<PAGE>
As filed with the Securities and Exchange Commission on October 1, 1999
Registration No. 333-80141
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------
AMENDMENT NO. 7 TO
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------
DSL.net, Inc.
(Exact name of registrant as specified in its charter)
----------
Delaware 4813 06-1510312
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction Classification Code Number) Identification Number)
of incorporation or
organization)
----------
DSL.net, Inc.
545 Long Wharf Drive
New Haven, CT 06511
(203) 772-1000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
----------
David Struwas, President and Chief Executive Officer
DSL.net, Inc.
545 Long Wharf Drive
New Haven, CT 06511
(203) 772-1000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------
Copies to:
Mark H. Burnett, Esq. Stephen Zamansky, Esq. Ellen B. Corenswet, Esq.
Testa, Hurwitz & DSL.net, Inc. Babak Yaghmaie, Esq.
Thibeault, LLP 545 Long Wharf Drive Brobeck, Phleger &
125 High Street New Haven, Connecticut 06511 Harrison LLP
Boston, Massachusetts (203) 772-1000 1633 Broadway, 47th Floor
02110 New York, New York 10019
(617) 248-7000 (212) 581-1600
----------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this registration statement becomes effective.
----------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [X]
----------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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<PAGE>
EXPLANATORY NOTE
This Amendment No. 7 has been filed for the sole purpose of filing
additional exhibits to the Registration Statement.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
Estimated expenses (other than underwriting discounts and commissions)
payable in connection with the sale of the common stock offered hereby are as
follows:
<TABLE>
<S> <C>
SEC registration fee.......................................... $ 36,602
NASD filing fee............................................... 13,166
Nasdaq National Market listing fee............................ 95,000
Printing and engraving expenses............................... 175,000
Legal fees and expenses....................................... 350,000
Accounting fees and expenses.................................. 350,000
Blue Sky fees and expenses (including legal fees)............. 5,000
Transfer agent and registrar fees and expenses................ 5,000
Miscellaneous................................................. 19,732
----------
Total....................................................... $1,050,000
==========
</TABLE>
DSL.net will bear all expenses shown above.
Item 14. Indemnification of Directors and Officers.
The Delaware General Corporation Law and the certificate of incorporation of
DSL.net that will become effective immediately following this offering and the
by-laws as amended prior to this offering will provide for indemnification of
our directors and officers for liabilities and expenses that they may incur in
such capacities. In general, directors and officers will be indemnified with
respect to actions taken in good faith in a manner reasonably believed to be
in, or not opposed to, the best interests of DSL.net and, with respect to any
criminal action or proceeding, actions that the indemnitee had no reasonable
cause to believe were unlawful. Reference is made to our Amended and Restated
Certificate of Incorporation and Amended and Restated By-Laws filed as Exhibits
3.02 and 3.04 hereto, respectively.
The Underwriting Agreement provides that the Underwriters are obligated,
under certain circumstances, to indemnify directors, officers and controlling
persons of DSL.net against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). Reference is made to
the form of Underwriting Agreement filed as Exhibit 1.01 hereto.
In addition, we have an existing directors and officers liability insurance
policy.
Item 15. Recent Sales of Unregistered Securities.
In the three years preceding the filing of this registration statement, the
Company has issued the following securities that were not registered under the
Securities Act:
(a) Issuances of Capital Stock, Notes and Warrants
In March 1998, DSL.net issued and sold an aggregate of (i) 5,089,634 shares
of common stock for an aggregate of $500 and (ii) 20,000 shares of a prior
Series A preferred stock for an aggregate of $50,000.
II-1
<PAGE>
In August 1998, DSL.net issued a promissory note in the aggregate principal
amount of $100,000.
In November 1998, DSL.net issued five convertible promissory notes in the
aggregate principal amount of $350,000, two warrants to purchase an aggregate
31,250 shares of Series A preferred stock at a price of $1.00 per share and
rights to warrants to purchase 56,250 shares of Series A preferred stock at a
price of $1.00 per share.
In December 1998, DSL.net issued and sold an aggregate of (i) 7,634,451
shares of common stock in exchange for 20,000 shares of a prior series A
preferred stock and (ii) 4,071,707 shares of common stock in exchange for
promissory notes in an aggregate principal amount of $7,637.
In January 1999, DSL.net issued and sold 3,500,000 shares of Series A
preferred stock and warrants to purchase 3,500,000 shares of a prior series B
preferred stock for an aggregate of $3,500,000, a portion of which was paid by
the cancellation of two convertible promissory notes in the aggregate principal
amount of $125,000. In addition, DSL.net issued three warrants to purchase
56,250 shares of Series A preferred stock at a price of $1.00 per share in
exchange for the rights to warrants to purchase 56,250 warrants of Series A
preferred stock. DSL.net also issued an aggregate of 225,000 shares of Series A
preferred stock in conversion of three convertible promissory notes in the
aggregate principal amount of $225,000. Each outstanding share of Series A
preferred stock is convertible into 2.666 shares of common stock. Finally,
DSL.net issued 8 shares of common stock for aggregate consideration of $0.02.
In March 1999, DSL.net issued and sold an aggregate of 436,256 shares of
common stock for services valued at $29,455. Based on subsequent events,
DSL.net recognized compensation expense of $587,457 in connection with the
issuance of these shares. In addition, DSL.net issued one warrant to purchase
41,726 shares of Series A preferred stock at an exercise price of $2.40 per
share.
In April 1999, DSL.net issued and sold an aggregate of 6,500,000 shares of
Series B preferred stock in exchange for 3,500,000 shares of Series A preferred
stock and the cancellation of warrants to purchase 3,500,000 shares of a prior
series B preferred stock. In addition, in April 1999, DSL.net issued and sold
an aggregate of 2,785,516 shares of Series C preferred stock for aggregate
consideration of $10,000,002. Each outstanding share of preferred stock is
convertible into 2.666 shares of common stock.
In May 1999, DSL.net issued and sold an aggregate of 2,868,069 shares of
Series D preferred stock for aggregate consideration of $30,000,001, including
a secured promissory note in an aggregate principal amount of $5,999,429, which
note has since been paid in full. Each outstanding share of Series D preferred
stock is convertible into 2.666 shares of common stock.
In June 1999, DSL.net issued an aggregate of 95,603 shares of Series D
preferred stock for aggregate consideration of $1,000,007, including a secured
promissory note in an aggregate principal amount of $999,912. The note, which
contained an interest rate of 6.00%, was paid in full on July 16, 1999. In
addition, in July 1999, DSL.net issued an aggregate of 939,086 shares of Series
E preferred stock for aggregate consideration of $18,499,994. Each outstanding
share of Series D and E preferred stock is convertible into 2.666 shares of
common stock.
II-2
<PAGE>
(b) Grants and Exercises of Stock Options
As of August 31, 1999, DSL.net had granted options to purchase an aggregate
of 5,623,650 shares of common stock under the 1999 stock plan at exercise
prices ranging from $.04 to $7.39 for an aggregate purchase price of
approximately $5,573,000, and 93,310 shares of common stock had been issued in
connection with the exercise of options.
No underwriters were involved in the foregoing sales of securities. Such
sales were made in reliance upon an exemption from the registration provisions
of the Securities Act set forth in Section 4(2) thereof relative to sales by an
issuer not involving any public offering or the rules and regulations
thereunder, or, in the case of certain options to purchase common stock and
employee stock grants, Rule 701 under the Securities Act. All of the foregoing
securities are deemed restricted securities for purposes of the Securities Act.
II-3
<PAGE>
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
------- -------
<C> <S>
1.01 Form of Underwriting Agreement.
1.02 Form of Subscription Agreement by and between DSL.net and Staples,
Inc.
3.01 Amended and Restated Certificate of Incorporation of DSL.net, as
amended.
3.02 Form of Second Amended and Restated Certificate of Incorporation of
DSL.net (to be filed immediately after the closing of the offering).
3.03 Amended and Restated By-laws of DSL.net.
4.01* Specimen Certificate for shares of DSL.net's Common Stock.
4.02 Description of Capital Stock (contained in the Certificate of
Incorporation filed as Exhibit 3.02).
4.03* Form of Stock Purchase Warrant dated as of November 18, 1998 between
DSL.net and certain investors, as amended.
4.04* Form of Stock Subscription Warrant dated as of January 8, 1999 between
DSL.net and certain investors.
4.05* Stock Subscription Warrant dated as of March 4, 1999 by and between
DSL.net and Comdisco, Inc.
5.01 Legal Opinion of Testa, Hurwitz & Thibeault, LLP.
10.01+ Amended and Restated 1999 Stock Plan.
10.02+ 1999 Employee Stock Purchase Plan
10.03* Amended and Restated Investors' Rights Agreement dated as of July 16,
1999 between DSL.net and the purchasers named therein.
10.04* Master Lease Agreement dated as of March 4, 1999 between Comdisco,
Inc. and DSL.net, as modified by the Addendum thereto.
10.05* Credit Agreement dated as of May 12, 1999 by and between DSL.net and
Fleet National Bank.
10.06* Security Agreement dated as of May 12, 1999 by and between DSL.net and
Fleet National Bank.
10.07* Lease Agreement dated February 5, 1999 by and between DSL.net and Long
Wharf Drive, LLC., as amended.
10.08* Amended and Restated Shareholders' Agreement, as amended, by and among
DSL.net and certain investors.
10.09* Note and Warrant Purchase Agreement dated November 18, 1998 by and
among DSL.net and VantagePoint Venture Partners.
10.10* Form of Subscription Agreement dated as of October 28, 1998 by and
among DSL.net and certain stockholders.
10.11* Series A Preferred Stock and Warrant Purchase Agreement dated January
8, 1999 by and among DSL.net and the investors named therein.
10.12* Securities Exchange and Subscription Agreement dated April 15, 1999 by
and between DSL.net, VantagePoint Venture Partners 1996, L.P. and
VantagePoint Communications Partners, L.P.
10.13* Series C Preferred Stock Purchase Agreement dated March 31, 1999 by
and among DSL.net and the investors named therein.
10.14* Series D Preferred Stock Purchase Agreement dated May 12, 1999 by and
among DSL.net and the investors named therein.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
------- -------
<C> <S>
10.15* Preferred Stock Purchase Agreement dated June 2, 1999 by and between
DSL.net and Raymond C. Allieri.
10.16* Series E Preferred Stock Purchase Agreement dated July 6, 1999 by and
between DSL.net and Microsoft Corporation.
10.17* Series E Preferred Stock Purchase Agreement dated July 16, 1999 by and
between DSL.net and Staples, Inc.
10.18+* Additional Compensation Agreement dated as of December 29, 1998
between DSL.net and David Struwas.
10.19+* Additional Compensation Agreement dated as of December 29, 1998
between DSL.net and John Jaser.
10.20* On-Net Service Agreement dated February 2, 1999 by and between DSL.net
and MCI Worldcom Technologies, Inc.
23.01 Consent of Testa, Hurwitz & Thibeault, LLP (contained in Exhibit
5.01).
23.02* Consent of PricewaterhouseCoopers, LLP.
24.01* Power of Attorney.
27.01* Financial Data Schedule.
</TABLE>
- ---------------------
* Previously filed.
** To be filed by amendment.
+ Indicates a management contract or any compensatory plan, contract or
arrangement.
(b) Financial Statement Schedules
Schedule II
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been omitted.
Item 17. Undertakings.
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 described in Item 14 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
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, 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.
The undersigned registrant hereby undertakes (1) to provide to the
underwriters at the closing specified in the underwriting agreement,
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser; (2) that for
purposes of determining any liability under the Securities Act, the information
omitted from the form
II-5
<PAGE>
of prospectus filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was declared
effective; and (3) that for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 7 to the Registration Statement
(File No. 333-80141) to be signed on its behalf by the undersigned, thereunto
duly authorized, in New Haven, Connecticut on October 1, 1999.
DSL.NET, INC.
By: /s/ Stephen Zamansky
---------------------------------
Stephen Zamansky
Vice President and General
Counsel
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 7 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title(s) Date
--------- -------- ----
<S> <C> <C>
* President, Chief Executive October 1, 1999
______________________________________ Officer and Director
David F. Struwas (Principal Executive
Officer)
* Chief Financial Officer October 1, 1999
______________________________________ and Vice President,
Robert Q. Berlin Strategic Planning
(Principal Financial and
Accounting Officer)
* Director October 1, 1999
______________________________________
Robert Gilbertson
* Director October 1, 1999
______________________________________
William J. Marshall
* Director October 1, 1999
______________________________________
William Seifert
* Director October 1, 1999
______________________________________
James D. Marver
* Director October 1, 1999
______________________________________
</TABLE> Paul K. Sun
/s/ Stephen Zamansky
*By: ___________________________
Stephen Zamansky
as Attorney-in-Fact
II-7
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
------- -------
<C> <S>
1.01 Form of Underwriting Agreement.
1.02 Form of Subscription Agreement by and between DSL.net and Staples,
Inc.
3.01 Amended and Restated Certificate of Incorporation of DSL.net, as
amended.
3.02 Form of Second Amended and Restated Certificate of Incorporation of
DSL.net (to be filed immediately after the closing of the offering).
3.03 Amended and Restated By-laws of DSL.net.
4.01* Specimen Certificate for shares of DSL.net's Common Stock.
4.02 Description of Capital Stock (contained in the Certificate of
Incorporation filed as Exhibit 3.02).
4.03* Form of Stock Purchase Warrant dated as of November 18, 1998 between
DSL.net and certain investors, as amended.
4.04* Form of Stock Subscription Warrant dated as of January 8, 1999 between
DSL.net and certain investors.
4.05* Stock Subscription Warrant dated as of March 4, 1999 by and between
DSL.net and Comdisco, Inc.
5.01 Legal Opinion of Testa, Hurwitz & Thibeault, LLP.
10.01+ Amended and Restated 1999 Stock Plan.
10.02+ 1999 Employee Stock Purchase Plan.
10.03* Amended and Restated Investors' Rights Agreement dated as of July 16,
1999 between DSL.net and the purchasers named therein.
10.04* Master Lease Agreement dated as of March 4, 1999 between Comdisco,
Inc. and DSL.net, as modified by the Addendum thereto.
10.05* Credit Agreement dated as of May 12, 1999 by and between DSL.net and
Fleet National Bank.
10.06* Security Agreement dated as of May 12, 1999 by and between DSL.net and
Fleet National Bank.
10.07* Lease Agreement dated February 5, 1999 by and between DSL.net and Long
Wharf Drive, LSL., as amended.
10.08* Amended and Restated Shareholders' Agreement, as amended, by and among
DSL.net and certain investors, as amended.
10.09* Note and Warrant Purchase Agreement dated November 18, 1998 by and
among DSL.net and VantagePoint Venture Partners.
10.10* Form of Subscription Agreement dated as of October 28, 1998 by and
among DSL.net certain investors.
10.11* Series A Preferred Stock and Warrant Purchase Agreement dated January
8, 1999 by and among DSL.net and the investors named therein.
10.12* Securities Exchange and Subscription Agreement dated April 15, 1999 by
and between DSL.net, VantagePoint Venture Partners 1996, L.P. and
VantagePoint Communications Partners, L.P.
10.13* Series C Preferred Stock Purchase Agreement dated March 31, 1999 by
and among DSL.net and the investors named therein.
10.14* Series D Preferred Stock Purchase Agreement dated May 12, 1999 by and
among DSL.net and the investors named therein.
10.15* Preferred Stock Purchase Agreement dated June 2, 1999 by and between
DSL.net and Raymond C. Allieri.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
------- -------
<C> <S>
10.16* Series E Preferred Stock Purchase Agreement dated July 6, 1999 by and
between DSL.net and Microsoft Corporation.
10.17* Series E Preferred Stock Purchase Agreement dated July 16, 1999 by and
between DSL.net and Staples, Inc.
10.18+* Additional Compensation Agreement dated as of December 29, 1998
between DSL.net and David Struwas.
10.19+* Additional Compensation Agreement dated as of December 29, 1998
between DSL.net and John Jaser.
10.20* On-Net Service Agreement dated February 2, 1999 by and between DSL.net
and MCI Worldcom Technologies, Inc.
23.01 Consent of Testa, Hurwitz & Thibeault, LLP (contained in Exhibit
5.01).
23.02* Consent of PricewaterhouseCoopers, LLP.
24.01* Power of Attorney.
27.01* Financial Data Schedule.
</TABLE>
- ---------------------
* Previously filed.
** To be filed by amendment.
+ Indicates a management contract or any compensatory plan, contract or
arrangement.
<PAGE>
Exhibit 1.01
------------
__________ Shares/1/
DSL.net, Inc.
Common Stock
UNDERWRITING AGREEMENT
----------------------
__________, 1999
DEUTSCHE BANK SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS INC.
DLJdirect Inc.
As representatives of the several Underwriters
named in Schedule I hereto
c/o Deutsche Bank Securities Inc.
One South Street
Baltimore, Maryland 21202
Dear Sirs:
DSL.net, Inc., a Delaware corporation (the "COMPANY"), proposes to issue
and sell ____________ shares of its common stock, $.0005 par value per share
(the "FIRM SHARES"), to the several underwriters named in Schedule I hereto (the
"UNDERWRITERS"). The Company also proposes to issue and sell to the several
Underwriters not more than an additional _______ shares of its common stock,
$.0005 par value per share (the "ADDITIONAL SHARES"), if requested by the
Underwriters as provided in Section 2 hereof. The Firm Shares and the
Additional Shares are hereinafter referred to collectively as the "SHARES". The
shares of common stock of the Company to be outstanding after giving effect to
the sales contemplated hereby are hereinafter referred to as the "COMMON STOCK".
SECTION 1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"COMMISSION") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "ACT"), a registration statement on Form S-1, including a
prospectus, relating to the Shares. The registration statement, as amended at
the time it became effective, including the information (if any) deemed to be
part of the registration statement at the time of effectiveness pursuant to Rule
430A under the Act, is hereinafter referred to as the "REGISTRATION STATEMENT";
and the prospectus in the form first used to confirm sales of Shares is
hereinafter referred to as the "PROSPECTUS". If the Company has filed or is
required pursuant to the terms hereof to file a registration statement pursuant
to Rule 462(b)
- -----------------
/1/ Insert number of shares to be sold (not including green shoe).
<PAGE>
under the Act registering additional shares of Common Stock (a "RULE
462(b) REGISTRATION STATEMENT"), then, unless otherwise specified, any reference
herein to the term "Registration Statement" shall be deemed to include such Rule
462(b) Registration Statement.
SECTION 2. Agreements to Sell and Purchase and Lock-Up Agreements. On the
basis of the representations and warranties contained in this Agreement, and
subject to its terms and conditions, the Company agrees to issue and sell, and
each Underwriter agrees, severally and not jointly, to purchase from the Company
at a price per Share of $______ (the "PURCHASE PRICE") the number of Firm Shares
set forth opposite the name of such Underwriter in Schedule I hereto.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to issue
and sell the Additional Shares and the Underwriters shall have the right to
purchase, severally and not jointly, up to _______ Additional Shares from the
Company at the Purchase Price. Additional Shares may be purchased solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. The Underwriters may exercise their right to purchase
Additional Shares in whole or in part from time to time by giving written notice
thereof to the Company within 30 days after the date of this Agreement. You
shall give any such notice on behalf of the Underwriters and such notice shall
specify the aggregate number of Additional Shares to be purchased pursuant to
such exercise and the date for payment and delivery thereof, which date shall be
a business day (i) no earlier than two business days after such notice has been
given (and, in any event, no earlier than the Closing Date (as hereinafter
defined)) and (ii) no later than ten business days after such notice has been
given. If any Additional Shares are to be purchased, each Underwriter,
severally and not jointly, agrees to purchase from the Company the number of
Additional Shares (subject to such adjustments to eliminate fractional shares as
you may determine) which bears the same proportion to the total number of
Additional Shares to be purchased from the Company as the number of Firm Shares
set forth opposite the name of such Underwriter in Schedule I bears to the total
number of Firm Shares.
The Company hereby agrees not to (i) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or (ii) enter
into any swap or other arrangement that transfers all or a portion of the
economic consequences associated with the ownership of any Common Stock
(regardless of whether any of the transactions described in clause (i) or (ii)
is to be settled by the delivery of Common Stock, or such other securities, in
cash or otherwise), except to the Underwriters pursuant to this Agreement, for a
period of 180 days after the date of the Prospectus without the prior written
consent of Deutsche Bank Securities Inc. Notwithstanding the foregoing, during
such period (i) the Company may grant stock options pursuant to the Company's
existing stock option plan and employee stock purchase plan, (ii) the Company
may issue shares of Common Stock upon the exercise of an option or warrant or
the conversion of a security outstanding on the date hereof granted or issued
under the Company's existing stock option plan or employee stock purchase plan,
and (iii) the Company may issue shares of Common Stock and other securities
convertible into or exercisable or exchangeable for shares of Common Stock in
connection with acquisitions (including asset acquisitions) and strategic
partner relationships, provided that, each holder of such Common Stock or such
other securities shall, prior to or concurrently with the issuance of
2
<PAGE>
such Common Stock or other securities, agree in writing to be bound by
restrictions set forth in the agreements described in the last sentence of this
paragraph. The Company also agrees not to file any registration statement (other
than a registration statement on Form S-8 registering Common Stock issuable
under the Company's existing stock option plan and employee stock purchase plan)
with respect to any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock for a period of 180 days after the
date of the Prospectus without the prior written consent of Deutsche Bank
Securities Inc. The Company shall, prior to or concurrently with the execution
of this Agreement, deliver an agreement executed by (i) each of the directors
and officers of the Company and (ii) each stockholder of the Company (other than
those listed on Annex I hereto), to the effect that such person will not, except
as provided therein, during the period commencing on the date such person signs
such agreement and ending 180 days after the date of the Prospectus, without the
prior written consent of Deutsche Bank Securities Inc., (A) engage in any of the
transactions described in the first sentence of this paragraph or (B) make any
demand for, or exercise any right with respect to, the registration of any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock.
SECTION 3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose (i) to make a public offering of their respective portions
of the Shares as soon after the execution and delivery of this Agreement as in
your judgment is advisable and (ii) initially to offer the Shares upon the terms
set forth in the Prospectus.
SECTION 4. Delivery and Payment. The Shares shall be represented by
definitive certificates and shall be issued in such authorized denominations and
registered in such names as Deutsche Bank Securities Inc. shall request no later
than two business days prior to the Closing Date or the applicable Option
Closing Date (as defined below), as the case may be. The Company shall deliver
the Shares, with any transfer taxes thereon duly paid by the Company, to
Deutsche Bank Securities Inc. through the facilities of The Depository Trust
Company ("DTC"), for the respective accounts of the several Underwriters,
against payment to the Company of the Purchase Price therefor by wire transfer
of Federal or other funds immediately available in New York City. The
certificates representing the Shares shall be made available for inspection not
later than 9:30 A.M., New York City time, on the business day prior to the
Closing Date or the applicable Option Closing Date, as the case may be, at the
office of DTC or its designated custodian (the "DESIGNATED OFFICE"). The time
and date of delivery and payment for the Firm Shares shall be 9:00 a.m., New
York City time, on ________, 1999 or such other time on the same or such other
date as Deutsche Bank Securities Inc. and the Company shall agree in writing.
The time and date of delivery for the Firm Shares are hereinafter referred to as
the "CLOSING DATE". The time and date of delivery and payment for any
Additional Shares to be purchased by the Underwriters shall be 9:00 a.m., New
York City time, on the date specified in the applicable exercise notice given by
you pursuant to Section 2 or such other time on the same or such other date as
Deutsche Bank Securities Inc. and the Company shall agree in writing. The time
and date of delivery for any Additional Shares are hereinafter referred to as an
"OPTION CLOSING DATE".
The documents to be delivered on the Closing Date or any Option Closing
Date on behalf of the parties hereto pursuant to Section 8 of this Agreement
shall be delivered at the offices of Brobeck, Phleger & Harrison LLP, 1633
Broadway, New York, New York 10019 and the Shares shall be delivered at the
Designated Office, all on the Closing Date or such Option Closing Date, as the
case may be.
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SECTION 5. Agreements of the Company. The Company agrees with you:
(a) To advise you promptly and, if requested by you, to confirm such
advice in writing, (i) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or for
additional information, (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the suspension
of qualification of the Shares for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purposes, (iii) when any amendment to the
Registration Statement becomes effective, (iv) if the Company is required to
file a Rule 462(b) Registration Statement after the effectiveness of this
Agreement, when the Rule 462(b) Registration Statement has become effective and
(v) of the happening of any event during the period referred to in Section 5(d)
below which makes any statement of a material fact made in the Registration
Statement or the Prospectus untrue or which requires any additions to or changes
in the Registration Statement or the Prospectus in order to make the statements
therein not misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the Company will use
its best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To furnish to you three (3) signed copies of the Registration
Statement as first filed with the Commission and of each amendment to it,
including all exhibits, and to furnish to you and each Underwriter designated by
you such number of conformed copies of the Registration Statement as so filed
and of each amendment to it, without exhibits, as you may reasonably request.
(c) To prepare the Prospectus, the form and substance of which shall be
satisfactory to you, and to file the Prospectus in such form with the Commission
within the applicable period specified in Rule 424(b) under the Act; during the
period specified in Section 5(d) below, not to file any further amendment to the
Registration Statement and not to make any amendment or supplement to the
Prospectus of which you shall not previously have been advised or to which you
shall reasonably object after being so advised; and, during such period, to
prepare and file with the Commission, promptly upon your reasonable request, any
amendment to the Registration Statement or amendment or supplement to the
Prospectus which may be necessary or advisable in connection with the
distribution of the Shares by you, and to use its best efforts to cause any such
amendment to the Registration Statement to become promptly effective.
(d) Prior to 10:00 A.M., New York City time, on the first business day
after the date of this Agreement and from time to time thereafter for such
period as in the opinion of counsel for the Underwriters a prospectus is
required by law to be delivered in connection with sales by an Underwriter or a
dealer, to furnish in New York City to each Underwriter and any dealer as many
copies of the Prospectus (and of any amendment or supplement to the Prospectus)
as such Underwriter or dealer may reasonably request.
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(e) If during the period specified in Section 5(d), any event shall
occur or condition shall exist as a result of which, in the opinion of counsel
for the Underwriters, it becomes necessary to amend or supplement the Prospectus
in order to make the statements therein, in the light of the circumstances when
the Prospectus is delivered to a purchaser, not misleading, or if, in the
opinion of counsel for the Underwriters, it is necessary to amend or supplement
the Prospectus to comply with applicable law, forthwith to prepare and file with
the Commission an appropriate amendment or supplement to the Prospectus so that
the statements in the Prospectus, as so amended or supplemented, will not in the
light of the circumstances when it is so delivered, be misleading, or so that
the Prospectus will comply with applicable law, and to furnish to each
Underwriter and to any dealer as many copies thereof as such Underwriter or
dealer may reasonably request.
(f) Prior to any public offering of the Shares, to cooperate with you and
counsel for the Underwriters in connection with the registration or
qualification of the Shares for offer and sale by the several Underwriters and
by dealers under the state securities or Blue Sky laws of such jurisdictions as
you may request, to continue such registration or qualification in effect so
long as required for distribution of the Shares and to file such consents to
service of process or other documents as may be necessary in order to effect
such registration or qualification; provided, however, that the Company shall
not be required in connection therewith to qualify as a foreign corporation in
any jurisdiction in which it is not now so qualified or to take any action that
would subject it to general consent to service of process or taxation other than
as to matters and transactions relating to the Prospectus, the Registration
Statement, any preliminary prospectus or the offering or sale of the Shares, in
any jurisdiction in which it is not now so subject.
(g) To mail and make generally available to its stockholders as soon as
practicable an earnings statement covering a period of at least twelve months
beginning after the effective date of the Registration Statement that shall
satisfy the provisions of Section 11(a) of the Act, and to advise you in writing
when such statement has been so made available.
(h) During the period of three years after the date of this Agreement, to
furnish to you as soon as available copies of all reports or other
communications furnished to the record holders of Common Stock or furnished to
or filed with the Commission or any national securities exchange on which any
class of securities of the Company is listed and such other publicly available
information concerning the Company and its subsidiaries as you may reasonably
request.
(i) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of its obligations under this Agreement,
including: (i) the fees, disbursements and expenses of the Company's counsel and
the Company's accountants in connection with the registration and delivery of
the Shares under the Act and all other fees and expenses (subject to the
provisions of clauses (iv) and (v) below, other than the fees and expenses of
counsel to the Underwriters) in connection with the preparation, printing,
filing and distribution of the Registration Statement (including financial
statements and exhibits), any preliminary prospectus, the Prospectus and all
amendments and supplements to any of the foregoing, including the mailing and
delivering of copies thereof to the Underwriters and dealers in the quantities
specified herein during the period specified in Section 5(d) hereof, (ii) all
costs and expenses related to the transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, (iii) all
costs of printing or producing this Agreement and any other agreements or
documents in connection with the offering, purchase, sale or delivery of the
Shares, (iv) all expenses in
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connection with the registration or qualification of the Shares for offer and
sale under the securities or Blue Sky laws of the several states and all costs
of printing or producing any Preliminary and Supplemental Blue Sky Memoranda in
connection therewith (including the filing fees and reasonable fees and
disbursements of counsel for the Underwriters in connection with such
registration or qualification and memoranda relating thereto, (which shall not
exceed $10,000), (v) the filing fees and reasonable fees and disbursements of
counsel for the Underwriters in connection with the review and clearance of the
offering of the Shares by the National Association of Securities Dealers, Inc.,
(vi) all fees and expenses in connection with the preparation and filing of the
registration statement on Form 8-A relating to the Common Stock and all costs
and expenses incident to the listing of the Shares on the Nasdaq National
Market, (vii) the cost of printing certificates representing the Shares, (viii)
the costs and charges of any transfer agent, registrar and/or depositary, and
(ix) all other costs and expenses incident to the performance of the obligations
of the Company hereunder for which provision is not otherwise made in this
Section.
(j) To use its best efforts to list for quotation the Shares on the Nasdaq
National Market and to maintain the listing of the Shares on the Nasdaq National
Market for a period of three years after the date of this Agreement.
(k) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the Company prior to
the Closing Date or any Option Closing Date, as the case may be, and to satisfy
all conditions precedent to the delivery of the Shares.
(l) If the Registration Statement at the time of the effectiveness of this
Agreement does not cover all of the Shares, to file a Rule 462(b) Registration
Statement with the Commission registering the Shares not so covered in
compliance with Rule 462(b) by 10:00 P.M., New York City time, on the date of
this Agreement and to pay to the Commission the filing fee for such Rule 462(b)
Registration Statement at the time of the filing thereof or to give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the Act.
SECTION 6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) The Registration Statement has become effective (other than any Rule
462(b) Registration Statement to be filed by the Company after the effectiveness
of this Agreement); any Rule 462(b) Registration Statement filed after the
effectiveness of this Agreement will become effective no later than 10:00 P.M.,
New York City time, on the date of this Agreement; and no stop order suspending
the effectiveness of the Registration Statement is in effect, and no proceedings
for such purpose are pending before or, to the Company's knowledge, threatened
by the Commission.
(b) (i) The Registration Statement (other than any Rule 462(b)
Registration Statement to be filed by the Company after the effectiveness of
this Agreement), when it became effective, did not contain and, as amended, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) the Registration Statement (other than
any Rule 462(b)
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Registration Statement to be filed by the Company after the effectiveness of
this Agreement) and the Prospectus comply and, as amended or supplemented, if
applicable, will comply in all material respects with the Act, (iii) if the
Company is required to file a Rule 462(b) Registration Statement after the
effectiveness of this Agreement, such Rule 462(b) Registration Statement and any
amendments thereto, when they become effective (A) will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(B) will comply in all material respects with the Act and (iv) the Prospectus
does not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations and
warranties set forth in this paragraph do not apply to statements or omissions
in the Registration Statement or the Prospectus based upon information relating
to any Underwriter furnished to the Company in writing by such Underwriter
through you expressly for use therein.
(c) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Act, complied when so filed in all material
respects with the Act, and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and warranties
set forth in this paragraph do not apply to any material misstatement or
omission or alleged material misstatement or omission that was cured in any
subsequently filed preliminary prospectus or the Prospectus, as amended or
supplemented, or statements or omissions in any preliminary prospectus based
upon information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein.
(d) Each of the Company and its subsidiaries has been duly incorporated or
formed, as applicable, is validly existing as a corporation or limited liability
company, as applicable, in good standing under the laws of its jurisdiction of
incorporation or formation and has the corporate power or limited liability
company power and authority to carry on its business as described in the
Prospectus and to own, lease and operate its properties, and each is duly
qualified and is in good standing as a foreign corporation or limited liability
company, as applicable, authorized to do business in each jurisdiction in which
the nature of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole.
(e) There are no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or liens granted or issued by
the Company or any of its subsidiaries relating to or entitling any person to
purchase or otherwise to acquire any shares of the capital stock of the Company
or any of its subsidiaries, except as otherwise disclosed in the Registration
Statement.
(f) All the outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and non-assessable; and
the Shares have been duly authorized and, when issued and delivered to the
Underwriters against payment therefor as provided by this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of such Shares
will not be subject to any preemptive or similar rights.
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(g) All of the outstanding shares of capital stock or limited liability
company interests, as applicable, of each of the Company's subsidiaries have
been duly authorized and validly issued and are fully paid and non-assessable,
and are owned by the Company, directly or indirectly through one or more
subsidiaries, free and clear of any security interest, claim, lien, encumbrance
or adverse interest of any nature.
(h) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(i) Neither the Company nor any of its subsidiaries is in violation of its
respective charter or limited liability company agreement, as applicable, or by-
laws or in default in the performance of any obligation, agreement, covenant or
condition contained in any indenture, loan agreement, mortgage, lease or other
agreement or instrument that is material to the Company and its subsidiaries,
taken as a whole, to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries or their respective property is
bound.
(j) The execution, delivery and performance of this Agreement by the
Company, the compliance by the Company with all the provisions hereof and the
consummation of the transactions contemplated hereby will not (i) require any
consent, approval, authorization or other order of, or qualification with, any
court or governmental body or agency (except such as may be required under the
Act, the Securities Exchange Act of 1934 and the securities or Blue Sky laws of
the various states), (ii) conflict with or constitute a breach of any of the
terms or provisions of, or a default under, the charter or limited liability
company agreement, as applicable or by-laws of the Company or any of its
subsidiaries or any indenture, loan agreement, mortgage, lease or other
agreement or instrument that is material to the Company and its subsidiaries,
taken as a whole, to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries or their respective property is
bound, (iii) violate or conflict with any applicable law or any rule,
regulation, judgment, order or decree of any court or any governmental body or
agency having jurisdiction over the Company, any of its subsidiaries or their
respective property or (iv) result in the suspension, termination or revocation
of any Authorization (as defined below) of the Company or any of its
subsidiaries or any other impairment of the rights of the holder of any such
Authorization.
(k) There are no legal or governmental proceedings pending or, to the
Company's knowledge, threatened to which the Company or any of its subsidiaries
is or, to the Company's knowledge, could be a party or to which any of their
respective property is or, to the Company's knowledge, could be subject that are
required to be described in the Registration Statement or the Prospectus and are
not so described; nor are there any statutes, regulations, contracts or other
documents that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement that are not
so described or filed as required.
(l) Neither the Company nor any of its subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants
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("ENVIRONMENTAL LAWS"), any provisions of the Employee Retirement Income
Security Act of 1974, as amended, or any provisions of the Foreign Corrupt
Practices Act, or the rules and regulations promulgated thereunder, except for
such violations which, singly or in the aggregate, would not have a material
adverse effect on the business, prospects, financial condition or results of
operation of the Company and its subsidiaries, taken as a whole.
(m) Each of the Company and its subsidiaries has such permits, licenses,
consents, exemptions, franchises, authorizations and other approvals (each, an
"AUTHORIZATION") of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and all
courts and other tribunals, including, without limitation, under any applicable
Environmental Laws, as are necessary to own, lease, license and operate its
respective properties and to conduct its business, except where the failure to
have any such Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole. Each such Authorization is valid and in full
force and effect and each of the Company and its subsidiaries is in compliance
with all the terms and conditions thereof and with the rules and regulations of
the authorities and governing bodies having jurisdiction with respect thereto;
and no event has occurred (including, without limitation, the receipt of any
notice from any authority or governing body) which allows or, after notice or
lapse of time or both, would allow, revocation, suspension or termination of any
such Authorization or results or, after notice or lapse of time or both, would
result in any other impairment of the rights of the holder of any such
Authorization; and such Authorizations contain no restrictions that are
burdensome to the Company or any of its subsidiaries; except as is disclosed in
the Registration Statement or where such failure to be valid and in full force
and effect or to be in compliance, the occurrence of any such event or the
presence of any such restriction would not, singly or in the aggregate, have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole.
(n) There are no costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws or any
Authorization, any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate, have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole.
(o) This Agreement has been duly authorized, executed and delivered by the
Company.
(p) PricewaterhouseCoopers LLP are independent public accountants with
respect to the Company and its subsidiaries as required by the Act.
(q) The consolidated financial statements included in the Registration
Statement and the Prospectus (and any amendment or supplement thereto), together
with related schedules and notes, present fairly the consolidated financial
position, results of operations and changes in financial position of the Company
and its subsidiaries on the basis stated therein at the respective dates or for
the respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally accepted
accounting principles
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consistently applied throughout the periods involved, except as disclosed
therein; the supporting schedules, if any, included in the Registration
Statement present fairly in accordance with generally accepted accounting
principles the information required to be stated therein; and the other
financial and statistical information and data set forth in the Registration
Statement and the Prospectus (and any amendment or supplement thereto) are, in
all material respects, accurately presented and prepared on a basis consistent
with such financial statements and the books and records of the Company.
(r) The Company is not and, after giving effect to the offering and sale
of the Shares and the application of the proceeds thereof as described in the
Prospectus, will not be, an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
(s) Except as disclosed in the Registration Statement, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company or to
require the Company to include such securities with the Shares registered
pursuant to the Registration Statement.
(t) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there has not occurred any material adverse change or any development involving
a prospective material adverse change in the condition, financial or otherwise,
or the earnings, business, management or operations of the Company and its
subsidiaries, taken as a whole, (ii) there has not been any material adverse
change or any development involving a prospective material adverse change in the
capital stock or in the long-term debt of the Company or any of its subsidiaries
and (iii) neither the Company nor any of its subsidiaries has incurred any
material liability or obligation, direct or contingent.
(u) Each certificate signed by any officer of the Company and delivered
to the Underwriters or counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to the Underwriters as to the matters
covered thereby.
(v) Neither the Company nor any of its subsidiaries owns any real
property. The Company and its Subsidiaries have good and marketable title to all
personal property owned by them which is material to the business of the Company
and its subsidiaries, taken as a whole, in each case free and clear of all
liens, encumbrances and defects except such as are described in the Prospectus
or such as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and its subsidiaries; and any real property and buildings held
under lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not materially interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries, taken as a whole, in
each case except as described in the Prospectus.
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(w) The Company and its subsidiaries own, or possess valid and enforceable
licenses to, or rights to use, all patents, patent rights, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names ("INTELLECTUAL PROPERTY") currently
employed by the Company and its subsidiaries in connection with the business now
operated by them, except where the failure to own or possess licenses for or
rights to use such Intellectual Property would not, singly or in the aggregate,
have a material adverse effect on the business, prospects, financial condition
or results of operation of the Company and its subsidiaries, taken as a whole.
Neither the Company, nor its subsidiaries, has received any written notice, nor
are they aware of facts which would form a reasonable basis for any such claim,
that: (i) challenges the Company's or its subsidiaries' rights in or to any
Intellectual Property; (ii) challenges the validity or scope of any Intellectual
Property; (iii) any third party has or will be able to establish any rights in
the Intellectual Property, except for the ownership rights of the owners of the
Intellectual Property which is licensed to the Company or the rights of parties
to whom the Company has granted licenses of such Intellectual Property; (iv) the
Intellectual Property infringes or otherwise violates any patent, copyright,
trade secret, trademark or other proprietary right of any third party; or (v)
there is infringement of the Intellectual Property by any third party, which, in
the case of any such claim specified in clauses (i), (ii), (iii), (iv) or (v)
above, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, except that the Company has received notice from
the United States Patent and Trademark Office that its registration of the
trademark "DSL.net" may be removed from the list of supplemental registrations
under certain circumstances.
(x) The Company and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; and neither the Company nor any of its subsidiaries (i) has received
written notice from any insurer or agent of such insurer that substantial
capital improvements or other material expenditures will have to be made in
order to continue such insurance or (ii) has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers at a cost that would
not have a material adverse effect on the business, prospects, financial
conditions or results of operations of the Company and its subsidiaries, taken
as a whole.
(y) No relationship, direct or indirect, exists between or among the
Company or any of its subsidiaries on the one hand, and the directors, officers,
shareholders, customers or suppliers of the Company or any of its subsidiaries
on the other hand, which is required by the Act to be described in the
Registration Statement or the Prospectus which is not so described.
(z) There is no (i) significant unfair labor practice complaint,
grievance or arbitration proceeding pending or, to the Company's knowledge,
threatened against the Company or any of its subsidiaries before the National
Labor Relations Board or any state or local labor relations board, (ii) strike,
labor dispute, slowdown or stoppage pending or, to the Company's knowledge,
threatened against the Company or any of its subsidiaries or (iii) union
representation question existing with respect to the employees of the Company
and its subsidiaries, except for such actions specified in clause (i), (ii) or
(iii) above, which, singly or in the aggregate, would not have a material
adverse effect on the business, prospects, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole. To the
Company's knowledge, no collective bargaining organizing activities are taking
place with respect to the Company or any of its subsidiaries.
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(aa) The Company and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(bb) All material tax returns required to be filed by the Company and
each of its subsidiaries in any jurisdiction have been filed, other than those
filings being contested in good faith, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other charges
due pursuant to such returns or pursuant to any assessment received by the
Company or any of its subsidiaries have been paid, other than those being
contested in good faith and for which adequate reserves have been provided.
(cc) The Company has reviewed its operations and any third parties with
which the Company has a material relationship to evaluate the extent to which
the business or operations of the Company will be affected by the Year 2000
Problem. As a result of such review, the Company does not believe that the Year
2000 Problem will have a material adverse effect on the business, prospects,
financial condition or results of operation of the Company and its subsidiaries,
taken as a whole. The "YEAR 2000 PROBLEM" as used herein means any significant
risk that computer hardware or software used in the receipt, transmission,
processing, manipulation, storage, retrieval, retransmission or other
utilization of data or in the operation of mechanical or electrical systems of
any kind will not be able to reliably distinguish dates beginning on January 1,
2000 from dates prior to January 1, 2000.
(dd) The Company has not at any time during the last five (5) years (i)
made any unlawful contribution to any candidate for foreign office or failed to
disclose fully any contribution in violation of law, or (ii) made any payment to
any federal or state governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction thereof.
(ee) The Company has not taken and will not take, directly or indirectly,
any action designed to or that might reasonably be expected to cause or result
in stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of the Shares.
SECTION 7. Indemnification. (a) The Company agrees:
(i) to indemnify and hold harmless each Underwriter and each person,
if any, who controls any Underwriter within the meaning of the Act, against any
losses, claims, damages or liabilities to which such Underwriter or any such
controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (i) any untrue statement
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or alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (iii) any alleged act or failure to act by any
Underwriter in connection with, or relating in any manner to, the Shares or the
offering contemplated hereby, and which is included as part of or referred to in
any loss, claim, damage, liability or action arising out of or based upon
matters covered by clause (i) or (ii) above (provided, that the Company shall
not be liable under this clause (iii) to the extent that it is determined in a
final judgment by a court of competent jurisdiction that such loss, claim,
damage, liability or action resulted directly from any such acts or failures to
act undertaken or omitted to be taken by such Underwriter through its gross
negligence or willful misconduct); provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement, or omission or alleged omission made in the Registration Statement,
any preliminary prospectus, the Prospectus, or such amendment or supplement, in
reliance upon and in conformity with written information furnished to the
Company by or through the Representatives specifically for use in the
preparation thereof; and further provided, however, that the Company will not be
liable to any Underwriter who failed to deliver a Prospectus, as then amended or
supplemental, to the person asserting any claim for any such loss, claim, damage
or liability that arises out of or is based upon an untrue statement or alleged
untrue statement, or omission or alleged omission made in any preliminary
prospectus if such actual or alleged untrue statement or omission was cured in
the Prospectus, as then amended or supplemented.
(ii) to reimburse each Underwriter and each such controlling person
upon demand for any legal or other out-of-pocket expenses reasonably incurred by
such Underwriter or such controlling person in connection with investigating or
defending any such loss, claim, damage or liability, action or proceeding or in
responding to a subpoena or governmental inquiry related to the offering of the
Shares, whether or not such Underwriter or controlling person is a party to any
action or proceeding. In the event that it is finally judicially determined that
the Underwriters were not entitled to receive payments for legal and other
expenses pursuant to this subparagraph, the Underwriters will promptly return
all sums that had been advanced pursuant hereto.
(b) Each Underwriter severally and not jointly will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Act, against any losses, claims, damages or
liabilities to which the Company or any such director, officer, or controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
or (ii) the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made; and
will reimburse any legal or other expenses reasonably incurred by the Company or
any such director, officer, or controlling person in connection with
investigating or defending any such loss, claim, damage, liability, action or
13
<PAGE>
proceeding; provided, however, that each Underwriter will be liable in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives
specifically for use in the preparation thereof. This indemnity agreement will
be in addition to any liability which such Underwriter may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 7, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for in Section
7(a) or (b) shall be available to any party who shall fail to give notice as
provided in this Section 7(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 7(a) or (b). In case any
such proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party and
shall pay as incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel at its own expense. Notwithstanding the foregoing, the
indemnifying party shall pay as incurred (or within 30 days of presentation) the
fees and expenses of the counsel retained by the indemnified party in the event
(i) the indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and employ
counsel acceptable to the indemnified party within a reasonable period of time
after notice of commencement of the action. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such indemnified parties. Such
firm shall be designated in writing by you in the case of parties indemnified
pursuant to Section 7(a) and by the Company in the case of parties indemnified
pursuant to Section 7(b). The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but if settled
with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. In addition, the
indemnifying party will not, without the prior written consent of the
indemnified party, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action or proceeding of which
indemnification may be sought hereunder (whether or not any indemnified party is
an actual or potential party to such claim, action or proceeding) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action or
proceeding.
14
<PAGE>
(d) If the indemnification provided for in this Section 7 is unavailable
to or insufficient to hold harmless an indemnified party under Section 7(a), (b)
or (c) above in respect of any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) in such proportion as is appropriate
to reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law then each indemnifying party shall contribute to such amount paid
or payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, (or actions or proceedings in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company, and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 7(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7(d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to above in this Section 7(d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), (i) no Underwriter shall be required to
contribute any amount in excess of the underwriting discounts and commissions
applicable to the Shares purchased by such Underwriter, and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations in this
Section 7(d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 7 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
15
<PAGE>
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or any persons
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter, or to the Company, its directors or officers, or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 7.
(g) The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
SECTION 8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares under this Agreement
are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company contained in
this Agreement shall be true and correct on the Closing Date with the same force
and effect as if made on and as of the Closing Date.
(b) If the Company is required to file a Rule 462(b) Registration
Statement after the effectiveness of this Agreement, such Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., New York City
time, on the date of this Agreement; and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and, to the
Company's knowledge, no proceedings for that purpose shall have been commenced
or shall be pending before or contemplated by the Commission.
(c) You shall have received on the Closing Date a certificate dated the
Closing Date, signed by David Struwas and Robert Berlin, in their capacities as
the President and Chief Executive Officer and Chief Financial Officer of the
Company, respectively, confirming the matters set forth in Sections 6(t), 8(a)
and 8(b) (which, with respect to the commencement, pendency and contemplation of
stop order proceedings by the Commission, shall be to their knowledge) and that
the Company has complied with all of the agreements and satisfied all of the
conditions herein contained and required to be complied with or satisfied by the
Company on or prior to the Closing Date.
(d) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there shall not have occurred any change or any development involving a
prospective change in the condition, financial or otherwise, or the earnings,
business, management or operations of the Company and its subsidiaries, taken as
a whole, (ii) there shall not have been any change or any development involving
a prospective change in the capital stock or in the long-term debt of the
Company or any of its subsidiaries and (iii) neither the Company nor any of its
subsidiaries shall have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause 8(d)(i),
8(d)(ii) or 8(d)(iii), in your judgment, is material and adverse and, in your
judgment, makes it impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
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<PAGE>
(e) You shall have received on the Closing Date an opinion (satisfactory
to you and counsel for the Underwriters), dated the Closing Date, of Testa,
Hurwitz & Thibeault, LLP counsel for the Company, to the effect that:
(i) the Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of its jurisdiction of incorporation
and has the corporate power and authority to carry on its business as described
in the Prospectus and to own, lease and operate its properties;
(ii) the Shares have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor as provided by this
Agreement, will be validly issued, fully paid and nonassessable, and the
issuance of such Shares will not be subject to any preemptive rights, rights of
first refusal or first offer, or similar rights arising under the Delaware
General Corporation Law, the Company's certificate of incorporation or any
agreement filed as an exhibit to the Registration Statement;
(iii) this Agreement has been duly authorized, executed and
delivered by the Company;
(iv) the authorized capital stock of the Company conforms as to
legal matters to the description thereof set forth under the caption
"Description of Capital Stock" in the Prospectus;
(v) the Registration Statement has become effective under the Act
and, to such counsel's knowledge, no stop order suspending its effectiveness has
been issued and no proceedings for that purpose are, to such counsel's
knowledge, pending before or contemplated by the Commission;
(vi) the statements under the captions "Description of Capital Stock"
and "Underwriting" in the Prospectus, insofar as such statements purport to
summarize legal matters present fair summaries of such legal matters, in all
material respects;
(vii) the execution, delivery and performance of this Agreement by
the Company, the compliance by the Company with all the provisions hereof and
the consummation of the transactions contemplated hereby will not (A) require
any consent, approval, authorization or other order of, or qualification with,
any court or governmental body or agency (except such as may be required under
the Act, the Exchange Act, and the securities or Blue Sky laws of the various
states), or (B) conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the certificate of incorporation or by-laws
of the Company or any agreement that is filed as an exhibit to the Registration
Statement;
17
<PAGE>
(viii) such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of their respective property is subject
that are required to be described in the Registration Statement or the
Prospectus and are not so described, or of any contracts or other documents that
are required to be described in the Registration Statement or the Prospectus or
to be filed as exhibits to the Registration Statement that are not so described
or filed as required;
(ix) the Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described in
the Prospectus, will not be, an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended;
(x) to such counsel's knowledge, except as disclosed in the
Registration Statement, there are no contracts, agreements or understandings
between the Company and any person granting such person the right to require the
Company to file a registration statement under the Act with respect to any
securities of the Company or to require the Company to include such securities
with the Shares registered pursuant to the Registration Statement; and
(xi) such counsel has in the course of the preparation of the
Registration Statement and the Prospectus, participated in conferences with
officers, employees and other representatives of the Company,
PricewaterhouseCoopers LLP (the Company's independent public accountants), Day,
Berry & Howard, Swidler Berlin Sherreff and Friedman LLP (regulatory counsel to
the Company) and your representatives and counsel concerning the information
contained in the Registration Statement and the Prospectus and although such
counsel need not pass upon, nor assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus and need not make any independent check or
verification thereof, based on such participation no fact has come to the
attention of such counsel that cause such counsel to believe that the
Registration Statement (except for financial statements, financial statement
schedules, and other financial and statistical data included therein, as to
which such counsel need make no statement), at the time it became effective,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading, or that the Prospectus (except for financial statements,
financial statement schedules, and other financial and statistical data
included, as to which such counsel need make no statement), as of the date of
such Prospectus or as of the Closing Date, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
The opinion of Testa, Hurwitz & Thibeault, LLP described in Section 8(e)
above shall be rendered to you at the request of the Company and shall so state
therein.
(f) You shall have received on the Closing Date an opinion (satisfactory
to you and counsel for the underwriters), dated the Closing Date, of Day, Berry
& Howard, counsel for the Company, to the effect that:
18
<PAGE>
(i) all the outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and nonassessable and
not subject to any preemptive rights, rights of first refusal or first offer, or
similar rights arising under the Delaware General Corporation Law, the Company's
certificate of incorporation or any agreement filed as an exhibit to the
Registration Statement;
(ii) all of the outstanding shares of capital stock or limited
liability company interests of each of the Company's subsidiaries have been duly
authorized and validly issued and are fully paid and nonassessable, and are
owned by the Company, directly or indirectly through one or more subsidiaries,
free and clear of any security interest, claim, lien, encumbrance or adverse
interest of any nature;
(iii) the Company is duly qualified and is in good standing as a
foreign corporation authorized to do business in the State of Connecticut; and
(iv) the statements under the caption "Business--Legal Proceedings,"
in the Prospectus, insofar as such statements purport to summarize legal matters
present fair summaries of such legal matters, in all material respects;
(g) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Swidler Berlin Sherreff Friedman, LLP, regulatory counsel for
the Company, which opinion shall be to your reasonable satisfaction.
(h) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Brobeck, Phleger & Harrison LLP, counsel for the Underwriters,
as to the matters referred to in Sections 8(e)(ii), 8(e)(vi), 8(e)(viii) (but
only with respect to the statements under the caption "Description of Capital
Stock" and "Underwriting") and 8(e)(xii).
In giving such opinions, with respect to the matters covered by Section
8(e)(xi), Testa, Hurwitz & Thibeault LLP and Brobeck, Phleger & Harrison LLP may
state that their opinion and belief are based upon their participation in the
preparation of the Registration Statement and Prospectus and any amendments or
supplements thereto and review and discussion of the contents thereof, but are
without independent check or verification except as specified.
(i) You shall have received, on each of the date hereof and the Closing
Date, a letter dated the date hereof or the Closing Date, as the case may be, in
form and substance satisfactory to you, from PricewaterhouseCoopers LLP,
independent public accountants, containing the information and statements of the
type ordinarily included in accountants' "comfort letters" to Underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(j) The Company shall have delivered to you the agreements specified in
Section 2 hereof which agreements shall be in full force and effect on the
Closing Date.
(k) The Shares shall have been duly listed for quotation on the Nasdaq
National Market.
19
<PAGE>
(l) The Company shall not have failed on or prior to the Closing Date to
perform or comply with any of the agreements herein contained and required to be
performed or complied with by the Company on or prior to the Closing Date.
The several obligations of the Underwriters to purchase any Additional
Shares hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Company, the due authorization and issuance of such
Additional Shares and other matters related to the issuance of such Additional
Shares.
SECTION 9. Effectiveness of Agreement and Termination. This Agreement
shall become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the Closing
Date by you by written notice to the Company if any of the following has
occurred: (i) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions or in the
financial markets of the United States or elsewhere that, in your judgment, is
material and adverse and, in your judgment, makes it impracticable to market the
Shares on the terms and in the manner contemplated in the Prospectus, (ii) the
suspension or material limitation of trading in securities or other instruments
on the New York Stock Exchange, the American Stock Exchange, the Chicago Board
of Options Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade
or the Nasdaq National Market or limitation on prices for securities or other
instruments on any such exchange or the Nasdaq National Market, (iii) the
suspension of trading of any securities of the Company on any exchange or in the
over-the-counter market, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
court or other governmental authority which in your opinion materially and
adversely affects, or will materially and adversely affect, the business,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, (v) the declaration of a banking moratorium by
either federal or New York State authorities or (vi) the taking of any action by
any federal, state or local government or agency in respect of its monetary or
fiscal affairs which in your opinion has a material adverse effect on the
financial markets in the United States.
If on the Closing Date or on an Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase the Firm
Shares or Additional Shares, as the case may be, which it has or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not more
than one-tenth of the total number of Firm Shares or Additional Shares, as the
case may be, to be purchased on such date by all Underwriters, each non-
defaulting Underwriter shall be obligated severally, in the proportion which the
number of Firm Shares set forth opposite its name in Schedule I bears to the
total number of Firm Shares which all the non-defaulting Underwriters have
agreed to purchase, or in such other proportion as you may specify, to purchase
the Firm Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; provided that in no event shall the number of Firm Shares or Additional
Shares, as the case may be, which any Underwriter has agreed to purchase
pursuant to Section 2 hereof be increased pursuant to this
20
<PAGE>
Section 9 by an amount in excess of one-ninth of such number of Firm Shares or
Additional Shares, as the case may be, without the written consent of such
Underwriter. If on the Closing Date any Underwriter or Underwriters shall fail
or refuse to purchase Firm Shares and the aggregate number of Firm Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Firm Shares to be purchased by all Underwriters and arrangements
satisfactory to you and the Company for purchase of such Firm Shares are not
made within 48 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter and the Company. In any
such case which does not result in termination of this Agreement, either you or
the Company shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other documents or arrangements
may be effected. If, on an Option Closing Date, any Underwriter or Underwriters
shall fail or refuse to purchase Additional Shares and the aggregate number of
Additional Shares with respect to which such default occurs is more than one-
tenth of the aggregate number of Additional Shares to be purchased on such date,
the non-defaulting Underwriters shall have the option to (i) terminate their
obligation hereunder to purchase such Additional Shares or (ii) purchase not
less than the number of Additional Shares that such non-defaulting Underwriters
would have been obligated to purchase on such date in the absence of such
default. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of any such Underwriter
under this Agreement.
SECTION 10. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to the Company, to DSL.net,
Inc., 545 Long Wharf Drive, New Haven, Connecticut 06511, Attention: General
Counsel and (ii) if to any Underwriter or to you, to you c/o Deutsche Bank
Securities Inc., One Bankers Trust Plaza, 130 Liberty Street, New York, New York
10006, Attention: General Counsel, or in any case to such other address as the
person to be notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company and the several Underwriters set
forth in or made pursuant to this Agreement shall remain operative and in full
force and effect, and will survive delivery of and payment for the Shares,
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of any Underwriter, the officers or directors of any
Underwriter, any person controlling any Underwriter, the Company, the officers
or directors of the Company or any person controlling the Company, (ii)
acceptance of the Shares and payment for them hereunder and (iii) termination of
this Agreement.
If for any reason the Shares are not delivered by or on behalf of the
Company as provided herein (other than as a result of any termination of this
Agreement pursuant to Section 9), the Company agrees to reimburse the several
Underwriters for all out-of-pocket expenses (including the fees and
disbursements of counsel) incurred by them. Notwithstanding any termination of
this Agreement, the Company shall be liable for all expenses which it has agreed
to pay pursuant to Section 5(i) hereof. The Company also agrees to reimburse
the several Underwriters, their directors and officers and any persons
controlling any of the Underwriters for any and all fees and expenses
(including, without limitation, the fees disbursements of counsel) incurred by
them in connection with enforcing their rights hereunder (including, without
limitation, pursuant to Section 7 hereof).
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Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Company, the Underwriters, the
Underwriters' directors and officers, any controlling persons referred to
herein, the Company's directors and the Company's officers who sign the
Registration Statement and their respective successors and assigns, all as and
to the extent provided in this Agreement, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include a purchaser of any of the Shares from any of the
several Underwriters merely because of such purchase.
This Agreement shall be governed and construed in accordance with the laws
of the State of New York.
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
DSL.net, Inc.
By:
---------------------------------
Title:
DEUTSCHE BANK SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS INC.
DLJdirect INC.
Acting severally on behalf of themselves
and the several Underwriters named
in Schedule I hereto
By: DEUTSCHE BANK SECURITIES INC.
By:
--------------------------------
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SCHEDULE I
----------
Underwriters Number of Firm Shares
to be Purchased
Deutsche Bank Securities Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Lehman Brothers
DLJ direct
Total
23
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Annex I
-------
[Insert names of stockholders of the Company who will not be required to sign
lock ups]
24
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Exhibit 1.02
SUBSCRIPTION AGREEMENT
----------------------
DSL.net, Inc.
545 Long Wharf Drive
New Haven, CT 06511
Attention: David F. Struwas, President and Chief Executive Officer
Gentlemen:
1. SUBSCRIPTION. Subject to the terms and conditions hereof, the
------------
undersigned hereby irrevocably subscribes for and agrees to purchase _____
shares (the "Shares") of the common stock, $.0005 par value (the "Common
Stock"), of DSL.net, Inc. (the "Company") at a price of $___ per share, and an
aggregate purchase price of $________ (the "Purchase Price").
2. CLOSING. The closing shall take place at the offices of Testa, Hurwitz
-------
& Thibeault, High Street Tower, 125 High Street, Boston, Massachusetts 02110, at
10:00 a.m., Boston time, on ______, 1999, or at such other location, date and
time as may be agreed upon between the undersigned and the Company (such closing
being called the "Closing" and such date and time being called the "Closing
Date"); provided, however, that notwithstanding anything to the contrary herein,
the undersigned shall have no obligation to purchase the Shares unless the
Closing shall occur simultaneously with the closing of the purchase and sale of
the Firm Shares (as defined in the Underwriting Agreement) pursuant to the
Underwriting Agreement dated _________, 1999 by and among the Company and
Deutsche Bank Securities Inc., Donaldson, Lufkin & Jenrette Securities
Corporation, Lehman Brothers Inc. and DLJdirect Inc. (the "Underwriting
Agreement"). At the Closing, the Company shall issue or have issued and deliver
to the undersigned a stock certificate or certificates in definitive form,
registered in the name of the undersigned, representing the Shares. As payment
in full for the Shares, and against delivery of the stock certificate or
certificates therefor as aforesaid, on the Closing Date, the undersigned shall
transfer the Purchase Price of the Shares to the account of the Company by wire
transfer.
3. REPRESENTATIONS AND ACKNOWLEDGEMENTS OF THE UNDERSIGNED.
-------------------------------------------------------
3.1. AUTHORITY: The undersigned represents and warrants to the
---------
Company that the execution, delivery and performance of this Agreement, and
the consummation of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action. This Agreement has been duly
executed and delivered by the undersigned and constitutes a valid and
binding obligation of the undersigned enforceable in accordance with its
terms.
3.2. ACKNOWLEDGEMENT: The undersigned hereby acknowledges that it
---------------
has received and reviewed the preliminary prospectus of the Company dated
September 7, 1999.
<PAGE>
- 2 -
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
---------------------------------------------
and warrants to the undersigned as follows:
4.1. ORGANIZATION AND STANDING: The Company is a corporation duly
-------------------------
organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power and authority to conduct its
business as presently conducted and as proposed to be conducted.
4.2. ISSUANCE OF SHARES: The issuance, sale and delivery of the
------------------
Shares in accordance with this Agreement, have been duly authorized by all
necessary corporate action on the part of the Company, and all such shares
have been duly reserved for issuance.
4.3. AUTHORITY FOR AGREEMENT: The execution, delivery and performance
-----------------------
by the Company of this Agreement, and the consummation by the Company of
the transactions contemplated hereby, have been duly authorized by all
necessary corporate action. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of
the Company enforceable in accordance with its terms.
4.4. REGISTRATION ON FORM S-1: The Shares have been registered on the
------------------------
Company's Registration Statement on Form S-1 (File No. 333-80141) filed on
June 7, 1999, as amended.
5. MISCELLANEOUS.
-------------
5.1. NOTICES: All notices or other communications given or made
-------
hereunder shall be in writing and shall be effective when either served by
personal delivery, express overnight courier service, electronic facsimile
transmission or by first class mail, postage prepaid, to the undersigned at
the address set forth below or to the Company at the address set forth
above.
5.2. GOVERNING LAW: This Agreement shall be governed by and
-------------
construed in accordance with the internal laws of the State of Delaware.
5.3. ENTIRE AGREEMENT: This Agreement constitutes the entire
----------------
agreement between the parties with respect to the subject matter hereof and
may be amended or superseded only by a writing executed by the parties.
6. CONTINUING EFFECTING OF REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS.
-----------------------------------------------------------------------
The representations and warranties of Sections 3 and 4 are true and accurate as
of the date of this Agreement and shall be true and accurate as of the Closing
Date, and shall survive delivery and acceptance of the Shares. If in any
respect such representations, warranties and acknowledgments shall not be true
and accurate at the Closing Date, such party
<PAGE>
- 3 -
shall give immediate written notice of such fact to the other party, specifying
which representations and warranties and acknowledgments are not true and
accurate.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
- 4 -
IN WITNESS WHEREOF, the undersigned has hereby executed this Agreement this
________ day of ______, 1999.
STAPLES, INC.
By:
----------------------------------
Title:
----------------------------------
The Company hereby accepts the foregoing subscription subject to the terms and
conditions set forth herein as of the ________ day of _______, 1999.
DSL.NET, INC.
By:
----------------------------------
Title:
----------------------------------
<PAGE>
Exhibit 3.01
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
Of
DSL.net, Inc.
(Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware)
DSL.net, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the "General
Corporation Law"),
DOES HEREBY CERTIFY:
FIRST: That the name of this corporation is DSL.net, Inc. and that
this corporation was originally incorporated pursuant to the General Corporation
Law on March 3, 1998 under the name DSL.net, Inc.
SECOND: That the Board of Directors duly adopted resolutions
proposing to amend and restate the certificate of incorporation of this
corporation, declaring said amendment and restatement to be advisable and in the
best interests of this corporation and its stockholders, and authorizing the
appropriate officers of this corporation to solicit the consent of the
stockholders therefor, which proposed amendment and restatement is as follows:
ARTICLE I
The name of this corporation is DSL.net, Inc.
ARTICLE II
The address of the registered office of this corporation in the State
of Delaware is 1013 Centre Road, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is Corporation Service
Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
<PAGE>
ARTICLE IV
A. Classes of Stock. This corporation is authorized to issue two
----------------
classes of stock to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares that this corporation is authorized to issue
is 218,962,500 shares, of which 200,000,000 shares shall be Common Stock with a
par value of $.0005 per share and 18,962,500 shares shall be Preferred Stock
with a par value of $.001 per share.
B. Rights, Preferences and Restrictions of Preferred Stock. Of the
-------------------------------------------------------
Preferred Stock authorized by this certificate of incorporation, 3,862,500
shares shall be designated as Series A Preferred Stock ("Series A Preferred
Stock"), 6,500,000 shares shall be designated as Series B Preferred Stock
("Series B Preferred Stock"), 3,500,000 shares shall be designated as Series C
Preferred Stock ("Series C Preferred Stock"), 3,000,000 shares shall be
designated as Series D Preferred Stock ("Series D Preferred Stock") and
2,100,000 shares shall be designated as Series E Preferred Stock ("Series E
Preferred Stock"). The rights, preferences, privileges, and restrictions
granted to and imposed on the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock and Series E Preferred
Stock are as set forth below in this Article IV(B).
1. Dividend Provisions. The holders of shares of Preferred
-------------------
Stock shall be entitled to receive dividends, out of any assets legally
available therefor, prior and in preference to any declaration or payment of any
dividend (payable other than in Common Stock or other securities and rights
convertible into or entitling the holder thereof to receive, directly or
indirectly, additional shares of Common Stock of this corporation) on the Common
Stock of this corporation, at the rate of (i) $.08 per share per annum for the
Series A Preferred Stock, (ii) $.0430768 per share per annum for the Series B
Preferred Stock, (iii) $.2872 per share per annum for the Series C Preferred
Stock, (iv) $.8368 per share for the Series D Preferred Stock and (v) $1.576 per
share per annum for the Series E Preferred Stock (in each case as adjusted for
any stock splits, stock dividends, recapitalizations or the like after the date
of the filing of this Amended and Restated Certificate of Incorporation with the
Secretary of State of the State of Delaware), payable when, as, and if declared
by the Board of Directors. Such dividends shall not be cumulative. The holders
of the outstanding Preferred Stock may waive any dividend preference that such
holders shall be entitled to receive under this Section 1 upon the affirmative
vote or written consent of the holders of at least a majority of the Preferred
Stock (voting together as a class, as provided in Section 4(a)) then
outstanding.
2. Liquidation Preference.
----------------------
(a) In the event of any liquidation, dissolution or winding up
of this corporation, either voluntary or involuntary, the holders of Preferred
Stock shall be entitled to receive, prior and in preference to any distribution
of any of the assets of this corporation to the holders of Common Stock by
reason of their ownership thereof, an amount per share equal to (i) the sum of
$1.00 for each outstanding share of Series A
-2-
<PAGE>
Preferred Stock (the "Original Series A Issue Price"), (ii) the sum of $.53846
for each outstanding share of Series B Preferred Stock (the "Original Series B
Issue Price"), (iii) the sum of $3.59 for each outstanding share of Series C
Preferred Stock (the "Original Series C Issue Price"), (iv) the sum of $10.46
for each outstanding share of Series D Preferred Stock (the "Original Series D
Issue Price") and (v) the sum of $19.70 for each outstanding share of Series E
Preferred Stock (the "Original Series E Issue Price"), plus declared but unpaid
dividends on such shares (subject to adjustment of such fixed dollar amounts for
any stock splits, stock dividends, combinations, recapitalizations or the like,
after the date of the filing of this Amended and Restated Certificate of
Incorporation with the Secretary of State of the State of Delaware). If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Preferred Stock shall be insufficient to permit the payment to
such holders of the full aforesaid preferential amounts, then the entire assets
and funds of this corporation legally available for distribution shall be
distributed ratably among the holders of the Preferred Stock in proportion to
the amount of such preferential amounts due on the shares of Preferred Stock
owned by each such holder.
(b) Upon completion of the distribution required by subsection (a) of
this Section 2, all of the remaining assets of this corporation available for
distribution to stockholders shall be distributed among the holders of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock and Common Stock pro rata based on the
number of shares of Common Stock held by each (assuming full conversion of all
such Preferred Stock, even if not currently convertible).
(c) (i) For purposes of this Section 2, a liquidation, dissolution
or winding up of this corporation shall be deemed to be occasioned by, or to
include, (A) the acquisition of this corporation by another entity by means of
any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation) if, following such
transaction, the holders of the outstanding voting power of the corporation
prior to the transaction cease to hold, directly or indirectly, a majority of
the outstanding voting power of the surviving entity; or (B) a sale of all or
substantially all of the assets of this corporation unless in either case the
holders of Preferred Stock representing a majority of the voting power of the
Preferred Stock (voting together as a class, as provided in Section 4(a)) elect
to the contrary by giving written notice thereof to the corporation at least
three days before the effective date of such event. If such notice is given, the
provisions of Section 3(g) below shall apply.
(ii) In any of such events, if the consideration received by this
corporation or its stockholders is other than cash or securities, its value will
be deemed its fair market value, as determined in good faith by the Board of
Directors. Any securities shall be valued as follows:
(A) Securities not subject to investment letter or other
similar restrictions on free marketability covered by (B) below:
-3-
<PAGE>
(1) If traded on a securities exchange or through the
Nasdaq National Market, the value shall be deemed to be the average of
the closing prices of the securities on such exchange or system over
the thirty (30) day period ending three (3) days prior to the closing;
(2) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid or sale prices
(whichever is applicable) over the thirty (30) day period ending three
(3) days prior to the closing; and
(3) If there is no active public market, the value
shall be the fair market value thereof, as mutually determined by this
corporation and the holders of at least a majority of the voting power
of all then outstanding shares of Preferred Stock.
(B) The method of valuation of securities subject to
investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a stockholder's status as an
affiliate or former affiliate) shall be to make an appropriate discount
from the market value determined as above in (A) (1), (2) or (3) to reflect
the approximate fair market value thereof, as mutually determined by this
corporation and the holders of at least a majority of the voting power of
all then outstanding shares of Preferred Stock.
(iii) In the event the requirements of this subsection 2(c) are
not complied with, this corporation shall forthwith either:
(A) cause such closing to be postponed until such time as
the requirements of this Section 2 have been complied with; or
(B) cancel such transaction, in which event the rights,
preferences and privileges of the holders of the Preferred Stock shall
revert to and be the same as such rights, preferences and privileges
existing immediately prior to the date of the first notice referred to in
subsection 2(c)(iv) hereof.
(iv) This corporation shall give each holder of record of
Preferred Stock written notice of such impending transaction not later than
twenty (20) days prior to the stockholders' meeting called to approve such
transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the
final approval of such transaction. The first of such notices shall
describe the material terms and conditions of the impending transaction and
the provisions of this Section 2, and this corporation shall thereafter
give such holders prompt notice of any material changes. The transaction
shall in no event take place sooner than twenty (20) days after this
corporation has given the first notice provided for herein or sooner than
ten (10) days after this corporation has given notice of any material
changes provided for herein; provided, however, that such periods may be
shortened upon the written
-4-
<PAGE>
consent of the holders of Preferred Stock that are entitled to such notice
rights or similar notice rights and that represent at least a majority of
the voting power of all then outstanding shares of such Preferred Stock.
3. Conversion. The holders of the Preferred Stock shall have
----------
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert.
----------------
(i) Each share of Series A Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the
date of issuance of such share, at the office of this corporation or any
transfer agent for such stock, into such number of fully paid and
nonassessable shares of Common Stock equal to the quotient (rounded up to
the nearest one-thousandth) as is determined by dividing the Original
Series A Issue Price by the Conversion Price applicable to such share,
determined as hereafter provided, in effect on the date the certificate is
surrendered for conversion. The current Conversion Price per share for
shares of Series A Preferred Stock shall be $.3750937734; provided,
however, that the Conversion Price for the Series A Preferred Stock shall
be subject to adjustment as set forth in subsection 3(d).
(ii) Each share of Series B Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the
date of issuance of such shares, at the office of this corporation or any
transfer agent for such stock, into such number of fully paid and
nonassessable shares of Common Stock equal to the quotient (rounded up to
the nearest one-thousandth) as is determined by dividing the Original
Series B Issue Price by the Conversion Price applicable to such share,
determined as hereinafter provided, in effect on the date the certificate
is surrendered for conversion. The current Conversion Price per share for
the Series B Preferred Stock shall be $.2019729932; provided, however, that
the Conversion Price for the Series B Preferred Stock shall be subject to
adjustment as set forth in subsection 3(d).
(iii) Each share of Series C Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the
date of issuance of such share, at the office of this corporation or any
transfer agent for such stock, into such number of fully paid and
nonassessable shares of Common Stock equal to the quotient (rounded up to
the nearest one-thousandth) as is determined by dividing the Original
Series C Issue Price by the Conversion Price applicable to such share,
determined as hereafter provided, in effect on the date the certificate is
surrendered for conversion. The current Conversion Price per share for
shares of Series C Preferred Stock shall be $1.3465866467; provided,
however, that the Conversion Price for the Series C Preferred Stock shall
be subject to adjustment as set forth in subsection 3(d).
-5-
<PAGE>
(iv) Each share of Series D Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the
date of issuance of such share, at the office of this corporation or any
transfer agent for such stock, into such number of fully paid and
nonassessable shares of Common Stock equal to the quotient (rounded up to
the nearest one-thousandth) as is determined by dividing the Original
Series D Issue Price by the Conversion Price applicable to such share,
determined as hereafter provided, in effect on the date the certificate is
surrendered for conversion. The current Conversion Price per share for
shares of Series D Preferred Stock shall be $3.9234808702; provided,
however, that the Conversion Price for the Series D Preferred Stock shall
be subject to adjustment as set forth in subsection 3(d).
(v) Each share of Series E Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the
date of issuance of such share, at the office of this corporation or any
transfer agent for such stock, into such number of fully paid and
nonassessable shares of Common Stock equal to the quotient (rounded up to
the nearest one-thousandth) as is determined by dividing the Original
Series E Issue Price by the Conversion Price applicable to such share,
determined as hereafter provided, in effect on the date the certificate is
surrendered for conversion. The current Conversion Price per share for
shares of Series D Preferred Stock shall be $7.3893473368; provided,
however, that the Conversion Price for the Series D Preferred Stock shall
be subject to adjustment as set forth in subsection 3(d).
(b) Automatic Conversion. Each share of Preferred Stock shall
--------------------
automatically be converted into shares of Common Stock at the applicable
Conversion Price at the time in effect for such series of Preferred Stock
immediately upon the earlier of (i) this corporation's sale of its Common
Stock in a firm commitment underwritten public offering pursuant to a
registration statement under the Securities Act of 1933, as amended, the
public offering price of which was not less than $7.50 per share (as
adjusted for any stock splits, stock dividends, recapitalizations and the
like after the date of the filing of this Amended and Restated Certificate
of Incorporation with the Secretary of State of the State of Delaware),
resulting in aggregate net proceeds to this corporation of at least
$30,000,000 or (ii) the date specified by written consent or agreement of
the holders of a majority of the then outstanding shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series
D Preferred Stock and Series E Preferred Stock (voting as a class as
provided in Section 4(a)).
(c) Mechanics of Conversion. Before any holder of Preferred
-----------------------
Stock shall be entitled to convert the same into shares of Common Stock, he
or she shall surrender the certificate or certificates therefor, duly
endorsed, at the office of this corporation or of any transfer agent for
such Preferred Stock, and shall give written notice to this corporation at
its principal corporate office, of the election to convert the same and
shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. This
-6-
<PAGE>
corporation shall, as soon as practicable thereafter, issue and deliver at
such office to such holder of Preferred Stock, or to the nominee or
nominees of such holder, a certificate or certificates for the number of
shares of Common Stock to which such holder shall be entitled as aforesaid.
Such conversion shall be deemed to have been made immediately prior to the
close of business on the date of such surrender of the shares of Preferred
Stock to be converted, and the person or persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock
as of such date. If the conversion is in connection with an underwritten
offering of securities registered pursuant to the Securities Act of 1933,
the conversion may, at the option of any holder tendering Preferred Stock
for conversion, be conditioned upon the closing with the underwriters of
the sale of securities pursuant to such offering, in which event the
persons entitled to receive the Common Stock upon conversion of the
Preferred Stock shall not be deemed to have converted such Preferred Stock
until immediately prior to the closing of such sale of securities.
(d) Conversion Price Adjustments of Preferred Stock for Certain
-----------------------------------------------------------
Dilutive Issuances, Splits and Combinations. The Conversion Price of the
-------------------------------------------
Series A Preferred Stock, the Conversion Price of the Series B Preferred
Stock, the Conversion Price of the Series C Preferred Stock, the Conversion
Price of the Series D Preferred Stock and the Conversion Price of the
Series E Preferred Stock shall be subject to adjustment from time to time
as follows:
(i) (A) If this corporation shall issue, after July 21,
1999 (the "Purchase Date"), any Additional Stock (as defined below) without
consideration or for a consideration per share less than the applicable
Conversion Price for the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock or Series E
Preferred Stock in effect immediately prior to the issuance of such
Additional Stock, the applicable Conversion Price for the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series
D Preferred Stock or Series E Preferred Stock, as the case may be, in
effect immediately prior to each such issuance shall forthwith (except as
otherwise provided in this clause (i)) be adjusted to a price determined by
multiplying such Conversion Price by a fraction, the numerator of which
shall be the number of shares of such series of Preferred Stock outstanding
immediately prior to such issuance plus the number of shares of capital
stock that the aggregate consideration received by this corporation for
such issuance would purchase at such Conversion Price and the denominator
of which shall be the number of shares of such series of Preferred Stock
outstanding immediately prior to such issuance plus the number of shares of
such Additional Stock.
(B) No adjustment of the applicable Conversion Price
for the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock or Series E Preferred Stock shall
be made in an amount less than one cent per share, provided that any
adjustments that are not
-7-
<PAGE>
required to be made by reason of this sentence shall be carried forward and
shall be either taken into account in any subsequent adjustment made prior
to three (3) years from the date of the event giving rise to the adjustment
being carried forward, or shall be made at the end of three (3) years from
the date of the event giving rise to the adjustment being carried forward.
Except to the limited extent provided for in subsections (E)(3) and (E)(4),
no adjustment of such Conversion Price pursuant to this subsection 3(d)(i)
shall have the effect of increasing the Conversion Price above the
Conversion Price in effect immediately prior to such adjustment.
(C) In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of cash paid
therefor before deducting any reasonable discounts, commissions or other
expenses allowed, paid or incurred by this corporation for any underwriting
or otherwise in connection with the issuance and sale thereof.
(D) In the case of the issuance of the Common Stock
for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair value thereof as determined
in good faith by the Board of Directors for this purpose, irrespective of
any accounting treatment.
(E) In the case of the issuance (whether before, on or
after the applicable Purchase Date) of options to purchase or rights to
subscribe for Common Stock, securities by their terms convertible into or
exchangeable for Common Stock or options to purchase or rights to subscribe
for such convertible or exchangeable securities, the following provisions
shall apply for all purposes of this subsection 3(d)(i) and subsection
3(d)(ii):
(1) The aggregate maximum number of shares of
Common Stock deliverable upon exercise (assuming the satisfaction of
any conditions to exercisability, including without limitation, the
passage of time, but without taking into account potential
antidilution adjustments) of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at the
time such options or rights were issued and for a consideration equal
to the consideration (determined in the manner provided in subsections
3(d)(i)(C) and (d)(i)(D)), if any, received by this corporation upon
the issuance of such options or rights plus the minimum exercise price
provided in such options or rights (without taking into account
potential antidilution adjustments) for the Common Stock covered
thereby.
(2) The aggregate maximum number of shares of
Common Stock deliverable upon conversion of, or in exchange for, any
such convertible or exchangeable securities or upon the exercise of
options to purchase or rights to subscribe for such convertible or
exchangeable securities and subsequent conversion or exchange thereof
shall be deemed
-8-
<PAGE>
to have been issued at the time such securities were issued or such
options or rights were issued and for a consideration equal to the
consideration, if any, received by this corporation for any such
securities and related options or rights (excluding any cash received
on account of accrued interest or accrued dividends), plus the minimum
additional consideration, if any, to be received by this corporation
(without taking into account potential antidilution adjustments) upon
the conversion or exchange of such securities or the exercise of any
related options or rights (the consideration in each case to be
determined in the manner provided in subsections 3(d)(i)(C) and
(d)(i)(D)).
(3) In the event of any change in the number of
shares of Common Stock deliverable or in the consideration payable to
this corporation upon exercise of such options or rights or upon
conversion of or in exchange for such convertible or exchangeable
securities, including, but not limited to, a change resulting from the
antidilution provisions thereof, the applicable Conversion Price of
each series of Preferred Stock, to the extent in any way affected by
or computed using such options, rights or securities, shall be
recomputed to reflect such change, but no further adjustment shall be
made for the actual issuance of Common Stock or any payment of such
consideration upon the exercise of any such options or rights or the
conversion or exchange of such securities.
(4) Upon the expiration of any such options or
rights, the termination of any such rights to convert or exchange or
the expiration of any options or rights related to such convertible or
exchangeable securities, the applicable Conversion Price of each
series of Preferred Stock, to the extent in any way affected by or
computed using such options, rights or securities or options or rights
related to such securities, shall be recomputed to reflect the
issuance of only the number of shares of Common Stock (and convertible
or exchangeable securities that remain in effect) actually issued upon
the exercise of such options or rights, upon the conversion or
exchange of such securities or upon the exercise of the options or
rights related to such securities.
(5) The number of shares of Common Stock deemed
issued and the consideration deemed paid therefor pursuant to
subsections 3(d)(i)(E)(1) and (2) shall be appropriately adjusted to
reflect any change, termination or expiration of the type described in
either subsection 3(d)(i)(E)(3) or (4).
(ii) "Additional Stock" shall mean any shares of Common
Stock issued (or deemed to have been issued pursuant to subsection
3(d)(i)(E)) by this corporation after the Purchase Date, other than:
-9-
<PAGE>
(A) Common Stock issued (or Common Stock issuable
pursuant to Common Stock Equivalents, as defined in subsection 3(d)(iii)
hereof, issued) pursuant to a transaction described in subsection 3(d)(iii)
hereof; or
(B) Up to 12,364,200 shares (subject to adjustment for
any stock splits, stock dividends, recapitalizations and the like after the
date of the filing of this Amended and Restated Certificate of
Incorporation with the Secretary of State of the State of Delaware) of
Common Stock (or options to purchase or rights to subscribe for Common
Stock, securities by their terms convertible into or exchangeable for
Common Stock, or options to purchase or rights to subscribe for such
convertible or exchangeable securities) issuable, or issued to employees,
consultants or directors (if in transactions with primarily non-financing
purposes) of this corporation directly or pursuant to a stock option plan,
restricted stock plan or other stock-based employee compensation plan
approved by the Board of Directors of this corporation, provided, however,
that such issuance has been approved by the Compensation Committee of the
corporation's board of directors;
(C) Warrants to purchase the Common Stock of this
corporation issued to banks, equipment lessors or similar financial
institutions, in connection with bank financing, equipment leases and other
comparable transactions approved by the Board of Directors; or
(D) The issuance of up to 6,500,000 shares of Series B
Preferred Stock in exchange for shares of Series A Preferred Stock and
warrants to purchase the capital stock of this corporation.
(E) The issuance of up to 3,500,000 shares of Series C
Preferred Stock, 3,000,000 shares of Series D Preferred Stock and 2,100,000
shares of Series E Preferred Stock.
(F) Common Stock issued or issuable upon conversion of
shares of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, or Series E Preferred Stock.
(G) Common Stock issued or issuable as a result of
adjustment of the Conversion Price for the Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or
Series E Preferred Stock made pursuant to this Section 3.
(iii) In the event this corporation shall at any time or
from time to time after the Purchase Date fix a record date for the
effectuation of a split or subdivision of the outstanding shares of Common
Stock or the determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in additional shares of Common Stock
or other securities or rights convertible into, or entitling the holder
thereof to receive directly or indirectly,
-10-
<PAGE>
additional shares of Common Stock (hereinafter referred to as "Common Stock
Equivalents") without payment of any consideration by such holder for the
additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion
or exercise thereof), then, as of such record date (or the date of such
dividend distribution, split or subdivision if no record date is fixed),
the applicable Conversion Price of each series of Preferred Stock shall be
appropriately decreased so that the number of shares of Common Stock
issuable on conversion of each share of such series shall be increased in
proportion to such increase of the aggregate of shares of Common Stock
outstanding and those issuable with respect to such Common Stock
Equivalents (with the number of shares issuable with respect to Common
Stock Equivalents determined in the manner provided for deemed issuances in
subsection 3(d)(i)(E)).
(iv) If the number of shares of Common Stock outstanding at
any time after the Purchase Date is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date of such
combination, the applicable Conversion Price of each series of Preferred
Stock shall be appropriately increased so that the number of shares of
Common Stock issuable on conversion of each share of such series shall be
decreased in proportion to such decrease in outstanding shares.
(e) Other Distributions. In the event this corporation shall
-------------------
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by this corporation or other persons, assets (excluding
cash dividends) or options or rights not referred to in subsection
3(d)(iii), then, in each such case for the purpose of this subsection 3(e),
the holders of the Preferred Stock shall be entitled to a proportionate
share of any such distribution as though they were the holders of the
number of shares of Common Stock of this corporation into which their
shares of Preferred Stock are convertible as of the record date fixed for
the determination of the holders of Common Stock of this corporation
entitled to receive such distribution or the date of such distribution if
no record date is fixed.
(f) Recapitalizations. If at any time or from time to time there
-----------------
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere
in this Section 3 or in Section 2), provision shall be made so that the
holders of the Preferred Stock shall thereafter be entitled to receive upon
conversion of the Preferred Stock the number of shares of stock or other
securities or property of the corporation or otherwise, to which a holder
of Common Stock deliverable upon conversion of such Preferred Stock would
have been entitled on such recapitalization. In any such case, appropriate
adjustment shall be made in the application of the provisions of this
Section 3 with respect to the rights of the holders of the Preferred Stock
after the recapitalization to the end that the provisions of this Section 3
(including adjustment of the Conversion Price then in effect and the number
of shares purchasable upon conversion of the Preferred
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<PAGE>
Stock) shall be applicable after that event as nearly equivalent as may be
practicable.
(g) Adjustment for Merger or Reorganization. In case of any
---------------------------------------
consolidation or merger of the corporation with or into another corporation
or the sale of all or substantially all of the assets of the corporation to
another corporation (other than a consolidation, merger, or sale that is
treated as a liquidation under Section 2 (c) above), each share of
Preferred Stock shall thereafter be convertible into the number of shares
of stock or other securities or property to which a holder of the number of
shares of Common Stock of the corporation deliverable upon conversion of
such Preferred Stock would have been entitled upon such consolidation,
merger or conveyance.
(h) No Impairment. This corporation will not, by amendment of
-------------
its certificate of incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by this corporation, but will at all times in good
faith assist in the carrying out of all the provisions of this Section 3
and in the taking of all such action as may be necessary or appropriate in
order to protect the Conversion Rights of the holders of the Preferred
Stock against impairment.
(i) No Fractional Shares and Certificate as to Adjustments.
------------------------------------------------------
(i) No fractional shares shall be issued upon the
conversion of any share or shares of the Preferred Stock, and the number of
shares of Common Stock to be issued shall be rounded up to the nearest
whole share, determined on the basis of the total number of shares of
Preferred Stock the holder is at the time converting into Common Stock and
the number of shares of Common Stock issuable upon such aggregate
conversion.
(ii) Upon the occurrence of each adjustment or readjustment
of the applicable Conversion Price for each series of Preferred Stock
pursuant to this Section 3, this corporation, at its expense, shall
promptly compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of Preferred Stock a
certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. This
corporation shall, upon the written request at any time of any holder of
Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (A) such adjustment and readjustment, (B) the
applicable Conversion Price for such series of Preferred Stock at the time
in effect, and (C) the number of shares of Common Stock and the amount, if
any, of other property that at the time would be received upon the
conversion of a share of such series of Preferred Stock.
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<PAGE>
(j) Notices of Record Date. In the event of any taking by this
----------------------
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
corporation shall mail to each holder of Preferred Stock, at least ten (10) days
prior to the date specified therein, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right, and the amount and character of such dividend, distribution or right.
(k) Reservation of Stock Issuable Upon Conversion. This corporation
---------------------------------------------
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Preferred Stock, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Preferred Stock, in
addition to such other remedies as shall be available to the holder of such
Preferred Stock, this corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes, including, without limitation, engaging in best efforts to obtain the
requisite shareholder approval of any necessary amendment to this its
certificate of incorporation.
(l) Notices. Any notice required by the provisions of this Section 3
-------
to be given to the holders of shares of Preferred Stock shall be deemed given if
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of this corporation.
4. Voting Rights.
-------------
(a) General Voting Rights. The holder of each share of Series A
---------------------
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock or Series E Preferred Stock shall have the right to one vote for
each share of Common Stock into which such Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series E
Preferred Stock could then be converted, and with respect to such vote, such
holder of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock or Series E Preferred Stock shall have full
voting rights and powers equal to the voting rights and powers of the holders of
Common Stock, and shall be entitled, notwithstanding any provision hereof, to
notice of any stockholders' meeting in accordance with the by-laws of this
corporation, and shall be entitled to vote, together with holders of Common
Stock, with respect to any question upon which holders of Common Stock have the
right to vote, other
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<PAGE>
than the election of directors, which shall be conducted in accordance with
Section 4 of Article IV(B) hereof.
(b) Voting for the Election of Directors. As long as at least an
------------------------------------
aggregate of 3,362,500 shares of Series A Preferred Stock and Series B Preferred
Stock remain outstanding, the holders of shares of Series A Preferred Stock and
Series B Preferred Stock (voting as a class, as provided in Section 4(a)) shall
be entitled to elect two (2) directors of this corporation. As long as at least
a majority of the shares of Series C Preferred Stock originally issued remain
outstanding, the holders of shares of Series C Preferred Stock shall be entitled
to elect one (1) director of this corporation. The holders of shares of the
corporation's Common Stock shall be entitled to elect two (2) directors of this
corporation. The holders of shares of the corporation's Common Stock, Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock (voting as a class, as provided in
Section 4(a)) shall be entitled to elect two (2) directors of this corporation.
In the case of any vacancy (other than a vacancy caused by removal) in
the office of a director occurring among the directors elected by the holders of
a class or series of stock pursuant to this Section 4(b), the remaining
directors so elected by that class or series may by affirmative vote of a
majority thereof (or the remaining director so elected if there be but one, or
if there are no such directors remaining, by the affirmative vote of the holders
of a majority of the shares of that class or series), elect a successor or
successors to hold office for the unexpired term of the director or directors
whose place or places shall be vacant. Any director who shall have been elected
by the holders of a class or series of stock or by any directors so elected as
provided in the immediately preceding sentence hereof may be removed during the
aforesaid term of office, either with or without cause, by, and only by, the
affirmative vote of the holders of a majority of the voting power of the shares
of the classes or series of stock entitled to elect such director or directors,
given either at a special meeting of such stockholders duly called for that
purpose or pursuant to a written consent of stockholders, and any vacancy
thereby created may be filled by the holders of the classes or series of stock
represented at the meeting or pursuant to unanimous written consent.
5. Protective Provisions. Subject to the rights of series of
---------------------
Preferred Stock that may from time to time come into existence, so long as any
shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock or Series E Preferred Stock are outstanding,
this corporation shall not, nor shall it allow any of its subsidiaries, without
first obtaining the approval (by vote or written consent, as provided by law) of
the holders of at least a majority of the then outstanding shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock (voting as a class as provided in
Section 4(a)):
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<PAGE>
(a) sell, convey, or otherwise dispose of all or substantially all of
its property or business or merge into or consolidate with any other corporation
(other than a wholly-owned subsidiary corporation) or effect any transaction or
series of related transactions in which more than fifty percent (50%) of the
voting power of this corporation or any subsidiary is disposed of;
(b) alter or change the rights, preferences or privileges of the
shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock or Series E Preferred Stock so as to affect
adversely the shares;
(c) increase or decrease (other than by redemption or conversion) the
total number of authorized shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series E
Preferred Stock;
(d) authorize or issue, or obligate itself to issue, any other equity
security, including any other security convertible into or exercisable for any
equity security, having a preference over, or being on a parity with, the Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock or Series E Preferred Stock with respect to dividends,
liquidation, redemption or voting;
(e) pay or declare any dividend or distribution on any shares of
Common Stock or redeem, purchase or otherwise acquire (or pay into or set aside
for a sinking fund for such purpose) any share or shares of Preferred Stock or
Common Stock; provided, however, that this restriction shall not apply to the
repurchase of shares of Common Stock from employees, officers, directors,
consultants or other persons performing services for this corporation or any
subsidiary pursuant to agreements under which this corporation has the option to
repurchase such shares at cost or at cost upon the occurrence of certain events,
such as the termination of employment;
(f) amend this corporation's certificate of incorporation or by-laws
in a manner which adversely affects the holders of the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or
Series E Preferred Stock or which alters the indemnification provisions set
forth in Article XI hereof or Article 8 of the by-laws;
(g) voluntarily liquidate, dissolve or wind up; or
(h) increase the authorized number of directors of this corporation
to more than seven.
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<PAGE>
The foregoing notwithstanding, the approval of holders of a particular
series of Preferred Stock shall not be required if the action is one referred to
in clause (b), (c), (d) or (f) above and does not affect such series.
6. Status of Converted Stock. In the event any shares of Preferred
-------------------------
Stock shall be converted pursuant to Section 3 hereof, the shares so converted
shall be canceled and shall not be issuable by this corporation.
C. Common Stock. The rights, preferences, privileges and restrictions
------------
granted to and imposed on the Common Stock are as set forth below in this
Article IV(C).
1. Dividend Rights. Subject to the prior rights of holders of all
---------------
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of this corporation
legally available therefor, such dividends as may be declared from time to time
by the Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or winding
------------------
up of this corporation, the assets of this corporation shall be distributed as
provided in Section 2 of Article IV(B) hereof.
3. Redemption. The Common Stock is not redeemable.
----------
4. Voting Rights.
-------------
(a) Except as to the election of directors, which shall be as
provided for in Section 4(b) of Article IV(B), and Section 5 of Article IV(B),
the holder of each share of Common Stock shall have the right to one vote for
each such share, and shall be entitled to notice of any stockholders' meeting in
accordance with the by-laws of this corporation, and shall be entitled to vote
upon all matters voted on by stockholders of this corporation.
(b) Notwithstanding the provisions of Section 242(b)(2) of the
General Corporation Law of the State of Delaware, the holders of Common Stock
shall vote together with the holders of the Preferred Stock as a single class
with respect to any proposed amendment hereto that would increase the number of
authorized shares of Common Stock with each such share being entitled to such
number of votes per share as is provided in this Article IV, and the holders of
the Common Stock shall not be entitled to a separate class vote with respect
thereto.
5. Residual Rights. All rights accruing to the outstanding shares
---------------
of capital stock of this corporation not expressly provided for to the contrary
herein shall be vested in the Common Stock.
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<PAGE>
ARTICLE V
Except as otherwise provided in this certificate of incorporation, in
furtherance and not in limitation of the powers conferred by statute, the Board
of Directors is expressly authorized to make, repeal, alter, amend and rescind
any or all of the by-laws of this corporation.
ARTICLE VI
A. Number of Directors. Subject to the provisions of Article IV
--------------------
hereof, the number of directors of this corporation shall be fixed from time to
time by, or in the manner provided in, a by-law or amendment thereof duly
adopted by the Board of Directors or by the stockholders.
B. Classified Board of Directors. This Part B of Article VI shall be
-----------------------------
effective commencing with the election of directors to be held at the first
annual meeting of stockholders of this corporation after the automatic
conversion of all outstanding shares of the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock pursuant to Section 3(b) of Article IV(B) of this corporation's
certificate of incorporation (the time at which such automatic conversion occurs
shall be referred to as the "Automatic Conversion Time").
1. Classes and Size. The Board of Directors shall be divided
----------------
into three classes: Class I, Class II and Class III. No one class shall have
more than one director more than any other class.
2. Terms of Office. Each director shall serve for a term ending
---------------
on the date of the third annual meeting following the annual meeting of
stockholders at which such director was elected; provided, however, that each
-------- -------
initial director in Class I shall serve for a term ending on the date of the
second annual meeting of stockholders held after the Automatic Conversion Time;
each initial director in Class II shall serve for a term ending on the date of
the third annual meeting of stockholders held after the Automatic Conversion
Time; and each initial director in Class III shall serve for a term ending on
the date of the fourth annual meeting of stockholders held after the Automatic
Conversion Time.
3. Allocation of Directors Among Classes in the Event of
-----------------------------------------------------
Increases or Decreases in the Number of Directors. In the event of any increase
- -------------------------------------------------
or decrease in the authorized number of directors, (i) each director then
serving as such shall nevertheless continue as a director of the class of which
he or she is a member until the expiration of such director's current term or
his or her prior death, removal or resignation and (ii) the newly created or
eliminated directorships resulting from such increase or decrease shall be
apportioned by the Board of Directors among the three classes of directors so as
to ensure that no one class has more than one director more than any other
class. To the extent possible, consistent with the foregoing rule, any
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<PAGE>
newly created directorships shall be added to those classes whose terms of
office are to expire at the earliest dates following such allocation, unless
otherwise provided for from time to time by resolution adopted by a majority of
the directors then in office, even if less than a quorum. No decrease in the
number of directors constituting the whole Board of Directors shall shorten the
term of an incumbent Director.
C. Election of Directors. Elections of directors need not be by
---------------------
written ballot except as and to the extent provided in the by-laws of the
corporation.
D. Removal of Directors.
--------------------
1. During the period between the Automatic Conversion Time and
the date of the first annual meeting of stockholders of this corporation
following the Automatic Conversion Time, any one or more or all of the directors
may be removed (i) without cause only by the affirmative vote of the holders of
shares of voting stock of this corporation representing at least seventy-five
percent (75%) of the voting power of all of the then outstanding shares of
capital stock of this corporation entitled to vote generally in the election of
directors, voting together as a single class, and (ii) with cause only by the
affirmative vote of the holders of shares of voting stock of this corporation
representing at least a majority of the voting power of all of the then
outstanding shares of capital stock of this corporation entitled to vote
generally in the election of directors, voting together as a single class.
2. From and after the date of the first annual meeting of
stockholders of this corporation following the Automatic Conversion Time, any
one or more or all of the directors may be removed, only for cause, by the
affirmative vote of the holders of shares of voting stock of this corporation
representing at least seventy-five percent (75%) of the voting power of all of
the then outstanding shares of capital stock of this corporation entitled to
vote generally in the election of directors, voting together as a single class.
E. Tenure. Notwithstanding any provisions to the contrary contained
------
in this corporation's certificate of incorporation, each director shall hold
office until his or her successor is elected and qualified, or until his or her
earlier death, resignation or removal.
F. Vacancies. Any vacancy in the Board of Directors, however
---------
occurring (including a vacancy resulting from an enlargement of the Board of
Directors), may be filled by vote of a majority of the directors then in office,
even if less than a quorum, or by a sole remaining director. A director elected
to fill a vacancy shall be elected for the unexpired term of his or her
predecessor in office, if applicable, and a director chosen to fill a position
resulting from an increase in the number of directors shall hold office until
the next election of the class for which such director shall have been chosen.
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<PAGE>
G. Quorum. A majority of the total number of the whole Board of
------
Directors shall constitute a quorum at all meetings of the Board of Directors.
If one or more of the directors shall be disqualified to vote at any meeting,
then the required quorum shall be reduced by one for each such director so
disqualified; provided, however, that in no case shall less than one-third (1/3)
-------- -------
of the total number of the whole Board of Directors fixed in accordance with
this Article VI constitute a quorum. In the absence of a quorum at any such
meeting, a majority of the directors present may adjourn the meeting from time
to time without further notice other than announcement at the meeting, until a
quorum shall be present.
H. Action at Meeting. At any meeting of the Board of Directors at
-----------------
which a quorum is present, the vote of a majority of those present shall be
sufficient to take any action, unless a different vote is specified by law or
the corporation's certificate of incorporation or by-laws.
I. Stockholder Nominations and Introduction of Business, Etc.
---------------------------------------------------------
Advance notice of stockholder nominations for election of directors and other
business to be brought by stockholders before a meeting of stockholders shall be
given in the manner provided in the by-laws of the corporation.
J. Rights of Preferred Stock. The provisions of this Article VI are
-------------------------
subject to the rights of the holders of any class or series of Preferred Stock
from time to time outstanding.
ARTICLE VII
At any time prior to the Automatic Conversion Time, any action which
is required to be taken at any annual or special meeting of stockholders of this
corporation, or any action which may be taken at any annual or special meeting
of stockholders, may be taken without a meeting in accordance with section 228
of the General Corporation Law of the State of Delaware. From and after the
Automatic Conversion Time, stockholders of this corporation may not take any
action by written consent in lieu of a meeting.
ARTICLE VIII
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of this corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the by-laws of this corporation.
ARTICLE IX
A director of this corporation shall, to the fullest extent permitted
by the General Corporation Law as it now exists or as it may hereafter be
amended, not be
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<PAGE>
personally liable to this corporation 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 this 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 General Corporation Law, or (iv) for any transaction from which the director
derived any improper personal benefit. If the General Corporation Law is amended
to authorize corporation action further eliminating or limiting the personal
liability of directors, then the liability of a director of this corporation
shall be, and hereby is, eliminated or limited to the fullest extent permitted
by the General Corporation Law, as so amended.
Any amendment, repeal or modification of this Article IX, or the
adoption of any provision of this certificate of incorporation inconsistent with
this Article IX, by the stockholders of this corporation shall not apply to or
adversely affect any right or protection of a director of this corporation
existing at the time of such amendment, repeal, modification or adoption.
ARTICLE X
The Board of Directors of this corporation, when evaluating any offer
of another party (a) to make a tender or exchange offer for any equity security
of this corporation or (b) to effect a business combination, shall, in
connection with the exercise of its judgment in determining what is in the best
interests of this corporation as whole, be authorized to give due consideration
to any such factors as the Board of Directors determines to be relevant,
including, without limitation:
(A) the interests of this corporation's stockholders, including
the possibility that these interests might be best served by the continued
independence of this corporation;
(B) whether the proposed transaction might violate federal or
state laws;
(C) not only the consideration being offered in the proposed
transaction, in relation to the then current market price for the outstanding
capital stock of this corporation, but also to the market price for the capital
stock of this corporation over a period of years, the estimated price that might
be achieved in a negotiated sale of this corporation as a whole or in part or
through orderly liquidation, the premiums over market price for the securities
of other corporations in similar transactions, current political, economic and
other factors bearing on securities prices and this corporation's financial
condition and future prospects; and
(D) the social, legal and economic effects upon employees,
suppliers, customers, creditors and others having similar relationships with
this corporation, upon the communities in which this corporation conducts its
business and upon the economy of the state, region and nation.
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In connection with any such evaluation, the Board of Directors is authorized to
conduct such investigations and engage in such legal proceedings as the Board of
Directors may determine.
ARTICLE XI
This corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation. From and after the Automatic
Conversion Time, in addition to the vote of any class or series of stock of this
corporation required by law, this certificate of incorporation or a certificate
of designation with respect to a class or series of Preferred Stock, the
affirmative vote of the holders of shares of voting stock of this corporation
representing at least seventy-five percent (75%) of the voting power of all of
the then outstanding shares of the capital stock of this corporation entitled to
vote generally in the election of directors, voting together as a single class,
shall be required to (i) reduce or eliminate the number of authorized shares of
Common Stock or the number of authorized shares of Preferred Stock set forth in
Article IV or (ii) amend or repeal, or adopt any provision inconsistent with,
Articles III, V, VI, VII, IX, X, XII and XIII or this sentence.
ARTICLE XII
This corporation is (i) required to provide indemnification of, and
advancement of expenses to, its directors and officers to the fullest extent
permitted by the General Corporation Law and other applicable laws, and (ii)
permitted to provide indemnification of, and advancement of expenses to, its
directors, officers, employees and agents of this corporation (and any other
persons to which General Corporation Law permits this corporation to provide
indemnification) through by-law provisions, agreements with such persons, vote
of stockholders or disinterested directors or otherwise, in excess of the
indemnification and advancement otherwise permitted by Section 145 of the
General Corporation Law, subject, in each case, only to limits created by
applicable law (statutory or non-statutory).
Any amendment, repeal or modification of the foregoing provisions of
this Article XII shall not adversely affect any right or protection of a
director, officer, employee, agent, or other person existing at the time of, or
increase the liability of any director, officer, employee or agent of this
corporation or other person with respect to any acts or omissions of such
director, officer, employee, agent or other person occurring prior to, such
amendment, repeal or modification.
ARTICLE XIII
This corporation is to have perpetual existence.
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ARTICLE XIV
Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
(S)291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation under
(S)279 of Title 8 of the Delaware Code order a meeting of the creditors or class
of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this corporation, as the case
may be, and also on this corporation.
* * *
THIRD: The foregoing amendment and restatement was approved by the
holders of the requisite number of shares of said corporation in accordance with
Section 228 of the General Corporation Law.
FOURTH: That said amendment and restatement was duly adopted in
accordance with the provisions of Section 242 and 245 of the General Corporation
Law.
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<PAGE>
IN WITNESS WHEREOF, this Restated Certificate of Incorporation has been
executed by the President and the Secretary of this corporation on this ____ day
of September, 1999.
_______________________________________
Stephen Zamansky, Secretary
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<PAGE>
EXHIBIT 3.02
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
Of
DSL.net, Inc.
(Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware)
DSL.net, Inc., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware (the "General Corporation
Law"),
DOES HEREBY CERTIFY:
FIRST: That the name of this corporation is DSL.net, Inc. and that this
corporation was originally incorporated pursuant to the General Corporation Law
on March 3, 1998 under the name DSL.net, Inc.
SECOND: That the Board of Directors duly adopted resolutions proposing to
amend and restate the certificate of incorporation of this corporation,
declaring said amendment and restatement to be advisable and in the best
interests of this corporation and its stockholders, and authorizing the
appropriate officers of this corporation to solicit the consent of the
stockholders therefor, which proposed amendment and restatement is as follows:
ARTICLE I
The name of this corporation is DSL.net, Inc.
ARTICLE II
The address of the registered office of this corporation in the State of
Delaware is 1013 Centre Road, in the City of Wilmington, County of New Castle.
The name of its registered agent at such address is Corporation Service Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
<PAGE>
ARTICLE IV
A. Classes of Stock. This corporation is authorized to issue two
----------------
classes of stock to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares that this corporation is authorized to issue
is 220,000,000 shares, of which 200,000,000 shares shall be Common Stock with a
par value of $.0005 per share and 20,000,000 shares shall be Preferred Stock
with a par value of $.001 per share.
B. Preferred Stock.
---------------
Shares of the Preferred Stock may be issued from time to time in one or
more classes or series. The Board of Directors of the corporation shall have
authority to the fullest extent permitted under the General Corporation Law to
adopt resolutions from time to time fixing, for each class or series of
Preferred Stock, the voting powers, whether full, limited or no voting powers,
and such designations, preferences and relative, participating, optional or
other special rights, and qualifications, or restrictions thereof, and fixing,
altering or reducing the number of shares comprising any such class or series,
subject to any requirements of the General Corporation Law and the corporation's
certificate of incorporation.
The authority of the Board of Directors with respect to each such class or
series shall include, without limitation of the foregoing, the right to
determine and fix the following preferences and powers, which may vary as
between different classes or series of Preferred Stock:
1. the distinctive designation of such class or series and the number of
shares to constitute such class or series of Preferred Stock;
2. the rate at which dividends, if any, on the shares of such class or
series of Preferred Stock shall be declared and paid, or set aside for payment,
whether dividends at the rate so determined shall be cumulative or accruing, and
whether the shares of such class or series shall be entitled to any
participating or other dividends in addition to dividends at the rate so
determined, and if so, on what terms;
3. the right or obligation, if any, of this corporation to redeem shares
of the particular class or series of Preferred Stock and, if redeemable, the
price, terms and manner of such redemption;
4. the special and relative rights and preferences, if any, and the
amount or amounts per share, which the shares of such class or series of
Preferred Stock shall be entitled to receive upon any voluntary or involuntary
liquidation, dissolution or winding up of this corporation;
5. the terms and conditions, if any, upon which shares of such class or
series of Preferred Stock shall be convertible into, or exchangeable for, shares
of capital stock of
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<PAGE>
this corporation of any other class or series, including the price or prices or
the rate or rates of conversion or exchange and the terms of adjustment, if any;
6. the obligation, if any, of this corporation to retire, redeem or
purchase shares of such class or series of Preferred Stock pursuant to a sinking
fund or fund of a similar nature or otherwise, and the terms and conditions of
such obligation;
7. the voting rights, if any, including special voting rights with
respect to the election of directors and matters adversely affecting any class
or series of Preferred Stock;
8. the limitations, if any, on the issuance of additional shares of such
class or series or any shares of any other class or series of Preferred Stock;
and
9. such other preferences, powers, qualifications, special or relative
rights and privileges thereof as the Board of Directors of this corporation may
deem advisable and are not inconsistent with law, the provisions of this
corporation's certificate of incorporation or the provisions of any certificate
of designation of any class or series of Preferred Stock.
C. Common Stock. The rights, preferences, privileges and
------------
restrictions granted to and imposed on the Common Stock are as set forth below
in this Article IV(C).
1. Dividend Rights. Subject to the prior rights of holders of
---------------
all classes of stock at the time outstanding having prior rights as to
dividends, the holders of the Common Stock shall be entitled to receive, when
and as declared by the Board of Directors, out of any assets of this corporation
legally available therefor, such dividends as may be declared from time to time
by the Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or
------------------
winding up of this corporation and after distribution in full of the
preferential amounts, if any, to be distributed to the holders of shares of the
Preferred Stock, the holders of shares of Common Stock shall be entitled to
receive all of the remaining assets of the corporation of whatever kind
available for distribution to stockholders ratably in proportion to the number
of shares of Common Stock held by them respectively, unless otherwise provided
by law or the corporation's certificate of incorporation or in any certificate
of designation filed in accordance with the General Corporation Law of the State
of Delaware with respect to the designation of any class or series of Preferred
Stock.
3. Redemption. The Common Stock is not redeemable.
----------
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<PAGE>
4. Voting Rights.
-------------
(a) Except as may be provided in this corporation's certificate
of incorporation or in any certificate of designation of any class or series of
Preferred Stock, the holder of each share of Common Stock shall have the right
to one vote for each such share, and shall be entitled to notice of any
stockholders' meeting in accordance with the by-laws of this corporation, and
shall be entitled to vote upon all matters voted on by stockholders of this
corporation.
(b) Notwithstanding the provisions of Section 242(b)(2) of the
General Corporation Law, the holders of Common Stock shall vote together with
the holders of the Preferred Stock, if any, as a single class with respect to
any proposed amendment hereto that would increase the number of authorized
shares of Common Stock with each such share being entitled to such number of
votes per share as is provided in this Article IV, and the holders of the Common
Stock shall not be entitled to a separate class vote with respect thereto.
5. Residual Rights. All rights accruing to the outstanding
---------------
shares of capital stock of this corporation not expressly provided for to the
contrary herein or in any certificate of designation of any class or series of
Preferred Stock shall be vested in the Common Stock.
ARTICLE V
Except as otherwise provided in this certificate of incorporation, in
furtherance and not in limitation of the powers conferred by statute, the Board
of Directors is expressly authorized to make, repeal, alter, amend and rescind
any or all of the by-laws of this corporation.
ARTICLE VI
A. Number of Directors. The number of directors of this corporation
-------------------
shall be fixed from time to time by a resolution of the Board of Directors.
B. Classes of Directors. This Part B of Article VI shall be effective
--------------------
commencing with the election of directors to be held at the first annual meeting
of stockholders of this corporation after the filing of this Second Amended and
Restated Certificate of Incorporation (the date of such first annual meeting
shall be referred to as the "Commencement Date").
1. Commencement and Size of Classes. The Board of Directors shall be
--------------------------------
divided into three classes: Class I, Class II and Class III. No one class
shall have more than one director more than any other class.
2. Terms of Office. Each director shall serve for a term ending on
---------------
the date of the third annual meeting following the annual meeting of
stockholders at
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<PAGE>
which such director was elected; provided, however, that each initial director
in Class I shall serve for a term ending on the date of the first annual meeting
of stockholders held after the Commencement Date; each initial director in Class
II shall serve for a term ending on the date of the second annual meeting of
stockholders held after the Commencement Date; and each initial director in
Class III shall serve for a term ending on the date of the third annual meeting
of stockholders held after the Commencement Date.
3. Allocation of Directors Among Classes in the Event of Increases
---------------------------------------------------------------
or Decreases in the Number of Directors. In the event of any increase or
- ---------------------------------------
decrease in the authorized number of directors, (i) each director then serving
as such shall nevertheless continue as a director of the class of which he or
she is a member until the expiration of such director's current term or his or
her prior death, removal or resignation and (ii) the newly created or eliminated
directorships resulting from such increase or decrease shall be apportioned by
the Board of Directors among the three classes of directors so as to ensure that
no one class has more than one director more than any other class. To the extent
possible, consistent with the foregoing rule, any newly created directorships
shall be added to those classes whose terms of office are to expire at the
earliest dates following such allocation, unless otherwise provided for from
time to time by resolution adopted by a majority of the directors then in
office, even if less than a quorum. No decrease in the number of directors
constituting the whole Board of Directors shall shorten the term of an incumbent
Director.
C. Election of Directors. Elections of directors need not be by
---------------------
written ballot except as and to the extent provided in the by-laws of the
corporation.
D. Removal of Directors.
--------------------
1. During the period between the date of the filing of this
Second Amended and Restated Certificate of Incorporation and the Commencement
Date, any one or more or all of the directors may be removed (i) without cause
only by the affirmative vote of the holders of shares of voting stock of this
corporation representing at least seventy-five percent (75%) of the voting power
of all of the then outstanding shares of capital stock of this corporation
entitled to vote generally in the election of directors, voting together as a
single class; and (ii) with cause only by the affirmative vote of the holders of
shares of voting stock of this corporation representing at least a majority of
the voting power of all of the then outstanding shares of capital stock of this
corporation entitled to vote generally in the election of directors, voting
together as a single class.
2. From and after the Commencement Date, any one or more or all
of the directors may be removed, only for cause, by the affirmative vote of the
holders of shares of voting stock of this corporation representing at least
seventy-five percent (75%) of the voting power of all of the then outstanding
shares of capital stock of this corporation entitled to vote generally in the
election of directors, voting together as a single class.
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<PAGE>
E. Tenure. Notwithstanding any provisions to the contrary contained
------
in this corporation's certificate of incorporation, each director shall hold
office until his or her successor is elected and qualified, or until his or her
earlier death, resignation or removal.
F. Vacancies. Any vacancy in the Board of Directors, however
---------
occurring (including a vacancy resulting from an enlargement of the Board of
Directors), may be filled by vote of a majority of the directors then in office,
even if less than a quorum, or by a sole remaining director. A director elected
to fill a vacancy shall be elected for the unexpired term of his or her
predecessor in office, if applicable, and a director chosen to fill a position
resulting from an increase in the number of directors shall hold office until
the next election of the class for which such director shall have been chosen.
G. Quorum. A majority of the total number of the whole Board of
------
Directors shall constitute a quorum at all meetings of the Board of Directors.
If one or more of the directors shall be disqualified to vote at any meeting,
then the required quorum shall be reduced by one for each such director so
disqualified; provided, however, that in no case shall less than one-third (1/3)
-------- -------
of the total number of the whole Board of Directors fixed in accordance with
this Article VI constitute a quorum. In the absence of a quorum at any such
meeting, a majority of the directors present may adjourn the meeting from time
to time without further notice other than announcement at the meeting, until a
quorum shall be present.
H. Action at Meeting. At any meeting of the Board of Directors at
-----------------
which a quorum is present, the vote of a majority of those present shall be
sufficient to take any action, unless a different vote is specified by law or
the corporation's certificate of incorporation or by-laws.
I. Stockholder Nominations and Introduction of Business, Etc.
---------------------------------------------------------
Advance notice of stockholder nominations for election of directors and other
business to be brought by stockholders before a meeting of stockholders shall be
given in the manner provided in the by-laws of the corporation.
J. Rights of Preferred Stock. The provisions of this Article VI are
-------------------------
subject to the rights of the holders of any class or series of Preferred Stock
from time to time outstanding.
ARTICLE VII
Stockholders of the corporation may not take any action by written
consent in lieu of a meeting.
ARTICLE VIII
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of this corporation may be kept
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<PAGE>
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the by-laws of this corporation.
ARTICLE IX
A director of this corporation shall, to the fullest extent permitted by
the General Corporation Law as it now exists or as it may hereafter be amended,
not be personally liable to this corporation 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 this 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 General Corporation Law, or (iv) for any transaction from which the director
derived any improper personal benefit. If the General Corporation Law is
amended to authorize corporation action further eliminating or limiting the
personal liability of directors, then the liability of a director of this
corporation shall be, and hereby is, eliminated or limited to the fullest extent
permitted by the General Corporation Law, as so amended.
Any amendment, repeal or modification of this Article IX, or the adoption
of any provision of this certificate of incorporation inconsistent with this
Article IX, by the stockholders of this corporation shall not apply to or
adversely affect any right or protection of a director of this corporation
existing at the time of such amendment, repeal, modification or adoption.
ARTICLE X
The Board of Directors of this corporation, when evaluating any offer of
another party (a) to make a tender or exchange offer for any equity security of
this corporation or (b) to effect a business combination, shall, in connection
with the exercise of its judgment in determining what is in the best interests
of this corporation as whole, be authorized to give due consideration to any
such factors as the Board of Directors determines to be relevant, including,
without limitation:
(A) the interests of this corporation's stockholders, including the
possibility that these interests might be best served by the continued
independence of this corporation;
(B) whether the proposed transaction might violate federal or
state laws;
(C) not only the consideration being offered in the proposed
transaction, in relation to the then current market price for the outstanding
capital stock of this corporation, but also to the market price for the capital
stock of this corporation over a period of years, the estimated price that might
be achieved in a negotiated sale of this corporation as a whole or in part or
through orderly liquidation, the premiums over
-7-
<PAGE>
market price for the securities of other corporations in similar transactions,
current political, economic and other factors bearing on securities prices and
this corporation's financial condition and future prospects; and
(D) the social, legal and economic effects upon employees, suppliers,
customers, creditors and others having similar relationships with this
corporation, upon the communities in which this corporation conducts its
business and upon the economy of the state, region and nation.
In connection with any such evaluation, the Board of Directors is authorized to
conduct such investigations and engage in such legal proceedings as the Board of
Directors may determine.
ARTICLE XI
This corporation reserves the right to amend, alter, change or repeal any
provision contained in this certificate of incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation. In addition to the vote of any
class or series of stock of this corporation required by law, this certificate
of incorporation or a certificate of designation with respect to a class or
series of Preferred Stock, the affirmative vote of the holders of shares of
voting stock of this corporation representing at least seventy-five percent
(75%) of the voting power of all of the then outstanding shares of the capital
stock of this corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be required to (i) reduce or
eliminate the number of authorized shares of Common Stock or the number of
authorized shares of Preferred Stock set forth in Article IV or (ii) amend or
repeal, or adopt any provision inconsistent with, Articles III, V, VI, VII, IX,
X, XII and XIII or this sentence.
ARTICLE XII
This corporation is (i) required to provide indemnification of, and
advancement of expenses to, its directors and officers to the fullest extent
permitted by the General Corporation Law and other applicable laws, and (ii)
permitted to provide indemnification of, and advancement of expenses to, its
directors, officers, employees and agents of this corporation (and any other
persons to which General Corporation Law permits this corporation to provide
indemnification) through by-law provisions, agreements with such persons, vote
of stockholders or disinterested directors or otherwise, in excess of the
indemnification and advancement otherwise permitted by Section 145 of the
General Corporation Law, subject, in each case, only to limits created by
applicable law (statutory or non-statutory).
Any amendment, repeal or modification of the foregoing provisions of this
Article XII shall not adversely affect any right or protection of a director,
officer, employee, agent, or other person existing at the time of, or increase
the liability of any director, officer, employee or agent of this corporation or
other person
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<PAGE>
with respect to any acts or omissions of such director, officer, employee, agent
or other person occurring prior to, such amendment, repeal or modification.
ARTICLE XIII
This corporation is to have perpetual existence.
ARTICLE XIV
Whenever a compromise or arrangement is proposed between this corporation
and its creditors or any class of them and/or between this corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this corporation under (S)291 of Title 8
of the Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for this corporation under (S)279 of Title 8 of
the Delaware Code order a meeting of the creditors or class of creditors, and/or
of the stockholders or class of stockholders of this corporation, as the case
may be, to be summoned in such manner as the said court directs. If a majority
in number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
* * *
THIRD: The foregoing amendment and restatement was approved by the
holders of the requisite number of shares of said corporation in accordance with
Section 228 of the General Corporation Law.
FOURTH: That said amendment and restatement was duly adopted in
accordance with the provisions of Section 242 and 245 of the General Corporation
Law.
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<PAGE>
IN WITNESS WHEREOF, this Restated Certificate of Incorporation has been
executed by the President and the Secretary of this corporation on this ____ day
of _________________, 1999.
___________________________________
Stephen Zamansky, Secretary
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<PAGE>
EXHIBIT 3.03
DSL.net, Inc.
* * * * * * *
AMENDED AND RESTATED BY-LAWS
* * * * * * *
1. OFFICES.
-------
1.1 Registered Office. The registered office shall be in the City of
-----------------
Wilmington, County of New Castle, State of Delaware.
1.2 Other Offices. The Corporation may also have offices at such
-------------
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
2. MEETINGS OF STOCKHOLDERS.
------------------------
2.1 Place of Meetings. All meetings of the stockholders shall be held at
-----------------
such place either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
2.2 Annual Meeting. Annual meetings of stockholders shall be held on
--------------
such date and at such time as shall be designated from time to time by the Board
of Directors and stated in the notice of the meeting, at which the stockholders
shall elect a Board of Directors and transact such other business as may
properly be brought before the meeting.
2.3 Annual Meeting Notice. Written notice of the annual meeting stating
---------------------
the place, date and hour of the meeting shall be given to each stockholder
entitled to vote at such meeting not less than ten, nor more than sixty, days
before the date of the meeting.
2.4 Voting List. The officer who has charge of the stock ledger of the
-----------
Corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. This list shall
<PAGE>
presumptively determine the identity of the stockholders entitled to vote at the
meeting and the number of shares held by each of them.
2.5 Special Stockholders Meetings. Special meetings of stockholders may
-----------------------------
be called at any time by the Chairman of the Board (if any), a majority of the
Board of Directors or the President and shall be held at such place, on such
date and at such time as shall be fixed by the Board of Directors or the person
calling the meeting. Business transacted at any special meeting of stockholders
shall be limited to matters relating to the purpose or purposes stated in the
notice of meeting.
2.6 Notice of Special Meeting. Written notice of a special meeting
-------------------------
stating the place, date and hour of the meeting and the purpose or purposes for
which the meeting is called, shall be given not less than ten, nor more than
sixty, days before the date of the meeting, to each stockholder entitled to vote
at such meeting.
2.7 Purposes of Special Meetings. Business transacted at any special
----------------------------
meeting of stockholders shall be limited to the purposes stated in the notice.
2.8 Quorum. A majority of the voting power of the Corporation, present
------
in person or represented by proxy, shall constitute a quorum at all meetings of
the stockholders for the transaction of business except as otherwise provided by
statute, the Certificate of Incorporation or these by-laws. Shares held by
brokers which such brokers are prohibited from voting (pursuant to their
discretionary authority on behalf of beneficial owners of such shares who have
not submitted a proxy with respect to such shares) on some or all of the matters
before the stockholders, but which shares would otherwise be entitled to vote at
the meeting ("Broker Non-Votes") shall be counted, for the purpose of
determining the presence or absence of a quorum, both (a) toward the total
voting power of the shares of capital stock of the Corporation and (b) as being
represented by proxy. If a quorum has been established for the purpose of
conducting the meeting, a quorum shall be deemed to be present for the purpose
of all votes to be conducted at such meeting, provided that where a separate
vote by a class or classes, or series thereof, is required, a majority of the
voting power of the shares of such class or classes, or series, present in
person or represented by proxy shall constitute a quorum entitled to take action
with respect to that vote on that matter. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the chairman of the
meeting or the stockholders holding a majority of the voting power of the shares
of stock entitled to vote thereat, present in person or represented by proxy,
shall have power to adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
2.9 Controlling Vote. When a quorum is present at any meeting, the
----------------
vote of the holders of a majority of the voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express
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<PAGE>
provision of a statute, the Certificate of Incorporation or these by-laws a
different vote is required, in which case such express provision shall govern
and control the decision of such question. Any election of directors by the
stockholders shall be determined by a plurality of the votes cast by the
stockholders entitled to vote at such election, except as otherwise provided by
the Certificate of Incorporation. For the purposes of this Section 2.9, Broker
Non-Votes represented at the meeting but not permitted to vote on a particular
matter shall not be counted, with respect to the vote on such matter, in the
number of (a) votes cast, (b) votes cast affirmatively, or (c) votes cast
negatively.
2.10 Voting and Proxies. At any meeting of the stockholders, each
------------------
stockholder shall have one vote for each share of stock entitled to vote at such
meeting held of record by such stockholder and a proportionate vote for each
fractional share so held, unless otherwise provided in the Certificate of
Incorporation. Each stockholder of record entitled to vote at a meeting of
stockholders, or to express consent or dissent to corporate action in writing
without a meeting (to the extent not otherwise prohibited by the Certificate of
Incorporation or these by-laws), may vote or express such consent or dissent in
person or may authorize another person or persons to vote or act for such
stockholder by written proxy executed by such stockholder or his or her
authorized agent or by a transmission permitted by law and delivered to the
secretary of the Corporation. No such proxy shall be voted or acted upon after
three years from the date of its execution, unless the proxy expressly provides
for a longer period. Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission created pursuant to this Section
2.10 may be substituted or used in lieu of the original writing or transmission
for any and all purposes for which the original writing or transmission could be
used, provided that such copy, facsimile telecommunication or reproduction shall
be a complete reproduction of the entire original writing or transmission.
All voting, including on the election of directors but excepting where
otherwise required by law or the Certificate of Incorporation, may take place
via a voice vote. Any vote not taken by voice shall be taken by ballots, each
of which shall state the name of the stockholder or proxy voting and such other
information as may be required under the procedure established for the meeting.
2.11 Action Taken by Written Consent. Stockholders of the Corporation may
-------------------------------
not take any action by written consent in lieu of a meeting.
2.12 Introduction of Business at Meetings.
------------------------------------
(a) Annual Meetings of Stockholders.
-------------------------------
(i) Nominations of persons for election to the Board of
Directors and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders (A)
pursuant to the Corporation's notice of meeting, (B) by or at the
direction of the Board of Directors or (C) by any stockholder of the
Corporation who was a stockholder of record at the time of giving of
notice provided for in this Section 2.12, who is entitled to vote at
the
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<PAGE>
meeting and who complies with the notice procedures set forth in this
Section 2.12.
(ii) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (C) of
paragraph (a)(i) of this Section 2.12, the stockholder must have given
timely notice thereof in writing to the Secretary of the Corporation
and such other business must otherwise be a proper matter for
stockholder action. To be timely, a stockholder's notice shall be
delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the one hundred
twentieth (120th) day nor earlier than the close of business on the
one hundred fiftieth (150th) day prior to the first anniversary of the
date of the proxy statement delivered to stockholders in connection
with the preceding year's annual meeting; provided, however, that if
-----------------
either (1) the date of the annual meeting is more than thirty (30)
days before or more than sixty (60) days after such an anniversary
date or (2) no proxy statement was delivered to stockholders in
connection with the preceding year's annual meeting, notice by the
stockholder to be timely must be so delivered not earlier than the
close of business on the ninetieth (90th) day prior to such annual
meeting and not later than the close of business on the later of the
sixtieth (60th) day prior to such annual meeting or the close of
business on the tenth (10th) day following the day on which public
announcement of the date of such meeting is first made by the
Corporation. Such stockholder's notice shall set forth (a) as to each
person whom the stockholder proposes to nominate for election or
reelection as a director, all information relating to such person that
is required to be disclosed in solicitations of proxies for election
of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934 (the
"Exchange Act") (including such person's written consent to being
named in the proxy statement as a nominee and to serving as a director
if elected); (b) as to any other business that the stockholder
proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for
conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any, on
whose behalf the proposal is made; and (c) as to the stockholder
giving the notice and the beneficial owner, if any, on whose behalf
the nomination or proposal is made (i) the name and address of such
stockholder, as they appear on the Corporation's books, and of such
beneficial owner and (ii) the class and number of shares of capital
stock of the Corporation that are owned beneficially and held of
record by such stockholder and such beneficial owner.
(iii) Notwithstanding anything in the second sentence of
paragraph (a)(ii) of this Section 2.12 to the contrary, in the event
that the number of directors to be elected to the Board of Directors
of the Corporation is increased and there is no public announcement by
the Corporation naming all of the nominees for director or specifying
the size of the increased Board of Directors at least one hundred
twenty (120) days prior to the first anniversary of the preceding
year's annual meeting (or, if the annual meeting is held more than
thirty (30) days
-4-
<PAGE>
before or sixty (60) days after such anniversary date, at least ninety
(90) days prior to such annual meeting), a stockholder's notice
required by this Section 2.12 shall also be considered timely, but
only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the Secretary at the principal
executive office of the Corporation not later than the close of
business on the tenth (10th) day following the day on which such
public announcement is first made by the Corporation.
(b) Special Meetings of Stockholders. Only such business shall be
--------------------------------
conducted at a special meeting of stockholders as shall have been brought
before the meeting pursuant to the Corporation's notice of meeting.
Nominations of persons for election to the Board of Directors may be made
at a special meeting of stockholders at which directors are to be elected
pursuant to the Corporation's notice of meeting (i) by or at the direction
of the Board of Directors or (ii) provided that the Board of Directors has
determined that directors shall be elected at such meeting, by any
stockholder of the Corporation who is a stockholder of record at the time
of giving of notice of the special meeting, who shall be entitled to vote
at the meeting and who complies with the notice procedures set forth in
this Section 2.12. If the Corporation calls a special meeting of
stockholders for the purpose of electing one or more directors to the Board
of Directors, any such stockholder may nominate a person or persons (as the
case may be), for election to such position(s) as specified in the
Corporation's notice of meeting, if the stockholder's notice required by
paragraph (a)(ii) of this Section 2.12 shall be delivered to the Secretary
at the principal executive offices of the Corporation not earlier than the
ninetieth (90/th/) day prior to such special meeting nor later than the
later of (x) the close of business on the sixtieth (60th) day prior to such
special meeting or (y) the close of business on the tenth (10/th/) day
following the day on which public announcement is first made of the date of
such special meeting and of the nominees proposed by the Board of Directors
to be elected at such meeting.
(c) General.
-------
(i) Only such persons who are nominated in accordance with the
procedures set forth in this Section 2.12 shall be eligible to serve
as directors and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in
accordance with the procedures set forth in this Section 2.12. Except
as otherwise provided by law, the Certificate of Incorporation or
these by-laws, the chairman of the meeting shall have the power and
duty to determine whether a nomination or any business proposed to be
brought before the meeting was made or proposed, as the case may be,
in accordance with the procedures set forth in this Section 2.12 and,
if any proposed nomination or business is not in compliance herewith,
to declare that such defective proposal or nomination shall be
disregarded.
(ii) For purposes of this Section 2.12, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones
News Service, Associated Press, PR Newswire, Business Wire or
comparable national news
-5-
<PAGE>
service or in a document publicly filed by the Corporation with the
Securities and Exchange Commission pursuant to Section 13, 14 or 15(d)
of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this Section
2.12, a stockholder shall also comply with all applicable requirements
of the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth herein. Nothing in this Section 2.12
shall be deemed to affect any rights (A) of stockholders to request
inclusion of proposals in the Corporation's proxy statement pursuant
to Rule 14a-8 under the Exchange Act or (B) of the holders of any
series of Preferred Stock to elect directors under specified
circumstances.
3. DIRECTORS.
---------
3.1 Number and Election. The number of directors which shall constitute
-------------------
the whole Board of Directors shall be determined by resolution of the Board of
Directors, but in no event shall be less than three. The number of directors
may be decreased at any time and from time to time by a majority of the
directors then in office, but only to eliminate vacancies existing by reason of
the death, resignation, removal or expiration of the term of one or more
directors. The directors shall be elected at the annual meeting of the
stockholders (or, if so determined by the Board of Directors pursuant to Section
2.12, at a special meeting of stockholders) as provided in Section 2, and each
director elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders of the Corporation.
3.2 Powers of the Board. The business of the Corporation shall be managed
-------------------
by or under the direction of its Board of Directors, which may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
statute or by the Certificate of Incorporation or by these by-laws directed or
required to be exercised or done by the stockholders.
3.3 Place of Meetings. The Board of Directors of the Corporation may hold
-----------------
meetings, both regular and special, either within or without the State of
Delaware.
3.4 Annual Meeting. An annual meeting of each newly elected Board of
--------------
Directors shall be held directly following each annual meeting of the
stockholders for the purpose of appointing the officers of the Corporation and
transacting such other business as shall be brought before such meeting. No
notice of the annual meeting shall be necessary to the newly elected directors
in order legally to constitute the meeting, provided a quorum shall be present.
In the event of the failure of the newly elected Board of Directors to meet
directly following the annual stockholders' meeting, the annual meeting of the
Board of Directors may be held at such time and place as shall be specified in a
notice given as hereinafter provided for special meetings of the Board of
Directors, or as shall be specified in a written waiver signed by all of the
directors.
3.5 Regular Meetings. Regular meetings of the Board of Directors may be
----------------
held without notice at such time and at such place as shall from time to time be
determined by the Board.
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<PAGE>
3.6 Special Meetings. Special meetings of the Board may be called by the
----------------
Chairman of the Board (if any), the president or the secretary and shall be
called by the president or secretary on the written request of any director.
Notice of any special meeting of directors shall be given to each director by
the secretary or by the officer or one of the directors requesting the meeting.
Notice shall be duly given to each director (i) by giving notice to such
director in person or by telephone at least 24 hours in advance of the meeting,
(ii) by sending a telegram or delivering written notice by facsimile
transmission, by e-mail or by hand, to his or her last known business, home or
e-mail address at least 24 hours in advance of the meeting, or (iii) by mailing
written notice to his or her last known business or home address at least 72
hours in advance of the meeting. A notice or waiver of notice of a meeting of
the Board of Directors need not specify the purposes of the meeting.
3.7 Quorum. At all meetings of the Board, a majority of the directors
------
shall constitute a quorum for the transaction of business, and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
3.8 Action Taken by Written Consent. Unless otherwise restricted by the
-------------------------------
Certificate of Incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the board or committee.
3.9 Meetings by Conference Call. Unless otherwise restricted by the
---------------------------
Certificate of Incorporation or these by-laws, members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors, or any committee, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
3.10 Committees.
----------
(a) The Board of Directors may, by resolution passed by a majority of
the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the Corporation. Such committee
or committees shall have such name or names, powers and functions as may be
determined from time to time by resolution adopted by the Board of
Directors.
(b) The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another
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<PAGE>
member of the Board of Directors to act at the meeting in the place of any
such absent or disqualified member.
(c) Any such committee, to the extent provided in the resolution of
the Board of Directors and subject to the provisions of the General
Corporation Law of the State of Delaware, shall have and may exercise all
the powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it.
3.11 Minutes of Committee Meetings. Each committee shall keep regular
-----------------------------
minutes of its meetings and report the same to the Board of Directors when
required.
3.12 Compensation of Directors. Unless otherwise restricted by the
-------------------------
Certificate of Incorporation or these by-laws, the Board of Directors shall have
the authority to fix the compensation of directors. The directors may be paid
their expenses, if any, of attendance at each meeting of the Board of Directors
and may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like compensation for serving on such committees and attending committee
meetings.
3.13 Vacancies. Unless and until filled by the stockholders, any vacancy
---------
in the Board of Directors, however occurring, including a vacancy resulting from
an enlargement thereof, may be filled by vote of a majority of the directors
then in office, although less than a quorum, or by a sole remaining director.
4. NOTICES.
-------
4.1 Notices. Whenever, under the provisions of any statute or of the
-------
Certificate of Incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at such person's address as it appears on the records
of the Corporation, with postage thereon prepaid, and such notice shall be
deemed to be given at the time when the same shall be deposited in the United
States mail. Notice to directors may also be given by telegram, facsimile or e-
mail.
4.2 Waiver of Notice. Whenever any notice is required to be given under
----------------
the provisions of any statute or of the Certificate of Incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, or the
appearance of such person or persons at such meeting in person or by proxy,
shall be deemed equivalent thereto.
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<PAGE>
5. OFFICERS.
--------
5.1 Election of Officers. The officers of the Corporation shall be chosen
--------------------
by the Board of Directors at its annual meeting following each annual meeting of
the stockholders and shall be a president, a secretary and a treasurer. Any
number of offices may be held by the same person, unless the Certificate of
Incorporation or these by-laws otherwise provide.
5.2 Other Officers. The Board of Directors may also appoint a Chairman of
--------------
the Board, one or more vice presidents, one or more assistant secretaries and
assistant treasurers and such other officers and agents as it shall deem
necessary, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors. The Chairman of the Board, if any, shall be elected from
the members of the Board of Directors.
5.3 Successors. The officers of the Corporation shall hold office until
----------
their successors are chosen and qualified. Any officer elected or appointed by
the Board of Directors may be removed at any time by the Board of Directors.
Any vacancy occurring in any office of the Corporation shall be filled by the
Board of Directors.
5.4 Chairman of the Board. If provided by the Board of Directors, the
---------------------
Chairman shall be the chief executive officer of the Corporation and shall
perform such duties and possess such powers as are designated by the Board of
Directors. The Chairman shall preside at all meetings of the stockholders and
the Board of Directors, and, if designated as the chief executive officer of the
Corporation, shall have general and active management of the business of the
Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The chairman may execute bonds, mortgages
and other contracts requiring a seal, under the seal of the Corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the Board of Directors to some other officer or agent of the Corporation. The
chairman may appoint an acting Secretary to record all the proceedings of the
meetings of the Corporation in the event that the Secretary or an Assistant
Secretary is unable to do so.
5.5 President. Unless otherwise provided by the Board of Directors, the
---------
president shall be the chief executive officer of the Corporation. In the
absence of the chairman or in the event of the chairman's inability or refusal
to act, the president shall preside at all meetings of the stockholders and the
Board of Directors, shall have the power to appoint an acting Secretary if
needed to record all proceedings of the Corporation, shall have general and
active management of the business of the Corporation and shall see that all
orders and resolutions of the Board of Directors are carried into effect. The
president shall perform such other duties and shall have such other powers as
the Board of Directors may from time to time prescribe. The president shall
execute bonds, mortgages and other contracts requiring a seal, under the seal of
the Corporation, except where required or permitted by law to be otherwise
signed and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation.
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<PAGE>
5.6 Vice Presidents. Any vice president shall perform such duties and
---------------
possess such powers as the Board of Directors or the president may from time to
time prescribe. In the absence of the president or in the event of the
president's inability or refusal to act, the vice president (or in the event
there be more than one vice president, the vice presidents in the order
designated by the directors, or in the absence of any designation, then any vice
president) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice president shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
5.7 Secretary. The secretary shall perform such duties and shall have
---------
such powers as the Board of Directors or the President may from time to time
prescribe. In addition, the secretary shall perform such duties and have such
powers as are incident to the office of secretary, including without limitation
the duty and power to give notices of all meetings of stockholders and special
meetings of the Board of Directors, to attend all meetings of stockholders and
the Board of Directors and keep a record of the proceedings, to maintain a stock
ledger and prepare lists of stockholders and their addresses as required, to be
custodian of corporate records and the corporate seal and to affix and attest to
the same on documents. The Board of Directors may give general authority to any
other officer to affix the seal of the Corporation and to attest the affixing by
such officer's signature.
5.8 Assistant Secretary. Any assistant secretary shall perform such
-------------------
duties and possess such powers as the Board of Directors, the president or the
secretary may from time to time prescribe. The assistant secretary, or if there
be more than one, the assistant secretaries in the order determined by the Board
of Directors (or if there be no such determination, then any assistant
secretary) shall, in the absence of the secretary or in the event of the
secretary's inability or refusal to act, perform the duties and exercise the
powers of the secretary and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
5.9 Treasurer. The treasurer shall perform such duties and shall have
---------
such powers as the Board of Directors or the president may from time to time
prescribe. In addition, the treasurer shall perform such duties and have such
powers as are incident to the office of treasurer, including without limitation
the duty and power to keep and be responsible for all funds and securities of
the Corporation, to deposit funds of the Corporation in depositories selected in
accordance with these by-laws, to disburse such funds as ordered by the Board of
Directors, to make proper accounts for such funds, and to render as required by
the Board of Directors statements of all such transactions and of the financial
condition of the Corporation.
5.10 Assistant Treasurer. The assistant treasurers shall perform such
-------------------
duties and possess such powers as the Board of Directors, the president or the
treasurer may from time to time prescribe. The assistant treasurer, or if there
shall be more than one, the assistant treasurers in the order determined by the
Board of Directors (or if there be no such determination, then any assistant
treasurer), shall, in the absence of the treasurer or in the event of the
treasurer's inability or refusal to act, perform the duties and exercise the
powers of the treasurer and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
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<PAGE>
6. CERTIFICATES OF STOCK.
---------------------
6.1 Certificate. Every holder of stock in the Corporation shall be
-----------
entitled to have a certificate, signed by, or in the name of the Corporation by,
the chairman or vice chairman of the Board of Directors, or the president or a
vice president and the treasurer or an assistant treasurer, or the secretary or
an assistant secretary of the Corporation, certifying the number of shares owned
by such holder in the Corporation.
6.2 Stock Legends. Every certificate for shares of stock which are
-------------
subject to any restriction on transfer pursuant to the Certificate of
Incorporation, these by-laws or any agreement to which the Corporation is a
party, shall have conspicuously noted on the face or back of the certificate
either the full text of the restriction or a statement of the existence of such
restriction and a statement that the Corporation will furnish a copy thereof to
the holder of such certificate upon written request and without charge. Every
certificate issued when the Corporation is authorized to issue more than one
class or series of stock shall set forth on its face or back either the full
text of the preferences, voting powers, qualifications and special and relative
rights of the shares of each class and series authorized to be issued or a
statement of the existence of such preferences, powers, qualifications and
rights and a statement that the Corporation will furnish a copy thereof to the
holder of such certificate upon written request and without charge.
6.3 Signatures on Certificates. Any of or all the signatures on the
--------------------------
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent or registrar at the date of
issue.
6.4 Lost Certificates. The Board of Directors may direct a new
-----------------
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issuance of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or the owner's legal representative, to advertise the same in such
manner as it shall require and/or to give the Corporation a bond in such sum as
it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.
6.5 Transfer of Stock. Upon surrender to the Corporation or the transfer
-----------------
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
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<PAGE>
6.6 Fixed Record Date. In order that the Corporation may determine the
-----------------
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting, provided,
---------
however, that the Board of Directors may fix a new record date for the adjourned
- -------
meeting.
6.7 Registered Stockholders. The Corporation shall be entitled to
-----------------------
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.
7. GENERAL PROVISIONS.
------------------
7.1 Dividends. Dividends upon the capital stock of the Corporation,
---------
subject to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the Certificate of Incorporation.
7.2 Reserves to Meet Contingencies. Before payment of any dividend, there
------------------------------
may be set aside, out of any funds of the Corporation available for dividends,
such sum or sums as the directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the directors shall think conducive to
the interest of the Corporation, and the directors may modify or abolish any
such reserve in the manner in which it was created.
7.3 Checks. All checks or demands for money and notes of the Corporation
------
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
7.4 Fiscal Year. The fiscal year of the Corporation shall be fixed by
-----------
resolution of the Board of Directors.
7.5 Corporate Seal. The corporate seal shall have inscribed thereon the
--------------
name of the Corporation, the year of its organization and the words "Seal" and
"Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
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<PAGE>
8. INDEMNIFICATION.
---------------
8.1 Action Against Party Because of Corporate Position. The Corporation
--------------------------------------------------
shall indemnify, to the fullest extent permitted by applicable law as it
presently exists or may hereafter be amended, any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director or officer of the Corporation,
or such director or officer of the Corporation is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise or non-profit
entity, against expenses (including attorneys' fees and disbursements, inclusive
of any appeal), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such claim, action, suit
or proceeding if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any claim, action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
----
contendere or its equivalent, shall not, of itself, create a presumption that
- ----------
the person did not act in good faith and in a manner that he reasonably believed
to be in or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
8.2 Action by or in the Right of Corporation. The Corporation shall
----------------------------------------
indemnify any person who is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a director or officer of the Corporation, or such director or officer of
the Corporation is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise or non-profit entity, against expenses
(including attorneys' fees and disbursements, inclusive of any appeal) actually
and reasonably incurred by him in connection with the defense or settlement of
such claim, action or suit if he acted in good faith and in a manner he
reasonably believed to be in or is not opposed to the best interests of the
Corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that a court of
competent jurisdiction (the "Court") in which such claim, action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court
shall deem proper.
8.3 Reimbursement If Successful. To the extent that a present or former
---------------------------
director or officer of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Sections
8.1 or 8.2, or in defense of any claims, issue or matter therein, such person
shall be indemnified against expenses (including attorneys' fees and
disbursements, inclusive of any appeal) actually and reasonably incurred by such
person in
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<PAGE>
connection therewith, notwithstanding that such person has not been successful
(on the merits or otherwise) on any other claim, issue or matter in any such
claim, action, suit or proceeding.
8.4 Authorization. Any indemnification under Sections 8.1 and 8.2 (unless
-------------
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the present or former
director, officer, employee or agent is proper in the circumstances because such
person has met the applicable standard of conduct set forth in Sections 8.1 and
8.2. Such determination shall be made, with respect to a person who is a
director or officer at the time of such determination, (a) by a majority vote of
the directors who are or were not parties to such action, suit or proceeding,
even though less than a quorum, or (b) by a committee of such directors
designated by majority vote of such directors, even though less than a quorum,
or (c) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (d) by the stockholders.
8.5 Advanced Reimbursement. Expenses (including attorneys' fees and
----------------------
disbursements, inclusive of any appeal) incurred by an officer or director of
the Corporation in defending any pending or threatened civil, criminal,
administrative or investigative action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified by the Corporation as authorized in
this, or granted pursuant to, Section 8. Such expenses (including attorneys'
fees) incurred by former directors and officers or other employees or agents of
the Corporation may be so paid upon such terms and conditions, if any, as the
Board of Directors deems appropriate.
8.6 Indemnification No Exclusive. The indemnification and advancement of
----------------------------
expenses provided by, or granted pursuant to, this Section 8 shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any statute, rule of law, provision of the Certificate of Incorporation, as it
may be amended, By-law, agreement, vote of stockholders or disinterested
directors, or otherwise, both as to action in such person's official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person. Where such other provision provides broader rights of
indemnification than these by-laws, said other provision shall control.
8.7 Indemnification of Employees and Agents. The Corporation may, to the
---------------------------------------
extent authorized from time to time by the Board of Directors, provide rights to
indemnification and to the advancement of expenses to employees and agents of
the Corporation, and to such employees and agents serving at the request of the
Corporation as a director, partner, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise or non-profit
entity, similar to those conferred in this Section 8 to directors and officers
of the Corporation.
8.8 Insurance. The Corporation shall have power to purchase and maintain
---------
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, partner, officer, employee agent of another corporation,
partnership, joint venture, trust or other enterprise or
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<PAGE>
non-profit entity against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of such person's
status as such, whether or not the Corporation would have the power to indemnify
him against such liability under the provisions of this Section 8.
9. AMENDMENTS.
----------
9.1 By the Board of Directors. Except as is otherwise set forth in these
-------------------------
by-laws, these by-laws may be altered, amended or repealed, or new by-laws may
be adopted, by the affirmative vote of a majority of the directors present at
any regular or special meeting of the Board of Directors at which a quorum is
present.
9.2 By the Stockholders. Except as otherwise set forth in these by-laws,
-------------------
these by-laws may be altered, amended or repealed or new by-laws may be adopted
by the affirmative vote of the holders of a majority of the shares of the
capital stock of the Corporation issued and outstanding and entitled to vote at
any regular meeting of stockholders, or at any special meeting of stockholders
provided notice of such alteration, amendment, repeal or adoption of new by-laws
shall have been stated in the notice of such special meeting.
-15-
<PAGE>
Exhibit 5.01
September 30, 1999
DSL.net, Inc.
545 Long Wharf Drive
New Haven, CT 06511
RE: Registration Statement on Form S-1 (No. 333-80141)
Ladies and Gentlemen:
We are acting as counsel for DSL.net, Inc., a Delaware corporation (the
"Company"), in connection with the issuance and sale by the Company of up to
-------
10,968,000 shares (the "Shares") of Common Stock, par value $.0005 per share, of
------
the Company pursuant to the Company's Registration Statement on Form S-1 (No.
333-80141) which has been filed with the Securities and Exchange Commission (the
"Registration Statement").
----------------------
We have examined such documents, records and matters of law as we have
deemed necessary for the purposes of this opinion, and based thereupon we are of
the opinion that the Shares, when issued and paid for in accordance with the
terms described in the Registration Statement, will be validly issued, fully
paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5.01 to the
Registration Statement and to the reference to our firm in the Prospectus under
the caption "Legal Matters."
Very truly yours,
TESTA, HURWITZ & THIBEAULT, LLP
<PAGE>
Exhibit 10.01
DSL.net, Inc.
AMENDED AND RESTATED 1999 STOCK PLAN
February 19, 1999, as amended and restated as of ________
SECTION 1. Purpose.
- --------- -------
The purpose of the Amended and Restated 1999 Stock Plan (the "Plan") is to
secure for DSL.net, Inc., (the "Company"), its parent (if any) and any
subsidiaries of the Company (collectively the "Related Corporations") the
benefits arising from capital stock ownership by those employees, directors,
officers and consultants of the Company and any Related Corporations who will be
responsible for the Company's future growth and continued success.
The Plan will provide a means whereby (a) employees of the Company and any
Related Corporations may purchase stock in the Company pursuant to options which
qualify as "incentive stock options" ("Incentive Stock Options") under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), (b)
directors, employees and consultants of the Company and any Related Corporations
may purchase stock in the Company pursuant to options granted hereunder which do
not qualify as Incentive Stock Options ("Non-Qualified Options"); (c) directors,
employees and consultants of the Company and any Related Corporations may be
awarded stock in the Company ("Awards"); (d) directors, employees and
consultants of the Company and any Related Corporations may receive stock
appreciation rights ("SARs"); and (e) directors, employees and consultants of
the Company and any Related Corporations may make direct purchases of stock in
the Company ("Purchases"). Both Incentive Stock Options and Non-Qualified
Options are referred to hereafter individually as an "Option" and collectively
as "Options." As used herein, the terms "parent" and "subsidiary" mean "parent
corporation" and "subsidiary corporation" as those terms are defined in Section
424 of the Code. Options, Awards, SARs and Purchases are referred to hereafter
individually as a "Plan Benefit" and collectively as "Plan Benefits."
Directors, employees and consultants of the Company and any Related Corporations
are referred to herein as "Participants."
SECTION 2. Administration.
- --------- --------------
2.1 Board of Directors and the Committee. The Plan will be administered
------------------------------------
by the Board of Directors of the Company whose construction and interpretation
of the terms and provisions hereof shall be final and conclusive. Any director
to whom a Plan Benefit is awarded shall be ineligible to vote upon his or her
Plan Benefit, but Plan Benefits may be granted any such director by a vote of
the remainder of the directors, except as limited below. The Board of Directors
may in its sole discretion grant Options, issue shares upon exercise of such
Options, grant Awards, grant SARs and approve Purchases, all as provided in the
Plan. The Board of Directors shall have authority, subject to the express
provisions of the Plan, to construe the Plan and its related agreements, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the respective Option, Award, SAR and
Purchase
<PAGE>
-2-
agreements, which need not be identical, and to make all other determinations in
the judgment of the Board of Directors necessary or desirable for the
administration of the Plan. The Board of Directors may correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any related
agreement in the manner and to the extent it shall deem expedient to carry the
Plan into effect and it shall be the sole and final judge of such expediency. No
director shall be liable for any action or determination made in good faith. The
Board of Directors may delegate to the President or Chief Executive Officer of
the Company the power to grant options to non-officers in accordance with
written guidelines approved by the Board of Directors. In addition, the Board of
Directors may delegate any or all of its powers under the Plan to a Compensation
Committee or other Committee (the "Committee") appointed by the Board of
Directors consisting of at least two members of the Board of Directors. If the
Company has a class of stock registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), then members of the
Committee shall at all times be: (i) "outside directors" as such term is defined
in Treas. Reg. (S) 1.162-27(e)(3) (or any successor regulation); and (ii) "non-
employee directors" within the meaning of Rule 16b-3 (or any successor rule)
under the Exchange Act, as such terms are interpreted from time to time;
provided, however that if the members of the Committee do not meet the
requirements set forth in (ii) above, then all decisions and acts of the
Committee shall be subject to and effective upon the approval of the Board of
Directors. If a Committee meeting the requirements of (i) and (ii) above is so
appointed, all references to the Board of Directors herein shall mean and relate
to such Committee, unless the context otherwise requires; provided, however,
-----------------
that if a Committee is appointed that does not meet the requirements of and (ii)
above, then all decisions and acts of the Committee shall be subject to and
effective upon the approval of the Board of Directors.
2.2 Compliance with Section 162(m) of the Code. Section 162(m) of the
------------------------------------------
Code, added by the Omnibus Budget Reconciliation Act of 1993, generally limits
the tax deductibility to publicly held companies of compensation in excess of
$1,000,000 paid to certain "covered employees" ("Covered Employees"). If the
Company is subject to Section 162(m) of the Code, it is the Company's intention
to preserve the deductibility of such compensation to the extent it is
reasonably practicable and to the extent it is consistent with the Company's
compensation objectives. For purposes of this Plan, Covered Employees of the
Company shall be those employees of the Company described in Section 162(m)(3)
of the Code.
SECTION 3. Eligibility.
- --------- -----------
3.1 Incentive Stock Options. Participants who are employees shall be
-----------------------
eligible to receive Incentive Stock Options pursuant to the Plan; provided that
no person shall be granted any Incentive Stock Option under the Plan who, at the
time such Option is granted, owns, directly or indirectly, Common Stock of the
Company possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of its Related Corporations, unless the
requirements of Section 6.6(b) hereof are satisfied. In determining whether
this 10% threshold has been reached, the stock attribution rules of Section
424(d) of the Code shall apply. Directors who are not regular employees are not
eligible to receive Incentive Stock Options.
<PAGE>
-3-
3.2 Non-Qualified Options, Awards, SARs and Purchases. Non-Qualified
-------------------------------------------------
Options, Awards, SARs and authorizations to make Purchases may be granted to any
Participant.
3.3 Generally. The Board of Directors may take into consideration a
---------
Participant's individual circumstances in determining whether to grant an
Incentive Stock Option, a Non-Qualified Option, an Award or an SAR or to approve
a Purchase. Granting of any Option, Award or SAR or approval of any Purchase
for any individual shall neither entitle that individual to, nor disqualify that
individual from, participation in any other grant of Plan Benefits.
SECTION 4. Stock Subject to Plan.
- --------- ---------------------
Subject to adjustment as provided in Sections 10 and 11 hereof, the stock
to be offered under the Plan shall consist of shares of the Company's Common
Stock, par value $.0005 per share, and the maximum number of shares of stock
which will be reserved for issuance, and in respect of which Plan Benefits may
be granted pursuant to the provisions of the Plan, shall not exceed in the
aggregate 12,364,200 shares. Such shares may be authorized and unissued shares
or may be treasury shares. If an Option or SAR granted hereunder shall expire
or terminate for any reason without having been exercised in full, or if the
Company shall reacquire any unvested shares issued pursuant to Awards or
Purchases, the unpurchased shares subject thereto and any unvested shares so
reacquired shall again be available for subsequent grants of Plan Benefits under
the Plan. Stock issued pursuant to the Plan may be subject to such restrictions
on transfer, repurchase rights or other restrictions as shall be determined by
the Board of Directors.
SECTION 5. Granting of Options, Awards and SARs and Approvals of Purchases.
- --------- ---------------------------------------------------------------
Options, Awards and SARs may be granted and Purchases may be approved under
the Plan at any time after February 19, 1999 and prior to February 19, 2009.
The date of grant of an Option, Award or SAR or approval of a Purchase under the
Plan will be the date specified by the Board of Directors at the time the Board
of Directors grants such Option, Award or SAR or approves such Purchase;
provided, however, that such date shall not be prior to the date on which the
Board of Directors takes such action. The Board of Directors shall have the
right, with the consent of a Participant, to convert an Incentive Stock Option
granted under the Plan to a Non-Qualified Option pursuant to Section 6.7. Plan
Benefits may be granted alone or in addition to other grants under the Plan.
SECTION 6. Special Provisions Applicable to Options and SARs.
- --------- -------------------------------------------------
6.1 Purchase Price and Shares Subject to Options and SARs.
-----------------------------------------------------
(a) The purchase price per share of stock deliverable upon the
exercise of an Option shall be determined by the Board of Directors,
provided, however, that (i) in the case of an Incentive Stock Option, the
-------- -------
exercise price shall not be less than 100% of the fair market value of such
stock on the day the option is granted (except as modified in
<PAGE>
-4-
Section 6.6(b) hereof). The Board of Directors may delegate to the Chief
Executive Officer of the Company the power to determine the exercise price
of an option in accordance with written guidelines approved by the Board of
Directors.
(b) Options granted under the Plan may provide for the payment of the
exercise price by delivery of (i) cash or a check payable to the order of
the Company in an amount equal to the exercise price of such Options, (ii)
shares of Common Stock of the Company owned by the Participant having a
fair market value equal in amount to the exercise price of the Options
being exercised, or (iii) any combination of (i) and (ii). The fair market
value of any shares of the Company's Common Stock which may be delivered
upon exercise of an Option shall be determined by the Board of Directors.
The Board of Directors may also permit Participants, either on a selective
or aggregate basis, to simultaneously exercise Options and sell the shares
of Common Stock thereby acquired, either to the Company or pursuant to a
brokerage or similar arrangement, approved in advance by the Board of
Directors, and to use the proceeds from such sale as payment of the
purchase price of such shares.
(c) If, at the time an Option is granted under the Plan, the
Company's Common Stock is publicly traded, "fair market value" shall be
determined as of the last business day for which the prices or quotes
discussed in this sentence are available prior to the date such Option is
granted (the "Determination Date") and shall mean (i) the average (on the
Determination Date) of the high and low prices of the Common Stock on the
principal national securities exchange on which the Common Stock is traded,
if such Common Stock is then traded on a national securities exchange; (ii)
the last reported sale price (on the Determination Date) of the Common
Stock on the Nasdaq Stock Market if the Common Stock is not then traded on
a national securities exchange; or (iii) the closing bid price (or average
of bid prices) last quoted (on the Determination Date) by an established
quotation service for over-the-counter securities, if the Common Stock is
not reported on the Nasdaq Stock Market. However, if the Common Stock is
not publicly traded at the time an Option is granted under the Plan, "fair
market value" shall be deemed to be the fair value of the Common Stock as
determined by the Board of Directors after taking into consideration all
factors which it deems appropriate, including, without limitation, recent
sale and offer prices of the Common Stock in private transactions
negotiated at arm's length.
(d) If the Company is subject to Section 162(m) of the Code, the
maximum number of shares with respect to which Options or SARs may be
granted to any employee, including any cancellations or repricings which
may occur, shall be limited to 1,500,000 shares in any calendar year.
6.2 Duration of Options and SARs. Subject to Section 6.6(b) hereof, each
----------------------------
Option and SAR and all rights thereunder shall be expressed to expire on such
date as the Board of Directors may determine, but in no event later than ten
years from the day on which the Option or SAR is granted and shall be subject to
earlier termination as provided herein.
<PAGE>
-5-
6.3 Exercise of Options and SARs.
----------------------------
(a) Subject to Section 6.6(b) hereof, each Option and SAR granted
under the Plan shall be exercisable at such time or times and during such
period as shall be set forth in the instrument evidencing such Option or
SAR. To the extent that an Option or SAR is not exercised by a Participant
when it becomes initially exercisable, it shall not expire but shall be
carried forward and shall be exercisable, on a cumulative basis, until the
expiration of the exercise period. No partial exercise may be for less
than ten (10) full shares of Common Stock (or its equivalent).
(b) The Board of Directors shall have the right to accelerate the
date of exercise of any installments of any Option or SAR; provided that
the Board of Directors shall not accelerate the exercise date of any
installment of any Option granted to a Participant as an Incentive Stock
Option (and not previously converted into a Non-Qualified Option pursuant
to Section 6.7) if such acceleration would violate the annual vesting
limitation contained in Section 422(d)(1) of the Code, which provides
generally that the aggregate fair market value (determined at the time the
Option is granted) of the stock with respect to which Incentive Stock
Options granted to any Participant are exercisable for the first time by
such Participant during any calendar year (under all plans of the Company
and any Related Corporations) shall not exceed $100,000. To the extent the
aggregate fair market value of the stock with respect to which Incentive
Stock Options granted to any Participant are exercisable for the first time
by such Participant during any calendar year (under all plans of the
Company and any Related Corporations) exceeds $100,000, such Options shall
be treated as Non-Qualified Options.
6.4 Nontransferability of Options and SARs.
--------------------------------------
No Option or SAR granted under the Plan shall be assignable or transferable
by the Participant, either voluntarily or by operation of law, except by will or
the laws of descent and distribution or, with respect to Non-Qualified Options
and SARs, pursuant to a qualified domestic relations order as defined by the
Code or Title I of the Employee Retirement Income Security Act ("ERISA") or the
rules promulgated thereunder or unless the Participant's non-qualified stock
option agreement granting such options (the "Non-Qualified Stock Option
Agreement") or the Participant's SAR agreement granting such SARs (the "SAR
Agreement") provides otherwise. Unless otherwise provided by the Non-Qualified
Stock Option Agreement or the SAR Agreement, during the life of the Participant,
the Option or SAR shall be exercisable only by him or her. If any Participant
should attempt to dispose of or encumber his or her Options or SARs, other than
in accordance with the applicable terms of a Non-Qualified Stock Option
Agreement or SAR Agreement, his or her interest in such Options or SARs shall
terminate.
6.5 Effect of Termination of Employment or Death.
--------------------------------------------
(a) Except as provided in any applicable option agreement, if a
Participant ceases to be employed by the Company or a Related Corporation
for any reason, including retirement but other than death, any Option or
SAR granted to such Participant
<PAGE>
-6-
under the Plan shall immediately terminate; provided, however, that any
-------- -------
portion of such Option or SAR which was otherwise exercisable on the date
of termination of the Participant's employment may be exercised within the
three-month period following the date on which the Participant ceased to be
so employed, but in no event after the expiration of the exercise period.
Any such exercise may be made only to the extent of the number of shares
subject to the Option or SAR which were purchasable on the date of such
termination of employment. If the Participant dies during such three-month
period, the Option or SAR shall be exercisable by the Participant's
personal representatives, heirs or legatees to the same extent and during
the same period that the Participant could have exercised the Option or SAR
on the date of his or her death.
(b) If the Participant dies while an employee of the Company or any
Related Corporation, any Option or SAR granted to such Participant under
the Plan shall be exercisable by the Participant's personal
representatives, heirs or legatees, for the purchase of that number of
shares and to the same extent that the Participant could have exercised the
Option or SAR on the date of his or her death. The Option or SAR or any
unexercised portion thereof shall terminate unless so exercised prior to
the earlier of the expiration of six months from the date of such death or
the expiration of the exercise period.
6.6 Designation of Incentive Stock Options; Limitations.
---------------------------------------------------
Options granted under the Plan which are intended to be Incentive Stock
Options qualifying under Section 422 of the Code shall be designated as
Incentive Stock Options and shall be subject to the following additional terms
and conditions:
(a) Dollar Limitation. The aggregate fair market value (determined at
-----------------
the time the option is granted) of the Common Stock for which Incentive
Stock Options are exercisable for the first time during any calendar year
by any person under the Plan (and all other incentive stock option plans of
the Company and any Related Corporations) shall not exceed $100,000. To the
extent the aggregate fair market value of the Common Stock for which
Incentive Stock Options granted to any Participant are exercisable for the
first time by such Participant during any calendar year (under all plans of
the Company and any Related Corporations) exceeds $100,000, such Options
shall be treated as Non-Qualified Options. In the event that Section
422(d)(1) of the Code is amended to alter the limitation set forth therein
so that following such amendment such limitation shall differ from the
limitation set forth in this Section 6.6(a), the limitation of this Section
6.6(a) shall be automatically adjusted accordingly.
(b) 10% Stockholder. If any employee to whom an Incentive Stock
---------------
Option is to granted pursuant to the provisions of the Plan is on the date
of grant the owner of stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any Related
Corporations, then the following special provisions shall be applicable to
the Incentive Stock Option granted to such individual:
<PAGE>
-7-
(i) The option price per share of the Common Stock subject to
such Incentive Stock Option shall not be less than 110% of the fair
market value of one share of Common Stock on the date of grant; and
(ii) The option exercise period shall not exceed five years from
the date of grant.
In determining whether the 10% threshold has been reached, the stock
attribution rules of Section 424(d) of the Code shall apply.
(c) Except as modified by the preceding provisions of this Section
6.6, all of the provisions of the Plan shall be applicable to Incentive
Stock Options granted hereunder.
6.7 Conversion of Incentive Stock Options into Non-Qualified Options;
-----------------------------------------------------------------
Termination of Incentive Stock Options. The Board of Directors, at the written
- --------------------------------------
request of any Participant, may in its discretion take such actions as may be
necessary to convert such Participant's Incentive Stock Options (or any
installments or portions of installments thereof) that have not been exercised
on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such Incentive Stock Options, regardless of whether the
Participant is an employee of the Company or a Related Corporation at the time
of such conversion. Such actions may include, but not be limited to, extending
the exercise period or reducing the exercise price of the appropriate
installments of such Options. At the time of such conversion, the Board of
Directors (with the consent of the Participant) may impose such conditions on
the exercise of the resulting Non-Qualified Options as the Board of Directors in
its discretion may determine, provided that such conditions shall not be
inconsistent with the Plan. Nothing in the Plan shall be deemed to give any
Participant the right to have such Participant's Incentive Stock Options
converted into Non-Qualified Options, and no such conversion shall occur until
and unless the Board of Directors takes appropriate action. The Board of
Directors, with the consent of the Participant, may also terminate any portion
of any Incentive Stock Option that has not been exercised at the time of such
termination.
6.8 Stock Appreciation Rights. A SAR is the right to receive, without
-------------------------
payment, an amount equal to the excess, if any, of the fair market value of a
share of Common Stock on the date of exercise over the grant price, which amount
will be multiplied by the number of shares with respect to which the SARs shall
have been exercised. The grant of SARs under the Plan shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the express terms of the Plan, as the Board of
Directors shall deem desirable:
(a) Grant. SARs may be granted in tandem with, in addition to or
-----
completely independent of any Plan Benefit.
(b) Grant Price. The grant price of a SAR may be the fair market
-----------
value of a share of Common Stock on the date of grant or such other price
as the Board of Directors may determine.
<PAGE>
-8-
(c) Exercise. A SAR may be exercised by a Participant in accordance
--------
with procedures established by the Board of Directors or as otherwise
provided in any agreement evidencing any SARs. The Board of Directors may
provide that an SAR shall be automatically exercised on one or more
specified dates.
(d) Form of Payment. Payment upon exercise of an SAR may be made in
---------------
cash, in shares of Common Stock or any combination thereof, as the Board of
Directors shall determine.
(e) Fair Market Value. Fair market value shall be determined in
-----------------
accordance with Section 6.1(c) with the "Determination Date" being
determined by reference to the date of grant or the date of exercise of an
SAR, as applicable.
6.9 Rights as a Stockholder.
-----------------------
The holder of an Option or SAR shall have no rights as a stockholder with
respect to any shares covered by the Option or SAR until the date of issue of a
stock certificate to him or her for such shares. Except as otherwise expressly
provided in the Plan, no adjustment shall be made for dividends or other rights
for which the record date is prior to the date such stock certificate is issued.
6.10 Special Provisions Applicable to Non-Qualified Options and SARs
---------------------------------------------------------------
Granted to Covered Employees.
----------------------------
If the Company is subject to Section 162(m) of the Code, in order for the
full value of Non-Qualified Options or SARs granted to Covered Employees to be
deductible by the Company for federal income tax purposes, the Company may
intend for such Non-Qualified Options or SARs to be treated as "qualified
performance-based compensation" as described in Treas. Reg. (S)1.162-27(e) (or
any successor regulation). In such case, Non-Qualified Options or SARs granted
to Covered Employees shall be subject to the following additional requirements:
(a) such options and rights shall be granted only by the Committee;
and
(b) the exercise price of such Options and the grant price of such
SARs granted shall in no event be less than the fair market value of the
Common Stock as of the date of grant of such Options or SARs.
SECTION 7. Special Provisions Applicable to Awards
- --------- ---------------------------------------
7.1 Grants of Awards. The Board of Directors may grant a Participant an
----------------
Award subject to such terms and conditions as the Board of Directors deems
appropriate, including, without limitation, restrictions on the pledging, sale,
assignment, transfer or other disposition of such shares and the requirement
that the Participant forfeit all or a portion of such shares back to the Company
upon termination of employment.
<PAGE>
-9-
7.2 Conditions. Approvals of Awards may be subject to the following
----------
conditions:
(a) Each Participant receiving an Award shall enter into an agreement
(a "Stock Restriction Agreement") with the Company, if required by the
Board of Directors, in a form specified by the Board of Directors agreeing
to such terms and conditions of the Award as the Board of Directors deems
appropriate.
(b) Shares issued and transferred to a Participant pursuant to an
Award may, if required by the Board of Directors, be deposited with the
Treasurer or other officer of the Company designated by the Board of
Directors to be held until the lapse of the restrictions upon such shares,
and each Participant shall execute and deliver to the Company stock powers
enabling the Company to exercise its rights hereunder.
(c) Certificates for shares issued pursuant to an Award shall, if the
Company shall deem it advisable, bear a legend to the effect that they are
issued subject to specified restrictions.
(d) Certificates representing the shares issued pursuant to an Award
shall be registered in the name of the Participant and shall be owned by
such Participant. Such Participant shall be the holder of record of such
shares for all purposes, including voting and receipt of dividends paid
with respect to such shares.
7.3 Nontransferability. Shares issued pursuant to an Award may not be
------------------
sold, assigned, transferred, alienated, commuted, anticipated, or otherwise
disposed of (except, subject to the provisions of such Participant's Stock
Restriction Agreement, by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or Title
I of ERISA or the rules promulgated thereunder), or pledged or hypothecated as
collateral for a loan or as security for the performance of any obligation, or
be otherwise encumbered, and are not subject to attachment, garnishment,
execution or other legal or equitable process, prior to the lapse of
restrictions on such shares, and any attempt at action in contravention of this
Section shall be null and void. If any Participant should attempt to dispose of
or encumber his or her shares issued pursuant to an Award prior to the lapse of
the restrictions imposed on such shares, his or her interest in such shares
shall terminate.
7.4 Effect of Termination of Employment or Death on Awards. If, prior to
------------------------------------------------------
the lapse of restrictions applicable to Awards, the Participant ceases to be an
employee of the Company or the Related Corporations for any reason, Awards to
such Participant, as to which restrictions have not lapsed, shall be forfeited
to the Company, effective on the date of the Participant's termination of
employment. The Board of Directors shall have the sole power, consistent with
applicable laws, to decide in each case to what extent leaves of absence shall
be deemed a termination of employment.
<PAGE>
-10-
SECTION 8. Special Provisions Applicable to Purchases.
- --------- ------------------------------------------
All approvals of Purchases which provide that the Company has a right to
repurchase the shares subject to such Purchase (the "Restricted Shares") shall
be subject to the terms and conditions set forth in the related agreement (the
"Stock Purchase Restriction Agreement") approved by the Board of Directors, and
shall be subject to the other terms and conditions of this Section 8.
8.1 Conditions. All approvals of Purchases shall be subject to the
----------
following conditions:
(a) Prior to the issuance and transfer of Restricted Shares, the
Participant shall pay to the Company the purchase price (the "Purchase
Price") of the Restricted Shares in cash or in such other manner as shall
be as approved by the Board of Directors.
(b) Restricted Shares issued and transferred to a Participant may, if
required by the Board of Directors, be deposited with the Treasurer or
other officer of the Company designated by the Board of Directors to be
held until the lapse of the restrictions upon such Restricted Shares, and
each Participant shall execute and deliver to the Company stock powers
enabling the Company to exercise its rights hereunder.
(c) Certificates for Restricted Shares shall, if the Company shall
deem it advisable, bear a legend to the effect that they are issued subject
to specified restrictions.
(d) Certificates representing the Restricted Shares shall be
registered in the name of the Participant and shall be owned by such
Participant. Such Participant shall be the holder of record of such
Restricted Shares for all purposes, including voting and receipt of
dividends paid with respect to such Restricted Shares.
8.2 Nontransferability. A Participant's Restricted Shares may not be
------------------
sold, assigned, transferred, alienated, commuted, or otherwise disposed of
(except, subject to the provisions of such Participant's Stock Purchase
Restriction Agreement, by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or Title
I of ERISA or the rules promulgated thereunder), or pledged or hypothecated as
collateral for a loan or as security for the performance of any obligation, or
be otherwise encumbered, and are not subject to attachment, garnishment,
execution or other legal or equitable process, prior to the lapse of
restrictions on such Restricted Shares, and any attempt at action in
contravention of this Section shall be null and void. If any Participant should
attempt to dispose of or encumber his or her Restricted Shares prior to the
lapse of the restrictions imposed on such Restricted Shares, his or her interest
in the Restricted Shares awarded to him or her shall terminate.
SECTION 9. Requirements of Law.
- --------- -------------------
9.1 Violations of Law. No shares shall be issued and delivered upon
-----------------
exercise of any Option or the making of any Award or Purchase or the payment of
any SAR unless and until, in
<PAGE>
-11-
the opinion of counsel for the Company, any applicable registration requirements
of the Securities Act of l933, as amended, any applicable listing requirements
of any national securities exchange on which stock of the same class is then
listed, and any other requirements of law or of any regulatory bodies having
jurisdiction over such issuance and delivery, shall have been fully complied
with. Each Participant may, by accepting Plan Benefits, be required to represent
and agree in writing, for himself or herself and for his or her transferees by
will or the laws of descent and distribution, that the stock acquired by him,
her or them is being acquired for investment. The requirement for any such
representation may be waived at any time by the Board of Directors.
9.2 Compliance with Rule 16b-3. If the Company has a class of stock
--------------------------
registered pursuant to Section 12 of the Exchange Act, the intent of this Plan
is to qualify for the exemption provided by Rule 16b-3 under the Exchange Act.
To the extent any provision of the Plan does not comply with the requirements of
Rule 16b-3, it shall be deemed inoperative to the extent permitted by law and
deemed advisable by the Board of Directors and shall not affect the validity of
the Plan. In the event Rule 16b-3 is revised or replaced, the Board of
Directors may exercise discretion to modify this Plan in any respect necessary
to satisfy the requirements of the revised exemption or its replacement.
SECTION 10. Recapitalization.
- ---------- ----------------
In the event that dividends are payable in Common Stock of the Company or
in the event there are splits, sub-divisions or combinations of shares of Common
Stock of the Company, the number of shares available under the Plan shall be
increased or decreased proportionately, as the case may be, and the number of
shares deliverable upon the exercise thereafter of any Option previously granted
shall be increased or decreased proportionately, as the case may be, without
change in the aggregate purchase price, and the number of shares to which
granted SARs relate shall be increased or decreased proportionately, as the case
may be, and the grant price of such SARs shall be decreased or increased
proportionately, as the case may be.
SECTION 11. Reorganization.
- ---------- --------------
(a) In case the Company is merged or consolidated with another corporation
and the Company is not the surviving corporation, or, in case the property or
stock of the Company is acquired by any other corporation, or in case of a
reorganization or liquidation of the Company, the Board of Directors of the
Company, or the board of directors of any corporation assuming the obligations
of the Company hereunder, shall, as to outstanding Plan Benefits, either (i)
make appropriate provision for the protection of any such outstanding Plan
Benefits by the substitution on an equitable basis of appropriate stock of the
Company or of the merged, consolidated or otherwise reorganized corporation
which will be issuable in respect of the shares of Common Stock of the Company,
provided only that the excess of the aggregate fair market value of the shares
subject to the Plan Benefits immediately after such substitution over the
purchase price thereof is not more than the excess of the aggregate fair market
value of the shares subject to such Plan Benefits immediately before such
substitution over the purchase price thereof, (ii) upon written notice to the
Participants, provide that all unexercised Plan Benefits must be
<PAGE>
-12-
exercised within a specified number of days of the date of such notice or such
Plan Benefits will be terminated, or (iii) upon written notice to the
Participants, provide that the Company or the merged, consolidated or otherwise
reorganized corporation shall have the right, upon the effective date of any
such merger, consolidation, sale of assets or reorganization, to purchase all
Plan Benefits held by each Participant and unexercised as of that date at an
amount equal to the aggregate fair market value on such date of the shares
subject to the Plan Benefits held by such Participant over the aggregate
purchase price therefor, such amount to be paid in cash or, if stock of the
merged, consolidated or otherwise reorganized corporation is issuable in respect
of the shares of the Common Stock of the Company, then, in the discretion of the
Board of Directors, in stock of such merged, consolidated or otherwise
reorganized corporation equal in fair market value to the aforesaid amount. In
any such case the Board of Directors shall, in good faith, determine fair market
value and may, in its discretion, advance the lapse of any waiting or
installment periods and exercise dates.
(b) Notwithstanding anything herein to the contrary, in the event that
following or in connection with a Change-in-Control (as defined below), a
Participant's employment with, or service as a director or consultant of, the
Company is (i) terminated by the Company for any reason other than Cause (as
defined below), or (ii) terminated by the Participant for Good Reason (as
defined below), any portion of a Participant's Plan Benefit which would
otherwise vest or become exercisable solely with the passage of time and the
Participant's continued employment with or service as a director or consultant
of the Company, shall immediately vest and become fully exercisable and all
rights relevant to such Plan Benefit shall accrue immediately to such
Participant, unless otherwise explicitly provided in the applicable Award
agreement. The term "Cause" shall mean (i) habitual intoxication, (ii) illegal
drug use or addiction, (iii) conviction of a felony (or plea of guilty or nolo
contendere), (iv) material failure or inability to perform one's agreements,
duties or obligations as an employee, director or consultant, other than from
illness or injury, and (v) willful misconduct or negligence in the performance
of one's agreements, duties or obligations as an employee, director or
consultant. The term "Change-in-Control" shall mean: (i) any sale, lease,
exchange or other transfer (in one transaction or series of transactions) of all
or substantially all of the assets of the Company; (ii) individuals who, as of
the date hereof, constitute the entire Board of Directors of the Company (the
"Incumbent Directors") cease for any reason to constitute at least a majority of
the Board of Directors, provided that any individual becoming a director
subsequent to the date hereof whose election or nomination for election was
approved by a vote of at least a majority of the then Incumbent Directors shall
be, for the purposes of this provision, considered as though such individual
were an Incumbent Director; (iii) any consolidation or merger of the Company
with any other entity (including, without limitation, a triangular merger) where
the stockholders of the Company immediately prior to the consolidation or
merger, would not, immediately after the consolidation or merger, beneficially
own, directly or indirectly, shares representing fifty percent (50%) of the
combined voting power of all of the outstanding securities of the entity issuing
cash or securities in the consolidation or merger (or its ultimate parent
corporation, if any); (iv) a person, including a "person" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), other than the Company or an employee benefit plan sponsored by the
Company, becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
forty percent (40%) or more of the total voting power represented by the
Company's then outstanding voting securities, except for a person who was a
<PAGE>
-13-
beneficial owner of forty percent (40%) or more of the total voting power of the
Company's outstanding voting securities on April 29, 1999; or (v) the Board of
Directors of the Company, by a vote of a majority of all the Directors, adopts a
resolution to the effect that a "Change-in-Control" has occurred for purposes of
this Agreement. The term "Good Reason" shall mean that (i) the Participant's
compensation has been materially reduced, (ii) the Participant's position,
duties or responsibilities have been materially changed, (iii) the Participant,
if an employee of the Company, has been required to move his or her principal
residence because his primary place of employment is moved to a location greater
than thirty (30) miles away from its then current location, (iv) the Company has
not paid to the Participant when due any salary, bonus or other material benefit
due to him or her, or (v) there exists a breach by the Company of any material
term or provision of any employment agreement between it and the Participant,
provided, however, that, in any such event, the Participant shall notify the
Company of such event and give it fifteen (15) days to remedy the situation
before terminating his or her employment.
SECTION 12. No Special Employment Rights.
- ---------- ----------------------------
Nothing contained in the Plan or in any Plan Benefit documentation shall
confer upon any Participant receiving a grant of any Plan Benefit any right with
respect to the continuation of his or her employment by the Company (or any
Related Corporation) or interfere in any way with the right of the Company (or
any Related Corporation), subject to the terms of any separate employment
agreement to the contrary, at any time to terminate such employment or to
increase or decrease the compensation of the Participant from the rate in
existence at the time of the grant of any Plan Benefit. Whether an authorized
leave of absence, or absence in military or government service, shall constitute
termination of employment shall be determined by the Board of Directors.
SECTION 13. Amendment of the Plan.
- ---------- ---------------------
The Board of Directors may at any time and from time to time modify or
amend the Plan in any respect. The termination or any modification or amendment
of the Plan shall not, without the consent of a recipient of any Plan Benefit,
affect his or her rights under any Plan Benefit previously granted. With the
consent of the affected Participant, the Board of Directors may amend
outstanding agreements relating to any Plan Benefit, in a manner not
inconsistent with the Plan. The Board of Directors hereby reserves the right to
amend or modify the terms and provisions of the Plan and of any outstanding
Options to the extent necessary to qualify any or all Options under the Plan for
such favorable federal income tax treatment (including deferral of taxation upon
exercise) as may be afforded incentive stock options under Section 422 of the
Code, provided, however, that the consent of an optionee is required if such
amendment or modification would cause unfavorable income tax treatment for such
optionee.
<PAGE>
-14-
SECTION 14. Withholding.
- ---------- -----------
The Company's obligation to deliver shares of stock upon the exercise of
any Option or the granting of an Award or to make payment upon any exercise of
any SAR or making of a Purchase shall be subject to the satisfaction by the
Participant of all applicable federal, state and local income and employment tax
withholding requirements.
SECTION 15. Effective Date and Duration of the Plan.
- ---------- ---------------------------------------
15.1 Effective Date. The Plan shall become effective when adopted by the
--------------
Board of Directors, but no Incentive Stock Option granted under the Plan shall
become exercisable unless and until the Plan shall have been approved by the
Company's stockholders. If such stockholder approval is not obtained within l2
months after the date of the Board's adoption of the Plan, then any Incentive
Stock Options previously granted under the Plan shall terminate and no further
Incentive Stock Options shall be granted. Subject to such limitation, Options
may be granted under the Plan at any time after the effective date and before
the date fixed herein for termination of the Plan.
15.2 Duration. Unless sooner terminated in accordance with Section l1
--------
hereof, the Plan shall terminate upon the earlier of (i) the tenth anniversary
of the date of its adoption by the Board of Directors or (ii) the date on which
all shares available for issuance under the Plan shall have been issued pursuant
to any Awards or Purchases or the exercise or cancellation of Options and SARs
granted hereunder. If the date of termination is determined under (i) above,
then Plan Benefits outstanding on such date shall continue to have force and
effect in accordance with the provisions of the instruments evidencing such Plan
Benefits.
SECTION 16. Governing Law.
- ---------- -------------
The Plan and all actions taken thereunder shall be governed by the laws of
the State of Connecticut.
<PAGE>
-15-
Register of Amendments to Plan
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Paragraph No. and Change Board Approval Date of Stockholder Approval
------------------------ -------------- ----------------------------
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Section 11 was amended.....
- -----------------------------------------------------------------------------------------------
Section 2.1 was amended to allow September __, 1999 September __, 1999
the Board of Directors to
delegate the power to grant
options under the Plan to
non-officers.
- -----------------------------------------------------------------------------------------------
Section 2.1 was amended to September __, 1999 September __, 1999
provide that under certain
circumstances, all decisions and
acts of the Compensation
Committee shall be subject to
the approval of the Board of
Directors.
- -----------------------------------------------------------------------------------------------
Section 4 was amended to increase September __, 1999 September __, 1999
the number of authorized shares
from 7,400,000 to 12,364,200
- -----------------------------------------------------------------------------------------------
Section 5 was amended to change September __, 1999 September __, 1999
the expiration date of the Plan
from March 30, 2009 to February
19, 2009. Are you sure the
original plan did not have a
2/19/09 date? If so, is there a
tax issue with a 3/30/09 date?
- -----------------------------------------------------------------------------------------------
Section 6.1 was amended to delete September __, 1999 September __, 1999
the minimum exercise price for
Non-Qualified Options granted
under the Plan and to increase
the limitation on the maximum
number of shares with respect to
which Options of SARs may be
granted under the Plan to any
one employee from 250,000 to
1,500,000 shares.
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 10.02
DSL.net, Inc.
1999 EMPLOYEE STOCK PURCHASE PLAN
Article 1 - Purpose.
- -------------------
This 1999 Employee Stock Purchase Plan (the "Plan") is intended to encourage
stock ownership by all eligible employees of DSL.net, Inc., a Delaware
corporation (the "Company"), and its participating subsidiaries (as defined in
Article 17) so that they may share in the growth of the Company by acquiring or
increasing their proprietary interest in the Company. The Plan is designed to
encourage eligible employees to remain in the employ of the Company and its
participating subsidiaries. The Plan is intended to constitute an "employee
stock purchase plan" within the meaning of Section 423(b) of the Internal
Revenue Code of 1986, as amended (the "Code").
Article 2 - Administration of the Plan.
- --------------------------------------
The Plan may be administered by a committee appointed by the Board of
Directors of the Company (the "Committee"), subject to such limitations as may
be approved by the Board of Directors. The Committee shall consist of not less
than two members of the Company's Board of Directors. The Board of Directors
may from time to time remove members from, or add members to, the Committee.
Vacancies on the Committee, however caused, shall be filled by the Board of
Directors. The Committee may select one of its members as Chairman, and shall
hold meetings at such times and places as it may determine. Acts by a majority
of the Committee, or acts reduced to or approved in writing by a majority of the
members of the Committee, shall be the valid acts of the Committee, subject to
such limitations as approved by the Board of Directors.
The interpretation and construction by the Committee of any provisions of the
Plan or of any option granted under it shall be conclusive subject to such
limitations as are approved by the Board of Directors. The Committee may from
time to time adopt such rules and regulations for carrying out the Plan as it
may deem best, provided that any such rules and regulations shall be subject to
such limitations as approved by the Board of Directors and applied on a uniform
basis to all employees under the Plan. No member of the Board of Directors or
the Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any option granted under it.
In the event the Board of Directors fails to appoint or disbands the
Committee, the Board of Directors shall have all power and authority to
administer the Plan. In such event, the word "Committee" wherever used herein
shall be deemed to mean the Board of Directors.
Article 3 - Eligible Employees.
- ------------------------------
All employees of the Company or any of its participating subsidiaries whose
customary employment is more than 20 hours per week and for more than three
months in any calendar year and who have completed at least three months of
service shall be eligible to receive options under the Plan to purchase common
stock of the Company, and all eligible employees shall have the same rights and
privileges hereunder; provided, however, that with respect to the first Payment
Period (as defined in Article 5), all persons who are employees of the Company
or any of its participating subsidiaries on the
<PAGE>
-2-
date of the closing of the initial public offering whose customary employment is
more than 20 hours per week and for more than three months in any calendar year
shall be eligible to receive options under the Plan to purchase common stock of
the Company. Persons who are eligible employees on the first business day of any
Payment Period shall receive their options as of such day. Persons who become
eligible employees after any date on which options are granted under the Plan
shall be granted options on the first day of the next succeeding Payment Period
on which options are granted to eligible employees under the Plan. In no event,
however, may an employee be granted an option if such employee, immediately
after the option was granted, would be treated as owning stock possessing five
percent or more of the total combined voting power or value of all classes of
stock of the Company or of any parent corporation or subsidiary corporation, as
the terms "parent corporation" and "subsidiary corporation" are defined in
Section 424(e) and (f) of the Code. For purposes of determining stock ownership
under this paragraph, the rules of Section 424(d) of the Code shall apply, and
stock which the employee may purchase under outstanding options shall be treated
as stock owned by the employee.
Article 4 - Stock Subject to the Plan.
- -------------------------------------
The stock subject to the options under the Plan shall be shares of the
Company's authorized but unissued common stock, par value $.0005 per share (the
"Common Stock"), or shares of Common Stock reacquired by the Company, including
shares purchased in the open market. The aggregate number of shares which may
be issued pursuant to the Plan is 300,000, subject to adjustment as provided in
Article 12. If any option granted under the Plan shall expire or terminate for
any reason without having been exercised in full or shall cease for any reason
to be exercisable in whole or in part, the unpurchased shares subject thereto
shall again be available under the Plan.
Article 5 - Payment Period and Stock Options.
- --------------------------------------------
The first Payment Period during which payroll deductions will be accumulated
under the Plan shall commence immediately upon the initial offering of the
Common Stock to the public (the "Offering") and shall end on February 29, 2000.
For the remainder of the duration of the Plan, Payment Periods shall consist of
the six-month periods commencing on March 1 and September 1 and ending on August
31 and the last day of February, respectively, of each calendar year.
Twice each year, on the first business day of each Payment Period, the
Company will grant to each eligible employee who is then a participant in the
Plan an option to purchase on the last day of such Payment Period, at the
exercise price hereinafter provided for, a maximum of 500 shares, on condition
that such employee remains eligible to participate in the Plan throughout the
remainder of such Payment Period. The participant shall be entitled to exercise
the option so granted only to the extent of the participant's accumulated
payroll deductions on the last day of such Payment Period. If the participant's
accumulated payroll deductions on the last day of the Payment Period would
enable the participant to purchase more than 500 shares except for the 500-share
limitation, the excess of the amount of the accumulated payroll deductions over
the aggregate purchase price of the 500 shares shall be promptly refunded to the
participant by the Company, without interest. The exercise price per share for
each Payment Period shall be the lesser of (i) 85% of the average market price
of the Common Stock on the first business day of the Payment Period and (ii) 85%
of the average market price of the Common Stock on the last business day of the
Payment Period, in either event rounded up to the nearest cent. Notwithstanding
the foregoing, with regard to the first Payment Period, the exercise price shall
be calculated as the lesser of (i) 85% of the price per share at which the
Common Stock is sold to the public upon the Offering, without regard to any
applicable discounts or commission provided to the underwriters, and (ii) 85% of
the average market price of the Common Stock on the last business day of
<PAGE>
-3-
the First Payment Period. The foregoing limitation on the number of shares
subject to option and the Exercise price shall be subject to adjustment as
provided in Article 12.
For purposes of the Plan, the term "average market price" on any date means
(i) the average on that date of the high and low prices of the Common Stock on
the principal national securities exchange on which the Common Stock is traded,
if the Common Stock is then traded on a national securities exchange; or (ii)
the last reported sale price on that date of the Common Stock on the Nasdaq
National Market or the Nasdaq SmallCap Market, if the Common Stock is not then
traded on a national securities exchange; or (iii) the average of the closing
bid and asked prices last quoted on that date by an established quotation
service for over-the-counter securities, if the Common Stock is not reported on
the Nasdaq National Market or the Nasdaq SmallCap Market; or (iv) if the Common
Stock is not publicly traded, the fair market value of the Common Stock as
determined by the Committee after taking into consideration all factors which it
deems appropriate, including, without limitation, recent sale and offer prices
of the Common Stock in private transactions negotiated at arm's length.
For purposes of the Plan, the term "business day" means a day on which there
is trading on the NASDAQ National Market or the aforementioned national
securities exchange, whichever is applicable pursuant to the preceding
paragraph; and if neither is applicable, a day that is not a Saturday, Sunday or
legal holiday in State of Connecticut.
No employee shall be granted an option which permits the employee's right to
purchase stock under the Plan, and under all other Section 423(b) employee stock
purchase plans of the Company and any parent or subsidiary corporations, to
accrue at a rate which exceeds $25,000 of fair market value of such stock
(determined on the date or dates that options on such stock were granted) for
each calendar year in which such option is outstanding at any time. The purpose
of the limitation in the preceding sentence is to comply with Section 423(b)(8)
of the Code. If the participant's accumulated payroll deductions on the last
day of the Payment Period would otherwise enable the participant to purchase
Common Stock in excess of the Section 423(b)(8) limitation described in this
paragraph, the excess of the amount of the accumulated payroll deductions over
the aggregate purchase price of the shares actually purchased shall be promptly
refunded to the participant by the Company, without interest.
Article 6 - Exercise of Option.
- ------------------------------
Each eligible employee who continues to be a participant in the Plan on the
last day of a Payment Period shall be deemed to have exercised his or her option
on such date and shall be deemed to have purchased from the Company such number
of full shares of Common Stock reserved for the purpose of the Plan as the
participant's accumulated payroll deductions on such date will pay for at the
Exercise price, subject to the 500-share limit of the option and the Section
423(b)(8) limitation described in Article 5. If the individual is not a
participant on the last day of a Payment Period, then he or she shall not be
entitled to exercise his or her option. Only full shares of Common Stock may be
purchased under the Plan. Unused payroll deductions remaining in a
participant's account at the end of a Payment Period by reason of the inability
to purchase a fractional share shall be carried forward to the next Payment
Period.
Article 7 - Authorization for Entering the Plan.
- -----------------------------------------------
An employee may elect to enter the Plan by filling out, signing and
delivering to the Company an authorization:
<PAGE>
-4-
A. Stating the percentage to be deducted regularly from the employee's
pay;
B. Authorizing the purchase of stock for the employee in each Payment
Period in accordance with the terms of the Plan; and
C. Specifying the exact name or names in which stock purchased for the
employee is to be issued as provided under Article 11 hereof.
Such authorization must be received by the Company at least ten days before the
first day of the next succeeding Payment Period and shall take effect only if
the employee is an eligible employee on the first business day of such Payment
Period; provided, however, that with respect to the first Payment Period, such
authorization must be received by the Company no later than two (2) weeks
following the date of the closing of the initial public offering of shares of
the Company's Common Stock.
Unless a participant files a new authorization or withdraws from the Plan,
the deductions and purchases under the authorization the participant has on file
under the Plan will continue from one Payment Period to succeeding Payment
Periods as long as the Plan remains in effect.
The Company will accumulate and hold for each participant's account the
amounts deducted from his or her pay. No interest will be paid on these
amounts.
Article 8 - Maximum Amount of Payroll Deductions.
- ------------------------------------------------
An employee may authorize payroll deductions in an amount (expressed as a
whole percentage) not less than one percent (1%) but not more than ten percent
(10%) of the employee's total compensation, including base pay or salary and any
overtime, bonuses and commissions.
Article 9 - Change in Payroll Deductions.
- ----------------------------------------
Deductions may not be increased or decreased during a Payment Period.
However, a participant may withdraw in full from the Plan.
Article 10 - Withdrawal from the Plan.
- -------------------------------------
A participant may withdraw from the Plan (in whole but not in part) at any
time prior to the last day of a Payment Period by delivering a withdrawal notice
to the Company. Effective upon the receipt of any such withdrawal notice, the
Company shall promptly refund, without interest, the entire balance of such
participant's payroll deduction account under the Plan.
To re-enter the Plan, an employee who has previously withdrawn must file a
new authorization at least ten days before the first day of the next Payment
Period in which he or she wishes to participate. The employee's re-entry into
the Plan becomes effective at the beginning of such Payment Period, provided
that he or she is an eligible employee on the first business day of the Payment
Period.
Article 11 - Issuance of Stock.
- ------------------------------
Certificates for stock issued to participants shall be delivered as soon as
practicable after each Payment Period by the Company's transfer agent.
<PAGE>
-5-
Stock purchased under the Plan shall be issued only in the name of the
participant, or if the participant's authorization so specifies, in the name of
the participant and another person of legal age as joint tenants with rights of
survivorship.
Article 12 - Adjustments.
- ------------------------
Upon the happening of any of the following described events, a participant's
rights under outstanding options granted under the Plan shall be adjusted as
hereinafter provided:
A. In the event that the shares of Common Stock shall be subdivided or
combined into a greater or smaller number of shares or if, upon a
reorganization, split-up, liquidation, recapitalization or the like of the
Company, the shares of Common Stock shall be exchanged for other securities
of the Company, each participant shall be entitled, subject to the conditions
herein stated, to purchase such number of shares of Common Stock or amount of
other securities of the Company as were exchangeable for the number of shares
of Common Stock that such participant would have been entitled to purchase
except for such action, and appropriate adjustments shall be made in the
purchase price per share to reflect such subdivision, combination or
exchange; and
B. In the event the Company shall issue any of its shares as a stock
dividend upon or with respect to the shares of stock of the class which shall
at the time be subject to option hereunder, each participant upon exercising
such an option shall be entitled to receive (for the purchase price paid upon
such exercise) the shares as to which the participant is exercising his or
her option and, in addition thereto (at no additional cost), such number of
shares of the class or classes in which such stock dividend or dividends were
declared or paid, and such amount of cash in lieu of fractional shares, as is
equal to the number of shares thereof and the amount of cash in lieu of
fractional shares, respectively, which the participant would have received if
the participant had been the holder of the shares as to which the participant
is exercising his or her option at all times between the date of the granting
of such option and the date of its exercise.
Upon the happening of any of the foregoing events, the class and aggregate
number of shares set forth in Article 4 hereof which are subject to options
which have been or may be granted under the Plan and the limitations set forth
in the second paragraph of Article 5 shall also be appropriately adjusted to
reflect the events specified in paragraphs A and B above. Notwithstanding the
foregoing, any adjustments made pursuant to paragraphs A or B shall be made only
after the Committee, based on advice of counsel for the Company, determines
whether such adjustments would constitute a "modification" (as that term is
defined in Section 424 of the Code). If the Committee determines that such
adjustments would constitute a modification, it may refrain from making such
adjustments.
If the Company is to be consolidated with or acquired by another entity in a
merger, a sale of all or substantially all of the Company's assets or otherwise
(an "Acquisition"), the Committee or the board of directors of any entity
assuming the obligations of the Company hereunder (the "Successor Board") shall,
with respect to options then outstanding under the Plan, either (i) make
appropriate provision for the continuation of such options by arranging for the
substitution on an equitable basis for the shares then subject to such options
either (a) the consideration payable with respect to the outstanding shares of
the Common Stock in connection with the Acquisition, (b) shares of stock of the
successor corporation, or a parent or subsidiary of such corporation, or (c)
such other securities as the Successor Board deems appropriate, the fair market
value of which shall not materially exceed the fair market value of the shares
of Common Stock subject to such options immediately preceding the Acquisition;
or (ii) terminate each participant's options in exchange for a cash payment
equal to the excess of (a) the fair market value on
<PAGE>
-6-
the date of the Acquisition of the number of shares of Common Stock that the
participant's accumulated payroll deductions as of the date of the Acquisition
could purchase at an exercise price determined with reference only to the first
business day of the applicable Payment Period and subject to the 500-share, Code
Section 423(b)(8) and fractional-share limitations on the amount of stock a
participant would be entitled to purchase, over (b) the result of multiplying
such number of shares by such exercise price.
The Committee or Successor Board shall determine the adjustments to be made
under this Article 12, and its determination shall be conclusive.
Article 13 - No Transfer or Assignment of Employee's Rights.
- -----------------------------------------------------------
An employee's rights under this Plan are the employee's alone and may not be
transferred or assigned to or availed of by, any other person other than by will
or the laws of descent and distribution. Any option granted under the Plan may
not be transferred or assigned and may be exercised only by the participant.
Article 14 - Termination of Employee's Rights.
- ---------------------------------------------
Whenever a participant ceases to be an eligible employee because of
retirement, voluntary or involuntary termination, resignation, layoff,
discharge, death or for any other reason, his or her rights under the Plan shall
immediately terminate, and the Company shall promptly refund, without interest,
the entire balance of his or her payroll deduction account under the Plan.
Notwithstanding the foregoing, eligible employment shall be treated as
continuing intact while a participant is on military leave, sick leave or other
bona fide leave of absence, for up to 90 days, or for so long as the
participant's right to re-employment is guaranteed either by statute or by
contract, if longer than 90 days.
If a participant's payroll deductions are interrupted by any legal process, a
withdrawal notice will be considered as having been received from the
participant on the day the interruption occurs.
Article 15 - Termination and Amendments to Plan.
- -----------------------------------------------
Unless terminated sooner as provided below, the Plan shall terminate on
December 31, 2009. The Plan may be terminated at any time by the Company's
Board of Directors but such termination shall not affect options then
outstanding under the Plan. It will terminate in any case when all or
substantially all of the unissued shares of stock reserved for the purposes of
the Plan have been purchased. If at any time shares of stock reserved for the
purpose of the Plan remain available for purchase but not in sufficient number
to satisfy all then unfilled purchase requirements, the available shares shall
be apportioned among participants in proportion to the amount of payroll
deductions accumulated on behalf of each participant that would otherwise be
used to purchase stock, and the Plan shall terminate. Upon such termination or
any other termination of the Plan, all payroll deductions not used to purchase
stock will be refunded, without interest.
The Committee or the Board of Directors may from time to time adopt
amendments to the Plan provided that, without the approval of the stockholders
of the Company, no amendment may (i) increase the number of shares that may be
issued under the Plan; (ii) change the class of employees eligible to receive
options under the Plan, if such action would be treated as the adoption of a new
plan for purposes of Section 423(b) of the Code; or (iii) cause Rule 16b-3 under
the Securities Exchange Act of 1934 to become inapplicable to the Plan.
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Article 16 - Limits on Sale of Stock Purchased under the Plan.
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The Plan is intended to provide shares of Common Stock for investment and not
for resale. The Company does not, however, intend to restrict or influence any
employee in the conduct of his or her own affairs. An employee may, therefore,
sell stock purchased under the Plan at any time the employee chooses, subject to
compliance with any applicable federal or state securities laws and subject to
any restrictions imposed under Article 21 to ensure that tax withholding
obligations are satisfied. THE EMPLOYEE ASSUMES THE RISK OF ANY MARKET
FLUCTUATIONS IN THE PRICE OF THE STOCK.
Article 17 - Participating Subsidiaries.
- ---------------------------------------
The term "participating subsidiary" shall mean any present or future
subsidiary of the Company, as that term is defined in Section 424(f) of the
Code, which is designated from time to time by the Board of Directors to
participate in the Plan. The Board of Directors shall have the power to make
such designation before or after the Plan is approved by the stockholders.
Article 18 - Optionees Not Stockholders.
- ---------------------------------------
Neither the granting of an option to an employee nor the deductions from his
or her pay shall constitute such employee a stockholder of the shares covered by
an option until such shares have been actually purchased by the employee.
Article 19 - Application of Funds.
- ---------------------------------
The proceeds received by the Company from the sale of Common Stock pursuant
to options granted under the Plan will be used for general corporate purposes.
Article 20 - Notice to Company of Disqualifying Disposition.
- -----------------------------------------------------------
By electing to participate in the Plan, each participant agrees to notify the
Company in writing immediately after the participant transfers Common Stock
acquired under the Plan, if such transfer occurs within two years after the
first business day of the Payment Period in which such Common Stock was
acquired. Each participant further agrees to provide any information about such
a transfer as may be requested by the Company or any subsidiary corporation in
order to assist it in complying with the tax laws. Such dispositions generally
are treated as "disqualifying dispositions" under Sections 421 and 424 of the
Code, which have certain tax consequences to participants and to the Company and
its participating subsidiaries.
Article 21 - Withholding of Additional Income Taxes.
- ---------------------------------------------------
By electing to participate in the Plan, each participant acknowledges that
the Company and its participating subsidiaries are required to withhold taxes
with respect to the amounts deducted from the participant's compensation and
accumulated for the benefit of the participant under the Plan, and each
participant agrees that the Company and its participating subsidiaries may
deduct additional amounts from the participant's compensation, when amounts are
added to the participant's account, used to purchase Common Stock or refunded,
in order to satisfy such withholding obligations. Each participant further
acknowledges that when Common Stock is purchased under the Plan the Company and
its participating subsidiaries may be required to withhold taxes with respect to
all or a portion of the
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difference between the fair market value of the Common Stock purchased and its
purchase price, and each participant agrees that such taxes may be withheld from
compensation otherwise payable to such participant. It is intended that tax
withholding will be accomplished in such a manner that the full amount of
payroll deductions elected by the participant under Article 7 will be used to
purchase Common Stock. However, if amounts sufficient to satisfy applicable tax
withholding obligations have not been withheld from compensation otherwise
payable to any participant, then, notwithstanding any other provision of the
Plan, the Company may withhold such taxes from the participant's accumulated
payroll deductions and apply the net amount to the purchase of Common Stock,
unless the participant pays to the Company, prior to the exercise date, an
amount sufficient to satisfy such withholding obligations. Each participant
further acknowledges that the Company and its participating subsidiaries may be
required to withhold taxes in connection with the disposition of stock acquired
under the Plan and agrees that the Company or any participating subsidiary may
take whatever action it considers appropriate to satisfy such withholding
requirements, including deducting from compensation otherwise payable to such
participant an amount sufficient to satisfy such withholding requirements or
conditioning any disposition of Common Stock by the participant upon the payment
to the Company or such subsidiary of an amount sufficient to satisfy such
withholding requirements.
Article 22 - Governmental Regulations.
- -------------------------------------
The Company's obligation to sell and deliver shares of Common Stock under the
Plan is subject to the approval of any governmental authority required in
connection with the authorization, issuance or sale of such shares.
Government regulations may impose reporting or other obligations on the
Company with respect to the Plan. For example, the Company may be required to
identify shares of Common Stock issued under the Plan on its stock ownership
records and send tax information statements to employees and former employees
who transfer title to such shares.
Article 23 - Governing Law.
- --------------------------
The validity and construction of the Plan shall be governed by the laws of
State of Delaware, without giving effect to the principles of conflicts of law
thereof.
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Date Approved by Board of Directors of the Company:
Date Approved by Stockholders of the Company:
