<PAGE>
As filed with the Securities and Exchange Commission on February 17, 1999
Registration No. 333-_______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
EXODUS COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 77-0403076
--------------------------------- -------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
2831 Mission College Blvd.
Santa Clara, CA 95054
(408) 346-2200
(Address and Telephone Number of Registrant's Principal Executive Offices)
1999 Stock Option Plan
Non-Plan Stock Options Granted by Registrant
(Full Title of the Plans)
Ellen M. Hancock
President and Chief Executive Officer
Exodus Communications, Inc.
2831 Mission College Blvd.
Santa Clara, CA 95054
(408) 346-2200
(Name, Address and Telephone Number, Including Area Code, of Agent For Service)
Copies to:
Robert A. Freedman, Esq.
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Amount Proposed Maximum Proposed Maximum Amount of
Title of Securities to be Offering Price Aggregate Registration
to be Registered Registered Per Share Offering Price Fee
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value 1,554,550 (1) $87.44 (2) $135,925,966 (2) $37,788
Common Stock, $0.001 par value 981,495 (3) 52.41 (4) 51,443,876 (4) 14,302
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Shares available for grant as of February 16, 1999 under the 1999 Stock
Option Plan.
(2) Estimated as of February 12, 1999 pursuant to Rule 457(a) solely for the
purpose of calculating the registration fee.
(3) Shares subject to outstanding options granted under the 1999 Stock Option
Plan and pursuant to non-plan option grants.
(4) Represents weighted average per share exercise price for such outstanding
options pursuant to Rule 457(h)(1).
<PAGE>
EXODUS COMMUNICATIONS, INC.
REGISTRATION STATEMENT ON FORM S-8
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
- ------ ---------------------------------------
The following documents filed with the Securities and Exchange Commission
(the "Commission") are incorporated herein by reference:
(a) The Registrant's prospectus filed November 10, 1998 pursuant to Rule
424(b) under the Securities Act of 1933, as amended (the "Securities
Act"), that contains audited financial statements of the Registrant as
of December 31, 1996 and 1997 and for each of the years in the three
year period ended December 31, 1997.
(b) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998, as amended by a Form 10-Q/A filed with the Commission
on June 11, 1998.
(c) The Registrant's Current Report on Form 8-K filed with the Commission
on June 11, 1998.
(d) The Registrant's Current Report on Form 8-K filed with the Commission
on June 26, 1998.
(e) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998, as amended by a Form 10-Q/A filed with the Commission
on September 25, 1998.
(f) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998.
(g) The Registrant's Current Report on Form 8-K filed with the Commission
on January 29, 1999.
(h) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A filed on February 13,
1998 under Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including any amendment or report filed
for the purpose of updating such description.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-
effective amendment which indicates that all securities registered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed incorporated by reference herein and to be a part hereof from the date of
the filing of such documents.
Item 4. Description of Securities.
- ------- -------------------------
Not applicable.
Item 5. Interests of Named Experts and Counsel.
- ------ --------------------------------------
Not applicable.
Item 6. Indemnification of Directors and Officers and Limitation of Liability.
- ------ ---------------------------------------------------------------------
As permitted by Section 145 of the Delaware General Corporation Law, the
Registrant's Certificate of Incorporation includes a provision that eliminates
the personal liability of its directors to the Registrant or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law or (iv) for any transaction
from which the director derived an improper personal benefit. In
2
<PAGE>
addition, as permitted by Section 145 of the Delaware General Corporation Law,
the Bylaws of the Registrant provide that: (i) the Registrant is required to
indemnify its directors and executive officers to the fullest extent permitted
by the Delaware General Corporation Law; (ii) the Registrant may, in its
discretion, indemnify other officers, employees and agents as set forth in the
Delaware General Corporation Law; (iii) upon receipt of an undertaking to repay
such advances if indemnification is determined to be unavailable, the Registrant
is required to advance expenses, as incurred, to its directors and executive
officers to the fullest extent permitted by the Delaware General Corporation Law
in connection with a proceeding (except if a determination is reasonably and
promptly made by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding or, in certain
circumstances, by independent legal counsel in a written opinion that the facts
known to the decision-making party demonstrate clearly and convincingly that
such person acted in bad faith or in a manner that such person did not believe
to be in, or not opposed to, the best interests of the corporation); (iv) the
rights conferred in the Bylaws are not exclusive and the Registrant is
authorized to enter into indemnification agreements with its directors, officers
and employees and agents; (v) the Registrant may not retroactively amend the
Bylaw provisions relating to indemnity; and (vi) to the fullest extent permitted
by the Delaware General Corporation Law, a director or executive officer will be
deemed to have acted in good faith and in a manner he or she reasonably believed
to be in, or not opposed to, the best interests of the Registrant and, with
respect to any criminal action or proceeding, to have had no reasonable cause to
believe that his or her conduct was unlawful if his or her action is based on
the records or books of account of the corporation or on information supplied to
him or her by officers of the corporation in the course of their duties or on
the advice of legal counsel for the corporation or on information or records
given or reports made to the corporation by independent certified public
accountants or appraisers or other experts.
The Registrant's policy is to enter into indemnification agreements with
each of its directors and executive officers. The indemnification agreements
provide that directors and executive officers will be indemnified and held
harmless to the fullest possible extent permitted by law including against all
expenses (including attorneys' fees), judgments, fines and settlement amounts
paid or reasonably incurred by them in any action, suit or proceeding, including
any derivative action by or in the right of the Registrant, on account of their
services as directors, officers, employees or agents of the Registrant or as
directors, officers, employees or agents of any other company or enterprise when
they are serving in such capacities at the request of the Registrant. The
Registrant will not be obligated pursuant to the agreements to indemnify or
advance expenses to an indemnified party with respect to proceedings or claims
(i) initiated or brought voluntarily by the indemnified party and not by way of
defense, except with respect to a proceeding to establish or enforce a right to
indemnification under the indemnification agreements or any other agreement or
insurance policy or under the Registrant's Certificate of Incorporation or
Bylaws now or hereafter in effect relating to indemnification, or authorized by
the Board of Directors or as otherwise required under Delaware statute or law,
regardless of whether the indemnified party is ultimately determined to be
entitled to such indemnification, (ii) for expenses and the payment of profits
arising from the purchase and sale by the indemnified party of securities in
violation of Section 16(b) of the Securities Exchange Act of 1934 or any similar
successor statute or (iii) if a final decision by a court having jurisdiction in
the matter shall determine that such indemnification is not lawful.
The indemnification agreement also provides for contribution in certain
situations in which the Registrant and a director or executive officer are
jointly liable but indemnification is unavailable, such contribution to be based
on the relative benefits received and the relative fault of the Registrant and
the director or executive officer. No contribution is allowed to a person found
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act of 1933) from any person who was not found guilty of such
fraudulent misrepresentation.
The indemnification agreement requires a director or executive officer to
reimburse the Registrant for all expenses advanced only to the extent it is
ultimately determined that the director or executive officer is not entitled,
under Delaware law, the Bylaws, the indemnification agreement or otherwise, to
be indemnified for such expenses. The indemnification agreement provides that
it is not exclusive of any rights a director or executive officer may have under
the Certificate of Incorporation, Bylaws, other agreements, any majority-in-
interest vote of the stockholders or vote of disinterested directors, Delaware
law or otherwise.
The indemnification provision in the Bylaws, and the form of
indemnification agreements entered into between the Registrant and its directors
and executive officers, may be sufficiently broad to permit indemnification
3
<PAGE>
of the Registrant's executive officers and directors for liabilities arising
under the Securities Act of 1933, as amended (the "Securities Act").
As authorized by the Registrant's Bylaws, the Registrant, with approval by
the Board, maintains director and officer liability insurance.
In addition, Thadeus Mocarski, a director of the Registrant, is indemnified
in certain circumstances by Fleet Financial Group, Inc.
Item 7. Exemption from Registration Claimed.
- ------ -----------------------------------
Not applicable.
Item 8. Exhibits.
- ------ --------
4.01 Registrant's Restated Certificate of Incorporation (incorporated
herein by reference to Exhibit 3.07 of the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998).
4.02 Certificate of Designations specifying the terms of the Series A
Junior Participating Preferred Stock of the Registrant, as filed
with the Delaware Secretary of State on January 28, 1999
(incorporated herein by reference to Exhibit 3.02 of the
Registrant's Registration Statement on Form 8-A filed with the
Commission on January 29, 1999 (the "1999 Form 8-A")).
4.03 Registrant's Bylaws (incorporated herein by reference to Exhibit
3.06 of the Registrants' Registration Statement on Form S-1,
Registration No. 333-44469 declared effective by the Commission on
March 18, 1998.)
4.04 Registrant's 1999 Stock Option Plan.
4.05 Form of Non-Plan Stock Option Agreement for options granted to
certain non-executive officer employees.
4.06 Non-Plan Stock Option Agreement for option granted to James J.
McInerney.
4.07 Non-Plan Stock Option Agreement for option granted to Susan R.
Farber.
4.08 Rights Agreement, dated January 27, 1999, between Registrant and
BankBoston, N.A., as Rights Agent (incorporated herein by
reference to Exhibit 4.04 to the 1999 Form 8-A).
5.01 Opinion of Fenwick & West LLP.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).
23.02 Consent of KPMG LLP, independent accountants.
24.01 Power of Attorney (see page 6).
Item 9. Undertakings.
- ------ ------------
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
4
<PAGE>
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) above do not
-------- -------
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or furnished to
the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement 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.
- ----
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions discussed in Item 6 hereof, or otherwise,
the Registrant has been advised that in the opinion of the 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 the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereby, the Registrant 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.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Santa Clara, State of California, on this 16th day
of February, 1999.
EXODUS COMMUNICATIONS, INC.
By: /s/ Richard S. Stoltz
________________________________________
Richard S. Stoltz
Executive Vice President, Finance,
Chief Financial Officer and Chief
Operating Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints Ellen M. Hancock and Richard S. Stoltz,
and each of them, his true and lawful attorneys-in-fact and agents with full
power of substitution, for him or her and in his or her name, place and stead,
in any and all capacities, to sign any and all amendments (including post-
effective amendments) to this Registration Statement on Form S-8, and to file
the same with all exhibits thereto and all documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or his, her or their substitute or substitutes, may
lawfully do or cause to be done or by virtue hereof.
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.
Name Title Date
---- ----- ----
Principal Executive Officer:
/s/ Ellen M. Hancock President, Chief Executive February 16, 1999
- -------------------------------- Officer and Director
Ellen M. Hancock
Principal Financial Officer and
Principal Accounting Officer:
/s/ Richard S. Stoltz Executive Vice President, February 16, 1999
- -------------------------------- Finance, Chief Financial
Richard S. Stoltz Officer and Chief
Operating Officer
Additional Directors:
/s/ K.B. Chandrasekhar Chairman of the February 16, 1999
- -------------------------------- Board of Directors
K.B. Chandrasekhar
/s/ Frederick W.W. Bolander Director February 16, 1999
- --------------------------------
Frederick W.W. Bolander
6
<PAGE>
/s/ Mark Dubovoy Director February 16, 1999
- --------------------------------
Mark Dubovoy
/s/ John R. Dougery Director February 16, 1999
- --------------------------------
John R. Dougery
/s/ Max D. Hopper Director February 16, 1999
- --------------------------------
Max D. Hopper
/s/ Peter A. Howley Director February 16, 1999
- --------------------------------
Peter A. Howley
/s/ Daniel C. Lynch Director February 16, 1999
- --------------------------------
Daniel C. Lynch
/s/ Thadeus Mocarski Director February 16, 1999
- --------------------------------
Thadeus Mocarski
/s/ Kanwal S. Rekhi Director February 16, 1999
- --------------------------------
Kanwal S. Rekhi
7
<PAGE>
Exhibit Index
-------------
Exhibit No. Description
- ---------- -----------
4.01 Registrant's Restated Certificate of Incorporation (incorporated
herein by reference to Exhibit 3.07 of the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998).
4.02 Certificate of Designations specifying the terms of the Series A
Junior Participating Preferred Stock of the Registrant, as filed
with the Delaware Secretary of State on January 28, 1999
(incorporated herein by reference to Exhibit 3.02 of the
Registrant's Registration Statement on Form 8-A filed with the
Commission on January 29, 1999 (the "1999 Form 8-A")).
4.03 Registrant's Bylaws (incorporated herein by reference to Exhibit
3.06 of the Registrants' Registration Statement on Form S-1,
Registration No. 333-44469 declared effective by the Commission on
March 18, 1998.)
4.04 Registrant's 1999 Stock Option Plan.
4.05 Form of Non-Plan Stock Option Agreement for options granted to
certain non-executive officer employees.
4.06 Non-Plan Stock Option Agreement for option granted to James J.
McInerney.
4.07 Non-Plan Stock Option Agreement for option granted to Susan R.
Farber.
4.08 Rights Agreement, dated January 27, 1999, between Registrant and
BankBoston, N.A., as Rights Agent (incorporated herein by
reference to Exhibit 4.04 to the 1999 Form 8-A).
5.01 Opinion of Fenwick & West LLP.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).
23.02 Consent of KPMG LLP, independent accountants.
24.01 Power of Attorney (see page 6).
8
<PAGE>
EXHIBIT 4.04
EXODUS COMMUNICATIONS, INC.
1999 STOCK OPTION PLAN
As Adopted January 26, 1999
1. PURPOSE. The purpose of this Plan is to provide incentives to
-------
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent and
Subsidiaries, by offering them an opportunity to participate in the Company's
future performance through awards of Options. Capitalized terms not defined in
the text are defined in Section 21, if they are not otherwise defined in other
sections of this Plan.
2. SHARES SUBJECT TO THE PLAN.
--------------------------
2.1 Number of Shares Available. Subject to Sections 2.2 and 16,
--------------------------
the total number of Shares reserved and available for grant and issuance
pursuant to this Plan will be 2,000,000 Shares. Subject to Sections 2.2 and 16,
Shares that are subject to: (a) issuance upon exercise of an Option but cease to
be subject to such Option for any reason other than exercise of such Option; and
(b) an Option granted hereunder but are forfeited or are repurchased by the
Company at the original issue price because the Shares are Unvested Shares at
the time of the Participant's Termination, will again be available for grant and
issuance in connection with future Options under this Plan. At all times the
Company shall reserve and keep available a sufficient number of Shares as shall
be required to satisfy the requirements of all outstanding Options granted under
this Plan.
2.2 Adjustment of Shares. If the number of outstanding shares is
--------------------
changed by a stock dividend, recapitalization, stock split, reverse stock split,
subdivision, combination, reclassification or similar change in the capital
structure of the Company without consideration, then (a) the number of Shares
reserved for issuance under this Plan, and (b) the Exercise Prices of and number
of Shares subject to outstanding Options, will be proportionately adjusted,
subject to any required action by the Board or the stockholders of the Company
and compliance with applicable securities laws; provided, that fractions of a
--------
Share will not be issued but will either be paid in cash at the Fair Market
Value of such fraction of a Share or will be rounded up to the nearest whole
Share, as determined by the Committee; and provided, further, that the Exercise
Price of any Option may not be decreased to below the par value of the Shares.
3. ELIGIBILITY. Options may be granted to employees, officers,
-----------
consultants, independent contractors and advisors of the Company or any Parent
or Subsidiary of the Company; provided such consultants, contractors and
--------
advisors render bona fide services not in connection with the offer and sale of
securities in a capital-raising transaction. A person may be granted more than
one Option under this Plan. Options awarded to Insiders or other individuals
who are officers of the Company may not exceed in the aggregate forty percent
(40%) of all Shares that are reserved for grant under this Plan and employees
who are not officers of the Company, or any Parent or Subsidiary of the Company
must receive at least sixty percent (60%) of all Shares that are reserved for
grant under this Plan.
4. ADMINISTRATION.
--------------
4.1 Committee Authority. This Plan will be administered by the
-------------------
Committee or by the Board acting as the Committee. Subject to the general
purposes, terms and conditions of this Plan, and to the direction of the Board,
the Committee will have full power to implement and carry out this Plan.
Without limitation, the Committee will have the authority to:
(a) construe and interpret this Plan, any Stock Option Agreement and
any other agreement or document executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and regulations relating to
this Plan or any Option;
<PAGE>
Exodus Communications, Inc.
1999 Stock Option Plan
(c) select persons to receive Options;
(d) determine the form and terms of Options;
(e) determine the number of Shares subject to Options;
(f) determine whether Options will be granted singly, in combination
with, in tandem with, in replacement of, or as alternatives to,
other Options under this Plan or any other incentive or
compensation plan of the Company or any Parent or Subsidiary of
the Company;
(g) grant waivers of Plan or Option conditions;
(h) determine the vesting, exercisability and payment of Options;
(i) correct any defect, supply any omission or reconcile any
inconsistency in this Plan, any Option or any Stock Option
Agreement;
(j) determine whether an Option has been earned; and
(k) make all other determinations necessary or advisable for the
administration of this Plan.
4.2 Committee Discretion. Any determination made by the
--------------------
Committee with respect to any Option will be made in its sole discretion at the
time of grant of the Option or, unless in contravention of any express term of
this Plan or Option, at any later time, and such determination will be final and
binding on the Company and on all persons having an interest in any Option under
this Plan. The Committee may delegate to one or more officers of the Company
the authority to grant an Option under this Plan to Participants who are not
Insiders.
5. OPTIONS. Only nonqualified stock options that do not qualify as
-------
incentive stock options within the meaning of Code Section 422(b) may be granted
under this Plan. The Committee may grant Options to eligible persons and will
determine (i) the number of Shares subject to the Option, (ii) the Exercise
Price of the Option, (iii) the period during which the Option may be exercised,
and (iv) all other terms and conditions of the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under this Plan
--------------------
will be evidenced by a Stock Option Agreement. The Stock Option Agreement will
be in such form and contain such provisions (which need not be the same for each
Participant) as the Committee may from time to time approve, and which will
comply with and be subject to the terms and conditions of this Plan.
5.2 Date of Grant. The date of grant of an Option will be the
-------------
date on which the Committee makes the determination to grant the Option, unless
a later date is otherwise specified by the Committee. The Stock Option
Agreement and a copy of this Plan will be delivered to the Participant within a
reasonable time after the Option is granted.
5.3 Exercise Period and Expiration Date. Options will be
-----------------------------------
exercisable within the times or upon the occurrence of events determined by the
Committee as set forth in the Stock Option Agreement governing such Option;
provided, however, that no Option will be exercisable after the expiration of
- -------- -------
ten (10) years from the date the Option is granted. The Committee also may
provide for Options to become exercisable at one time or from time to time,
periodically or otherwise, in such number of Shares or percentage of Shares as
the Committee determines.
-2-
<PAGE>
Exodus Communications, Inc.
1999 Stock Option Plan
5.4 Exercise Price. The Exercise Price of an Option will be
--------------
determined by the Committee when the Option is granted and may not be less than
Fair Market Value of the Shares on the date of grant. Payment for the Shares
purchased must be made in accordance with Section 6 of this Plan.
5.5 Method of Exercise. Options may be exercised only by
------------------
delivery to the Company of a written stock option exercise agreement (the
"Exercise Agreement") in a form approved by the Committee (which need not be the
same for each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price for the number of Shares being
purchased.
5.6 Termination. Notwithstanding the exercise periods set forth
-----------
in the Stock Option Agreement, exercise of an Option will always be subject to
the following:
(a) If the Participant is Terminated for any reason except death or
Disability, then the Participant may exercise such Participant's
Options only to the extent that such Options would have been
exercisable upon the Termination Date no later than three (3)
months after the Termination Date (or such shorter or longer time
period not exceeding five (5) years as may be determined by the
Committee, but in any event, no later than the expiration date of
the Options.
(b) If the Participant is Terminated because of Participant's death or
Disability (or the Participant dies within three (3) months after
a Termination other than for Cause or because of Participant's
Disability), then Participant's Options may be exercised only to
the extent that such Options would have been exercisable by
Participant on the Termination Date and must be exercised by
Participant (or Participant's legal representative or authorized
assignee) no later than twelve (12) months after the Termination
Date (or such shorter or longer time period not exceeding five (5)
years as may be determined by the Committee) but in any event no
later than the expiration date of the Options.
(c) Notwithstanding the provisions in paragraph 5.6(a) above, if a
Participant is terminated for Cause, neither the Participant, the
Participant's estate nor such other person who may then hold the
Option shall be entitled to exercise any Option with respect to
any Shares whatsoever, after termination of service, whether or
not after termination of service the Participant may receive
payment from the Company or any Parent or Subsidiary of the
Company for vacation pay, for services rendered prior to
termination, for services rendered for the day on which
termination occurs, for salary in lieu of notice, or for any other
benefits. In making such determination, the Board shall give the
Participant an opportunity to present to the Board evidence on his
behalf. For the purpose of this paragraph, termination of service
shall be deemed to occur on the date when the Company dispatches
notice or advice to the Participant that his service is
terminated.
5.7 Limitations on Exercise. The Committee may specify a
-----------------------
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that the minimum number will not prevent a Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 Modification, Extension or Renewal. The Committee may
----------------------------------
modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor, provided that any such action may not, without
the written consent of a Participant, impair any of such Participant's rights
under any Option previously granted. The Committee may reduce the Exercise
Price of outstanding Options without the consent of Participants affected by a
written notice to them; provided, however, that the Exercise Price may not be
-------- -------
reduced below the minimum Exercise Price that would be permitted under Section
5.4 of this Plan for Options granted on
-3-
<PAGE>
Exodus Communications, Inc.
1999 Stock Option Plan
the date the action is taken to reduce the Exercise Price; and provided,
further, that the Exercise Price shall not be reduced below the par value of the
Shares.
6. PAYMENT FOR SHARE PURCHASES.
---------------------------
6.1 Payment. Payment for Shares purchased on exercise of an
-------
Option may be made in cash (by check) or, where expressly approved for the
Participant by the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to the Participant;
(b) by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid for
within the meaning of SEC Rule 144 (and, if such shares were
purchased from the Company by use of a promissory note, such note
has been fully paid with respect to such shares); or (2) were
obtained by Participant in the public market;
(c) by tender of a full recourse promissory note having such terms as
may be approved by the Committee and bearing interest at a rate
sufficient to avoid imputation of income under Sections 483 and
1274 of the Code; provided, however, that a Participant who is not
-------- -------
an employee of the Company may not purchase Shares with a
promissory note unless the note is adequately secured by
collateral other than the Shares; and provided, further, that the
portion of the Exercise Price equal to the par value of the Shares
must be paid in cash;
(d) by waiver of compensation due or accrued to the Participant for
services rendered;
(e) provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from the Participant and
a broker-dealer that is a member of the National Association
of Securities Dealers (an "NASD Dealer") whereby the
Participant irrevocably elects to exercise the Option and to
sell a portion of the Shares so purchased to pay for the
Exercise Price, and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward the Exercise
Price directly to the Company; or
(2) through a "margin" commitment from the Participant and a NASD
Dealer whereby the Participant irrevocably elects to exercise
the Option and to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a loan from the
NASD Dealer in the amount of the Exercise Price, and whereby
the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the Exercise Price directly to the Company;
or
(f) by any combination of the foregoing.
6.2 Loan Guarantees. The Committee may help the Participant pay
---------------
for Shares purchased under this Plan by authorizing a guarantee by the Company
of a third-party loan to the Participant.
7. WITHHOLDING TAXES.
-----------------
7.1 Withholding Generally. Whenever Shares are to be issued on
---------------------
exercise of Options granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. If a payment in satisfaction of an
Option is to be made in cash, such payment will be net of an amount sufficient
to satisfy federal, state, and local withholding tax requirements.
-4-
<PAGE>
Exodus Communications, Inc.
1999 Stock Option Plan
7.2 Stock Withholding. When, under applicable tax laws, a
-----------------
Participant incurs tax liability in connection with the exercise or vesting of
any Option that is subject to tax withholding and the Participant is obligated
to pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee and be in writing in a form acceptable to the
Committee
8. PRIVILEGES OF STOCK OWNERSHIP.
-----------------------------
8.1 Voting and Dividends. No Participant will have any of the
--------------------
rights of a stockholder with respect to any Shares until the Shares are issued
to the Participant. After Shares are issued to the Participant, the Participant
will be a stockholder and have all the rights of a stockholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, however, that
if the Shares are Unvested Shares, any new, additional or different securities
the Participant may become entitled to receive with respect to the Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Unvested Shares; provided, further that the Participant will have no right to
retain such dividends or distributions with respect to Shares that are
repurchased at the Participant's original Exercise Price pursuant to Section 10.
8.2 Financial Statements. The Company will provide financial
--------------------
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Options outstanding; provided, however, that the Company will
-------- -------
not be required to provide such financial statements to Participants whose
services in connection with the Company assure them access to equivalent
information.
9. TRANSFERABILITY. Options granted under this Plan, and any
---------------
interest therein, will not be transferable or assignable by Participant, and may
not be made subject to execution, attachment or similar process, otherwise than
by will or by the laws of descent and distribution or as determined by the
Committee and set forth in the Stock Option Agreement. During the lifetime of
the Participant an Option will be exercisable only by the Participant, and any
elections with respect to the Option may be made only by the Participant unless
otherwise determined by the Committee and set forth in the Stock Option
Agreement.
10. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
----------------------
Company may reserve to itself and/or its assignee(s) in the Stock Option
Agreement a right to repurchase at the Participant's Exercise Price a portion of
or all Unvested Shares held by a Participant following such Participant's
Termination at any time within ninety (90) days after the later of Participant's
Termination Date and the date Participant purchases Shares under this Plan, for
cash and/or cancellation of purchase money indebtedness.
11. CERTIFICATES. All certificates for Shares or other securities
------------
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed or
quoted.
12. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
------------------------
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing the Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the
-5-
<PAGE>
Exodus Communications, Inc.
1999 Stock Option Plan
purchase of Shares under this Plan will be required to pledge and deposit with
the Company all or part of the Shares so purchased as collateral to secure the
payment of Participant's obligation to the Company under the promissory note;
provided, however, that the Committee may require or accept other or additional
- -------- -------
forms of collateral to secure the payment of such obligation and, in any event,
the Company will have full recourse against the Participant under the promissory
note notwithstanding any pledge of the Participant's Shares or other collateral.
In connection with any pledge of the Shares, Participant will be required to
execute and deliver a written pledge agreement in such form as the Committee
will from time to time approve. The Shares purchased with the promissory note
may be released from the pledge on a pro rata basis as the promissory note is
paid.
13. EXCHANGE AND BUYOUT OF OPTIONS. The Committee may, at any time or
------------------------------
from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Options in exchange for the surrender and
cancellation of any or all outstanding Options. The Committee may at any time
buy from a Participant an Option previously granted with payment in cash, Shares
or other consideration, based on such terms and conditions as the Committee and
the Participant may agree.
14. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Option will
----------------------------------------------
not be effective unless such Option is in compliance with all applicable federal
and state securities laws, rules and regulations of any governmental body, and
the requirements of any stock exchange or automated quotation system upon which
the Shares may then be listed or quoted, as they are in effect on the date of
grant of the Option and also on the date of exercise or other issuance.
Notwithstanding any other provision in this Plan, the Company will have no
obligation to issue or deliver certificates for Shares under this Plan prior to:
(a) obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable; and/or (b) completion of any registration
or other qualification of such Shares under any state or federal law or ruling
of any governmental body that the Company determines to be necessary or
advisable. The Company will be under no obligation to register the Shares with
the SEC or to effect compliance with the registration, qualification or listing
requirements of any state securities laws, stock exchange or automated quotation
system, and the Company will have no liability for any inability or failure to
do so.
15. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Option
-----------------------
granted under this Plan will confer or be deemed to confer on any Participant
any right to continue in the employ of, or to continue any other relationship
with, the Company or any Parent or Subsidiary of the Company or limit in any way
the right of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.
16. CORPORATE TRANSACTIONS.
----------------------
16.1 Assumption or Replacement of Options by Successor. In the
-------------------------------------------------
event of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock
holdings and the Options granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company immediately prior to such merger
(other than any stockholder that merges, or which owns or controls another
corporation that merges, with the Company in such merger) cease to own their
shares or other equity interest in the Company, (d) the sale of substantially
all of the assets of the Company, or (e) the acquisition, sale, or transfer of
more than 50% of the outstanding shares of the Company by tender offer or
similar transaction, any or all outstanding Options may be assumed, converted or
replaced by the successor corporation (if any), which assumption, conversion or
replacement will be binding on all Participants. In the alternative, the
successor corporation may substitute equivalent Options or provide substantially
similar consideration to Participants as was provided to stockholders (after
taking into account the existing provisions of the Options). The successor
corporation may also issue, in place of outstanding Shares of the Company held
by the Participant, substantially similar shares or other property subject to
repurchase restrictions no less favorable to the Participant. In the event such
successor corporation (if any) refuses to assume or substitute
-6-
<PAGE>
Exodus Communications, Inc.
1999 Stock Option Plan
Options, as provided above, pursuant to a transaction described in this
Subsection 16.1, such Options will expire on such transaction at such time and
on such conditions as the Committee will determine; provided, however, that the
-------- -------
Committee may, in its sole discretion, provide that the vesting of any or all
Options granted pursuant to this Plan will accelerate. If the Committee
exercises such discretion with respect to Options, such Options will become
exercisable in full prior to the consummation of such event at such time and on
such conditions as the Committee determines, and if such Options are not
exercised prior to the consummation of the corporate transaction, they shall
terminate at such time as determined by the Committee.
16.2 Other Treatment of Options. Subject to any greater rights
--------------------------
granted to Participants under the foregoing provisions of this Section 16, in
the event of the occurrence of any transaction described in Section 16.1, any
outstanding Options will be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation, or sale of assets.
16.3 Assumption of Options by the Company. The Company, from
------------------------------------
time to time, also may substitute or assume outstanding options granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either; (a) granting an Option under this Plan in substitution
of such other company's option; or (b) assuming such option as if it had been
granted under this Plan if the terms of such assumed option could be applied to
an Option granted under this Plan. Such substitution or assumption will be
permissible if the holder of the substituted or assumed option would have been
eligible to be granted an Option under this Plan if the other company had
applied the rules of this Plan to such grant. In the event the Company assumes
an option granted by another company, the terms and conditions of such Option
will remain unchanged (except that the exercise price and the number and nature
------
of Shares issuable upon exercise of any such option will be adjusted
appropriately pursuant to Section 424(a) of the Code). In the event the Company
elects to grant a new Option rather than assuming an existing option, such new
Option may be granted with a similarly adjusted Exercise Price.
17. ADOPTION. This Plan will become effective on the date that it is
--------
adopted by the Board (the "Effective Date").
18. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided
--------------------------
herein, this Plan will terminate ten (10) years from the Effective Date. This
Plan and all agreements thereunder shall be governed by and construed in
accordance with the laws of the State of California.
19. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
--------------------------------
terminate or amend this Plan in any respect, including without limitation
amendment of any form of Stock Option Agreement or instrument to be executed
pursuant to this Plan.
20. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by
--------------------------
the Board, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under this Plan, and such arrangements
may be either generally applicable or applicable only in specific cases.
21. DEFINITIONS. As used in this Plan, the following terms will have
-----------
the following meanings:
"Board" means the Board of Directors of the Company.
"Cause" means the commission of an act of theft, embezzlement, fraud,
dishonesty or a breach of fiduciary duty to the Company or a Parent or
Subsidiary of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
-7-
<PAGE>
Exodus Communications, Inc.
1999 Stock Option Plan
"Committee" means the Compensation Committee of the Board.
"Company" means Exodus Communications, Inc. or any successor
corporation.
"Disability" means a disability, whether temporary or permanent,
partial or total, as determined by the Committee.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exercise Price" means the price at which a holder of an Option
may purchase the Shares issuable upon exercise of the Option.
"Fair Market Value" means, as of any date, the value of a share of
the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq National Market,
its closing price on the Nasdaq National Market on the date of
determination as reported in The Wall Street Journal;
-----------------------
(b) if such Common Stock is publicly traded and is then listed on a
national securities exchange, its closing price on the date of
determination on the principal national securities exchange on
which the Common Stock is listed or admitted to trading as
reported in The Wall Street Journal; or
-----------------------
(c) if such Common Stock is publicly traded but is not quoted on the
Nasdaq National Market nor listed or admitted to trading on a
national securities exchange, the average of the closing bid and
asked prices on the date of determination as reported in The Wall
--------
Street Journal;
--------------
(d) if none of the foregoing is applicable, by the Committee in good
faith.
"Insider" means an officer or director of the Company or any other
person whose transactions in the Company's Common Stock are subject to Section
16 of the Exchange Act.
"Option" means an Option of an option to purchase Shares pursuant
to Section 5.
"Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
"Participant" means a person who receives an Option under this
Plan.
"Plan" means this Exodus Communications, Inc. 1999 Stock Option
Plan, as amended from time to time.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means shares of the Company's Common Stock reserved for
issuance under this Plan, as adjusted pursuant to Sections 2 and 16, and any
successor security.
-8-
<PAGE>
Exodus Communications, Inc.
1999 Stock Option Plan
"Stock Option Agreement" means, with respect to each Option, the
signed written agreement between the Company and the Participant setting forth
the terms and conditions of the Option.
"Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
"Termination" or "Terminated" means, for purposes of this Plan with
respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, consultant, independent contractor, or
advisor to the Company or a Parent or Subsidiary of the Company. An employee
will not be deemed to have ceased to provide services in the case of (i) sick
leave, (ii) military leave, or (iii) any other leave of absence approved by the
Committee, provided, that such leave is for a period of not more than 90 days,
unless reemployment upon the expiration of such leave is guaranteed by contract
or statute or unless provided otherwise pursuant to formal policy adopted from
time to time by the Company and issued and promulgated to employees in writing.
In the case of any employee on an approved leave of absence, the Committee may
make such provisions respecting suspension of vesting of the Option while on
leave from the employ of the Company or a Parent or Subsidiary of the Company as
it may deem appropriate, except that in no event may an Option be exercised
after the expiration of the term set forth in the Stock Option Agreement. The
Committee will have sole discretion to determine whether a Participant has
ceased to provide services and the effective date on which the Participant
ceased to provide services (the "Termination Date").
"Unvested Shares" means "Unvested Shares" as defined in the Option
Agreement.
"Vested Shares" means "Vested Shares" as defined in the Option
Agreement.
-9-
<PAGE>
No. ______
EXODUS COMMUNICATIONS, INC.
1999 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
----------------------
This Stock Option Agreement (this "Agreement") is made and entered
into as of the Date of Grant set forth below (the "Date of Grant") by and
between Exodus Communications, Inc., a Delaware corporation (the "Company"), and
the Optionee named below ("Optionee"). Capitalized terms not defined herein
shall have the meanings ascribed to them in the Company's 1999 Stock Option Plan
(the "Plan").
Optionee:
_____________________________________
Social Security Number:
_____________________________________
Optionee's Address:
_____________________________________
_____________________________________
Total Option Shares:
_____________________________________
Exercise Price Per Share:
_____________________________________
Date of Grant:
_____________________________________
Vesting Start Date:
_____________________________________
Expiration Date:
_____________________________________
(unless earlier terminated under Section 3 hereof)
1. Grant of Option. The Company hereby grants to Optionee a
---------------
nonqualified stock option (this "Option") to purchase up to the total number of
shares of Common Stock of the Company set forth above as Total Option Shares
(collectively, the "Shares") at the Exercise Price Per Share set forth above
(the "Exercise Price"), subject to all of the terms and conditions of this
Agreement and the Plan.
2. Vesting; Exercise Period.
------------------------
2.1 Vesting of Shares. This Option shall be exercisable as it
-----------------
vests. Subject to the terms and conditions of the Plan and this Agreement, this
Option shall become exercisable as to portions of the Shares as follows: (a)
this Option shall not be exercisable with respect to any of the Shares until the
expiration of six (6) months from the Vesting Start Date or ______________ ___,
19___ (the "First Vesting Date"); (b) if Optionee has continuously provided
services to the Company, or any parent or subsidiary of the Company, at all
times during the time period beginning on the Vesting Start Date and ending on
the First Vesting Date, then on the First Vesting Date, this Option shall become
exercisable as to Twelve percent (12%) of the Shares; and (c) thereafter this
Option shall become exercisable as to an additional Two percent (2%) of the
Shares upon the expiration of each full calendar month for the next succeeding
Forty-four (44) months provided that Optionee has continuously provided services
to
<PAGE>
the Company, or any parent or subsidiary of the Company, at all times during
the relevant month; provided that this Option shall cease to vest upon
Optionee's Termination and provided further that Optionee shall in no event be
entitled under this Option to purchase a number of shares of the Company's
Common Stock greater than the "Total Option Shares."
2.2 Vesting of Options. Shares that are vested pursuant to the
------------------
schedule set forth in Section 2.1 hereof are "Vested Shares." Shares that are
not vested pursuant to the schedule set forth in Section 2.1 hereof are
"Unvested Shares."
2.3 Expiration. This Option shall expire on the Expiration Date
----------
set forth above and must be exercised, if at all, on or before the earlier of
the Expiration Date or the date on which this Option is earlier terminated in
accordance with the provisions of Section 3 hereof.
3. Termination.
-----------
3.1 Termination for Any Reason Except Death, Disability or Cause.
------------------------------------------------------------
If Optionee is Terminated for any reason except Optionee's death, Disability or
Cause, then this Option, to the extent (and only to the extent) that it is
vested in accordance with the schedule set forth in Section 2.1 hereof on the
Termination Date, may be exercised by Optionee no later than three (3) months
after the Termination Date, but in any event no later than the Expiration Date.
3.2 Termination Because of Death or Disability. If Optionee is
------------------------------------------
Terminated because of death or Disability of Optionee (or the Optionee dies
within three (3) months after Termination other than for Cause or because of
Disability), then this Option, to the extent that it is vested in accordance
with the schedule set forth in Section 2.1 hereof on the Termination Date, may
be exercised by Optionee (or Optionee's legal representative or authorized
assignee) no later than twelve (12) months after the Termination Date, but in
any event no later than the Expiration Date.
3.3 Termination for Cause. If Optionee is Terminated for Cause,
---------------------
this Option will expire on the Optionee's date of Termination.
3.4 No Obligation to Employ. Nothing in the Plan or this
-----------------------
Agreement shall confer on Optionee any right to continue in the employ of, or
other relationship with, the Company or any Parent or Subsidiary of the Company,
or limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Optionee's employment or other relationship at any time,
with or without Cause.
4. Manner of Exercise.
------------------
4.1 Stock Option Exercise Agreement. To exercise this Option,
-------------------------------
Optionee (or in the case of exercise after Optionee's death, Optionee's
executor, administrator, heir or legatee, as the case may be) must deliver to
the Company an executed stock option exercise agreement in the form attached
hereto as Exhibit A, or in such other form as may be
---------
<PAGE>
approved by the Company from time to time (the "Exercise Agreement"), which
shall set forth, inter alia, Optionee's election to exercise this Option, the
----- ----
number of shares being purchased, any restrictions imposed on the Shares and any
representations, warranties and agreements regarding Optionee's investment
intent and access to information as may be required by the Company to comply
with applicable securities laws. If someone other than Optionee exercises this
Option, then such person must submit documentation reasonably acceptable to the
Company that such person has the right to exercise this Option.
4.2 Limitations on Exercise. This Option may not be exercised
-----------------------
unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise. This Option may
not be exercised as to fewer than 100 Shares unless it is exercised as to all
Shares as to which this Option is then exercisable.
4.3 Payment. The Exercise Agreement shall be accompanied by full
-------
payment of the Exercise Price for the Shares being purchased in cash (by check),
or where permitted by law:
(a) by cancellation of indebtedness of the Company to the Optionee;
(b) by surrender of shares of the Company's Common Stock that either: (1)
have been owned by Optionee for more than six (6) months and have been
paid for within the meaning of SEC Rule 144 (and, if such shares were
purchased from the Company by use of a promissory note, such note has
been fully paid with respect to such shares); or (2) were obtained by
Optionee in the open public market; and (3) are clear of all liens,
---
claims, encumbrances or security interests;
(c) by waiver of compensation due or accrued to Optionee for services
rendered;
(d) provided that a public market for the Company's stock exists: (1)
through a "same day sale" commitment from Optionee and a broker-dealer
that is a member of the National Association of Securities Dealers (an
"NASD Dealer") whereby Optionee irrevocably elects to exercise this
Option and to sell a portion of the Shares so purchased to pay for the
Exercise Price and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the exercise price directly to the
Company; or (2) through a "margin" commitment from Optionee and an NASD
--
Dealer whereby Optionee irrevocably elects to exercise this Option and
to pledge the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount of
the Exercise Price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the Exercise Price directly to
the Company; or
(e) by any combination of the foregoing.
<PAGE>
4.4 Tax Withholding. Prior to the issuance of the Shares upon
---------------
exercise of this Option, Optionee must pay or provide for any applicable federal
or state withholding obligations of the Company. If the Committee permits,
Optionee may provide for payment of withholding taxes upon exercise of this
Option by requesting that the Company retain Shares with a Fair Market Value
equal to the minimum amount of taxes required to be withheld. In such case, the
Company shall issue the net number of Shares to the Optionee by deducting the
Shares retained from the Shares issuable upon exercise.
4.5 Issuance of Shares. Provided that the Exercise Agreement and
------------------
payment are in form and substance satisfactory to counsel for the Company, the
Company shall issue the Shares registered in the name of Optionee, Optionee's
authorized assignee, or Optionee's legal representative, and shall deliver
certificates representing the Shares with the appropriate legends affixed
thereto.
5. Compliance with Laws and Regulations. The exercise of this Option
------------------------------------
and the issuance and transfer of Shares shall be subject to compliance by the
Company and Optionee with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer. Optionee understands that the Company is under no obligation to
register or qualify the Shares with the SEC, any state securities commission or
any stock exchange to effect such compliance.
6. Nontransferability of Option. This Option may not be transferred
----------------------------
in any manner other than by will or by the laws of descent and 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, successors and
assigns of Optionee.
7. Tax Consequences. Set forth below is a brief summary as of the
----------------
date the Board adopted the Plan of some of the federal and California 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 ADVISOR BEFORE EXERCISING THIS OPTION
OR DISPOSING OF THE SHARES.
7.1 Exercise of Stock Option. There may be a regular federal
-------------------------
and California income tax liability upon the exercise of this Option. 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. The Company may be
required to withhold from Optionee's compensation or collect from Optionee and
pay to the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.
<PAGE>
7.2 Disposition of Shares. If the Shares are held for more than
---------------------
twelve (12) months after the date of the transfer of the Shares pursuant to the
exercise of this Option, any gain realized on disposition of the Shares will be
treated as long-term capital gain.
8. Privileges of Stock Ownership. Optionee shall not have any of the
-----------------------------
rights of a stockholder with respect to any Shares until the Shares are issued
to Optionee.
9. Interpretation. Any dispute regarding the interpretation of this
--------------
Agreement shall be submitted by Optionee or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Optionee.
10. Entire Agreement. The Plan is incorporated herein by reference.
----------------
This Agreement and the Plan and the Exercise Agreement constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior understandings and agreements with respect
to such subject matter.
11. Notices. Any notice required to be given or delivered to the
-------
Company under the terms of this Agreement shall be in writing and addressed to
the Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated above or to such other address as
such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: personal
delivery; three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by facsimile.
12. Successors and Assigns. The Company may assign any of its rights
----------------------
under this Agreement. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement shall be binding upon
Optionee and Optionee's heirs, executors, administrators, legal representatives,
successors and assigns.
13. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the internal laws of the State of California, without regard
to that body of law pertaining to choice of law or conflict of law.
14. Acceptance. Optionee hereby acknowledges receipt of a copy of the
----------
Plan and this Agreement. Optionee has read and understands the terms and
provisions thereof, and accepts this Option subject to all the terms and
conditions of the Plan and this Agreement. Optionee acknowledges that there may
be adverse tax consequences upon exercise of this Option or disposition of the
Shares and that the Company has advised Optionee to consult a tax advisor prior
to such exercise or disposition.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
in duplicate by its duly authorized representative and Optionee has executed
this Agreement in duplicate as of the Date of Grant.
EXODUS COMMUNICATIONS, INC. OPTIONEE
By:
------------------------------ ----------------------------------
(Signature)
- --------------------------------- ----------------------------------
(Please print name) (Please print name)
- ---------------------------------
(Please print title)
<PAGE>
EXHIBIT A
---------
STOCK OPTION EXERCISE AGREEMENT
<PAGE>
Exhibit 4.05
EXODUS COMMUNICATIONS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
OPTION #1
This Stock Option Agreement ("Agreement") is made and entered into as of
---------
the Date of Grant set forth below (the "Date of Grant") by and between Exodus
-------------
Communications, Inc., a Delaware corporation (the "Company"), and the Optionee
-------
named below ("Optionee"). Capitalized terms not defined herein shall have the
--------
meanings ascribed to them in the Company's 1998 Equity Incentive Plan, as
amended (the "Plan").
----
Optionee: William F. Wilson
-----------------------------------
Social Security Number:
-----------------------------------
Address:
-----------------------------------
Total Option Shares: 20,000
-----------------------------------
Exercise Price Per Share: $24.25
-----------------------------------
Date of Grant: 10/2/1998
-----------------------------------
Vesting Start Date: 10/2/1998
-----------------------------------
Expiration Date: 10/2/2008
-----------------------------------
1. Grant of Option. The Company hereby grants to Optionee an option
---------------
(this "Option") to purchase the total number of shares of Common Stock of the
------
Company, $0.001 par value, set forth above as Total Option Shares (the "Shares")
------
at the Exercise Price Per Share set forth above (the "Exercise Price"), subject
--------------
to the terms and conditions of this Agreement. This Option is intended to be a
"nonqualified stock option."
2. Vesting and Exercise Periods
----------------------------
2.1 Vesting and Exercise Periods of Option. This Option
--------------------------------------
shall be exercisable as it vests. Subject to the terms and conditions of this
Agreement, this Option shall become exercisable as to portions of the Shares as
follows: (a) this Option shall not be exercisable with respect to any of the
Shares until the expiration of six (6) months from the Vesting Start Date or
April 2, 1999 (the "First Vesting Date"); (b) if Optionee has continuously
provided services to the Company, at all times during the time period beginning
on the Vesting Start Date and ending on the First Vesting Date, then on the
First Vesting Date, this Option shall become exercisable as to Twelve percent
(12%) of the Shares (2,400 Shares); and (c) thereafter this Option shall become
exercisable as to an additional Two percent (2%) of the Shares (400 Shares) upon
the
<PAGE>
expiration of each full calendar month for the next succeeding Forty-four (44)
months provided that Optionee has continuously provided services to the Company
at all times during the relevant month; and provided further that this Option
shall cease to vest upon Optionee's Termination and that Optionee shall in no
event be entitled under this Option to purchase a number of shares of the
Company's Common Stock greater than the "Total Option Shares." For purposes of
this Option, Optionee will be deemed to continue in service with the Company for
so long as Optionee renders services as an employee, director or independent
consultant to the Company or any Subsidiary or Parent of the Company.
2.2 Vesting Continuation on Involuntary Termination.
-----------------------------------------------
Notwithstanding the requirement set forth in Section 2.1 hereof that Optionee
continue to render services to vest in this Option and pursuant to the terms of
the Executive Employment Policy, in the event of the "Involuntary Termination"
of Optionee as defined in the Executive Employment Policy, Optionee shall
continue to vest in this Option in accordance with the schedule set forth in
Section 2.1 hereof as if Optionee had remained in service for a period of three
(3) months following such Involuntary Termination.
2.3 Vesting Acceleration on Change of Control. Pursuant to
-----------------------------------------
the terms of the Executive Employment Policy, immediately prior to a "Change of
Control", as defined in the Executive Employment Policy and set forth in this
Section 2.3, Optionee shall become vested in Fifty percent (50%) of the Shares
that have not yet vested pursuant to the schedule set forth in Section 2.1
hereof. For purposes of this Section 2.3 "Change of Control" means, the
occurrence of any of the following events: (a) a merger or consolidation
involving the Company in which the shareholders of the Company immediately prior
to such merger or consolidation own less than fifty percent of the voting power
of the surviving corporation; (b) the sale of all or substantially all of the
assets of the Company; or (c) any person or group (as defined in the Securities
Exchange Act of 1934, as amended) becoming the beneficial owner (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended),
directly or indirectly, of securities representing more than fifty percent of
the voting power of the Company then outstanding.
2.4 Expiration. This Option shall expire on the Expiration Date
----------
set forth above and must be exercised, if at all, on or before the Expiration
Date.
3. Termination. The following provisions shall govern the exercise of
-----------
this Option in the event the Optionee is Terminated:
3.1 Termination for Any Reason Except Death, Disability or Cause.
-------------------------------------------------------------
If Optionee is Terminated for any reason except Optionee's death, Disability or
Cause, then this Option, to the extent (and only to the extent) that it is
vested in accordance with the schedule set forth in Section 2.1 hereof on the
Termination Date, may be exercised by Optionee no later than three (3) months
after the later of: (a) the Termination Date or (b) the last day of the vesting
continuation period set forth in Section 2.1 hereof. In no event may Optionee
exercise this Option after the Expiration Date.
3.2 Termination Because of Death or Disability. If Optionee is
------------------------------------------
Terminated because of death or Disability of Optionee (or the Optionee dies
within three (3) months after
2
<PAGE>
Termination other than for Cause or because of Disability), then this Option, to
the extent that it is vested in accordance with the schedule set forth in
Section 2.1 hereof on the Termination Date, may be exercised by Optionee (or
Optionee's legal representative or authorized assignee) no later than twelve
(12) months after the later of: (a) the Termination Date or (b) the last day of
the vesting continuation period set forth in Section 2.1 hereof. In no event may
Optionee exercise this Option after the Expiration Date.
3.3 Termination for Cause. If Optionee is Terminated for Cause,
---------------------
this Option will expire on the Optionee's date of Termination.
3.4 No Obligation to Employ. Nothing in this Agreement shall
-----------------------
confer on Optionee any right to continue in the employ of, or other relationship
with, the Company or any Parent or Subsidiary of the Company, or limit in any
way the right of the Company or any Parent or Subsidiary of the Company to
terminate Optionee's employment or other relationship at any time, with or
without Cause.
3.5 Termination. For purposes of this Section 3, Optionee shall
-----------
not be deemed Terminated nor shall a Termination be deemed to have occurred for
so long as Optionee continues to render services as an employee, director or
independent consultant to the Company or any Subsidiary or Parent of the Company
and for so long as Optionee is entitled to continued vesting pursuant to Section
2.2 hereof.
4. Manner of Exercise
------------------
4.1 Stock Option Exercise Agreement. To exercise this Option,
-------------------------------
Optionee (or in the case of exercise after Optionee's death, Optionee's
executor, administrator, heir or legatee, as the case may be) must deliver to
the Company an executed stock option exercise agreement in such form as may be
approved by the Company from time to time (the "Exercise Agreement"), which
------------------
shall set forth, inter alia, Optionee's election to exercise this Option and the
----------
number of Shares being purchased. If someone other than Optionee exercises this
Option, then such person must submit documentation reasonably acceptable to the
Company that such person has the right to exercise this Option.
4.2 Limitations on Exercise. This Option may not be exercised
-----------------------
unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise. This Option may
not be exercised as to fewer than 100 Shares, unless it is exercised as to all
Shares as to which this Option is then exercisable.
4.3 Payment. The Exercise Agreement shall be accompanied by full
-------
payment of the Exercise Price for the Shares being purchased in cash (by check),
or where permitted by law:
(a) by cancellation of indebtedness of the Company to the Optionee;
(b) by surrender of shares of the Company's Common Stock that either: (1)
have been owned by Optionee for more than six (6) months and have been
paid for within the meaning of SEC Rule 144, and if such shares were
purchased from the Company by use of a promissory note, such note has
been fully paid with respect
3
<PAGE>
to such shares, or were obtained by Optionee in the open public
market; and (2) are clear of all liens, claims, encumbrances or
security interests;
(c) by waiver of compensation due or accrued to Optionee for services
rendered;
(d) provided that a public market for the Company's stock exists, (1)
through a "same day sale" commitment from Optionee and a broker-dealer
that is a member of the National Association of Securities Dealers (a
"NASD Dealer") whereby Optionee irrevocably elects to exercise this
-----------
Option and to sell a portion of the Shares so purchased to pay for the
Exercise Price and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise Price directly to the
Company, or (2) through a "margin" commitment from Optionee and a NASD
--
Dealer whereby Optionee irrevocably elects to exercise this Option and
to pledge the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount of
the Exercise Price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the Exercise Price directly to
the Company; or
(e) by any combination of the foregoing.
4.4 Tax Withholding. In connection with the issuance of the Shares
---------------
upon exercise of this Option, Optionee must pay or provide for any applicable
federal or state withholding obligations of the Company. If the Committee
permits, Optionee may provide for payment of withholding taxes upon exercise of
this Option by requesting that the Company retain Shares with a Fair Market
Value equal to the minimum amount of taxes required to be withheld. In such
case, the Company shall issue the net number of Shares to Optionee by deducting
the Shares retained from the Shares issuable upon exercise.
4.5 Issuance of Shares. Upon the exercise of this Option in
------------------
accordance with this Section 4, the Company shall issue the purchased Shares
registered in the name of Optionee, Optionee's authorized assignee, or
Optionee's legal representative, and shall deliver certificates representing the
Shares with the appropriate legends affixed thereto.
5. Compliance with Laws and Regulations. The exercise of this Option and
------------------------------------
the issuance and transfer of Shares shall be subject to compliance by the
Company and Optionee with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer.
6. Nontransferability of Option. This Option may not be transferred in
----------------------------
any manner other than by will or by the laws of decent and 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, successor and
assigns of Optionee.
7. Tax Consequences. Set forth below is a brief summary as of the Date
----------------
of Grant of some of the federal and California tax consequences of exercise of
this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS
4
<PAGE>
AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISOR
BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
7.1 Exercise of Nonqualified Stock Option. 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. The Company will be required to
withhold from Optionee's compensation or collect from Optionee and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.
7.2 Disposition of Shares. If the Shares are held for more than
---------------------
twelve (12) months after the date of the transfer of the Shares pursuant to the
exercise of this Option, any gain realized on disposition of the Shares will be
treated as a long-term capital gain for federal income tax purposes.
8. Privileges of Stock Ownership. Optionee shall not have any of the
-----------------------------
rights of a stockholder with respect to any Shares until Optionee exercises this
Option and pays the Exercise Price.
9. Entire Agreement. This Agreement constitutes the entire agreement of
----------------
the parties and supersede all prior undertakings and agreements with respect to
the subject matter hereof.
10. Notices. Any notices required to be given or delivered to the Company
-------
under the terms of this Agreement shall be in writing and addressed to the
Corporate Secretary of the Company at the Company's principal corporate offices.
Any notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated above or to such other address as
such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon; personal delivery;
three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by facsimile.
11. Successor and Assigns. The Company any assign any of its rights under
---------------------
this Agreement. This Agreement shall be binding upon and inure to the benefit
of the successors and assigns the Company. Subject to the restrictions on
transfer set forth herein, this Agreement shall be binding upon Optionee and
Optionee's heirs, executors, administrators, legal representatives, successors
and assigns.
12. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of California.
13. Acceptance. Optionee hereby acknowledges receipt of this Agreement.
----------
Optionee has read and understands the terms and provisions thereof, and accepts
this Option subject to all the terms and conditions of this Agreement. Optionee
acknowledges that there may be adverse tax consequences upon exercise of this
Option or disposition of the Shares and that Optionee should consult a tax
advisor prior to such exercise or disposition.
5
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate by its duly authorized representative and Optionee has
executed this Agreement in duplicate as of the Date of Grant.
EXODUS COMMUNICATIONS, INC. OPTIONEE
By______________________________ ____________________________
William F. Wilson
________________________________
(Please print name)
________________________________
(Please print title)
6
<PAGE>
Exhibit 4.06
EXODUS COMMUNICATIONS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made and entered into as of
---------
the Date of Grant set forth below (the "Date of Grant") by and between Exodus
-------------
Communications, Inc., a Delaware corporation (the "Company"), and the Optionee
-------
named below ("Optionee"). Capitalized terms not defined herein shall have the
--------
meanings ascribed to them in the Company's 1998 Equity Incentive Plan, as
amended (the "Plan").
----
Optionee: James J. McInerney
-----------------------------------
Social Security Number:
-----------------------------------
Address:
-----------------------------------
-----------------------------------
Total Option Shares: 150,000
-----------------------------------
Exercise Price Per Share: $23.875
-----------------------------------
Date of Grant: 10/26/1998
-----------------------------------
Vesting Start Date: 10/26/1998
-----------------------------------
Expiration Date: 10/26/2008
-----------------------------------
1. Grant of Option. The Company hereby grants to Optionee an option
---------------
(this "Option") to purchase the total number of shares of Common Stock of the
------
Company, $0.001 par value, set forth above as Total Option Shares (the "Shares")
------
at the Exercise Price Per Share set forth above (the "Exercise Price"), subject
--------------
to the terms and conditions of this Agreement. This Option is intended to be a
"nonqualified stock option."
2. Vesting and Exercise Periods
----------------------------
2.1 Vesting and Exercise Periods of Option. This Option shall be
--------------------------------------
exercisable as it vests. Subject to the terms and conditions of this Agreement,
this Option shall become exercisable as to portions of the Shares as follows:
(a) this Option shall not be exercisable with respect to any of the Shares until
the expiration of three (3) months from the Vesting Start Date or January 26,
1999 (the "First Vesting Date"); (b) if Optionee has continuously provided
services to the Company, at all times during the time period beginning on the
Vesting Start Date and ending on the First Vesting Date, then on the First
Vesting Date, this Option shall become exercisable as to Six percent (6%) of the
Shares (9,000 Shares); and (c) thereafter this Option shall become exercisable
as to an additional Two percent (2%) of the Shares (3,000 Shares) upon the
expiration of each full calendar month for the next succeeding Forty-seven (47)
months
<PAGE>
provided that Optionee has continuously provided services to the Company at all
times during the relevant month; and provided further that this Option shall
cease to vest upon Optionee's Termination and that Optionee shall in no event be
entitled under this Option to purchase a number of shares of the Company's
Common Stock greater than the "Total Option Shares." For purposes of this
Option, Optionee will be deemed to continue in service with the Company for so
long as Optionee renders services as an employee, director or independent
consultant to the Company or any Subsidiary or Parent of the Company.
2.2 Vesting Continuation on Involuntary Termination.
-----------------------------------------------
Notwithstanding the requirement set forth in Section 2.1 hereof that Optionee
continue to render services to vest in this Option and pursuant to the terms of
the Executive Employment Policy, in the event of the "Involuntary Termination"
of Optionee as defined in the Executive Employment Policy, Optionee shall
continue to vest in this Option in accordance with the schedule set forth in
Section 2.1 hereof as if Optionee had remained in service for a period of six
(6) months following such Involuntary Termination.
2.3 Vesting Acceleration on Change of Control. Pursuant to the
-----------------------------------------
terms of the Executive Employment Policy, immediately prior to a "Change of
Control", as defined in the Executive Employment Policy and set forth in this
Section 2.3, Optionee shall become vested in Fifty percent (50%) of the Shares
that have not yet vested pursuant to the schedule set forth in Section 2.1
hereof. For purposes of this Section 2.3 "Change of Control" means, the
occurrence of any of the following events: (a) a merger or consolidation
involving the Company in which the shareholders of the Company immediately prior
to such merger or consolidation own less than fifty percent of the voting power
of the surviving corporation; (b) the sale of all or substantially all of the
assets of the Company; or (c) any person or group (as defined in the Securities
Exchange Act of 1934, as amended) becoming the beneficial owner (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended),
directly or indirectly, of securities representing more than fifty percent of
the voting power of the Company then outstanding.
2.4 Expiration. This Option shall expire on the Expiration Date
----------
set forth above and must be exercised, if at all, on or before the Expiration
Date.
3. Termination. The following provisions shall govern the exercise of
-----------
this Option in the event the Optionee is Terminated:
3.1 Termination for Any Reason Except Death, Disability or Cause.
-------------------------------------------------------------
If Optionee is Terminated for any reason except Optionee's death, Disability or
Cause, then this Option, to the extent (and only to the extent) that it is
vested in accordance with the schedule set forth in Section 2.1 hereof on the
Termination Date, may be exercised by Optionee no later than three (3) months
after the later of: (a) the Termination Date or (b) the last day of the vesting
continuation period set forth in Section 2.1 hereof. In no event may Optionee
exercise this Option after the Expiration Date.
3.2 Termination Because of Death or Disability. If Optionee is
------------------------------------------
Terminated because of death or Disability of Optionee (or the Optionee dies
within three (3) months after Termination other than for Cause or because of
Disability), then this Option, to the extent that it
2
<PAGE>
is vested in accordance with the schedule set forth in Section 2.1 hereof on the
Termination Date, may be exercised by Optionee (or Optionee's legal
representative or authorized assignee) no later than twelve (12) months after
the later of: (a) the Termination Date or (b) the last day of the vesting
continuation period set forth in Section 2.1 hereof. In no event may Optionee
exercise this Option after the Expiration Date.
3.3 Termination for Cause. If Optionee is Terminated for Cause,
---------------------
this Option will expire on the Optionee's date of Termination.
3.4 No Obligation to Employ. Nothing in this Agreement shall
-----------------------
confer on Optionee any right to continue in the employ of, or other relationship
with, the Company or any Parent or Subsidiary of the Company, or limit in any
way the right of the Company or any Parent or Subsidiary of the Company to
terminate Optionee's employment or other relationship at any time, with or
without Cause.
3.5 Termination. For purposes of this Section 3, Optionee shall
-----------
not be deemed Terminated nor shall a Termination be deemed to have occurred for
so long as Optionee continues to render services as an employee, director or
independent consultant to the Company or any Subsidiary or Parent of the Company
and for so long as Optionee is entitled to continued vesting pursuant to Section
2.2 hereof.
4. Manner of Exercise
------------------
4.1 Stock Option Exercise Agreement. To exercise this Option,
-------------------------------
Optionee (or in the case of exercise after Optionee's death, Optionee's
executor, administrator, heir or legatee, as the case may be) must deliver to
the Company an executed stock option exercise agreement in such form as may be
approved by the Company from time to time (the "Exercise Agreement"), which
------------------
shall set forth, inter alia, Optionee's election to exercise this Option and the
----------
number of Shares being purchased. If someone other than Optionee exercises this
Option, then such person must submit documentation reasonably acceptable to the
Company that such person has the right to exercise this Option.
4.2 Limitations on Exercise. This Option may not be exercised
-----------------------
unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise. This Option may
not be exercised as to fewer than 100 Shares, unless it is exercised as to all
Shares as to which this Option is then exercisable.
4.3 Payment. The Exercise Agreement shall be accompanied by full
-------
payment of the Exercise Price for the Shares being purchased in cash (by check),
or where permitted by law:
(a) by cancellation of indebtedness of the Company to the Optionee;
(b) by surrender of shares of the Company's Common Stock that either: (1)
have been owned by Optionee for more than six (6) months and have been
paid for within the meaning of SEC Rule 144, and if such shares were
purchased from the Company by use of a promissory note, such note has
been fully paid with respect
3
<PAGE>
to such shares, or were obtained by Optionee in the open public
market; and (2) are clear of all liens, claims, encumbrances or
security interests;
(c) by waiver of compensation due or accrued to Optionee for services
rendered;
(d) provided that a public market for the Company's stock exists, (1)
through a "same day sale" commitment from Optionee and a broker-dealer
that is a member of the National Association of Securities Dealers (a
"NASD Dealer") whereby Optionee irrevocably elects to exercise this
-----------
Option and to sell a portion of the Shares so purchased to pay for the
Exercise Price and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise Price directly to the
Company, or (2) through a "margin" commitment from Optionee and a NASD
--
Dealer whereby Optionee irrevocably elects to exercise this Option and
to pledge the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount of
the Exercise Price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the Exercise Price directly to
the Company; or
(e) by any combination of the foregoing.
4.4 Tax Withholding. In connection with the issuance of the Shares
---------------
upon exercise of this Option, Optionee must pay or provide for any applicable
federal or state withholding obligations of the Company. If the Committee
permits, Optionee may provide for payment of withholding taxes upon exercise of
this Option by requesting that the Company retain Shares with a Fair Market
Value equal to the minimum amount of taxes required to be withheld. In such
case, the Company shall issue the net number of Shares to Optionee by deducting
the Shares retained from the Shares issuable upon exercise.
4.5 Issuance of Shares. Upon the exercise of this Option in
------------------
accordance with this Section 4, the Company shall issue the purchased Shares
registered in the name of Optionee, Optionee's authorized assignee, or
Optionee's legal representative, and shall deliver certificates representing the
Shares with the appropriate legends affixed thereto.
5. Compliance with Laws and Regulations. The exercise of this Option and
------------------------------------
the issuance and transfer of Shares shall be subject to compliance by the
Company and Optionee with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer.
6. Nontransferability of Option. This Option may not be transferred in
----------------------------
any manner other than by will or by the laws of decent and 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, successor and
assigns of Optionee.
7. Tax Consequences. Set forth below is a brief summary as of the Date
----------------
of Grant of some of the federal and California tax consequences of exercise of
this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS
4
<PAGE>
AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISOR
BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
7.1 Exercise of Nonqualified Stock Option. 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. The Company will be required to withhold
from Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.
7.2 Disposition of Shares. If the Shares are held for more than
---------------------
twelve (12) months after the date of the transfer of the Shares pursuant to the
exercise of this Option, any gain realized on disposition of the Shares will be
treated as a long-term capital gain for federal income tax purposes.
8. Privileges of Stock Ownership. Optionee shall not have any of the
-----------------------------
rights of a stockholder with respect to any Shares until Optionee exercises this
Option and pays the Exercise Price.
9. Entire Agreement. This Agreement constitutes the entire agreement of
----------------
the parties and supersede all prior undertakings and agreements with respect to
the subject matter hereof.
10. Notices. Any notices required to be given or delivered to the Company
-------
under the terms of this Agreement shall be in writing and addressed to the
Corporate Secretary of the Company at the Company's principal corporate offices.
Any notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated above or to such other address as
such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon; personal delivery;
three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by facsimile.
11. Successor and Assigns. The Company any assign any of its rights under
---------------------
this Agreement. This Agreement shall be binding upon and inure to the benefit
of the successors and assigns the Company. Subject to the restrictions on
transfer set forth herein, this Agreement shall be binding upon Optionee and
Optionee's heirs, executors, administrators, legal representatives, successors
and assigns.
12. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of California.
13. Acceptance. Optionee hereby acknowledges receipt of this Agreement.
----------
Optionee has read and understands the terms and provisions thereof, and accepts
this Option subject to all the terms and conditions of this Agreement. Optionee
acknowledges that there may be adverse tax consequences upon exercise of this
Option or disposition of the Shares and that Optionee should consult a tax
advisor prior to such exercise or disposition.
5
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate by its duly authorized representative and Optionee has
executed this Agreement in duplicate as of the Date of Grant.
EXODUS COMMUNICATIONS, INC. OPTIONEE
By______________________________ ____________________________
James J. McInerney
________________________________
(Please print name)
________________________________
(Please print title)
6
<PAGE>
Exhibit 4.07
EXODUS COMMUNICATIONS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made and entered into as of
---------
the Date of Grant set forth below (the "Date of Grant") by and between Exodus
-------------
Communications, Inc., a Delaware corporation (the "Company"), and the Optionee
-------
named below ("Optionee"). Capitalized terms not defined herein shall have the
--------
meanings ascribed to them in the Company's 1998 Equity Incentive Plan, as
amended (the "Plan").
----
Optionee: Susan R. Farber
-----------------------------------
Social Security Number:
-----------------------------------
Address:
-----------------------------------
Total Option Shares: 150,000
-----------------------------------
Exercise Price Per Share: $30.9375
-----------------------------------
Date of Grant: 11/2/1998
-----------------------------------
Vesting Start Date: 11/2/1998
-----------------------------------
Expiration Date: 11/2/2008
-----------------------------------
1. Grant of Option. The Company hereby grants to Optionee an option
---------------
(this "Option") to purchase the total number of shares of Common Stock of the
------
Company, $0.001 par value, set forth above as Total Option Shares (the "Shares")
------
at the Exercise Price Per Share set forth above (the "Exercise Price"), subject
--------------
to the terms and conditions of this Agreement. This Option is intended to be a
"nonqualified stock option."
2. Vesting and Exercise Periods
----------------------------
2.1 Vesting and Exercise Periods of Option. This Option
--------------------------------------
shall be exercisable as it vests. Subject to the terms and conditions of this
Agreement, this Option shall become exercisable as to portions of the Shares as
follows: (a) this Option shall not be exercisable with respect to any of the
Shares until the expiration of six (6) months from the Vesting Start Date or May
2, 1999 (the "First Vesting Date"); (b) if Optionee has continuously provided
services to the Company, at all times during the time period beginning on the
Vesting Start Date and ending on the First Vesting Date, then on the First
Vesting Date, this Option shall become exercisable as to Twelve percent (12%) of
the Shares (18,000 Shares); and (c) thereafter this Option shall become
exercisable as to an additional Two percent (2%) of the Shares (3,000 Shares)
upon the expiration of each full calendar month for the next succeeding Forty-
four (44) months provided
<PAGE>
that Optionee has continuously provided services to the Company at all times
during the relevant month; and provided further that this Option shall cease to
vest upon Optionee's Termination and that Optionee shall in no event be entitled
under this Option to purchase a number of shares of the Company's Common Stock
greater than the "Total Option Shares." For purposes of this Option, Optionee
will be deemed to continue in service with the Company for so long as Optionee
renders services as an employee, director or independent consultant to the
Company or any Subsidiary or Parent of the Company.
2.2 Vesting Continuation on Involuntary Termination.
-----------------------------------------------
Notwithstanding the requirement set forth in Section 2.1 hereof that Optionee
continue to render services to vest in this Option and pursuant to the terms of
the Executive Employment Policy, in the event of the "Involuntary Termination"
of Optionee as defined in the Executive Employment Policy, Optionee shall
continue to vest in this Option in accordance with the schedule set forth in
Section 2.1 hereof as if Optionee had remained in service for a period of twelve
(12) months following such Involuntary Termination.
2.3 Vesting Acceleration on Change of Control. Pursuant to the
-----------------------------------------
terms of the Executive Employment Policy, immediately prior to a "Change of
Control", as defined in the Executive Employment Policy and set forth in this
Section 2.3, Optionee shall become vested in Fifty percent (50%) of the Shares
that have not yet vested pursuant to the schedule set forth in Section 2.1
hereof. For purposes of this Section 2.3 "Change of Control" means, the
occurrence of any of the following events: (a) a merger or consolidation
involving the Company in which the shareholders of the Company immediately prior
to such merger or consolidation own less than fifty percent of the voting power
of the surviving corporation; (b) the sale of all or substantially all of the
assets of the Company; or (c) any person or group (as defined in the Securities
Exchange Act of 1934, as amended) becoming the beneficial owner (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended),
directly or indirectly, of securities representing more than fifty percent of
the voting power of the Company then outstanding.
2.4 Expiration. This Option shall expire on the Expiration Date
----------
set forth above and must be exercised, if at all, on or before the Expiration
Date.
3. Termination. The following provisions shall govern the exercise of
-----------
this Option in the event the Optionee is Terminated:
3.1 Termination for Any Reason Except Death, Disability or Cause.
-------------------------------------------------------------
If Optionee is Terminated for any reason except Optionee's death, Disability or
Cause, then this Option, to the extent (and only to the extent) that it is
vested in accordance with the schedule set forth in Section 2.1 hereof on the
Termination Date, may be exercised by Optionee no later than three (3) months
after the later of: (a) the Termination Date or (b) the last day of the vesting
continuation period set forth in Section 2.1 hereof. In no event may Optionee
exercise this Option after the Expiration Date.
3.2 Termination Because of Death or Disability. If Optionee is
------------------------------------------
Terminated because of death or Disability of Optionee (or the Optionee dies
within three (3) months after Termination other than for Cause or because of
Disability), then this Option, to the extent that it
2
<PAGE>
is vested in accordance with the schedule set forth in Section 2.1 hereof on the
Termination Date, may be exercised by Optionee (or Optionee's legal
representative or authorized assignee) no later than twelve (12) months after
the later of: (a) the Termination Date or (b) the last day of the vesting
continuation period set forth in Section 2.1 hereof. In no event may Optionee
exercise this Option after the Expiration Date.
3.3 Termination for Cause. If Optionee is Terminated for Cause,
---------------------
this Option will expire on the Optionee's date of Termination.
3.4 No Obligation to Employ. Nothing in this Agreement shall
-----------------------
confer on Optionee any right to continue in the employ of, or other relationship
with, the Company or any Parent or Subsidiary of the Company, or limit in any
way the right of the Company or any Parent or Subsidiary of the Company to
terminate Optionee's employment or other relationship at any time, with or
without Cause.
3.5 Termination. For purposes of this Section 3, Optionee shall
-----------
not be deemed Terminated nor shall a Termination be deemed to have occurred for
so long as Optionee continues to render services as an employee, director or
independent consultant to the Company or any Subsidiary or Parent of the Company
and for so long as Optionee is entitled to continued vesting pursuant to Section
2.2 hereof.
4. Manner of Exercise
------------------
4.1 Stock Option Exercise Agreement. To exercise this Option,
-------------------------------
Optionee (or in the case of exercise after Optionee's death, Optionee's
executor, administrator, heir or legatee, as the case may be) must deliver to
the Company an executed stock option exercise agreement in such form as may be
approved by the Company from time to time (the "Exercise Agreement"), which
------------------
shall set forth, inter alia, Optionee's election to exercise this Option and the
----------
number of Shares being purchased. If someone other than Optionee exercises this
Option, then such person must submit documentation reasonably acceptable to the
Company that such person has the right to exercise this Option.
4.2 Limitations on Exercise. This Option may not be exercised
-----------------------
unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise. This Option may
not be exercised as to fewer than 100 Shares, unless it is exercised as to all
Shares as to which this Option is then exercisable.
4.3 Payment. The Exercise Agreement shall be accompanied by full
-------
payment of the Exercise Price for the Shares being purchased in cash (by check),
or where permitted by law:
(a) by cancellation of indebtedness of the Company to the Optionee;
(b) by surrender of shares of the Company's Common Stock that either: (1)
have been owned by Optionee for more than six (6) months and have been
paid for within the meaning of SEC Rule 144, and if such shares were
purchased from the Company by use of a promissory note, such note has
been fully paid with respect
3
<PAGE>
to such shares, or were obtained by Optionee in the open public
market; and (2) are clear of all liens, claims, encumbrances or
security interests;
(c) by waiver of compensation due or accrued to Optionee for services
rendered;
(d) provided that a public market for the Company's stock exists, (1)
through a "same day sale" commitment from Optionee and a broker-dealer
that is a member of the National Association of Securities Dealers (a
"NASD Dealer") whereby Optionee irrevocably elects to exercise this
-----------
Option and to sell a portion of the Shares so purchased to pay for the
Exercise Price and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise Price directly to the
Company, or (2) through a "margin" commitment from Optionee and a NASD
--
Dealer whereby Optionee irrevocably elects to exercise this Option and
to pledge the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount of
the Exercise Price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the Exercise Price directly to
the Company; or
(e) by any combination of the foregoing.
4.4 Tax Withholding. In connection with the issuance of the Shares
---------------
upon exercise of this Option, Optionee must pay or provide for any applicable
federal or state withholding obligations of the Company. If the Committee
permits, Optionee may provide for payment of withholding taxes upon exercise of
this Option by requesting that the Company retain Shares with a Fair Market
Value equal to the minimum amount of taxes required to be withheld. In such
case, the Company shall issue the net number of Shares to Optionee by deducting
the Shares retained from the Shares issuable upon exercise.
4.5 Issuance of Shares. Upon the exercise of this Option in
------------------
accordance with this Section 4, the Company shall issue the purchased Shares
registered in the name of Optionee, Optionee's authorized assignee, or
Optionee's legal representative, and shall deliver certificates representing the
Shares with the appropriate legends affixed thereto.
5. Compliance with Laws and Regulations. The exercise of this Option and
------------------------------------
the issuance and transfer of Shares shall be subject to compliance by the
Company and Optionee with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer.
6. Nontransferability of Option. This Option may not be transferred in
----------------------------
any manner other than by will or by the laws of decent and 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, successor and
assigns of Optionee.
7. Tax Consequences. Set forth below is a brief summary as of the Date
----------------
of Grant of some of the federal and California tax consequences of exercise of
this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS
4
<PAGE>
AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISOR
BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
7.1 Exercise of Nonqualified Stock Option. 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. The Company will be required to
withhold from Optionee's compensation or collect from Optionee and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.
7.2 Disposition of Shares. If the Shares are held for more than
---------------------
twelve (12) months after the date of the transfer of the Shares pursuant to the
exercise of this Option, any gain realized on disposition of the Shares will be
treated as a long-term capital gain for federal income tax purposes.
8. Privileges of Stock Ownership. Optionee shall not have any of the
-----------------------------
rights of a stockholder with respect to any Shares until Optionee exercises this
Option and pays the Exercise Price.
9. Entire Agreement. This Agreement constitutes the entire agreement of
----------------
the parties and supersede all prior undertakings and agreements with respect to
the subject matter hereof.
10. Notices. Any notices required to be given or delivered to the
-------
Company under the terms of this Agreement shall be in writing and addressed to
the Corporate Secretary of the Company at the Company's principal corporate
offices. Any notice required to be given or delivered to Optionee shall be in
writing and addressed to Optionee at the address indicated above or to such
other address as such party may designate in writing from time to time to the
Company. All notices shall be deemed to have been given or delivered upon;
personal delivery; three (3) days after deposit in the United States mail by
certified or registered mail (return receipt requested); one (1) business day
after deposit with any return receipt express courier (prepaid); or one (1)
business day after transmission by facsimile.
11. Successor and Assigns. The Company any assign any of its rights under
---------------------
this Agreement. This Agreement shall be binding upon and inure to the benefit
of the successors and assigns the Company. Subject to the restrictions on
transfer set forth herein, this Agreement shall be binding upon Optionee and
Optionee's heirs, executors, administrators, legal representatives, successors
and assigns.
12. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of California.
13. Acceptance. Optionee hereby acknowledges receipt of this Agreement.
----------
Optionee has read and understands the terms and provisions thereof, and accepts
this Option subject to all the terms and conditions of this Agreement. Optionee
acknowledges that there may be adverse tax consequences upon exercise of this
Option or disposition of the Shares and that Optionee should consult a tax
advisor prior to such exercise or disposition.
5
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate by its duly authorized representative and Optionee has
executed this Agreement in duplicate as of the Date of Grant.
EXODUS COMMUNICATIONS, INC. OPTIONEE
By______________________________ ____________________________
Susan R. Farber
________________________________
(Please print name)
________________________________
(Please print title)
6
<PAGE>
Exibit 5.01
[LETTERHEAD OF FENWICK & WEST LLP]
February 15, 1999
Exodus Communications, Inc.
2831 Mission College Boulevard
Santa Clara, CA 95054
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on Form S-8 (the
"Registration Statement") to be filed by you with the Securities and Exchange
Commission (the "Commission") on or about February 17, 1999 in connection with
the registration under the Securities Act of 1933, as amended, of an aggregate
of 2,536,045 shares of your Common Stock (the "Stock"), subject to issuance by
you upon the exercise of stock options (a) granted by you outside of your option
plans (the "Non-Plan Options") and (b) granted or to be granted by you under
your 1999 Stock Option Plan (the "1999 Plan"). In rendering this opinion, we
have examined the following:
(1) the Registration Statement, together with the Exhibits filed as a part
thereof;
(2) the prospectuses prepared in connection with the Registration
Statement;
(3) the 1999 Plan and related form of stock option agreement;
(4) the stock option agreements governing the Non-Plan Options;
(5) the minutes of meetings and actions by written consent of the
stockholders and Board of Directors that are contained in your minute
books and the minute books of your predecessor, Exodus Communications,
Inc., a California corporation ("Exodus California"), that are in our
possession;
(6) a certificate from your transfer agent dated February 15, 1999
regarding the number of shares outstanding, and a list prepared by you
identifying all outstanding options, warrants and other rights to
acquire your capital stock and;
(7) a Management Certificate addressed to us and dated of even date
herewith executed by the Company containing certain factual and other
representations.
We have also confirmed the continued effectiveness of your registration
under the Securities Exchange Act of 1934, as amended, by telephone call to the
offices of the Commission and have confirmed your eligibility to use Form S-8.
In our examination of documents for purposes of this opinion, we have
assumed, and express no opinion as to, the genuineness of all signatures on
original documents, the authenticity of all documents submitted to us as
originals or copies of originals, the conformity to
<PAGE>
Exodus Communications, Inc.
February 15, 1999
Page 2
originals of all documents submitted to us as copies, the legal capacity of all
natural persons executing the same, the lack of any undisclosed terminations,
modifications, waivers or amendments to any documents reviewed by us and the due
execution and delivery of all documents where due execution and delivery are
prerequisites to the effectiveness thereof.
As to matters of fact relevant to this opinion, we have relied solely upon
our examination of the documents referred to above and have assumed the current
accuracy and completeness of the information obtained from records referred to
above. We have made no independent investigation or other attempt to verify the
accuracy of any of such information or to determine the existence or non-
existence of any other factual matters; however, we are not aware of any facts
-------
that would cause us to believe that the opinion expressed herein is not
accurate.
We are admitted to practice law in the State of California, and we express
no opinion herein with respect to the application or effect of the laws of any
jurisdiction other than the existing laws of the State of California and the
existing Delaware General Corporation Law without reference to case law or
secondary sources.
Based upon the foregoing, it is our opinion that the 2,536,045 shares of
Stock that may be issued and sold by you upon the exercise of stock options (a)
granted pursuant to the Non-Plan Options and (b) granted or to be granted under
the 1999 Plan, when issued and sold in accordance with the applicable plan and
stock option agreements entered or to be entered into with respect to optionees,
and in the manner referred to in the relevant prospectuses associated with the
Registration Statement, will be validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us, if any, in the
Registration Statement, the Prospectus constituting a part thereof and any
amendments thereto.
This opinion speaks only as of its date and we assume no obligation to
update this opinion should circumstances change after the date hereof. This
opinion is intended solely for your use as an exhibit to the Registration
Statement for the purpose of the above sale of the Stock and is not to be relied
upon for any other purpose.
Very truly yours,
/s/ FENWICK & WEST LLP
FENWICK & WEST LLP
<PAGE>
Exhibit 23.02
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Exodus Communications, Inc:
We consent to incorporation herein by reference of our report dated February 13,
1998, except as to Note 8 which is as of May 28, 1998, relating to the balance
sheets of Exodus Communications, Inc. as of December 31, 1996 and 1997, and the
related statements of operations, stockholders' (deficit) equity and cash flows
for each of the years in the three-year period ended December 31, 1997, which
report appears in the Company's Prospectus filed November 10, 1998 pursuant to
Rule 424(b).
Mountain View, California /s/ KPMG LLP
February 15, 1999
