tenant, its successors, and to the extent assignment may be approved by Landlord hereunder. Tenant's assigns. FORCE MAJEURE 35. Whenever a period of time is herein prescribed for action to be taken by Landlord or Tenant, Landlord or Tenant, as relevant, shall not be liable or responsible for, and there shall be excluded from the computation for any such period of time, any delays due to strike, riots, acts of God, shortages of labor or materials, war, governmental laws, regulations or restrictions or any other causes of any kind whatsoever which are beyond the control of Landlord or Tenant, as relevant. MISCELLANEOUS 36. A. The term "Tenant" or any pronoun used in place thereof shall indicate and include the masculine or feminine, the singular or plural number, individuals, firms or corporations, and their and each of their respective successors, executors, administrators and permitted assigns, according to the context hereof. B. Time is of the essence regarding this Lease and all of its provisions. C. This Lease shall in all respects be governed by the laws of the State of California. D. This Lease, together with its exhibits, contains all the agreements of the parties hereto and supersedes any previous negotiations. E. There have been no representations made by the Landlord or understandings made between the parties other than those set forth in this Lease and its exhibits. F. This Lease may not be modified except by a written instrument by the parties hereto. Page 12 32 G. If, for any reason whatsoever, any of the provisions hereof shall be unenforceable or ineffective, all of the other provisions shall be and remain in full force and effect. ADDITIONAL PROVISIONS 37. Additional paragraph's 38, 39, 40 & 41, Addenda to Lease items 1 - 17. Exhibits A, B & C attached hereto and made a part hereof. IN WITNESS WHEREOF, the parties hereto have executed this Lease the day and year first above written. "LANDLORD" Spieker Properties, L.P. a California limited partnership By: Spieker Properties, Inc. a Maryland Corporation Its: General Partner By: /s/ JOHN A. FOSTER ------------------------- John A. Foster Its: Senior Vice President ------------------------- Date: 12/19/95 ------------------------- "TENANT" At Home Corporation a Delaware corporation By: /s/ William R. Hearst III ------------------------- Its: Chief Executive Officer ------------------------- Date: 12/19/95 ------------------------- Page 13 33 ADDITIONAL PARAGRAPHS TO LEASE AGREEMENT DATED DECEMBER 13, 1995, BETWEEN SPIEKER PROPERTIES, L.P., A CALIFORNIA LIMITED PARTNERSHIP, AS LANDLORD, AND AT HOME CORPORATION, A DELAWARE CORPORATION, AS TENANT, FOR APPROXIMATELY 32,908 SQUARE FOOT PREMISES LOCATED AT 385 RAVENDALE DRIVE, MOUNTAIN VIEW, CALIFORNIA. 38. TENANT IMPROVEMENTS None. Tenant agrees to accept the Premises in "as is" condition with no Tenant improvements to be provided by Landlord. 39. TENANT PARKING Lessee shall be entitled to the non-exclusive use of one hundred thirty eight (138) parking spaces. 40. RESTORATION At Lease termination. Tenant will not be required to remove any of the tenant improvements existing in the Premises at Lease Commencement. 41. RENEWAL OPTION 34 ADDENDA TO LEASE AGREEMENT DATED DECEMBER 13, 1995, BETWEEN SPIEKER PROPERTIES, L.P., A CALIFORNIA LIMITED PARTNERSHIP, AS LANDLORD, AND AT HOME CORPORATION, A DELAWARE CORPORATION, AS TENANT, FOR APPROXIMATELY 32,908 SQUARE FOOT PREMISES LOCATED AT 385 RAVENDALE DRIVE, MOUNTAIN VIEW, CALIFORNIA ADDENDUM 1. RENT Rent for the Premises shall be as follows: Months 1-12: Months 13-24: Months 25-36: Months 37-48: Months 49-60: Months 61-72: ADDENDUM 2. ALTERATIONS Tenant may make non structural alterations to the interior of the Premises up to ten thousand dollars ($10,000), per annum without obtaining prior written consent of Landlord. Such improvements shall not have an impact or cause change to the building's structure, mechanical or plumbing systems. ADDENDUM 3. LETTER OF CREDIT ADDENDUM 4. ADA COMPLIANCE Tenant shall not be required to make any structural changes or any changes which constitute capital expenditures in order to comply with any law, ordinance, rule or regulation unless such changes are a result of Tenant's particular use of the Premises. Tenant shall have the sole responsibility for complying, at Tenant's cost, with provisions of the American with Disabilities Act of 1990 ("ADA") as it may later be amended, with respect to the Premises and to the common areas of the Project, where such compliance has been brought about: (i) by any alterations to the Premises or to the common areas by the Tenant or on behalf of the Tenant, by Landlord or otherwise, performed after the Term Commencement Date; (ii) by any changes to Tenant's use of the Premises; or (iii) by any architectural barriers caused by Tenant's installation of any equipment, furniture, or other personal property on the Premises (items (i), (ii) and (iii) collectively, "Tenants ADA Responsibilities"). Tenant shall indemnify, defend and hold Landlord, its agents and employees harmless from and against any and all claims, damages or liabilities arising directly or indirectly from Tenant's failure to satisfy any of Tenant's ADA Responsibilities. Landlord shall indemnify, defend and hold Tenant, its agents and employees harmless from and against any and all claims, damages or liabilities arising directly or indirectly from Landlord's failure to comply with any obligations of a landlord under the ADA, other than such claims, damages or liabilities arising from Tenant's failure to satisfy any of Tenant's ADA Responsibilities [REMAINDER OF PAGE ILLEGIBLE]. 35 ADDENDA TO LEASE DECEMBER 13, 1995 ADDENDUM 6. HAZARDOUS SUBSTANCES A. TENANT INDEMNITY REGARDING HAZARDOUS SUBSTANCES Tenant shall indemnify, defend and hold harmless Landlord, its employees, partners, agents, assigns, licensees, servants, subsidiaries and affiliate organizations against any and all claims, suits, loss, costs (including costs of investigation, clean up, monitoring, restoration and reasonable attorneys' fees); damage or liability, whether foreseeable or unforeseeable, by reason of property damage (including diminution in the value of property of Landlord), personal injury or death directly arising from or related to ANY HAZARDOUS SUBSTANCE (as defined below) released, manufactured, discharged, disposed, used or stored ON THE PREMISES BY TENANT OR TENANT'S AGENTS, EMPLOYEES, CONTRACTORS OR ASSIGNS REGARDLESS OF WHO CAUSED THE SAME, EXCEPT FOR HAZARDOUS SUBSTANCE (i) (A) ORIGINATING ON PROPERTY WHICH IS NOT LEASED, OWNED OR OTHERWISE USED OR CONTROLLED BY TENANT AND (B) WHICH MIGRATED THROUGH THE AIR, GROUNDWATER OR OTHERWISE TO THE PROJECT; OR (ii) WAS NOT CAUSED BY TENANT, ITS EMPLOYEES, INVITEES, SUBTENANTS, AGENTS, ASSIGNEES, LICENSEES OR SERVANTS. For the purpose of this indemnity, Hazardous Substances are defined, collectively, as oil, flammable explosives, asbestos, radioactive materials, hazardous wastes, toxic or contaminated substances or similar materials, including, without limitation, any substances which are "hazardous substances", "hazardous wastes", "hazardous materials", or "toxic substances" under applicable environmental laws, ordinances or regulations. The provisions of this Tenant indemnity regarding Hazardous Substances shall survive the termination of the Lease. B. LANDLORD INDEMNITY REGARDING HAZARDOUS MATERIALS Landlord shall indemnify, defend and hold harmless Tenant, its officers, employees, shareholders, parent, subsidiary and affiliate organizations and agents to the extent of Landlord's interest in the Project, against any and all claims, suits, loss, costs (including costs of investigation, clean up, monitoring, restoration and reasonable attorneys' fees), damage of liability, whether foreseeable or unforeseeable, by reason of property damage, personal injury or death directly arising from a related to the presence of Hazardous Substances (as defined below) in, on or about the Project immediately prior to Tenant's first occupancy (unless caused by Tenant, its employees, invitees, subtenants, agents, assigns, licensees or servants) or the subsequent release, disposal, use or storage of Hazardous Substances in, on or about the Project by Landlord, its employees, agents, assigns, licensees or servants. For the purposes of this Indemnity Hazardous Substances are defined, collectively, as oil, flammable explosives, asbestos, radioactive materials, hazardous waste, toxic or contaminated substances or similar materials, including, without limitation, any substances which are "hazardous substances", "hazardous waste", hazardous materials" or "toxic substances" under applicable laws, ordinances or regulations. The provisions of this Landlord Indemnity regarding Hazardous Substances shall survive the termination of the Lease. ADDENDUM 7. REAL ESTATE TAX EXCLUSIONS In addition, the following shall not constitute real property taxes for the purpose of this Lease, and nothing contained herein shall be deemed to require Tenant to pay any of the following: (i) any franchise, succession or transfer taxes; (ii) interest on taxes or penalties resulting from Landlord's failure to pay taxes; (iii) real estate taxes resulting from over standard improvements made by other tenants. ADDENDUM 8. BASIC OPERATING COST EXCLUSIONS The following shall not constitute Basic Operating Costs for the purpose of this Lease, and nothing contained herein shall be deemed to require Tenant to pay any of the following: (i) legal fees, brokerage commissions, advertising costs and other related expenses incurred in connection with the leasing of the Building; (ii) damage and repairs attributable to condemnation, fire or other casualty, covered under any insurance policy (above any "deductible" position thereof) carried by Landlord in connection with the Building; (iii) damage and repairs covered under any warranty or insurance policy carried by Landlord in connection with the Building or Property; (iv) damage and repairs necessitated by the negligence or willful misconduct of Landlord or Landlord's Landlord's employees, contractors or agents; (v) executive salaries of Landlord; (vi) salaries of service personnel to the extent that such service personnel perform services not solely in connection with the management, operation, repair or maintenance of the Building or Common Areas; (vii) Landlord's general overhead expenses not related to the Building; (viii) payments of principal or interest on any mortgage or other encumbrance including ground lease payments and points, commissions and legal fees associated with financing; (ix) depreciation; (x) legal fees, accountants' fees and other expenses incurred in connection with disputes with Tenant or other tenants or occupants of the Building or associated with the enforcement of any leases or defense of the Landlord's title to or interest in 36 ADDENDA TO LEASE DECEMBER 13, 1995 ADDENDUM 8. BASIC OPERATING COST ESTIMATES (CONTINUED) the Building or any part thereof; (xi) costs (including permit, license and inspection fees) incurred in renovating or otherwise improving, decorating, painting or altering space for other tenants or other occupants or vacant space in the Building; (xii) costs incurred due to violation by Landlord or any other tenant in the Building, of the terms and conditions of any lease; (xiii) charitable or political contributions; (xiv) interest, penalties or other costs arising out of Landlord's failure to make timely payments of its obligations; (xv) costs incurred in advertising and promotional activities for the Building. Landlord and Tenant agree that the cost of any structural repairs or replacements or any improvements, alterations or expenditures of a capital nature which exceed Ten Thousand Dollars ($10,000) in cost, shall be amortized over the useful life of such item, as determined by generally accepted accounting principles and that Tenant shall be solely responsible for the portion of such amortized cost coming due within the Term of this Lease. ADDENDUM 9. INDEMNIFICATION Landlord shall indemnify, defend by counsel reasonably satisfactory to Tenant and hold Tenant harmless from and against any and all claims, liabilities, judgments, causes of action, damages, costs and expenses (including, without limitation, reasonable attorney's and experts' fees), caused by or arising in connection with the gross negligence or willful misconduct of Landlord or Landlord's agents, employees, contractors or invitees. ADDENDUM 10. TENANT'S NOTICE TO LANDLORD Tenant may give Landlord notice of any repairs that are required under the terms of this Lease and Landlord shall proceed forthwith to effect the same with reasonable diligence, but in no event shall Landlord commence to proceed with repairs required later than ten (10) days after receipt of such notice. ADDENDUM 11. EXCEPTIONS TO TENANT'S REPAIR OBLIGATIONS In no event shall Tenant's obligation to repair under this subsection extend to (i) damage and repairs covered under any insurance policy carried by Landlord in connection with the Building (provided that nothing herein shall be deemed to alter or terminate Tenant's obligation to reimburse Landlord for Tenant's Proportionate Share of the "deductible" portion of the Landlord's property insurance policy); (ii) damage caused in whole or in part by the negligence or willful misconduct of Landlord or Landlord's agents, employees, invitees or licensees; (iii) repairs covered under Basic Operating Costs; (iv) reasonable wear and tear; (v) conditions covered under any warranties of Landlord's contractors; or (vi) damage by fire and other casualties, or acts of governmental authorities, or acts of God and the elements, except to the extent such damage is caused by Tenant or Tenant's agents, employees or contractors. ADDENDUM 12. SUBORDINATION Notwithstanding anything to the contrary in the Lease, the effective subordination of this Lease to any future mortgages, deeds of trust, other security interest or leases shall be subject to the fulfillment of the conditions precedent that the holder of such mortgage or other lien on the Building or Property shall first have agreed in writing that so long as Tenant is not in default, the Lease shall not be terminated by foreclosure or sale pursuant to the terms of such mortgage or lien. ADDENDUM 13. SECURITY DEPOSIT Provided that Tenant is not then in default under the Lease, Landlord shall return the Security Deposit to Tenant within thirty (30) days of the expiration or earlier termination of the Lease. ADDENDUM 14. BONUS RENT If Tenant shall assign, sublease or otherwise transfer all or any portion of the Premises to a party other than Tenant Affiliate (as defined below), Landlord and Tenant shall evenly divide any rent or other consideration paid to Tenant in connection with such assignment, sublease or other transfer which is in excess of the Base Rent due under this Lease, after first deducting out for the Tenant's account the cost of (i) broker's commission paid by Tenant with regard to the transfer; (ii) reasonable legal fees; and (iii) the cost of improvements made to the subleased premises by Tenant at Tenant's expense for the purpose of subletting which, upon the expiration or earlier termination of this Lease shall or may become the property of Landlord pursuant to the terms hereof. ADDENDUM 15. CORPORATE TRANSFERS Notwithstanding anything to the contrary in the Lease, the terms of Section 21.D of the Lease shall not apply at any time that Tenant is a publicly traded company. 37 ADDENDA TO LEASE DECEMBER 13, 1995 ADDENDUM 16. TENANT AFFILIATES Tenant may assign this Lease or sublet any portion of the Premises without Landlord's consent to any of the following (i) any corporation which controls, is controlled by or under common control with Tenant; (ii) any corporation resulting from the merger or consolidation of Tenant and has a net worth equal to or greater than Ten Million Dollars ($10,000,000) upon execution of the assignment or sublease document; (iii) any person or entity which acquires all of the assets of Tenant as a going concern of the business that is being conducted on the Premises (collectively, "Tenant Affiliate"), provided that such assignee assumes in full the obligations of Tenant under the Lease. Landlord's right to terminate the Lease in response to a requested assignment or subletting shall not apply to an assignment of the Lease or subletting of the Premises to a Tenant Affiliate. ADDENDUM 17. POSSESSION AND LEASE COMMENCEMENT As of the date of this Lease Agreement, Landlord has not been notified by any governmental authority to perform any repairs, alterations, additions or improvements to bring this Building into compliance. IN WITNESS WHEREOF, the parties hereto have executed this Addendum the day and year first above written. "LANDLORD" Spieker Properties, L.P. a California limited partnership By: Spieker Properties, Inc. a Maryland Corporation Its: General Partner By: /s/ JOHN A. FOSTER ---------------------------- John A. Foster Its: Senior Vice President ---------------------------- Date: 12/19/95 ---------------------------- "TENANT" At Home Corporation a Delaware corporation By: /s/ William R. Hearst III ---------------------------- Its: Chief Executive Officer ---------------------------- Date: 12/15/95 ---------------------------- EX-10.6 15 SEVERANCE AGREEMENT, SCOTT KRIENS 1 EXHIBIT 10.6 CHANGE OF CONTROL AGREEMENT This Change of Control Agreement (the "Agreement") is made and entered into effective as of October 1, 1996 (the "Effective Date"), by and between Scott Kriens (the "Employee") and Juniper Networks, Inc., a California corporation (the "Company"). R E C I T A L S A. It is expected that the Company from time to time will consider the possibility of an acquisition by another company or other change of control. The Board of Directors of the Company (the "Board") recognizes that such consideration can be a distraction to the Employee and can cause the Employee to consider alternative employment opportunities. The Board has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication of the Employee, notwithstanding the possibility, threat or occurrence of a change of control (as defined below) of the Company. B. The Board believes that it is in the best interests of the Company and its shareholders to provide the Employee with an incentive to continue his employment and to maximize the value of the Company upon a Change of Control for the benefit of its shareholders. C. The Board believes that it is imperative to provide the Employee with certain severance benefits upon the Employee's termination of employment following a Change of Control and thereby provide the Employee with enhanced financial security and sufficient encouragement to remain with the Company notwithstanding the possibility of a Change of Control. D. To accomplish the foregoing objectives, the Board of Directors has directed the Company, upon execution of this Agreement by the Employee, to agree to the terms provided herein. E. Certain capitalized terms used in the Agreement are defined in Section 8 below. AGREEMENT In consideration of the mutual covenants herein contained, and in consideration of the continuing employment of Employee by the Company, the parties agree as follows: 1. Duties and Scope of Employment. (a) Position. The Company shall employ the Employee in the position of Chief Executive Officer with such duties, responsibilities and compensation as in effect as of the Effective Date; provided, however, that the Board shall have the right, prior to the occurrence of a Change of Control, to revise such responsibilities and compensation from time to time as the Board may deem necessary or appropriate. 2 (b) Obligations. The Employee shall devote his full business efforts and time to the Company and its subsidiaries. The foregoing, however, shall not preclude the Employee from engaging in such activities and services as do not interfere or conflict with his responsibilities to the Company. 2. At-Will Employment. The Company and the Employee acknowledge that the Employee's employment is and shall continue to be at-will, as defined under applicable law. If the Employee's employment terminates for any reason, including (without limitation) any termination prior to a Change of Control, the Employee shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement, or as may otherwise be available in accordance with the Company's established Employee plans and policies at the time of termination. The terms of this Agreement shall terminate upon the earlier of (i) the date that all obligations of the parties hereunder have been satisfied or (ii) the date upon which this Agreement terminates by consent of the parties hereto. A termination of the terms of this Agreement pursuant to the preceding sentence shall be effective for all purposes, except that such termination shall not affect the payment or provision of compensation or benefits on account of a termination of employment occurring prior to the termination of the terms of this Agreement. 3. Compensation and Benefits. (a) Base Compensation. The Company shall pay the Employee as compensation for services a base salary at the annualized rate agreed upon by the Company and the Employee as of the Effective Date in effect at the time of the Change of Control (as defined herein). Such salary shall be reviewed at least annually and shall be increased from time to time subject to accomplishment of such performance and contribution goals and objectives as may be established from time to time by the Board of Directors. Such salary shall be paid periodically in accordance with normal Company payroll practices. The annual compensation specified in this Section 3(a), together with any increases in such compensation that the Board may grant from time to time, is referred to in this Agreement as "Base Compensation." (b) Bonus. Beginning with the Company's next fiscal year and for each fiscal year thereafter during the term of this Agreement, if the Board implements a bonus program, the Employee shall be eligible to receive an annual bonus (the "Bonus") based upon targets approved prior to the beginning of each fiscal year by the Board (the "Target Bonus"). The Bonus payable hereunder shall be paid in accordance with the Company's normal practices and policies. (c) Employee Benefits. The Employee shall be eligible to participate in the Employee benefit plans and executive compensation programs maintained by the Company applicable to other key executives of the Company, including (without limitation) retirement plans, savings or profit-sharing plans, deferred compensation plans, supplemental retirement or excess-benefit plans, stock option, incentive or other bonus plans, life, disability, health, accident and other insurance programs, paid vacations, and similar plans or programs, subject in each case to the generally applicable terms and conditions of the plan or program in question and to the determination of any committee administering such plan or program. -2- 3 4. Change of Control. (a) Accelerated Vesting Upon a Change of Control. In the event of a Change of Control, in addition to any portion of the Employee's restricted stock and options that were vested immediately prior to such Change of Control, shares of restricted stock shall be released from the repurchase option and options shall become vested and exercisable as to an additional amount as though the Employee had remained continuously employed for a period of eighteen (18) months following such Change of Control. In addition, at a Change of Control, shares of restricted stock and options shall be released from the repurchase option and options shall become vested and exercisable at a rate which is 1.5 times the rate otherwise set forth in the Agreement for a period of twelve (12) full calendar months following the Change of Control; provided however, if the Employee's employment with the Company terminates at any time within such twelve (12) month period after a Change of Control as a result of Involuntary Termination other than for Cause, then upon such termination, shares of restricted stock shall be released from the repurchase options and options shall become vested and exercisable with respect to all of the shares which otherwise would vest during such twelve (12) month period under this section; provided further that if such Involuntary Termination results from an event described in Section 8(b)(i), (ii), (iii), (iv) or (v), Employee shall agree to provide transition services pursuant to Section 5 hereof and during such transition period, shares of restricted stock shall be released from the repurchase option and options shall become vested and exercisable at a rate which is 1.5 times the rate otherwise set forth in the Agreement. (b) Compensation. In addition to the above, if Employee's employment with the Company is terminated as a result of an Involuntary Termination other than for Cause, upon a Change of Control, Employee shall be entitled to receive Base Compensation and Benefits for a period of three (3) months. 5. Transition Services. Following a Change of Control, if the Board of Directors so requests, Employee shall continue his employment for a period not to exceed twelve (12) months to assist in the transition. Employee's duties and obligations under this Section 5 are limited solely to provide transition services. Any additional or other duties or obligations must be negotiated separately. During such time, Employee shall continue to receive an amount equal to the Base Compensation (including bonus) and Benefits for the year in which the Change of Control occurs. 6. Termination Apart from a Change of Control. If Employee's employment is terminated as a result of Involuntary Termination other than for Cause, he shall be entitled to receive three (3) months Base Compensation and Benefits, regardless of whether there has been a Change of Control. In addition, if no Change of Control has occurred, Employee's restricted stock shall be released from the repurchase option and options shall become vested and exercisable as to an additional amount as though the Employee had remained continuously employed for a period of three (3) months. 7. Certain Business Combinations. In the event it is determined by the Board of Directors, upon receipt of a written opinion of the Corporation's independent public accountants, that the enforcement of any Section or subsection of this Agreement, including, but not limited to, -3- 4 Section 4(a) hereof, which allows for the acceleration of the release of the repurchase option with respect to restricted shares of the Corporation's common stock upon a termination in connection with a Change of Control, would preclude accounting for any proposed business combination of the Corporation involving a Change of Control as a pooling of interests, and the Board otherwise desires to approve such a proposed business transaction which requires as a condition to the closing of such transaction that it be accounted for as a pooling of interests, then any such Section or subsection of this Statement shall be null and void. For purposes of this Section 7, the Board's determination shall require the unanimous approval of the disinterested Board members. 8. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings: (a) Change of Control. "Change of Control" shall mean the occurrence of any of the following events: (i) Any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becoming the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company's then outstanding voting securities, other than in a private financing where securities are acquired directly from the Company; (ii) A change in the composition of the Board of Directors of the Company occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors. "Incumbent Directors" shall mean directors who either (A) are directors of the Company as of the date hereof, or (B) are elected, or nominated for election, to the Board of Directors of the Company with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual not otherwise an Incumbent Director whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company); or (iii) The approval by shareholders of the Company of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the approval by the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. (b) Involuntary Termination. "Involuntary Termination" shall mean (i) without the Employee's express written consent, a significant reduction of the Employee's duties, position or responsibilities, or the removal of the Employee from such position and responsibilities, unless the Employee is provided with a comparable position (i.e., a position of equal or greater organizational level, duties, authority, compensation and status); (ii) without the Employee's express written -4- 5 consent, a substantial reduction, without good business reasons, of the facilities and perquisites (including office space and location) available to the Employee immediately prior to such reduction; (iii) a significant reduction by the Company in the Base Compensation of the Employee as in effect immediately prior to such reduction; (iv) a material reduction by the Company in the kind or level of Employee benefits to which the Employee is entitled immediately prior to such reduction with the result that the Employee's overall benefits package is significantly reduced; (v) without the Employee's express written consent, the relocation of the Employee to a facility or a location more than 50 miles from the Employee's then present location; (vi) any purported termination of the Employee by the Company which is not effected for Disability or for Cause, or any purported termination for which the grounds relied upon are not valid; or (vii) the failure of the Company to obtain the assumption of this Agreement by any successors contemplated in Section 10 below. (c) Cause. "Cause" shall mean (i) any act of personal dishonesty taken by the Employee in connection with his responsibilities as an Employee and intended to result in substantial personal enrichment of the Employee, (ii) the conviction of a felony which the Board reasonably believes had or will have a material detrimental effect on the Company's reputation or business, (iii) a willful act by the Employee which constitutes gross misconduct and which is injurious to the Company, and (iv) continued violations by the Employee of the Employee's obligations which are demonstrably willful and deliberate on the Employee's part after there has been delivered to the Employee a written demand for performance from the Company which describes the basis for the Company's belief that the Employee has not substantially performed his duties. (d) Disability. "Disability" shall mean that the Employee has been unable to perform his duties under this Agreement as the result of his incapacity due to physical or mental illness, and such inability, at least 26 weeks after its commencement, is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Employee or the Employee's legal representative (such agreement as to acceptability not to be unreasonably withheld). (e) Termination Date. "Termination Date" shall mean the date on which either party delivers a notice of termination to the other. 9. Successors. (a) Company's Successors. Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company's business and/or assets shall assume the obligations under this Agreement and agree expressly to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term "Company" shall include any successor to the Company's business and/or assets which executes and delivers the assumption agreement described in this subsection (a) or which becomes bound by the terms of this Agreement by operation of law. -5- 6 (b) Employee's Successors. The terms of this Agreement and all rights of the Employee hereunder shall inure to the benefit of, and be enforceable by, the Employee's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. 10. Notice. (a) General. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of the Employee, mailed notices shall be addressed to him at the home address which he most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary. (b) Notice of Termination. Any termination by the Company for Cause or by the Employee as a result of a voluntary resignation or an Involuntary Termination shall be communicated by a notice of termination to the other party hereto given in accordance with Section 10 of this Agreement. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and shall specify the termination date (which shall be not more than 30 days after the giving of such notice). The failure by the Employee to include in the notice any fact or circumstance which contributes to a showing of Involuntary Termination shall not waive any right of the Employee hereunder or preclude the Employee from asserting such fact or circumstance in enforcing his rights hereunder. 11. Arbitration. At the option of either party, any and all disputes or controversies whether of law or fact and of any nature whatsoever arising from or respecting this Agreement shall be decided by arbitration in accordance with the rules and regulations of the American Arbitration Association. The arbitrator shall be selected as follows: in the event the Company and the Employee agree on one arbitrator, the arbitration shall be conducted by such arbitrator. In the event the Company and the Employee do not so agree, the Company and the Employee shall each select one independent, qualified arbitrator and the two arbitrators so selected shall select the third arbitrator. The Company reserves the right to object to any individual arbitrator who shall be employed by or affiliated with a competing organization. Arbitration shall take place at Santa Clara County, California, or any other location mutually agreeable to the parties. At the request of either party, arbitration proceedings will be conducted in the utmost secrecy; in such case all documents, testimony and records shall be received, heard and maintained by the arbitrators in secrecy under seal, available for the inspection only of the Company or the Employee and their respective attorneys and their respective experts who shall agree in advance and in writing to receive all such information confidentially and to maintain such information in secrecy until such information shall become generally known. The arbitrator, who shall act by majority vote, shall be able to decree any and all relief of an equitable nature, -6- 7 including but not limited to such relief as a temporary restraining order, a temporary and/or a permanent injunction, and shall also be able to award damages, with or without an accounting and costs, provided that punitive damages shall not be awarded. The decree or judgment of an award rendered by the arbitrators may be entered in any court having jurisdiction thereof. Reasonable notice of the time and place of arbitration shall be given to all persons, other than the parties, as shall be required by law, in which case such persons or those authorized representatives shall have the right to attend and/or participate in all the arbitration hearings in such manner as the law shall require. 12. Miscellaneous Provisions. (a) No Duty to Mitigate. The Employee shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that the Employee may receive from any other source. (b) Waiver. No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time. (c) Whole Agreement. No agreements, representations or understandings (whether oral or written and whether express or implied) which are not expressly set forth in this Agreement have been made or entered into by either party with respect to the subject matter hereof. (d) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California. (e) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. (f) No Assignment of Benefits. The rights of any person to payments or benefits under this Agreement shall not be made subject to option or assignment, either by voluntary or involuntary assignment or by operation of law, including (without limitation) bankruptcy, garnishment, attachment or other creditor's process, and any action in violation of this subsection (d) shall be void. (g) Employment Taxes. All payments made pursuant to this Agreement will be subject to withholding of applicable income and employment taxes. (h) Assignment by Company. The Company may assign its rights under this Agreement to an affiliate, and an affiliate may assign its rights under this Agreement to another -7- 8 affiliate of the Company or to the Company; provided, however, that no assignment shall be made if the net worth of the assignee is less than the net worth of the Company at the time of assignment. In the case of any such assignment, the term "Company" when used in a section of this Agreement shall mean the corporation that actually employs the Employee. (i) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument. IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written. COMPANY: JUNIPER NETWORKS, INC. By: ------------------------------------- Title: ---------------------------------- EMPLOYEE: ----------------------------------------- Scott Kriens -8- EX-10.7 16 CHANGE OF CONTROL AGREEMENT 1 EXHIBIT 10.7 JUNIPER NETWORKS, INC. CHANGE OF CONTROL AGREEMENT This Change of Control Agreement (the "AGREEMENT") is made and entered into by and between Marcel Gani (the "EMPLOYEE") and Juniper Networks, Inc., a California corporation (the "COMPANY"), effective as of February 18, 1997. R E C I T A L S A. It is expected that the Company from time to time will consider the possibility of an acquisition by another company or other Change of Control. The Board of Directors of the Company (the "BOARD") recognizes that such consideration can be a distraction to the Employee and can cause the Employee to consider alternative employment opportunities. The Board has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication and objectivity of the Employee, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company. B. The Board believes that it is imperative to provide the Employee with certain benefits upon a Change of Control which provides the Employee with enhanced financial security and provides incentive and encouragement to the Employee to remain with the Company notwithstanding the possibility of a Change of Control. The parties hereto agree as follows: 1. TERM OF AGREEMENT. This Agreement shall terminate on the earlier of (i) the date that all obligations of the parties hereto with respect to this Agreement have been satisfied or (ii) the date upon which this Agreement terminates by consent of the parties hereto. 2. AT-WILL EMPLOYMENT. The Company and the Employee acknowledge that the Employee's employment is and shall continue to be at-will, as defined under applicable law. If the Employee's employment terminates for any reason, including (without limitation) any termination prior to a Change of Control, unless the termination is to avoid this agreement, the Employee shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement, or as may otherwise be available in accordance with the Company's established employee plans and practice or pursuant to other agreements with the Company. 3. DEFINITIONS. (a) "CHANGE OF CONTROL" means the occurrence of any of the following events: 2 (i)Any "person" (as such term is used in Sections s13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the "BENEFICIAL OWNER" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company's then outstanding voting securities other than in a private financing transaction approved by the Board of Directors; or (ii) the direct or indirect sale or exchange by the stockholders of the Company of all or substantially all of the stock of the Company; (iii) a merger or consolidation in which the Company is a party and in which the stockholders of the Company before such Ownership Change do not retain, directly or indirectly, at a least majority of the beneficial interest in the voting stock of the Company after such transaction; (iv) or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. (b) BASE COMPENSATION. The Company shall pay the Employee as compensation for services a base salary at the annualized rate agreed upon by the Company and the Employee as of the Effective Date or in effect at the time of Termination. Such salary shall be reviewed at least annually and shall be increased from time to time subject to accomplishment of such performance and contribution goals and objectives as may be established from time to time by the Board of Directors. Such salary shall be paid periodically in accordance with normal Company payroll practices. The annual compensation specified in this Section, together with any increases in such compensation that the Board may grant from time to time, is referred to in this Agreement as "Base Compensation." (c) EMPLOYEE BENEFITS. The Employee shall be eligible to participate in the Employee benefit plans and executive compensation programs maintained by the Company applicable to other key executives of the Company, including (without limitation) retirement plans, savings or profit-sharing plans, deferred compensation plans, supplemental retirement or excess-benefit plans, stock option, incentive or other bonus plans, life, disability, health, accident and other insurance programs, paid vacations, and similar plans or programs, subject in each case to the generally applicable terms and conditions of the plan or program in question and to the determination of any committee administering such plan or program. (d) INVOLUNTARY TERMINATION. "Involuntary Termination" shall mean (i) without the Employee's express written consent, a significant reduction of the Employee's duties, position or responsibilities, or the removal of the Employee from such position and responsibilities, unless the Employee is provided with a comparable position (i.e., a position of equal or greater organizational level, duties, authority, compensation and status); (ii) without the Employee's express written consent, a substantial reduction, without good business reasons, of the facilities and perquisites (including office space and location) available to the Employee immediately prior to such reduction; (iii) a significant reduction by the Company in the Base Compensation of the Employee as in effect immediately prior to such reduction; (iv) a material reduction by the Company in the kind or level of -2- 3 Employee benefits to which the Employee is entitled immediately prior to such reduction with the result that the Employee's overall benefits package is significantly reduced; (v) without the Employee's express written consent, the relocation of the Employee to a facility or a location more than 50 miles from the Employee's then present location; (vi) any purported termination of the Employee by the Company which is not effected for Disability or for Cause, or any purported termination for which the grounds relied upon are not valid; or (vii) the failure of the Company to obtain the assumption of this Agreement by any successors contemplated in Section 7 below. (e) CAUSE. "Cause" shall mean (i) any act of personal dishonesty taken by the Employee in connection with his responsibilities as an Employee and intended to result in substantial personal enrichment of the Employee, (ii) the conviction of a felony which the Board reasonably believes had or will have a material detrimental effect on the Company's reputation or business, (iii) a willful act by the Employee which constitutes gross misconduct and which is injurious to the Company, and (iv) continued violations by the Employee of the Employee's obligations which are demonstrably willful and deliberate on the Employee's part after there has been delivered to the Employee a written demand for performance from the Company which describes the basis for the Company's belief that the Employee has not substantially performed his duties. 4. CHANGE OF CONTROL BENEFITS. (a) Change of Control. Employee shall be entitled to receive from the Company the benefits as provided in this Section 4 if there is a Change of Control that occurs while Employee is employed by the Company. (i)Option and Restricted Stock Accelerated Vesting. In the event of a Change of Control that occurs while Employee is employed by the Company, shares of restricted stock shall be released from the repurchase option and options shall become immediately vested and exercisable as to the number of shares that would vest over the next thirty (30) months or the balance of Employee's unvested stock if a lesser amount. Notwithstanding the foregoing, if such vesting acceleration would cause a contemplated Change of Control transaction that was intended to be accounted for as a "pooling-of-interests" transaction to become ineligible for such accounting treatment under generally accepted accounting principles, as determined by the Company's independent public accountants (the "ACCOUNTANTS") prior to the Change of Control, Employee's stock options and restricted stock shall not have their vesting so accelerated. (ii) Compensation. In addition to the above, if Employee's employment with the Company is terminated as a result of Involuntary Termination other than for Cause, regardless of whether there has been a Change of Control, Employee shall be entitled to receive Base Compensation and Benefits for a period of three (3) months. 5. ATTORNEY FEES, COSTS AND EXPENSES. The prevailing party, determined without regard to whether or not the action results in a final judgment, shall be entitled to collect from the other party its reasonable attorneys' fees, costs and expenses incurred in connection with any action brought by either party in connection with the subject matter of this Agreement. -3- 4 6. LIMITATION ON PAYMENTS. In the event that the benefits provided for in this Agreement or otherwise payable to the Employee (i) constitute "parachute payments" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code") and (ii) but for this Section, would be subject to the excise tax imposed by Section 4999 of the Code, then the Employee's severance benefits under subsection 3(b) shall be payable either (a) in full, or (b) as to such lesser amount which would result in no portion of such benefits being subject to excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by the Employee on an after-tax basis, of the greatest amount of benefits under subsection 3(b), notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code. Unless the Company and the Employee otherwise agree in writing, any determination required under this Section 6 shall be made in writing by the Company's independent public accountants (the "Accountants"), whose determination shall be conclusive and binding upon the Employee and the Company for all purposes. For purposes of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6. 7. SUCCESSORS. (a) Company's Successors. Any successor to the Company (whether direct or indirect and whether by purchase, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company's business and/or assets shall assume the obligations under this Agreement and agree expressly to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term "COMPANY" shall include any successor to the Company's business and/or assets which executes and delivers the assumption agreement described in this Section 7 (a) or which becomes bound by the terms of this Agreement by operation of law. (b) Employee's Successors. The terms of this Agreement and all rights of the Employee hereunder shall inure to the benefit of, and be enforceable by, the Employee's personal or legal representatives, executors, administrators, successors, heirs, distributes, devisees and legatees. 8. NOTICE. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case -4- 5 of the Employee, mailed notices shall be addressed to him at the home address which he most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary. 9. MISCELLANEOUS PROVISIONS. (a) Waiver. No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time. (b) Whole Agreement. No agreements, representations or understandings (whether oral or written and whether express or implied) which are not expressly set forth in this Agreement have been made or entered into by either party with respect to the subject matter hereof. (c) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California as applied to agreements entered into and performed within California solely by residents of that state. (d) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. (e) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument. -5- 6 IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the date set forth above. COMPANY JUNIPER NETWORKS, INC. ----------------------------------- Scott Kriens, President EMPLOYEE ----------------------------------- Marcel Gani -6- 7 EX-10.8 17 AGREEMENT FOR ASIC DESIGN 1 08/21/97 EXHIBIT 10.8 Agreement for ASIC Design and Purchase of Products between IBM Microelectronics 1000 River Street Essex Junction, Vermont and Juniper Networks Agreement Number V1967 Commencement Date: At Signoff IBM Customer Account Representative: Ed Buturla Name and Address of Buyer: Juniper Networks 385 Ravendale Drive Mountain View, CA 94043 This agreement ("Agreement") is entered into by and between International Business Machines Corporation, incorporated under the laws of the State of New York ("IBM") and Juniper Networks, ("Buyer"), incorporated under the laws of the State of California. This Agreement and its attachments ("Attachments") sets forth the terms and conditions pursuant to which semiconductor products will be designed, manufactured, sold and purchased. The terms and conditions by which IBM licenses to Buyer the IBM Design Kits specified in Attachment A are governed by the IBM Design Kit License initially executed by the parties on April 14, 1997. 1.0 DEFINITIONS 1.1 "ASIC(S)" means application specific integrated circuits. 1.2 "ASIC TOOL KITS" means any computer aided design software and data provided by IBM and used by Buyer for the purpose of designing or checking ASIC designs, as updated or enhanced from time to time by IBM. 1.3 "BUYER DELIVERABLE ITEMS" means any information and materials supplied to IBM by Buyer, as set forth in Attachment B, including, without limitation, software, schematics, netlists, microcode, designs or techniques, as accepted by IBM and utilized in the design of or otherwise incorporated into a Product. 1.4 "ENGINEERING CHANGE" means a mechanical or electrical change to the Product which affects form, fit, function or maintainability. 1.5 "IBM DELIVERABLE ITEMS" means the information, materials and tools supplied to Buyer by IBM, as set forth in Attachment B, including, without limitation, IBM Design Kits, ASIC Tool Kits and Prototype devices. Juniper ASIC Agreement Page 1 of 20 IBM Confidential 2 08/21/97 1.6 "IBM DESIGN KITS" means any IBM computer aided design software and data (including libraries) provided to Buyer for the purpose of designing or testing ASIC designs, as updated and enhanced from time to time. The term "IBM Design Kits" includes ASIC Tool Kits. 1.7 "INITIAL ASIC DESIGN REVIEW CHECKLIST" ("IDR") means a report in form and content as regularly used by IBM to make a preliminary assessment of the feasibility of Buyer's proposed Product design. 1.8 "MILESTONES" means completion of the (i) initial design review ("IDR Milestone"), (ii) pre-layout and timing analysis ("RTL Milestone"), and (iii) the release to manufacturing ("RTM Milestone") stages of work. 1.9 "NON-RECURRING ENGINEERING CHARGES" ("NRE CHARGES") means the costs for NRE Services. 1.10 "NON-RECURRING ENGINEERING SERVICES" ("NRE SERVICES") means engineering services provided by IBM to develop Products to be manufactured under this Agreement, which shall include delivery of Prototypes as specified in Attachment C. 1.11 "PRODUCT(S)" means production units of the ASIC product(s) to be sold and purchased under this Agreement as specified in Attachment A and as may be amended by the parties to include additional Products. Products shall not include Prototypes. 1.12 "PRODUCT SPECIFICATIONS" means the specifications for each Product including, without limitation, the post-layout electronic data interchange format ("EDIF") and timing requirements (including clock skew requirements), a statement of post-layout test coverage and I/O placement; as documented in the RTM, expressly or by specific incorporation. 1.13 "PROTOTYPE ACCEPTANCE" means Buyer's written approval that Buyer's Prototype evaluation demonstrates Prototype conformance to Product Specifications. 1.14 "PROTOTYPE DEVICE(S)" OR "PROTOTYPES" means a preliminary version of a Product which may or may not be functional and which is not suitable for production in commercial quantities. 1.15 "PURCHASE ORDER LEAD TIME" means the required minimum amount of time between IBM's receipt of the Purchase Order issued by Buyer and the requested shipment date necessary to accommodate manufacturing cycle time, as specified in Attachment C. 1.16 "RELEASE TO LAYOUT CHECKLIST" ("RTL") means a performance approval report in form and content as regularly used by IBM to document completion of the pre-layout Level Sensitive Scan Design ("LSSD") and timing analysis milestone of the SOW. 1.17 "RELEASE TO MANUFACTURING CHECKLIST" ("RTM") means a performance approval report in form and content as regularly used by IBM to document the design review milestone at the completion of the post-layout timing analysis. 1.18 "SCHEDULED SHIPMENT DATE" means the date for shipment of Product requested by Buyer in a Purchase Order. 1.19 "SHIPMENT DATE" means the date for shipment of Product requested by Buyer in a Purchase Order. 1.20 "STATEMENT OF WORK" or "SOW" means a statement of work as set forth in Attachment A that identifies the respective design obligations that the parties agree to complete for the development of particular Products. 2.0 TERM OF AGREEMENT This Agreement shall become effective on the date it is executed by Buyer and IBM (the "Commencement Date"). The term of this Agreement will begin on the Commencement Date and will be effective for a period of three (3) years after the date of execution (the "Contract Period"), subject, however, to earlier termination as permitted under Section 13.0. Juniper ASIC Agreement Page 2 of 20 IBM Confidential 3 08/21/97 3.0 WORK SCOPE 3.1 IBM will provide Buyer with engineering support and assistance and Buyer will provide IBM with the Buyer Deliverable items and cooperate with IBM in the use of IBM Deliverable Items to enable IBM to manufacture Products, in accordance with the SOW. The Products are designed for verification on IBM ASIC tools and to be manufactured by IBM under this Agreement. The terms and conditions by which IBM licenses the IBM Design Kits are exclusively governed by the IBM Design Kit License Agreement, which is hereby incorporated by reference. 3.2 In the event that multiple Products are developed under this Agreement or this Agreement is amended to include other Products, each such Product shall be developed under and subject to a separate SOW, separate development checklist and separate Product pricing. 4.0 ASIC PRODUCT DESIGN 4.1 IBM'S ASIC development checklists shall document the development of each of Buyer's Product design(s). 4.1.1 The IDR will be used to make a preliminary feasibility assessment of each of Buyer's proposed Product design and to advise Buyer of any areas where Buyer's design(s) do not conform to IBM design requirements. 4.1.2 The RTL shall include, expressly or by specific incorporation, the design specifications for each Product required by Buyer to successfully place, route, time and conform to LSSD and provide static timing analysis. The RTL shall also document the fact that such information is available to Buyer and has been communicated to Buyer before each Product netlist is released to layout. Buyer's signature on the RTL shall record Buyer's acknowledgment of satisfactory completion of all work on such Product through such Milestone. 4.1.3 Buyer's signature on the RTM shall record Buyer's acknowledgment of (i) satisfactory completion of all work on such Product through the RTM Milestone and (ii) the specifications to which IBM's warranty obligations, set forth in Section 14.0, apply. To the extent that specifications and test parameters contained in the RTM vary those set forth in the RTL, the specifications contained in the RTM shall govern. 4.1.4 Buyer's signature on the RTL and RTM checklists shall not be unreasonably withheld. 4.2 All Milestone and Prototype delivery schedules are estimates only. 4.3 Any data relating to a Product design that Buyer is to furnish to IBM must be compatible with IBM tools, with which IBM will verify all design and engineering work for conformance to IBM's technology groundrules. 4.4 Buyer may request changes to any Product design during the course of the SOW by submitting a written request to IBM. Upon receipt by IBM of any such request, IBM shall promptly inform Buyer of the effect of the requested change on the SOW including estimated completion of the design work to incorporate any requested changes and applicable price increase(s), if any. IBM may, however, continue work without regard to the requested change until both parties have agreed in writing to adjustment in price and estimated completion date terms, unless Buyer specifically notifies IBM in writing to halt work. 4.5 Buyer may, for the applicable unit price specified in Section 4.0 of Attachment C, order Prototypes in addition to the quantity included in the NRE Charges at any time before five (5) working days prior to RTM signoff. Subject to the RTM signoff and adequate yield from the initial wafer lot, IBM shall use reasonable efforts to deliver such additional Prototypes within two (2) weeks of the estimated delivery date for Prototypes. 4.6 Subject to the terms and conditions of this Agreement, both parties will exercise reasonable diligence in performing the design activities set forth in the SOW for each Product. 4.7 IBM agrees to provide Products to Buyer as requested by Buyer and accepted by IBM subject to the provisions of Section 5.0 and Section 6.0. 4.8 All computer data provided to IBM by Buyer will be free from any virus, worm or other routines that would permit unauthorized access or otherwise harm software, hardware or data. 5.0 PRODUCT DEMAND FORECASTS 5.1 The first Product demand forecast agreed to by Buyer and IBM is set forth in Attachment C. The forecast covers twelve (12) months broken out by Product and month. During the term of this Agreement, Buyer will provide IBM with updated Product demand forecasts on a monthly basis covering a rolling twelve (12) month period (not to extend beyond the Contract Period), which will be reviewed for approval by IBM within ten (10) days of receipt by IBM. Updated forecasts shall be in substantially the same format as the first forecast in Attachment C. Forecasts shall be provided to IBM's Customer Account Representative as identified above. Juniper ASIC Agreement Page 3 of 20 IBM Confidential 4 08/21/97 Forecasts shall constitute good faith estimates of Buyer's anticipated requirements for Products for the periods indicated based on current market conditions, and IBM's acceptance shall constitute IBM's good faith intention to quote and supply such requirements if requested and ordered by Buyer in accordance with this Section 5.0. Notwithstanding the foregoing, Product demand forecasts accepted by IBM shall not contractually obligate IBM to supply, nor contractually obligate Buyer to purchase, the quantities of units of Product set forth in such forecasts. 5.2 Buyer may request Products that exceed Product demand forecasts previously accepted by IBM. Such requests are subject to rejection by IBM for any reason, including, without limitation, resource availability. 6.0 PURCHASE ORDERS 6.1 Buyer shall order NRE Services by issuing written purchase orders. Purchase orders for NRE Services will be deemed accepted by IBM unless rejected in writing by IBM, specifying the reasons for rejection, within fourteen (14) calendar days after IBM's receipt of such purchase order. 6.2 Buyer shall order Products by issuing written purchase orders. Purchase orders for Products must be received by IBM in advance, with at least the Purchase Order Lead Time specified in Attachment C, to allow IBM to meet Buyer's requested Shipment Date. Requested Shipment Dates will be deemed accepted (subject to the Purchase Order Lead Time) by IBM if the purchase order requesting such Shipment Date is accepted by IBM. If so accepted, a requested Shipment Date shall constitute a Scheduled Shipment Date. Subject to IBM's written acceptance, Buyer may request an improved Scheduled Shipment Date. Such acceptance shall not be unreasonably withheld by IBM. 6.3 Purchase orders for Products will be deemed accepted by IBM unless rejected in writing by IBM, specifying the reasons for rejection, within fourteen (14) calendar days after IBM's receipt of such purchase order. Purchase orders for Products may be rejected by IBM if such purchase order requests a quantity of Products that (i) exceeds the most recent Product demand forecast accepted by IBM or (ii) a Shipment Date IBM deems unacceptable, or (iii) does not comply with the terms and conditions of this Agreement, or if Buyer is in breach of this Agreement. 6.4 Purchase orders issued to IBM shall include the following: 6.4.1 NRE Services and/or Product(s) being ordered; 6.4.2 quantity of units of Product requested (in increments of the minimum ship pack quantity ("SPQ") only); 6.4.3 NRE charges and/or unit price per Attachment C; 6.4.4 billing address; 6.4.5 shipping instructions, including carrier, destination address and requested shipment dates; 6.4.6 reference to this Agreement and Agreement Number. 6.5 This Agreement shall take precedence over and govern in case of any additional, different or conflicting terms and conditions in any purchase order(s) or any other form of either party. Purchase orders and other forms of either party may not vary the terms of this Agreement. Additional, different or conflicting terms and conditions on a purchase order or other form shall be of no effect. 6.6 Notwithstanding any other provision of this Agreement, in the event that IBM's ability to supply the Product is constrained (except as caused by Buyer) for reasons which include, but are not limited to, component availability, and the Scheduled Shipment Date cannot be met, IBM will reduce the quantities of Products to be supplied to Buyer in proportion to the reduction in quantities of products of the same technology or utilizing the same manufacturing process to be supplied to satisfy others. Receipt of such allocated supply and later delivery of all undelivered ordered quantities after the constraint ends shall constitute Buyer's exclusive remedy in the event of such supply constraint. 7.0 PRICING 7.1 Buyer shall pay IBM the NRE Charge applicable to such Product as set forth in Attachment C, as well as other sums for special services as are separately listed or referenced in Attachment C. Juniper ASIC Agreement Page 4 of 20 IBM Confidential 5 08/21/97 7.2 The unit price for each unit of Product ordered shall be calculated at the time the applicable purchase order is accepted using the Product's Price Quantity Matrix set forth in Attachment C. The quantity used as an input into such Price Quantity Matrix shall be the yearly cumulative quantity of units of a Products determined by the purchase orders accepted by IBM within such calendar year after the Commencement Date, including the units of Product requested in the purchase order that is the subject of such price calculation. 8.0 TITLE AND SHIPMENT 8.1 Title and risk of loss for a Product pass to Buyer when IBM delivers the Product to the carrier. 8.2 Products shall be shipped from the manufacturing location FOB for domestic U.S. destinations and ExWorks (as defined in the 1990 INCO Terms) for international shipments. 8.3 In no event shall IBM be deemed to assume any liability in connection with any shipment, nor shall the carrier be construed as an agent of IBM. 9.0 INVOICING, PAYMENT TERMS, TAXES 9.1 NRE Charges shall accrue and be invoiced on the schedule set forth in Section 2.0 of Attachment C. IBM shall invoice Buyer for all units of Product upon shipment. All payments under this Agreement shall be due [***]. If Buyer's account becomes in arrears or if Buyer exceeds its credit limit with IBM, in addition to any other right under this Agreement, [***] IBM reserves the right to cease development work or stop shipment to Buyer or ship to Buyer on a cash-in-advance basis until Buyer's account is again current. 9.2 IBM reserves a purchase money security interest in Products purchased under this Agreement in the amount of the price and in Buyer's proceeds from the same, including, without limitation, accounts receivable. Purchase money security interests will be satisfied by payment in full. Buyer agrees to execute UCC-1 financing statements or other appropriate documents to be filed in order to perfect IBM's security interest. 9.3 Buyer is responsible for all taxes related to Products except for taxes based on IBM's net income. 9.4 Buyer shall provide IBM with a copy of a valid reseller's exemption certificate for Products purchased for resale for each applicable taxing jurisdiction. Based on such certificate, and where the law permits, IBM will treat Buyer as exempt from applicable state and local sales tax for Products purchased hereunder. Buyer shall notify IBM promptly in writing of any modification or revocation of its exempt status. Buyer shall reimburse IBM for any and all assessments resulting from a refusal by a taxing jurisdiction to recognize any Buyer reseller's exemption certificate, or from Buyer's failure to have a valid reseller's exemption certificate. If Buyer purchases Product under this Agreement for internal use, Buyer agrees to notify IBM and pay applicable sales tax. 10.0 INTEREST ON OVERDUE PAYMENTS Buyer will be liable for interest on any overdue payment under this Agreement, [***] commencing on the date such payment becomes due at an annual rate equal to the maximum legal rate in the jurisdiction where the claim is asserted [***]. 11.0 CANCELLATION CHARGES, RESCHEDULING AND ORDER CHANGE PROVISIONS 11.1 Buyer may cancel a purchase order or any portion thereof upon written notice to IBM. If Buyer cancels a purchase order for NRE Services or Prototypes, or if Buyer unreasonably withholds its signature from the RTL or RTM, IBM will cease further work in connection with the Product and invoice Buyer for the total of all unpaid NRE Charges applicable to the next development Milestone (Section 2.0 of Attachment C), an NRE cancellation charge pursuant to Section 3.0 of Attachment C and the applicable unit price for any canceled Prototype devices that were ordered pursuant to Section 4.5 of this Agreement. For purchase orders for units of Product, if the written notice is less than the Purchase Order Lead Time then a cancellation charge, as specified in Section 9.0 of Attachment C will immediately become due for each canceled unit. *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. Juniper ASIC Agreement Page 5 of 20 IBM Confidential 6 08/21/97 11.2 For a purchase order for production units which is more than thirty (30) days, but less than the Purchase Order Lead Time, from its Scheduled Shipment Date, Buyer may request in writing a one-time deferral of the Scheduled Shipment Date for not more than ninety (90) days, with no cancellation charge imposed. However, if this purchase order is subsequently deferred or canceled, then the cancellation charge specified in Section 9.0 of Attachment C will be due. 12.0 ENGINEERING CHANGES 12.1 IBM may implement Engineering Changes required to satisfy governmental standards, protect Product, system or data integrity, or for environmental, health or safety reasons ("Mandatory Engineering Changes"). 12.2 For all previously shipped Product not incorporating Mandatory Engineering Changes, IBM may provide replacement Products (including parts, materials and documentation) at the expense of the party at fault. Buyer must use reasonable effort to install Mandatory Engineering Changes on all Buyer installed Products and Products in its inventory. If IBM requests the return of Products displaced by installation of replacement Products, Buyer will promptly return any displaced Products to IBM after installation of such replacement Products, at IBM's expense. 12.3 In addition to Mandatory Engineering Changes, IBM may implement Engineering Changes that result in cost reductions to the Product ("Elective Engineering Changes") with prior approval from Buyer. Such approval shall not be unreasonably withheld. IBM shall give Buyer prompt notice of Elective Engineering Changes. 12.4 IBM may make available other Engineering Changes ("Optional Engineering Changes"). The cost of any Optional Engineering Changes that Buyer desires to implement will be borne by Buyer and will be determined through a request for quote process. 13.0 TERMINATION OF AGREEMENT 13.1 If either party is in material default of a provision of this Agreement and such default is not corrected within (30) days of receipt of written notice, this Agreement may be terminated by the party not in default. 13.1.1 If Buyer terminates due to IBM default, all previously accepted purchase orders shall be automatically without charge to Buyer, except for any specific purchase order(s) that the parties mutually agree not to cancel. 13.1.2 If IBM terminates due to Buyer default at IBM's discretion, all previously accepted purchase orders shall be automatically canceled and adjustment changes and cancellation charges will apply in addition to any other amounts then due. 13.2 Notwithstanding the provisions of Section 13.1, either party shall have the right to terminate this Agreement immediately if: 13.2.1 The other party flies a petition in bankruptcy, undergoes a reorganization pursuant to a petition in bankruptcy, is adjudicated a bankrupt, becomes insolvent, becomes dissolved or liquidated, files a petition for dissolution or liquidation, makes an assignment for benefit of creditors, or has a receiver appointed for its business; or 13.2.2 The other party is subject to property attachment or court injunction or court order which has a substantial negative effect on its ability to fulfill its obligations under this Agreement. 13.3 IBM may terminate this Agreement, or its obligation with respect to specifically affected Products, immediately if: 13.3.1 Buyer unreasonably withholder its consent of IBM to make Elective Engineering Changes under Section 12.0; or 13.3.2 IBM receives a claim or charge, and [***] otherwise has a reasonable basis to believe any time during the term of this Agreement, that any of the Buyer Deliverable items infringe third party intellectual property rights. [***] 13.4 In the event this Agreement is terminated pursuant to Section 13.1.2, 13.2 or 13.3, all amounts due and payable to the non-terminating party as of the date of such termination shall become immediately due and payable. 13.5 Either party may terminate this Agreement without cause upon one (1) year's prior written notice to the other. If Buyer is the terminating party, all previously accepted *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. Juniper ASIC Agreement Page 6 of 20 IBM Confidential 7 8/21/97 purchase orders will be filed, but IBM shall not be obligated to accept further purchase orders after receiving notice. If IBM is the terminating party, IBM will continue to accept new purchase orders pursuant to Section 6.0 during the notice period. 13.6 All Products shipped against accepted purchase orders will be subject to the terms and conditions of this Agreement notwithstanding any termination or expiration of the term of this Agreement. 14.0 WARRANTIES 14.1 IBM warrants that each unit of Product after delivery will be free from defects in material and workmanship and will conform to the Product Specifications as set forth in the RTM for the applicable period set forth in Attachment C. Delivery to Buyer of each unit of Product is deemed to occur five (5) days after shipment from IBM. Buyer acknowledges that the functionality of Products is contingent upon Buyer's designs and, therefore, the warranty of this Section 14.1 does not apply to the functionality of Products fabricated hereunder. This warranty does not include repair of damage resulting from failure to provide a suitable installation environment, or any use for other than the intended purpose, accident, disaster, neglect, misuse, transportation, alterations, or non-IBM repairs or activities. 14.2 Any unit of Product that fails to conform to the warranty of Section 14.1, while under warranty, may be returned, transportation prepaid by Buyer, to the location IBM designates for repair, replacement or credit, at IBM's discretion. [***] IBM will repair or replace such units or provide a credit to Buyer for the purchase price paid for such units by Buyer. IBM will ship replacement units back to Buyer, transportation prepaid by IBM, and such units of Product will be considered newly delivered for warranty purposes. 14.3 Should any unit of Product returned to IBM hereunder be found by IBM to be free from defects or non-conformities, IBM will return such unit of Product to Buyer transportation prepaid by IBM. Payment for such unit of Product will be due and payable by Buyer upon receipt of the invoice. [***] 14.4 Prototypes provided by IBM under this Agreement are provided on an "AS IS" basis, without warranty of any kind. 14.5 No course of dealing, course of performance, usage of trade, Product or Prototype description shall be deemed to establish a warranty, express or implied. 14.6 THE FOREGOING WARRANTIES MADE BY IBM ARE EXCLUSIVE AND IN LIEU OF ANY OTHER WARRANTIES FROM IBM, EXPRESS OR IMPLIED INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ANY IMPLIED WARRANTIES OF NON-INFRINGEMENT. 15.0 CONFIDENTIAL INFORMATION All information exchanged under this Agreement will be deemed to be non-confidential. If a party wishes to exchange confidential information, the exchange will be made under the terms of the separate agreement for exchange of confidential information (Agreement Number V0903) as executed between the parties on 4/27/96. 16.0 TRADEMARKS AND TRADE NAMES 16.1 Neither this Agreement, nor the sale of Products hereunder, shall be deemed to give either party any right to use the other party's trademarks or any of the other party's trade names without specific, prior written consent. 17.0 INTELLECTUAL PROPERTY RIGHTS 17.1 Buyer represents, and IBM acknowledges Buyer's representation, that all Buyer Deliverable items for the Products are the property of Buyer. Buyer represents and warrants it is the rightful owner, or authorized licensee (with all requisite rights to sublicense) of the Buyer Deliverable Items and all other designs, information, and materials supplied to IBM hereunder, and that no part of such materials knowingly incorporate or infringe the intellectual property of any third party. 17.2 IBM or its licensors shall retain and have all intellectual property right (including, without limitation, mask work rights) associated with any intellectual property furnished by IBM *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. Juniper ASIC Agreement Page 7 of 20 IBM Confidential 8 in connection with this Agreement, including without limitation, (i) all base array layers, (ii) all IBM-licensed library elements (including, without limitation, any megafunctions or cores), (iii) all design methodologies and tools [***]. To the extent Buyer has access to such intellectual property, Buyer shall use such intellectual property solely for the purpose of designing Prototypes and Products for manufacture pursuant to this Agreement. Buyer hereby conveys to IBM any intellectual property rights it may acquire therein. 17.3 IBM shall own any masks made by IBM using logic data provided by Buyer. IBM will use any tangible netlist tape(s), and tangible GDS II tape(s) received from Buyer or generated exclusively for Buyer hereunder, and any masks made from such GDS II tape(s), only to manufacture Products for sale to Buyer. 17.4 If in the course of performance under this Agreement either party discovers or invents any process, pattern, device or other invention, that party shall be deemed the owner of such discovery or invention. In the event any such invention is jointly discovered or invented by the parties, the parties shall be deemed joint owners of such discovery or invention without any duty of accounting. 17.5 The parties understand and agree that no license or other right is granted herein to either party, directly or by implication, estoppel or otherwise, with respect to any know-how, inventions, patents, trade secrets, copyrights, mask works or other intellectual property rights, except as may be required by IBM to manufacture the Product(s). No additional license or other right, express or implied, shall arise from the consummation of this Agreement, or from any acts, statements or dealings leading to such consummation. 18.0 INTELLECTUAL PROPERTY INDEMNIFICATION 18.1 IBM shall indemnify Buyer from and against any damages finally settled or awarded by a court of competent jurisdiction resulting from any direct infringement of any patents or copyrights of a third party in any country in which IBM sells similar products that expose IBM to similar liabilities as the Product, arising as a result of any of IBM's manufacturing process, equipment or testing, that is not specifically required by Buyer's designs, specifications or instructions. IBM shall defend at its own expense, including attorney's fees, any suit brought against Buyer alleging such infringement. In the event that Buyer becomes enjoined from using Product in its inventory due to such infringement, IBM at its option and expense, will secure for Buyer the right to continue to use and market the Product, or modify or replace the Product with a non-infringing product. If IBM determines that neither of the foregoing alternatives is reasonably available, Buyer may return the Product in Buyer's inventory to IBM for a credit equal to the price paid for the units of Product affected. IBM shall have no obligation regarding any claim based upon modification of the Product by Buyer or its customers, use of the Product in other than its intended operating environment or the combination, operation or use of the product with non-IBM products or equipment. 18.2 Buyer shall indemnify IBM from and against any damages finally settled or awarded by a court of competent jurisdiction resulting from any direct infringement of any patents or copyrights of a third party in any country where Buyer uses or distributes the Product, arising as a result of IBM's compliance with any of Buyer's design, specifications, instructions or modifications of the Product by Buyer and shall defend at its own expense, including attorney's fees, any suit brought against IBM alleging any such infringement. 18.3 The rights provided in Sections 18.1 and 18.2 are contingent upon the parties seeking to enforce indemnification by giving prompt written notice to the indemnifying party regarding any claim, demand or action for which the indemnified party seeks indemnification. The indemnified party is required to fully cooperate with the indemnifying party at the indemnifying party's expense and shall allow the indemnifying party to control the defense or settlement of any such claim, demand or action, including obtaining the written consent of the indemnifying party prior to any settlement proposal or settlement. IBM shall have the right to waive Buyer's obligations under Section 18.2 and provide for its own defense [***]. 18.4 The purchase, receipt or possession of the Product from or through IBM carries no license or immunity, express or implied, under any patent of IBM covering the combination of the Product with other products or the use of any such combination, or under any patent or other intellectual property right of any third party relating to the Product or its combinations with any other products. *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. Juniper ASIC Agreement Page 8 of 20 IBM Confidential 9 8/21/97 18.5 Except as expressly stated in this Agreement, this Section 18.0 states the entire liability of the parties and their exclusive remedies with respect to infringement and all other warranties against infringement of any intellectual property rights, statutory, express or implied are hereby disclaimed. 19.0 INDEPENDENT PARTIES Each party hereto is an independent contractor and is not an agent of the other party for any purpose whatsoever. Neither party shall make any warranties or representations on the other party's behalf, nor shall it assume or create any other obligations on the other party's behalf. IBM and Buyer agree to indemnify from and against any damages finally awarded by a court of competent jurisdiction resulting from any violation of this Section 19.0. 20.0 LIMITATION OF REMEDIES 20.1 IBM's entire liability and Buyer's exclusive remedy are set forth in this Section: 20.1.1 In all situations involving non-conforming or defective Products furnished under this Agreement as set forth in Section 14.1, Buyer's exclusive remedy is the replacement of the Products or a credit to Buyer of the purchase price paid for such units by Buyer, at IBM's sole discretion. 20.1.2 IBM's liability for actual damages for any cause whatsoever (other than as set forth in Section 20.1.1), shall be limited to the greater of fifty thousand dollars ($50,000) or the applicable unit price for the specific units of Product that caused the damages or that are the subject matter of, or are directly related to, the cause of action. This limitation will apply, except as otherwise stated in this Section, regardless of the form of action, whether in contract or in tort, including negligence. This limitation will not apply to the payment of costs, damages and attorney's fees referred to in Section 18.0. This limitation will also not apply to claims by Buyer for bodily injury or damage to real property or tangible personal property caused by IBM's negligence. [***] 20.1.3 In no event will either party be liable to the other party for any lost profits, lost savings, incidental damages or other consequential damages, even if advised of the possibility of such damages, except as provided in Section 18.0. In addition IBM will not be liable for any claim based on any third-party claim, except as provided in Section 18.0. In no event will IBM be liable for any damages caused by Buyer's failure to perform Buyer's responsibilities. 20.1.4 In addition, IBM shall have no liability when the Products are used in conjunction with (a) any medical implantation or other direct life support applications where malfunction may result in direct physical harm or injury to persons or (b) commercial aviation, nuclear materials, or other ultra-hazardous activities. 21.0 SUBCONTRACT AND ASSIGNMENT 21.1 IBM has the right to subcontract its responsibilities under this Agreement, provided that any subcontractor retained by IBM is obligated in writing to the same obligations as set forth herein with respect to IBM. In the event that IBM does subcontract certain portions of its responsibilities, the term "employee" as used herein shall be deemed to include such subcontractor and/or its employees. 21.2 Neither party to this Agreement may assign its rights or delegate its duties, in whole or in part, without the prior written consent of the other party, [***] except that IBM may assign its rights to payment. [***] Any act in derogation of the foregoing will be null and void. 21.3 During the term of this Agreement and for one (1) year thereafter, Buyer shall not solicit any IBM employee who is directly engaged in performing activities under this Agreement to fill out an application for employment; nor shall Buyer solicit the employees of any third party engaged on behalf of IBM in performing activities that are related to this Agreement. *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. Juniper ASIC Agreement Page 9 of 20 IBM Confidential 10 08/21/97 22.0 COMPETITIVE PRODUCTS AND SERVICES Neither this Agreement nor any activities hereunder will impair any right of IBM or Buyer to design, develop, manufacture, market, service, or otherwise deal in, directly or indirectly, other products or services including those which are competitive with those offered by IBM or Buyer. 23.0 PROMOTIONAL ACTIVITY Press releases and other like publicity, advertising or promotional material which mention the other party by name, this Agreement or any term hereof shall be agreed upon by both parties in writing prior to any release. 24.0 FORCE MAJEURE Except for payments due IBM, neither party shall be in default or liable for any delay or failure of compliance with this Agreement due to an act of nature, public enemy, freight embargo, or other cause if such act of nature, public enemy, freight embargo, or other cause is beyond the control of the non-performing party. A non-performing party shall cure as soon as practicable. 25.0 NOTICES 25.1 All notices shall be in writing and shall be deemed delivered when sent by certified mail return receipt requested. IBM JUNIPER Address Address 1055 Joaquin Road 385 Ravendale Drive Mountain View, CA 94043 Mountain View, CA 94043 Attn: Attn: Archna Nigam/Brian McDonnell Marcel Gani 25.2 Day to day activities under this Agreement will be directed by the Technical Coordinators identified in Attachment A, who will be responsible for maintaining technical liaison between the parties. Either party may change its respective representative designated for receipt of notices, or its Technical Coordinator and their addresses designated for notices by notifying the other party in the same manner as any other notice. 26.0 GENERAL PROVISIONS 26.1 This Agreement may be executed in any number of identical counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument when each party has signed one such counterpart. 26.2 The activities of each party and its employees, agents or representatives while on the other party's premises (including any design center) shall comply with the host company's policies and procedures for such facilities, including security procedures and visitation guidelines. 26.3 Each party will comply with all applicable federal, state and local laws, regulations and ordinances including, without limitation, the regulations of the U.S. Government relating to the export of commodities and technical data insofar as they relate to the activities under this Agreement. Buyer agrees that machines, commodities, and technical data provided under this Agreement are subject to restrictions under the export control laws and regulations of the United States of America, including, without limitation, the U.S. Export Administration Act and the U.S. Export Administration Regulations. Buyer hereby gives its written assurance that neither machines, commodities or technical data provided by IBM under this Agreement, nor the direct product thereof, will be exported, or re-exported, directly or indirectly, to prohibited countries or nationals thereof without first obtaining applicable government approval. Buyer agrees it is responsible for obtaining required government documents and approvals prior to export of any machine, commodity, or technical data. 26.4 This Agreement shall be construed, and the legal relations between the parties hereto shall be determined, in accordance with the substantive laws of the State of New York, without regard to the conflict of laws principles thereof. The parties hereto expressly Juniper ASIC Agreement Page 10 of 20 IBM Confidential 11 waive any right they may have to a jury trial and agree that any proceeding under this Agreement shall be tried by a judge without a jury. 26.5 If any section or subsection of this Agreement is found by competent judicial authority to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of any such section or subsection in every other respect and the remainder of this Agreement shall continue in effect so long as the redacted Agreement still expresses the intent of the parties. If the intent of the parties cannot be preserved, this Agreement shall be either renegotiated or terminated. 26.6 Irrespective of nonpayment, no actions, regardless of form, arising out of this Agreement, may be brought by either party more than two (2) years after the cause of action has arisen 26.7 This Agreement may be modified only by a written amendment signed by persons authorized to do so bind Buyer and IBM. This Agreement shall not be supplemented or modified by any course of dealing, course of performance or trade usage. The term "this Agreement" as used herein includes any applicable Attachments or future written amendment(s) made in accordance with this Section. 26.8 Failure by either party to insist in any instance on strict conformance by the other to any term of this Agreement or failure by either party to act in the event of a breach will not be construed as a consent to or waiver of any subsequent breach of the same or of any other term contained in this Agreement. 26.9 All obligations and duties which by their nature survive the expiration or termination of this Agreement shall remain in effect beyond any expiration or termination, including, without limitation, Sections 8.0, 9.0, 10.0, 13.6, 14.0, 15.0, 16.0, 17.0, 18.0, 19.0 and 20.0. 26.10 The headings in this Agreement are for convenience only and are not intended to affect the meaning or interpretation of this Agreement. 27.0 SOLE AGREEMENT The parties acknowledge that each has read this Agreement and its Attachments, understands them, and agrees to be bound by their terms and conditions. Further, the parties agree that this Agreement and its Attachments and the IBM Design Kit License Agreement, are the complete and exclusive statement of the agreement between the parties, which supersedes all proposals and all prior agreements, oral or written, and all other communications between the parties relating to the subject matter hereof. Agreed to: Agreed to: INTERNATIONAL BUSINESS JUNIPER NETWORKS MACHINES CORPORATION By: [Illegible] By: /s/ Marcel Gani ------------------------- ------------------------- Authorized Signature Authorized Signature Name Name: Marcel Gani Title Title: Chief Financial Officer Dated: Dated: 8/26/97 -------------------- -------------------- ----------------------------------------------------------------------------- This agreement shall not bind either party to any obligations unless and until it is executed in writing by both parties. Juniper ASIC Agreement Page 11 of 20 IBM Confidential 12 08/21/97 ATTACHMENT A [***] Juniper ASIC Agreement Page 12 of 20 IBM Confidential] *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 13 08/21/97 [***] Juniper ASIC Agreement Page 13 of 20 IBM Confidential *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 14 ATTACHMENT B Deliverable Items [to be customized to the transaction] [***] Juniper ASIC Agreement Page 14 of 20 IBM Confidential *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 15 ATTACHMENT C [***] Juniper ASIC Agreement Page 15 of 20 IBM Confidential *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 16 [***] Juniper ASIC Agreement Page 16 of 20 IBM Confidential *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 17 08/21/97 [***] Juniper ASIC Agreements Page 17 of 20 IBM Confidential *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 18 08/21/97 [***] *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. Juniper ASIC Agreement Page 18 of 20 IBM Confidential 19 08/21/97 [***] Juniper ASIC Agreement Page 19 of 20 IBM Confidential *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 20 8/21/97 [***] Juniper ASIC Agreement Page 20 of 20 IBM Confidential *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. EX-10.8.1 18 AMENDMENT ONE TO AGREEMENT FOR ASIC DESIGN 1 SIGNATURE COPY EXHIBIT 10.8.1 AMENDMENT 1 TO AGREEMENT V1967 This Amendment to the Agreement for ASIC Design and Purchase of Products ("Amendment 1") is made and entered into between Juniper Networks ("Buyer"), and IBM Microelectronics ("IBM"). This Amendment 1 shall be effective as of the last date signed below (the "Effective Date"). WHEREAS IBM and Buyer are parties to the Agreement for ASIC Design and Purchase of Products, Agreement Number V1967 having an effective date of August 26, 1997 (the "Agreement"); WHEREAS IBM and Buyer desire to amend the Agreement as set forth herein; NOW THEREFORE the parties hereby agree as follows: 1. Restated Product Appendices: Attached hereto is a complete set of the revised, updated Product Attachments for the Agreement that replace all prior Product Attachments in their entirety. 2. No Other Amendment or Modification. Except as expressly set forth in this Amendment 1, the Agreement remains in full force and effect without modification. The terms and conditions of this Amendment 1 and the Agreement shall not be modified or amended except by a writing signed by authorized representatives of both parties. 3. Entire Agreement. The Agreement, as amended herein, sets forth the entire agreement and understanding between the parties, and supersedes and cancels all previous negotiations, agreements, commitments and writings, in respect to the subject matter hereof, and neither party hereto shall be bound by any term, clause, provision or condition except as expressly provided in the Agreement as amended herein or as duly set forth on or subsequent to the date hereof in writing, signed by duly authorized representatives of the parties. Agreed to: Agreed to: INTERNATIONAL BUSINESS JUNIPER NETWORKS MACHINES CORPORATION By: /s/ PETER D. HANSEN By: /s/ GARY HEIDENREICH --------------------------- ------------------------------ Authorized Signature Authorized Signature Name: Peter Hansen Name: Gary Heidenreich Title: V.P. North America Sales Title: V.P. of Operations Dated: 1/5/98 Dated: 12-16-97 ------------------------ --------------------------- IBM Page 1 of 8 Juniper Networks *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 2 SIGNATURE COPY ATTACHMENT A [***] IBM Page 2 of 8 Juniper Networks *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 3 SIGNATURE COPY Juniper6.1wp [***] IBM Page 3 of 8 Juniper Networks *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 4 SIGNATURE COPY Juniper6.1wp ATTACHMENT B Deliverable Items [to be customized to the transaction] [***] IBM Page 4 of 8 Juniper Networks *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 5 SIGNATURE COPY Juniper6.lwp ATTACHMENT C [***] IBM Page 5 of 8 Juniper Networks *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 6 SIGNATURE COPY Juniper6.lwp [***] IBM Page 6 of 8 Juniper Networks *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 7 SIGNATURE COPY [***] *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. IBM Page 7 of 8 Juniper Networks 8 SIGNATURE COPY [***] *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. Page 8 of 8 EX-10.8.2 19 AMENDMENT TWO TO AGREEMENT FOR ASIC DESIGN 1 EXHIBIT 10.8.2 February 19, 1998 SIGNATURE COPY AMENDMENT 2 TO AGREEMENT V1967 This Amendment to the Agreement for ASIC Design and Purchase of Products ("Amendment 2") is made and entered into between Juniper Networks ("Buyer"), and IBM Microelectronics ("IBM"). This Amendment 2 shall be effective as of the last date signed below (the "Effective Date"). WHEREAS IBM and Buyer are parties to the Agreement for ASIC Design and Purchase of Products, Agreement Number V1967 having an effective date of August 26, 1997 (the "Agreement"); WHEREAS IBM and Buyer desire to amend the Agreement as set forth herein; NOW THEREFORE the parties hereby agree as follows: 1. Additional Product Attachments: Attached hereto as an addition to the Agreement are Product Attachments for Chip K. 2. No Other Amendment or Modification. Except as expressly set forth in this Amendment 2, the Agreement as amended remains in full force and effect without modification. The terms and conditions of this Amendment 2 and the Agreement shall not be modified or amended except by a writing signed by authorized representatives of both parties. 3. Entire Agreement. The Agreement, as amended, sets forth the entire agreement and understanding between the parties, and supersedes and cancels all previous negotiations, agreements, commitments and writings, in respect to the subject matter hereof, and neither party hereto shall be bound by any term, clause, provision or condition except as expressly provided in the Agreement as amended herein or as duly set forth on or subsequent to the date hereof in writing, signed by duly authorized representatives of the parties. Agreed to: Agreed to: INTERNATIONAL BUSINESS JUNIPER NETWORKS MACHINES CORPORATION By: /s/ PETER D. HANSEN By: /s/ GARY HEIDENREICH --------------------------- ------------------------------ Authorized Signature Authorized Signature Name: Peter Hansen Name: Gary Heidenreich Title: V.P. North America Sales Title: V.P. of Operations Dated: 3/2/98 Dated: 2-23-98 ------------------------ --------------------------- IBM Page 1 of 7 Juniper Networks 2 February 19, 1998 SIGNATURE COPY ATTACHMENT A [***] *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. IBM Page 2 of 7 Juniper Networks 3 February 19, 1998 SIGNATURE COPY [***] - -------------- *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. IBM Page 3 of 7 Juniper Networks 4 February 19, 1998 SIGNATURE COPY ATTACHMENT B Deliverable Items [to be customized to the transaction] [***] - -------------- *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. Page 4 of 7 5 February 19, 1998 SIGNATURE COPY ATTACHMENT C [***] - -------------- *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. IBM Page 5 of 7 Juniper Networks 6 Amend2K.4.lwp February 19, 1998 SIGNATURE COPY [***] - -------------- *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. IBM Page 6 of 7 Juniper Networks 7 Amend2K.4.1wp February 19, 1998 SIGNATURE COPY [***] - -------------- *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. IBM Page 7 of 7 Juniper Networks EX-10.9 20 STANDARD MANUFACTURING AGREEMENT, SOLECTRON 1 EXHIBIT 10.9 Standard Manufacturing Agreement Solectron Confidential STANDARD MANUFACTURING AGREEMENT Solectron California Corporation ("Solectron") whose principal place of business is located at 847 Gibraltar Drive, Milpitas, California 95035 and Fine Pitch Technology Inc. whose principal place of business is located at 2450 Autumnvale Drive, San Jose, California 95131 (Solectron California Corporation and Fine Pitch Technology Inc. collectively referred to as "Solectron") and Juniper Networks Inc. ("Customer") whose principal place of business is located at 385 Ravendale Drive, Mountain View, California 94043 in their desire to formulate a strategic business relationship and to define their expectations regarding this relationship, hereby agree as follows: 1.0 PRECEDENCE: 1.1 This Agreement is intended by Solectron and Customer to operate as a basic set of operating conditions regarding their respective business relationship. Product specific requirements along with specific business terms and conditions will be mutually agreed to and documented by an addendum to this Agreement. 1.2 It is the intent of the parties that this Agreement and its addenda shall prevail over the Standard Manufacturing Agreement previously entered into by the party's with the effective date of February 10, 1998. It is the intent of the parties that this Agreement and its addenda shall also prevail over the terms and conditions of any purchase order, acknowledgment form or other instrument. 1.3 This Agreement may be executed in one or more counterparts, each of which will be deemed the original, but all of which will constitute but one and the same document. The parties agree this Agreement and its addenda may not be modified except in writing signed by both parties. 2.0 TERM 2.1 This Agreement shall commence on the effective date, June 10, 1998, and shall continue for an initial term of one (1) year. This Agreement shall automatically be renewed for successive one(1) year increments unless either party requests in writing, at least ninety (90) days prior to the anniversary date, that this Agreement not be so renewed. 3.0 PRODUCT FORECAST 1 of 11 2 Standard Manufacturing Agreement Solectron Confidential 3.1 Customer will provide an annual twelve (12) month forecast and a monthly six (6) month rolling Product forecast to Solectron. 4.0 MATERIAL PROCUREMENT 4.1 Solectron is authorized to purchase materials using standard purchasing practices including, but not limited to, acquisition of material recognizing Economic Order Quantities, ABC buy policy and long lead time component management in order to meet the forecasted requirements of Customer. [***] Customer recognizes its financial responsibility for the material purchased by Solectron on behalf of Customer. Customer is responsible for material to the extent that (i) material was purchased by Solectron to support the Product forecast and agreed upon safety stock; (ii) Solectron exercised reasonable business judgment in managing suppliers and lead times; (iii) Solectron complied with Customer cancellation instructions in a timely manner (canceled all open orders within one (1) week of receiving instructions). 4.2 Customer may revise or cancel a purchase order for Product and may also eliminate a component from a Product. If Customer revises or cancels a purchase order ("Order"), or eliminates a component, or through revised forecast (downside) causes excess inventory, Solectron shall identify all potential liability of Customer for material on order, material on hand, work in process, and finished goods. Solectron shall undertake commercially reasonable efforts to cancel all applicable component purchase orders and reduce component inventory through return for credit programs or allocate components for alternate programs to minimize charges to Customer. Customer agrees to compensate Solectron for costs incurred for finished goods (including profit); work in process (including labor performed); material on hand which could not be returned or used for other customers and at other sites of Solectron; material on order which could not be canceled; applicable material supplier's restocking or cancellation fees; and agreed - -------------- *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 2 of 11 3 Standard Manufacturing Agreement Solectron Confidential Solectron handling charges. Customer agrees to pay carrying costs to Solectron of [***]. 4.3 Solectron will report its inventory position to Customer on a monthly basis, including the following data: quantity of raw material, work in process and any open orders that cannot be canceled due to supplier lead time. Report will specifically identify any material on hand or on order where the quantity exceeds the agreed three (3) month forward looking forecast plus safety stock. 4.4 Solectron shall undertake reasonable efforts to cancel all applicable component purchase orders and reduce component inventory through return for credit programs or allocate components for alternate programs if applicable. 5.0 PURCHASE ORDERS AND PRICE REVIEWS 5.1 Initial order placement will be an Order from Customer to Solectron issued electronically with facsimile copy as backup. Shipment of Product to Customer from date of acceptance shall be [***] for forecasted Product [***]. Solectron will provide notice to Customer of Order acceptance and scheduled shipment date [***]. 5.2 Customer may issue specific Orders to Solectron which will be identified as "high priority" at time of Order placement. Scheduled shipment of designated "high priority" Product will be [***]. Solectron will ship these Products [***]. Solectron's on-time delivery performance of "high priority" Products will be taken into consideration by the parties during quarterly price reviews. 5.3 In the event Customer issues Orders in excess of forecasts and agreed to safety stock, Solectron will use commercially reasonable efforts to recover and replenish inventory levels. Expediting costs for such Orders will be agreed upon prior to Order placement. Solectron will provide Customer with "what-if" shortages results [***]. 5.4 Solectron and Customer will meet every three (3) months during the term of this Agreement to review safety stock levels, pricing and to determine whether any price adjustment is required. [***] - -------------- *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 3 of 11 4 Standard Manufacturing Agreement Solectron Confidential 5.5 Solectron will provide pricing for average monthly volumes of [***]. If volumes fall below [***] production rate of [***], Solectron and Customer agree to review the causes. If the volumes have dropped due to the end of Product life, Solectron and Customer agree to develop their end-of-life support strategy. If the low volumes are only temporary, Solectron and Customer will discuss what if any fixed program costs are required to maintain the Solectron team. Solectron will attempt to minimize the fixed program costs by re-assigning personnel whenever possible. Solectron will consider production volumes of comparable (within the same Product family) follow-on products when calculating total monthly volumes realized. 6.0 DELIVERY 6.1 Solectron will target [***] on time delivery, defined as shipment of Product by Solectron within a window of [***] except as provided above. Each configuration order received from Customer will include the date on which the Product is to be delivered to either Customer or their designated customer location. 6.2 The FOB point is ex factory. 6.3 Solectron and Customer shall agree to delivery schedule flexibility requirements specific to the Product as documented in the addenda. 6.4 Upon learning of any potential delivery delays, Solectron will notify Customer as to the cause and extent of such delay. 6.5 If Solectron fails to make deliveries at the specified time and such failure is caused by Solectron, Solectron will, at no additional cost to Customer, employ accelerated measures such as material expediting fees, premium transportation costs, or labor overtime required to meet the specified delivery schedule or minimize the lateness of deliveries. 6.6 Should Customer require Solectron to undertake export activity on behalf of Customer, Customer agrees to submit requested export information to Solectron pursuant to Solectron Guidelines for Customer-Driven Export Shipments as provided in the addenda. 7.0 PAYMENT TERMS 7.1 Solectron and Customer agree to payment terms of Net 30 days from the date of invoice. - -------------- *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 4 of 11 5 Standard Manufacturing Agreement Solectron Confidential 7.2 Currency will be in U.S. Dollars unless specifically negotiated and reflected in the addenda. 7.3 Until the purchase price and all other charges payable to Solectron have been received in full, Solectron retains and Customer grants to Solectron a security interest in the products delivered to Customer and any proceeds therefrom. 8.0 QUALITY 8.1 The Customer program quality requirements shall be in accordance with IAW ISO 9002. Printed Circuit Board Assemblies ("PCBA") shall be fabricated IAW with IPC-A-610 Rev.B, Class 2. Low volumes will prohibit the use of statistical based methods for quality management. Rather, all entities agree to evaluate quality performance using a yield or Defects Per Million (DPM) process, with a Pareto of failures. Improvements will be prioritized and assigned appropriate resources by all parties. 9.0 ENGINEERING CHANGES 9.1 Customer may, upon advance written notice to Solectron, submit engineering changes for incorporation into the Product. It is important that this notification include documentation of the change to effectively support an investigation of the impact of the engineering change. Solectron will make a reasonable effort to review the engineering change and report to Customer [***]. If any such change affects the price, delivery, or quality performance of said Product, an equitable adjustment will be negotiated between Solectron and Customer prior to implementation of the change. 9.2 Solectron agrees not to undertake significant process changes, design changes, or process step discontinuance affecting electrical performance and/or mechanical form and fit without prior written notification and concurrence of the Customer. 10.0 INVENTORY MANAGEMENT 10.1 Solectron agrees to purchase components according to the Customer approved vendor list (AVL) including any sourcing plans as provided by the addenda. 10.2 All customer tooling/equipment furnished to Solectron or paid for by Customer in connection with this Agreement shall: a) Be clearly marked and remain the personal property of Customer. - -------------- *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 5 of 11 6 Standard Manufacturing Solectron Confidential b) Be kept free of liens and encumbrances c) Unless otherwise agreed, Customer is responsible for the general maintenance of Customer tooling/equipment. Solectron shall hold Customer property at its own risk and shall not modify the property without the written permission of Customer. Upon Customer's request, Solectron shall redeliver the property to Customer in the same condition as originally received by Solectron with the exception of reasonable wear and tear. In the event the property is lost, damaged or destroyed, Solectron's liability for the property is limited to the book value of the property. 11.0 CONFIDENTIAL INFORMATION 11.1 Solectron and Customer agree to execute, as part of this Agreement, a Nondisclosure Agreement for the reciprocal protection of confidential information. 11.2 Subject to the terms of the Nondisclosure Agreement and the proprietary rights of the parties, Solectron and Customer agree to exchange, at least semi-annually, relevant process development information and business plans to include market trends, process technologies, product requirements, new product developments, available capacity and other information to support technology advancements by both Solectron and Customer. 12.0 WARRANTY 12.1 Solectron warrants for a period of [***] from the date of manufacture of the Product, that (i) the Product will conform to the specifications applicable to such Product at the time of its manufacture, which are furnished in writing by Customer and accepted by Solectron; (ii) such Product will be of good material (supplied by Solectron) and workmanship and free from defects for which Solectron is responsible in the manufacture; (iii) such Product will be free and clear of all liens and encumbrances and that Solectron will convey good and marketable title to such Product. In the event that any Product manufactured shall not be in conformity with the foregoing warranties, Solectron shall, at Solectron's option, either credit Customer for any such nonconformity (not to exceed the purchase price paid by Customer for such Product), or, at Solectron's expense, replace, repair or correct such Product. The foregoing constitutes Customer's sole remedies against Solectron for breach of warranty claims. 12.2 Solectron shall have no responsibility or obligation to Customer under warranty claims with respect to Products that have been subjected to abuse, misuse, accident, alteration, neglect or unauthorized repair. *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 6 of 11 7 Standard Manufacturing Agreement Solectron Confidential THE WARRANTIES CONTAINED IN THIS SECTION ARE IN LIEU OF, AND SOLECTRON EXPRESSLY DISCLAIMS AND CUSTOMER WAIVES ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR ARISING BY COURSE OF DEALING OR PERFORMANCE, CUSTOM, USAGE IN THE TRADE OR OTHERWISE, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE AND FITNESS FOR A PARTICULAR USE. 12.3 An Epidemic Condition exists when Failure reports or statistical samplings show that [***] of the same Product installed or shipped during any one month contain an identical, repetitive defect in Solectron supplied material and/or workmanship. If during the warranty period of one year, the same Product shows evidence of an Epidemic Condition Juniper shall promptly notify Solectron of such condition. Upon notification, Juniper shall have the right, pending correction of the Epidemic Condition, to postpone further shipments of such Product by giving written notice of such postponement to Solectron. Such postponement shall temporarily relieve Solectron of its shipment liability and Juniper of any shipment liability for such postponed shipments. Both parties shall work together to prepare and propose a corrective action plan addressing implementation and procedure milestones for remedying such Epidemic Condition(s). Both parties shall use best efforts to implement the remedy in accordance with the agreed upon schedule. In the event of Epidemic Failure Solectron will: (a) Incorporate the remedy in the affected Product in accordance with Juniper engineering change order procedures. (b) Ship all subsequent Products incorporating the required modification. (c) [***] 12.4 Solectron shall have no liability or responsibility under Sections above for any losses or damages to the extent that any such Epidemic Failure claims are the result of: 12.4.a Solectron's compliance with Customer specifications; 12.4.b the negligence of Customer or any other person providing goods or services in connection with the design, development, production, and distribution of the Product (with the exception of Solectron manufacture of the Product); 12.4.c modification or alteration of the Product by a party other than Solectron; 12.4.d defects in Customer's products or components thereof (with the exception of the Products and Solectron supplied components thereof). *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 7 of 11 8 Standard Manufacturing Agreement Solectron Confidential 13.0 TERMINATION 13.1 If either party fails to meet any one or more of the terms and conditions as stated in either this Agreement or the addenda, Solectron and Customer agree to negotiate in good faith to resolve such default. If the defaulting party fails to cure such default or submit an acceptable written plan to resolve such default within thirty (30) days following notice of default, the nondefaulting party shall have the right to terminate this Agreement by furnishing the defaulting party with thirty (30) days written notice of termination. 13.2 This Agreement shall immediately terminate should either party; (i) become insolvent; (ii) enter into or file a petition, arraignment or proceeding seeking an order for relief under the bankruptcy laws of its respective jurisdiction; (iii) enter into a receivership of any of its assets or; (iv) enter into a dissolution of liquidation of its assets or an assignment for the benefit of its creditors. 13.3 Either Solectron or Customer may terminate this Agreement without cause by giving ninety (90) days advance written notice to the other party. 14.0 DISPUTE RESOLUTION 14.1 In the spirit of continued cooperation, the parties intend to and hereby establish the following dispute resolution procedure to be utilized in the unlikely event any controversy should arise out of or concerning the performance of this Agreement. 14.2 It is the intent of the parties that any dispute be resolved informally and promptly through good faith negotiation between Solectron and Customer. Either party may initiate negotiation proceedings by written notice to the other party setting forth the particulars of the dispute. The parties agree to meet in good faith to jointly define the scope and a method to remedy the dispute. If these proceedings are not productive of a resolution, then senior management of Solectron and Customer are authorized to and will meet personally to confer in a bona fide attempt to resolve the matter. 14.3 Should any disputes remain existent between the parties after completion of the two-step resolution process set forth above, then the parties shall promptly submit any dispute to mediation with an independent mediator. In the event mediation is not successful in resolving the dispute, the parties agree to submit the dispute to binding arbitration as provided by their respective jurisdiction. 15.0 LIMITATION OF LIABILITY 8 OF 11 9 Standard Manufacturing Agreement Solectron Confidential IN NO EVENT, WHETHER AS A RESULT OF BREACH OF CONTRACT, WARRANTY, OR TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, PRODUCT LIABILITY, OR OTHERWISE, SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY DAMAGES OF ANY KIND WHETHER OR NOT EITHER PARTY WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. 16.0 PATENT, COPYRIGHT AND TRADEMARK INDEMNITY Each party (the "indemnifying party") shall defend, indemnify, and hold harmless the other party from any claims by a third party of infringement of intellectual properties resulting from the acts of the indemnifying party pursuant to this Agreement, provided that the other party (i) gives the indemnifying party prompt notice of any such claims, (ii) renders reasonable assistance to the indemnifying party thereon, and (iii) permits the indemnifying party to direct the defense of the settlement of such claims. 17.0 GENERAL 17.1 Each party to this Agreement will maintain insurance to protect itself from claims (i) by the party's employees, agents and subcontractors under Worker's Compensation and Disability Acts, (ii) for damages because of injury to or destruction of tangible property resulting out of any negligent act, omission or willful misconduct of the party or the party's employees or subcontractors, (iii) for damages because of bodily injury, sickness, disease or death of its employees or any other person arising out of any negligent act, omission, or willful misconduct of the party or the party's employees, agents or subcontractors. 17.2 Neither party shall delegate, assign or transfer its rights or obligations under this Agreement, whether in whole or part, without the written consent of the other party provided, however, upon prior written notice to Solectron Customer may assign or transfer its rights to those parties as provided in Exhibit A. 17.3 Neither party shall be liable for any failure or delay in its performance under this Agreement due to acts of God, acts of civil or military authority, fires, floods, earthquakes, riots, wars or any other cause beyond the reasonable control of the delayed party provided that the delayed party: (i) gives the other party written notice of such cause within fifteen (15) days of the discovery of the event; and (ii) uses its reasonable efforts to remedy such delay in its performance. 17.4 This Agreement shall be governed by, and construed in accordance with the laws of the State of California, excluding its conflict of laws provisions. In any action to enforce this Agreement, the prevailing party shall be awarded all court costs and reasonable attorney fees incurred. 9 of 11 10 Standard Manufacturing Agreement Solectron Confidential Agreed: Solectron California Corporation Customer Juniper Networks By: /s/ JIM WILLIAMS By: /s/ GARY HEIDENREICH ---------------------------- ------------------------ Name: Jim Williams Name: Gary Heidenreich -------------------------- ---------------------- Title: Vice President Title: VP, Operations ---------------------------- ------------------------ Date: 8/8/98 Date: 6/10/98 -------------------------- ---------------------- Fine Pitch Technology Inc. By: /s/ YEN-HAO PAN ---------------------------- Name: Yen-Hao Pan -------------------------- Title: Operation Mgr ---------------------------- Date: 6/3/98 -------------------------- 10 of 11 11 JUNIPER NETWORKS SOLECTRON ADDENDUM TO STANDARD MANUFACTURING AGREEMENT This Addendum and the Standard Manufacturing Agreement (SMA) set forth the terms and conditions under which Solectron agrees to manufacture and support the Juniper Networks Martini product based on the specifications provided by Juniper Networks. SOLECTRON agrees to perform such manufacturing, and to ship to Juniper or it's customers in return for payment. This Addendum is hereby incorporated by reference into the SMA. Except as set forth herein, the Addendum is subject to each and every provision of the SMA. Capitalized terms not otherwise defined here shall have the meanings ascribed to such terms in the SMA. This addendum describes changes and additions to the SMA. It follows the numbering scheme of the SMA. If a specific item was NOT changed or modified, that item number will NOT be seen in the Addendum. For example, there were no changes to Item 1.1. Thus, there is no 1.1 under section 1.0 although 1.1.1. has been added under section 1.1 and thus are elements of this Addendum. Signatures /s/ JIM DAILY /s/ GARY HEIDENREICH - ------------------------- ----- ----------------------- Jim Daly Gary Heidenreich Division Manager Vice President of Operations Complex Systems Division Juniper Networks Solectron 11 of 11 12 PRICE EXHIBIT [***] *** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. -----END PRIVACY-ENHANCED MESSAGE-----