EXHIBIT 10.25
* Represents confidential information for which Ariba, Inc. is seeking
confidential treatment with the Securities and Exchange Commission.
December 10, 2001
Nihon Ariba K.K.
Tokyo Opera City Tower, 36th Floor
3-20-2, Nishi-Shinjuku
Shinjuku-ku
Tokyo 163-1436 Japan
Ariba, Inc.
000 00xx Xxxxxx,
Xxxxxxxxx, XX 00000,
Xxxxxx Xxxxxx
Re: Revenue Targets
Gentlemen:
This Standby Purchase Agreement (this "Standby Purchase Agreement") sets
forth certain undertakings of SOFTBANK EC Holding Corp. ("SBEC") as to certain
Revenue Commitments described herein with respect to certain Software products
and services of Nihon Ariba K.K. (the "Company"). Certain capitalized terms used
herein shall have the respective meanings set forth for such terms in Exhibit A
attached hereto; others that are not otherwise defined herein shall have the
meaning given to them in the Amended Master Alliance Agreement (as defined in
Exhibit A).
1. Revenue Targets.
(a) Subject to Section 1(b), the Revenue Targets for each Revenue
Period are as follows:
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Revenue Period Revenue Target Revenue Date
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1. [*] [*]
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2. [*] [*]
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3. [*] [*]
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4. [*] [*]
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5. [*] [*]
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6. [*] [*]
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Revenue Period Revenue Target Revenue Date
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7. [*] [*]
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8. [*] [*]
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9. [*] [*]
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10. [*] [*]
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Total [*]
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(b) Notwithstanding the foregoing, the Revenue Target(s) applicable to
(i) the Revenue Period during which any of the following events or
circumstances occurs and (ii) any succeeding Revenue Period(s) shall be
reduced to zero, and SBEC shall have no [*] Payment obligations or other
liabilities hereunder with respect to such Revenue Targets:
(i) if either Ariba, Inc. ("Ariba") or the Company (except, in
the case of the Company, while a [*] (as defined in the First Amended
and Restated Shareholders Agreement by and among Softbank Corp., SBEC,
Ariba and the Company ("Shareholders Agreement")) is in effect) has
elected to terminate the [*] between them dated December 10, 2001 in
accordance with the terms thereof (the "[*]"), or
(ii) if the Company is dissolved, liquidated, or declared
bankrupt or a filing for voluntary or involuntary bankruptcy, civil
rehabilitation or for the application of other similar insolvency or
rehabilitation procedures is made by the Company.
2. Notice of Revenue. Within twenty (20) days after the end of each Revenue
Period, the Company will provide SBEC with a report, prepared in accordance with
the Company's records, the Purchase Orders and Payment Reports (each as defined
in the Amended Master Alliance Agreement), and summarizing in reasonable detail
the Qualifying Revenues received by the Company for such Revenue Period, with
appropriate documentation reasonably requested by SBEC to verify the calculation
of such Qualifying Revenues set out in the report (the "Qualifying Revenue
Report").
3. [*] Payments.
(a) If a [*] exists for a Revenue Period, then within ten (10) days
after receiving the Qualifying Revenue Report for the applicable Revenue
Period (such tenth day is described herein as the "[*] Date"), SBEC shall
pay to the Company an irrevocable and nonrefundable amount equal to the [*]
(the "[*] Payment"). SBEC shall receive a nonrefundable credit in the
amount of each [*] Payment received by the Company (whether from SBEC
pursuant hereto or from SOFTBANK Corp. pursuant to the Release,
Reimbursement and Payment Agreement dated as of the date hereof among the
parties hereto and SOFTBANK Corp. (the "Release")) as a credit to be
applied to Qualifying Revenues paid to the Company for future Software
product licenses (the "[*] Licenses") purchased prior to the final Revenue
Date by Alliance Partner(s) pursuant to (i) the Amended Master Alliance
Agreement; or (ii) an Approved Purchase Agreement. Section 3(c) hereof,
together with the last sentence of this Section 3(a), shall govern the
application of such credits. For purposes of calculating Qualifying
Revenues for each Revenue Period, any Revenue arising from [*] Licenses
shall be considered as arising in the Revenue Period in which the [*]
resulting in such [*] Licenses occurred. For the avoidance of doubt, the
parties acknowledge and agree that (i) SBEC shall not be entitled to a
refund or to
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receive cash payment in lieu of credit against future Software product
license fees or support fees, or to apply credits to any payments other
than as expressly set forth in Section 3(c); (ii) all [*] Payments provided
for hereunder must be made even if no modification, enhancement or other
changes are made to the existing Software products and product suites as
offered by the Company; (iii) without limiting any other obligations of
SBEC set forth herein or otherwise or of any Alliance Partner, any [*] that
has not been paid to the Company by March 31, 2004 shall be paid within 30
days thereafter; and (iv) all credits towards [*] Licenses shall expire if
not used prior to March 31, 2004.
(b) For purposes of calculating the Qualifying Revenues and the [*]
(if any) for any Revenue Period, Qualifying Revenues in yen during such
Revenue Period shall be converted into U.S. Dollars at the exchange rate
determined as follows: the dollar/yen exchange rate to be used for such
Revenue Period shall be set on the first business day of such Revenue
Period and shall equal the average of the daily closing Japanese Yen Spot
Prices as quoted by Bloomberg on each day during the twenty business days
up to and including such first business day; provided that (i) if such
average is lower than [*] (e.g., [*]), then the exchange rate for such
Revenue Period shall be [*] and (ii) if such average is higher than [*]
(e.g., [*]), then the exchange rate for such Revenue Period shall be [*].
(c) If, in a Revenue Period, Company receives Qualifying Revenue
pursuant to the Amended Master Alliance Agreement or an Approved Purchase
Agreement in excess of the Revenue Target for such Revenue Period, then
within forty-five (45) days of Company's receipt of payment in cash for the
entire amount of Qualifying Revenue for such Revenue Period, Company shall
pay to SBEC, by wire transfer, an amount equal to the lesser of (a) the
amount by which the Qualifying Revenue for such Revenue Period exceeds the
Revenue Target for such Revenue Period and (b) the amount of [*] existing
at the beginning of such Revenue Period. Notwithstanding the foregoing, the
Company shall not be required to make any cash payment due hereunder for
any Revenue Period unless the Company receives cash payment of all
Qualifying Revenues for such Revenue Period within 60 days after the end of
such Revenue Period.
4. Notice of Objection.
(a) After any [*] Payment has been made in compliance with Section
3(a) for any Revenue Period and within sixty (60) days from the Revenue
Date for such Revenue Period (the "Objection Notice Period"), SBEC may give
the Company written notice that SBEC objects to the calculation of
Qualifying Revenues set forth in such Qualifying Revenue Report (the
"Objection Notice"). Neither the filing of an Objection Notice nor any
pending dispute shall relieve SBEC of its obligation to promptly make any
[*] Payment in accordance with Section 3(a) above.
(b) Upon receipt of any Objection Notice, the parties will use
reasonable efforts to resolve any objections. If the parties are unable to
resolve the dispute within twenty (20) days from the date of the Objection
Notice, the parties will jointly select an accounting firm of international
standing to resolve the dispute. If the parties are unable to agree on the
choice of such an accounting firm, they will select an accounting firm of
international standing by lot (other than any accounting firms for any of
the parties) (the "Accountant") which
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shall determine the Qualifying Revenue for the applicable Revenue Period.
The Accountant shall deliver to each of the parties its determination
within twenty (20) days after being selected, and the determination of the
Accountant shall be binding upon the parties. The expenses of the
Accountant shall be borne equally by the parties, provided that if SBEC's
objection is resolved in SBEC's favor, the Company shall reimburse SBEC to
the extent required so that the amount paid by SBEC pursuant to Section
3(a) hereof less the amount of such reimbursement is in accordance with the
resolution of the dispute. SBEC acknowledges and agrees that any Revenue
recognized by the Company prior to or in a Revenue Period that constitutes
Excluded Cash Payments (as defined below) shall not count as Revenue for
purposes of satisfying the Revenue Targets.
5. Company Records. The Company shall maintain complete and accurate
accounting records in accordance with sound accounting principles and will
preserve such records for a period of at least two (2) years. SBEC may
semi-annually, or at such additional time at its request, audit, or hire an
independent auditor to audit, the operations, books and records of the Company
required to be maintained pursuant to this Section.
6. Unconditional Obligation. SBEC's obligation to fully and promptly make
all [*] Payments is and shall remain unconditional and irrevocable
notwithstanding any breach or termination of this Standby Purchase Agreement,
the Amended Master Alliance Agreement or any related agreements or obligations
or the occurrence of a Modification Event (as defined in the Shareholders
Agreement) or Payment Failure (as defined in the [*] dated as of the date hereof
between Ariba, Inc. and the Company). SBEC expressly waives any defense to the
obligations set forth in either this Standby Purchase Agreement or the Amended
Master Alliance Agreement that it or any Alliance Partner may have now or
hereafter may have. Until all [*] Payments that are required to be paid pursuant
to Section 3(a) hereof have been made in full, SBEC and Alliance Partners
expressly waive any right to enforce any remedy which SBEC or Alliance Partners
now has or hereafter may have against Ariba in connection with the Transaction
Agreements, Approved Purchase Agreements, and any other agreements between
Softbank Corp. or its affiliates and Ariba or its affiliates relating to the
Company; provided that such enforcement rights shall be restored upon the
payment in full of any [*] Payments that are required to be paid pursuant to
Section 3(a) hereof. Any right to enforce any obligation under this Standby
Purchase Agreement or any other agreement shall not affect the waivers of SBEC
set forth in this Section 6. Alliance Partners and SBEC expressly waive all
setoffs and counterclaims and all presentments, demands for performance, notices
of nonperformance, protests, notices of protest, notices of dishonor, and all
other notices of any kind or nature whatsoever with respect to the Revenue
Commitments and [*] Payments. Alliance Partners and SBEC expressly waive, to the
fullest extent allowed by law, the benefit of any statute of limitations
affecting Alliance Partners' or SBEC's liability hereunder.
7. Term; Effect of Termination.
(a) This Standby Purchase Agreement shall become effective on the
Attachment Effective Date and shall continue until the later of (A) March
31, 2004 or (B) when SBEC shall have paid all [*] Payments required to be
paid by it pursuant hereto.
(b) The Revenue Commitment and the obligation to pay any unfulfilled
[*] Payments (whether currently due or for future Revenue Periods) set
forth in
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Section 3 above, and the Company's obligations under Section 3(c) above as
limited by the last sentence of Section 3(c), shall survive any expiration
or termination of this Standby Purchase Agreement or the Amended Master
Alliance Agreement.
8. Governing Law; Dispute Resolution. The validity, construction and
enforceability of this Standby Purchase Agreement and all related agreements,
collectively or separately, shall be governed by and construed in accordance
with the laws of the State of California. The parties shall attempt to resolve
all disputes between the parties arising out of or relating to this Standby
Purchase Agreement and all related agreements, collectively or separately (other
than disputes with respect to the selection of the Accountant, which shall be
governed by Section 4(b)) amicably through good faith discussions upon the
written request of any party. In the event that any such dispute cannot be
resolved thereby within a period of sixty (60) days after such notice has been
given (the last day of such sixty (60) day period being herein referred to as
the "Arbitration Date"), such dispute shall be finally settled by arbitration in
San Francisco, California, using the English language in accordance with the
Arbitration Rules and Procedures of JAMS then in effect, by one or more
commercial arbitrator(s) with substantial experience in resolving complex
commercial contract disputes, who may or may not be selected from the
appropriate list of JAMS arbitrators. If the Parties cannot agree upon the
number and identity of the arbitrators within fifteen (15) days following the
Arbitration Date, then a single arbitrator shall be selected on an expedited
basis in accordance with the Arbitration Rules and Procedures of JAMS. Any
arbitrator so selected shall have substantial experience in the software
industry. The arbitrator(s) shall have the authority to grant specific
performance and to allocate between the parties the costs of arbitration
(including service fees, arbitrator fees and all other fees related to the
arbitration) in such equitable manner as the arbitrator(s) may determine. The
prevailing party in the arbitration shall be entitled to receive reimbursement
of its reasonable expenses (including reasonable attorneys' fees, expert witness
fees and all other expenses) incurred in connection therewith. Judgment upon the
award so rendered may be entered in a court having jurisdiction or application
may be made to such court for judicial acceptance of any award and an order of
enforcement, as the case may be. Notwithstanding the foregoing, each Party shall
have the right to institute an action in a court of proper jurisdiction for
preliminary injunctive relief pending a final decision by the arbitrator(s),
provided that a permanent injunction and damages shall only be awarded by the
arbitrator(s). For all purposes of this Section 8, the parties consent to
exclusive jurisdiction and venue in the United States federal Courts located in
the Northern District of California. For the avoidance of doubt, the validity,
construction, and enforceability of this Agreement and the resolution of
disputes arising out of and relating to this Agreement and any related
agreements (other than an action solely between Nihon Ariba K.K. and Softbank
Commerce Corporation relating solely to the Amended Master Alliance Agreement),
collectively or separately, shall be governed solely by this Section 8,
notwithstanding that (i) the Amended Master Alliance Agreement is governed by
Japanese law and uses a different dispute resolution procedure or (ii) disputes
arising out of or relating to this Agreement are, or are asserted to, in any way
relate to or be based on similar facts as disputes arising out of or relating to
the Amended Master Alliance Agreement.
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9. Sole Obligation. Notwithstanding anything contained herein to the
contrary, the Parties acknowledge and agree that the sole obligation of SBEC
with respect to Revenue Targets, Revenue Commitments and [*] shall be to timely
make any [*] Payments in accordance with the terms hereof.
10. Third Party Beneficiary. The parties acknowledge that Ariba is a third
party beneficiary of all of the Company's rights and all of SBEC's obligations
under this Agreement. Ariba may directly enforce any such rights and
obligations.
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Please indicate your acceptance of the foregoing by signing this Standby
Purchase Agreement in the space provided below.
Very truly yours,
SOFTBANK EC HOLDING CORP.
By /s/ Xxx Xxxxxxxx
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Name: Xxx Xxxxxxxx
Title: President & CEO
Agreed and Accepted:
NIHON ARIBA K.K.
By: /s/ Xxxxxxx Xxxxxxxx
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Name: Xxxxxxx Xxxxxxxx
Title: President and CEO
ARIBA, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxx
Title: President & CEO
EXHIBIT A
DEFINITIONS
Alliance Partners: SOFTBANK Corp., SBEC, SOFTBANK Commerce Corp. and any
other entity Controlled by SOFTBANK Corp., that has been expressly authorized to
market, distribute, resell and/or license the Software and related services
under, and pursuant to the terms of, the Amended Master Alliance Agreement by
and between Nihon Ariba and SOFTBANK Commerce Corporation dated December 10,
2001 (including the Attachment for Reselling and the Addendum to the Attachment
for Reselling as each is incorporated therein, the "Amended Master Alliance
Agreement") or an Approved Purchase Agreement. "Controlled" means, with respect
to such entity, more than fifty percent (50%) of the outstanding shares of
securities of which (representing the right to vote for the election of
directors or other managing authority) are owned, directly or indirectly, by
SOFTBANK, but only so long as such ownership shall continue.
Approved Purchase Agreement: Approved Purchase Agreement means an agreement
for the purchase of Software products from the Company by an Alliance Partner
that is approved by each of the Company and Ariba in writing in advance in its
sole discretion. Ariba's approval must include the approval of (i) an officer of
Ariba who also serves as a director of the Company or (ii) the Chief Financial
Officer of Ariba.
[*]: Potential customers of the Company (i) listed on a schedule to be
provided by SBEC and approved by the Company, which consent shall not be
unreasonably withheld or (ii) mutually agreed upon by the Company and SBEC as
follows:
Prior to commencing substantial sales efforts with respect to any
potential [*] (a "Target"), SBEC shall notify the Company in writing
identifying such Target, and provide the Company with any such
documentation relating to such Target as may be reasonably requested by the
Company. [*].
Qualifying Revenue: The aggregate Revenue to the Company received after
September 1, 2001 from and only from each [*] (i) for support for the first year
for which support is rendered to such [*] (but no subsequent years) and (ii) for
Software product licensing (but not any revenue or other credit from consulting,
maintenance, training, education or other professional services). Qualifying
Revenue shall specifically exclude any Revenue attributable to or arising out of
Excluded Cash Payments.
Excluded Cash Payments: Means [*] received by the Company in cash payments
prior to the date of this Standby Purchase Agreement which the parties agree are
associated with the end user licenses of Software products listed on Schedule I
hereto. The Parties hereto acknowledge that no Revenues attributable to such
Excluded Cash Payments shall constitute Qualifying Revenue or [*] Payments or
otherwise be applied towards satisfying the Revenue Commitments set forth herein
regardless of whether such payments are received before or after September 1,
2001. As a result, pursuant to this Standby Purchase Agreement, Nihon Ariba
shall be entitled to receive no less than [*] in cash payments in addition to
the Excluded Cash Payments.
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Revenue: Revenue shall mean amounts payable to the Company from Alliance
Partners represented on a Purchase Order with respect to Alliance Partner that
is received and accepted by the Company during the applicable Revenue Period.
Revenue Commitment: Revenue Commitment shall mean, in each Revenue Period,
the amount of the Revenue Target that will be achieved either through the
payment of Qualifying Revenue by Alliance Partners or the payment of the [*] by
SBEC in accordance with this Standby Purchase Agreement (or both).
Revenue Date: The last day of each respective Revenue Period as set forth
in Section 1(a) of this Standby Purchase Agreement.
Revenue Period: The three month period that ends on each of the dates
specified in the table set forth in Section 1 of this Standby Purchase
Agreement, provided that the first Revenue Period shall be deemed to be a four
month period starting on September 1, 2001 and ending on December 31, 2001,
subject to the omission of all Revenue associated with Excluded Cash Payments,
as provided above.
Revenue Target: The targeted level of Qualifying Revenue for each Revenue
Period as set forth in Section 1 of this Standby Purchase Agreement.
[*]: [*] shall mean, for any Revenue Period, the amount, if any, by which
the Qualifying Revenue is [*] than the Revenue Target, provided that such [*]
shall be [*] on a dollar-for-dollar basis by an amount equal to the amount, if
any, by which the aggregate amount of Qualifying Revenue and [*] Payments for
all prior Revenue Periods exceeds the sum of the Revenue Targets for all prior
Revenue Periods.
[*]: [*] means the aggregate [*] Payments received by the Company in cash
pursuant to Section 3(a) less the aggregate amount of cash remitted to SBEC
pursuant to Section 3(c).
U.S. GAAP: Generally accepted accounting principles of the United States of
America.
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[*]
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