<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 20, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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AKAMAI TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 7389 04-3432319
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
201 BROADWAY
CAMBRIDGE, MASSACHUSETTS 02139
(617) 250-3000
(ADDRESS INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
ROBERT O. BALL III, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
AKAMAI TECHNOLOGIES, INC.
201 BROADWAY
CAMBRIDGE, MASSACHUSETTS 02139
(617) 250-3000
(NAME, ADDRESS INCLUDING ZIP CODE AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
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<S> <C>
JOHN H. CHORY, ESQ. KEITH F. HIGGINS, ESQ.
SUSAN W. MURLEY, ESQ. DAVID B. WALEK, ESQ.
HALE AND DORR LLP ROPES & GRAY
60 STATE STREET ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02109 BOSTON, MASSACHUSETTS 02110
TELEPHONE: (617) 526-6000 TELEPHONE: (617) 951-7000
TELECOPY: (617) 526-5000 TELECOPY: (617) 951-7050
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date hereof.
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,
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 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 number of the earlier effective registration statement for the same
offering. [ ]
- ---------
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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<CAPTION>
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(1) REGISTRATION FEE(2)
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<S> <C> <C>
Common Stock, $.01 par value per share.................... $86,250,000 $23,978
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</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(o) under the Securities Act of 1933,
as amended.
(2) Calculated pursuant to Rule 457(a) based on an estimate of the proposed
maximum aggregate offering price.
------------------------
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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and we are not soliciting offers to buy these
securities in any state where the offer or sale is not permitted.
PROSPECTUS (Subject to Completion)
Issued , 1999
Shares
[AKAMAI LOGO]
COMMON STOCK
------------------------
AKAMAI TECHNOLOGIES, INC. IS OFFERING SHARES OF COMMON STOCK.
THIS IS OUR INITIAL PUBLIC OFFERING AND NO PUBLIC MARKET CURRENTLY EXISTS FOR
OUR SHARES. WE ANTICIPATE THAT THE INITIAL PUBLIC OFFERING PRICE WILL BE BETWEEN
$ AND $ PER SHARE.
------------------------
WE HAVE APPLIED TO LIST OUR COMMON STOCK ON THE NASDAQ NATIONAL MARKET UNDER THE
SYMBOL "AKAM."
------------------------
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 6.
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PRICE $ A SHARE
------------------------
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<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS AKAMAI
---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Per Share.................... $ $ $
Total........................ $ $ $
</TABLE>
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
Akamai has granted the underwriters the right to purchase up to an additional
shares to cover over-allotments. Morgan Stanley & Co. Incorporated
expects to deliver the shares of common stock to purchasers on , 1999.
------------------------
MORGAN STANLEY DEAN WITTER
DONALDSON, LUFKIN & JENRETTE
SALOMON SMITH BARNEY
THOMAS WEISEL PARTNERS LLC
, 1999
<PAGE> 3
[GATEFOLD ARTWORK]
TO COME
[Narrative description of graphic material omitted in electronically filed
document
The following text is at the top of the page and spans the front cover foldout:
AKAMAI's INTERNET CONTENT DELIVERY SERVICE
The following text appears on the left hand side of the inside front cover
foldout above the first graphic:
Internet Content Delivery Without FreeFlow Service
The left hand side of the inside front cover contains a graphic that consists
of a personal computer on the left and a server on the right. The server is
labeled "Customer Web Server." Clouds and arrows cross back and forth between
the personal computer and the Web Server.
Below this graphic the following text appears:
The arrows are labeled as follows:
- Step 1 User enters URL
- Step 2 Web Server returns HTML with embedded URLS
- Step 3 User browsers requests embedded objects
- Step 4 Rich content served
Akamai's technology changes the way in which content on a Web page is delivered
to an Internet user without interrupting the normal data flow. Normally, when a
user clicks on any Web page, the Web site returns a Hypertext Markup Language,
or HTML, text file containing text and formatting instructions which the browser
uses to display the page. This text file also contains the Universal Resource
Locators, or URLs, of non-text objects on the page, such as photographs, banner
advertisements, graphics and software downloads.
The following text appears on the right hand side of the inside front cover
above a second graphic:
Internet Content Delivery With FreeFlow Service.
The right hand side of the front cover contains a graphic that consists of a
personal computer on the left and a server on the right labeled "Customer Web
Server." Below the personal computer there is a server labeled "Akamai Server."
Clouds and arrows cross back and forth between the personal computer and the Web
Server and the personal computer and the Akamai Server. The arrows are labeled
as follows:
- Step 1 User enters URL
- Step 2 Web server returns HTML with embedded URLs
- Step 3 User browser requests embedded objects
- Step 4 Rich content served
below the graphic the following text appears
Akamai's customers identify which of their Web objects are to be delivered over
Akamai's network. The customer then runs a software utility provided by Akamai,
called FreeFlow Launcher, which searches for the URLs of the selected objects
and tags them with a special code. The result is that when a user's browser
downloads an HTML file containing the coded Web objects for that page, the
browser is automatically pointed to Akamai's network to retrieve those objects.
Our process does not require any modification to the browser or other personal
computer configuration changes. While Akamai can serve the HTML as well as the
objects embedded in it, our customers typically choose to serve the HTML
themselves to maintain direct contact with the user. Thus, even while users are
receiving content from our servers, our customers can continue to count Web site
visitors, track user demographics and dynamically assemble Web page content,
including the insertion of targeted advertising and other personalized content.]
<PAGE> 4
TABLE OF CONTENTS
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PAGE
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PROSPECTUS SUMMARY..................... 3
RISK FACTORS........................... 6
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS........................... 16
USE OF PROCEEDS........................ 17
DIVIDEND POLICY........................ 17
CAPITALIZATION......................... 18
DILUTION............................... 19
SELECTED FINANCIAL DATA................ 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS........................... 21
</TABLE>
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PAGE
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BUSINESS............................... 25
MANAGEMENT............................. 36
RELATED PARTY TRANSACTIONS............. 41
PRINCIPAL STOCKHOLDERS................. 44
DESCRIPTION OF CAPITAL STOCK........... 46
SHARES ELIGIBLE FOR FUTURE SALE........ 48
UNDERWRITERS........................... 50
LEGAL MATTERS.......................... 52
EXPERTS................................ 52
WHERE YOU CAN FIND MORE INFORMATION.... 52
INDEX TO FINANCIAL STATEMENTS.......... F-1
</TABLE>
------------------------
UNTIL , 1999 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS THAT BUY, SELL OR TRADE THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
2
<PAGE> 5
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information about Akamai and the common stock being sold in this offering and
our financial statements and accompanying notes appearing elsewhere in this
prospectus.
AKAMAI TECHNOLOGIES, INC.
We provide a global Internet content delivery service that improves Web
site speed and reliability and protects against Web site crashes due to demand
overloads. Our FreeFlow service, which we sell to Global 2000 and
Internet-centric businesses, delivers our customers' Web content through a
worldwide server network by locating the content geographically closer to their
users. Using software that is based on our proprietary algorithms, we monitor
Internet traffic patterns and deliver our customers' content by the most
efficient route. Our service is easy to implement and does not require our
customers or their Web site visitors to make any hardware or software
modifications. Using our FreeFlow service, our customers have been able to more
than double the speed at which they deliver content to their users and, in some
instances, have been able to improve speeds by ten times or more.
The ability of a Web site to attract users is in part based on the richness
of its content. Increasingly, Web site owners want to enhance their content by
adding graphics, such as photographs, images and logos, as well as deploying
newer technologies, such as video and audio streaming, animation and software
downloads. While richer content attracts more visitors, it also places
increasing demands on the Web site to deliver the content quickly and reliably.
As a result, Web site owners frequently elect to constrain the amount of rich
content on their Web sites, thus sacrificing the quality of the user experience
to maintain minimally acceptable performance levels.
To use our service, customers identify and tag portions of their Web site
content that require significant amounts of bandwidth, such as advertising
banners, icons, graphics and software downloads. These tagged items are
delivered over our server network. When users request this content, which we
call "Akamaized" content, our FreeFlow service routes the request to the server
that is best able to deliver the content most quickly based on the geographic
proximity, performance and congestion of all available servers on our network.
Our technology originated from research that our founders began developing
at the Massachusetts Institute of Technology in 1995. We introduced our FreeFlow
service commercially in April 1999. As of July 31, 1999, we had 900 Akamai
servers deployed in 15 countries across 25 telecommunications networks,
providing our customers with a guaranteed global Internet content delivery
service. Our customers, which operate many of the most trafficked Web sites,
include Apple Computer, CNN Interactive, Discovery Channel Online, Infoseek, J.
Crew.com, The Motley Fool and Yahoo!.
We currently sell our service primarily through a direct sales force. Our
plan is to continue to pursue heavily trafficked Web sites through our direct
sales force and to penetrate other markets through indirect distribution
channels. Currently our sales force is actively targeting primarily domestic
companies, focusing on the 300 Web sites that have the greatest number of
visitors, Fortune 100 companies and Global 2000 companies with large operations
in the United States.
RECENT DEVELOPMENTS
In August 1999 we entered into a strategic alliance with Cisco Systems to
enhance and jointly develop new content routing, switching and caching
technologies to improve the performance of Web content delivery. Cisco purchased
shares of our Series E convertible preferred stock for an aggregate purchase
price of approximately $49.0 million in August 1999. For more detailed
information about our strategic alliance with Cisco, see "Business -- Strategic
Alliances -- Cisco Systems" on page 30.
3
<PAGE> 6
THE OFFERING
Common stock offered................ shares
Common stock to be outstanding after
this offering....................... shares
Use of proceeds..................... For working capital and general
corporate purposes. For more detailed
information, see "Use of Proceeds" on
page 17.
Proposed Nasdaq National Market
symbol.............................. AKAM
SUMMARY FINANCIAL DATA
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<CAPTION>
PERIOD FROM INCEPTION
(AUGUST 20, 1998) THROUGH SIX MONTHS ENDED
DECEMBER 31, 1998 JUNE 30, 1999
------------------------- ----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue............................................... $ -- $ 404
Total operating expenses.............................. 900 10,043
Operating loss........................................ (900) (9,639)
Net loss.............................................. (890) (9,783)
Net loss attributable to common stockholders.......... (890) (10,078)
Basic and diluted net loss per share.................. $(0.12) $ (1.07)
Weighted average common shares outstanding............ 7,507 9,446
Pro forma basic and diluted net loss per share
(unaudited)......................................... $(0.09) $ (0.46)
Pro forma weighted average common shares outstanding
(unaudited)......................................... 9,631 21,207
</TABLE>
Weighted average shares used in computing the pro forma basic and diluted
net loss per share have been calculated assuming the conversion of all shares of
convertible preferred stock outstanding as of June 30, 1999 into common stock as
if the shares had converted immediately upon issuance. Accordingly, accrued
dividends and accretion to redemption value are not included in the calculation
of pro forma basic and diluted loss per share. The pro forma as adjusted column
in the balance sheet data below gives effect to the conversion of all shares of
convertible preferred stock outstanding as of June 30, 1999 into common stock
upon the closing of this offering and the sale of the shares of
common stock in this offering at an assumed initial public offering price of
$ , after deducting the estimated underwriting discounts and commissions and
estimated offering expenses payable by us.
Pro forma and as adjusted shares have not been adjusted for the issuance of
1,867,480 shares of Series E convertible preferred stock on August 6, 1999.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
----------------------
PRO FORMA
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $44,829
Working capital............................................. 41,602
Total assets................................................ 52,627
Long-term liabilities....................................... 12,128
Convertible preferred stock................................. 40,929
Total stockholders' equity (deficit)........................ $(4,693)
</TABLE>
4
<PAGE> 7
Except as set forth in our financial statements or as otherwise indicated,
all information in this prospectus:
- Assumes no exercise of the underwriters' over-allotment option;
- Reflects the conversion of all shares of our convertible preferred stock
outstanding as of June 30, 1999 into an aggregate of 16,107,847 shares of
common stock;
- Reflects a 3-for-1 stock split of our common stock effected on January
28, 1999 and a 3-for-1 stock split of our common stock effected on May
25, 1999; and
- Reflects the filing, as of the closing of the offering, of our amended
and restated certificate of incorporation and the adoption of our amended
and restated by-laws implementing provisions described below under
"Description of Capital Stock -- Delaware Law and Our Charter and By-Law
Provisions; Anti-Takeover Effects" on page 46.
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell shares of common stock and
seeking offers to buy shares of common stock only in jurisdictions where offers
and sales are permitted.
We are a Delaware corporation. Our principal executive offices are located
at 201 Broadway, Cambridge, Massachusetts 02139 and our telephone number is
(617) 250-3000. Our World Wide Web site address is www.akamai.com. The
information in our Web site is not incorporated by reference into this
prospectus.
Akamai, the Akamai logo and FreeFlow are our trademarks. This prospectus
also contains trademarks and trade names of other companies.
5
<PAGE> 8
RISK FACTORS
You should consider carefully the risks described below before you decide
to buy our common stock. The risks and uncertainties described below are not the
only ones facing us. If any of the following risks actually occur, our business,
financial condition or results of operations would likely suffer. In such case,
the trading price of our common stock could fall, and you may lose all or part
of the money you paid to buy our common stock.
RISKS RELATED TO OUR BUSINESS
OUR BUSINESS IS DIFFICULT TO EVALUATE BECAUSE WE HAVE A LIMITED OPERATING
HISTORY.
We were founded in August 1998 and began offering our FreeFlow service in
April 1999. We have limited meaningful historical financial data upon which to
base planned operating expenses and upon which investors may evaluate us and our
prospects. In addition, our operating expenses are largely based on anticipated
revenue trends and a high percentage of our expenses are and will continue to be
fixed in the short-term. You should consider the risks and difficulties
frequently encountered by companies like ourselves in a new and rapidly evolving
market. Our ability to sell our service and the level of success we achieve,
depends, among other things, on the level of demand for Internet content
delivery services, which is a new and rapidly evolving market. Our business
strategy may be unsuccessful, and we may not successfully address the risks we
face.
WE ARE ENTIRELY DEPENDENT ON OUR INTERNET CONTENT DELIVERY SERVICE AND OUR
FUTURE REVENUE DEPENDS ON ITS COMMERCIAL SUCCESS.
Our future growth depends on the commercial success of our Internet content
delivery service. Our FreeFlow service or other services under development may
not achieve widespread market acceptance. We plan to commercially introduce our
service for the delivery of streaming audio and video later this year, and our
future revenue growth will depend, in part, on customer acceptance of this
service. Failure of our current and planned services to operate as expected
could delay or prevent their adoption. If our target customers do not adopt,
purchase and successfully deploy our current and planned services, our revenue
will not grow significantly and our business, results of operations and
financial condition will be seriously harmed.
THE INTERNET CONTENT DELIVERY MARKET IS NEW AND OUR BUSINESS WILL SUFFER IF IT
DOES NOT DEVELOP AS WE EXPECT.
The market for Internet content delivery services is new. We cannot be
certain that a viable market for our service will emerge or be sustainable. If
this market does not develop, or develops more slowly than we expect, our
business, results of operations and financial condition will be seriously
harmed.
ANY FAILURE OF OUR NETWORK INFRASTRUCTURE COULD LEAD TO SIGNIFICANT COSTS AND
DISRUPTIONS WHICH COULD REDUCE OUR REVENUE AND HARM OUR BUSINESS, FINANCIAL
RESULTS AND REPUTATION.
Our business is dependent on providing our customers with fast, efficient
and reliable Internet content delivery. To meet these customer requirements we
must protect our network infrastructure against damage from:
- Human error;
- Physical or electronic security breaches;
- Fire, earthquake, flood and other natural disasters;
- Power loss;
- Sabotage and vandalism; and
- Similar events.
6
<PAGE> 9
Despite precautions we have taken, the occurrence of a natural disaster or
other unanticipated problems at one or more of our servers could result in
service interruptions or significant damage to equipment. We provide a FreeFlow
service guarantee that our networks will deliver Internet content 24 hours a
day, seven days a week, 365 days a year. If we do not provide this service, the
customer does not pay for our services on that day. Any widespread loss of
services would reduce our revenue, and could harm our business, financial
results and reputation.
BECAUSE OUR INTERNET CONTENT DELIVERY SERVICE IS COMPLEX AND IS DEPLOYED IN
COMPLEX ENVIRONMENTS, IT MAY HAVE ERRORS OR DEFECTS THAT COULD SERIOUSLY HARM
OUR BUSINESS.
Our Internet content delivery service is highly complex and is designed to
be deployed in very large and complex networks. Because of the nature of our
service, we can only fully test it when it is fully deployed in very large
networks with high traffic. As of July 31, 1999, our network consisted of 900
servers. We and our customers have from time to time discovered errors and
defects in our software. In the future, there may be additional errors and
defects in our software that may adversely affect our service. If we are unable
to efficiently fix errors or other problems that may be identified, we could
experience:
- Loss of or delay in revenue and loss of market share;
- Loss of customers;
- Failure to attract new customers or achieve market acceptance;
- Diversion of development resources;
- Loss of credibility;
- Increased service costs; and
- Legal actions by our customers.
ANY FAILURE OF OUR TELECOMMUNICATIONS PROVIDERS TO PROVIDE REQUIRED
TRANSMISSION CAPACITY TO US COULD RESULT IN INTERRUPTIONS IN OUR SERVICE.
Our operations are dependent upon transmission capacity provided by
third-party telecommunications providers. Any failure of such telecommunications
providers to provide the capacity we require may result in a reduction in, or
termination of, service to our customers. This failure may be a result of the
telecommunications providers or Internet service providers choosing services
that are competitive with our service. If we do not have access to third-party
transmission capacity, we could lose customers or fees charged to such
customers, and our business and financial results could suffer.
THE MARKETS IN WHICH WE OPERATE ARE HIGHLY COMPETITIVE AND WE MAY BE UNABLE TO
COMPETE SUCCESSFULLY AGAINST NEW ENTRANTS AND ESTABLISHED COMPANIES WITH GREATER
RESOURCES.
We compete in markets that are new, intensely competitive, highly
fragmented and rapidly changing. We have experienced and expect to continue to
experience increased competition. Many of our current competitors, as well as a
number of our potential competitors, have longer operating histories, greater
name recognition and substantially greater financial, technical and marketing
resources than we do. Some of our current or potential competitors have the
financial resources to withstand substantial price competition. Moreover, many
of our competitors have more extensive customer bases, broader customer
relationships and broader industry alliances that they could use to their
advantage in competitive situations, including relationships with many of our
current and potential customers. Our competitors may be able to respond more
quickly than we can to new or emerging technologies and changes in customer
requirements. Some of our current or potential competitors may bundle their
services with other software or hardware in a manner that may discourage Web
site owners from purchasing any service we offer or Internet service providers
from installing our servers.
7
<PAGE> 10
As competition in the Internet content delivery market continues to
intensify, new solutions will come to market. We are aware of at least one
company that is focusing significant resources on developing and marketing
products and services that will compete with Akamai. We also believe that we may
face competition from other providers of competing Internet content delivery
services, including networking hardware and software manufacturers, content
distribution providers, traditional hardware manufacturers, telecommunications
providers, software database companies, and large diversified software and
technology companies.
Increased competition could result in:
- Price and revenue reductions and lower profit margins;
- Loss of customers; and
- Loss of market share.
Any one of these could materially and adversely affect our business, financial
condition and results of operations.
SALES TO APPLE COMPUTER REPRESENT A SIGNIFICANT PORTION OF OUR REVENUE.
Sales of our service to Apple Computer represented approximately 75% of our
revenue for the six-month period ended June 30, 1999 and we expect that sales to
Apple Computer will represent a significant portion of our revenue for the year
ending December 31, 1999. Apple Computer has the right to terminate our
agreement on short notice if we materially breach our agreement. A significant
decline in sales to Apple Computer could reduce our revenue and cause our
business and financial results to suffer.
IF EITHER OF OUR STRATEGIC ALLIANCES TERMINATE, THEN OUR BUSINESS COULD BE
ADVERSELY AFFECTED.
We entered into a strategic alliance with Apple Computer in June 1999 and
with Cisco Systems in August 1999. Under each of these agreements, we are
seeking to jointly develop technology, services and/or products with our
strategic alliance partners. We may not be successful in developing these
products. The strategic alliance with Cisco may be terminated by Cisco or us on
short notice for any reason, and the strategic alliance with Apple may be
terminated by Apple or us if the other party materially breaches the agreement.
A termination of, or significant adverse change in, our relationship with Apple
Computer or Cisco Systems could have a material adverse effect on our business.
OUR BUSINESS WILL SUFFER IF WE ARE NOT ABLE TO SCALE OUR NETWORK AS DEMAND
INCREASES.
We have had only limited deployment of our Internet content delivery
service to date, and we cannot be certain that our network can connect and
manage a substantially larger number of customers at high transmission speeds.
Our network may not be scalable to expected customer levels while maintaining
superior performance. In addition, as customers' usage of bandwidth increases,
we will need to make additional investments in our infrastructure to maintain
adequate downstream data transmission speeds. We cannot assure you that we will
be able to make these investments successfully or at an acceptable cost.
Upgrading our infrastructure may cause delays or failures in our network. As a
result, in the future our network may be unable to achieve or maintain a
sufficiently high transmission capacity. Our failure to achieve or maintain high
capacity data transmission could significantly reduce demand for our service,
reducing our revenue and causing our business and financial results to suffer.
OUR BUSINESS WILL SUFFER IF WE DO NOT RESPOND RAPIDLY TO TECHNOLOGICAL
CHANGES.
The market for Internet content delivery services is likely to be
characterized by rapid technological change, frequent new product introductions
and changes in customer requirements. We may be unable to respond quickly or
effectively to these developments. If competitors introduce products, services
or technologies better than ours or that gain greater market acceptance, or new
industry standards emerge, our service
8
<PAGE> 11
may become obsolete, which would materially and adversely affect our business,
results of operations and financial condition.
In developing our service, we have made, and will continue to make,
assumptions about the standards that may be adopted by our customers and
competitors. If the standards adopted are different from those which we have
chosen to support, market acceptance of our service may be significantly reduced
or delayed and our business will be seriously harmed. In addition, the
introduction of services or products incorporating new technologies and the
emergence of new industry standards could render our existing service obsolete.
IF OUR LICENSE AGREEMENT WITH MIT TERMINATES, THEN OUR BUSINESS COULD BE
ADVERSELY AFFECTED.
We have licensed from MIT technology covered by various patent applications
and copyrights relating to Internet content delivery technology. Some of our
technology is based in part on the technology covered by these patent
applications and copyrights. MIT may terminate the license agreement if we cease
our business due to insolvency or if we materially breach the terms of the
license agreement. A termination of our license agreement with MIT could have a
material adverse effect on our business.
OUR BUSINESS WILL BE ADVERSELY AFFECTED IF WE ARE UNABLE TO PROTECT OUR
INTELLECTUAL PROPERTY RIGHTS FROM THIRD-PARTY CHALLENGES.
We rely on a combination of patent, copyright, trademark and trade secret
laws and restrictions on disclosure to protect our intellectual property rights.
These legal protections afford only limited protection; competitors may gain
access to our intellectual property which may result in the loss of our
customers.
Although we have licensed technology covered by patent applications filed
with the United States Patent and Trademark Office with respect to Internet
content delivery services, we have no patents or patent applications with
respect to our Internet content delivery service. Accordingly, neither our
technology nor technology licensed by us is covered by patents that would
preclude or inhibit competitors from entering our market. Our future patents, if
any, and patents licensed by us may be successfully challenged or may not
provide us with any competitive advantages. Moreover, although we have licensed
technology covered by international patent applications, none of our technology
is patented abroad, nor do we currently have any international patent
applications pending. We cannot be certain that any pending or future patent
applications will be granted, that any future patent will not be challenged,
invalidated or circumvented, or that rights granted under any patent that may be
issued will provide competitive advantages to us. Monitoring unauthorized use of
our service is difficult and we cannot be certain that the steps we have taken
will prevent unauthorized use of our technology, particularly in foreign
countries where the laws may not protect our proprietary rights as fully as in
the United States.
OUR FAILURE TO INCREASE OUR REVENUE WOULD PREVENT US FROM ACHIEVING AND
MAINTAINING PROFITABILITY.
We have never been profitable. We have incurred significant losses since
inception and expect to continue to incur losses in the future. As of June 30,
1999, we had an accumulated deficit of $10.7 million. We cannot be certain that
our revenue will grow or that we will achieve sufficient revenue to achieve
profitability. Our failure to significantly increase our revenue would seriously
harm our business and operating results. We have large fixed expenses, and we
expect to continue to incur significant and increasing sales and marketing,
product development, administrative and other expenses, including fees to obtain
access to bandwidth for the transport of data over our network. As a result, we
will need to generate significantly higher revenues to achieve and maintain
profitability. If our revenue grows more slowly than we anticipate or if our
operating expenses increase more than we expect or cannot be reduced in the
event of lower revenue, our business will be materially and adversely affected.
THE LONG AND VARIABLE SALES CYCLES FOR OUR SERVICE MAY CAUSE REVENUE AND
OPERATING RESULTS TO VARY SIGNIFICANTLY FROM QUARTER TO QUARTER.
A customer's decision to purchase our Internet content delivery service
involves a lengthy evaluation and testing process. As a result, our sales cycle
is likely to be lengthy. Throughout the sales cycle, we spend
9
<PAGE> 12
considerable time and expense educating and providing information to prospective
customers about the use and benefits of our service. Because of our limited
operating history and the nature of our business, we cannot predict these sales
and deployment cycles. The long sales cycles may cause our revenue and results
of operations to vary significantly and unexpectedly from quarter to quarter. If
our operating results fall below the expectations of securities analysts or
investors in some future quarter or quarters, the market price of our common
stock could be adversely affected.
OUR HISTORICAL REVENUE RATES MAY NOT BE INDICATIVE OF FUTURE REVENUE RATES
BECAUSE THE RATES WE CHARGE FOR OUR SERVICE MAY DECLINE OVER TIME.
We expect that our cost to obtain bandwidth capacity for the transport of
data over our network will decline over time as a result of, among other things,
the large amount of capital currently being invested to build infrastructure
providing additional bandwidth. We expect the prices we charge for data
transported over our network will also decline over time as a result of, among
other things, the lower cost of obtaining bandwidth and existing and new
competition in the markets we address. As a result, our historical revenue rates
are not indicative of future revenue based on comparable traffic volumes. If we
fail to accurately predict the decline in costs of bandwidth or, in any event,
if we are unable to sell our service at acceptable prices relative to our
bandwidth costs, or if we fail to offer additional services from which we can
derive additional revenue, our revenue will decrease and our business and
financial results will suffer.
OUR BUSINESS AND PROSPECTS DEPEND ON DEMAND FOR AND MARKET ACCEPTANCE OF THE
INTERNET AND ITS INFRASTRUCTURE DEVELOPMENT.
The increased use of the Internet for retrieving, sharing and transferring
information among businesses, consumers, suppliers and partners has only begun
to develop in recent years, and our success will depend in large part on
continued growth in the use of the Internet. Critical issues concerning the
commercial use of the Internet, including security, reliability, cost, ease of
access, quality of service, regulatory initiatives and necessary increases in
bandwidth availability, remain unresolved and are likely to affect the
development of the market for our service. The adoption of the Internet for
information retrieval and exchange, commerce and communications generally will
require the acceptance of a new medium of conducting business and exchanging
information. Demand for and market acceptance of the Internet are subject to a
high level of uncertainty and are dependent on a number of factors, including:
- The growth in consumer access to and acceptance of new interactive
technologies;
- The development of technologies that facilitate interactive communication
between organizations; and
- Increases in user bandwidth.
If the Internet as a commercial or business medium fails to develop or
develops more slowly than expected, our business and prospects will suffer.
OUR BUSINESS WILL SUFFER IF WE DO NOT ANTICIPATE AND MEET SPECIFIC CUSTOMER
REQUIREMENTS.
Our current and prospective customers may require features and capabilities
that our current service offering does not have. To achieve market acceptance
for our service, we must effectively and timely anticipate and adapt to customer
requirements and offer services that meet customer demands. Our failure to offer
services that satisfy customer requirements would seriously harm our business,
results of operations and financial condition.
We intend to continue to invest in technology development. The development
of new or enhanced services is a complex and uncertain process that requires the
accurate anticipation of technological and market trends. We may experience
design, manufacturing, marketing and other difficulties that could delay or
prevent the development, introduction or marketing of new services as well as
enhancements. The introduction of new or enhanced services also requires that we
manage the transition from older services in order to minimize disruption in
customer ordering patterns and ensure that we can deliver services to meet
anticipated customer
10
<PAGE> 13
demand. Our inability to effectively manage this transition would materially
adversely affect our business, results of operations and financial condition.
WE HAVE LIMITED SALES AND MARKETING EXPERIENCE; OUR BUSINESS WILL SUFFER IF WE
DO NOT EXPAND OUR DIRECT AND INDIRECT SALES ORGANIZATIONS AND OUR CUSTOMER
SERVICE AND SUPPORT OPERATIONS.
We currently have limited sales and marketing experience. Our limited
experience may restrict our success in commercializing our service. Our service
requires a sophisticated sales effort targeted at a limited number of key people
within our prospective customers' organizations. This sales effort requires the
efforts of trained sales personnel. We need to expand our marketing and sales
organization in order to increase market awareness of our service to a greater
number of organizations and generate increased revenue. We are in the process of
developing our direct sales force and plan to hire additional qualified sales
personnel. Competition for these individuals is intense, and we might not be
able to hire the kind and number of sales personnel we need. In addition, we
believe that our future success is dependent upon our ability to establish
successful relationships with a variety of distribution partners. If we are
unable to expand our direct and indirect sales operations, we may not be able to
increase market awareness or sales of our service, which may prevent us from
achieving and maintaining profitability.
Hiring personnel is very competitive in our industry because there is a
limited number of people available with the necessary technical skills and
understanding of our market. Once we hire them, they require extensive training
in our Internet content delivery service. If we are unable to expand our
customer service and support organization and train them as rapidly as
necessary, we may not be able to increase sales of our service, which would
seriously harm our business.
OUR BUSINESS WILL SUFFER IF WE FAIL TO MANAGE OUR GROWTH PROPERLY.
We have expanded our operations rapidly since our inception. We continue to
increase the scope of our operations and have grown our headcount substantially.
Our total number of employees grew from 35 on February 1, 1999 to 143 on August
11, 1999. In addition, we plan to continue to hire a significant number of
employees this year. This growth has placed, and our anticipated growth in
future operations will continue to place, a significant strain on our management
systems and resources. Our ability to successfully offer our service and
implement our business plan in a rapidly evolving market requires an effective
planning and management process. We expect that we will need to continue to
improve our financial and managerial controls, reporting systems and procedures,
and will need to continue to expand, train and manage our work force worldwide.
Competition for highly skilled personnel is intense, especially in the New
England area. We may fail to attract, assimilate or retain qualified personnel
to fulfill our current or future needs. Our planned rapid growth places a
significant demand on management and financial and operational resources. In
order to grow and achieve future success, we must:
- Retain existing personnel;
- Hire, train, manage and retain additional qualified personnel; and
- Effectively manage multiple relationships with our customers, suppliers
and other third parties.
Failure to do so would have a materially adverse effect on our business, results
of operations and financial condition.
We have recently hired and plan to hire in the near future a number of key
employees and officers. To integrate into our company, these individuals must
spend a significant amount of time learning our business model and management
system, in addition to performing their regular duties. Accordingly, the
integration of new personnel has resulted and will continue to result in some
disruption to our ongoing operations. If we fail to complete this integration in
an efficient manner, our business and financial results will suffer.
11
<PAGE> 14
WE DEPEND ON OUR KEY PERSONNEL TO MANAGE OUR BUSINESS EFFECTIVELY IN A RAPIDLY
CHANGING MARKET AND IF WE ARE UNABLE TO RETAIN OUR KEY EMPLOYEES, OUR ABILITY TO
COMPETE COULD BE HARMED.
Our future success depends upon the continued services of our executive
officers and other key technology, sales, marketing and support personnel, who
have critical industry experience and relationships that we rely on in
implementing our business plan. None of our officers or key employees is bound
by an employment agreement for any specific term. We have "key person" life
insurance policies covering only the lives of F. Thomson Leighton and Daniel M.
Lewin. The loss of the services of any of our key employees could delay the
development and introduction of and negatively impact our ability to sell our
service. We face intense competition for qualified personnel, including research
and development, service and support and sales and marketing personnel.
WE FACE RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS THAT COULD HARM OUR
BUSINESS.
To be successful, we believe we must expand our international operations.
Therefore, we expect to commit significant resources to expand our international
sales and marketing activities. However, we may not be able to maintain or
increase market demand for our service which may harm our business. We are
increasingly subject to a number of risks associated with international business
activities which may increase our costs, lengthen our sales cycle and require
significant management attention. These risks include:
- Increased expenses associated with marketing services in foreign
countries;
- General economic conditions in international markets;
- Currency exchange rate fluctuations;
- Unexpected changes in regulatory requirements resulting in unanticipated
costs and delays;
- Tariffs, export controls and other trade barriers;
- Longer accounts receivable payment cycles and difficulties in collecting
accounts receivable;
- Potentially adverse tax consequences, including restrictions on the
repatriation of earnings; and
- The risks related to the recent global economic turbulence and adverse
economic circumstances in Asia.
WE FACE A NUMBER OF UNKNOWN RISKS ASSOCIATED WITH YEAR 2000 PROBLEMS.
The year 2000 computer issue creates a variety of risks for us. The year
2000 computer problem refers to the potential for system and processing failures
of date-related data as a result of computer-controlled systems using two digits
rather than four to define the applicable year. For example, computer programs
that have time-sensitive software may recognize a date represented as "00" as
the year 1900 rather than the year 2000. This could result in a system failure
or miscalculations causing disruptions of operations, including among other
things, a temporary inability to process transactions, send invoices or engage
in similar normal business activities. The risks involve:
- Potential warranty or other claims by our customers;
- Errors in systems we use to run our business;
- Errors in systems used by our suppliers;
- Errors in systems used by our customers; and
- Potential reduced spending by other companies on Internet content
delivery services as a result of significant spending on year 2000
remediation.
We have designed our service for use in the year 2000 and beyond and
believe it is year 2000 compliant. However, our service is used in conjunction
with larger networks involving sophisticated hardware and software products
supplied by other vendors. Each of our customers' networks involves different
combinations
12
<PAGE> 15
of third-party products. We cannot evaluate whether all of their products are
year 2000 compliant. We may face claims based on year 2000 problems in other
companies' products or based on issues arising from the integration of multiple
products within the overall network. Although no claims of this kind have been
made, we may in the future be required to defend our service in legal
proceedings which could be expensive regardless of the merits of these claims.
If our suppliers, vendors, major distributors, partners, customers and
service providers fail to correct their year 2000 problems, these failures could
result in an interruption in, or a failure of, our normal business activities or
operations. If a year 2000 problem occurs, it may be difficult to determine
which party's products have caused the problem. These failures could interrupt
our operations and damage our relationships with our customers. Due to the
general uncertainty inherent in the year 2000 problem resulting from the
readiness of third-party suppliers and vendors, we are unable to determine at
this time whether year 2000 failures could harm our business and our financial
results.
Our customers' purchasing plans could be affected by year 2000 issues if
they need to expend significant resources to fix their existing systems to
become year 2000 compliant. This situation may reduce funds available to
purchase our service. In addition, some customers may wait to purchase our
service until after the year 2000, which may reduce our revenue.
RISKS RELATED TO LEGAL UNCERTAINTY
WE COULD INCUR SUBSTANTIAL COSTS DEFENDING OUR INTELLECTUAL PROPERTY FROM
INFRINGEMENT OR A CLAIM OF INFRINGEMENT.
Other companies, including our competitors, may obtain patents or other
proprietary rights that would prevent, limit or interfere with our ability to
make, use or sell our service. As a result, we may be found to infringe on the
proprietary rights of others. In the event of a successful claim of infringement
against us and our failure or inability to license the infringed technology, our
business and operating results would be significantly harmed. Companies in the
Internet market are increasingly bringing suits alleging infringement of their
proprietary rights, particularly patent rights. Any litigation or claims,
whether or not valid, could result in substantial costs and diversion of
resources. Intellectual property litigation or claims could force us to do one
or more of the following:
- Cease selling, incorporating or using products or services that
incorporate the challenged intellectual property;
- Obtain a license from the holder of the infringed intellectual property
right, which license may not be available on reasonable terms; and
- Redesign products or services.
If we are forced to take any of the foregoing actions, our business may be
seriously harmed. Although we carry general liability insurance, our insurance
may not cover potential claims of this type or may not be adequate to indemnify
us for all liability that may be imposed.
INTERNET-RELATED LAWS COULD ADVERSELY AFFECT OUR BUSINESS.
Laws and regulations which apply to communications and commerce over the
Internet are becoming more prevalent. The most recent session of the United
States Congress resulted in Internet laws regarding children's privacy,
copyrights, taxation and the transmission of sexually explicit material. The
European Union recently enacted its own privacy regulations, and is currently
considering copyright legislation that may extend the right of reproduction held
by copyright holders to include the right to make temporary copies for any
reason. The law of the Internet, however, remains largely unsettled, even in
areas where there has been some legislative action. It may take years to
determine whether and how existing laws such as those governing intellectual
property, privacy, libel and taxation apply to the Internet. In addition, the
growth and development of the market for online commerce may prompt calls for
more stringent consumer protection laws, both in the United States and abroad,
that may impose additional burdens on companies conducting business online. The
13
<PAGE> 16
adoption or modification of laws or regulations relating to the Internet, or
interpretations of existing law, could adversely affect our business.
WE MAY BE SUBJECT TO REGULATION, TAXATION, ENFORCEMENT OR OTHER LIABILITIES IN
UNEXPECTED JURISDICTIONS.
We provide our Internet content delivery service to customers located
throughout the United States and in several foreign countries. As a result, we
may be required to qualify to do business, or be subject to tax or other laws
and regulations, in these jurisdictions even if we do not have a physical
presence or employees or property in these jurisdictions. The application of
these multiple sets of laws and regulations is uncertain, but we could find we
are subject to regulation, taxation, enforcement or other liability in
unexpected ways, which could materially adversely affect our business, financial
condition and results of operations.
RISKS RELATED TO THE SECURITIES MARKETS AND THIS OFFERING
OUR STOCK PRICE MAY BE VOLATILE.
Prior to this offering, you could not buy or sell our common stock
publicly. An active public market for our common stock may not develop or be
sustained after this offering. The market for technology stocks has been
extremely volatile. The following factors could cause the market price of our
common stock to fluctuate significantly from the price paid by investors in this
offering:
- The addition or departure of key Akamai personnel;
- Variations in our quarterly operating results;
- Announcements by us or our competitors of significant contracts, new
products or services offerings or enhancements, acquisitions,
distribution partnerships, joint ventures or capital commitments;
- Changes in financial estimates by securities analysts;
- Our sales of common stock or other securities in the future;
- Changes in market valuations of networking, Internet and
telecommunications companies; and
- Fluctuations in stock market prices and volumes.
MANAGEMENT MAY APPLY THE PROCEEDS OF THIS OFFERING TO USES THAT DO NOT
INCREASE OUR PROFITS OR MARKET VALUE.
Our management will have considerable discretion in the application of the
net proceeds of this offering, and you will not have the opportunity, as part of
your investment decision, to assess whether the proceeds are being used
appropriately. The net proceeds may be used for corporate purposes that do not
increase our profitability or our market value. Pending application of the
proceeds, they may be placed in investments that do not produce income or that
lose value.
INSIDERS WILL CONTINUE TO HAVE SUBSTANTIAL CONTROL OVER AKAMAI AFTER THIS
OFFERING AND COULD LIMIT YOUR ABILITY TO INFLUENCE THE OUTCOME OF KEY
TRANSACTIONS, INCLUDING CHANGES OF CONTROL.
We anticipate that the executive officers, directors and entities
affiliated with them will, in the aggregate, beneficially own approximately
% of our outstanding common stock following the completion of this
offering. These stockholders, if acting together, would be able to influence
significantly all matters requiring approval by our stockholders, including the
election of directors and the approval of mergers or other business combination
transactions.
PROVISIONS OF OUR CHARTER DOCUMENTS MAY HAVE ANTI-TAKEOVER EFFECTS THAT COULD
PREVENT A CHANGE IN CONTROL.
Provisions of our amended and restated certificate of incorporation,
by-laws, and Delaware law could make it more difficult for a third party to
acquire us, even if doing so would be beneficial to our stockholders.
14
<PAGE> 17
THERE MAY BE SALES OF A SUBSTANTIAL AMOUNT OF OUR COMMON STOCK AFTER THIS
OFFERING THAT COULD CAUSE OUR STOCK PRICE TO FALL.
Our current stockholders hold a substantial number of shares, which they
will be able to sell in the public market in the near future. Sales of a
substantial number of shares of our common stock within a short period of time
after this offering could cause our stock price to fall. In addition, the sale
of these shares could impair our ability to raise capital through the sale of
additional stock.
THE UNPREDICTABILITY OF OUR QUARTERLY RESULTS MAY ADVERSELY AFFECT THE TRADING
PRICE OF OUR COMMON STOCK.
Our revenue and operating results will vary significantly from quarter to
quarter due to a number of factors, many of which are outside of our control and
any of which may cause our stock price to fluctuate. The primary factors that
may affect us include the following:
- Demand for Internet content delivery services;
- The timing and size of sales of our services;
- The timing of recognizing revenue and deferred revenue;
- New product and service introductions and enhancements by our competitors
and ourselves;
- Changes in our pricing policies or the pricing policies of our
competitors;
- Our ability to develop, introduce and ship new products, services and
enhancements that meet customer requirements in a timely manner;
- The length of the sales cycle for our services;
- Increases in the prices of the products, services, components or raw
materials we purchase, including bandwidth;
- Our ability to attain and maintain quality levels for our services;
- Expenses related to testing of our services;
- Costs related to acquisitions of technology or businesses; and
- General economic conditions as well as those specific to the Internet and
related industries.
We plan to increase significantly our operating expenses to fund greater
levels of engineering and development, expand our sales and marketing
operations, broaden our customer support capabilities and develop new
distribution channels. We also plan to expand our general and administrative
functions to address the increased reporting and other administrative demands,
which will result from this offering and the increasing size of our business.
Our operating expenses are largely based on anticipated revenue trends and a
high percentage of our expenses are, and will continue to be, fixed in the short
term. As a result, a delay in generating or recognizing revenue for the reasons
set forth above, or for any other reason, could cause significant variations in
our operating results from quarter to quarter and could result in substantial
operating losses.
Due to the above factors, we believe that quarter-to-quarter comparisons of
our operating results are not a good indication of our future performance. It is
likely that in some future quarters, our operating results may be below the
expectations of public market analysts and investors. In this event, the price
of our common stock will probably fall.
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<PAGE> 18
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve
substantial risks and uncertainties. You can identify these statements by
forward-looking words such as "anticipate," "believe," "could," "estimate,"
"expect," "intend," "may," "should," "will" and "would" or similar words. You
should read statements that contain these words carefully because they discuss
our future expectations, contain projections of our future results of operations
or of our financial position or state other "forward-looking" information. We
believe that it is important to communicate our future expectations to our
investors. However, there may be events in the future that we are not able to
accurately predict or control. The factors listed above in the section captioned
"Risk Factors," as well as any cautionary language in this prospectus, provide
examples of risks, uncertainties and events that may cause our actual results to
differ materially from the expectations we describe in our forward-looking
statements. Before you invest in our common stock, you should be aware that the
occurrence of the events described in these risk factors and elsewhere in this
prospectus could have a material adverse effect on our business, results of
operations and financial position.
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<PAGE> 19
USE OF PROCEEDS
We estimate that the net proceeds from our sale of the shares of
common stock will be approximately $ , assuming an initial public offering
price of $ per share and after deducting estimated underwriting discounts
and commissions and estimated offering expenses payable by us. If the over-
allotment option is exercised in full, we estimate that the net proceeds will be
approximately $ .
The principal purposes of this offering are to establish a public market
for our common stock, to increase our visibility in the marketplace, to
facilitate future access to public capital markets, to provide liquidity to
existing stockholders and to obtain additional working capital.
We expect to use the net proceeds for anticipated working capital and
general corporate purposes. Although we may use a portion of the net proceeds to
acquire businesses, products or technologies that are complementary to our
business, we have no specific acquisitions planned. Pending such uses, we plan
to invest the net proceeds in investment grade, interest-bearing securities.
DIVIDEND POLICY
We have never paid or declared any cash dividends on our common stock or
other securities and do not anticipate paying cash dividends in the foreseeable
future. We currently intend to retain all future earnings, if any, for use in
the operation of our business.
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<PAGE> 20
CAPITALIZATION
The following table sets forth our capitalization as of June 30, 1999. The
pro forma information gives effect to the conversion of all of our outstanding
convertible preferred stock outstanding as of June 30, 1999. The pro forma as
adjusted information reflects the issuance and sale of the shares
of common stock offered by us in this offering at an assumed initial public
offering price of $ per share. The outstanding share information excludes:
- 5,595,550 shares of common stock issuable upon exercise of options and
warrants outstanding as of June 30, 1999;
- shares of common stock reserved for future issuance under
our 1998 Stock Incentive Plan as of June 30, 1999;
- 145,195 shares of Series C convertible preferred stock issuable upon
exercise of an outstanding option as of June 30, 1999, which are
convertible into 454,188 shares of common stock; and
- 1,867,480 shares of Series E convertible preferred stock issued in
August 1999, which are convertible into 1,867,480 shares of common
stock.
This table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and our financial
statements and accompanying notes and other financial data included elsewhere in
this prospectus.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
-----------------------------------
PRO PRO FORMA
ACTUAL FORMA AS ADJUSTED
-------- -------- -----------
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C>
Long-term liabilities...................................... $ 12,128 $ 12,128 $
Convertible preferred stock, $.01 par value; 10,000,000
shares authorized:
Series A convertible preferred stock, $.01 par value;
1,100,000 shares authorized, issued and outstanding
actual; none authorized, issued and outstanding pro forma
and pro forma as adjusted................................ 8,291 -- --
Series B convertible preferred stock, $.01 par value;
1,327,500 shares authorized, issued and outstanding
actual; none authorized, issued and outstanding pro forma
and pro forma as adjusted................................ 20,138 -- --
Series C convertible preferred stock, $.01 par value;
145,195 shares authorized, none issued and outstanding
actual; none authorized, issued and outstanding pro forma
and pro forma as adjusted................................ -- -- --
Series D convertible preferred stock, $.01 par value;
685,194 shares authorized, issued and outstanding actual;
none authorized, issued and outstanding pro forma and pro
forma as adjusted........................................ 12,500 -- --
Stockholders' equity (deficit):
Common stock, $.01 par value; 300,000,000 shares
authorized, 21,542,655 shares issued and outstanding,
actual; 37,650,502 shares issued and outstanding, on a
pro forma basis; shares issued and outstanding,
on a pro forma as adjusted basis......................... 215 376
Additional paid-in capital................................. 16,247 57,015
Note receivable from officers for stock.................... (2,480) (2,480)
Deferred compensation...................................... (8,002) (8,002)
Accumulated deficit........................................ (10,673) (10,673) --
-------- -------- -------
Total stockholders' equity (deficit)............. (4,693) 36,236 --
-------- -------- -------
Total capitalization............................. $ 48,364 $ 48,364 $
======== ======== =======
</TABLE>
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<PAGE> 21
DILUTION
Akamai's pro forma net tangible book value as of June 30, 1999, giving
effect to the conversion of all shares of convertible preferred stock
outstanding as of June 30, 1999 into common stock on the closing of this
offering, was approximately $35.8 million, or $0.95 per share of common stock.
Pro forma net tangible book value per share represents our tangible net worth
(tangible assets less total liabilities) divided by the 37,650,502 shares of
common stock outstanding after giving effect to the conversion of all
outstanding shares of convertible preferred stock into common stock. After
giving effect to the issuance and sale of the shares of common stock offered by
Akamai in this offering at an assumed initial public offering price of $ per
share. Akamai's pro forma net tangible book value at June 30, 1999 would have
been $ , or $ per share. The initial public offering price per
share will significantly exceed the net tangible book value per share.
Accordingly, new investors who purchase common stock in this offering will
suffer an immediate dilution of their investment of $ per share. The
following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $
Pro forma net tangible book value per share before this
offering............................................... $0.95
Increase in pro forma net tangible book value per share
attributable to new investors..........................
-----
Pro forma net tangible book value per share after this
offering..................................................
------
Dilution per share to new investors......................... $
======
</TABLE>
The following table summarizes on a pro forma basis as of June 30, 1999,
giving effect to the conversion of all shares of convertible preferred stock
outstanding as of June 30, 1999 into common stock, the difference between the
number of shares of common stock purchased from Akamai, the total consideration
paid to Akamai, and the average price per share paid by existing stockholders
and by new investors. The calculation below is based on an assumed initial
public offering price of $ per share, before deduction of estimated
underwriting discounts and commissions and estimated offering expenses payable
by us:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------- ------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders....................... % $ % $
New investors...............................
-------- ----- ------ ------
Total............................. 100.0% $ $100.0%
======== ===== ====== ======
</TABLE>
The table above assumes no exercise of stock options and warrants
outstanding at June 30, 1999. As of June 30, 1999, there were options and
warrants outstanding to purchase 6,049,738 shares of common stock, including
454,188 shares of common stock issuable upon conversion of shares of Series C
convertible preferred stock, at a weighted average exercise price of $ per
share and shares reserved for future grant or award under
Akamai's stock plans. To the extent any of these options and warrants are
exercised, there will be further dilution to new investors. To the extent all of
such outstanding options and warrants had been exercised as of June 30, 1999,
net tangible book value per share after this offering would be $ and
total dilution per share to new investors would be $ . If the
underwriters' over-allotment option is exercised in full, the number of shares
held by new investors will increase to shares, or % of the
total number of shares of common stock outstanding after this offering.
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<PAGE> 22
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with
Akamai's financial statements and related notes and with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
other financial data included elsewhere in this prospectus. The statement of
operations data for the period from inception (August 20, 1998) to December 31,
1998 and the six-month period ended June 30, 1999 and the balance sheet data as
of June 30, 1999 are derived from audited financial statements included
elsewhere in this prospectus. Operating results for the six-month period ended
June 30, 1999 are not necessarily indicative of the results that may be expected
for any other period or the entire year ending December 31, 1999.
<TABLE>
<CAPTION>
PERIOD FROM INCEPTION
(AUGUST 20, 1998) TO SIX MONTHS ENDED
DECEMBER 31, 1998 JUNE 30, 1999
--------------------- ----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue................................................... $ -- $ 404
Operating expenses:
Cost of service......................................... 31 1,408
Engineering and development............................. 228 2,053
Sales, general and administrative....................... 435 5,243
Equity related compensation............................. 206 1,339
------ --------
Total operating expenses........................ 900 10,043
------ --------
Operating loss............................................ (900) (9,639)
Interest income (expense), net............................ 10 (144)
------ --------
Net loss.................................................. (890) (9,783)
Dividends and accretion to preferred stock redemption
value................................................... -- 295
------ --------
Net loss attributable to common stockholders.............. $ (890) $(10,078)
====== ========
Basic and diluted net loss per share...................... $(0.12) $ (1.07)
Weighted average common shares outstanding................ 7,507 9,446
Pro forma basic and diluted net loss per share
(unaudited)............................................. $(0.09) $ (0.46)
Pro forma weighted average common shares outstanding
(unaudited)............................................. 9,631 21,207
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
-------------------------------------
PRO FORMA
ACTUAL AS ADJUSTED
----------------- ----------------
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $44,829
Working capital............................................. 41,602
Total assets................................................ 52,627
Long-term liabilities....................................... 12,128
Convertible preferred stock................................. 40,929
Total stockholders' equity (deficit)........................ $(4,693)
</TABLE>
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<PAGE> 23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read together with our financial
statements and accompanying notes appearing elsewhere in this prospectus. This
prospectus contains forward-looking statements that involve risks and
uncertainties. Actual results may differ from those indicated in forward-looking
statements.
OVERVIEW
We provide a global Internet content delivery service that improves Web
site speed and reliability and protects against Web site crashes due to demand
overloads. Our FreeFlow service, which we sell to Global 2000 and
Internet-centric businesses, delivers our customers' Web content through a
worldwide server network by locating the content geographically closer to their
users.
Since our inception, we have incurred significant losses, and as of June
30, 1999, we had an accumulated deficit of $10.7 million. We have not achieved
profitability on a quarterly or an annual basis, and anticipate that we will
continue to incur net losses. We expect to incur significant engineering and
development and sales, general and administrative expenses and, as a result, we
will need to generate significant revenue to achieve and maintain profitability.
We derive our revenue from the sale of our FreeFlow service under contracts
with terms typically ranging from three to 12 months. We recognize revenue based
on fees for the amount of Internet content delivered through our service. These
contracts also provide for minimum monthly fees. In the future, we may also
derive revenue from one-time implementation fees which would be recognized
ratably over the period of the related contracts.
To date, substantially all of our revenue has been derived from customers
based in the United States. We expect that revenue from customers based outside
the United States will increase in future periods. To date, all of our revenue
has been derived from direct sales and we expect that revenue through indirect
distribution channels will increase in future periods. For the six-month period
ended June 30, 1999, one customer accounted for 75% of our revenue and one
customer accounted for 14% of our revenue.
Cost of services consists of depreciation of network equipment used in
providing our FreeFlow service, fees paid to network providers for bandwidth and
monthly fees paid to third-party network data centers for housing our servers.
We enter into contracts for bandwidth with third-party network providers with
terms typically ranging from six months to three years. These contracts commit
us to minimum monthly fees plus additional fees for bandwidth usage above our
contracted level. Under our FreeFlow ISP program, we provide use of our servers
to smaller Internet service providers which, in turn, provide us with rack space
for our servers and access to their bandwidth. We do not recognize as revenue
any value to the Internet service providers associated with the use of our
servers and do not expense the value of the rack space and bandwidth we receive.
We believe that to date the values provided under this program have been
insignificant.
Engineering and development expenses consist primarily of salaries and
related personnel costs and costs related to the design, development, testing,
deployment and enhancement of our service and our network. We have to date
expensed our engineering and development costs as they were incurred. We believe
that research and development is critical to our strategic product development
objectives and intend to enhance our technology to meet the changing
requirements of the market demand. As a result, we expect our engineering and
development expenses to increase in the future.
Sales, general and administrative expenses consist primarily of salaries
and related costs of sales and marketing, operations and finance personnel and
recruiting expenses, professional fees and legal and accounting services. We
expect that sales, general and administrative expenses will increase in the
future as we hire additional personnel, expand our operations domestically,
initiate additional marketing programs, establish sales offices in new locations
and incur additional costs related to the growth of our business and our
operations as a public company.
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<PAGE> 24
RESULTS OF OPERATIONS
PERIOD FROM INCEPTION (AUGUST 20, 1998) THROUGH DECEMBER 31, 1998 AND THE
SIX-MONTH PERIOD ENDED JUNE 30, 1999
Revenue. We recorded no revenue for the period from inception (August 20,
1998) to December 31, 1998. Revenue was $403,900 for the six months ended June
30, 1999. The increase in revenue was due to sales of our FreeFlow service,
which was commercially introduced in April 1999.
Cost of Service. Cost of service expenses were $30,600 for the period from
inception (August 20, 1998) to December 31, 1998 and represented 3.4% of total
operating expenses in fiscal 1998. Cost of service expenses were $1.4 million
for the six months ended June 30, 1999 and represented 14.0% of total operating
expenses for the six months ended June 30, 1999. The increase in cost of service
expenses was due to the commencement of testing of our FreeFlow service in early
1999 and commercial introduction of our FreeFlow service in April 1999.
Engineering and Development. Engineering and development expenses were
$228,600 for the period from inception (August 20, 1998) to December 31, 1998
and represented 25.4% of total operating expenses in fiscal 1998. Engineering
and development expenses for the six months ended June 30, 1999 were $2.1
million and represented 20.4% of total operating expenses for the six months
ended June 30, 1999. The period-to-period increases were primarily due to
increased costs associated with a significant increase in personnel and payroll
and other related expenses.
Sales, General and Administrative. Sales, general and administrative
expenses were $435,300 for the period from inception (August 20, 1998) to
December 31, 1998 and represented 48.4% of total operating expenses in fiscal
1998. Sales, general and administrative expenses for the six months ended June
30, 1999 were $5.2 million and represented 52.2% of total operating expenses for
the period. The period-to-period increase reflects the increase in sales,
general and administrative personnel and payroll and other related expenses as
well as expenses necessary to support and scale our operations.
Equity Related Compensation. Equity related compensation expenses consist
of the amortization of deferred stock compensation resulting from the grant of
stock options or shares of restricted stock at exercise or sale prices
subsequently deemed to be less than the fair value of the common stock on the
grant date. At June 30, 1999, deferred stock compensation, which is a component
of stockholders' equity, was $8.0 million. This amount is being amortized
ratably over the vesting periods of the applicable stock options and restricted
shares, typically four years, with 25% vesting on the first anniversary of the
grant date and the balance vesting 6.25% quarterly thereafter. We expect to
incur equity related compensation expense of at least $1.8 million in 1999, $2.9
million in 2000 and $2.6 million in 2001.
Interest Income (Expense), Net. Interest income (expense), net was $9,600
and ($144,000) for the period from inception (August 20, 1998) through December
31, 1998 and the six months ended June 30, 1999, respectively. Interest income
(expense), net consists of interest earned on our cash equivalent balances and
short-term investments, net of interest expense, and decreased during the six
months ended June 30, 1999 due to the issuance of the senior subordinated notes
and borrowings for the purchase of equipment.
NET OPERATING LOSSES AND TAX CREDIT CARRYFORWARDS.
As of June 30, 1999, we had approximately $7.0 million of state and federal
net operating loss carryforwards for tax reporting purposes available to offset
future taxable income. Such net operating loss carryforwards begin to expire in
2019, to the extent that they are not utilized. We have not recognized any
benefit from the future use of loss carryforwards since inception. Management's
evaluation of all the available evidence in assessing realizability of the tax
benefits of such loss carryforwards indicates that the underlying assumptions of
future profitable operations contain risks that do not provide sufficient
assurance to recognize the tax benefits currently. The net operating loss
carryforwards could be limited in future years if there is a significant change
in our ownership.
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<PAGE> 25
LIQUIDITY AND CAPITAL RESOURCES
Since inception, we have financed our operations primarily through private
sales of our capital stock and issuance of senior subordinated notes totaling
approximately $55.6 million in net proceeds through June 30, 1999. We have also
financed our operations through borrowings on long-term debt agreements for the
purchase of capital equipment in the amount of $1.5 million. At June 30, 1999,
cash, cash equivalents and short-term investments totaled $45.1 million.
Cash provided by (used in) operating activities was $1,600 for the period
from inception (August 20, 1998) to December 31, 1998 and $(5.4) million for the
six months ended June 30, 1999. Net cash flows from operating activities in each
period reflect increasing net losses and to a lesser extent receivables and
prepaid expenses offset in part by increased accounts payable and accrued
expenses.
Cash used in investing activities was $1.7 million for the period from
inception (August 20, 1998) to December 31, 1998 and $5.3 million for the six
months ended June 30, 1999. Net cash used for investing activities in each
period reflect purchases of property and equipment, primarily computers and
servers for deployment and expansion of our network.
Cash provided by financing activities was $8.3 million for the period from
inception (August 20, 1998) through December 31, 1998 and $48.9 million for the
six months ended June 30, 1999. Cash provided by financing activities for these
periods was derived primarily from private sales of convertible preferred stock
and the issuance of 15% senior subordinated notes. We have an equipment line of
credit aggregating $1.5 million, collateralized by the property and equipment
which bears interest at the current 36 month treasury yield plus 275 basis
points, with a minimum interest rate of 7.0%. At June 30, 1999, approximately
$1.5 million was outstanding under this line of credit.
We believe that the net proceeds from this offering, together with our
current cash, cash equivalents and marketable securities, will be sufficient to
meet our anticipated cash needs for working capital and capital expenditures for
at least the next 12 months. If cash generated from operations is insufficient
to satisfy our liquidity requirements, we may seek to sell additional equity or
debt securities. If additional funds are raised through the issuance of debt
securities, these securities could have rights, preferences and privileges
senior to those accruing to holders of common stock, and the term of this debt
could impose restrictions on our operations. The sale of additional equity or
convertible debt securities could result in additional dilution to our
stockholders, and we cannot be certain that additional financing will be
available in amounts or on terms acceptable to us, if at all. If we are unable
to obtain this additional financing, we may be required to reduce the scope of
our planned technology, services or product development and sales and marketing
efforts, which could harm our business, financial condition and operating
results.
YEAR 2000 COMPLIANCE
Impact of Year 2000 Computer Problem. The year 2000 computer problem
refers to the potential for system and processing failures of date-related data
as a result of computer-controlled systems using two digits rather than four to
define the applicable year. For example, computer programs that have
time-sensitive software may not recognize a date represented as "00" as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculation causing disruptions of operations, including among other things,
a temporary inability to process transactions, send invoices or engage in
similar normal business activities.
State of Readiness of our Service. We have designed our network and our
service for use in the year 2000 and beyond and believe our network and service
are year 2000 compliant. We are in the process of testing our network and our
service for year 2000 compliance and plan to complete this testing before
November 1999. However, our network is generally integrated into larger networks
involving sophisticated hardware and software products supplied by other
vendors. Each of our customers' networks involves different combinations of
third party products. We cannot evaluate whether all of their products are year
2000 compliant. We may face claims based on year 2000 problems in other
companies' products or based on issues arising from the integration of multiple
products within the overall network. Although no such claims have
23
<PAGE> 26
been made against us, we may in the future be required to defend our service in
legal proceedings which could be expensive regardless of the merits of such
claims.
State of Readiness of our Internal Systems. Our business may be affected
by year 2000 issues related to noncompliant internal systems developed by us or
by third-party vendors. Our material third-party vendors have stated that they
are, or expect to be, year 2000 compliant in a timely manner. We are not
currently aware of any year 2000 problem relating to any of our material
internal systems. We are in the process of testing all such systems for year
2000 compliance and plan to complete this testing before November 1999. We do
not believe that we have any significant systems that contain embedded chips
that are not year 2000 compliant. Our internal operations and business are also
dependent upon the computer-controlled systems of third parties such as our
suppliers, customers and other service providers. We believe that, absent a
systemic failure outside our control, such as a prolonged loss of electrical or
telephone service, year 2000 problems at third parties such as manufacturers,
suppliers, customers and service providers will not have a material impact on
our operations. If our manufacturers, suppliers, vendors, partners, customers
and service providers fail to correct their year 2000 problems, these failures
could result in an interruption in, or a failure of, our normal business
activities and services. If a year 2000 problem occurs, it may be difficult to
determine which party's products have caused the problem. These failures could
interrupt our operations and damage our relationships with our customers. Due to
the general uncertainly inherent in the year 2000 problem resulting from the
readiness of third-party manufacturers, suppliers and vendors, we are unable to
determine at this time whether year 2000 failures could harm our business and
our financial results. Our customers' purchasing plans could be affected by year
2000 issues if they need to expend significant resources of fix their existing
systems to become year 2000 compliant. This situation may reduce funds available
to purchase our products.
Risks. The failure of our internal systems to be year 2000 compliant could
temporarily prevent us from providing service to our customers, issuing invoices
and developing products and services and could require us to devote significant
resources to correct such problems. Due to the general uncertainty inherent in
the year 2000 computer problem, which results from the uncertainty of the year
2000 readiness of third-party suppliers and vendors, we are unable to determine
at this time whether the consequences of year 2000 failures will have a material
impact on our business, results of operations or financial condition.
To date, we have incurred expenses of approximately $130,000 in connection
with our efforts to become year 2000 compliant and do not anticipate that any
future costs associated with our year 2000 remediation efforts will be material.
MARKET RISK
Akamai does not use derivative financial instruments. We generally place
our marketable security investments in high credit quality instruments,
primarily U.S. Government obligations and corporate obligations with contractual
maturities of less than one year. We do not expect any material loss from our
marketable security investments and therefore believe that our potential
interest rate exposure is not material.
RECENT ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivatives and Hedging Activities," which establishes
accounting and reporting standards for derivative instruments, including
derivative instruments embedded in other contracts, and for hedging activities.
We will adopt SFAS No. 133 as required by SFAS No. 137, "Deferral of the
Effective Date of the FASB Statement No. 133," in fiscal year 2001. We do not
expect the adoption of SFAS No. 133 to have an impact on our financial condition
or results of operations.
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<PAGE> 27
BUSINESS
OVERVIEW
We provide a global Internet content delivery service that improves Web
site speed and reliability and protects against Web site crashes due to demand
overloads. Our FreeFlow service, which we sell to Global 2000 and
Internet-centric businesses, delivers our customers' Web content through a
worldwide server network by locating the content geographically closer to their
users. Using software that is based on our proprietary algorithms, we monitor
Internet traffic patterns and deliver our customers' content by the most
efficient route. Our service is easy to implement and does not require our
customers or their Web site visitors to make any hardware or software
modifications. Using our FreeFlow service, our customers have been able to more
than double the speed at which they deliver content to their users and, in some
instances, have been able to improve speeds by ten times or more.
Our technology originated from research that our founders began developing
at the Massachusetts Institute of Technology in 1995. We introduced our FreeFlow
service commercially in April 1999. As of July 31, 1999, we had 900 Akamai
servers deployed in 15 countries across 25 telecommunications networks,
providing our customers with a guaranteed global Internet content delivery
service. Our customers, which operate many of the most trafficked Web sites,
include Apple Computer, CNN Interactive, Discovery Channel Online, Infoseek, J.
Crew.com, The Motley Fool and Yahoo!.
INDUSTRY BACKGROUND
The Internet has emerged as a global medium for commerce and
communications. International Data Corporation estimates that there were
approximately 142 million users of the Internet at the end of 1998 and that the
number of users will grow to 502 million by the end of 2002. The growth in the
number of users, together with the wealth of content and information available
on the Internet, have led to sharp increases in the daily traffic volume of Web
sites. Media Metrix estimated that the number of unique visitors to the top 25
Web sites increased from 224 million in June 1998 to 330 million in June 1999.
The ability of a Web site to attract users is in part based on the richness
of its content. Increasingly, Web site owners want to enhance their content by
adding graphics, such as photographs, images and logos, as well as deploying
newer technologies, such as video and audio streaming, animation and software
downloads. While richer content attracts more visitors, it also places
increasing demands on the Web site to deliver the content quickly and reliably.
As a result, Web site owners frequently elect to constrain the amount of rich
content on their Web sites, thus sacrificing the quality of the user experience
to maintain minimally acceptable performance levels.
The Internet was not originally designed to provide a rich multimedia
environment for individual Web site visitors. Since its origins as a United
States Department of Defense research project, the Internet has evolved into an
aggregation of many networks, each developed and managed by different
telecommunications service providers. As a result, the Internet lacks the
ability to manage traffic between disparate networks to find the optimal route
to deliver content. Congestion or transmission blockages significantly delay the
information reaching the user. The storage of Web site information in central
locations further complicates Internet content delivery. As the volume of
information requested on a Web site increases, large quantities of repetitive
data traverse the Internet from that central location.
The combination of richer content and increasing volumes of Web site
visitors can significantly lengthen the time required for a user to download
information from a site and may cause the site to crash. These performance
problems are exacerbated during peak demand times, such as a breaking news
event, the release of an on-line movie trailer, the first day of ticket sales
for a hit film, an on-line special event or sudden demand for a new software
release. Because it is typically not cost-effective for a Web site to design its
infrastructure to handle relatively infrequent periods of "flash" or sudden
demand, periods of peak network traffic and surges in traffic volumes often
overwhelm the capacity of the site, causing long delays or complete site
outages. Delays and site crashes often cause user frustration and
disappointment. Jupiter Communications found that in June 1999, if response
times at a particular Web site did not meet Internet users' expectations, 37% of
those
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users visited a substitute Web site to meet their needs. For 24% of users, the
decision to use an alternative Web site was permanent.
While various products and services have been developed to address
performance problems, they generally do not address the fundamental
architectural limitations of the Internet. For example, caching is a hardware
and/or software solution sold to Internet service providers to help them improve
network performance by placing electronic copies of selected Internet content on
geographically distributed servers on their own network. Caching is not,
however, designed to address the needs of Web site owners, and in particular to
deliver their content with high performance and reliability across the multiple
networks that comprise the Internet. Outsourcing Web server management to
hosting companies enables Web sites to add server capacity as needed and
increase server reliability. However, hosting does not address the transmission
disruption problems that can arise as data leave the hosting company's servers
and traverse the public network to the user. Broadband services are being
deployed to increase the speed of a user's connection to the Internet,
addressing the problems that occur in what is commonly known as the "last mile."
While these services increase bandwidth in the last mile, they do not address
the content delivery problems that occur when congestion overwhelms a Web site
or specific points across the Internet.
To serve the increasing volumes of traffic on the Internet and, at the same
time, enhance the user experience with increased graphic, video and audio
content, Web sites require content delivery services that can provide rich
content to users, enhance Web site response times and avoid delays and outages
caused by peak demand and public network congestion. These services must be not
only fast, reliable and easy to implement, but also capable of delivering rich
content that is continually updated. In addition, these services may be
cost-effective to the customer only if they do not require significant capital
or labor expenditures and can be implemented at a cost that is based on actual
usage.
THE AKAMAI SOLUTION
Akamai provides a content delivery service that allows Web sites to
accelerate the delivery of content to Internet users, improve reliability and
handle peak crowds. To use our service, customers identify and tag portions of
their Web site content that require significant amounts of bandwidth, such as
advertising banners, icons, graphics and software downloads. These tagged items
are delivered over our server network. When users request this content, which we
call "Akamaized" content, our FreeFlow service routes the request to the server
that is best able to deliver the content most quickly based on the geographic
proximity, performance and congestion of all available servers on our network.
Our network has the following capabilities:
- Real-time Internet monitoring, which enables our servers to monitor in
real-time the performance of our network and communicate the information
to other servers in our network;
- Dynamic server load management, which enables each server to react to
Internet and server congestion, overloads and outages and respond by
rerouting traffic around problems; and
- Internet user connection management, which enables each server to map the
geographic location of users so that content is delivered to each user
from our most efficient server.
These capabilities enable our global network to provide delivery of Web content
through the optimal route without relying on any central point of control.
The key benefits of our solution include:
Faster Content Delivery. FreeFlow can more than double the speed at which
Web sites can deliver Web content to Internet users and, in some cases, has
improved speeds by ten times or more. In addition, by using our service,
customers can deliver more graphics, video, audio, animation, software downloads
and other rich content without compromising the performance of their Web sites.
The ability to improve the speed of a Web site and increase the use of rich
content can result in an enhanced user experience and longer Web site visits,
which can translate into greater advertising and e-commerce revenue for our
customers.
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Superior Reliability. The underlying technology in our FreeFlow service
enables us to monitor the performance of our global network 24 hours a day,
seven days a week, 365 days a year. We route traffic around network bottlenecks
or outages, delivering content in an optimal manner while avoiding delays and
downtime.
Peak Demand Protection. Traditional Web site architectures support a
finite number of users. It is costly to upgrade Web sites to accommodate
sporadic peak demand. Our service enables a customer to use the extensive
capacity of our global server network and thus eliminate the need for a Web site
to incur significant capital or labor expenditures to design an infrastructure
to handle peak demand.
Global Reach. We have implemented our service on our global network of
over 900 servers deployed in 15 countries across 25 telecommunications networks.
Compelling Cost Proposition. Our customers can use our service without any
up-front investment in hardware or software. We offer our service under
pay-for-use contracts based on the amount of Internet content delivered. To
further reduce costs, our customers receive volume discounts as their usage
increases. We thus provide our customers with a scalable approach to content
delivery without the capital investment and increasing cost per user typically
associated with equipment-based alternatives.
Ease of Implementation. Our service forms a transparent layer on the
Internet between our customer's Web site and visitors accessing that site.
Through our easy-to-use FreeFlow Launcher software, our customers can quickly
tag the objects to be delivered over our network and begin to implement our
service. Customers can continuously update or modify their Web site content
without affecting site performance. Moreover, our service does not require that
the customer modify its computer hardware or software.
STRATEGY
Our goal is to capitalize on our proprietary technology and leading market
position to establish a new industry standard for the delivery of Web content to
Internet users. To accomplish this goal, we are pursuing a strategy built on the
following initiatives:
Target Leading Web Sites Across a Broad Spectrum of Internet
Categories. We commercially introduced our FreeFlow service in April 1999 and
have attracted as customers three of the world's top six most heavily trafficked
Web sites, as reported by Media Metrix for June 1999. We are seeking to further
extend our penetration into leading Web sites across a broad spectrum of
Internet categories, including media, entertainment, financial services and
e-commerce. We are expanding our direct sales force to target Web sites in these
categories. We are also developing partner programs with companies that have
influence with Web site owners, such as Web design firms and systems integrators
who can promote our service to their customers.
Further Expand Our Worldwide Network. We plan to continue to expand our
network to increase capacity and improve performance. By adding servers, we can
increase the number of routes through which we can deliver Web content and thus
shorten the distance between our servers and Internet users. We have a
three-part strategy for expanding our network. First, we are placing our servers
in secure data centers served by Internet service providers that provide us with
bandwidth to deliver content from our servers to Internet users. Second, through
our FreeFlow ISP program, we provide use of our servers to smaller Internet
service providers who, in turn, provide us with rack space for our servers and
bandwidth to deliver content. Finally, we are planning to expand our network by
integrating our technology with network infrastructure products such as routers
and switches, to facilitate implementation of our service by Internet service
providers.
Establish Akamai as a Leading Brand for Content Delivery. We plan to
establish Akamai as the industry standard for providing Internet content
delivery. We intend to promote our brand to create strong penetration among all
top Internet content providers. We believe that this strong brand awareness,
combined with our existing global network of servers and customer base of
leading Internet-centric companies, will help to create a competitive advantage
in our market.
Extend Our World-Class Technology Leadership. We believe that Akamai has
established a reputation as a technological leader in Internet content delivery.
We plan to continue to enhance our current technologies, and develop new
technologies, that can improve the performance and reliability of our network
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<PAGE> 30
and expand the features and benefits that we can offer through our service. We
intend to leverage our technology to introduce innovative services and products
that take advantage of our worldwide network and our distributed computing
services capacity. To maintain our technological leadership, we plan to continue
to invest significant time and resources in recruiting computer scientists,
engineers and software developers with expertise in the areas of mathematics,
computer science and networking.
Leverage Our Services Model. We are creating a business model that will
generate a stream of recurring revenues, while maintaining relatively low
capital and bandwidth costs. We believe that we can maintain relatively low
capital costs because our service is based on software that runs on low cost,
off-the-shelf servers and we use the existing network infrastructure of
telecommunications providers instead of building our own fiber- or
satellite-based network infrastructure. In addition, we believe that we can
maintain relatively low bandwidth costs because we buy in large volumes and our
costs are based primarily on usage levels. Our recurring revenue model is based
on offering services to our customers that provide for payment based on the
amount of Internet content delivered through our service. As a result, our
revenue base has the potential to grow as the number of Internet users
increases, as these users access the Internet more often and for longer periods,
and as more Web sites incorporate richer content. We believe that the relatively
low capital costs required to build and maintain our network, together with the
relatively low costs that we are required to pay for bandwidth used on our
network, should enable us to leverage this recurring revenue base.
Build Strategic Alliances to Strengthen Market Position. We intend to
continue to develop strategic alliances with other Internet-related companies to
accelerate market acceptance of our services. To date, we have entered into two
major strategic alliances. In June 1999, we entered into a strategic alliance
with Apple Computer to integrate Apple's QuickTime TV network, QuickTime 4
Player and QuickTime Streaming Server with our global Internet content delivery
service. In August 1999, we entered into a strategic alliance with Cisco Systems
to, among other things, integrate Akamai technology with Cisco's networking
products. We will continue to pursue select relationships with other Internet
technology providers, Internet hosting companies, Internet service providers,
Web site developers and systems integrators. We believe these relationships will
accelerate the proliferation of our technology and services, increase our brand
recognition and improve access to our target customer base.
FREEFLOW SERVICE
SERVICE
Our FreeFlow service provides for the delivery of Web site content to
Internet users. When implementing our FreeFlow service, our customers select
bandwidth intensive portions of their Web sites, such as complex graphics,
advertisements, logos, software downloads and pictures, which are delivered to
users over our network. In the near future, we plan to introduce commercially a
service that will enable the delivery of streaming audio and video over our
network.
FreeFlow customers pay only for the Internet content delivered through our
service. Monthly usage charges are based on megabits per second of content
delivered. Customers commit to pay for a minimum usage level over a fixed
contract term, and pay additional fees when usage exceeds this commitment.
Monthly prices currently begin at $1,995 per megabit per second, with discounts
available for volume usage.
Our FreeFlow service is backed by Akamai's 100% proof-of-performance
guarantee. Through our guarantee we promise that:
- Our service will deliver content 24 hours a day, seven days a week, 365
days a year;
- Our service will deliver content faster than the customer can do it
itself;
- If we fail to deliver on any day, the customer does not pay for the
service for that day.
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TECHNOLOGY
The FreeFlow service incorporates the following Akamai technologies:
Akamaized URLs. Akamai's technology changes the way in which content on a
Web page is delivered to an Internet user without interrupting the normal data
flow. Normally, when a user clicks on any Web page, the Web site returns a
Hypertext Markup Language, or HTML, text file containing text and formatting
instructions which the browser uses to display the page. This text file also
contains the Universal Resource Locators, or URLs, of non-text objects on the
page, such as photographs, banner advertisements, graphics and software
downloads.
Akamai's customers identify which of their Web objects are to be delivered
over Akamai's network. The customer then runs a software utility provided by
Akamai, called FreeFlow Launcher, which searches for the URLs of the selected
objects and tags them with a special code. We refer to this tagged content as
"Akamaized" content. This modification transforms each URL for Akamaized content
into an "ARL," or Akamai Resource Locator. The result is that when a user's
browser downloads an HTML file containing ARLs of Web objects for that page, the
browser is automatically pointed to Akamai's network to retrieve those objects.
Our process does not require any modification to the browser or other personal
computer configuration changes. While Akamai can serve the HTML as well as the
objects embedded in it, our customers typically choose to serve the HTML
themselves to maintain direct contact with the user. Thus, even while users are
receiving Akamaized content from our servers, our customers can continue to
count Web site visitors, track user demographics and dynamically assemble Web
page content, including the insertion of targeted advertising and other
personalized content.
Domain Name Servers. The Internet relies on a distributed hierarchical
database, called the Domain Name System, or DNS, to translate Web site names
into numerical Internet Protocol, or IP, addresses. Akamai employs tiers of DNS,
or name, servers that interact seamlessly with the Internet's standard DNS
servers and intelligently direct a user's request for Web site content toward
the most efficient Akamai server to deliver the requested content. When an
Internet user requests a page containing Akamaized content, the user's browser
asks a Domain Name Server to find an IP address for the Akamai network. The DNS
automatically directs the query to one of Akamai's top-level DNS servers rather
than to the central Web site. The Akamai top-level DNS servers use proprietary
mapping software to determine the approximate location of the user in the
Internet. The top-level DNS server then refers the user's request to an Akamai
low-level DNS server that is responsible for traffic near the user. The
low-level DNS server then answers with the IP addresses of a group, or "region,"
of Akamai servers that can deliver the desired content to the user most quickly
and reliably based on the geographic proximity, load and availability of all
servers on the network. The low-level DNS servers use up-to-the-second
information about Internet and server conditions to make the best routing
decision for each user.
Server Load Management. Once Akamai's servers determine the optimal region
for serving content to a user at a given moment, a simple process for selecting
an individual server for such delivery would be to "round-robin" all requests to
each content server in that region. However, such an approach would require that
all objects reside on every content server, resulting in poor use of system
resources and poor load balancing. Instead, Akamai uses proprietary algorithms
to balance the loads of all servers within each region and ensure that objects
reside in the minimum number of servers required to deliver optimal performance.
Real-Time Monitoring. Akamai's FreeFlow service performs real-time
monitoring of its own servers and of the Internet to make certain that content
is delivered to users with the best performance and reliability. A key design
principle of Akamai's system is the use of distributed control. Therefore, if
any computer, data center or portion of the Internet fails, the FreeFlow service
will continue operating.
FreeFlow constantly monitors the performance of connections between various
locations around the Internet and our regions. We use numerous types of network
information to determine the performance of these connections. The result is a
"map" of the optimal Akamai region for each location at that point in time.
Akamai rebuilds this map periodically to reflect changing conditions.
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Real-time monitoring also ensures reliability. A region is suspended if the
data center in which Akamai's servers are located fails or is performing poorly.
However, even when this disruption occurs, the FreeFlow service continues to
function. To ensure fault tolerance, Akamai deploys back-up low-level DNS
servers in each region that physically reside in separate data centers. These
back-up DNS servers automatically direct users to servers in alternate regions
unaffected by the remote outage.
To ensure reliability against the failure of an individual server, each
server is assigned a "buddy" server within a region. Buddy servers query one
another every second to sense all failures. If a server's buddy does not respond
to a query, that server takes over its buddy's IP address and serves all content
requested of the buddy.
STRATEGIC ALLIANCES
We have strategic alliances with Apple Computer and Cisco Systems and
intend to enter into additional strategic alliances with leading technology
companies to accelerate market acceptance of our services. We believe strategic
alliances can accelerate market acceptance of our technology and services,
increase our brand recognition and improve access to our target customer base.
APPLE COMPUTER
In June 1999, we entered into a strategic alliance with Apple Computer to
improve the delivery of streaming media over the Internet. Under the agreement,
we will integrate our global Internet content delivery service and Apple's
QuickTime TV network, QuickTime 4 Player and QuickTime Streaming Server. The
combined technologies are designed to give Apple Macintosh and Microsoft Windows
users worldwide access to fast, reliable, high-resolution streaming services
through e-commerce, media and other Web sites.
Under the terms of the strategic alliance, we have agreed to be the
exclusive network provider to Apple for QuickTime TV. Apple has also designated
us as the preferred network provider to Apple customers developing streaming
QuickTime content.
Apple purchased shares of our Series D convertible preferred stock for an
aggregate purchase price of approximately $12.5 million in June 1999.
CISCO SYSTEMS
In August 1999, we entered into a strategic alliance with Cisco Systems to
enhance and jointly develop new content routing, switching and caching
technologies to improve the performance of Internet content delivery. Under the
strategic alliance, Cisco and Akamai have agreed to jointly develop protocols
and algorithms designed to enhance content-based routing and switching
technologies within Cisco's infrastructure to optimize our Internet content
delivery service. In addition, Cisco has agreed to integrate our Internet
content delivery technology into its networking technology. We have also agreed
to explore new technologies to enable next-generation switching designed to
dynamically adapt to changing network conditions.
Cisco purchased shares of our Series E convertible preferred stock for an
aggregate purchase price of approximately $49.0 million in August 1999.
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CUSTOMERS
We introduced our FreeFlow service commercially in April 1999. Our customer
base spans a broad spectrum of Internet categories. The following is a
representative list of our customers.
<TABLE>
<S> <C>
INTERNET-CENTRIC
Infoseek
Looksmart
Yahoo!
MEDIA, ENTERTAINMENT & TECHNOLOGY
Apple Computer
Artisan Entertainment
CNN Interactive
Discovery Channel Online
Hard Rock Hotel
Paramount Digital Entertainment
Sportsline USA
E-COMMERCE
Furniture.com
HomePortfolio.com
J.Crew.com
Wrenchead.com
FINANCIAL SERVICES
CCBN
Gomez.com
The Motley Fool
</TABLE>
SALES, SERVICE AND MARKETING
We currently sell our service primarily through a direct sales force. Our
plan is to continue to pursue heavily trafficked Web sites through our direct
sales force and to penetrate other markets through indirect distribution
channels. As of August 11, 1999, we had 12 employees in our sales and
distribution organization. Currently our sales force is actively targeting
primarily domestic companies, focusing on the 300 Web sites that have the
greatest number of visitors, Fortune 100 companies and Global 2000 companies
with large operations in the United States.
In addition to our direct sales efforts, we are developing our partner
program with design and system integration firms and consultants. We encourage
these partners to recommend the Akamai solution to their customers as part of
their design, integration and consulting work for those customers. As of August
11, 1999, we had three employees in our partner program group.
Our technical consulting group directly supports our sales and distribution
efforts by providing technical consulting and integration assistance to our
current and prospective customers. As of August 11, 1999, we had 12 employees in
our technical consulting group.
We believe that a high level of customer service and support is critical to
the successful marketing and sale of our products and services. We are building
a comprehensive service and support organization to meet the needs of our
customers. As of August 11, 1999, we had six employees in our customer service
and support organization. We are seeking to hire additional customer service and
support personnel as our customer base grows and as we introduce new products
and services.
To support our sales efforts and actively promote the Akamai brand name, we
conduct comprehensive marketing programs. Our marketing strategies include an
active public relations campaign, print advertisements, online advertisements,
trade shows, strategic partnerships and on-going customer communications
programs. We focus our marketing efforts on business and trade publications,
online media outlets, industry events and sponsored activities. We participate
in a variety of Internet, computer and financial industry conferences and
encourage our officers and employees to pursue speaking engagements at these
conferences. As of August 11, 1999, we had 10 employees in our marketing
organization.
NETWORK DEPLOYMENT
As of July 31, 1999, our network was comprised of 900 servers in 15
countries across 25 telecommunication networks. Some of the telecommunications
networks across which Akamai servers are deployed include: AboveNet
Communications, AT&T, Digex, Exodus Communications, GTE Internetworking,
interNode
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networks, Korea Telecom, Level 3 Communications, OzEmail Limited, Pacific
Internet, PSINet, UUNET Technologies, Verio, VisiNet and WonderNet.
Most of our servers are currently deployed in secure data centers served by
major domestic and international Internet service providers. These Internet
service providers provide bandwidth to deliver content from our servers to
Internet users.
We also deploy our servers at smaller and medium-sized domestic and
international Internet service providers through our FreeFlow ISP program. Under
this program, we offer use of our servers to Internet service providers. In
exchange, we do not pay for rack space to house our servers or bandwidth to
deliver content from our servers to Internet users. By hosting Akamai servers,
Internet service providers obtain access to popular content from the Internet
that is served from the Akamai network. As a result, when this content is
requested by a user, the Internet service provider does not need to pay for the
bandwidth otherwise necessary to retrieve the content from the originating Web
site.
We are planning to expand our network by integrating our technology with
networking and other network infrastructure products, such as routers and
switches, to facilitate implementation of our service by Internet service
providers.
RESEARCH AND DEVELOPMENT
Akamai's beginnings trace to a challenge that Tim Berners-Lee, the inventor
of the World Wide Web, posed to his colleagues at MIT in early 1995 to invent a
fundamentally new and better way to deliver Internet content to users. F.
Thomson Leighton, an MIT Professor of Applied Mathematics and founder of Akamai,
recognized that a solution to Web congestion could be found in applied
mathematics and algorithms. Dr. Leighton believed that algorithms could be used
to create a network of distributed servers that could communicate as a system
and could deliver content without depending on a centralized controlling core.
Dr. Leighton, together with Daniel Lewin, one of his graduate students at MIT,
and several other researchers with expertise in computer science and data
networking, undertook the development of the mathematical algorithms necessary
to handle the dynamic routing of content.
We believe that strong product and service development capabilities are
essential to enhancing our core technologies, developing new applications for
our technology and maintaining our competitiveness. We have invested and intend
to continue to invest a significant amount of human and financial resources in
Akamai's research and development organization.
As of August 11, 1999, we had 47 employees devoted to our research and
development efforts. Our research and development organization is comprised of
the following groups:
- The server group, which develops and maintains the server software used
in our FreeFlow service;
- The mapping group, which develops techniques for monitoring and routing
Internet traffic;
- The performance analysis group, which develops tools to test and monitor
the performance of systems;
- The graphic user interface group, which builds programs that allow our
customers and network operations center personnel to graphically view the
status and performance of our network in real time; and
- The algorithm design and implementation groups, which design and
implement the algorithms that operate our FreeFlow service and its
derivative technologies.
We are focusing our research and development efforts on enhancing our
FreeFlow service and building on our technology for our new services under
development, including streaming media. From our inception in August 1998
through June 30, 1999, our engineering and development expenses were
approximately $2.3 million. We expect to continue to commit significant
resources to research and development in the future. To date, all engineering
and development expenses have been expensed as incurred.
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COMPETITION
The market for Internet content delivery services is new, rapidly evolving
and intensely competitive. We expect competition to increase both from existing
competitors and new market entrants for various components of our service. We
compete primarily on the basis of:
- Performance of our service, including speed of delivery, reliability,
peak crowd protection, and global content delivery capabilities;
- Ease of implementation and use of our service;
- Types of content delivered; and
- Price.
We compete primarily with companies offering products and services that
address Internet performance problems, including companies that provide Internet
content delivery services, streaming content delivery services and
equipment-based solutions to Internet performance problems, such as load
balancers and server switches.
Our competitors may be able to respond more quickly than we can to new or
emerging technologies and changes in customer requirements. Some of our current
or potential competitors may bundle their products with other software or
hardware in a manner that may discourage Web site owners from purchasing
products we offer or Internet service providers from being willing to install
our servers.
Increased competition could result in price reductions, fewer customer
orders, reduced gross margins and loss of market share, any of which could
materially and adversely affect our business, financial condition and
operations.
PROPRIETARY RIGHTS AND LICENSING
Our success and ability to compete are dependent on our ability to develop
and maintain the proprietary aspects of our technology and operate without
infringing on the proprietary rights of others. We rely on a combination of
patent, trademark, trade secret and copyright laws and contractual restrictions
to protect the proprietary aspects of our technology. These legal protections
afford only limited protection for our technology. We have no patents and we
have not filed any patent applications with the United States Patent and
Trademark Office with respect to our Internet content delivery service. We seek
to limit disclosure of our intellectual property by requiring employees and
consultants with access to our proprietary information to execute
confidentiality agreements with us and by restricting access to our source code.
Due to rapid technological change, we believe that factors such as the
technological and creative skills of our personnel, new product developments and
enhancements to existing products are more important than the various legal
protections of our technology to establishing and maintaining a technology
leadership position.
Despite our efforts to protect our proprietary rights, unauthorized parties
may attempt to copy aspects of our products or to obtain and use information
that we regard as proprietary. The laws of many countries do not protect our
proprietary rights to as great an extent as do the laws of the United States.
Litigation may be necessary in the future to enforce our intellectual property
rights, to protect our trade secrets, to determine the validity and scope of the
proprietary rights of others or to defend against claims of infringement or
invalidity. Any such resulting litigation could result in substantial costs and
diversion of resources and could have a material adverse effect on our business,
operating results and financial condition. There can be no assurance that our
means of protecting our proprietary rights will be adequate or that our
competitors will not independently develop similar technology. Any failure by us
to meaningfully protect our property could have a material adverse effect on our
business, operating results and financial condition.
In October 1998, we entered into a license agreement with MIT under which
we were granted a royalty-free, worldwide right to use and sublicense the
intellectual property rights of MIT under various patent applications and
copyrights relating to Internet content delivery technology. We cannot predict
whether any of these applications will result in any issued patents or, if
patents are issued, any meaningful protection. Some of
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our technology is based on technology licensed from MIT. The license has been
granted to us on an exclusive basis, but is subject to the rights of the U.S.
government to use the licensed intellectual property in government-funded
inventions. As part of the license agreement, MIT retained the right to use the
licensed intellectual property for non-commercial, teaching and educational
purposes. In connection with the license agreement, we issued 341,055 shares of
our common stock to MIT in October 1998. The license agreement is irrevocable,
but MIT may terminate the agreement if we cease our business due to insolvency
or if we materially breach the terms of the license agreement.
EMPLOYEES
As of August 11, 1999, we had a total of 130 full-time employees and 13
part-time employees. We expect to hire additional employees through 1999.
Our future success will depend in part on our ability to attract, retain
and motivate highly qualified technical and management personnel, for whom
competition is intense. Our employees are not represented by any collective
bargaining unit. We believe our relations with our employees are good.
BOARD OF ADVISORS
Our board of advisors consists of individuals with recognized expertise in
the Internet, networking, science and entertainment fields who advise us about
developing technology standards, business strategy, and anticipating and meeting
marketplace needs. The following people are members of our board of advisors:
Tim Berners-Lee holds the 3Com Founders chair at the Laboratory for
Computer Science at MIT. He directs the World Wide Web Consortium, an open forum
of companies and organizations with the mission to lead the Web to its full
potential. In 1989, Dr. Berners-Lee invented the World Wide Web.
Gil Friesen is a director of the Digital Entertainment Network. Previously,
Mr. Friesen served as president of A&M Records. Mr. Friesen co-founded Classic
Sports Network, a cable network sold to ESPN in 1997.
Sam Gassel is chief systems engineer for CNN Internet Technologies. He has
been the architect of CNN's Internet systems since the launch of CNN.com in
1995. Before joining CNN/Turner Broadcasting in 1994, Mr. Gassel worked in
Academic Computing at the University of Chicago.
Ron Graham is a professor of Computer and Information Sciences at the
University of California, San Diego. Dr. Graham is also a chief scientist
emeritus for AT&T Labs and was president of the American Mathematical Society
from 1993 to 1995.
Amos Hostetter is the former chief executive officer of MediaOne. Mr.
Hostetter co-founded Continental Cablevision in 1963 and served as its chairman
and chief executive officer prior to its merger with MediaOne Group in 1996. Mr.
Hostetter is currently chairman of Pilot House Associates, LLC.
Jan Hier-King is the head of enterprise technology of Charles Schwab &
Co.'s electronic brokerage unit. Ms. Hier-King led the start-up of the
technology organization supporting the institutional business at Charles Schwab.
Daniel Smith is president and chief executive officer of Sycamore Networks,
Inc. Prior to joining Sycamore, Mr. Smith was president and chief executive
officer of Cascade Communications and a member of its board of directors.
Cascade Communications was acquired by Ascend Communications in June 1997.
Peter Solvik is senior vice president and chief information officer of
Cisco Systems. At Cisco Systems, Mr. Solvik is responsible for the company's
worldwide use of information technology, including Internet-based customer
service and electronic commerce tools. He is also responsible for the Internet
Business Solutions Group at Cisco Systems.
Ralph Terkowitz is chief information officer of The Washington Post
Company. Mr. Terkowitz founded and in 1996 became chief executive officer of
Digital Ink Co., the electronic publishing subsidiary of The Washington Post
Company.
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Members of the board of advisors generally receive options to purchase our
common stock under our 1998 stock incentive plan.
FACILITIES
Our headquarters are currently located in approximately 15,988 square feet
of leased office space located in Cambridge, Massachusetts. The lease for
portions of this space terminates at various times from April 2003 to May 2004.
We are negotiating a lease for approximately 53,544 square feet of space in
a second office building in Cambridge, Massachusetts. We plan to relocate our
entire office and operations to the new location. The lease is for a seven-year
term commencing on December 1, 1999, with certain expansion options.
LEGAL PROCEEDINGS
We are not a party to any material legal proceedings.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of Akamai, and their ages and
positions as of June 30, 1999 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
George H. Conrades(1)...................... 60 Chairman of the Board of Directors and
Chief Executive Officer
Paul Sagan................................. 40 President and Chief Operating Officer
F. Thomson Leighton(2)..................... 42 Chief Scientist and Director
Daniel M. Lewin............................ 29 Chief Technology Officer and Director
Robert O. Ball III......................... 41 Vice President, General Counsel and
Secretary
Earl P. Galleher III....................... 39 Vice President of Sales and Distribution
David Goodtree............................. 37 Vice President of Marketing
Steven P. Heinrich......................... 55 Vice President of Human Resources
Bruce M. Maggs............................. 36 Vice President of Research and Development
Jonathan Seelig............................ 27 Vice President of Strategy and Corporate
Development
Arthur H. Bilger(2)........................ 46 Vice Chairman of the Board of Directors
Todd A. Dagres(1).......................... 39 Director
Terrance G. McGuire(1)..................... 43 Director
Edward W. Scott(1)(2)...................... 36 Director
</TABLE>
- ------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
Set forth below is certain information regarding the professional
experience for each of the above-named persons.
George H. Conrades has served as Chairman and Chief Executive Officer of
Akamai since April 1999 and as a director since December 1998. Mr. Conrades has
also been a venture partner of Polaris Venture Partners, Inc., an early stage
investment company, since August 1998. From August 1997 to July 1998, Mr.
Conrades served as Executive Vice President of GTE and President of GTE
Internetworking, an integrated telecommunication services firm. Mr. Conrades
served as Chairman of the Board of Directors and Chief Executive Officer of BBN
Corporation, a national Internet services provider and Internet technology
research and development company, from January 1994 until its acquisition by GTE
Internetworking in July 1997. Prior to joining BBN Corporation, Mr. Conrades was
an IBM Senior Vice President and a Member of IBM's Corporate Management Board.
Mr. Conrades is currently a director of CBS and Infinity Broadcasting, a media
company. He is also an interim member of the board of ICANN, the Internet
Corporation for the Assignment of Names and Numbers, a non-profit organization
established by the United States government to oversee the administration of
Internet names and addresses.
Paul Sagan joined Akamai in October 1998 as Vice President and Chief
Operating Officer and has served as President and Chief Operating Officer since
May 1999. Mr. Sagan was the Senior Advisor to the World Economic Forum, a
Geneva, Switzerland-based organization, from July 1997 to August 1998. From
December 1995 to December 1996, Mr. Sagan was the President and Editor of Time
Inc. New Media, an affiliate of Time Warner, Inc., a global media and
entertainment company. From September 1992 to December 1995, Mr. Sagan served as
a vice president and senior vice president of Time Warner Cable, a division of
Time Warner, Inc.
F. Thomson Leighton co-founded Akamai and has served as Chief Scientist and
a director since August 1998. Dr. Leighton has been a professor of Mathematics
at MIT since 1982 and has served as the Head of the
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Algorithms Group in MIT's Laboratory for Computer Science since its inception in
1996. Dr. Leighton is currently on sabbatical from MIT. Dr. Leighton is a former
two-term chair of the 2,000-member Association of Computing Machinery Special
Interest Group on Algorithms and Complexity Theory, and a former two-term
Editor-in-Chief of the Journal of the ACM, one of the nation's premier journals
for computer science research.
Daniel M. Lewin co-founded Akamai and has served as a director since August
1998. Mr. Lewin served as President of Akamai from August 1998 to May 1999 and
as Chief Technology Officer since May 1999. Since July 1996, Mr. Lewin has been
a Ph.D. candidate in the Algorithms Group at MIT's Laboratory for Computer
Science. From May 1994 to May 1996, Mr. Lewin worked at IBM's research
laboratory in Haifa, Israel as a full-time Research Fellow and Project Leader
responsible for the development and support of IBM's Genesys system.
Robert O. Ball III has served as Vice President and General Counsel of
Akamai since July 1999 and has served as Secretary since August 1999. From June
1996 until August 1999, Mr. Ball was a Partner and Chair of the Electronic
Commerce Practice Team at Alston & Bird LLP, a law firm. From 1991 until May
1996, Mr. Ball was a Partner at Cashin, Morton & Mullins, a law firm.
Earl P. Galleher III has served as Vice President of Sales and Distribution
of Akamai since March 1999. From March 1996 until August 1998, Mr. Galleher was
employed with Digex, Inc., a national Internet carrier, where he served as Vice
President and General Manager from March 1996 to January 1997 and as the
President of the Web Site Management Division from January 1997 to August 1998.
From November 1991 to February 1996, Mr. Galleher served as Director of
Marketing at American Mobile Satellite Corporation, a mobile voice and data
service provider.
David Goodtree has served as the Vice President of Marketing since March
1999. From October 1994 to March 1999, Mr. Goodtree served as Group Director at
Forrester Research, Inc., an independent technology research firm. Prior to
joining Forrester Research, Inc., from October 1990 to September 1994, Mr.
Goodtree managed product development for MCI Communications Corporation, now
known as MCI WorldCom, Inc., a telecommunications company.
Steven P. Heinrich has served as Vice President of Human Resources of
Akamai since March 1999. Prior to joining Akamai, Mr. Heinrich established
Constellation Consulting, Inc., a human resources consulting firm specializing
in early stage, high technology businesses. From November 1979 to October 1997,
Mr. Heinrich served as the Vice President of Human Resources for BBN
Corporation.
Bruce M. Maggs joined Akamai in October 1998 as a Senior Research Scientist
and has served as Vice President of Research and Development since April 1999.
From September 1998 to January 1999, Dr. Maggs was a Visiting Associate
Professor of Computer Science at MIT. Dr. Maggs is currently on leave from his
appointment as Associate Professor of Computer Science at Carnegie Mellon
University, a position he has held since July 1997. From January 1994 until his
appointment as Associate Professor, Dr. Maggs was an Assistant Professor at
Carnegie Mellon. From September 1990 to December 1993, Dr. Maggs was a Research
Scientist at the NEC Research Institute, Inc., an institute which conducts
research in computer and physical sciences.
Jonathan Seelig co-founded Akamai in August 1998 and has served as Vice
President of Strategy and Corporate Development since that time. From January
1995 to September 1997, Mr. Seelig worked for ECI Telecom, Ltd., a provider of
digital telecommunications and data transmission systems to network service
providers. Mr. Seelig is presently on a leave of absence as an M.B.A. candidate
at MIT's Sloan School of Management.
Arthur H. Bilger has served as a director of Akamai since November 1998 and
has served as Vice Chairman of the Board of Directors since August 1999. From
December 1994 until March 1997, Mr. Bilger was president, chief operating
officer and a member of the board of directors of New World Communications Group
Incorporated, an entity engaged in television broadcasting and production. From
August 1990 until December 1994, Mr. Bilger was a founding principal of Apollo
Advisors, L.P. and Lion Advisors, L.P., entities
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engaged in the management of securities investments. Mr. Bilger is currently a
director of Mandalay Resort Group, an owner and operator of hotel casino
facilities.
Todd A. Dagres has served as a director of Akamai since November 1998.
Since February 1996, Mr. Dagres has been a general partner of Battery Ventures,
a venture capital firm. From February 1994 to February 1996, Mr. Dagres was a
Principal and Senior Technology Analyst at Montgomery Securities, now known as
Banc of America Securities LLC, an investment bank and brokerage firm.
Terrance G. McGuire has served as a director of Akamai since April 1999.
Mr. McGuire is a founder and has been a general partner of Polaris Venture
Partners, Inc. since June 1996. Since 1992, Mr. McGuire has also been a general
partner of Burr, Egan, Deleage & Co., a venture capital firm.
Edward W. Scott has served as a director of Akamai since April 1999. Mr.
Scott is a founder and general partner of the Baker Communications Fund, a
communications private equity fund. He has been a general partner of that firm
since March 1996. From December 1990 until March 1996, Mr. Scott was a private
equity investor with the Apollo Investment Fund, L.P.
Each executive officer serves at the discretion of the board of directors
and holds office until his successor is elected and qualified or until his
earlier resignation or removal. There are no family relationships among any of
the directors or executive officers of Akamai. Each of the directors serve on
the board of directors pursuant to the terms of an agreement that will terminate
upon the closing of this offering.
ELECTION OF DIRECTORS
Following this offering, the board of directors will be divided into three
classes, each of whose members will serve for a staggered three-year term.
Messrs. Conrades and McGuire will serve in the class whose term expires in 2000;
Messrs. Leighton and Scott will serve in the class whose term expires in 2001;
and Messrs. Bilger, Dagres and Lewin will serve in the class whose term expires
in 2002. Upon the expiration of the term of a class of directors, directors in
such class will be elected for three-year terms at the annual meeting of
stockholders in the year in which such term expires.
COMPENSATION OF DIRECTORS
We reimburse directors for reasonable out-of-pocket expenses incurred in
attending meetings of the board of directors. We may, in our discretion, grant
stock options and other equity awards to our non-employee directors from time to
time pursuant to our 1998 stock incentive plan. We have not yet determined the
amount and timing of such grants or awards.
BOARD COMMITTEES
The board of directors has established a compensation committee and an
audit committee. The compensation committee, which consists of Messrs. Conrades,
Dagres, McGuire and Scott, reviews executive salaries, administers our bonus,
incentive compensation and stock plans, and approves the salaries and other
benefits of our executive officers. In addition, the compensation committee
consults with our management regarding our pension and other benefit plans and
compensation policies and practices.
The audit committee, which consists of Messrs. Bilger, Leighton and Scott,
reviews the professional services provided by our independent accountants, the
independence of such accountants from our management, our annual financial
statements and our system of internal accounting controls. The audit committee
also reviews such other matters with respect to our accounting, auditing and
financial reporting practices and procedures as it may find appropriate or may
be brought to its attention.
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EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by us, for services
rendered for the period from August 20, 1998, the date of our inception, to
December 31, 1998, to the person who served as our President during that period.
We did not have a Chief Executive Officer during that period. None of our other
executive officers who held office as of December 31, 1998 met the definition of
"highly compensated" within the meaning of the Securities and Exchange
Commission's executive compensation disclosure rules. In the table below,
columns required by the regulations of the Securities and Exchange Commission
have been omitted where no information was required to be disclosed under those
columns.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------
NAME AND PRINCIPAL POSITION SALARY($)
- --------------------------- -------------------
<S> <C>
Daniel M. Lewin............................................. $ 30,000
President(1)
</TABLE>
- ------------
(1) Daniel M. Lewin resigned as President of Akamai and became our Chief
Technology Officer on May 18, 1999.
On September 2, 1998, we sold 5,695,875 shares of common stock to Mr. Lewin
for an aggregate purchase price of $63,285 pursuant to the terms of a stock
restriction agreement. The stock restriction agreement gives us the right to
repurchase a portion of these shares at the original purchase price if Mr. Lewin
ceases to provide services to us prior to August 31, 2002. However, our right to
repurchase shares held by Mr. Lewin terminates upon a change in control of
Akamai.
STOCK OPTIONS
We did not grant any stock options to Mr. Lewin during the period from our
inception to December 31, 1998.
BENEFIT PLANS
1998 Stock Incentive Plan. Our 1998 stock incentive plan provides for the
grant of restricted stock and other stock-based awards and stock options. A
maximum of shares of common stock are authorized to be issued
pursuant to the 1998 stock incentive plan. Our officers, employees, directors,
consultants and advisors are eligible to receive awards under the 1998 stock
incentive plan.
The compensation committee of our board of directors administers the 1998
stock incentive plan. The compensation committee with the assistance of
management selects the recipients of awards and determines:
- The number of shares of common stock covered by options and the dates
upon which such options become exercisable;
- The exercise price of options;
- The duration of options; and
- The number of shares of common stock subject to any restricted stock or
other stock-based awards and the terms and conditions of such awards,
including the conditions for repurchase, issue price and repurchase
price.
In the event of a merger or other acquisition event, our board of directors
is authorized to provide for outstanding awards to be assumed or substituted for
by the acquiror. If the acquiror does not assume or substitute for outstanding
awards, our board of directors may provide that all unexercised options will
become exercisable in full prior to the completion of such event and that these
options will terminate upon the completion of the event if not previously
exercised. In addition, immediately prior to the consummation of an acquisition
event, the vesting schedule of each outstanding option and stock-based award
will be accelerated.
39
<PAGE> 42
1999 Employee Stock Purchase Plan. Our 1999 employee stock purchase plan
provides for the issuance of up to shares of our common stock to
participating employees.
All of our employees, including directors who are employees, and all
employees of any participating subsidiaries:
- Whose customary employment is more than 20 hours per week for more than
five months in a calendar year;
- Who were employed by us prior to , 1999 for the first
offering period or for subsequent offering periods, who have been
employed by us for at least three months prior to enrolling; and
- Who are employed on the first day of a designated payroll deduction
offering period
are eligible to participate in the 1999 employee stock purchase plan. Employees
who would immediately after the grant own five percent or more of the total
combined voting power or value of our stock or any subsidiary are not eligible
to participate.
To participate in the 1999 employee stock purchase plan, an employee must
authorize us to deduct from one to ten percent of his or her base pay during the
offering period. The first offering period will commence on the first date of
trading of our common stock on the Nasdaq National Market. The purchase price of
the shares for the first offering period is 85% of the initial public offering
price or the closing price per share of the common stock on the last day of the
offering period, whichever is lower. The purchase price of the shares for the
subsequent offering periods is 85% of the closing price per share of the common
stock on either the first or last day of the offering period, whichever is
lower.
401(k) Plan. Our employee savings and retirement plan is qualified under
Section 401 of the Internal Revenue Code. Our employees may elect to reduce
their current compensation by up to the statutorily prescribed annual limit and
have the amount of such reduction contributed to the 401(k) plan. We may make
matching or additional contributions to the 401(k) plan in amounts to be
determined annually by our board of directors.
40
<PAGE> 43
RELATED PARTY TRANSACTIONS
ISSUANCES OF PREFERRED STOCK AND 15% SENIOR SUBORDINATED NOTES
Since our inception in August 1998, we have issued and sold preferred stock
and 15% senior subordinated notes coupled with warrants to purchase common stock
to the following persons and entities who are our executive officers, directors
or 5% or greater stockholders. For more detail on shares of stock held by these
purchasers, see "Principal Stockholders" on page 44.
<TABLE>
<CAPTION>
WARRANTS TO
SERIES A SERIES B 15% SENIOR PURCHASE AGGREGATE
PREFERRED PREFERRED SUBORDINATED COMMON PURCHASE
NAME STOCK STOCK NOTES STOCK PRICE
- ---- --------- --------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Arthur H. Bilger(1).................. 32,894 9,610 $ 100,000 2,225 $ 494,779
Baker Communications Fund, L.P. ..... -- 929,244 $7,000,000 155,778 $20,999,990
Battery Ventures IV, L.P.(2)......... 513,165 63,056 -- -- $ 4,850,056
George H. Conrades(3)................ 29,605 8,649 $ 65,154 1,449 $ 420,458
Earl P. Galleher III................. 3,289 961 $ 48,333 1,075 $ 87,808
Jonathan Seelig...................... 14,473 4,228 $ 31,852 708 $ 205,546
Entities affiliated with Polaris
Venture Management Co. II,
L.L.C.(4).......................... 263,163 237,318 $1,000,000 22,254 $ 6,575,472
Paul Sagan........................... 6,578 1,922 $ 14,477 322 $ 93,427
</TABLE>
- ------------
(1) Excludes securities held by Baker Communications Fund, L.P., of which Mr.
Bilger is a limited partner. Mr. Bilger is the managing member of the
general partner of ADASE Partners, L.P. and the managing member of AT
Investors LLC. Mr. Bilger's shares of Series A preferred stock represent
holdings of ADASE Partners, L.P. in Akamai. Mr. Bilger's shares of Series B
convertible preferred stock and his notes and warrants are held by AT
Investors LLC. Mr. Bilger disclaims beneficial ownership of the securities
held by ADASE Partners, L.P. and AT Investors LLC except to the extent of
his pecuniary interest in those entities.
(2) Includes 7,895 shares of Series A convertible preferred stock and 969 shares
of Series B convertible preferred stock held by Battery Investment Partners
IV, LLC, of which Battery Ventures IV, L.P. is a managing member.
(3) Excludes securities held by entities affiliated with Polaris Venture
Management Co. II, L.L.C., of which Mr. Conrades is a general partner.
(4) Represents 257,119 shares of Series A convertible preferred stock, 231,687
shares of Series B convertible preferred stock, 15% senior subordinated
notes in the principal amount of $976,271 and 7,242 warrants held by Polaris
Venture Partners II L.P. and 6,044 shares of Series A convertible preferred
stock, 5,631 shares of Series B convertible preferred stock, 15% senior
subordinated notes in the principal amount of $23,729 and 176 warrants held
by Polaris Venture Partners Founders Fund II L.P.
Series A Financing. On November 23, 1998, November 30, 1998 and December
14, 1998 we issued an aggregate of 1,100,000 shares of Series A preferred stock
to 22 investors, including Arthur H. Bilger, Battery Ventures IV, L.P., Battery
Investment Partners IV, LLC, George H. Conrades, Earl P. Galleher III, Jonathan
Seelig, Polaris Venture Partners II L.P., Polaris Venture Partners Founders Fund
II L.P. and Paul Sagan. The per share purchase price for our Series A
convertible preferred stock was $7.60.
Series B Financing. On April 16, 1999 and April 30, 1999 we issued an
aggregate of 1,327,500 shares of Series B convertible preferred stock to 24
investors, including Arthur H. Bilger, Baker Communications Fund, L.P., Battery
Ventures IV, L.P., Battery Investment Partners IV, LLC, George H. Conrades, Earl
P. Galleher III, Jonathan Seelig, Polaris Venture Partners II L.P., Polaris
Venture Partners Founders Fund II L.P. and Paul Sagan. The per share purchase
price for our Series B convertible preferred stock was $15.07. As
41
<PAGE> 44
part of our Series B financing, we granted Baker Communications Fund, L.P. an
option to purchase up to 145,195 shares of our Series C convertible preferred
stock which are convertible into an aggregate of 454,188 shares of common stock.
15% Senior Subordinated Note Financing. On May 7, 1999 we issued 15%
senior subordinated notes in the aggregate principal amount of $15,000,000
coupled with 333,806 warrants to purchase an aggregate of 1,001,418 shares of
common stock to 20 investors, including Arthur H. Bilger, Baker Communications
Fund, L.P., George H. Conrades, Earl P. Galleher III, Jonathan Seelig, Polaris
Venture Partners II L.P., Polaris Venture Partners Founders Fund II L.P. and
Paul Sagan. The 15% senior subordinated notes have a term of five years and bear
interest at the rate of 15% per year, compounded annually. The exercise price of
the warrants issued in connection with the 15% senior subordinated notes is
$4.99 per share.
ISSUANCES OF COMMON STOCK
The following table presents selected information regarding our issuances
of common stock to our executive officers and directors. We issued the shares of
common stock set forth in the table below pursuant to stock restriction
agreements with each of the executive officers and directors which give us
rights to repurchase all or a portion of the shares at their purchase price in
the event that the person ceases to provide services to us. Some of these stock
restriction agreements prohibit us from repurchasing shares following a change
in control of Akamai.
<TABLE>
<CAPTION>
DATE OF NUMBER AGGREGATE
NAME ISSUANCE OF SHARES PURCHASE PRICE
- ---- -------- --------- --------------
<S> <C> <C> <C>
Robert O. Ball III..................................... 7/23/99 125,000 $ 625,000
Arthur H. Bilger....................................... 11/19/98 297,000 $ 8,250
3/26/99 300,000 $ 200,000
George H. Conrades..................................... 3/26/99 2,970,000 $1,980,000
Earl P. Galleher III................................... 3/15/99 630,000 $ 52,500
F. Thomson Leighton.................................... 9/2/98 5,695,875 $ 63,288
Daniel M. Lewin........................................ 9/2/98 5,695,875 $ 63,288
Paul Sagan............................................. 10/28/98 1,191,600 $ 33,100
5/18/99 300,000 $ 500,000
Jonathan Seelig........................................ 9/2/98 1,188,000 $ 13,200
</TABLE>
AGREEMENTS WITH EXECUTIVE OFFICERS
On March 26, 1999, in connection with the issuance of restricted common
stock, we loaned $1,980,000 to George H. Conrades, our Chief Executive Officer
and Chairman of the Board of Directors. The loan bears interest at a rate of
5.3% per year, compounded annually until paid in full. The loan must be paid in
full by March 26, 2009 or earlier to the extent of proceeds, net of taxes,
received by Mr. Conrades upon his sale of capital stock of Akamai. On March 26,
1999 we entered into a severance agreement with Mr. Conrades. The severance
agreement requires us to pay Mr. Conrades a lump-sum cash payment equal to 299%
of his average annual salary and bonus for the most recent three years if his
employment is terminated by us other than for cause within two years following a
change in control of Akamai.
On May 18, 1999, in connection with the issuance of restricted common
stock, we loaned $500,000 to Paul Sagan, our President and Chief Operating
Officer. The loan bears interest at a rate of 5.3% per year, compounded annually
until paid in full. The loan must be paid in full by May 18, 2009 or earlier to
the extent of proceeds, net of taxes, received by Mr. Sagan upon his sale of
capital stock of Akamai.
On July 23, 1999, in connection with the issuance of restricted common
stock, we loaned $623,750 to Robert O. Ball III, our Vice President and General
Counsel. The loan bears interest at a rate of 6.1% per year, compounded annually
until paid in full. The loan must be paid in full by July 23, 2009 or earlier to
the extent of proceeds, net of taxes, received by Mr. Ball upon his sale of
capital stock of Akamai.
42
<PAGE> 45
------------------------
We believe that all of the securities issuances set forth above were made
on terms no less favorable to us than could have been obtained from unaffiliated
third parties. Akamai agreed to the material terms of each of the preferred
stock issuances described above after arms'-length negotiations with previously
unaffiliated persons. All future transactions, including loans between us and
our officers, directors, principal stockholders and their affiliates will be
approved by a majority of our board of directors, including a majority of the
independent and disinterested directors on our board of directors, and will
continue to be on terms no less favorable to us than could be obtained from
unaffiliated third parties.
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<PAGE> 46
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding beneficial ownership
of our common stock as of June 30, 1999, and as adjusted to reflect the sale of
the shares of common stock in this offering, by:
- Each person who owns beneficially more than 5% of the outstanding shares
of our common stock;
- Each of our directors;
- The executive officer named in the Summary Compensation Table under
"Management -- Executive Compensation" on page 39; and
- All of our directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, and includes voting and investment power
with respect to shares. Unless otherwise indicated below, to our knowledge, all
persons named in the table have sole voting and investment power with respect to
their shares of common stock, except to the extent authority is shared by
spouses under applicable law. Unless otherwise indicated, the address of each
person owning more than 5% of the outstanding shares of common stock is c/o
Akamai Technologies, Inc., 201 Broadway, Cambridge, Massachusetts 02139.
<TABLE>
<CAPTION>
PERCENTAGE OF
COMMON STOCK
OUTSTANDING
--------------------
NUMBER OF SHARES BEFORE AFTER
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OFFERING OFFERING
- ------------------------------------ ------------------ -------- --------
<S> <C> <C> <C>
F. Thomson Leighton(1).................................... 5,524,875 14.7% %
Daniel M. Lewin(2)........................................ 5,515,875 14.7% %
Battery Ventures IV, L.P.(3).............................. 4,886,849 13.0% %
20 Williams Street
Wellesley, MA 02481
Baker Communications Fund, L.P.(4)........................ 3,709,254 9.6% %
c/o Baker Capital Partners, LLC
540 Madison Avenue
New York, NY 10022
George H. Conrades(5)..................................... 3,271,307 8.7% %
Entities affiliated with Polaris Venture Management Co.
II, L.L.C.(6)........................................... 3,187,796 8.5% %
1000 Winter Street
Suite 3350
Waltham, MA 02451
Arthur H. Bilger(7)....................................... 933,627 2.5% %
Todd A. Dagres(8)......................................... 4,886,849 13.0% %
c/o Battery Ventures IV, L.P.
20 Williams Street
Wellesley, MA 02481
Terrance G. McGuire(9).................................... 3,187,796 8.5% %
c/o Polaris Venture Management Co. II, L.L.C.
1000 Winter Street
Suite 3350
Waltham, MA 02451
Edward W. Scott(10)....................................... 3,709,254 9.6% %
c/o Baker Capital Partners, LLC
540 Madison Avenue
New York, NY 10022
All executive officers and directors as a group (14
persons)(11)............................................ 30,774,646 79.6% %
</TABLE>
- ------------
(1) Includes 720,000 shares held by the F. Thomson Leighton 1998 Irrevocable
Trust.
(2) Includes 720,000 shares held by the Daniel Lewin 1998 Irrevocable Trust.
44
<PAGE> 47
(3) Includes 75,180 shares held by Battery Investment Partners IV, LLC. Battery
Ventures IV, L.P. is the managing member of Battery Investment Partners IV,
LLC.
(4) Includes 921,522 shares issuable upon the exercise of options and warrants
exercisable within 60 days after June 30, 1999.
(5) Includes 742,500 shares held by Lawrence T. Warble, Trustee Under Agreement
Dated August 10, 1999, and 4,347 shares issuable upon the exercise of
warrants exercisable within 60 days after June 30, 1999. Excludes shares
held by entities affiliated with Polaris Venture Management Co. II, L.L.C.,
of which Mr. Conrades is a general partner.
(6) Represents 3,048,813 shares held by Polaris Venture Partners II L.P.,
72,221 shares held by Polaris Venture Partners Founders' Fund II L.P.,
65,178 shares issuable upon exercise of warrants held by Polaris Venture
Partners II L.P. and exercisable within 60 days after June 30, 1999 and
1,584 shares issuable upon the exercise of warrants held by Polaris Venture
Partners Founders' Fund II L.P. and exercisable within 60 days after June
30, 1999. Polaris Venture Management Co. II, L.L.C. is the general partner
of Polaris Venture Partners and Polaris Venture Founders' Fund II L.P.
(7) Represents 297,000 shares held by the Arthur H. Bilger 1996 Family Trust,
601,122 shares held by ADASE Partners, L.P., 28,830 shares held by AT
Investors LLC and 6,675 shares issuable upon the exercise of warrants held
by AT Investors LLC and exercisable within 60 days after June 30, 1999. Mr.
Bilger, a director of Akamai, is the managing member of the general partner
of ADASE Partners, L.P. and managing member of AT Investors LLC. Mr. Bilger
disclaims beneficial ownership of the shares held by the Arthur H. Bilger
1996 Family Trust, ADASE Partners, L.P. and AT Investors LLC except to the
extent of his pecuniary interest in those entities. Excludes shares held by
Baker Communications Fund, L.P., of which Mr. Bilger is a limited partner.
(8) Represents 4,811,669 shares held by Battery Ventures IV, L.P. and 75,180
shares held by Battery Investment Partners IV, LLC. Battery Ventures IV,
L.P. is the managing member of Battery Investment Partners IV, LLC. Todd A.
Dagres, a director of Akamai, is a general partner of Battery Ventures IV,
L.P. Mr. Dagres disclaims beneficial ownership of the shares held by
Battery Ventures IV, L.P. and Battery Investment Partners IV, LLC except to
the extent of his pecuniary interest in those entities.
(9) Represents 3,048,813 shares held by Polaris Venture Partners II L.P.,
72,221 shares held by Polaris Venture Partners Founders' Fund II L.P.,
65,178 shares issuable upon exercise of warrants held by Polaris Venture
Partners II L.P. and exercisable within 60 days after June 30, 1999 and
1,584 shares issuable upon the exercise of warrants held by Polaris Venture
Partners Founders' Fund II L.P. and exercisable within 60 days after June
30, 1999. Polaris Venture Management Co. II, L.L.C. is the general partner
of Polaris Venture Partners II L.P. and Polaris Venture Partners Founders'
Fund II L.P. Terrance G. McGuire, a director of Akamai, is a general
partner of Polaris Venture Management Co. II, L.L.C. Mr. McGuire disclaims
beneficial ownership of the shares held by Polaris Venture Partners II L.P.
and Polaris Venture Partners Founders' Fund II L.P. except to the extent of
his pecuniary interest in those entities.
(10) Represents 2,787,732 shares held by Baker Communications Fund, L.P. and
921,522 shares issuable upon the exercise of options and warrants held by
Baker Communications Fund, L.P. and exercisable within 60 days after June
30, 1999. Baker Capital Partners, LLC is general partner of Baker
Communications Fund, L.P. Edward W. Scott, a director of Akamai, is a
general partner of Baker Communications Fund, L.P. Mr. Scott disclaims
beneficial ownership of the shares held by Baker Communications Fund, L.P.
except to the extent of his pecuniary interest in Baker Communications
Fund, L.P.
(11) Includes 1,005,621 shares issuable upon the exercise of options and
warrants exercisable within 60 days after June 30, 1999.
45
<PAGE> 48
DESCRIPTION OF CAPITAL STOCK
After this offering, the authorized capital stock of Akamai will consist of
300,000,000 shares of common stock, $.01 par value per share, and 5,000,000
shares of preferred stock, $.01 par value per share. As of June 30, 1999, there
were outstanding:
- 37,650,502 shares of common stock held by 63 stockholders of record; and
- options and warrants to purchase an aggregate of 6,049,738 shares of
common stock.
There will be 40,381,850 shares of common stock outstanding upon the
closing of this offering.
The following summary is not intended to be complete and is qualified by
reference to the provisions of applicable law and to our amended and restated
certificate of incorporation and amended and restated bylaws included as
exhibits to the Registration Statement of which this prospectus is a part. For
more information, see "Where You Can Find More Information" on page 52.
COMMON STOCK
Holders of our common stock are entitled to one vote for each share held on
matters submitted to a vote of stockholders. Holders of our common stock do not
have cumulative voting rights. Accordingly, holders of a majority of the shares
of common stock entitled to vote in any election of directors may elect all of
the directors standing for election. Holders of common stock are entitled to
receive their proportionate share of any dividends declared by the Board of
Directors, subject to any preferential dividend rights of outstanding preferred
stock. Upon the liquidation, dissolution or winding up of Akamai, the holders of
common stock are entitled to receive ratably the net assets of Akamai available
after the payment of all debts and other liabilities and subject to the
preferential rights of any outstanding preferred stock. The common stock has no
preemptive, subscription, redemption or conversion rights. All outstanding
shares of common stock are fully paid and nonassessable. The rights, preferences
and privileges of the common stock are subject to the rights of the holders of
shares of any series of preferred stock which Akamai may designate and issue in
the future.
PREFERRED STOCK
Our Board of Directors will be authorized to issue shares of preferred
stock in one or more series without stockholder approval. The Board will have
discretion to determine the rights, preferences, privileges and restrictions,
including voting rights, dividend rights, conversion rights, redemption
privileges and liquidation preferences of each series of preferred stock.
The purpose of authorizing the Board of Directors to issue preferred stock
and determine its rights and preferences is to eliminate delays associated with
a stockholder vote on specific issuances. The Board's ability to issue preferred
stock will provide desirable flexibility in connection with possible
acquisitions and other corporate purposes and could make it more difficult for a
third party to acquire, or could discourage a third party from acquiring, a
majority of our outstanding voting stock. The issuance of preferred stock with
voting and conversion rights may adversely affect the voting power of the
holders of common stock. We have no present plans to issue any shares of
preferred stock.
DELAWARE LAW AND OUR CHARTER AND BY-LAW PROVISIONS; ANTI-TAKEOVER EFFECTS
Akamai is subject to the provisions of Section 203 of the General
Corporation Law of Delaware. Section 203 prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for three years after the date of the transaction in which the
person became an interested stockholder, unless the business combination is
approved in a prescribed manner. A "business combination" includes mergers,
asset sales and other transactions resulting in a financial benefit to the
interested stockholder. An "interested stockholder" is a person who, together
with affiliates and associates, owns, or within three years did own, 15% or more
of the corporation's voting stock.
46
<PAGE> 49
Akamai's certificate of incorporation and by-laws to be effective on the
closing of this offering provide:
- That the Board of Directors be divided into three classes, as nearly
equal in size as possible, with no class having more than one director
more than any other class, with staggered three-year terms;
- That directors may be removed only for cause by the vote of the holders
of at least 66% of the shares of our capital stock entitled to vote; and
- That any vacancy on the Board of Directors, however occurring, including
a vacancy resulting from an enlargement of the Board, may only be filled
by vote of a majority of the directors then in office.
The classification of the Board of Directors and the limitations on the
removal of directors and filling of vacancies could make it more difficult for a
third party to acquire, or discourage a third party from acquiring, Akamai.
The certificate of incorporation and by-laws to be effective on the closing
of this offering also provide that, after the closing of this offering:
- Any action required or permitted to be taken by the stockholders at an
annual meeting or special meeting of stockholders may only be taken if it
is properly brought before such meeting and may not be taken by written
action in lieu of a meeting; and
- Special meetings of the stockholders may only be called by the Chairman
of the Board of Directors, the President, or by the Board of Directors.
Our by-laws will also provide that, in order for any matter to be
considered "properly brought" before a meeting, a stockholder must comply
with requirements regarding advance notice to us.
These provisions could delay until the next stockholders' meeting
stockholder actions which are favored by the holders of a majority of our
outstanding voting securities. These provisions may also discourage another
person or entity from making a tender offer for our common stock, because such
person or entity, even if it acquired a majority of our outstanding voting
securities, would be able to take action as a stockholder only at a duly called
stockholders meeting, and not by written consent.
Delaware law provides that the vote of a majority of the shares entitled to
vote on any matter is required to amend a corporation's certificate of
incorporation or by-laws, unless a corporation's certificate of incorporation or
by-laws, as the case may be, requires a greater percentage. Our certificate of
incorporation requires the vote of the holders of at least 75% of the shares of
our capital stock entitled to vote to amend or repeal any of the foregoing
provisions of our certificate of incorporation. Generally, our by-laws may be
amended or repealed by a majority vote of the Board of Directors or the holders
of a majority of the shares of our capital stock issued and outstanding and
entitled to vote. Changes to our by-laws regarding special meetings of
stockholders, written actions of stockholders in lieu of a meeting, and the
election, removal and classification of members of the Board of Directors
require the vote of the holders of at least 75% of the shares of our capital
stock entitled to vote. The stockholder vote would be in addition to any
separate class vote that might in the future be required pursuant to the terms
of any series preferred stock that might be then outstanding.
LIMITATION OF LIABILITY AND INDEMNIFICATION
Our certificate of incorporation provides that our directors and officers
shall be indemnified by us except to the extent prohibited by Delaware law. This
indemnification covers all expenses and liabilities reasonably incurred in
connection with their services for or on behalf of us. In addition, our
certificate of incorporation provides that our directors will not be personally
liable for monetary damages to us or to our stockholders for breaches of their
fiduciary duty as directors, unless they violated their duty of loyalty to us or
our stockholders, acted in bad faith, knowingly or intentionally violated the
law, authorized illegal dividends or redemptions or derived an improper personal
benefit from their action as directors.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is BankBoston, N.A.
47
<PAGE> 50
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, based on the number of shares outstanding
at June 30, 1999, we will have shares of common stock outstanding,
assuming no exercise of outstanding options. Of these shares, the shares to be
sold in this offering will be freely tradable without restriction or further
registration under the Securities Act, except that any shares purchased by our
affiliates, as that term is defined in Rule 144 under the Securities Act, may
generally only be sold in compliance with the limitations of Rule 144 described
below. The remaining shares of common stock are "restricted
securities" under Rule 144. Generally, restricted securities that have been
owned for at least two years may be sold immediately after the completion of
this offering and restricted securities that have been owned for at least one
year may be sold 90 days after the completion of this offering.
SALES OF RESTRICTED SHARES
In general, under Rule 144, stockholders, including our affiliates, who
have beneficially owned shares for at least one year are entitled to sell,
within any three-month period, a number of these shares that does not exceed the
greater of one percent of the then outstanding shares of common stock and the
average weekly trading volume in the common stock in the over-the-counter market
during the four calendar weeks preceding the date on which notice of such sale
is filed, provided requirements concerning availability of public information,
manner of sale and notice of sale are satisfied. In addition, our affiliates
must comply with the restrictions and requirements of Rule 144, other than the
one-year holding period requirement, in order to sell shares of common stock
which are not restricted securities.
Under Rule 144(k), a stockholder who is not an affiliate and has not been
an affiliate for at least three months prior to the sale and who has
beneficially owned shares for at least two years may sell these shares without
compliance with the foregoing requirements. In meeting the holding periods
described above, a stockholder can include the holding periods of a prior owner
who was not an affiliate. The holding periods described above do not begin until
the stockholder pays the full purchase price or other consideration. Rule 701
provides that currently outstanding shares of common stock acquired under our
employee compensation plans may be sold beginning 90 days after the date of this
prospectus by stockholder other than affiliates subject only to the manner of
sale provisions of Rule 144 and by affiliates under Rule 144 without compliance
with its one-year holding period requirement.
STOCK OPTIONS
At June 30, 1999, approximately shares of common stock were
issuable pursuant to vested options granted under our 1998 Stock Incentive Plan,
of which approximately shares are subject to lock-up agreements
with the underwriters.
We intend to file a registration statement on Form S-8 under the Securities
Act within 180 days after the date of this prospectus, to register up to
shares of common stock issuable under our 1998 Stock Incentive
Plan, including the 4,558,000 shares of common stock subject to outstanding
options as of June 30, 1999. We expect this registration statement to become
effective upon filing.
LOCK-UP AGREEMENTS
Akamai and our executive officers, directors and other securityholders have
entered into lock-up agreements with the underwriters. Without the prior written
consent of Morgan Stanley & Co. Incorporated, none of us will, during the period
ending 180 days after the date of this prospectus, (1) 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, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of common
stock or any securities convertible into or exchangeable for common stock, or
(2) enter into any swap or other arrangement that transfers to another, in whole
or in part, any of the economic consequences of ownership of the common stock,
regardless of whether any such transactions described in clause (1) or (2) of
this paragraph is to be settled by delivery of such common stock or such other
securities, in cash or otherwise. In addition, for a period of 180 days from the
date of this prospectus, except as required by law, we have
48
<PAGE> 51
agreed not to consent to any offer for sale, sale or other disposition, or any
transaction which is designed or could be expected, to result in, the
disposition by any person, directly or indirectly, of any shares of common stock
without the prior written consent of Morgan Stanley & Co. Incorporated except
that we may, without consent, grant options and sell shares pursuant to our
stock plans.
REGISTRATION RIGHTS
After this offering, the holders of approximately 34,810,846 shares of
common stock and the holders of warrants to purchase approximately 1,037,550
shares of common stock will be entitled to rights with respect to the
registration of these shares under the Securities Act. If we propose to register
any of our securities under the Securities Act, either for our own account or
for the account of other security holders exercising registration rights, these
holders are entitled to notice of such registration and are entitled to include
shares of common stock. Additionally, they are entitled to demand registration
rights pursuant to which they may require us on up to five occasions to file a
registration statement under the Securities Act at our expense. We are required
to use our best efforts to effect any such registration. These registration
rights are subject to the right of the underwriters of an offering to limit the
number of shares included in such registration and our right not to effect a
requested registration within 180 days following an offering of our securities
pursuant to a registration statement in connection with an underwritten public
offering, including this offering. Further, holders may require us to file
registration statements on Form S-3 at our expense. These registration rights
are subject to our right not to effect, no more than once during any 12-month
period, a requested registration if the registration would interfere with an
unforeseen securities or business transaction.
49
<PAGE> 52
UNDERWRITERS
Under the terms and subject to the conditions contained in the underwriting
agreement dated the date hereof, the underwriters named below, for whom Morgan
Stanley & Co. Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation,
Salomon Smith Barney Inc. and Thomas Weisel Partners LLC are acting as
representatives, have severally agreed to purchase, and we have agreed to sell
to them, the respective number of shares of common stock set forth opposite the
names of the underwriters below:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- ---- ---------
<S> <C>
Morgan Stanley & Co. Incorporated...........................
Donaldson, Lufkin & Jenrette Securities Corporation.........
Salomon Smith Barney Inc....................................
Thomas Weisel Partners LLC..................................
---------
Total.............................................
=========
</TABLE>
The underwriters are offering the shares subject to their acceptance of the
shares from us and subject to prior sale. The underwriting agreement provides
that the obligations of the several underwriters to pay for and accept delivery
of the shares of common stock offered in this offering are subject to the
approval of legal matters by their counsel and to other conditions. The
underwriters are obligated to take and pay for all of the shares of common stock
offered in this offering, other than those covered by the over-allotment option
described below, if any such shares are taken.
The underwriters initially propose to offer part of the shares of common
stock directly to the public at the initial public offering price set forth on
the cover page of this prospectus and part to dealers at a price that represents
a concession not in excess of $ per share under the initial public
offering price. Any underwriters may allow, and the dealers may reallow, a
concession not in excess of $ per share to other underwriters or to
other dealers. After the initial offering of the shares of common stock, the
offering price and other selling terms may from time to time be varied by the
representatives of the underwriters.
We have granted to the underwriters an option, exercisable for 30 days from
the date of this prospectus, to purchase up to an aggregate of
additional shares of common stock at the initial public offering price set forth
on the cover page hereof, less underwriting discounts and commissions. The
underwriters may exercise such option solely for the purpose of covering
over-allotments, if any, made in connection with this offering of common stock.
To the extent this over-allotment option is exercised, each underwriter will
become obligated, subject to other conditions, to purchase approximately the
same percentage of additional shares of common stock as the number set forth
next to such underwriter's name in the preceding table bears to the total number
of shares of common stock set forth next to the names of all underwriters in the
preceding table.
The underwriters have informed us that they do not intend sales to
discretionary accounts to exceed five percent of the total number of shares of
common stock offered by them.
At our request, the underwriters have reserved for sale up to percent of
the shares of common stock to be issued by us and offered in this offering for
sale, at the price per share in this offering, to directors, officers,
employees, business associates and related persons of Akamai. The underwriters
have also reserved for sale, at the initial public offering price, up to
shares of common stock offered in this offering for Baker
Communications Fund, L.P., one of our stockholders. The number of shares of
common stock available for sale to the general public will be reduced to the
extent such individuals or entities purchase such reserved shares. Any reserved
shares which are not so purchased will be offered by the underwriters to the
general public on the same basis as the other shares of common stock offered by
the Prospectus for this offering.
We have filed an application for our common stock to be quoted on the
Nasdaq National Market under the symbol "AKAM."
50
<PAGE> 53
Akamai, our directors and executive officers and substantially all other
stockholders are expected to agree that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the underwriters, during the
period ending 180 days after the date of this prospectus, he, she or it will
not, directly or indirectly:
- 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, lend 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
- Enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of common
stock,
whether any such transaction described above is to be settled by delivery of
common stock or such other securities, in cash or otherwise.
In order to facilitate the offering of the common stock, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the common stock. Specifically, the underwriters may over-allot in
connection with the offering, creating a short position in the common stock for
their own account. In addition, to cover over-allotments or to stabilize the
price of the common stock, the underwriters may bid for, and purchase, shares of
common stock in the open market. Finally, the underwriting syndicate may reclaim
selling concessions allowed to an underwriter or a dealer for distributing the
common stock in the offering if the syndicate repurchases previously distributed
shares of common stock in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the common stock above independent market
levels. The underwriters are not required to engage in these activities and may
end any of these activities at any time.
We and the underwriters have agreed to indemnify each other against
liabilities in connection with this offering, including liabilities under the
Securities Act.
Thomas Weisel Partners LLC, one of the representatives of the underwriters,
was organized and registered as a broker-dealer in December 1998. Since December
1998, Thomas Weisel Partners has been named as a lead or co-manager on 56 filed
public offerings of equity securities, of which 31 have been completed, and has
acted as a syndicate member in an additional 27 public offerings of equity
securities. Thomas Weisel Partners does not have any material relationship with
us or any of our officers, directors or other controlling persons, except with
respect to its contractual relationship with us pursuant to the underwriting
agreement entered into in connection with this offering.
PRICING OF THE OFFERING
Prior to this offering, there has been no public market for the shares of
common stock. Consequently, the public offering price for the shares of common
stock will be determined by negotiations between Akamai and the representatives
of the underwriters. Among the factors to be considered in determining the
public offering price will be:
- Our record of operations, our current financial position and future
prospects;
- The experience of our management;
- Sales, earnings and other financial and operating information in recent
periods; and
- The price-earnings ratios, price-sales ratios, market prices of
securities and financial and operating information of companies engaged
in activities similar to ours.
The estimated public offering price range set forth on the cover page of
this preliminary prospectus is subject to change as a result of market
conditions and other factors.
51
<PAGE> 54
LEGAL MATTERS
The validity of the shares of common stock we are offering will be passed
upon for us by Hale and Dorr LLP, Boston, Massachusetts. Legal matters in
connection with this offering will be passed upon for the underwriters by Ropes
& Gray, Boston, Massachusetts.
EXPERTS
The financial statements as of December 31, 1998 and June 30, 1999 and for
the period from inception (August 20, 1998) to December 31, 1998 and the
six-month period ended June 30, 1999 included in this prospectus have been so
included in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act with respect to the common stock
we propose to sell in this offering. This prospectus, which constitutes part of
the registration statement, does not contain all of the information set forth in
the registration statement. For further information about us and the common
stock we propose to sell in this offering, we refer you to the registration
statement and the exhibits and schedules filed as a part of the registration
statement. Statements contained in this prospectus as to the contents of any
contract or other document filed as an exhibit to the registration statement are
not necessarily complete. If a contract or document has been filed as an exhibit
to the registration statement, we refer you to the copy of the contract or
document that we have filed. You may inspect the registration statement,
including exhibits, without charge at the principal office of the Securities and
Exchange Commission in Washington, D.C. You may inspect and copy the same at the
public reference facilities maintained by the Securities and Exchange Commission
at 450 Fifth Street, N.W., Judiciary Plaza, Room 1024, Washington, D.C. 20549,
and at the Commission's regional offices located at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World Trade
Center, Suite 1300, New York, New York 10048. You can also obtain copies of this
material at prescribed rates by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, the
Securities and Exchange Commission maintains a website at http://www.sec.gov
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Securities and Exchange
Commission.
52
<PAGE> 55
AKAMAI TECHNOLOGIES, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Financial Statements:
Report of Independent Accountants......................... F-2
Balance Sheets............................................ F-3
Statements of Operations.................................. F-4
Statements of Convertible Preferred Stock and
Stockholders' Deficit.................................. F-5
Statements of Cash Flows.................................. F-6
Notes to Financial Statements............................. F-7
</TABLE>
F-1
<PAGE> 56
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Akamai Technologies, Inc.:
In our opinion, the accompanying balance sheets and the related statements
of operations, cash flows and convertible preferred stock and stockholders'
deficit present fairly, in all material respects, the financial position of
Akamai Technologies, Inc. as of December 31, 1998 and June 30, 1999, and the
results of its operations and its cash flows for the period from inception
(August 20, 1998) to December 31, 1998 and for the six-month period ended June
30, 1999, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
August 10, 1999
F-2
<PAGE> 57
AKAMAI TECHNOLOGIES, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31, JUNE 30, JUNE 30,
1998 1999 1999
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 6,579,909 $ 44,829,375 $ 44,829,375
Short-term investments.................................... 224,880 224,880 224,880
Accounts receivable....................................... -- 394,819 394,819
Prepaid expenses and other current assets................. 56,589 415,626 415,626
----------- ------------ ------------
Total current assets............................... 6,861,378 45,864,700 45,864,700
Property and equipment, net (Note 4)........................ 1,522,980 6,274,556 6,274,556
Other assets................................................ -- 29,077 29,077
Intangible assets, net...................................... 481,282 458,646 458,646
----------- ------------ ------------
Total assets....................................... $ 8,865,640 $ 52,626,979 $ 52,626,979
=========== ============ ============
LIABILITIES, CONVERTIBLE PREFERRED STOCK
AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses..................... $ 665,483 $ 2,967,937 $ 2,967,937
Accrued payroll and benefits.............................. 27,514 502,809 502,809
Accrued interest.......................................... -- 341,610 341,610
Current portion of obligations under capital lease and
equipment loan.......................................... 12,350 450,685 450,685
----------- ------------ ------------
Total current liabilities.......................... 705,347 4,263,041 4,263,041
Obligations under capital leases and equipment loan, net of
current portion........................................... 24,859 905,502 905,502
Senior subordinated notes (Note 5).......................... -- 11,222,738 11,222,738
----------- ------------ ------------
Total long-term liabilities........................ 24,859 12,128,240 12,128,240
----------- ------------ ------------
Total liabilities.................................. 730,206 16,391,281 16,391,281
Series A convertible preferred stock; $0.01 par value;
1,100,000 shares authorized, 1,100,000 issued and
outstanding at December 31, 1998 and June 30, 1999,
respectively, no shares issued and outstanding pro forma
June 30, 1999 (liquidation preference $8,360,000 at June
30, 1999)................................................. 8,283,758 8,290,958 --
Series B convertible preferred stock; $0.01 par value;
1,327,500 shares authorized, 1,327,500 issued and
outstanding at June 30, 1999, no shares issued and
outstanding pro forma June 30, 1999 (liquidation
preference $20,263,130 at June 30, 1999).................. -- 20,138,130 --
Series C convertible preferred stock; $0.01 par value;
145,195 shares authorized, none issued and outstanding at
June 30, 1999, no shares issued and outstanding pro forma
June 30, 1999............................................. -- -- --
Series D convertible preferred stock; $0.01 par value;
685,194 shares authorized, 685,194 issued and outstanding
at June 30, 1999, no shares issued and outstanding pro
forma June 30, 1999 (liquidation preference $12,524,657 at
June 30, 1999)............................................ -- 12,499,657 --
----------- ------------ ------------
Total convertible preferred stock (Note 7)......... 8,283,758 40,928,745 --
Commitments and contingencies (Note 6)
Stockholders' equity (deficit) (Note 8):
Common stock, $0.01 par value; 300,000,000 shares
authorized; 17,282,655 issued and outstanding at
December 31, 1998; 21,542,655 issued and outstanding at
June 30, 1999, 37,650,502 shares issued and outstanding
pro forma at June 30, 1999.............................. 172,827 215,427 376,505
Additional paid-in capital................................ 2,075,314 16,247,266 57,014,933
Notes receivable from officers for stock.................. -- (2,480,000) (2,480,000)
Deferred compensation..................................... (1,505,975) (8,002,463) (8,002,463)
Accumulated deficit....................................... (890,490) (10,673,277) (10,673,277)
----------- ------------ ------------
Total stockholders' equity (deficit)............... (148,324) (4,693,047) 36,235,698
----------- ------------ ------------
Total liabilities and stockholders' equity
(deficit)........................................ $ 8,865,640 $ 52,626,979 $ 52,626,979
=========== ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE> 58
AKAMAI TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(AUGUST 20, 1998) SIX-MONTH
THROUGH PERIOD ENDED
DECEMBER 31, 1998 JUNE 30, 1999
----------------- -------------
<S> <C> <C>
Revenue..................................................... $ -- $ 403,949
Operating expenses:
Cost of service........................................... 30,623 1,408,119
Engineering and development............................... 228,553 2,053,446
Sales, general and administrative......................... 435,283 5,242,547
Equity related compensation............................... 205,617 1,338,608
---------- ------------
Total operating expenses.......................... 900,076 10,042,720
---------- ------------
Operating loss.............................................. (900,076) (9,638,771)
Interest income (expense), net.............................. 9,586 (144,016)
---------- ------------
Net loss.................................................... (890,490) (9,782,787)
Dividends and accretion to preferred stock redemption
value..................................................... -- 294,872
---------- ------------
Net loss attributable to common stockholders................ $ (890,490) $(10,077,659)
========== ============
Basic and diluted net loss per share........................ $ (0.12) $ (1.07)
Weighted average common shares outstanding.................. 7,507,434 9,445,718
Pro forma basic and diluted net loss per share
(unaudited)............................................... $ (0.09) $ (0.46)
Pro forma weighted average common shares outstanding
(unaudited)............................................... 9,631,078 21,206,743
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE> 59
AKAMAI TECHNOLOGIES, INC.
STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
FOR THE PERIOD FROM INCEPTION (AUGUST 20, 1998) TO DECEMBER 31, 1998
AND THE SIX-MONTH PERIOD ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
SERIES A CONVERTIBLE SERIES B CONVERTIBLE SERIES D CONVERTIBLE
PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK COMMON STOCK
---------------------- ----------------------- --------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ---------- --------- ----------- ------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of common
stock to founders.... 14,823,000 $ 148,230
Issuance of common
stock for technology
license.............. 341,055 3,410
Sales of restricted
common stock......... 2,118,600 21,187
Sale of Series A
convertible preferred
stock................ 1,100,000 $8,283,758
Amortization of
deferred
compensation.........
Net loss...............
--------- ---------- ---------- ----------
Balance at December 31,
1998................. 1,100,000 8,283,758 17,282,655 172,827
Sale of restricted
common stock......... 990,000 9,900
Sale of restricted
common stock in
exchange for notes... 3,270,000 32,700
Sale of Series B
convertible preferred
stock................ 1,327,500 $19,875,115
Sale of Series D
convertible preferred
stock................ 685,194 $12,475,000
Dividends and accretion
to preferred stock
redemption value..... 7,200 263,015 24,657
Issuance of warrants...
Deferred compensation
related to grant of
stock options........
Amortization of
deferred
compensation.........
Net loss...............
--------- ---------- --------- ----------- ------- ----------- ---------- ----------
Balance at June 30,
1999................. 1,100,000 $8,290,958 1,327,500 $20,138,130 685,194 $12,499,657 21,542,655 $ 215,427
========= ========== ========= =========== ======= =========== ========== ==========
<CAPTION>
ADDITIONAL
PAID-IN DEFERRED NOTES ACCUMULATED SHAREHOLDERS'
CAPITAL COMPENSATION RECEIVABLE DEFICIT DEFICIT
----------- ------------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Issuance of common
stock to founders.... $ 53,970 $ 202,200
Issuance of common
stock for technology
license.............. 284,590 288,000
Sales of restricted
common stock......... 1,736,754 $(1,711,591) 46,350
Sale of Series A
convertible preferred
stock................
Amortization of
deferred
compensation......... 205,616 205,616
Net loss............... $ (890,490) (890,490)
----------- ----------- ------------ -----------
Balance at December 31,
1998................. 2,075,314 (1,505,975) (890,490) (148,324)
Sale of restricted
common stock......... 905,100 (622,500) 292,500
Sale of restricted
common stock in
exchange for notes... 3,981,290 (1,533,990) $(2,480,000) --
Sale of Series B
convertible preferred
stock................
Sale of Series D
convertible preferred
stock................
Dividends and accretion
to preferred stock
redemption value..... (294,872) (294,872)
Issuance of warrants... 3,901,828 3,901,828
Deferred compensation
related to grant of
stock options........ 5,678,606 (5,678,606) --
Amortization of
deferred
compensation......... 1,338,608 1,338,608
Net loss............... (9,782,787) (9,782,787)
----------- ----------- ----------- ------------ -----------
Balance at June 30,
1999................. $16,247,266 $(8,002,463) $(2,480,000) $(10,673,277) $(4,693,047)
=========== =========== =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE> 60
AKAMAI TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM INCEPTION
(AUGUST 20, 1998) SIX-MONTH PERIOD
THROUGH DECEMBER 31, ENDED JUNE 30,
1998 1999
--------------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss................................................ $ (890,490) $(9,782,787)
Adjustments to reconcile net loss to net cash from
operating activities:
Depreciation and amortization........................ 50,069 570,923
Amortization of discount on senior subordinated notes
and equipment loan................................. -- 133,440
Amortization of deferred compensation................ 205,617 1,338,608
Loss on disposal of fixed asset...................... -- 22,353
Changes in operating assets and liabilities:
Accounts receivable................................ -- (394,819)
Prepaid expenses and other assets.................. (56,588) (388,114)
Accounts payable and accrued expenses.............. 692,997 3,119,359
----------- -----------
Net cash provided by (used in) operating activities....... 1,605 (5,381,037)
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment..................... (1,522,981) (5,307,821)
Purchases of short-term investments..................... (224,880) --
----------- -----------
Net cash used in investing activities..................... (1,747,861) (5,307,821)
----------- -----------
Cash flows from financing activities:
Payments on capital lease obligations................... (3,943) (7,124)
Proceeds from equipment financing loan.................. -- 1,500,000
Payment on equipment financing loan..................... -- (167,167)
Proceeds from the issuance of senior subordinated notes,
net.................................................. -- 14,970,000
Proceeds from issuance of Series A convertible preferred
stock, net........................................... 8,283,758 --
Proceeds from issuance of Series B convertible preferred
stock, net........................................... -- 19,875,115
Proceeds from issuance of Series D convertible preferred
stock, net........................................... -- 12,475,000
Proceeds from issuance of restricted common stock....... 46,350 292,500
----------- -----------
Net cash provided by financing activities................. 8,326,165 48,938,324
----------- -----------
Net increase in cash and equivalents...................... 6,579,909 38,249,466
Cash and cash equivalents, beginning of the period........ -- 6,579,909
----------- -----------
Cash and cash equivalents, end of the period.............. $ 6,579,909 $44,829,375
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE> 61
AKAMAI TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
1. NATURE OF BUSINESS:
Akamai Technologies, Inc. ("Akamai" or the "Company") provides a global
Internet content delivery service that improves Web site speed and reliability
and protects against Web site crashes due to demand overloads. The Company's
FreeFlow service, which is sold to Global 2000 and Internet-centric businesses,
delivers customers' web content through a worldwide server network by locating
the content geographically closer to their users.
The Company has experienced substantial net losses since its inception and,
as of June 30, 1999, had an accumulated deficit of $10,673,277. Such losses and
accumulated deficit resulted from the Company's lack of substantial revenue and
costs incurred in the development of the Company's service and in the
establishment of the Company's network. For the foreseeable future, the Company
expects to continue to experience significant growth in its operating expenses
in order to execute its current business plan, particularly engineering and
development and sales, general and administrative expenses.
The Company has a single operating segment, Internet content delivery
service. The Company has no organizational structure dictated by product lines,
geography or customer type. All revenue earned to date have been generated from
U.S. based customers.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
CASH AND CASH EQUIVALENTS
Cash equivalents consist of cash held in bank deposit accounts and
short-term investments with remaining maturities of three months or less at the
date of purchase.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, net of accumulated depreciation.
Depreciation is computed on a straight-line basis over estimated useful lives of
three to five years. Leasehold improvements are depreciated over the shorter of
related lease terms or the estimated useful lives. Property and equipment
acquired under capital lease is depreciated over the shorter of related lease
terms or the useful life of the asset. Upon retirement or sale, the costs of the
assets disposed and the related accumulated depreciation are removed from the
accounts and any resulting gain or loss is included in the determination of
income. Repairs and maintenance costs are expensed as incurred.
INTANGIBLE ASSETS
Intangible assets consist primarily of the cost of acquired license rights
to content delivery technology. Intangible assets are amortized using the
straight-line method over ten years, based on the estimated useful life. The
carrying value of the intangible assets is reviewed on a quarterly basis for the
existence of facts or circumstances both internally and externally that may
suggest impairment. To date, no such impairment has occurred. The Company
determines whether an impairment has occurred based on gross expected future
cash flows and measures the amount of the impairment based on the related future
estimated discounted cash flows. The cash flow estimates used to determine the
impairment, if any, contain management's best estimates, using appropriate and
customary assumptions and projections at that time.
REVENUE RECOGNITION
The Company derives revenue from the sale of its FreeFlow service under
contracts with terms typically ranging from three to 12 months. The Company
recognizes revenue based on fees for the amount of Internet content delivered
through the Company's service. These contracts also provide for minimum monthly
fees. Revenue may also be derived from one-time implementation fees which are
recognized ratably over the period of the related contracts.
F-7
<PAGE> 62
AKAMAI TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
COSTS OF SERVICE
Cost of service consists of depreciation of network equipment used in
providing the Company's FreeFlow service, fees paid to network providers for
bandwidth and monthly fees for housing the Company's servers in third-party
network data centers. The Company enters into contracts for bandwidth with
third-party network providers with terms typically ranging from six months to
three years. These contracts commit the Company to minimum monthly fees plus
additional fees for bandwidth usage above the contracted level. Under the
Company's FreeFlow ISP program, the Company provides FreeFlow servers without
charge to smaller Internet service providers which, in turn, provide the Company
with rack space for the Company's servers and bandwidth to deliver content. The
Company does not recognize as revenue any value to the Internet service
providers associated with the use of the Company's servers and does not expense
the value of the rack space and bandwidth received.
STOCK-BASED COMPENSATION
The Company accounts for stock-based awards to employees using the
intrinsic value method as prescribed by Accounting Principles Board ("APB") No.
25, "Accounting for Stock Issued to Employees," and related interpretations.
Accordingly, no compensation expense is recorded for options issued to employees
in fixed amounts and with fixed exercise prices at least equal to the fair
market value of the Company's common stock at the date of grant. The Company has
adopted the provisions of Statement of Financial Accounting Standard ("SFAS")
No. 123, "Accounting for Stock-Based Compensation," through disclosure only
(Note 9). All stock-based awards to nonemployees are accounted for at their fair
value in accordance with SFAS No. 123.
ENGINEERING AND DEVELOPMENT COSTS
Engineering and development costs consist primarily of salaries and related
personnel costs for the design, deployment, testing and enhancement of the
Company's service and the Company's network.
Costs incurred in the engineering and development of the Company's service
are expensed as incurred, except for certain software development costs. Costs
associated with the development of computer software are expensed prior to the
establishment of technological feasibility (as defined by Statement of Financial
Accounting Standards ("SFAS") No. 86, "Accounting for the costs of Computer
Software to be Sold, Leased, or Otherwise Marketed") and capitalized thereafter.
The Company also has adopted Statement of Position ("SOP") 98-1, which requires
computer software costs associated with internal use software to be charged to
operations as incurred until certain capitalization criteria are met. Costs
eligible for capitalization under SFAS No. 86 and SOP 98-1 have been
insignificant to date.
USE OF ESTIMATES
The presentation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenue and expenses during the reporting
period. Actual results could differ from those estimates. Significant estimates
in these financial statements include valuation of deferred tax assets and
useful lives of depreciable assets.
CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of cash, cash equivalents and
accounts receivable. At December 31, 1998 and June 30, 1999, the Company had
cash balances at certain financial institutions in excess of federally insured
limits. However, the
F-8
<PAGE> 63
AKAMAI TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Company does not believe that it is subject to unusual credit risk beyond the
normal credit risk associated with commercial banking relationships. As of June
30, 1999, two customers accounted for 77% and 15% of accounts receivable. These
customers also accounted for 75% and 14% of total revenue for the six-month
period ended June 30, 1999.
INCOME TAXES
Deferred taxes are determined based on the difference between the financial
statement and tax basis of assets and liabilities using enacted tax rates in
effect in the years in which the differences are expected to reverse. Valuation
allowances are provided if, based upon the weight of available evidence, it is
more likely than not some or all of the deferred tax assets will not be
realized.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of the Company's financial instruments, which include
cash equivalents, accounts receivable, notes receivable, accounts payable,
accrued expenses and notes payable approximate their fair values at June 30,
1999.
OTHER COMPREHENSIVE INCOME
The Company has adopted SFAS No. 130 "Reporting Comprehensive Income,"
which established standards for reporting and displaying comprehensive income
and its components in a financial statement that is displayed with the same
prominence as other financial statements. Comprehensive loss is equal to net
loss, for the period from inception (August 20, 1998) to December 31, 1998 and
for the six-month period ended June 30, 1999.
RECENT ACCOUNTING PRONOUNCEMENT
In June 1998, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which establishes accounting and reporting standards for derivative
instruments and hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. The Company, to date, has
not engaged in derivative and hedging activities, and accordingly does not
believe that the adoption of SFAS No. 133 will have a material impact on the
financial reporting and related disclosures of the Company. The Company will
adopt SFAS No. 133 as required by SFAS No. 137, "Deferral of the Effective Date
of the FASB Statement No. 133," in fiscal year 2001.
PRO FORMA BALANCE SHEET (UNAUDITED)
Upon the closing of the Company's initial public offering, all of the
outstanding shares of convertible preferred stock as of June 30, 1999 will
automatically convert into approximately 16,107,847 shares of common stock. The
unaudited pro forma presentation of the balance sheet has been prepared assuming
the conversion of all shares of convertible preferred stock into common stock at
June 30, 1999. All references to pro forma information in the notes to the
financial statements are unaudited.
3. NET LOSS PER SHARE AND PRO FORMA NET LOSS PER SHARE:
Basic net loss per share is computed using the weighted average number of
common shares outstanding during the period. Dilutive net loss per share is
computed using the weighted average number of common shares outstanding during
the period, plus the dilutive effect of common stock equivalents. Common stock
equivalent shares consist of convertible preferred stock, unvested restricted
common stock, stock options and warrants. During the period from inception
(August 20, 1998) to December 31, 1998 and the six-month
F-9
<PAGE> 64
AKAMAI TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
period ended June 30, 1999, options to purchase 643,500 and 4,558,000 shares of
common stock, respectively, unvested restricted common stock of 9,024,552 and
9,975,402, respectively, preferred stock convertible into 9,900,000 and
16,107,847 shares of common stock, respectively, and warrants to purchase none
and 1,037,550 shares of common stock, respectively, were excluded from the
calculation of earnings per share since their inclusion would be antidilutive.
Pro forma basic and diluted net loss per share have been calculated assuming the
conversion of all outstanding shares of preferred stock into common stock, as if
the shares had converted immediately upon their issuance. Accordingly, net loss
has not been adjusted for the accrued dividends for preferred stock in the
calculation of pro forma loss per share.
The following is a calculation of pro forma net loss per share (unaudited):
<TABLE>
<CAPTION>
PERIOD
FROM INCEPTION SIX-MONTH
(AUGUST 20, 1998) TO PERIOD ENDED
DECEMBER 31, 1998 JUNE 30, 1999
-------------------- -------------
<S> <C> <C>
Basic and diluted:
Net loss............................................. $ (890,490) $(9,782,787)
Weighted average number of common shares............... 7,507,434 9,445,718
Weighted average assumed number of common shares upon
conversion of preferred stock........................ 2,123,644 11,761,025
----------- -----------
Total weighted average number of shares used in
computing pro forma net loss per share............... 9,631,078 21,206,743
=========== ===========
Basic and diluted pro forma net loss per common
share................................................ $ (0.09) $ (0.46)
</TABLE>
4. PROPERTY AND EQUIPMENT:
Property and equipment consists of the following:
<TABLE>
<CAPTION>
ESTIMATED
DECEMBER 31, JUNE 30, USEFUL
1998 1999 LIVES
------------ ---------- -----------
<S> <C> <C> <C>
Computer and networking equipment.............. $1,384,582 $5,822,526 3 years
Purchased software............................. -- 160,391 3 years
Furniture and fixtures......................... 104,942 280,752 5 years
Office equipment............................... 44,608 225,065 3 years
Leasehold improvements......................... 30,000 370,052 5 years
---------- ----------
1,564,132 6,858,786
Accumulated depreciation and amortization...... (41,152) (584,230)
---------- ----------
Property and equipment, net.................... $1,522,980 $6,274,556
========== ==========
</TABLE>
Depreciation and amortization expense on property and equipment for the
period from inception (August 20, 1998) to December 31, 1998 and the six-month
period ended June 30, 1999 was $41,152 and $548,287, respectively.
Equipment under capital leases at:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, DEPRECIABLE
1998 1999 LIVES
------------ -------- -----------
<S> <C> <C> <C>
Office equipment................................. $40,056 $ 54,451 3 years
Accumulated amortization......................... (1,873) (10,509)
------- --------
Capital leases, net.............................. $38,183 $ 43,942
======= ========
</TABLE>
F-10
<PAGE> 65
AKAMAI TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. SENIOR SUBORDINATED NOTES:
During April 1999, Akamai entered into note and warrant purchase agreements
with private investors. Under the agreements, Akamai issued 15% subordinated
demand notes payable in the aggregate amount of $15,000,000 due in May 2004. In
connection with the notes, the Company also issued warrants to purchase an
aggregate of 1,001,418 shares of common stock at $4.99 per share in exchange for
cash. These warrants expire in May 2004. The fair value of the warrants at the
time of issuance was estimated to be approximately $3,876,477, which was
recorded as additional paid-in capital and reduced the carrying value of the
notes. The fair value was estimated using the Black-Scholes model with the
following assumptions: dividend yield of 0%, volatility of 100%, risk free
interest rate of 5.1% and an expected life of 5 years. The discount on the notes
is being amortized over the term of the notes. For the six months ended June 30,
1999, interest expense of $129,215 related to the fair value of the warrants was
recognized.
6. COMMITMENTS:
LEASES
The Company leases its facilities and certain equipment under operating
leases. Rent expense for the period from inception (August 20, 1998) to December
31, 1998 and the six-month period ended June 30, 1999 was $36,023 and $185,335,
respectively. The leases expire at various dates through April 30, 2004 and
generally require the payment of real estate taxes, insurance, maintenance, and
operating costs. The Company also leases certain equipment under capital leases.
The minimum aggregate future obligations under noncancelable leases and
equipment loans as of June 30, 1999 are as follows:
<TABLE>
<CAPTION>
CAPITAL
LEASES
(INCLUDING
OPERATING EQUIPMENT
YEAR ENDING LEASES LOAN)
- ----------- ---------- ----------
<S> <C> <C>
1999........................................................ $ 261,841 $ 288,353
2000........................................................ 519,404 576,702
2001........................................................ 519,404 572,621
2002........................................................ 519,404 160,123
2003........................................................ 224,255 --
---------- ----------
Total....................................................... $2,044,308 1,597,799
==========
Less interest............................................... (241,612)
----------
Total principal obligation.................................. 1,356,187
Less current portion........................................ (450,685)
----------
Noncurrent portion of principal obligation.................. $ 905,502
==========
</TABLE>
EQUIPMENT LOAN
The Company received an equipment loan from its bank for $1.5 million on
January 26, 1999. The equipment loan is repayable in monthly installments of
$46,318 for 36 months, with a lump sum payment of $112,500 due in February 2002.
The interest rate on this loan at June 30, 1999 is approximately 10.8%.
In connection with the equipment loan, the Company issued warrants for the
purchase of 36,132 shares of common stock at a purchase price of $0.833. The
warrants were exercisable upon issuance and expire on January 26, 2002. The
Company estimated the value of the warrants to be $25,351 at the date of
issuance, which has been recorded as additional paid-in capital and reduced the
carrying value of the equipment loan. The fair value was estimated using the
Black-Scholes model with the following assumptions: dividend yield of
F-11
<PAGE> 66
AKAMAI TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
0%, volatility of 100%, risk free interest rate of 5.1% and an expected life of
five years. The discount on the note is being amortized over the estimated life
of the loan.
BANDWIDTH USAGE AND CO-LOCATION COSTS
The Company has commitments for bandwidth usage and co-location with
various network service providers. For the six months ended December 31, 1999,
and the years ended December 31, 2000, 2001 and 2002, the minimum commitments
are approximately $3,293,500, $4,861,400, $3,309,300, and $964,400,
respectively. Some of these agreements may be amended to either increase or
decrease the minimum commitments during the life of the contract.
7. CONVERTIBLE PREFERRED STOCK:
The authorized capital stock of the Company consists of (i) 300,000,000
shares of voting common stock ("Common Stock") authorized for issuance with a
par value of $0.01 and (ii) 10,000,000 shares of preferred stock with a par
value of $0.01, of which 1,100,000 shares are designated as Series A convertible
preferred stock ("Series A preferred stock"), 1,327,500 shares are designated as
Series B convertible preferred stock ("Series B preferred stock"), 145,195
shares are designated as Series C convertible preferred stock ("Series C
preferred stock"), and 685,194 shares of Series D convertible preferred stock
("Series D preferred stock").
SERIES A CONVERTIBLE PREFERRED STOCK
In November and December 1998, the Company issued 1,100,000 shares of
Series A preferred stock at $7.60 per share to investors for total consideration
of $8,283,758 (net of offering costs of $76,242).
The holders of the Series A preferred stock have voting rights equivalent
to the number of shares of common stock into which their shares of Series A
preferred stock convert. Dividends must be paid when dividends are declared on
common stock. The Series A preferred stock is convertible at any time by the
holders, at the then applicable conversion rate (1-to-1 on the date of issuance;
9.154-to-1 at June 30, 1999) adjusted for certain events including stock splits
and dividends. The Series A preferred stock is redeemable, subject to the
approval of the holders of 66% of the then outstanding shares of Series A
preferred stock beginning November 23, 2003 if the Company has not made a
qualified initial public offering of its common stock. Upon liquidation, holders
of Series A preferred stock are entitled to receive, out of funds then generally
available, $7.60 per share, plus any declared and unpaid dividends, thereon.
Following payment to holders of all other classes of preferred stock to which
the Series A preferred stock is subordinate, holders of Series A preferred stock
are then entitled to share in remaining available funds on an "as-if converted"
basis with holders of common stock.
SERIES B CONVERTIBLE PREFERRED STOCK
In April 1999, the Company issued 1,327,500 shares of Series B preferred
stock at $15.066 per share to private investors for total consideration of
$19,875,115 (net of offering costs of $125,000). In addition, the Company issued
a warrant to purchase 145,195 shares of Series C preferred stock at an exercise
price of $34.436 per share which expires at the earlier of (i) December 31, 1999
and (ii) the date immediately prior to the consummation of a qualified initial
public offering.
The holders of Series B preferred stock have voting rights equivalent to
the number of shares of common stock into which their shares of Series B
preferred stock convert. Dividends accrue annually and are cumulative at a rate
of 8% of the original purchase price of $15.066 per share, on a per share basis.
Dividends will only be paid in the event of a liquidation or redemption, as
defined. The Series B preferred stock is convertible at any time by the holders,
at the then applicable conversion rate (1-to-1 on the date of issuance; 3-to-1
at June 30, 1999) adjusted for certain events including stock splits. The Series
B preferred stock is
F-12
<PAGE> 67
AKAMAI TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
redeemable, as defined, subject to the approval of the holders of 66% of the
then outstanding shares of Series B preferred stock beginning April 5, 2003 if
the Company has not made a qualified initial public offering of its common
stock. Upon liquidation, holders of Series B preferred stock are entitled to
receive, out of funds then generally available, $15.066 per share, plus any
accrued and unpaid dividends, thereon. Following payment to holders of all other
classes of preferred stock to which the Series B preferred stock is subordinate,
holders of Series B preferred stock are then entitled to share in remaining
available funds on an "as if converted" basis with holders of common stock.
SERIES C CONVERTIBLE PREFERRED STOCK
In connection with the Series B preferred stock issuance, one holder of the
Series B preferred stock received the option to purchase 145,195 shares of
Series C preferred stock at the purchase price of $34.436 per share. The option
to purchase the Series C preferred stock expires upon the earlier of an initial
public offering or December 31, 1999. As of June 30, 1999, this option had not
been exercised by the holder.
The holders of the Series C preferred stock have voting rights equivalent
to the number of shares of common stock into which their shares of Series C
preferred stock convert. Dividends accrue annually and are cumulative at a rate
of 8% of the original purchase price of $34.436 per share, on a per share basis.
Dividends will only be paid in the event of a liquidation or redemption. The
Series C preferred stock is convertible at any time by the holders, at the then
applicable conversion rate (1-to-1 on the date of issuance; 3.128-to-1 at June
30, 1999) adjusted for certain events including stock splits and dividends
subject to the approval of the holders of 66% of the then outstanding shares of
Series C preferred stock beginning April 5, 2003 if the Company has not made a
qualified initial public offering of its common stock. Upon liquidation, holders
of Series C preferred stock are entitled to receive, out of funds generally
available, $34.436 per share, plus any accrued and unpaid dividends, thereon.
Following payment to holders of all other classes of preferred stock to which
Series C is subordinate, holders of Series C preferred stock are then entitled
to share in remaining available funds on an "as if converted" basis with holders
of common stock.
SERIES D CONVERTIBLE PREFERRED STOCK
In June 1999, the Company issued 685,194 shares of Series D preferred stock
at $18.243 per share to private investors for total consideration of $12,475,000
(net of offering costs of $25,000).
The holders of Series D preferred stock have voting rights equivalent to
the number of shares of common stock into which their shares of Series D
preferred stock convert. Dividends accrue annually and are cumulative at a rate
of 8% of the original purchase price of $18.243 per share, on a per share basis.
Dividends will be paid only in the event of a liquidation or redemption, as
defined. The Series D preferred stock is convertible at any time by the holders,
at the then applicable conversion rate (1-to-1 on the date of issuance; 3-to-1
at June 30, 1999) adjusted for certain events including stock splits and
dividends. The Series D preferred stock is redeemable, as defined, subject to
the approval of the holder of 66% of the then outstanding shares of Series D
preferred stock.
The holder of the Series D preferred stock is also a customer of the
Company. In June 1999, the holder of the Series D preferred stock entered into a
services agreement with the Company at customary rates. The aggregate minimum
value of the services agreement is $12,360,000 through July 2000. Accounts
receivable included $303,795 from this customer at June 30, 1999. Revenue
recognized from this customer for the six-month period ended June 30, 1999 were
$303,795.
F-13
<PAGE> 68
AKAMAI TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Upon the closing of the anticipated public offering, all outstanding shares
of preferred stock will automatically convert into shares of common stock as
follows:
<TABLE>
<CAPTION>
SHARES OF
SERIES COMMON STOCK
- ------ ------------
<S> <C>
Series A preferred stock.................................... 10,069,765
Series B preferred stock.................................... 3,982,500
Series C preferred stock.................................... --
Series D preferred stock.................................... 2,055,582
----------
16,107,847
==========
</TABLE>
In August 1999, the Company issued 1,867,480 shares of Series E Convertible
Preferred Stock ("Series E preferred stock") (see Note 13). Upon the closing of
the anticipated public offering, all outstanding shares of Series E preferred
stock will automatically convert into 1,867,480 shares of common stock.
8. STOCKHOLDERS' DEFICIT:
STOCK SPLIT
On January 28, 1999, the Company effected a 3-for-1 stock split through a
stock dividend of common stock. On May 25, 1999, the Company effected a 3-for-1
stock split through a stock dividend of common stock. All references to
preferred and common stock share and per share amounts including options and
warrants to purchase common stock have been retroactively restated to reflect
the stock splits.
COMMON STOCK
The common stockholders are entitled to one vote per share. At June 30,
1999, the Company had reserved 22,157,585 shares of common stock, for future
issuance upon conversion of Series A preferred stock, Series B preferred stock,
Series C preferred stock, Series D preferred stock, and the exercise of warrants
and stock options.
NOTES RECEIVABLE FROM OFFICERS FOR STOCK
In the connection with the issuance of restricted common stock, the Company
received full recourse notes receivable from the Chief Executive Officer and
President of the Company in the amount of $1,980,000 and $500,000, respectively.
The notes bear interest at 5.3%, and are payable in full by March 26, 2009 and
May 18, 2009, respectively.
9. 1998 STOCK INCENTIVE PLAN:
In 1998, the Board of Directors adopted the 1998 Stock Incentive Plan (the
"1998 Plan") for the issuance of incentive and nonqualified stock options and
restricted stock awards. The number of shares of common stock reserved for
issuance under the 1998 Plan is 11,377,800 shares. Options to purchase common
stock and restricted stock awards are granted at the discretion of the Board of
Directors.
Under the terms of the 1998 Plan, the exercise price of incentive stock
options granted must not be less than 100% (110% in certain cases) of the fair
market value of the common stock on the date of grant, as determined by the
Board of Directors. The exercise price of nonqualified stock options may be less
than the fair market value of the common stock on the date of grant, as
determined by the Board of Directors but in no case may the exercise price be
less than the statutory minimum. Vesting of options granted is at the discretion
of the Board of Directors, which typically is four years.
F-14
<PAGE> 69
AKAMAI TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
A restricted stock award provides for the issuance of common stock to
directors, officers, consultants and other key personnel at prices determined by
a Committee selected by the Board of Directors. Participants' unvested shares
are subject to repurchase by the Company at the original purchase price for up
to four years. Generally, 25% of the shares vest on the first anniversary of the
date of purchase and, thereafter, the remaining shares vest on a quarterly basis
through the fourth anniversary of the date of purchase. As of December 31, 1998
and June 30, 1999, the Company had the right to repurchase up to 1,641,600 and
4,423,500 unvested shares, respectively. Such shares may be repurchased at the
original purchase prices ranging from $0.01 to $1.67 per share. The shares
outstanding at December 31, 1998 and June 30, 1999 under the 1998 Plan have a
weighted average repurchase price of $0.04 and $0.48 per share, respectively.
A summary of activity under the Company's 1998 plan for the period from
inception (August 20, 1998) to December 31, 1998 and the six-month period ended
June 30, 1999 is presented below:
<TABLE>
<CAPTION>
WEIGHTED-
AVERAGE
SHARE
SHARES PRICE
--------- ---------
<S> <C> <C>
RESTRICTED STOCK AWARDS..................................... -- --
Outstanding at inception
Issued.................................................... 1,641,600 $0.04
Repurchased............................................... -- --
--------- -----
Outstanding at December 31, 1998............................ 1,641,600 0.04
Issued.................................................... 4,260,000 0.65
Repurchased............................................... -- --
--------- -----
Outstanding at June 30, 1999................................ 5,901,600 $0.48
========= =====
Vested restricted common stock at June 30, 1999............. 1,478,100 $0.50
========= =====
STOCK OPTION AWARDS
Outstanding at inception.................................... -- --
Granted................................................... 643,500 $0.03
Exercised................................................. --
Forfeited................................................. -- --
--------- -----
Outstanding at December 31, 1998............................ 643,500 $0.03
Granted................................................... 4,064,200 0.48
Exercised................................................. -- --
Forfeited................................................. (149,700) 0.72
--------- -----
Outstanding at June 30, 1999................................ 4,558,000 $0.40
========= =====
</TABLE>
The following table summarizes information about stock options outstanding
at June 30, 1999:
<TABLE>
<CAPTION>
VESTED AND EXERCISABLE
WEIGHTED -----------------------
AVERAGE WEIGHTED WEIGHTED
RANGE OF NUMBER REMAINING AVERAGE AVERAGE
EXERCISE OF OPTIONS CONTRACTUAL EXERCISE NUMBER EXERCISE
PRICES OUTSTANDING LIFE PRICE OF OPTIONS PRICE
-------- ----------- ----------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
$0.02 - $0.08 3,476,700 9.6 $0.07
$0.67 - $1.00 351,000 9.8 $0.84
$1.67 - $2.00 730,300 9.9 $1.80 70,000 $1.67
--------- --- ----- ------ -----
$0.02 - $2.00 4,558,000 9.6 $0.40 70,000 $1.67
========= === ===== ====== =====
</TABLE>
F-15
<PAGE> 70
AKAMAI TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation, SFAS No. 123," encourages but does not require
companies to record compensation cost for stock-based employee compensation at
fair value. The Company has chosen to account for stock-based compensation
granted to employees using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and
related interpretations. Accordingly, deferred compensation cost for restricted
stock awards and stock options granted to employees is measured as the excess,
if any, of the fair value of the Company's stock at the date of the grant over
the amount that must be paid to acquire the stock. From inception (August 20,
1998) through December 31, 1998 and the six-month period ended June 30, 1999,
the Company recorded approximately $1,711,600 and $7,835,000, respectively, in
deferred compensation for restricted stock awards and options to purchase common
stock granted at exercise prices subsequently determined to be below the fair
value of the common stock. Compensation expense of $205,617 and $1,338,608 was
recognized during the period from inception (August 20, 1998) through December
31, 1998 and the six-month period ended June 30, 1999, respectively.
Had the value of options granted been measured using the fair value method
prescribed by SFAS 123, the fair value of the options granted from inception
(August 20, 1998) through December 31, 1998 and the six-month period ended June
30, 1999 is estimated to be $0.01 and $1.59 per share, respectively. The fair
value of the option grant was estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions: risk free
rate of 5.5%; no expected dividends; an expected life of 10 years; and no
volatility. Had the Company accounted for stock options to employees under the
fair value method prescribed under SFAS No. 123, net losses as reported for the
period from inception (August 20, 1998) to December 31, 1998 and the six-month
period ended June 30, 1999 would have been $891,033 and $9,763,809,
respectively, under SFAS 123. Basic and diluted net loss per share would have
been $(0.12) and $(1.03) on a pro forma basis for the period from inception
(August 20, 1998) to December 31, 1998 and the six-month period ended June 30,
1999, respectively. The effects of applying SFAS 123 in this pro forma
disclosure are not indicative of future amounts.
10. INCOME TAXES:
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION SIX-MONTH
(AUGUST 20, 1998) PERIOD ENDED
TO DECEMBER 31, JUNE 30,
1998 1999
----------------- ------------
<S> <C> <C>
Current tax expense.................................... -- --
Deferred tax expense/(benefit)......................... $(288,000) $(3,396,000)
Valuation allowance.................................... 288,000 3,396,000
--------- -----------
-- --
========= ===========
</TABLE>
F-16
<PAGE> 71
AKAMAI TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The Company's effective tax rate varies from the statutory rate as follows:
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION SIX-MONTH
(AUGUST 20, 1998) PERIOD ENDED
TO DECEMBER 31, JUNE 30,
1998 1999
----------------- ------------
<S> <C> <C>
U.S. Federal income tax rate............................ (34.0)% (34.0)%
State taxes............................................. (6.3) (5.8)
Deferred compensation amortization...................... 3.2 3.4
Other................................................... (0.9) (0.3)
Valuation allowance..................................... 38.0 36.7
----- -----
-- --
===== =====
</TABLE>
Based on the Company's current financial status, realization of the
Company's deferred tax assets does not meet the "more likely than not" criteria
under SFAS No. 109 and, accordingly, a valuation allowance for the entire
deferred tax asset amount has been recorded. The components of the net deferred
tax asset (liability) and the related valuation allowance are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1998 JUNE 30, 1999
----------------- -------------
<S> <C> <C>
Net operating loss carryforwards....................... $ 16,000 $ 2,915,000
Capitalized start-up costs............................. 207,000 480,000
Capitalized research and development expenses.......... 70,000 377,000
Depreciation........................................... (13,000) (88,000)
Other.................................................. 8,000 --
--------- -----------
288,000 3,684,000
Valuation allowance.................................... (288,000) (3,684,000)
--------- -----------
Net deferred tax assets................................ -- --
========= ===========
</TABLE>
As of June 30, 1999, the Company has federal and state net operating loss
carryforwards of $7,033,000 which begin to expire in 2019. These net operating
loss carryforwards may be used to offset future federal and state taxable income
tax liabilities. The Company also has federal and state tax credit carryforwards
of $58,000 and $36,000, respectively.
Ownership changes resulting from the Company's issuance of capital stock
may limit the amount of net operating loss and tax credit carryforwards that can
be utilized annually to offset future taxable income. The amount of the annual
limitation is determined based upon the Company's value immediately prior to the
ownership change. Subsequent significant changes in ownership could further
affect the limitation in future years.
11. EMPLOYEE BENEFIT PLAN:
In January 1999, the Company established a savings plan for its employees
which is designed to be qualified under Section 401(k) of the Internal Revenue
Code. Eligible employees are permitted to contribute to the 401(k) plan through
payroll deductions within statutory and plan limits. The Company has not
contributed to the savings plan to date.
F-17
<PAGE> 72
AKAMAI TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
12. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
The following is the supplemental cash flow information for all periods
presented:
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION SIX-MONTH
(AUGUST 20, 1998) PERIOD ENDED
TO DECEMBER 31, JUNE 30,
1998 1999
----------------- ------------
<S> <C> <C>
Cash paid during the period for interest................ $ 10,407 $ 66,502
Cash paid during the period for income taxes............ -- 5,990
Noncash financing and investing activities:
Purchase of technology license for stock.............. 490,200
Issuance of restricted common stock in exchange for
note receivable.................................... -- 2,480,000
Dividends accrued, not paid on convertible preferred
stock.............................................. -- 287,672
Acquisition of equipment through capital lease........ 40,056 14,395
</TABLE>
13. SUBSEQUENT EVENTS:
SERIES E CONVERTIBLE PREFERRED STOCK
In August 1999, the Company issued 1,867,480 shares of Series E preferred
stock at $26.239 per share to a private investor for total consideration of
$49,000,808.
The holders of Series E preferred stock have voting rights equivalent to
the number of shares of common stock into which the shares of Series E preferred
stock convert. Dividends accrue annually and are cumulative at a rate of 8% of
the original purchase price of $26.239 per share, on a per share basis.
Dividends will be paid only in the event of a liquidation or redemption. The
Series E preferred stock is convertible at any time by the holders, at the then
applicable conversion rate (1-to-1 on the date of issuance) adjusted for certain
events such as stock splits and dividends. The Series E preferred stock is
redeemable, subject to the approval of the holders of 66% of the then
outstanding shares of Series E preferred stock.
In connection with the issuance of Series E preferred stock, the authorized
common stock increased from 60,000,000 to 300,000,000 and the authorized
preferred stock increased from 5,000,000 to 10,000,000 shares. All amounts have
been restated to reflect the increase in authorized shares.
F-18
<PAGE> 73
[AKAMAI LOGO]
<PAGE> 74
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, other than the
underwriting discount, payable by the Registrant in connection with the sale of
common stock being registered. All amounts are estimates except the SEC
registration fee, the NASD filing fees and the Nasdaq National Market listing
fee.
<TABLE>
<S> <C>
SEC registration fee........................................ $23,978
NASD filing fee............................................. 9,125
Nasdaq National Market listing fee.......................... 95,000
Printing and engraving expenses.............................
Legal fees and expenses.....................................
Accounting fees and expenses................................
Blue Sky fees and expenses (including legal fees)........... 15,000
Transfer agent and registrar fees and expenses..............
Miscellaneous...............................................
-------
Total.............................................
=======
</TABLE>
The Company will bear all expenses shown above.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article SEVENTH of the Registrant's Amended and Restated Certificate of
Incorporation (the "Restated Certificate") provides that no director of the
Registrant shall be personally liable for any monetary damages for any breach of
fiduciary duty as a director, except to the extent that the Delaware General
Corporation Law prohibits the elimination or limitation of liability of
directors for breach of fiduciary duty.
Article EIGHTH of the Restated Certificate provides that a director or
officer of the Registrant (a) shall be indemnified by the Registrant against all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement incurred in connection with any litigation or other legal proceeding
(other than an action by or in the right of the Registrant) brought against him
by virtue of his position as a director or officer of the Registrant 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 Registrant, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful and (b) shall be indemnified by the Registrant against all expenses
(including attorneys' fees) and amounts paid in settlement incurred in
connection with any action by or in the right of the Registrant brought against
him by virtue of his position as a director or officer of the Registrant 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 Registrant, except that no indemnification
shall be made with respect to any matter as to which such person shall have been
adjudged to be liable to the Registrant, unless the Court of Chancery of
Delaware determines that, despite such adjudication but in view of all of the
circumstances, he is entitled to indemnification of such expenses.
Notwithstanding the foregoing, to the extent that a director or officer has been
successful, on the merits or otherwise, including, without limitation, the
dismissal of an action without prejudice, he is required to be indemnified by
the Registrant against all expenses (including attorneys' fees) incurred in
connection therewith. Expenses shall be advanced to a director or officer at his
request, unless it is determined that he did not act in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the Registrant, and, with respect to any criminal action or proceeding had
reasonable cause to believe that his conduct was unlawful, provided that he
undertakes to repay the amount advanced if it is ultimately determined that he
is not entitled to indemnification for such expenses.
Indemnification is required to be made unless the Registrant determines
that the applicable standard of conduct required for indemnification has not
been met. In the event of a determination by the Registrant that the director or
officer did not meet the applicable standard of conduct required for
indemnification, or if the
II-1
<PAGE> 75
Registrant fails to make an indemnification payment within 60 days after such
payment is claimed by such person, such person is permitted to petition the
court to make an independent determination as to whether such person is entitled
to indemnification. As a condition precedent to the right of indemnification,
the director or officer must give the Registrant notice of the action for which
indemnity is sought and the Registrant has the right to participate in such
action or assume the defense thereof.
Article EIGHTH of the Restated Certificate further provides that the
indemnification provided therein is not exclusive, and provides that in the
event that the Delaware General Corporation Law is amended to expand the
indemnification permitted to directors or officers the Registrant must indemnify
those persons to the fullest extent permitted by such law as so amended.
Section 145 of the Delaware General Corporation Law provides that a
corporation has the power to indemnify a director, officer, employee or agent of
the corporation and certain other persons serving at the request of the
corporation in related capacities against amounts paid and expenses incurred in
connection with an action or proceeding to which he is or is threatened to be
made a party by reason of such position, if such person shall have 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, in any criminal proceeding, if such person
had no reasonable cause to believe his conduct was unlawful; provided that, in
the case of actions brought by or in the right of the corporation, no
indemnification shall be made with respect to any matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the adjudicating court determines that such indemnification is
proper under the circumstances.
The Underwriting Agreement provides that the Underwriters are obligated,
under certain circumstances, to indemnify directors, officers and controlling
persons of the Company against certain liabilities, including liabilities under
the Securities Act of 1933, as amended (the "Act"). Reference is made to the
form of Underwriting Agreement to be filed as Exhibit 1.1 hereto.
The Registrant has obtained liability insurance for its officers and
directors.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since incorporation in August 20, 1998, the Registrant has issued the
following securities that were not registered under the Securities Act as
summarized below. All issues of common stock from September 2, 1998 to January
28, 1999 reflect a 3-for-1 stock dividend. All issues of common stock from
January 29, 1999 to May 25, 1999 reflect a 3-for-1 stock dividend.
(a) Issuances of Capital Stock.
1. On September 2, 1998, the Registrant issued and sold an aggregate
of 1,397,750 shares (12,579,750 shares on a post-split basis, as described
herein) of its common stock at a purchase price of $0.10 per share, to F.
Thomson Leighton, Daniel M. Lewin, and Jonathan Seelig pursuant to their
respective stock restriction agreements. These shares were subject to a
3-for-1 stock dividend on January 28, 1999, upon which date the transferees
of Messrs. Leighton and Lewin and Mr. Seelig received an aggregate of
2,795,500 more shares of common stock. These shares were subject to a
3-for-1 stock dividend on May 25, 1999, upon which date the transferees of
Messrs. Leighton and Lewin and Mr. Seelig received an aggregate 8,386,500
more shares of common stock.
2. On September 2, 1998, the Registrant issued and sold an aggregate
of 41,250 shares (371,250 shares on a post-split basis, as described
herein) of its common stock at a purchase price of $0.10 per share, to
Preetish Nijhawan pursuant to a right of first refusal agreement. These
shares of common stock were subject to a 3-for-1 stock dividend on January
28, 1999, upon which date Mr. Nijhawan received 82,500 more shares of
common stock. These shares of common stock shares were subject to a 3-for-1
stock dividend on May 25, 1999, upon which date Mr. Nijhawan and his
transferees received 247,500 more shares of common stock.
3. On September 2, 1998, the Registrant issued and sold an aggregate
of 198,000 shares of its common stock (1,782,000 shares on a post-split
basis, as described herein) of its common stock at a
II-2
<PAGE> 76
purchase price of $0.10 per share, for an aggregate purchase price of
$19,800.00, to Randall Kaplan and David Karger, pursuant to their
respective stock restriction agreements. These shares of common stock were
subject to a 3-for-1 stock dividend on January 28, 1999, upon which date
Messrs. Kaplan and Karger received an aggregate of 396,000 more common
stock shares. These shares of common stock were subject to a 3-for-1 stock
dividend on May 25, 1999, upon which date Messrs. Kaplan and Karger
received an aggregate of 1,188,000 more shares of common stock.
4. On September 2, 1998, the Registrant issued and sold 10,000 shares
(90,000 shares on a post-split basis, as described herein) of its common
stock at a purchase price of $0.10 per share, for an aggregate purchase
price of $1,000.00, to Marco Greenberg pursuant to a right of first refusal
agreement. These shares of common stock shares were subject to a 3-for-1
stock dividend on January 28, 1999, upon which date Mr. Greenberg received
20,000 more common stock shares. These shares of common stock were subject
to a 3-for-1 stock dividend on May 25, 1999, upon which date Mr. Greenberg
received 60,000 more shares of common stock.
5. On October 28, 1998, the Registrant issued and sold 132,400 shares
(1,191,600 shares on a post-split basis, as described herein) of its common
stock at a purchase price of $0.25 per share to Paul Sagan pursuant to a
restricted stock agreement. These shares of common stock shares were
subject to a 3-for-1 stock dividend on January 28, 1999, upon which date
Mr. Sagan received 264,800 shares of common stock. These shares of common
stock were subject to a 3-for-1 stock dividend on May 25, 1999, upon which
date Mr. Sagan and his transferee received 794,400 more shares of common
stock.
6. On November 13, 1998, the Registrant issued and sold 20,000 shares
(180,000 shares on a post-split basis, as described herein) of its common
stock at a $5,000 purchase price of $0.25 per share to Gilbert Friesen
pursuant to a stock restriction agreement. These shares of common stock
were subject to a 3-for-1 stock dividend on January 28, 1999, upon which
date Mr. Friesen's transferee received 40,000 more shares of common stock.
These shares of common stock were subject to a 3-for-1 stock dividend on
May 25, 1999, upon which date Mr. Friesen's transferee received 120,000
more shares of its common stock.
7. On November 19, 1998, the Registrant issued and sold 33,000 shares
(297,000 shares on a post-split basis, as described herein) of its common
stock at a purchase price of $0.25 per share, for an aggregate purchase
price of $8,250.00, to the Arthur H. Bilger 1996 Family Trust pursuant to a
stock restriction agreement. These shares of common stock were subject to a
3-for-1 stock dividend on January 28, 1999, upon which date the Arthur H.
Bilger 1996 Family Trust received 66,000 more shares of common stock. These
shares of common stock were subject to a 3-for-1 stock dividend on May 25,
1999, upon which date the Arthur H. Bilger 1996 Family Trust received
198,000 more shares of common stock.
8. On November 23, 1998, the Registrant issued and sold an aggregate
of 37,895 shares (341,055 shares on a post-split basis, as described
herein) of its common stock to the Massachusetts Institute of Technology
pursuant to the terms of an exclusive patent and non-exclusive copyright
license Agreement dated as of October 26, 1998 between the Registrant and
the Massachusetts Institute of Technology. These common stock shares were
subject to a 3-for-1 stock dividend on January 28, 1999, upon which date
the investors received an aggregate of 75,790 more shares of common stock.
These common stock shares were subject to a 3-for-1 stock dividend on May
25, 1999, upon which date the investors received an aggregate of 227,370
more shares of common stock.
9. On November 23, 1998, the Registrant issued and sold 467,101 shares
of its Series A convertible preferred stock at a purchase price of $7.60
per share to 7 investors pursuant to a Series A convertible preferred stock
purchase agreement.
10. On November 30, 1998, the Registrant issued and sold 205,258
shares of its Series A convertible preferred stock at a purchase price of
$7.60 per share to 10 investors pursuant to a Series A convertible
preferred stock purchase agreement.
II-3
<PAGE> 77
11. On December 14, 1998, the Registrant issued and sold 427,641
shares of its Series A convertible preferred stock at a purchase price of
$7.60 per share to 8 investors pursuant to a Series A convertible preferred
stock purchase agreement.
12. On December 3, 1998, the Registrant issued and sold an aggregate
of 50,000 shares (450,000 shares on a post-split basis) of its common stock
at a purchase price of $0.75 per share, for an aggregate purchase price of
$37,500, to William Bogstad and Yoav Yerushalmi pursuant to their
respective Stock Restriction Agreements. These shares common stock shares
were subject to a 3-for-1 stock dividend on January 28, 1999, upon which
date Messrs. Bogstad and Yerushalmi received an aggregate of 100,000 more
shares of common stock. These shares of common stock were subject to a
3-for-1 stock dividend on May 25, 1999, upon which date Messrs. Bogstad and
Yerushalmi received 300,000 more shares of common stock.
13. On March 15, 1999, the Registrant issued and sold 210,000 shares
(630,000 shares on a post-split basis, as described herein) of its common
stock at a purchase price of $0.25 per share, for the purchase price of
$52,500, to Earl P. Galleher III pursuant to a stock restriction agreement.
These common stock shares were subject to a 3-for-1 stock dividend on May
25, 1999, upon which date Mr. Galleher received 420,000 more shares of
common stock.
14. On March 26, 1999, the Registrant issued and sold 20,000 shares
(60,000 shares on a post-split basis, as described herein) of its common
stock at a purchase price of $2.00 per share, for the aggregate purchase
price of $40,000, to Steven P. Heinrich. These common stock shares were
subject to a 3-for-1 stock dividend on May 25, 1999, upon which date Mr.
Heinrich received 40,000 more shares of common stock.
15. On March 26, 1999, the Registrant issued 100,000 shares (300,000
shares on a post-split basis, as described herein) of its common stock at a
purchase price of $2.00 per share, for an aggregate purchase price of
$200,000.00, to Arthur H. Bilger pursuant to a stock restriction agreement
granted under the 1998 Stock Incentive Plan. These shares of common stock
were subject to a 3-for-1 stock dividend on May 25, 1999, upon which date
ADASE Partners LLC, the transferee of Mr. Bilger, received 200,000 more
common stock shares.
16. On March 26, 1999, the Registrant issued and sold 990,000 shares
(2,970,000 shares on a post-split basis, as described herein) of its common
stock at a purchase price of $2.00 per share, for an aggregate purchase
price of $1,980,000, to George Conrades pursuant to a stock restriction
agreement granted under the 1998 Stock Incentive Plan. These shares of
common stock were subject to a 3-for-1 stock dividend on May 25, 1999, upon
which date Mr. Conrades received 1,980,000 more shares of common stock.
17. On April 16, 1999, the Registrant issued and sold 929,244 shares
of its Series B convertible preferred stock at a purchase price of $15.066
per share to Baker Communications Fund, L.P. pursuant to a Series B
convertible preferred stock and Series C convertible preferred stock
purchase agreement.
18. On April 30, 1999, the Registrant issued and sold 398,256 shares
of its Series B convertible preferred stock to 23 investors pursuant to a
Series B convertible preferred stock and Series C convertible preferred
stock purchase agreement.
19. On May 18, 1999, the Registrant issued and sold 100,000 shares
(300,000 shares on a post-split basis, as described herein) of common stock
at price of $5.00 per share, for a purchase price of $500,000 to Paul Sagan
pursuant to a Stock restriction agreement granted under 1998 Stock
Incentive Plan. These common stock shares were subject to a 3-for-1 stock
dividend on May 25, 1999, upon which date Mr. Sagan received 200,000 more
common stock shares.
20. On June 21, 1999, the Registrant issued and sold 685,194 shares of
its Series D convertible preferred shares at a purchase price of $18.243
per share to Apple Computer Inc. Ltd. pursuant to the Series D convertible
preferred stock purchase agreement.
II-4
<PAGE> 78
21. On July 1, 1999, the Registrant issued and sold 5,000 shares of
its common stock at a purchase price of $1.67 per share, for a purchase
price of $8,350.00, to Amos Hostetter pursuant to the exercise of a stock
option.
22. On July 1, 1999, the Registrant issued and sold 5,000 shares of
its common stock at a purchase price of $1.67 per share, for a purchase
price of $8,350.00, to Benjamin A. Gomez pursuant to the exercise of a
stock option.
23. On July 23, 1999, the Registrant issued and sold 125,000 shares of
its common stock at a purchase price of $5.00 per share, for an aggregate
purchase price of $625,000.00, to Robert O. Ball III pursuant to a stock
restriction agreement.
24. On August 6, 1999, the Registrant issued and sold 1,867,480 shares
of its Series E convertible preferred shares at a purchase price of $26.239
per share to Cisco Systems, Inc. pursuant to a Series E convertible
preferred stock purchase agreement.
(b) Grants of Stock Options.
1. From inception through June 30, 1999, the Registrant granted stock
options to purchase 4,558,000 shares of common stock at exercise prices
ranging from $0.25 to $2.00 per share to employees, consultants and
directors pursuant to its 1998 Stock Incentive Plan.
2. On April 16, 1999, the Registrant granted an option to purchase up
to 145,195 shares of its Series C convertible preferred stock at an
exercise price of $34.436 per share to Baker Communications Fund, L.P.
pursuant to a Series B convertible preferred stock and Series C convertible
preferred stock purchase agreement.
(c) Issuances of Notes and Warrants
1. On January 27, 1999, the Registrant issued a warrant to purchase up
to 3,947 shares of Common Stock at an exercise price of $7.60 per share. As
of June 30, 1999, this warrant was exercisable for up to 36,132 shares of
Common Stock at an exercise price of $0.83 per share.
2. On May 7, 1999, the Registrant issued 15% senior subordinated notes
in the principal amount of $15,000,000 and warrants to purchase up to
333,806 shares (1,001,418 shares on a post-split basis) of Common Stock at
an exercise price of $14.979 ($4.993 on a post-split basis) per share to 20
investors pursuant to a 15% senior subordinated notes and warrants to
purchase common stock purchase agreement.
No underwriters were involved in any of 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 options to purchase common stock,
Rule 701 of the Securities Act. All of the foregoing securities are deemed
restricted securities for the purposes of the Securities Act.
II-5
<PAGE> 79
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
*1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation of the Registrant, as amended.
3.2 Form of Amended and Restated Certificate of Incorporation of
the Registrant, to be filed prior to the closing of this
offering.
3.3 By-Laws of the Registrant.
3.4 Form of Amended and Restated By-Laws of the Registrant, to
be effective upon the closing of this offering.
*4.1 Specimen common stock certificate.
4.2 Third Amended and Restated Registration Rights Agreement
dated August 6, 1999.
*5.1 Opinion of Hale and Dorr LLP.
10.1 Second Amended and Restated 1998 Stock Incentive Plan.
10.2 Form of Restricted Stock Agreement granted under 1998 Stock
Incentive Plan.
10.3 Form of Incentive Stock Option Agreement granted under 1998
Stock Incentive Plan.
10.4 Form of Nonstatutory Stock Option Agreement granted under
1998 Stock Incentive Plan.
*10.5 1999 Employee Stock Purchase Plan.
10.6 Broadway Hampshire Associates Lease dated March 8, 1999, as
amended, by and between Broadway/Hampshire Associates
Limited Partnership and the Registrant.
10.7 Loan and Security Agreement dated as of January 27, 1999
between Silicon Valley Bank and the Registrant.
*+10.8 Strategic Alliance and Master Services Agreement effective
as of April 1, 1999 by and between the Registrant and Apple
Computer, Inc.
*+10.9 Strategic Alliance and Joint Development Agreement dated as
of August 6, 1999 by and between the Registrant and Cisco
Systems, Inc.
10.10 Series A Convertible Preferred Stock Purchase Agreement
dated as of November 23, 1998 between the Registrant and the
Purchasers named therein.
10.11 Series B Convertible Preferred Stock and Series C
Convertible Preferred Stock Purchase Agreement dated as of
April 16, 1999 between the Registrant and the Purchasers
named therein.
10.12 Series D Convertible Preferred Stock Purchase Agreement
dated as of June 21, 1999 between the Registrant and Apple
Computer Inc. Ltd.
10.13 Series E Convertible Preferred Stock Purchase Agreement
dated as of August 6, 1999 between the Registrant and Cisco
Systems, Inc.
10.14 Form of Master Services Agreement.
10.15 Severance Agreement dated March 26, 1999 by and between
George Conrades and the Registrant.
*+10.16 Exclusive Patent and Non-Exclusive Copyright License
Agreement dated as of October 26, 1998 between the
Registrant and the Massachusetts Institute of Technology.
10.17 $1,980,000 Promissory Note dated as of March 26, 1999 by and
between the Registrant and George H. Conrades.
10.18 $500,000 Promissory Note dated as of May 18, 1999 by and
between the Registrant and Paul Sagan.
</TABLE>
II-6
<PAGE> 80
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
10.19 $623,750 Promissory Note dated as of July 23, 1999 by and
between the Registrant and Robert O. Ball III.
*10.20 15% Senior Subordinated Note and Warrant to Purchase Common
Stock Purchase Agreement dated as of May 7, 1999 between the
Registrant and the Purchasers named therein.
23.1 Consent of PricewaterhouseCoopers LLP.
*23.2 Consent of Hale and Dorr LLP (included in Exhibit 5.1).
24.1 Powers of Attorney (see page II-8).
27.1 Financial Data Schedule.
27.2 Financial Data Schedule.
</TABLE>
- ------------
* To be filed by amendment.
+ Confidential treatment requested for certain portions of this Exhibit pursuant
to Rule 406 promulgated under the Securities Act, which portions are omitted
and filed separately with the Securities and Exchange Commission.
All schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes to provide to the Underwriter
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriter to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act"), may be permitted to directors, officers and
controlling persons of the registrant pursuant to the Delaware General
Corporation Law, the Restated Certificate of the registrant, the Underwriting
Agreement, 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 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 hereunder, the registrant
will, unless in the opinion of 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 Act and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes that:
(1) For purpose of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4), or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For purpose of determining any liability under the 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-7
<PAGE> 81
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Cambridge, Massachusetts, on this
20th day of August, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ GEORGE H. CONRADES
------------------------------------
George H. Conrades
Chairman and Chief Executive Officer
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers, directors and authorized representatives of
Akamai Technologies, Inc. hereby severally constitute and appoint George H.
Conrades, Paul Sagan and Robert O. Ball III, and each of them singly, our true
and lawful attorneys with full power to them, and each of them singly, with full
powers of substitution and resubstitution, to sign for us and in our names in
the capacities indicated below, the Registration Statement on Form S-1 filed
herewith and any and all pre-effective and post-effective amendments to said
Registration Statement, and any subsequent Registration Statement for the same
offering which may be filed under Rule 462(b), and generally to do all such
things in our names and on our behalf in our capacities as officers and
directors to enable Akamai Technologies, Inc. to comply with the provisions of
the Securities Act of 1933, as amended, and all requirements of the Securities
and Exchange Commission, hereby ratifying and confirming our signatures as they
may be signed by our said attorneys, or any of them, or their substitute or
substitutes, to said Registration Statement and any and all amendments thereto
or to any subsequent Registration Statement for the same offering which may be
filed under Rule 462(b).
II-8
<PAGE> 82
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ GEORGE H. CONRADES Chairman and Chief Executive August 20, 1999
- --------------------------------------------------- Officer (principal executive
George H. Conrades officer)
/s/ PAUL SAGAN President and Chief Operating August 20, 1999
- --------------------------------------------------- Officer (principal financial
Paul Sagan and accounting officer)
/s/ ARTHUR H. BILGER Director August 20, 1999
- ---------------------------------------------------
Arthur H. Bilger
/s/ TODD A. DAGRES Director August 20, 1999
- ---------------------------------------------------
Todd A. Dagres
/s/ F. THOMSON LEIGHTON Director August 20, 1999
- ---------------------------------------------------
F. Thomson Leighton
/s/ DANIEL M. LEWIN Director August 20, 1999
- ---------------------------------------------------
Daniel M. Lewin
/s/ TERRANCE G. MCGUIRE Director August 20, 1999
- ---------------------------------------------------
Terrance G. McGuire
/s/ EDWARD W. SCOTT Director August 20, 1999
- ---------------------------------------------------
Edward W. Scott
</TABLE>
II-9
<PAGE> 83
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO.
- -------
<C> <S>
*1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation of the Registrant, as amended.
3.2 Form of Amended and Restated Certificate of Incorporation of
the Registrant, to be filed prior to the closing of this
offering.
3.3 By-Laws of the Registrant.
3.4 Form of Amended and Restated By-Laws of the Registrant, to
be effective upon the closing of this offering.
*4.1 Specimen common stock certificate.
4.2 Third Amended and Restated Registration Rights Agreement
dated August 6, 1999.
*5.1 Opinion of Hale and Dorr LLP.
10.1 Second Amended and Restated 1998 Stock Incentive Plan.
10.2 Form of Restricted Stock Agreement granted under 1998 Stock
Incentive Plan.
10.3 Form of Incentive Stock Option Agreement granted under 1998
Stock Incentive Plan.
10.4 Form of Nonstatutory Stock Option Agreement granted under
1998 Stock Incentive Plan.
*10.5 1999 Employee Stock Purchase Plan.
10.6 Broadway Hampshire Associates Lease dated March 8, 1999, as
amended, by and between Broadway/Hampshire Associates
Limited Partnership and the Registrant.
10.7 Loan and Security Agreement dated as of January 27, 1999
between Silicon Valley Bank and the Registrant.
*+10.8 Strategic Alliance and Master Services Agreement effective
as of April 1, 1999 by and between the Registrant and Apple
Computer, Inc.
*+10.9 Strategic Alliance and Joint Development Agreement dated as
of August 6, 1999 by and between the Registrant and Cisco
Systems, Inc.
10.10 Series A Convertible Preferred Stock Purchase Agreement
dated as of November 23, 1998 between the Registrant and the
Purchasers named therein.
10.11 Series B Convertible Preferred Stock and Series C
Convertible Preferred Stock Purchase Agreement dated as of
April 16, 1999 between the Registrant and the Purchasers
named therein.
10.12 Series D Convertible Preferred Stock Purchase Agreement
dated as of June 21, 1999 between the Registrant and Apple
Computer Inc. Ltd.
10.13 Series E Convertible Preferred Stock Purchase Agreement
dated as of August 6, 1999 between the Registrant and Cisco
Systems, Inc.
10.14 Form of Master Services Agreement.
10.15 Severance Agreement dated March 26, 1999 by and between
George Conrades and the Registrant.
*+10.16 Exclusive Patent and Non-Exclusive Copyright License
Agreement dated as of October 26, 1998 between the
Registrant and the Massachusetts Institute of Technology.
10.17 $1,980,000 Promissory Note dated as of March 26, 1999 by and
between the Registrant and George H. Conrades.
10.18 $500,000 Promissory Note dated as of May 18, 1999 by and
between the Registrant and Paul Sagan.
10.19 $623,750 Promissory Note dated as of July 23, 1999 by and
between the Registrant and Robert O. Ball III.
</TABLE>
<PAGE> 84
<TABLE>
<CAPTION>
EXHIBIT
NO.
- -------
<C> <S>
*10.20 15% Senior Subordinated Note and Warrant to Purchase Common
Stock Purchase Agreement dated as of May 7, 1999 between the
Registrant and the Purchasers named therein.
23.1 Consent of PricewaterhouseCoopers LLP
*23.2 Consent of Hale and Dorr LLP (included in Exhibit 5.1).
24.1 Powers of Attorney (see page II-8).
27.1 Financial Data Schedule.
27.2 Financial Data Schedule.
</TABLE>
- ------------
* To be filed by amendment.
+ Confidential treatment requested for certain portions of this Exhibit pursuant
to Rule 406 promulgated under the Securities Act, which portions are omitted
and filed separately with the Securities and Exchange Commission.
<PAGE> 1
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
AKAMAI TECHNOLOGIES, INC.
FIRST. The name of the Corporation is: Akamai Technologies, Inc.
SECOND. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD. The nature of the business or purposes to be conducted or promoted
by the Corporation is as follows:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 5,000,000 shares, consisting of (i)
4,000,000 shares of Common Stock, $0.01 par value per share ("Common Stock"),
and (ii) 1,000,000 shares of Preferred Stock, $0.01 par value per share
("Preferred Stock").
The following is a statement of the designations and the powers,
privileges and rights, and the qualifications, limitations or restrictions
thereof in respect of each class of capital stock of the Corporation.
A. COMMON STOCK.
1. General. The voting, dividend and liquidation rights of the holders of
the Common Stock are subject to and qualified by the rights of the holders of
the Preferred Stock of any series as may be designated by the Board of Directors
upon any issuance of the Preferred Stock of any series.
2. Voting. The holders of the Common Stock are entitled to one vote for
each share held at all meetings of stockholders (and written actions in lieu of
meetings). There shall be no cumulative voting.
The number of authorized shares of Common Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the stock of the Corporation
entitled
<PAGE> 2
to vote, irrespective of the provisions of Section 242(b)(2) of the General
Corporation Law of Delaware.
3. Dividends. Dividends may be declared and paid on the Common Stock from
funds lawfully available therefor as and when determined by the Board of
Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.
4. Liquidation. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive all assets of the Corporation available for distribution to its
stockholders, subject to any preferential rights of any then outstanding
Preferred Stock.
B. PREFERRED STOCK.
Preferred Stock may be issued from time to time in one or more series,
each of such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors of the Corporation as hereinafter provided. Any shares of
Preferred Stock which may be redeemed, purchased or acquired by the Corporation
may be reissued except as otherwise provided by law. Different series of
Preferred Stock shall not be construed to constitute different classes of shares
for the purposes of voting by classes unless expressly provided.
Authority is hereby expressly granted to the Board of Directors from time
to time to issue the Preferred Stock in one or more series, and in connection
with the creation of any such series, by resolution or resolutions providing for
the issue of the shares thereof, to determine and fix such voting powers, full
or limited, or no voting powers, and such designations, preferences and relative
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, including without limitation thereof, dividend rights,
conversion rights, redemption privileges and liquidation preferences, as shall
be stated and expressed in such resolutions, all to the full extent now or
hereafter permitted by the General Corporation Law of Delaware. Without limiting
the generality of the foregoing, the resolutions providing for issuance of any
series of Preferred Stock may provide that such series shall be superior or rank
equally or be junior to the Preferred Stock of any other series to the extent
permitted by law. Except as otherwise provided in this Certificate of
Incorporation, no vote of the holders of the Preferred Stock or Common Stock
shall be a prerequisite to the designation or issuance of any shares of any
series of the Preferred Stock authorized by and complying with the conditions of
this Certificate of Incorporation, the right to have such vote being expressly
waived by all present and future holders of the capital stock of the
Corporation.
<PAGE> 3
FIFTH. The name and mailing address of the sole incorporator are as
follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
---- ---------------
<S> <C>
Daniel M. Lewin 15 Charlesden Park
Newtonville, MA 02460.
</TABLE>
SIXTH. In furtherance of and not in limitation of powers conferred by
statute, it is further provided:
1. Election of directors need not be by written ballot.
2. The Board of Directors is expressly authorized to adopt, amend or
repeal the By-Laws of the Corporation.
SEVENTH. Except to the extent that the General Corporation Law of Delaware
prohibits the elimination or limitation of liability of directors for breaches
of fiduciary duty, no director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for any breach of
fiduciary duty as a director, notwithstanding any provision of law imposing such
liability. No amendment to or repeal of this provision shall apply to or have
any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment.
EIGHTH. 1. Actions, Suits and Proceedings Other than by or in the Right of
the Corporation. The Corporation shall indemnify each 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, or has agreed to become, a director or
officer of the Corporation, or is or was serving, or has agreed to serve, at the
request of the Corporation, as a director, officer or trustee of, or in a
similar capacity with, another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan) (all such persons being
referred to hereafter as an "Indemnitee"), or by reason of any action alleged to
have been taken or omitted in such capacity, against all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with such action, suit
or proceeding and any appeal therefrom, 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
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to,
<PAGE> 4
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.
Notwithstanding anything to the contrary in this Article, except as set forth in
Section 7 below, the Corporation shall not indemnify an Indemnitee seeking
indemnification in connection with a proceeding (or part thereof) initiated by
the Indemnitee unless the initiation thereof was approved by the Board of
Directors of the Corporation. Notwithstanding anything to the contrary in this
Article, the Corporation shall not indemnify an Indemnitee to the extent such
Indemnitee is reimbursed from the proceeds of insurance, and in the event the
Corporation makes any indemnification payments to an Indemnitee and such
Indemnitee is subsequently reimbursed from the proceeds of insurance, such
Indemnitee shall promptly refund such indemnification payments to the
Corporation to the extent of such insurance reimbursement.
2. Actions or Suits by or in the Right of the Corporation. The Corporation
shall indemnify any Indemnitee who was or is a party or is threatened to be made
a party to any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was, or has agreed to become, a director or officer of the
Corporation, or is or was serving, or has agreed to serve, at the request of the
Corporation, as a director, officer or trustee of, or in a similar capacity
with, another corporation, partnership, joint venture, trust or other enterprise
(including any employee benefit plan), or by reason of any action alleged to
have been taken or omitted in such capacity, against all expenses (including
attorneys' fees) and, to the extent permitted by law, amounts paid in settlement
actually and reasonably incurred by him or on his behalf in connection with such
action, suit or proceeding and any appeal therefrom, 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, 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 the
Court of Chancery of Delaware shall determine upon application that, despite the
adjudication of such liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
(including attorneys' fees) which the Court of Chancery of Delaware shall deem
proper.
3. Indemnification for Expenses of Successful Party. Notwithstanding the
other provisions of this Article, to the extent that an Indemnitee has been
successful, on the merits or otherwise, in defense of any action, suit or
proceeding referred to in Sections 1 and 2 of this Article, or in defense of any
claim, issue or matter therein, or on appeal from any such action, suit or
proceeding, he shall be indemnified against all expenses (including attorneys'
fees) actually and reasonably incurred by him or on his behalf in connection
therewith. Without limiting the foregoing, if any action, suit or proceeding is
disposed of, on the merits or otherwise (including a disposition without
prejudice), without (i) the disposition being adverse to the Indemnitee, (ii) an
<PAGE> 5
adjudication that the Indemnitee was liable to the Corporation, (iii) a plea of
guilty or nolo contendere by the Indemnitee, (iv) an adjudication that the
Indemnitee did not act in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and (v) with
respect to any criminal proceeding, an adjudication that the Indemnitee had
reasonable cause to believe his conduct was unlawful, the Indemnitee shall be
considered for the purposes hereof to have been wholly successful with respect
thereto.
4. Notification and Defense of Claim. As a condition precedent to his
right to be indemnified, the Indemnitee must notify the Corporation in writing
as soon as practicable of any action, suit, proceeding or investigation
involving him for which indemnity will or could be sought. With respect to any
action, suit, proceeding or investigation of which the Corporation is so
notified, the Corporation will be entitled to participate therein at its own
expense and/or to assume the defense thereof at its own expense, with legal
counsel reasonably acceptable to the Indemnitee. After notice from the
Corporation to the Indemnitee of its election so to assume such defense, the
Corporation shall not be liable to the Indemnitee for any legal or other
expenses subsequently incurred by the Indemnitee in connection with such claim,
other than as provided below in this Section 4. The Indemnitee shall have the
right to employ his own counsel in connection with such claim, but the fees and
expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of the Indemnitee
unless (i) the employment of counsel by the Indemnitee has been authorized by
the Corporation, (ii) counsel to the Indemnitee shall have reasonably concluded
that there may be a conflict of interest or position on any significant issue
between the Corporation and the Indemnitee in the conduct of the defense of such
action or (iii) the Corporation shall not in fact have employed counsel to
assume the defense of such action, in each of which cases the fees and expenses
of counsel for the Indemnitee shall be at the expense of the Corporation, except
as otherwise expressly provided by this Article. The Corporation shall not be
entitled, without the consent of the Indemnitee, to assume the defense of any
claim brought by or in the right of the Corporation or as to which counsel for
the Indemnitee shall have reasonably made the conclusion provided for in clause
(ii) above.
5. Advance of Expenses. Subject to the provisions of Section 6 below, in
the event that the Corporation does not assume the defense pursuant to Section 4
of this Article of any action, suit, proceeding or investigation of which the
Corporation receives notice under this Article, any expenses (including
attorneys' fees) incurred by an Indemnitee in defending a civil or criminal
action, suit, proceeding or investigation or any appeal therefrom shall be paid
by the Corporation in advance of the final disposition of such matter; provided,
however, that the payment of such expenses incurred by an Indemnitee in advance
of the final disposition of such matter shall be made only upon receipt of an
undertaking by or on behalf of the Indemnitee to repay all amounts so advanced
in the event that it shall ultimately be determined
<PAGE> 6
that the Indemnitee is not entitled to be indemnified by the Corporation as
authorized in this Article. Such undertaking shall be accepted without reference
to the financial ability of the Indemnitee to make such repayment.
6. Procedure for Indemnification. In order to obtain indemnification or
advancement of expenses pursuant to Section 1, 2, 3 or 5 of this Article, the
Indemnitee shall submit to the Corporation a written request, including in such
request such documentation and information as is reasonably available to the
Indemnitee and is reasonably necessary to determine whether and to what extent
the Indemnitee is entitled to indemnification or advancement of expenses. Any
such indemnification or advancement of expenses shall be made promptly, and in
any event within 60 days after receipt by the Corporation of the written request
of the Indemnitee, unless with respect to requests under Section 1, 2 or 5 the
Corporation determines within such 60-day period that the Indemnitee did not
meet the applicable standard of conduct set forth in Section 1 or 2, as the case
may be. Such determination shall be made in each instance by (a) a majority vote
of the directors of the Corporation consisting of persons who are not at that
time parties to the action, suit or proceeding in question ("disinterested
directors"), whether or not a quorum, (b) a majority vote of a quorum of the
outstanding shares of stock of all classes entitled to vote for directors,
voting as a single class, which quorum shall consist of stockholders who are not
at that time parties to the action, suit or proceeding in question, (c)
independent legal counsel (who may, to the extent permitted by law, be regular
legal counsel to the Corporation), or (d) a court of competent jurisdiction.
7. Remedies. The right to indemnification or advances as granted by this
Article shall be enforceable by the Indemnitee in any court of competent
jurisdiction if the Corporation denies such request, in whole or in part, or if
no disposition thereof is made within the 60-day period referred to above in
Section 6. Unless otherwise required by law, the burden of proving that the
Indemnitee is not entitled to indemnification or advancement of expenses under
this Article shall be on the Corporation. Neither the failure of the Corporation
to have made a determination prior to the commencement of such action that
indemnification is proper in the circumstances because the Indemnitee has met
the applicable standard of conduct, nor an actual determination by the
Corporation pursuant to Section 6 that the Indemnitee has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the Indemnitee has not met the applicable standard of conduct.
The Indemnitee's expenses (including attorneys' fees) incurred in connection
with successfully establishing his right to indemnification, in whole or in
part, in any such proceeding shall also be indemnified by the Corporation.
8. Subsequent Amendment. No amendment, termination or repeal of this
Article or of the relevant provisions of the General Corporation Law of Delaware
or any other applicable laws shall affect or diminish in any way the rights of
any Indemnitee to indemnification under the provisions hereof with respect to
any action,
<PAGE> 7
suit, proceeding or investigation arising out of or relating to any actions,
transactions or facts occurring prior to the final adoption of such amendment,
termination or repeal.
9. Other Rights. The indemnification and advancement of expenses provided
by this Article shall not be deemed exclusive of any other rights to which an
Indemnitee seeking indemnification or advancement of expenses may be entitled
under any law (common or statutory), agreement or vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in any other capacity while holding office for the Corporation,
and shall continue as to an Indemnitee who has ceased to be a director or
officer, and shall inure to the benefit of the estate, heirs, executors and
administrators of the Indemnitee. Nothing contained in this Article shall be
deemed to prohibit, and the Corporation is specifically authorized to enter
into, agreements with officers and directors providing indemnification rights
and procedures different from those set forth in this Article. In addition, the
Corporation may, to the extent authorized from time to time by its Board of
Directors, grant indemnification rights to other employees or agents of the
Corporation or other persons serving the Corporation and such rights may be
equivalent to, or greater or less than, those set forth in this Article.
10. Partial Indemnification. If an Indemnitee is entitled under any
provision of this Article to indemnification by the Corporation for some or a
portion of the expenses (including attorneys' fees), judgments, fines or amounts
paid in settlement actually and reasonably incurred by him or on his behalf in
connection with any action, suit, proceeding or investigation and any appeal
therefrom but not, however, for the total amount thereof, the Corporation shall
nevertheless indemnify the Indemnitee for the portion of such expenses
(including attorneys' fees), judgments, fines or amounts paid in settlement to
which the Indemnitee is entitled.
11. Insurance. The Corporation may purchase and maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise (including any employee benefit plan) against any expense, liability
or loss incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify such
person against such expense, liability or loss under the General Corporation Law
of Delaware.
12. Merger or Consolidation. If the Corporation is merged into or
consolidated with another corporation and the Corporation is not the surviving
corporation, the surviving corporation shall assume the obligations of the
Corporation under this Article with respect to any action, suit, proceeding or
investigation arising out of or relating to any actions, transactions or facts
occurring prior to the date of such merger or consolidation.
<PAGE> 8
13. Savings Clause. If this Article or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Indemnitee as to any expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement in
connection with any action, suit, proceeding or investigation, whether civil,
criminal or administrative, including an action by or in the right of the
Corporation, to the fullest extent permitted by any applicable portion of this
Article that shall not have been invalidated and to the fullest extent permitted
by applicable law.
14. Definitions. Terms used herein and defined in Section 145(h) and
Section 145(i) of the General Corporation Law of Delaware shall have the
respective meanings assigned to such terms in such Section 145(h) and Section
145(i).
15. Subsequent Legislation. If the General Corporation Law of Delaware is
amended after adoption of this Article to expand further the indemnification
permitted to Indemnitees, then the Corporation shall indemnify such persons to
the fullest extent permitted by the General Corporation Law of Delaware, as so
amended.
NINTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute and this Certificate of
Incorporation, and all rights conferred upon stockholders herein are granted
subject to this reservation.
EXECUTED as of the 20th day of August, 1998.
/s/ Daniel M. Lewin
---------------------------------
Daniel M. Lewin
Incorporator
<PAGE> 9
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
AKAMAI TECHNOLOGIES, INC.
Pursuant to Section 242
of the General Corporation Law of
the State of Delaware
Akamai Technologies, Inc. (hereinafter called the "Corporation"),
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify as follows:
The Board of Directors of the Corporation, by unanimous written consent in
lieu of a meeting, duly adopted a resolution, pursuant to Sections 141(f) and
242 of the General Corporation Law of the State of Delaware, setting forth an
amendment to the Certificate of Incorporation of the Corporation and declaring
said amendment to be advisable. The stockholders of the Corporation duly
approved said proposed amendment by written consent in accordance with Sections
228 and 242 of the General Corporation Law of the State of Delaware. The
resolution setting forth the amendment is as follows:
RESOLVED: That the first paragraph of Article FOURTH of the Certificate of
Incorporation of the Corporation be and hereby is deleted in its entirety and
that the following paragraph be inserted in lieu thereof:
"FOURTH. The total number of shares of all classes of stock which
the Corporation shall have authority to issue is 7,000,000 shares,
consisting of (i) 5,000,000 shares of Common Stock, $0.01 par value per
share ("Common Stock"), and (ii) 2,000,000 shares of Preferred Stock,
$0.01 par value per share ("Preferred Stock")."
<PAGE> 10
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its Treasurer on this 18th day of November, 1998.
AKAMAI TECHNOLOGIES, INC.
By: /s/ F. Thomson Leighton
------------------------
F. Thomson Leighton
Treasurer
<PAGE> 11
CERTIFICATE OF DESIGNATIONS
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
AKAMAI TECHNOLOGIES, INC.
------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
------------------
Akamai Technologies, Inc., a Delaware corporation (the "Corporation")
certifies that pursuant to the authority contained in Article Fourth of its
Certificate of Incorporation and in accordance with the provisions of Section
151 of the General Corporation Law of the State of Delaware, the Board of
Directors of the Corporation, by unanimous written consent dated as of November
17, 1998 duly adopted the following resolution, which resolution remains in full
force and effect on the date hereof:
RESOLVED, that, pursuant to the authority expressly granted to and vested
in the Board of Directors of the Corporation in accordance with the provisions
of its Certificate of Incorporation, a series of Preferred Stock of the
Corporation be and hereby is established, consisting of 1,100,000 shares, $.01
par value per share, to be designated the "Series A Convertible Preferred Stock"
(hereinafter, the "Series A Preferred Stock"); that the Board of Directors be
and hereby is authorized to issue such shares of Series A Preferred Stock from
time to time and for such consideration and on such terms as the Board of
Directors shall determine; and that, subject to the limitations provided by law
and by the Certificate of Incorporation, the voting powers, preferences and
relative, participating, optional and other special rights, and qualifications,
limitations and restrictions thereof shall be as set forth on Schedule I
attached hereto.
<PAGE> 12
IN WITNESS WHEREOF, the Corporation has caused this certificate to be duly
executed by an authorized officer this 23rd day of November, 1998.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------
Daniel Lewin
President
<PAGE> 13
SCHEDULE I
AKAMAI TECHNOLOGIES, INC.
DESIGNATION OF SERIES A CONVERTIBLE PREFERRED STOCK
The series of Preferred Stock designated and known as "Series A
Convertible Preferred Stock" shall consist of 1,100,000 shares.
1. Voting.
1A. General. Except as may be otherwise provided in these terms of
the Series A Convertible Preferred Stock, in the Certificate of Incorporation
(the "Certificate of Incorporation") of Akamai Technologies, Inc. (the
"Corporation") or by law, the Series A Convertible Preferred Stock shall vote
together with all other classes and series of stock of the Corporation as a
single class on all actions to be taken by the stockholders of the Corporation.
Each share of Series A Convertible Preferred Stock shall entitle the holder
thereof to such number of votes per share on each such action as shall equal the
number of shares of Common Stock (including fractions of a share) into which
each share of Preferred Stock is then convertible.
1B. Board Size. Subject to the provisions of paragraph 1C below, the
Corporation shall not, without the written consent or affirmative vote of the
holders of at least 60% of the then outstanding shares of Series A Convertible
Preferred Stock, given in writing or by vote at a meeting, consenting or voting
(as the case may be) separately as a series, increase the maximum number of
directors constituting the Board of Directors to a number in excess of seven
(7).
1C. Board Seats. For so long as at least 50% of the shares of Series
A Convertible Preferred Stock issued pursuant to the Purchase Agreement remains
outstanding, the holders of the Series A Convertible Preferred Stock, voting as
a separate series, shall be entitled to elect two (2) directors of the
Corporation. At any meeting (or in a written consent in lieu thereof) held for
the purpose of electing directors, the presence in person or by proxy (or the
written consent) of the holders of at least a majority in interest of the then
outstanding shares of Series A Convertible Preferred Stock shall constitute a
quorum of the Series A Convertible Preferred Stock for the election of directors
to be elected solely by the holders of the Series A Convertible Preferred Stock
voting as a separate series. A vacancy in any directorship elected by the
holders of the Series A Convertible Preferred Stock shall be filled only by the
affirmative vote or written consent of the holders of at least 60% of the then
outstanding shares of Series A Convertible Preferred Stock. The directors to be
elected by the holders of the Series A Convertible Preferred Stock, voting
separately as one class, pursuant to this paragraph 1C, shall serve for terms
extending from the date of their election and qualification until the time of
the next succeeding annual meeting of stockholders and until their successors
have been elected and qualified.
<PAGE> 14
2. Dividends. No dividends shall be declared and set aside for any shares
of the Series A Convertible Preferred Stock except in the event that the Board
of Directors of the Corporation shall declare a dividend payable upon the then
outstanding shares of the Common Stock of the Corporation, in which event the
holders of the Series A Convertible Preferred Stock shall be entitled to the
amount of dividends per share of Series A Convertible Preferred Stock as would
be declared payable on the largest number of whole shares of Common Stock into
which each share of Series A Convertible Preferred Stock held by each holder
thereof could be converted pursuant to the provisions of Section 5 hereof, such
number determined as of the record date for the determination of holders of
Common Stock entitled to receive such dividend. All dividends declared upon the
Preferred Stock shall be declared pro rata per share.
3. Liquidation, Dissolution and Winding-up.
3A. Liquidation. Upon any liquidation, dissolution or winding up of
the Corporation (a "Liquidation Event"), whether voluntary or involuntary, the
holders of the shares of Series A Convertible Preferred Stock shall be paid an
amount equal to $7.60 per share plus, in the case of each share, an amount equal
to dividends accrued but unpaid thereon, computed to the date payment thereof is
made available, together with payment to any class of stock ranking equally with
the Series A Convertible Preferred Stock, and before any payment shall be made
to the holders of any stock ranking on liquidation junior to the Series A
Convertible Preferred Stock, such amount payable with respect to one share of
Series A Convertible Preferred Stock being sometimes referred to as the "Series
A Liquidation Preference Payment" and with respect to all shares of Series A
Convertible Preferred Stock being sometimes referred to as the "Series A
Liquidation Preference Payments". If upon any Liquidation Event, the assets to
be distributed to the holders of the Series A Convertible Preferred Stock shall
be insufficient to permit payment to such stockholders of the full preferential
amounts aforesaid, then all of the assets of the Corporation available for
distribution to holders of the Series A Convertible Preferred Stock shall be
distributed to such holders of the Series A Convertible Preferred Stock pro
rata, so that each holder receives that portion of the assets available for
distribution as the number of shares of such stock held by such holder bears to
the total number of shares of such stock then outstanding.
3B. Upon any Liquidation Event, immediately after the holders of
Series A Convertible Preferred Stock and holders of any class of stock ranking
equally with the Series A Convertible Preferred Stock have been paid in full
pursuant to subsection 3A above, the remaining net assets of the Corporation
available for distribution shall be distributed among the holders of the shares
of Common Stock.
<PAGE> 15
Written notice of such Liquidation Event, stating a payment date and the
place where said payments shall be made, shall be given by mail, postage
prepaid, or by facsimile to non-U.S. residents, not less than 20 days prior to
the payment date stated therein, to the holders of record of Series A
Convertible Preferred Stock, such notice to be addressed to each such holder at
its address as shown by the records of the Corporation.
The (x) consolidation or merger of the Corporation into or with any other
entity or entities which results in the exchange of outstanding shares of the
Corporation for securities or other consideration issued or paid or caused to be
issued or paid by any such entity or affiliate thereof (except a consolidation
or merger into a Subsidiary or merger in which the Corporation is the surviving
Corporation and the holders of the Corporation's voting stock outstanding
immediately prior to the transaction constitute a majority of the holders of
voting stock outstanding immediately following the transaction), (y) the sale or
transfer by the Corporation of all or substantially all its assets, or (z) the
sale or transfer by the Corporation's stockholders of capital stock representing
a majority of the outstanding capital stock of the Corporation shall be deemed
to be a Liquidation Event within the meaning of the provisions of this paragraph
3 (subject to the provisions of this paragraph 3 and not the provisions of
paragraph 5G hereof, unless 5G is elected in the following proviso), provided,
however, that if the holders of at least 60% of the then outstanding shares of
Series A Convertible Preferred Stock shall elect the benefits of the provisions
of paragraph 5G in lieu of receiving payment in a Liquidation Event pursuant to
this paragraph 3, then all holders of shares of Series A Convertible Preferred
Stock shall receive the benefits of the provisions of paragraph 5G in lieu of
receiving payment pursuant to this Section 3. Whenever the distribution provided
for in this paragraph 3 shall be payable in property other than cash, the value
of such distribution shall be the fair market value of such property as
determined in good faith by the Board of Directors of the Corporation.
4. Restrictions. At any time when at least 50% of the shares of Series A
Convertible Preferred Stock issued pursuant to the Purchase Agreement (as
defined in Section 8(a) below) remain outstanding, except where the vote or
written consent of the holders of a greater number of shares of the Corporation
is required by law or by the Certificate of Incorporation, and in addition to
any other vote required by law or the Certificate of Incorporation, without the
written consent of the holders of at least 60% of the then outstanding shares of
Series A Convertible Preferred Stock given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a series, the
Corporation will not:
(1) Consent to any Liquidation Event or merge or consolidate with or
into, or permit any Subsidiary to merge or consolidate with or into, any
other corporation, corporations, entity or entities (except a
consolidation or merger into a Subsidiary or
<PAGE> 16
merger in which the Corporation is the surviving corporation and the
holders of the Corporation's voting stock outstanding immediately prior to
the transaction constitute a majority of the holders of voting stock
outstanding immediately following the transaction or a consolidation or
merger pursuant to which the aggregate consideration definitively and
unconditionally payable to all of the stockholders of the Corporation is
greater than $50 million);
(2) Sell, abandon, transfer, lease or otherwise dispose of all or
substantially all of its properties or assets (unless the aggregate
consideration definitively and unconditionally payable to all of the
stockholders of the Corporation as a result of any such transaction is
greater than $50 million);
(3) Amend, alter or repeal any provision of its Certificate of
Incorporation or By-laws in a manner adverse to holders of the Series A
Convertible Preferred Stock;
(4) Create or authorize the creation of or issue any additional
class or series of shares of stock unless the same ranks junior to or on
parity with the Series A Convertible Preferred Stock as to dividends and
the distribution of assets on a Liquidation Event, or increase the
authorized amount of Series A Convertible Preferred Stock or increase the
authorized amount of any additional class or series of shares of stock
unless the same ranks junior to or on parity with the Series A Convertible
Preferred Stock as to dividends and the distribution of assets on a
Liquidation Event, or create or authorize any obligation or security
convertible into shares of Series A Convertible Preferred Stock or into
shares of any other class or series of stock unless the same ranks junior
to or on parity with the Series A Convertible Preferred Stock as to
dividends and the distribution of assets on a Liquidation Event, whether
any such creation, authorization or increase shall be by means of
amendment to the Certificate of Incorporation or by merger, consolidation
or otherwise;
(5) In any manner amend, alter or change the designations or the
powers, preferences or rights, privileges or the restrictions of the
Series A Convertible Preferred Stock, provided, however, that the
authorization or creation of any shares of capital stock on parity with
Series A Convertible Preferred Stock as to dividends and the distribution
of assets on a Liquidation Event shall not require approval of holders of
Series A Convertible Preferred Stock;
(6) Purchase or redeem, or set aside any sums for the purchase or
redemption of, or pay any dividend or make any distribution on, any shares
of stock ranking on parity with or junior to the Series A Convertible
Preferred Stock as to dividends and the distribution of assets on a
Liquidation Event, except for (i) dividends or other
<PAGE> 17
distributions payable on the Common Stock solely in the form of additional
shares of Common Stock or (ii) repurchases of shares of capital stock (at
the original purchase price therefor) from officers, employees, directors
or consultants of the Corporation which are subject to restrictive stock
purchase, right of first refusal or other agreements under which the
Corporation has the option to repurchase such shares upon the occurrence
of certain events, including termination of employment; or
(7) Increase the number of Reserved Employee Shares without the
affirmative vote or written consent of at least two of the directors
elected solely by the holders of Series A Convertible Preferred Stock or
the affirmative vote or written consent of the holders of at least 60% of
the then outstanding shares of Series A Convertible Preferred Stock.
5. Conversion. The holders of shares of Series A Convertible Preferred
Stock shall have the following conversion rights:
5A. Right to Convert. Subject to the terms and conditions of this
paragraph 5, the holder of any share or shares of Series A Convertible Preferred
Stock shall have the right, at its option at any time, to convert any such
shares of Series A Convertible Preferred Stock (except that upon any Liquidation
Event the right of conversion shall terminate at the close of business on the
business day fixed for payment of the amounts distributable on the Series A
Convertible Preferred Stock) into such number of fully paid and nonassessable
shares of Common Stock as is obtained by (i) multiplying the number of shares of
Series A Convertible Preferred Stock so to be converted by $7.60 and (ii)
dividing the result by the conversion price of $7.60 per share or in case an
adjustment of such price has taken place pursuant to the further provisions of
this paragraph 5, then by the conversion price as last adjusted and in effect at
the date any share or shares of Preferred Stock are surrendered for conversion
(such price, or such price as last adjusted, being referred to as the "Series A
Conversion Price"). Such rights of conversion shall be exercised by the holder
thereof by giving written notice that the holder elects to convert a stated
number of shares of Series A Convertible Preferred Stock into Common Stock and
by surrender of a certificate or certificates for the shares so to be converted
to the Corporation at its principal office (or such other office or agency of
the Corporation as the Corporation may designate by notice in writing to the
holders of the Series A Convertible Preferred Stock) at any time during its
usual business hours on the date set forth in such notice, together with a
statement of the name or names (with address) in which the certificate or
certificates for shares of Common Stock shall be issued.
5B. Issuance of Certificates; Time Conversion Effected. Promptly
after the receipt of the written notice referred to in paragraph 5A and
surrender of the certificate or
<PAGE> 18
certificates for the share or shares of Series A Convertible Preferred Stock to
be converted, the Corporation shall issue and deliver, or cause to be issued and
delivered, to the holder, registered in such name or names as such holder may
direct, a certificate or certificates for the number of whole shares of Common
Stock issuable upon the conversion of such share or shares of Series A
Convertible Preferred Stock. To the extent permitted by law, such conversion
shall be deemed to have been effected and the Series A Conversion Price shall be
determined as of the close of business on the date on which such written notice
shall have been received by the Corporation and the certificate or certificates
for such share or shares shall have been surrendered as aforesaid, and at such
time the rights of the holder of such share or shares of Series A Convertible
Preferred Stock shall cease, and the person or persons in whose name or names
any certificate or certificates for shares of Common Stock shall be issuable
upon such conversion shall be deemed to have become the holder or holders of
record of the shares represented thereby.
5C. Fractional Shares; Dividends; Partial Conversion. No fractional
shares shall be issued upon conversion of Series A Convertible Preferred Stock
into Common Stock and no payment or adjustment shall be made upon any conversion
on account of any cash dividends on the Common Stock issued upon such
conversion. At the time of each conversion, the Corporation shall: (i) if cash
is legally available, pay in cash an amount equal to all dividends accrued and
unpaid on the shares of Series A Convertible Preferred Stock surrendered for
conversion to the date upon which such conversion is deemed to take place as
provided in paragraph 5B, or (ii) if cash is not legally available, provide to
such holder a certificate representing a number of shares of Common Stock equal
to the quotient of all dividends accrued and unpaid on the shares of Series A
Convertible Preferred Stock so surrendered divided by the applicable Series A
Conversion Price. In case the number of shares of Series A Convertible Preferred
Stock represented by the certificate or certificates surrendered pursuant to
paragraph 5A exceeds the number of shares converted, the Corporation shall, upon
such conversion, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Series A Convertible Preferred Stock represented by the certificate or
certificates surrendered which are not to be converted. If any fractional share
of Common Stock would, except for the provisions of the first sentence of this
paragraph 5C, be delivered upon such conversion, the Corporation, in lieu of
delivering such fractional share, shall pay to the holder surrendering the
Series A Convertible Preferred Stock for conversion an amount in cash equal to
the current fair market value of such fractional share as determined in good
faith by the Board of Directors of the Corporation, and based upon the aggregate
number of Shares of Series A Convertible Preferred Stock surrendered by any one
holder.
5D. Adjustment of Series A Conversion Price Upon Issuance of Common
Stock. Except as provided in paragraphs 5E and 5F, if and whenever the
Corporation shall
<PAGE> 19
issue or sell, or is, in accordance with subparagraphs 5D(1) through 5D(8),
deemed to have issued or sold, any shares of Common Stock for a consideration
per share less than the Series A Conversion Price in effect immediately prior to
the time of such issue or sale, (such number being appropriately adjusted to
reflect the occurrence of any event described in paragraph 5F), then, forthwith
upon such issue or sale, the Series A Conversion Price shall be reduced to the
price determined by dividing (i) an amount equal to the sum of (a) the number of
shares of Common Stock outstanding immediately prior to such issue or sale
(assuming the conversion of the outstanding shares of Series A Convertible
Preferred Stock) multiplied by the then existing Series A Conversion Price and
(b) the consideration, if any, received by the Corporation upon such issue or
sale, by (ii) the total number of shares of Common Stock outstanding immediately
after such issue or sale (assuming the conversion of the outstanding shares of
Series A Convertible Preferred Stock).
For purposes of this paragraph 5D, the following subparagraphs 5D(1)
to 5D(8) shall also be applicable:
5D(1) Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by assumption
in a merger or otherwise) any warrants or other rights to subscribe for or
to purchase, or any options for the purchase of, Common Stock or any stock
or security convertible into or exchangeable for Common Stock (such
warrants, rights or options being called "Options" and such convertible or
exchangeable stock or securities being called "Convertible Securities")
whether or not such Options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price per
share for which Common Stock is issuable upon the exercise of such Options
or upon the conversion or exchange of such Convertible Securities
(determined by dividing (i) the total amount, if any, received or
receivable by the Corporation as consideration for the granting of such
Options, plus the minimum aggregate amount of additional consideration
payable to the Corporation upon the exercise of all such Options, plus, in
the case of such Options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable upon
the issue or sale of all such Convertible Securities and upon the
conversion or exchange thereof, by (ii) the total maximum number of shares
of Common Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon
the exercise of such Options) shall be less than the Series A Conversion
Price in effect immediately prior to the time of the granting of such
Options, then the total maximum number of shares of Common Stock issuable
upon the exercise of such Options or upon conversion or exchange of the
total maximum amount of such Convertible Securities issuable upon the
exercise of such Options shall be deemed to have been issued for such
price per share as of the date of granting of such Options or the issuance
of such Convertible Securities and thereafter
<PAGE> 20
shall be deemed to be outstanding. Except as otherwise provided in
subparagraph 5D(3), no adjustment of the Series A Conversion Price shall
be made upon the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such Options or upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Securities.
5D(2) Issuance of Convertible Securities. In case the Corporation
shall in any manner issue (whether directly or by assumption in a merger
or otherwise) or sell any Convertible Securities, whether or not the
rights to exchange or convert any such Convertible Securities are
immediately exercisable, and the price per share for which Common Stock is
issuable upon such conversion or exchange (determined by dividing (i) the
total amount received or receivable by the Corporation as consideration
for the issue or sale of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange of all such Convertible
Securities thereof, by (ii) the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of all such Convertible
Securities) shall be less than the Series A Conversion Price in effect
immediately prior to the time of such issue or sale, then the total
maximum number of shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall be deemed to have been
issued for such price per share as of the date of the issue or sale of
such Convertible Securities and thereafter shall be deemed to be
outstanding, provided that (a) except as otherwise provided in
subparagraph 5D(3), no adjustment of the Series A Conversion Price shall
be made upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities and (b) if any such issue or sale
of such Convertible Securities is made upon exercise of any Options to
purchase any such Convertible Securities for which adjustments of the
Series A Conversion Price have been or are to be made pursuant to other
provisions of this paragraph 5D, no further adjustment of the Series A
Conversion Price shall be made by reason of such issue or sale.
5D(3) Change in Option Price or Conversion Rate. Upon the happening
of any of the following events, namely, if the purchase price provided for
in any Option referred to in subparagraph 5D(1), the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in subparagraph 5D(1) or 5D(2), or the
rate at which Convertible Securities referred to in subparagraph 5D(1) or
5D(2) are convertible into or exchangeable for Common Stock shall change
at any time (including, but not limited to, changes under or by reason of
provisions designed to protect against dilution), the Series A Conversion
Price in effect at the time of such event shall forthwith be readjusted to
the Series A Conversion Price which would have been in effect at such time
had such Options or Convertible Securities still outstanding
<PAGE> 21
provided for such changed purchase price, additional consideration or
conversion rate, as the case may be, at the time initially granted, issued
or sold; provided, however, that in no event shall the Series A Conversion
Price then in effect hereunder be increased; and on the expiration of any
such Option or the termination of any such right to convert or exchange
such Convertible Securities, the Series A Conversion Price then in effect
hereunder shall forthwith be increased to the Conversion Price which would
have been in effect at the time of such expiration or termination had such
Option or Convertible Securities, to the extent outstanding immediately
prior to such expiration or termination, never been issued.
5D(4) Stock Dividends. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the Corporation
payable in Common Stock (except for the issue of stock dividends or
distributions upon the outstanding Common Stock for which adjustment is
made pursuant to paragraph 5F), Options or Convertible Securities, any
Common Stock, Options or Convertible Securities, as the case may be,
issuable in payment of such dividend or distribution shall be deemed to
have been issued or sold without consideration.
5D(5) Consideration for Stock. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received
by the Corporation therefor, without deduction therefrom of any expenses
incurred or any underwriting commissions or concessions paid or allowed by
the Corporation in connection therewith. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for
consideration other than cash, the amount of the consideration other than
cash received by the Corporation shall be deemed to be the fair value of
such consideration as determined in good faith by the Board of Directors
of the Corporation, without deduction of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the Corporation
in connection therewith. In case any Options shall be issued in connection
with the issue and sale of other securities of the Corporation, together
comprising one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall be
deemed to have been issued for such consideration as determined in good
faith by the Board of Directors of the Corporation.
5D(6) Record Date. In case the Corporation shall take a record of
the holders of its Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock, Options
or Convertible Securities or (ii) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of Common
<PAGE> 22
Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be.
5D(7) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or
for the account of the Corporation, and the disposition of any such shares
shall be considered an issue or sale of Common Stock for the purpose of
this paragraph 5D.
5D(8) Taxed Shares. The initial 650,000 Option Shares (as defined in
paragraph 8 herein and including 165,400 shares issued prior to the
closing of the initial issuance of the Series A Convertible Preferred
Stock) subject to the Plan (as defined in paragraph 8 herein) shall be
deemed to be "Taxed Shares". In case at any time the Corporation shall
grant an award of any of the Taxed Shares or grant an option to purchase
any of the Taxed Shares (including options to purchase an aggregate of
71,500 Taxed Shares granted prior to the date of the initial issuance of
Series A Convertible Preferred Stock), the Corporation shall not be
required to make any adjustment of the Series A Conversion Price;
provided, however, to the extent (i) the right of the Corporation to
repurchase shares (at the purchase price paid by the award recipient)
subject to an award of Taxed Shares terminates or does not exist and/or
(ii) the Corporation issues any shares of its Common Stock upon exercise
of an option to purchase Taxed Shares, then such Taxed Shares shall be
deemed to be "Issued Taxed Shares," and the Corporation shall adjust the
Series A Conversion Price as provided in paragraph 5D hereof and, that for
purposes of such adjustment the Corporation shall be deemed to have
received no consideration for the Issued Taxed Shares. Notwithstanding the
foregoing, if the Company shall repurchase any of the Founders' Shares (as
defined in paragraph 8 herein), any such Founders' Shares repurchased by
the Company shall reduce the number (on a one-for-one basis) of any Taxed
Shares (to the extent that such Taxed Shares have not become Issued Taxed
Shares), such that there shall be no adjustment to the Series A Conversion
Price upon issuance of the Option Shares previously designated as Taxed
Shares. It is the intent of this 5D(8) that notwithstanding any increase
in the number of Option Shares permitted by paragraph 8(c), no more than
an aggregate of 650,000 Option Shares (appropriately adjusted to reflect
an event described in paragraph 5F hereof) be deemed to be Taxed Shares;
and all calculations and determinations made pursuant to this 5D(8) shall
be made in good faith by the Corporation's Board of Directors after
consultation with the Corporation's counsel.
5E. Certain Issues of Common Stock Excepted. Anything herein to the
contrary notwithstanding, the Corporation shall not be required to make any
adjustment of the Series A Conversion Price in the case of the issuance of (i)
shares of Common Stock issuable
<PAGE> 23
upon conversion of the Series A Convertible Preferred Stock, (ii) shares of
Common Stock issued or issuable as a dividend or distribution on Series A
Convertible Preferred Stock and (iii) Reserved Employee Shares (as defined in
paragraph 8 herein) (other than Taxed Shares).
5F. Subdivision or Combination of Common Stock. In case the
Corporation shall at any time subdivide (by any stock split, stock dividend or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Series A Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced, and, conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Series A Conversion Price in effect immediately prior to such
combination shall be proportionately increased.
5G. Reorganization or Reclassification. If any capital
reorganization, reclassification, recapitalization, consolidation, merger, sale
of all or substantially all of the Corporation's assets or other similar
transaction (any such transaction being referred to herein as an "Organic
Change") shall be effected in such a way that holders of Common Stock shall be
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such Organic Change, lawful and adequate provisions shall be made
whereby each holder of a share or shares of Series A Convertible Preferred Stock
shall thereupon have the right to receive, upon the basis and upon the terms and
conditions specified herein and in lieu of or in addition to, as the case may
be, the shares of Common Stock immediately theretofore receivable upon the
conversion of such share or shares of Series A Convertible Preferred Stock, such
shares of stock, securities or assets as may be issued or payable with respect
to or in exchange for a number of outstanding shares of such Common Stock equal
to the number of shares of such Common Stock immediately theretofore receivable
upon such conversion had such Organic Change not taken place, and in any case of
a reorganization or reclassification only appropriate provisions shall be made
with respect to the rights and interests of such holder to the end that the
provisions hereof (including without limitation provisions for adjustments of
the Series A Conversion Price) shall thereafter be applicable, as nearly as may
be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of such conversion rights.
5H. Adjustment of Series A Conversion Price Upon Incurrence of
Loss.
(1) If and whenever the Purchasers (as defined in the Purchase
Agreement) shall be entitled to indemnification pursuant to Section 7.13 of the
Purchase Agreement and to the extent the amount of Losses (as defined in the
Purchase Agreement) for which indemnification is provided therein is not paid in
cash, the Series A Conversion Price shall be adjusted such that the number of
shares of Common Stock issuable upon the conversion of
<PAGE> 24
one share of Series A Convertible Preferred Stock shall be equal to the sum of
(A) the number of shares of Common Stock issuable upon conversion of one share
of Series A Convertible Preferred Stock immediately prior to the application of
this Section 5H and (B) the Additional Loss Shares. For purposes of this Section
5H, "Additional Loss Shares" shall mean such number of shares of Common Stock as
is determined by dividing the Loss Amount (as determined in accordance with
Section 7.13(c) of the Purchase Agreement) by the product of (x) the total
number of shares of Series A Convertible Preferred Stock then outstanding times
(y) the Current Series A Value (as determined in accordance with Section 7.13(c)
of the Purchase Agreement).
(2) In addition to any other notice required herein, the Corporation
shall provide each Purchaser with notice of any Loss promptly upon becoming
aware of such Loss, which notice shall specify the amount of such Loss and
specify in reasonable detail each individual item of Loss included in the amount
so stated.
5I. Notice of Adjustment. Upon any adjustment of the Series A
Conversion Price, then and in each such case the Corporation shall give written
notice thereof, by first class mail, postage prepaid, or by facsimile
transmission to non-U.S. residents, addressed to each holder of shares of
Preferred Stock at the address of such holder as shown on the books of the
Corporation, which notice shall state the Series A Conversion Price resulting
from such adjustment, setting forth in reasonable detail the method upon which
such calculation is based.
5J. Other Notices. In case at any time:
(1) the Corporation shall declare any dividend upon its Common Stock
payable in cash or stock or make any other distribution to the holders of
its Common Stock;
(2) the Corporation shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or
other rights;
(3) there shall be any capital reorganization or reclassification of
the capital stock of the Corporation, or a consolidation or merger of the
Corporation with or into, or a sale of all or substantially all its assets
to, another entity or entities; or
(4) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
<PAGE> 25
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by facsimile transmission to non-U.S. residents,
addressed to each holder of any shares of Preferred Stock at the address of such
holder as shown on the books of the Corporation, (a) at least 20 days' prior
written notice of the date on which the books of the Corporation shall close or
a record shall be taken for such dividend, distribution or subscription rights
or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least 20
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (a) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto and such notice in
accordance with the foregoing clause (b) shall also specify the date on which
the holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be.
5K. Stock to be Reserved. The Corporation will at all times reserve
and keep available out of its authorized Common Stock, solely for the purpose of
issuance upon the conversion of Series A Convertible Preferred Stock as herein
provided, such number of shares of Common Stock as shall then be issuable upon
the conversion of all outstanding shares of Series A Convertible Preferred
Stock. The Corporation covenants that all shares of Common Stock which shall be
so issued shall be duly and validly issued and fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof, and,
without limiting the generality of the foregoing, the Corporation covenants that
it will from time to time take all such action as may be requisite to assure
that the par value per share of the Common Stock is at all times equal to or
less than the Series A Conversion Price in effect at the time. The Corporation
will take all such action as may be necessary to assure that all such shares of
Common Stock may be so issued without violation of any applicable law or
regulation, or of any requirement of any national securities exchange upon which
the Common Stock may be listed.
5L. No Reissuance of Series A Convertible Preferred Stock. Shares of
Series A Convertible Preferred Stock which are converted into shares of Common
Stock as provided herein shall not be reissued.
5M. Issue Tax. The issuance of certificates for shares of Common
Stock upon conversion of Series A Convertible Preferred Stock shall be made
without charge to the holders thereof for any issuance tax in respect thereof,
provided that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the
<PAGE> 26
issuance and delivery of any certificate in a name other than that of the holder
of the Series A Convertible Preferred Stock which is being converted.
5N. Closing of Books. The Corporation will at no time close its
transfer books against the transfer of any Preferred Stock or of any shares of
Common Stock issued or issuable upon the conversion of any shares of Preferred
Stock in any manner which interferes with the timely conversion of such
Preferred Stock, except as may otherwise be required to comply with applicable
securities laws.
5O. Definition of Common Stock. As used in this paragraph 5, the
term "Common Stock" shall mean and include the Corporation's authorized Common
Stock, par value $.01 per share, as constituted on the date of filing of these
terms of the Preferred Stock, and shall also include any capital stock of any
class of the Corporation thereafter authorized which shall neither be limited to
a fixed sum or percentage of par value in respect of the rights of the holders
thereof to participate in dividends nor entitled to a preference in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; provided that the shares of Common
Stock receivable upon conversion of shares of Series A Convertible Preferred
Stock shall include only shares designated as Common Stock of the Corporation on
the date of filing of this instrument, or in case of any reorganization or
reclassification of the outstanding shares thereof, the stock, securities or
assets provided for in subparagraph 5G.
5P. Mandatory Conversion. All outstanding shares of Series A
Convertible Preferred Stock shall automatically convert to shares of Common
Stock if at any time the Corporation shall effect a public offering of shares of
Common Stock (any such offering, regardless of compliance with subsections (i),
(ii) and (iii) herein, being referred to as a "Public Offering") provided (i)
the aggregate net proceeds from such offering to the Corporation shall be at
least $20,000,000; (ii) the price paid by the public for such shares shall be at
least $22.80 (appropriately adjusted to reflect the occurrence of any event
described in paragraph 5F) and (iii) the offering is a firm commitment
underwritten public offering, then effective upon the closing of the sale of
such shares by the Corporation pursuant to such public offering, all outstanding
shares of Preferred Stock shall automatically convert to shares of Common Stock.
6. Redemption. The shares of Preferred Stock shall be redeemed as follows:
6A. Optional Redemption. The Corporation shall not have the right to
call or redeem at any time all or any shares of Series A Convertible Preferred
Stock. With the approval of the holders of 66% of the then outstanding shares of
Series A Convertible Preferred Stock, one or more holders of shares of Series A
Convertible Preferred Stock may,
<PAGE> 27
by giving notice (the "Notice") to the Corporation at any time after November
23, 2003 require the Corporation to redeem all of the outstanding Series A
Convertible Preferred Stock in two equal installments, with one-half of the
shares of Series A Convertible Preferred Stock redeemed on the First Redemption
Date (as defined below), and the remainder redeemed on the first anniversary of
the First Redemption Date (the "Second Redemption Date"). Upon receipt of the
Notice, the Corporation will so notify all other persons holding Series A
Convertible Preferred Stock. After receipt of the Notice, the Corporation shall
fix the first date for redemption (the "First Redemption Date"), provided that
such First Redemption Date shall occur within sixty (60) days after receipt of
the Notice. All holders of Series A Convertible Preferred Stock shall deliver to
the Corporation during regular business hours, at the office of any transfer
agent of the Corporation for the Series A Convertible Preferred Stock, or at the
principal office of the Corporation or at such other place as may be designated
by the Corporation, the certificate or certificates for the Series A Convertible
Preferred Stock, duly endorsed for transfer to the Corporation (if required by
it) on or before the First Redemption Date. The First Redemption Date and the
Second Redemption Date are collectively referred to as the "Redemption Dates".
6B. Redemption Price and Payment. The Series A Convertible Preferred
Stock to be redeemed on the Redemption Dates shall be redeemed by paying for
each share in cash an amount equal to $7.60 per share, plus an amount equal to
all dividends accrued and unpaid on each such share, such amount being referred
to as the "Series A Redemption Price." Such payment shall be made in full on
each of the Redemption Dates to the holders entitled thereto.
6C. Redemption Mechanics. At least 15 but not more than 35 days
prior to each Redemption Date, written notice (the "Redemption Notice") shall be
given by the Corporation by mail, postage prepaid, or by facsimile transmission
to non-U.S. residents, to each holder of record (at the close of business on the
business day next preceding the day on which the Redemption Notice is given) of
shares of Series A Convertible Preferred Stock notifying such holder of the
redemption and specifying the Series A Redemption Price, the Redemption Date and
the place where said Series A Redemption Price shall be payable. The Redemption
Notice shall be addressed to each holder at his address as shown by the records
of the Corporation. From and after the close of business on the Redemption Date,
unless there shall have been a default in the payment of the Series A Redemption
Price, all rights of holders of shares of Series A Convertible Preferred Stock
(except the right to receive the Series A Redemption Price) shall cease with
respect to such shares, and such shares shall not thereafter be transferred on
the books of the Corporation or be deemed to be outstanding for any purpose
whatsoever. If the funds of the Corporation legally available for redemption of
shares of Series A Convertible Preferred Stock on any Redemption Date are
insufficient to redeem the total number of outstanding shares of Series A
Convertible Preferred Stock to be
<PAGE> 28
redeemed on such Redemption Date, the holders of shares of Series A Convertible
Preferred Stock shall share ratably in any funds legally available for
redemption of such shares according to the respective amounts which would be
payable with respect to the full number of shares owned by them if all such
outstanding shares were redeemed in full. The shares of Series A Convertible
Preferred Stock not redeemed shall remain outstanding and entitled to all rights
and preferences provided herein; provided, however, that such unredeemed shares
shall be entitled to receive interest accruing daily with respect to the
applicable Series A Redemption Price at the rate of 15% per annum, payable
quarterly in arrears. At any time thereafter when additional funds of the
Corporation are legally available for the redemption of such shares of Series A
Convertible Preferred Stock, such funds will be used, at the end of the next
succeeding fiscal quarter, to redeem the balance of such shares, or such portion
thereof for which funds are then legally available, on the basis set forth
above.
6D. Redeemed or Otherwise Acquired Shares to be Retired. Any shares
of Series A Convertible Preferred Stock redeemed pursuant to this paragraph 6 or
otherwise acquired by the Corporation in any manner whatsoever shall be canceled
and shall not under any circumstances be reissued; and the Corporation may from
time to time take such appropriate corporate action as may be necessary to
reduce accordingly the number of authorized shares of Series A Convertible
Preferred Stock.
7. Amendments. Except where the vote or written consent of the holders of
a greater number of shares of the Corporation is required by these terms of the
Series A Convertible Preferred Stock by law or by the Certificate of
Incorporation, no provision of these terms of the Series A Convertible Preferred
Stock may be amended, modified or waived without the written consent or
affirmative vote of the holders of at least 60% of the then outstanding shares
of Series A Convertible Preferred Stock.
8. Definitions. As used herein, the following terms shall have the
following meanings:
(a) The term "Purchase Agreement" shall mean the Series A
Convertible Preferred Stock Purchase Agreement dated as of November 23, 1998
between the Corporation and the Purchasers listed in Exhibit 1.01 thereto as in
effect on November 23, 1998.
(b) The term the "Plan" shall mean the Corporation's 1998 Stock
Incentive Plan.
(c) The term "Reserved Employee Shares" shall mean shares of Common
Stock reserved by the Corporation pursuant to the Plan from time to time for (i)
the sale of shares of Common Stock to employees, consultants or non-employee
directors (other than representatives of the holders of Preferred Stock) of the
Corporation or (ii) the exercise of options to purchase Common Stock granted to
employees, consultants or non-employee directors (other than
<PAGE> 29
representatives of the holders of Preferred Stock) of the Corporation, not to
exceed in the aggregate 650,000 shares of Common Stock for both clauses (i) and
(ii) , with such number including 236,900 shares issued or subject to options
granted prior to the date of the initial issuance of the Series A Convertible
Preferred Stock (the "Option Shares") (appropriately adjusted to reflect an
event described in paragraph 5F hereof), provided that, such number of such
shares subject to the Plan shall be increased by up to 839,914 additional shares
of Common Stock (appropriately adjusted to reflect an event described in
paragraph 5F hereof) (collectively, the "Founders' Shares") upon the repurchase
of such Founders' Shares by the Company from the Founders pursuant to
contractual rights held by the Company. The foregoing number of Reserved
Employee Shares may be increased by the affirmative vote or written consent of
the directors elected solely by the holders of Series A Convertible Preferred
Stock or the affirmative vote or written consent of the holders of at least 60%
of the then outstanding shares of Series A Convertible Preferred Stock.
(c) The term "Subsidiary" or "Subsidiaries" shall mean any
corporation, partnership, trust or other entity of which the Corporation and/or
any of its other subsidiaries directly or indirectly owns at the time a majority
of the outstanding shares of every class of equity security of such corporation,
partnership, trust or other entity.
Executed: November 23, 1998 AKAMAI TECHNOLOGIES, INC.
/s/ Daniel Lewin
----------------
Daniel Lewin
President
<PAGE> 30
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
AKAMAI TECHNOLOGIES, INC.
Pursuant to Section 242
of the General Corporation Law of
the State of Delaware
Akamai Technologies, Inc. (hereinafter called the "Corporation"),
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify as follows:
The Board of Directors of the Corporation, by unanimous written consent in
lieu of a meeting, duly adopted a resolution, pursuant to Sections 141(f) and
242 of the General Corporation Law of the State of Delaware, setting forth an
amendment to the Certificate of Incorporation of the Corporation and declaring
said amendment to be advisable. The stockholders of the Corporation duly
approved said proposed amendment by written consent in accordance with Sections
228 and 242 of the General Corporation Law of the State of Delaware, and written
notice of such consent has been or will be given to all stockholders who have
not consented in writing to said amendment. The resolution setting forth the
amendment is as follows:
RESOLVED: That the first paragraph of Article FOURTH of the Certificate of
Incorporation of the Corporation be and hereby is deleted in its
entirety and that the following paragraph be inserted in lieu
thereof:
"FOURTH. The total number of shares of all classes of stock which
the Corporation shall have authority to issue is 17,000,000 shares,
consisting of (i) 15,000,000 shares of Common Stock, $0.01 par value per
share ("Common Stock"), and (ii) 2,000,000 shares of Preferred Stock,
$0.01 par value per share ("Preferred Stock")."
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its President on this 26th day of January, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel M. Lewin
-------------------
Daniel M. Lewin
President
<PAGE> 31
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
AKAMAI TECHNOLOGIES, INC.
Pursuant to Section 242
of the General Corporation Law of
the State of Delaware
Akamai Technologies, Inc. (hereinafter called the "Corporation"),
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify as follows:
The Board of Directors of the Corporation, by unanimous written consent in
lieu of a meeting, duly adopted a resolution, pursuant to Sections 141(f) and
242 of the General Corporation Law of the State of Delaware, setting forth an
amendment to the Certificate of Incorporation of the Corporation and declaring
said amendment to be advisable. The stockholders of the Corporation duly
approved said proposed amendment by written consent in accordance with Sections
228 and 242 of the General Corporation Law of the State of Delaware, and written
notice of such consent has been or will be given to all stockholders who have
not consented in writing to said amendment. The resolution setting forth the
amendment is as follows:
RESOLVED: That the first paragraph of Article FOURTH of the Certificate of
Incorporation of the Corporation be and hereby is deleted in its
entirety and that the following paragraph be inserted in lieu
thereof:
"FOURTH. The total number of shares of all classes of stock which
the Corporation shall have authority to issue is 27,000,000 shares,
consisting of (i) 22,000,000 shares of Common Stock, $0.01 par value per
share ("Common Stock"), and (ii) 5,000,000 shares of Preferred Stock,
$0.01 par value per share ("Preferred Stock")."
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its President on this 16th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel M. Lewin
-------------------
Daniel M. Lewin
President
<PAGE> 32
CERTIFICATE OF DESIGNATIONS
OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
AKAMAI TECHNOLOGIES, INC.
-------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-------------
Akamai Technologies, Inc., a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in Article Fourth of its
Certificate of Incorporation and in accordance with the provisions of Section
151 of the General Corporation Law of the State of Delaware, the Board of the
Directors of the Corporation, at a meeting held on April 13, 1999, duly adopted
the following resolution, which resolution remains in full force and effect on
the date hereof:
RESOLVED, that, pursuant to the authority expressly granted to and vested
in the Board of Directors of the Corporation, a series of Preferred Stock of the
Corporation be and hereby is established, consisting of 1,327,500 shares, $0.01
par value per share, to be designated "Series B Convertible Preferred Stock"
(hereinafter, the "Series B Preferred Stock"); that the Board of Directors be
and hereby is authorized to issue such shares of Series B Preferred Stock from
time to time and for such consideration and on such terms as the Board of
Directors shall determine; and that, subject to the limitations provided by law
and by the Certificate of Incorporation, the voting powers, preferences and
relative, participating, optional and other special rights, and qualifications,
limitations and restrictions thereof shall be as set forth on Schedule I
attached hereto.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be duly
executed by its President on this 16th day of April, 1999
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
-----------------
Daniel Lewin
President
<PAGE> 33
SCHEDULE I
AKAMAI TECHNOLOGIES, INC.
DESIGNATION OF SERIES B CONVERTIBLE PREFERRED STOCK
The series of Preferred Stock designated and known as "Series B
Convertible Preferred Stock" shall consist of 1,327,500 shares.
1. Voting.
1A. General. Except as may be otherwise provided in the terms of the
Series B Convertible Preferred Stock, in the Certificate of Incorporation (the
"Certificate of Incorporation") of Akamai Technologies, Inc. (the "Corporation")
or by law, the Series B Convertible Preferred Stock shall vote together with all
other classes and series of stock of the Corporation as a single class on all
actions to be taken by the stockholders of the Corporation. Each share of Series
B Convertible Preferred Stock shall entitle the holder thereof to such number of
votes per share on each such action as shall equal the number of shares of
Common Stock (including fractions of a share) into which each share of Series B
Convertible Preferred Stock is then convertible.
1B. Board Size. Subject to the provisions of paragraph 1C below, the
Corporation shall not, without the written consent or affirmative vote of the
holders of at least 60% of the then outstanding shares of Series B Convertible
Preferred Stock, given in writing or by vote at a meeting, consenting or voting
(as the case may be) separately as a series, increase the maximum number of
directors constituting the Board of Directors to a number in excess of nine (9).
1C. Board Seats. For so long as at least 50% of the shares of Series B
Convertible Preferred Stock issued pursuant to the Purchase Agreement (as
defined in paragraph 9 herein) remains outstanding, the holders of the Series B
Convertible Preferred Stock, voting as a separate series, shall be entitled to
elect one (1) director of the Corporation. At any meeting (or in a written
consent in lieu thereof) held for the purpose of electing directors, the
presence in person or by proxy (or the written consent) of the holders of at
least a majority in interest of the then outstanding shares of Series B
Convertible Preferred Stock shall constitute a quorum of the Series B
Convertible Preferred Stock for the election of directors to be elected solely
by the holders of the Series B Convertible Preferred Stock voting as a separate
series. A vacancy in any directorship elected by the holders of the Series B
Convertible Preferred Stock will be filled only by the affirmative vote or
written consent of the holders of at least 60% of the then outstanding shares of
Series B Convertible Preferred Stock. The directors to be elected by the holders
of the Series B Convertible Preferred Stock, voting separately as one class,
pursuant to this paragraph 1C, shall serve for terms extending from the date of
their election and qualification until the time of the next succeeding annual
meeting of stockholders and until their successors have been elected and
qualified.
2. Ranking. The Series B Convertible Preferred Stock shall rank, with
respect to dividend distributions and distributions upon a Liquidation Event (as
defined in paragraph 4A herein), senior to all classes of common stock of the
Company and to each other class of capital stock or series of preferred stock
(including the Series A Convertible Preferred Stock of the
<PAGE> 34
Corporation) established before the Preferred Stock Issue Date, by the Board of
Directors, pari passu with the Series C Convertible Preferred Stock of the
Corporation, and senior or pari passu to any other class of capital stock or
series of preferred stock established after the Preferred Stock Issue Date by
the Board of Directors. All classes of common stock of the Company, the Series A
Convertible, Preferred Stock and any other class of capital stock or series of
preferred stock established after the Preferred Stock Issue Date to which the
Series B Convertible Preferred Stock is senior, are collectively referred to
herein as "Junior Securities". The Series C Convertible Preferred Stock of the
Corporation and any other class of capital stock or series of preferred stock
established after the Preferred Stock Issue Date which ranks pari passu with the
Series B Convertible Preferred Stock, are collectively referred to herein as
"Pari Passu Securities".
3. Dividends.
3A. The holders of shares of the Series B Convertible Preferred Stock
shall be entitled to receive, when, as and if dividends are declared by the
Board of Directors out of funds of the Corporation legally available therefor,
cumulative preferential dividends at the annual rate of 8% on the Series B
Liquidation Preference Payments (as defined in paragraph 4A herein); provided,
however, that any such dividends shall be declared and paid only in the event of
(i) a Liquidation Event pursuant to paragraph 4A hereof or (ii) a Redemption
pursuant to paragraph 7B hereof. Holders of shares of Series B Convertible
Preferred Stock shall be entitled to receive the dividends provided for herein
in preference to and in priority over any dividends upon any of the Junior
Securities.
3B. Dividends on the Series B Convertible Preferred Stock shall accrue
on a daily basis from, the Preferred Stock Issue Date and, to the extent they
are not paid, shall accumulate on an annual basis on each December 31, whether
or not the Corporation has earnings or profits, whether or not there are funds
legally available for the payment of such dividends and whether or not dividends
are declared.
4. Liquidation, Dissolution and Winding-Up.
4A. Liquidation. Upon any liquidation, dissolution or winding up of the
Corporation (a "Liquidation Event"), whether voluntary or involuntary, the
holders of the shares of Series B Convertible Preferred Stock shall be paid an
amount equal to $15.066 per share plus, in the case of each share, an amount
equal to dividends accrued but unpaid thereon, computed to the date payment
thereof is made available, together with payment to any Pari Passu Securities,
and before any payment shall be made to the holders of any Junior Securities,
such amount payable with respect to one share of Series B Convertible Preferred
Stock being sometimes referred to as the "Series B Liquidation Preference
Payment" and with respect to all shares of Series B Convertible Preferred Stock
being sometimes referred to as the "Series B Liquidation Preference Payments".
If upon any Liquidation Event, the assets to be distributed to the holders of
the Series B Convertible Preferred Stock shall be insufficient to permit payment
to such stockholders of the full preferential amounts aforesaid, then all of the
assets of the Corporation available for distribution to holders of the Series B
Convertible Preferred Stock shall be distributed to such holders of the Series B
Convertible Preferred Stock pro rata, so that each
<PAGE> 35
holder receives that portion of the assets available for distribution as the
number of shares of such stock held by such holder bears to the total number of
shares of such stock then outstanding.
4B. Upon any Liquidation Event, immediately after the holders of Series
B Convertible Preferred Stock and holders of any Pari Passu Securities have been
paid in full pursuant to paragraph 4A above, the remaining net assets of the
Corporation available for distribution shall be distributed among the holders of
the shares of Junior Securities.
Written notice of such Liquidation Event, stating a payment date and the
place where said payments shall be made. shall be given by mail, postage
prepaid, or by facsimile to non-U.S. residents not less than 20 days prior to
the payment date stated therein, to the holders of record of Series B
Convertible Preferred Stock, such notice to be addressed to each such holder at
its address as shown by the records of the Corporation.
The (x) consolidation or merger of the Corporation into or with any other
entity or entities which results in the exchange of outstanding shares of the
Corporation for securities or other consideration issued or paid or caused to be
issued or paid by any such entity or affiliate thereof (except a consolidation
or merger into a Subsidiary or merger in which the Corporation is the surviving
Corporation and the holders of the Corporation's voting stock outstanding
immediately prior to the transaction constitute a majority of the holders of
voting stock outstanding immediately following the transaction), (y) sale or
transfer by the Corporation of all or substantially all of its assets, or (z)
sale or transfer by the Corporation's stockholders of capital stock representing
a majority of the outstanding capital stock of the Corporation shall be deemed
to be a Liquidation Event within the meaning of the provisions of this paragraph
4 (subject to the provisions of this paragraph 4 and not the provisions of
paragraph 6G hereof unless paragraph 6G is elected in the following proviso);
provided, however, that if the holders of at least 60% of the then outstanding
shares of Series B Convertible Preferred Stock shall elect the benefits of the
provisions of paragraph 6G in lieu of receiving payment in a Liquidation Event
pursuant to this paragraph 4, then all holders of shares of Series B Convertible
Preferred Stock shall receive the benefits of the provisions of paragraph 6G in
lieu of receiving payment pursuant to this paragraph 4. Whenever the
distribution provided for in this paragraph 4 shall be payable in property other
than cash, the value of such distribution shall be the fair market value of such
property as determined in good faith by the Board of Directors of the
Corporation.
5. Restrictions. At any time when at least 50% of the shares of Series B
Convertible Preferred Stock issued pursuant to the Purchase Agreement remain
outstanding, except where the vote or written consent of the holders of a
greater number of shares of the Corporation is required by law or by the
Certificate of Incorporation, and in addition to any other vote required by law
or the Certificate of Incorporation, without the written consent of the holders
of at least 60% of the then outstanding shares of Series B Convertible Preferred
Stock given in writing or by vote at a meeting, consenting or voting (as the
case may be) separately as a series, the Corporation will not:
(1) Consent to any Liquidation Event or merge or consolidate with or
into, or permit any Subsidiary to merge or consolidate with or into, any other
corporation, corporations, entity or entities (except a consolidation or merger
into a Subsidiary or merger in which the Corporation is the surviving
corporation and the holders of the Corporation's voting stock
<PAGE> 36
outstanding immediately prior to the transaction constitute a majority of the
holders of voting stock outstanding immediately following the transaction or a
consolidation or merger pursuant to which the aggregate consideration definitely
and unconditionally payable to all of the stockholders of the Corporation is
greater than $400 million);
(2) Sell, abandon, transfer, lease or otherwise dispose of all or
substantially all of its properties or assets (unless the aggregate
consideration definitely and unconditionally payable to all of the stockholders
of the Corporation is greater than $400 million);
(3) Amend, alter or repeal any provision of its Certificate of
Incorporation or By-laws in a manner adverse to holders of the Series B
Convertible Preferred Stock;
(4) Create or authorize the creation of or issue any additional class
or series of shares of stock (other than the Series C Convertible Preferred
Stock of the Corporation) unless the same ranks junior to or on parity with the
Series B Convertible Preferred Stock as to dividends and the distribution of
assets on a Liquidation Event, or increase the authorized amount of Series B
Convertible Preferred Stock or increase the authorized amount of any additional
class or series of shares of stock unless the same ranks junior to or on parity
with the Series B Convertible Preferred Stock as to dividends and the
distribution of assets on a Liquidation Event, or create or authorize any
obligation or security convertible into shares of Series B Convertible Preferred
Stock or into shares of any other class or series of stock unless the same ranks
junior to or on parity with the Series B Convertible Preferred Stock as to
dividends and the distribution of assets on a Liquidation Event, whether any
such creation, authorization or increase shall be by means of amendment to the
Certificate of Incorporation or by merger, consolidation or otherwise;
(5) In any manner amend, alter or change the designations or the
powers, preferences or rights, privileges or the restrictions of the Series B
Convertible Preferred Stock, provided, however, that the authorization or
creation of any shares of capital stock on parity with the Series B Convertible
Preferred Stock as to dividends and the distribution of assets on a Liquidation
Event shall not require approval of holders of Series B Convertible Preferred
Stock;
(6) Purchase or redeem, or set aside any sums for the purchase or
redemption of, or pay any dividend or make any distribution on, any Junior
Securities, except for (i) dividends or other distributions payable on the
Common Stock solely in the form of additional shares of Common Stock or (ii)
repurchases of shares of capital stock (at the original purchase price therefor)
from officers, employees, directors or consultants of the Corporation which are
subject to restrictive stock purchase, right of first refusal or other
agreements under which the Corporation has the option to repurchase such shares
upon the occurrence of certain events, including termination of employment; or
(7) Increase the number of Reserved Employee Shares without the
affirmative vote or written consent of a majority of the directors designated
solely by the holders of Series A Convertible Preferred Stock and Series B
Convertible Preferred Stock or the affirmative vote or written consent of the
holders of at least 50% of the then outstanding shares of Series A Convertible
Preferred Stock, Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock, voting together as a single class on a Common Stock equivalent
basis.
<PAGE> 37
6. Conversion. The holders of shares of Series B Convertible Preferred
Stock shall have the following conversion rights:
6A. Right to Convert. Subject to the terms and conditions of this
paragraph 6, the holder of any share or shares of Series B Convertible Preferred
Stock shall have the right, at its option at any time, to convert any such
shares of Series B Convertible Preferred Stock (except that upon any Liquidation
Event the right of conversion shall terminate at the close of business on the
business day fixed for payment of the amounts distributable on the Series B
Convertible Preferred Stock) into such number of fully paid and nonassessable
shares of Common Stock as is obtained by (i) multiplying the number of shares of
Series B Convertible Preferred Stock so to be converted by $15.066 and (ii)
dividing the result by the conversion price of $15.066 per share or in case an
adjustment of such price has taken place pursuant to the further provisions of
this paragraph 6, then by the conversion price as list adjusted and in effect at
the date any share or shares of Series B Convertible Preferred Stock are
surrendered for conversion (such price, or such price as last adjusted, being
referred to as the "Series B Conversion Price"). Such rights of conversion shall
be exercised by the holder thereof by giving written notice that the holder
elects to convert a stated number of shares of Series B Convertible Preferred
Stock into Common Stock and by surrender of a certificate or certificates for
the shares so to be converted to the Corporation at its principal office (or
such other office or agency of the Corporation as the Corporation may designate
by notice in writing to the holders of the Series B Convertible Preferred Stock)
at any time during its usual business hours on the date set forth in such
notice, together with a statement of the name or names (with address) in which
the certificate or certificates for shares of Common Stock shall be issued.
6B. Issuance of Certificates; Time Conversion Effected. Promptly after
the receipt of the written notice referred to in paragraph 6A and surrender of
the certificate or certificates for the share or shares of Series B Convertible
Preferred Stock to be converted, the Corporation shall issue and deliver, or
cause to be issued and delivered, to the holder, registered in such name or
names as such holder may direct, a certificate or certificates for the number of
whole shares of Common Stock issuable upon the conversion of such share or
shares of Series B Convertible Preferred Stock. To the extent permitted by law,
such conversion shall be deemed to have been effected and the Series B
Conversion Price shall be determined as of the close of business on the date on
which such written notice shall have been received by the Corporation and the
certificate or certificates for such share or shares shall have been surrendered
as aforesaid, and at such time the right of the holder of such share or shares
of Series B Convertible Preferred Stock shall cease, and the person or persons
in whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares represented thereby.
6C. Fractional Shares; Dividends; Partial Conversion. No fractional
shares shall be issued upon conversion of Series B Convertible Preferred Stock
into Common Stock and no payment or adjustment shall be made upon any conversion
on account of any cash dividends on the Common Stock issued upon such
conversion. At the time of each conversion, the Corporation shall pay in cash an
amount equal to all dividends declared and unpaid (if any) on the shares of
Series B Convertible Preferred Stock surrendered for conversion to the date upon
which such conversion is deemed to take place as provided in paragraph 6B. In
case the number of shares of Series B Convertible Preferred Stock represented by
the certificate or certificates
<PAGE> 38
surrendered pursuant to paragraph 6A exceeds the number of shares converted, the
Corporation shall, upon such conversion, execute and deliver to the holder, at
the expense of the Corporation, a new certificate or certificates for the number
of shares of Series B Convertible Preferred Stock represented by the certificate
or certificates surrendered which are not to be converted. If any fractional
share of Common Stock would, except for the provisions of the first sentence of
this paragraph 6C, be delivered upon such conversion, the Corporation, in lieu
of delivering such fractional share, shall pay to the holder surrendering the
Series B Convertible Preferred Stock for conversion an amount in cash equal to
the current fair market value of such fractional share as determined in good
faith by the Board of Directors of the Corporation, and based upon the aggregate
number of shares of Series B Convertible Preferred Stock surrendered by any one
holder.
6D. Adjustment of Series B Conversion Price Upon Issuance of Common
Stock. Except as provided in paragraphs 6E and 6F, if and whenever the
Corporation shall issue or sell, or is, in accordance with subparagraphs 6D(1)
through 6D(7), deemed to have issued or sold, any shares of Common Stock for a
consideration per share less than the Series B Conversion Price in effect
immediately prior to the time of such issue or sale, (such number being
appropriately adjusted to reflect the occurrence of any event described in
paragraph 6F), then, forthwith upon such issue or sale, the Series B Conversion
Price shall be reduced to the price determined by dividing (i) an amount equal
to the sum of (a) the number of shares of Common Stock outstanding immediately
prior to such issue or sale (assuming the conversion of the outstanding shares
of Series B Convertible Preferred Stock) multiplied by the then existing Series
B Conversion Price and (b) the consideration, if any, received by the
Corporation upon such issue or sale, by (ii) the total number of shares of
Common Stock outstanding immediately after such issue or sale (assuming the
conversion of the outstanding shares of Series B Convertible Preferred Stock).
For purposes of this paragraph 6D, the following subparagraphs 6D(1) to
6D(7) shall also be applicable:
6D(1) Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by assumption in
a merger or otherwise) any warrants or other rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or any stock or
security convertible into or exchangeable for Common Stock (such warrants,
rights or options being called "Options" and such convertible exchangeable
stock or securities being called "Convertible Securities") whether or not
such Options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for which
Common Stock is issuable upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities (determined by
dividing (i) the total amount, if any, received or receivable by the
Corporation as consideration for the granting of such Options, plus the
minimum aggregate amount of additional consideration payable to the
Corporation upon the exercise of all such Options, plus, in the case of
such Options which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if it any, payable upon the issue or
sale of all such Convertible Securities and upon the conversion or exchange
thereof, by (ii) the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon the conversion or
exchange of
<PAGE> 39
all such Convertible Securities issuable upon the exercise of such Options)
shall be less than the Series B Conversion Price in effect immediately
prior to the time of the granting of such Options, then the total maximum
number of shares of Common Stock issuable upon the exercise of such Options
or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been issued for such price per share as of the date of
granting of such Options or the issuance of such Convertible Securities and
thereafter shall be deemed to be outstanding. Except as otherwise provided
in subparagraph 6D(3), no adjustment of the Series B Conversion Price shall
be made upon the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such Options or upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Securities.
6D(2) Issuance of Convertible Securities. In case the Corporation
shall in any manner issue (whether directly or by assumption in a merger or
otherwise) or sell any Convertible Securities, whether or not the rights to
exchange or convert any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable
upon such conversion or exchange (determined by dividing (i) the total
amount received or receivable by the Corporation as consideration for the
issue or sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Corporation upon
the conversion or exchange of all such Convertible Securities thereof, by
(ii) the total maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities) shall be less
than the Series B Conversion Price in effect immediately prior to the time
of such issue or sale, then the total maximum number of shares of Common
Stock issuable upon conversion or exchange of all such Convertible
Securities shall be deemed to have been issued for such price per share as
of the date of the issue or sale of such Convertible Securities and
thereafter shall be deemed to be outstanding, provided that (a) except as
otherwise provided in subparagraph 6D(3), no adjustment of the Series B
Conversion Price shall be made upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities and (b) if any
such issue or sale of such Convertible Securities is made upon exercise of
any Options to purchase any such Convertible Securities for which
adjustments of the Series B Conversion Price have been or are to be made
pursuant to other provisions of this paragraph 6D, no further adjustment of
the Series B Conversion Price shall be made by reason of such issue or
sale.
6D(3) Change in Option Price or Conversion Rate. Upon the happening of
any of the following events, namely, if the purchase price provided for in
any Option referred to in subparagraph 6D(1), the additional consideration,
if any, payable upon the conversion or exchange of any Convertible
Securities referred to in subparagraph 6D(1) or 6D(2), or the rate at which
Convertible Securities referred to in subparagraph 6D(1) or 6D(2) are
convertible into or exchangeable for Common Stock shall change at any time
(including, but not limited to, changes under or by reason of provisions
designed to protect against dilution), the Series B Conversion Price in
effect at the time of such event shall forthwith be readjusted to the
Series B Conversion Price which would have been in effect at such time had
such Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate, as the
case
<PAGE> 40
may be, at the time initially granted, issued or sold; provided, however,
that in no event shall the Series B Conversion Price then in effect
hereunder be increased; and on the expiration of any such Option or the
termination of any such right to convert or exchange such Convertible
Securities, the Series B Conversion Price then in effect hereunder shall
forthwith be increased to the Conversion Price which would have been in
effect at the time of such expiration or termination had such Option or
Convertible Securities, to the extent outstanding immediately prior to such
expiration or termination, never been issued.
6D(4) Stock Dividends. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the Corporation
payable in Common Stock (except for the issue of stock dividends or
distributions upon the outstanding Common Stock for which adjustment is
made pursuant to paragraph 6F), Options or
Convertible Securities, any Common Stock, Options or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration.
6D(5) Consideration for Stock. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received
by the Corporation therefor, without deduction therefrom of any expenses
incurred or any underwriting commissions or concessions paid or allowed by
the Corporation in connection therewith. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for
consideration other than cash, the amount of the consideration other than
cash received by the Corporation shall be deemed to be the fair value of
such consideration as determined in good faith by the Board of Directors of
the Corporation, without deduction of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the Corporation
in connection therewith. In case any Options shall be issued in connection
with the issue and sale of other securities of the Corporation, together
comprising one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall be
deemed to have been issued for such consideration as determined in good
faith by the Board of Directors of the Corporation.
6D(6) Record Date. In case the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock, Options
or Convertible Securities or (ii) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of Common Stock
deemed to have been issued or sold upon the declaration of such dividend or
the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
6D(7) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or
for the account of the Corporation (or any Subsidiary), and the disposition
of any such shares shall be considered an issue or sale of Common Stock for
the purpose of this paragraph 6D.
<PAGE> 41
6E. Certain Issues Excepted. Anything herein to the contrary
notwithstanding, the Corporation shall not be required to make any adjustment of
the Series B Conversion Price in the case of the issuance of (i) shares of
Series C Convertible Preferred Stock pursuant to the Purchase Agreement, (ii)
shares of Common Stock issuable upon conversion of the Series A Convertible
Preferred Stock, Series B Convertible Preferred Stock or Series C Convertible
Preferred Stock, (iii) shares of Common Stock issued or issuable as a dividend
or distribution on Series A Convertible Preferred Stock, Series B Convertible
Preferred Stock or Series C Convertible Preferred Stock, (iv) Reserved Employee
Shares (as defined in paragraph 9 herein) or (v) warrant shares issued as
contemplated by the Purchase Agreement or shares of Common Stock issuable upon
conversion of such warrant shares.
6F. Subdivision or Combination of Common Stock. In case the Corporation
shall at any time subdivide (by any stock split, stock dividend or otherwise)
its outstanding shares of Common Stock into a greater number of shares, the
Series B Conversion Price in effect immediately prior to such subdivision shall
be proportionately reduced and, conversely, in case the outstanding shares of
Common Stock shall be combined into a smaller number of shares, the Series B
Conversion Price in effect immediately prior to such combination shall be
proportionately increased.
6G. Reorganization or Reclassification. If any capital reorganization,
reclassification, recapitalization, consolidation, merger, sale of all or
substantially all of the Corporation's assets or other similar transaction (any
such transaction being referred to herein as an "Organic Change") shall be
effected in such a way that holders of Common Stock shall be entitled to receive
(either directly or upon subsequent liquidation) stock, securities or assets
with respect to or in exchange for Common Stock, then, as a condition of such
Organic Change, lawful and adequate provisions shall be made whereby each holder
of a share or shares of Series B Convertible Preferred Stock shall thereupon
have the right to receive, upon the basis and upon the terms and conditions
specified herein and in lieu of or in addition to, as the case may be, the
shares of Common Stock immediately theretofore receivable upon the conversion of
such share or shares of Series B Convertible Preferred Stock, such shares of
stock, securities or assets as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such Common Stock immediately theretofore receivable upon
such conversion had such Organic Change not taken place, and in any case of a
reorganization or reclassification only appropriate provisions shall be made
with respect to the rights and interests of such holder to the end that the
provisions hereof (including without limitation provisions for adjustments of
the Series B Conversion Price) shall thereafter be applicable, as nearly as may
be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of such conversion rights.
6H. Notice of Adjustment. Upon any adjustment of the Series B
Conversion Price, then and in each such case the Corporation shall give written
notice thereof, by first class mail, postage prepaid, or by facsimile
transmission to non-U.S. residents, addressed to each holder of shares of Series
B Convertible Preferred Stock at the address of such holder as shown on the
books of the Corporation, which notice shall state the Series B Conversion Price
resulting from such adjustment, setting forth in reasonable detail the method
upon which such calculation is based.
<PAGE> 42
6I. Other Notices. In case at any time:
(1) the Corporation shall declare any dividend upon its Common Stock
payable in cash or stock or make any other distribution to the holders of its
Common Stock;
(2) the Corporation shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
(3) there shall be any capital reorganization or reclassification of
the capital stock of the Corporation, or a consolidation or merger of the
Corporation with or into, or a sale of all or substantially all of its assets
to, another entity or entities; or
(4) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by facsimile transmission to non-U.S. residents,
addressed to each holder of any shares of Preferred Stock at the address of such
holder as shown on the books of the Corporation, (a) at least 20 days' prior
written notice of the date on which the books of the Corporation shall close or
a record shall be taken for such dividend, distribution or subscription rights
or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least 20
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (a) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto and such notice in
accordance with the foregoing clause (b) shall also specify the date on which
the holders of Common Stock shall be entitled to "exchange their Common Stock
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be.
6J. Stock to be Reserved. The Corporation will at all times reserve and
keep available out of its authorized Common Stock, solely for the purpose of
issuance upon the conversion of Series B Convertible Preferred Stock as herein
provided, such number of shares of Common Stock as shall then be issuable upon
the conversion of all outstanding shares of Series B Convertible Preferred
Stock. The Corporation covenants that all shares of Common Stock which shall be
so issued shall be duly and validly issued and fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof, and,
without limiting the generality of the foregoing, the Corporation covenants that
it will from time to time take all such action as may be requisite to assure
that the par value per share of the Common Stock is at all times equal to or
less than the Series B Conversion Price in effect at the time. The Corporation
will take all such action as may be necessary to assure that all such shares of
Common Stock may be so issued without violation of any applicable law or
regulation, or of any requirement of any national securities exchange upon which
the Common Stock may be listed.
<PAGE> 43
6K. No Reissuance of Series B Convertible Preferred Stock. Shares of
Series B Convertible Preferred Stock which are converted into shares of Common
Stock as provided herein shall not be reissued.
6L. Issue Tax. The issuance of certificates for shares of Common Stock
upon conversion of Series B Convertible Preferred Stock shall be made without
charge to the holder thereof for any issuance tax in respect thereof; provided
that the Corporation shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the Series B Convertible
Preferred Stock which is being converted.
6M. Closing of Books. The Corporation will at no time close its
transfer books against the transfer of any Series B Convertible Preferred Stock
or of any shares of Common Stock issued or issuable upon the conversion of any
shares of Series B Convertible Preferred Stock in any manner which interferes
with the timely conversion of such Preferred Stock, except as may otherwise be
required to comply with applicable securities laws.
6N. Definition of Common Stock. As used in this paragraph 6, the term
"Common Stock" shall mean and include the Corporation's authorized Common Stock,
par value $.01 per share, as constituted on the date of filing of these terms of
the Series B Convertible Preferred Stock, and shall also include any capital
stock of any class of the Corporation thereafter authorized which shall neither
be limited to a fixed sum or percentage of par value in respect of the rights of
the holders thereof to participate in dividends nor entitled to a preference in
the distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; provided that the shares of Common
Stock receivable upon conversion of shares of Series B Convertible Preferred
Stock shall include only shares designated as Common Stock of the Corporation on
the date of filing of this instrument, or in case of any reorganization or
reclassification of the outstanding shares thereof, the stock, securities or
assets provided for in subparagraph 6G.
6O. Mandatory Conversion. All outstanding shares of Series B
Convertible Preferred Stock shall automatically convert to shares of Common
Stock if at any time the Corporation shall effect a public offering of shares of
Common Stock (any such offering, regardless of compliance with subsections (i),
(ii) and (iii) herein, being referred to as a "Public Offering"), provided (i)
the aggregate gross proceeds from such offering to the Corporation shall be at
least $20,000,000; (ii) the price paid by the public for such shares shall be at
least (x) 2.0 times the then Series B Conversion Price if the Public Offering
occurs prior to the 18 month anniversary of the Preferred Stock Issue Date or
(y) 3.0 times the then Series B Conversion Price if the Public Offering occurs
on or after the 18 month anniversary of the Preferred Stock Issue Date, and
(iii) the offering is a firm commitment underwritten Public Offering, and such
automatic conversion shall be effective upon the closing of the sale of such
shares by the Corporation pursuant to such Public Offering.
<PAGE> 44
7. Redemption. The shares of Series B Convertible Preferred Stock shall be
redeemed as follows:
7A. Optional Redemption. The Corporation shall not have the right to
call or redeem at any time all or any shares of Series B Convertible Preferred
Stock. With the approval of the holders of 66% of the then outstanding shares of
Series B Convertible Preferred Stock, one or more holders of shares of Series B
Convertible Preferred Stock may, by giving notice (the "Notice") to the
Corporation, require the Corporation to redeem any or all of the outstanding
Series B Convertible Preferred Stock on the Redemption Date (as defined below).
Upon receipt of the Notice, the Corporation will so notify all other persons
holding Series B Convertible Preferred Stock. After receipt of the Notice, the
Corporation shall fix the first date for redemption, which shall be the date
specified in the Notice, being any date on or after the earlier of (i) the fifth
(5th) anniversary of the Preferred Stock Issue Date and (ii) the date which is
the day before the Corporation is due to redeem any outstanding Junior
Securities (the "Redemption Date"). All holders of Series B Convertible
Preferred Stock shall deliver to the Corporation during regular business hours,
at the office of any transfer agent of the Corporation for the Series B
Convertible Preferred Stock, or at the principal office of the Corporation or at
such other place as may be designated by the Corporation, the certificate or
certificates for the Series B Convertible Preferred Stock, duly endorsed for
transfer to the Corporation (if required by it) on or before the Redemption
Date.
7B. Redemption Price and Payment. The Series B Convertible Preferred
Stock to be redeemed on the Redemption Date shall be redeemed by paying for each
share in cash an amount equal to the Series B Redemption Price (as defined
below). For purposes of this paragraph 7B, the "Series B Redemption Price" shall
mean $15.066 per share, plus an amount equal to all dividends accrued and unpaid
on each such share; provided, however, that if the Redemption Date is after the
fifth (5th) anniversary of the Preferred Stock Issue Date, then the "Series B
Redemption Price" shall mean the greater of (i) $15.066 per share, plus an
amount equal to all dividends accrued and unpaid on each such share and (ii) the
Fair Market Value (as defined below) of the Common Stock underlying the Series B
Convertible Preferred Stock. Such payment shall be made in full on the
Redemption Date to the holders entitled thereto. For purposes of this paragraph
7B, "Fair Market Value" of the Common Stock shall mean the average of the fair
market valuations of the Common Stock performed by two investment banks (the
"Initial Appraisers"), one of which shall be retained by the Corporation and one
of which shall be retained by the holders of a majority in interest of the
Series B Convertible Preferred Stock. Subject to the following sentence, such
determination by the Initial Appraisers of Fair Market Value shall be final and
binding on the parties. If the higher of the two valuations of the Initial
Appraisers is equal to or greater than 110% of the lower valuation, the
Corporation and holders of a majority in interest of the Series B Convertible
Preferred Stock shall select a third investment bank (the "Final Appraiser"),
which shall be mutually agreeable to the Corporation and the holders of a
majority in interest of the Series B Convertible Preferred Stock. The fair
market value of the Common Stock as determined by the Final Appraiser shall be
final and binding on the parties. The fees and expenses of the Initial
Appraisers shall be paid for by the party selecting such Initial Appraiser and
the fees and expenses of the Final Appraiser shall be shared by the Corporation
and the holders of the Series B Convertible Preferred Stock.
<PAGE> 45
7C. Redemption Mechanics. At least 15 but not more than 35 days prior
to the Redemption Date, written notice (the "Redemption Notice") shall be given
by the Corporation by mail, postage prepaid, or by facsimile transmission to
non-U.S. residents, to each holder of record (at the close of business on the
business day next preceding the day on which the Redemption Notice is given) of
shares of Series B Convertible Preferred Stock notifying such holder of the
redemption and specifying the Series B Redemption Price, the Redemption Date and
the place where said Series B Redemption Price shall be payable. The Redemption
Notice shall be addressed to each holder at his address as shown by the records
of the Corporation. From and after the close of business on the Redemption Date
unless there shall have been a default in the payment of the Series B Redemption
Price, all rights of holders of shares of Series B Convertible Preferred Stock
(except the right to receive the Series B Redemption Price) shall cease with
respect to such shares, and such shares shall not thereafter be transferred on
the books of the Corporation or be deemed to be outstanding for any purpose
whatsoever. If the funds of the Corporation legally available for redemption of
shares of Series B Convertible Preferred Stock on the Redemption Date are
insufficient to redeem the total number of outstanding shares of Series B
Convertible Preferred Stock to be redeemed on such Redemption Date, the holders
of shares of Series B Convertible Preferred Stock shall share ratably in any
funds legally available for redemption of such shares according to the
respective amounts which would be payable with respect to the full number of
shares owned by them if all such outstanding shares were redeemed in full. The
shares of Series B Convertible Preferred Stock not redeemed shall remain
outstanding and entitled to all rights and preferences provided herein;
provided, however, that such unredeemed shares shall be entitled to receive
interest accruing daily with respect to the applicable Series B Redemption Price
at the rate of 15% per annum, payable quarterly in arrears. At any time
thereafter when additional funds of the Corporation are legally available for
the redemption of such shares of Series B Convertible Preferred Stock, such
funds will be used, at the end of the next succeeding fiscal quarter, to redeem
the balance of such shares, or such portion thereof for which funds are then
legally available, on the basis set forth above.
7D. Redeemed or Otherwise Acquired Shares to be Retired. Any shares of
Series B Convertible Preferred Stock redeemed pursuant to this paragraph 7 or
otherwise acquired by the Corporation in any manner whatsoever shall be canceled
and shall not under any circumstances be reissued; and the Corporation may from
time to time take such appropriate corporate action as may be necessary to
reduce accordingly the number of authorized shares of Series B Convertible
Preferred Stock.
8. Amendments. Except where the vote or written consent of the holders of
a greater number of shares of the Corporation is required by these terms of the
Series B Convertible Preferred Stock, by law or by the Certificate of
Incorporation, no provision of these terms of the Series B Convertible Preferred
Stock may be amended, modified or waived without the written consent or
affirmative vote of the holders of at least 60% of the then outstanding shares
of Series B Convertible Preferred Stock.
9. Definitions. As used herein, the following terms shall have the
following meanings:
(1) The term "Founders" shall mean F. Thomson Leighton, Daniel Lewin,
Jonathan Seelig, Randall Kaplan, Gilbert Friesen and David Karger.
<PAGE> 46
(2) The term "Preferred Stock Issue Date" shall mean the date on which
the Series B Convertible Preferred Stock is originally issued by the Corporation
pursuant to the Purchase Agreement.
(3) The term "Purchase Agreement" shall mean the Series B Convertible
Preferred Stock and Series C Convertible Preferred Stock Purchase Agreement
dated as of April 16, 1999 between the Corporation, Baker Communications Fund,
L.P. and the other purchasers named therein, as in effect on April 16, 1999.
(4) The term the "Plan" shall mean the Corporation's 1998 Stock
Incentive Plan.
(5) The term "Reserved Employee Shares" shall mean shares of Common
Stock reserved by the Corporation pursuant to the Plan from time to time for (i)
the sale of shares of Common Stock to employees, consultants or non-employee
directors (other than representatives of the holders of Preferred Stock) of the
Corporation or (ii) the exercise of options to purchase Common Stock granted to
employees, consultants or non-employee directors (other than representatives of
the holders of Preferred Stock) of the Corporation, not to exceed in the
aggregate 3,450,000 shares of Common Stock for both clauses (i) and (ii), with
such number including 710,700 shares issued or subject to options granted prior
to the date of the initial issuance of the Series A Convertible Preferred Stock
(the "Option Shares") (approximately adjusted to reflect an event described in
paragraph 6F hereof); provided that, such number of such shares subject to the
Plan shall be increased by up to 2,519,742 additional shares of Common Stock
(appropriately adjusted to reflect an event described in paragraph 6F hereof)
(collectively, the "Founders' Shares") upon the repurchase of such Founders'
Shares by the Corporation from the Founders pursuant to contractual rights hold
by the Corporation. The foregoing numbers of Reserved Employee Shares may be
increased by the affirmative vote or written consent of a majority of the
directors designated solely by the holders of Series A Convertible Preferred
Stock and Series B Convertible Preferred Stock or the affirmative vote or
written consent of the holders of at least 50% of the then outstanding shares of
Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and
Series C Convertible Preferred Stock, voting together as a single class on a
Common Stock equivalent basis.
<PAGE> 47
(6) The term "Subsidiary" or "Subsidiaries" shall mean any corporation,
partnership, trust or other entity of which the Corporation and/or any of its
other subsidiaries directly or indirectly owns at the time a majority of the
outstanding shares of every class of equity security of such corporation,
partnership, trust or other entity.
<PAGE> 48
CERTIFICATE OF DESIGNATIONS
OF
SERIES C CONVERTIBLE PREFERRED STOCK
OF
AKAMAI TECHNOLOGIES, INC.
-------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
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Akamai Technologies, Inc., a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in Article Fourth of its
Certificate of Incorporation and in accordance with the provisions of Section
151 of the General Corporation Law of the State of Delaware, the Board of the
Directors of the Corporation, at a meeting held on April 13, 1999, duly adopted
the following resolution, which resolution remains in full force and effect on
the date hereof:
RESOLVED, that, pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation, a series of Preferred Stock
of the Corporation be and hereby is established, consisting of 145,195 shares,
$0.01 par value per share, to be designated "Series C Convertible Preferred
Stock" (hereinafter, the "Series C Preferred Stock"); that the Board of
Directors be and hereby is authorized to issue such shares of Series C Preferred
Stock from time to time and for such consideration and on such terms as the
Board of Directors shall determine; and that, subject to the limitations
provided by law and by the Certificate of Incorporation, the voting powers,
preferences and relative, participating, optional and other special rights, and
qualifications, limitations and restrictions thereof shall be as set forth on
Schedule I attached hereto.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
duly executed by its President on this 16th day of April, 1999
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
------------------------------
Daniel Lewin
President
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SCHEDULE 1
AKAMAI TECHNOLOGIES, INC.
DESIGNATION OF SERIES C CONVERTIBLE PREFERRED STOCK
The series of Preferred Stock designated and known as "Series C
Convertible Preferred Stock" shall consist of 145,195 shares.
1. Voting. Except as may be otherwise provided in these terms of the
Series C Convertible Preferred Stock, in the Certificate of Incorporation (the
"Certificate of Incorporation") of Akamai Technologies, Inc. (the "Corporation")
or by law, the Series C Convertible Preferred Stock shall vote together with all
other classes and series of stock of the Corporation as a single class on all
actions to be taken by the stockholders of the Corporation. Each share of Series
C Convertible Preferred Stock shall entitle the holder thereof to such number of
votes per share on each such action as shall equal the number of shares of
Common Stock (including fractions of a share) into which each share of Series C
Convertible Preferred Stock is then convertible.
2. Ranking. The Series C Convertible Preferred Stock shall rank, with
respect to dividend distributions and distributions upon a Liquidation Event (as
defined in paragraph 4A herein), senior to all classes of common stock of the
Company and to each other class of capital stock or series of preferred stock
(including the Series A Convertible Preferred Stock of the Corporation)
established before the Series B Preferred Stock Issue Date, by the Board of
Directors, pari passu with the Series B Convertible Preferred Stock of the
Corporation, and senior or pari passu to any other class of capital stock or
series of preferred stock established after the Series B Preferred Stock Issue
Date by the Board of Directors. All classes of common stock of the Company, the
Series A Convertible Preferred Stock and any other class of capital stock or
series of preferred stock established after the Series B Preferred Stock Issue
Date to which the Series C Convertible Preferred Stock is senior, are
collectively referred to herein as "Junior Securities". The Series B Convertible
Preferred Stock of the Corporation and any other class of capital stock or
series of preferred stock established after the Series B Preferred Stock Issue
Date which ranks pari passu with the Series C Convertible Preferred Stock, are
collectively referred to herein as "Pari Passu Securities".
3. Dividends.
3A. The holders of shares of the Series C Convertible
Preferred Stock shall be entitled to receive, when, as and if dividends are
declared by the Board of Directors out of funds of the Corporation legally
available therefor, cumulative preferential dividends at the annual rate of 8%
on the Series C Liquidation Preference Payments (as defined in paragraph 4A
herein); provided, however, that any such dividends shall be declared and paid
only in the event of (i) a Liquidation Event pursuant to paragraph 4A hereof or
(ii) a Redemption pursuant to paragraph 7B hereof. Holders of shares of Series C
Convertible Preferred Stock shall be entitled to receive the dividends provided
for herein in preference to and in priority over any dividends upon any of the
Junior Securities.
3B. Dividends on the Series C Convertible Preferred Stock
shall accrue on a daily basis from the Series C Preferred Stock Issue Date and,
to the extent they are not paid, shall
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accumulate on an annual basis on each December 31, whether or not the
Corporation has earnings or profits, whether or not there are funds legally
available for the payment of such dividends and whether or not dividends are
declared.
4. Liquidation, Dissolution and Winding-up.
4A. Liquidation. Upon any liquidation, dissolution or winding
up of the Corporation (a "Liquidation Event"), whether voluntary or involuntary,
the holders of the shares of Series C Convertible Preferred Stock shall be paid
an amount equal to $34.436 per share plus, in the case of each share, an amount
equal to dividends accrued but unpaid thereon, computed to the date payment
thereof is made available, together with payment to any Pari Passu Securities,
and before any payment shall be made to the holders of any Junior Securities,
such amount payable with respect to one share of Series C Convertible Preferred
Stock being sometimes referred to as the "Series C Liquidation Preference
Payment" and with respect to all shares of Series C Convertible Preferred Stock
being sometimes referred to as the "Series C Liquidation Preference Payments".
If upon any Liquidation Event, the assets to be distributed to the holders of
the Series C Convertible Preferred Stock shall be insufficient to permit payment
to such stockholders of the full preferential amounts aforesaid, then all of the
assets of the Corporation available for distribution to holders of the Series C
Convertible Preferred Stock shall be distributed to such holders of the Series C
Convertible Preferred Stock pro rata, so that each holder receives that portion
of the assets available for distribution as the number of shares of such stock
held by such holder bears to the total number of shares of such stock then
outstanding.
4B. Upon any Liquidation Event, immediately after the holders
of Series C Convertible Preferred Stock and holders of any Pari Passu Securities
have been paid in full pursuant to paragraph 4A above, the remaining net assets
of the Corporation available for distribution shall be distributed among the
holders of the shares of Junior Securities.
Written notice of such Liquidation Event, stating a payment date and
the place where said payments shall be made, shall be given by mail, postage
prepaid, or by facsimile to non-U.S. residents, not less than 20 days prior to
the payment date stated therein, to the holders of record of Series C
Convertible Preferred Stock, such notice to be addressed to each such holder at
its address as shown by the records of the Corporation.
The (x) consolidation or merger of the Corporation into or with any
other entity or entities which results in the exchange of outstanding shares of
the Corporation for securities or other consideration issued or paid or caused
to be issued or paid by any such entity or affiliate thereof (except a
consolidation or merger into a Subsidiary or merger in which the Corporation is
the surviving Corporation and the holders of the Corporation's voting stock
outstanding immediately prior to the transaction constitute a majority of the
holders of voting stock outstanding immediately following the transaction), (y)
sale or transfer by the Corporation of all or substantially all of its assets,
or (z) sale or transfer by the Corporation's stockholders of capital stock
representing a majority of the outstanding capital stock of the Corporation
shall be deemed to be a Liquidation Event within the meaning of the provisions
of this paragraph 4 (subject to the provisions of this paragraph 4 and not the
provisions of paragraph 6G hereof, unless paragraph 6G is elected in the
following proviso); provided, however, that if the holders of at least 60% of
the then outstanding shares of Series C Convertible Preferred Stock shall elect
the
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benefits of the provisions of paragraph 6G in lieu of receiving payment in a
Liquidation Event pursuant to this paragraph 4, then all holders of shares of
Series C Convertible Preferred Stock shall receive the benefits of the
provisions of paragraph 6G in lieu of receiving payment pursuant to this
paragraph 4. Whenever the distribution provided for in this paragraph 4 shall be
payable in property other than cash, the value of such distribution shall be the
fair market value of such property as determined in good faith by the Board of
Directors of the Corporation.
5. Restrictions. At any time when at least 50% of the shares of Series
C Convertible Preferred Stock issued pursuant to the Purchase Agreement remain
outstanding, except where the vote or written consent of the holders of a
greater number of shares of the Corporation is required by law or by the
Certificate of Incorporation, and in addition to any other vote required by law
or the Certificate of Incorporation, without the written consent of the holders
of at least 60% of the then outstanding shares of Series C Convertible Preferred
Stock given in writing or by vote at a meeting, consenting or voting (as the
case may be) separately as a series, the Corporation will not:
(1) Consent to any Liquidation Event or merge or consolidate
with or into, or permit any Subsidiary to merge or consolidate with or into, any
other corporation, corporations, entity or entities (except a consolidation or
merger into a Subsidiary or merger in which the Corporation is the surviving
corporation and the holders of the Corporation's voting stock outstanding
immediately prior to the transaction constitute a majority of the holders of
voting stock outstanding immediately following the transaction or a
consolidation or merger pursuant to which the aggregate consideration definitely
and unconditionally payable to all of the stockholders of the Corporation is
greater than $400 million);
(2) Sell, abandon, transfer, lease or otherwise dispose of all
or substantially all of its properties or assets (unless the aggregate
consideration definitely and unconditionally payable to all of the stockholders
of the Corporation is greater than $400 million);
(3) Amend, alter or repeal any provision of its Certificate of
Incorporation or By-laws in a manner adverse to holders of the Series C
Convertible Preferred Stock;
(4) Create or authorize the creation of or issue any
additional class or series of shares of stock (other than the Series B
Convertible Preferred Stock of the Corporation) unless the same ranks junior to
or on parity with the Series C Convertible Preferred Stock as to dividends and
the distribution of assets on a Liquidation Event, or increase the authorized
amount of Series C Convertible Preferred Stock or increase the authorized amount
of any additional class or series of shares of stock unless the same ranks
junior to or on parity with the Series C Convertible Preferred Stock as to
dividends and the distribution of assets on a Liquidation Event, or create or
authorize any obligation or security convertible into shares of Series C
Convertible Preferred Stock or into shares of any other class or series of stock
unless the same ranks junior to or on parity with the Series C Convertible
Preferred Stock as to dividends and the distribution of assets on a Liquidation
Event, whether any such creation, authorization or increase shall be by means of
amendment to the Certificate of Incorporation or by merger, consolidation or
otherwise;
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(5) In any manner amend, alter or change the designations or
the powers, preferences or rights, privileges or the restrictions of the Series
C Convertible Preferred Stock, provided, however, that the authorization or
creation of any shares of capital stock on parity with the Series C Convertible
Preferred Stock as to dividends and the distribution of assets on a Liquidation
Event shall not require approval of holders of Series C Convertible Preferred
Stock;
(6) Purchase or redeem, or set aside any sums for the purchase
or redemption of, or pay any dividend or make any distribution on, any Junior
Securities, except for (i) dividends or other distributions payable on the
Common Stock solely in the form of additional shares of Common Stock or (ii)
repurchases of shares of capital stock (at the original purchase price therefor)
from officers, employees, directors or consultants of the Corporation which are
subject to restrictive stock purchase, right of first refusal or other
agreements under which the Corporation has the option to repurchase such shares
upon the occurrence of certain events, including termination of employment; or
(7) Increase the number of Reserved Employee Shares without
the affirmative vote or written consent of a majority of the directors
designated solely by the holders of Series A Convertible Preferred Stock and
Series B Convertible Preferred Stock or the affirmative vote or written consent
of the holders of at least 50% of the then outstanding shares of Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock and Series C
Convertible Preferred Stock, voting together as a single class on a Common Stock
equivalent basis.
6. Conversion. The holders of shares of Series C Convertible Preferred
Stock shall have the following conversion rights:
6A. Right to Convert. Subject to the terms and conditions of
this paragraph 6, the holder of any share or shares of Series C Convertible
Preferred Stock shall have the right, at its option at any time, to convert any
such shares of Series C Convertible Preferred Stock (except that upon any
Liquidation Event the right of conversion shall terminate at the close of
business on the business day fixed for payment of the amounts distributable on
the Series C Convertible Preferred Stock) into such number of fully paid and
nonassessable shares of Common Stock as is obtained by (i) multiplying the
number of shares of Series C Convertible Preferred Stock so to be converted by
$34.436 and (ii) dividing the result by the conversion price of $34.436 per
share or in case an adjustment of such price has taken place pursuant to the
further provisions of this paragraph 6, then by the conversion price as last
adjusted and in effect at the date any share or shares of Series C Convertible
Preferred Stock are surrendered for conversion (such price, or such price as
last adjusted, being referred to as the "Series C Conversion Price"). Such
rights of conversion shall be exercised by the holder thereof by giving written
notice that the holder elects to convert a stated number of shares of Series C
Convertible Preferred Stock into Common Stock and by surrender of a certificate
or certificates for the shares so to be converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holders of the Series C
Convertible Preferred Stock) at any time during its usual business hours on the
date set forth in such notice, together with a statement of the name or names
(with address) in which the certificate or certificates for shares of Common
Stock shall be issued.
<PAGE> 53
6B. Issuance of Certificates; Time Conversion Effected.
Promptly after the receipt of the written notice referred to in paragraph 6A and
surrender of the certificate or certificates for the share or shares of Series C
Convertible Preferred Stock to be converted, the Corporation shall issue and
deliver, or cause to be issued and delivered, to the holder, registered in such
name or names as such holder may direct, a certificate or certificates for the
number of whole shares of Common Stock issuable upon the conversion of such
share or shares of Series C Convertible Preferred Stock. To the extent permitted
by law, such conversion shall be deemed to have been effected and the Series C
Conversion Price shall be determined as of the close of business on the date on
which such written notice shall have been received by the Corporation and the
certificate or certificates for such share or shares shall have been surrendered
as aforesaid, and at such time the rights of the holder or such share or shares
of Series C Convertible Preferred Stock shall cease, and the person or persons
in whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares represented thereby.
6C. Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of Series C Convertible
Preferred Stock into Common Stock and no payment or adjustment shall be made
upon any conversion on account of any cash dividends on the Common Stock issued
upon such conversion. At the time of each conversion, the Corporation shall pay
in cash an amount equal to all dividends declared and unpaid (if any) on the
shares of Series C Convertible Preferred Stock surrendered for conversion to the
date upon which such conversion is deemed to take place as provided in paragraph
6B. In case the number of shares of Series C Convertible Preferred Stock
represented by the certificate or certificates surrendered pursuant to paragraph
6A exceeds the number of shares converted, the Corporation shall, upon such
conversion, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Series C Convertible Preferred Stock represented by the certificate or
certificates surrendered which are not to be converted. If any fractional share
of Common Stock would, except for the provisions of the first sentence of this
paragraph 6C, be delivered upon such conversion, the Corporation, in lieu of
delivering such fractional share, shall pay to the holder surrendering the
Series C Convertible Preferred Stock for conversion an amount in cash equal to
the current fair market value of such fractional share as determined in good
faith by the Board of Directors of the Corporation, and based upon the aggregate
number of shares of Series C Convertible Preferred Stock surrendered by any one
holder.
6D. Adjustment of Series C Conversion Price Upon Issuance of
Common Stock. Except as provided in paragraphs 6E and 6F, if and whenever the
Corporation shall issue or sell, or is, in accordance with subparagraphs 6D(1)
through 6D(7), deemed to have issued or sold, any shares of Common Stock for a
consideration per share less than the Series C Conversion Price in effect
immediately prior to the time of such issue or sale, (such number being
appropriately adjusted to reflect the occurrence of any event described in
paragraph 6F), then, forthwith upon such issue or sale, the Series C Conversion
Price shall be reduced to the price determined by dividing (i) an amount equal
to the sum of (a) the number of shares of Common Stock outstanding immediately
prior to such issue or sale (assuming the conversion of the outstanding shares
of Series C Convertible Preferred Stock) multiplied by the then existing Series
C Conversion Price and (b) the consideration, if any, received by the
Corporation upon such issue or sale, by (ii) the total number of shares of
Common Stock outstanding immediately
<PAGE> 54
after such issue or sale (assuming the conversion of the outstanding shares of
Series C Convertible Preferred Stock).
For purposes of this paragraph 6D, the following subparagraphs
6D(1) to 6D(7) shall also be applicable:
6D(1) Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any warrants or other rights to
subscribe for or to purchase, or any options for the purchase of,
Common Stock or any stock or security convertible into or exchangeable
for Common Stock (such warrants, rights or options being called
"Options" and such convertible or exchangeable stock or securities
being called "Convertible Securities") whether or not such Options or
the right to convert or exchange any such Convertible Securities are
immediately exercisable, and the price per share for which Common Stock
is issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (i) the
total amount, if any, received or receivable by the Corporation as
consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the Corporation
upon the exercise of all such Options, plus, in the case of such
Options which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the issue or
sale of all such Convertible Securities and upon the conversion or
exchange thereof, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of such Options or upon the conversion
or exchange of all such Convertible Securities issuable upon the
exercise of such Options) shall be less than the Series C Conversion
Price in effect immediately prior to the time of the granting of such
Options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities
issuable upon the exercise of such Options shall be deemed to have been
issued for such price per share as of the date of granting of such
Options or the issuance of such Convertible Securities and thereafter
shall be deemed to be outstanding. Except as otherwise provided in
subparagraph 6D(3), no adjustment of the Series C Conversion Price
shall be made upon the actual issue of such Common Stock or of such
Convertible Securities upon exercise of such Options or upon the actual
issue of such Common Stock upon conversion or exchange of such
Convertible Securities.
6D(2) Issuance of Convertible Securities. In case the
Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert any such
Convertible Securities are immediately exercisable, and the price per
share for which Common Stock issuable upon such conversion or exchange
(determined by dividing (i) the total amount received or receivable by
the Corporation as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion
or exchange of all such Convertible Securities thereof, by (ii) the
total maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities) shall be
less than the Series C Conversion Price in effect immediately prior to
the time of such issue or sale, then the total maximum number of
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shares of Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall be deemed to have been issued for such
price per share as of the date of the issue or sale of such of such
Convertible Securities and thereafter shall be deemed to be
outstanding, provided that (a) except as otherwise provided in
subparagraph 6D(3), no adjustment of the Series C Conversion Price
shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities and (b) if any
such issue or sale of such Convertible Securities is made upon exercise
or any Options to purchase any such Convertible Securities for which
adjustments of the Series C Conversion Price have been or are to be
made pursuant to other provisions of this paragraph 6D, no further
adjustments of the Series C Conversion Price shall be made by reason of
such issue or sale.
6D(3) Change in Option Price of Conversion Rate. Upon the
happening of any of the following events, namely, if the purchase price
provided for in any Option referred to in subparagraph 6D(1), the
additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in subparagraph
6D(1) or 6D(2), or the rate at which Convertible Securities referred to
in subparagraph 6D(1) or 6D(2) are convertible into or exchangeable for
Common Stock shall change at any time (including, but not limited to,
changes under or by reason if provisions designed to protect against
dilution), the Series C Conversion Price in effect at the time of such
event shall forthwith be readjusted to the Series C Conversion Price
which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold; provided,
however, that in no event shall the Series C Conversion Price then in
effect hereunder be increased; and on the expiration of any such Option
or the termination of any such right to convert or exchange such
Convertible Securities, the Series C Conversion Price then in effect
hereunder shall forthwith be increased to the Conversion Price which
would have been in effect at the time of such expiration or termination
had such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination, never been issued.
6D(4) Stock Dividends. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the
Corporation payable in Common Stock (except for the issue of stock
dividends or distributions upon the outstanding Common Stock for which
adjustment is made pursuant to paragraph 6F), Options or Convertible
Securities, any Common Stock, Options or Convertible Securities, as the
case may be, issuable in payment of such dividend or distribution shall
be deemed to have been issued or sold without consideration.
6D(5) Consideration for Stock. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the
amount received by the Corporation therefor, without deduction
therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith.
In case any shares of Common Stock, Options or Convertible Securities
shall be issued or sold for consideration other than cash, the amount
of the consideration other than cash received by the Corporation shall
be deemed to be the fair value of such consideration as determined in
good faith by
<PAGE> 56
the Board of Directors of the Corporation without deduction of any
expenses incurred or any underwriting commissions or concessions paid
or allowed by the Corporation in connection therewith. In case any
Options shall be issued in connection with the issue and sale of other
securities of the Corporation, together comprising one integral
transaction in which no specific consideration is allocated to such
Options by the parties thereto, such Options shall be deemed to have
been issued for such consideration as determined in good faith by the
Board of Directors of the Corporation.
6D(6) Record Date. In case the Corporation shall take a record
of the holders of its Common Stock for the purpose of entitling them
(i) to receive a dividend or other distribution payable in Common
Stock, Options or Convertible Securities or (ii) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such
record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase,
as the case may be.
6D(7) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by
or for the account of the Corporation (or any Subsidiary), and the
disposition of any such shares shall be considered an issue or sale of
Common Stock for the purpose of this paragraph 6D.
6E. Certain Issues Excepted. Anything herein to the contrary
notwithstanding, the Corporation shall not be required to make any adjustment
for the Series C Conversion Price in the case of the issuance of (i) shares of
Series B Convertible Preferred Stock pursuant to the Purchase Agreement, (ii)
shares of Common Stock issuable upon conversion of the Series A Convertible
Preferred Stock, Series B Convertible Preferred Stock or Series C Convertible
Preferred Stock, (iii) shares of Common Stock issued or issuable as a dividend
or distribution on Series A Convertible Preferred Stock, Series B Convertible
Preferred Stock or Series C Convertible Preferred Stock, (iv) Reserved Employee
Shares (as defined in paragraph 9 herein) or (v) warrant shares issued as
contemplated by the Purchase Agreement or shares of Common Stock issuable upon
conversion of such warrant shares.
6F. Subdivision or Combination of Common Stock. In case the
Corporation shall at any time subdivide (by any stock split, stock dividend or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Series C Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced, and, conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Series C Conversion Price in effect immediately prior to such
combination shall be proportionately increased.
6G. Reorganization or Reclassification. If any capital
reorganization, reclassification, recapitalization, consolidation, merger, sale
of all or substantially all of the Corporation's assets or other similar
transaction (any such transaction being referred to herein as an "Organic
Change") shall be effected in such a way that holders of Common Stock shall be
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such Organic Change,
<PAGE> 57
lawful and adequate provisions shall be made whereby each holder of a share or
shares of Series C Convertible Preferred Stock shall thereupon have the right to
receive, upon the basis and upon the terms and conditions specified herein and
in lieu of or in addition to, as the case may be, the shares of Common Stock
immediately theretofore receivable upon the conversion of such share or shares
of Series C Convertible Preferred Stock, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for a number
of outstanding shares of such Common Stock equal to the number of shares of such
Common Stock immediately theretofore receivable upon such conversion had such
Organic Change not taken place, and in any case of a reorganization or
reclassification only appropriate provisions shall be made with respect to the
rights and interests of such holder to the end that the provisions hereof
(including without limitation provisions for adjustments of the Series C
Conversion Price) shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise of such conversion rights.
6H. Notice of Adjustment. Upon any adjustment of the Series C
Conversion Price, then and in each such case the Corporation shall give written
notice thereof, by first class mail, postage prepaid, or by facsimile
transmission to non-U.S. residents, addressed to each holder of shares of Series
C Convertible Preferred Stock at the address of such holder as shown on the
books of the Corporation, which notice shall state the Series C Conversion Price
resulting from such adjustment, setting forth in reasonable detail the method
upon which such calculation is based.
6I. Other Notices. In case at any time:
(1) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other distribution to the holders of
its Common Stock;
(2) the Corporation shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of any class or
other rights;
(3) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a consolidation or
merger of the Corporation with or into, or a sale of all or substantially all of
its assets to, another entity or entities; or
(4) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by facsimile transmission to non-U.S. residents,
addressed to each holder of any shares of Preferred Stock at the address of such
holder as shown on the books of the Corporation, (a) at least 20 days' prior
written notice of the date on which the books of the Corporation shall close or
a record shall be taken for such dividend, distribution or subscription rights
or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least 20
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (a) shall also specify, in the
case of any such dividend,
<PAGE> 58
distribution or subscription rights, the date on which the holders or Common
Stock shall be entitled thereto and such notice in accordance with the foregoing
clause (b) shall also specify the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up, as the case may be.
6J. Stock to be Reserved. The Corporation will at all times
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issuance upon the conversion of Series C Convertible Preferred Stock
as herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of all outstanding shares of Series C Convertible
Preferred Stock. The Corporation covenants that all shares of Common Stock which
shall be so issued shall be duly and validly issued and fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, and, without limiting the generality of the foregoing, the
Corporation covenants that it will from time to time take all such action as may
be requisite to assure that the par value per share of the Common Stock is at
all times equal to or less than the Series C Conversion Price in effect at the
time. The Corporation will take all such action as may be necessary to assure
that all such shares of Common Stock may be so issued without violation of any
applicable law or regulation, or of any requirement of any national securities
exchange upon which the Common Stock may be listed.
6K. No Reissuance of Series C Convertible Preferred Stock.
Shares of Series C Convertible Preferred Stock which are converted into shares
of Common Stock as provided herein shall not be reissued.
6L. Issue Tax. The issuance of certificates for shares of
Common Stock upon conversion of Series C Convertible Preferred Stock shall be
made without charge to the holders thereof for any issuance tax in respect
thereof; provided that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the holder of the
Series C Convertible Preferred Stock which is being converted.
6M. Closing of Books. The Corporation will at no time close
its transfer books against the transfer of any Series C Convertible Preferred
Stock or of any shares of Common Stock issued or issuable upon the conversion of
any shares of Series C Convertible Preferred Stock in any manner which
interferes with the timely conversion of such Preferred Stock, except as may
otherwise be required to comply with applicable securities laws.
6N. Definition of Common Stock. As used in this paragraph 6,
the term "Common Stock" shall mean and include the Corporation's authorized
Common Stock, par value $.01 per share, as constituted on the date of filing of
these terms of the Series C Convertible Preferred Stock, and shall also include
any capital stock of any class of the Corporation thereafter authorized which
shall neither be limited to a fixed sum of percentage of par value in respect of
the rights of the holders thereof to participate in dividends nor entitled to a
preference in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation; provided that the
shares of Common Stock receivable upon conversion of shares of Series C
Convertible Preferred Stock shall include only shares designated as Common Stock
of the Corporation on the date of filing of this instrument, or in case of any
reorganization or
<PAGE> 59
reclassification of the outstanding shares thereof, the stock, securities or
assets provided for in subparagraph 6G.
6O. Mandatory Conversion. All outstanding shares of Series C
Convertible Preferred Stock shall automatically convert to shares of Common
Stock if at any time the Corporation shall effect a public offering of shares of
Common Stock (any such offering, regardless of compliance with subsections (i),
(ii) and (iii) herein, being referred to as a "Public Offering"), provided (i)
the aggregate gross proceeds from such offering to the Corporation shall be at
least $20,000,000; (ii) the price paid by the public for such shares shall be at
least (x) 2.0 times the then Series B Conversion Price if the Public Offering
occurs prior to the 18 month anniversary of the Series B Preferred Stock Issue
Date or (y) 3.0 times the then Series B Conversion Price if the Public Offering
occurs on or after the 18 month anniversary of the Series B Preferred Stock
Issue Date, and (iii) the offering is a firm commitment underwritten Public
Offering, and such automatic conversion shall be effective upon the closing of
the sale of such shares by the Corporation pursuant to such Public Offering.
7. Redemption. The shares of Series C Convertible Preferred Stock shall
be redeemed as follows:
7A. Optional Redemption. The Corporation shall not have the
right to call or redeem at any time all or any shares of Series C Convertible
Preferred Stock. With the approval of the holders of 66% of the then outstanding
shares of Series C Convertible Preferred Stock, one or more holders of shares of
Series C Convertible Preferred Stock may, by giving notice (the "Notice") to the
Corporation, require the Corporation to redeem any or all of the outstanding
Series C Convertible Preferred Stock on the Redemption Date (as defined below).
Upon receipt of the Notice, the Corporation will so notify all other persons
holding Series C Convertible Preferred Stock. After receipt of the Notice, the
Corporation shall fix the first date for redemption, which shall be the date
specified in the Notice, being any date on or after the earlier of (i) the fifth
(5th) anniversary of the Series B Preferred Stock Issue Date and (ii) the date
which is the day before the Corporation is due to redeem any outstanding Junior
Securities (the "Redemption Date"). All holders of Series C Convertible
Preferred Stock shall delivery to the Corporation during regular business hours,
at the office of any transfer agent of the Corporation for the Series C
Convertible Preferred Stock, or at the principal office of the Corporation or at
such other place as may be designated by the Corporation, the certificate or
certificates for the Series C Convertible Preferred Stock, duly endorsed for
transfer to the Corporation (if required by it) on or before the Redemption
Date.
7B. Redemption Price and Payment. The Series C Convertible
Preferred Stock to be redeemed on the Redemption date shall be redeemed by
paying for each share in cash an amount equal to the Series C Redemption Price
(as defined below). For purposes of this paragraph 7B the "Series C Redemption
Price" shall mean $34.436 per share, plus an amount equal to all dividends
accrued and unpaid on each such share; provided, however, that if the Redemption
Date is after the fifth (5th) anniversary of the Series B Preferred Stock Issue
Date, then the "Series C Redemption Price" shall mean the greater of (i) $34.436
per share, plus an amount equal to all dividends accrued and unpaid on each such
share and (ii) the Fair Market Value (as defined below) of the Common Stock
underlying the Series C Convertible Preferred Stock. Such payment shall be made
in full on the Redemption Date to the holders entitled
<PAGE> 60
thereto. For purposes of this paragraph 7B, "Fair Market Value" of the Common
stock shall mean the average of the fair market valuations of the Common Stock
performed by two investment banks (the "Initial Appraisers"), one of which shall
be retained by the Corporation and one of which shall be retained by the holders
of a majority in interest of the Series C Convertible Preferred Stock. Subject
to the following sentence, such determination by the Initial Appraisers of Fair
Market Value shall be final and binding on the parties. If the higher of the two
valuations of the Initial Appraisers is equal to or greater than 110% of the
lower valuation, the Corporation and holders of a majority in interest of the
Series C Convertible Preferred Stock shall select a third investment bank (the
"Final Appraiser"), which shall be mutually agreeable to the Corporation and the
holders of a majority in interest of the Series C Convertible Preferred Stock.
The fair market value of the Common Stock as determined by the Final Appraiser
shall be final and binding on the parties. The fees and expenses of the Initial
Appraisers shall be paid for by the party selecting such Initial Appraiser and
the fees and expenses of the Final Appraiser shall be shared by the Corporation
and the holders of the Series C Convertible Preferred Stock.
7C. Redemption Mechanics. At least 15 but not more than 35
days prior to the Redemption Date, written notice (the "Redemption Notice")
shall be given by the Corporation by mail, postage prepaid, or by facsimile
transmission to non-U.S. residents, to each holder of record (at the close of
business on the business day next preceding the day on which the Redemption
Notice is given) of shares of Series C Convertible Preferred Stock notifying
such holder of the redemption and specifying the Series C Redemption Price, the
Redemption Date and the place where said Series C Redemption Price shall be
payable. The Redemption Notice shall be addressed to each holder at his address
as shown by the records of the Corporation. From and after the close of business
on the Redemption Date, unless there shall have been a default in the payment of
the Series C Redemption Price, all rights of holders of shares of Series C
Convertible Preferred Stock (except the right to receive the Series C Redemption
Price) shall cease with respect to such shares, and such shares shall not
thereafter be transferred on the books of the Corporation or be deemed to be
outstanding for any purpose whatsoever. If the funds of the Corporation legally
available for redemption of shares of Series C Convertible Preferred Stock on
the Redemption Date are insufficient to redeem the total number of outstanding
shares of Series C Convertible Preferred Stock to be redeemed on such Redemption
Date, the holders of shares of Series C Convertible Preferred Stock shall share
ratably in any funds legally available for redemption of such shares according
to the respective amounts which would be payable with respect to the full number
of shares owned by them if all such outstanding shares were redeemed in full.
The shares of Series C Convertible Preferred Stock not redeemed shall remain
outstanding and entitled to all rights and preferences provided herein;
provided, however, that such unredeemed shares shall be entitled to receive
interest accruing daily with respect to the applicable Series C Redemption Price
at the rate of 15% per annum, payable quarterly in arrears. At any time
thereafter when additional funds of the Corporation are legally available for
the redemption of such shares of Series C Convertible Preferred Stock, such
funds will be used, at the end of the next succeeding fiscal quarter, to redeem
the balance of such shares, or such portion thereof for which funds are then
legally available, on the basis set forth above.
7D. Redeemed or Otherwise Acquired Shares to be Retired. Any
shares of Series C Convertible Preferred Stock redeemed pursuant to this
paragraph 7 or otherwise acquired by the Corporation in any manner whatsoever
shall be canceled and shall not under any
<PAGE> 61
circumstances be reissued; and the Corporation may from time to time take such
appropriate corporate action as may be necessary to reduce accordingly the
number of authorized shares of Series C Convertible Preferred Stock.
8. Amendments. Except where the vote or written consent of the holders
of a greater number of shares of the Corporation is required by these terms of
the Series C Convertible Preferred Stock, by law or by the Certificate of
Incorporation, no provision of these terms of the Series C Convertible Preferred
Stock may be amended, modified or waived without the written consent or
affirmative vote of the holders of at least 60% of the then outstanding shares
of Series C Convertible Preferred Stock.
9. Definitions. As used herein, the following terms shall have the
following meanings:
(1) The term "Founders" shall mean F. Thornson Leighton,
Daniel Lewin, Jonathan Seelig, Randall Kaplan, Gilbert Friesen and David Karger.
(2) The term "Purchase Agreement" shall mean the Series B
Convertible Preferred Stock and Series C Convertible Preferred Stock Purchase
Agreement dated as of April 16, 1999 between the Corporation, Baker
Communications Fund, L.P. and the other purchasers named therein, as in effect
on April 16, 1999.
(3) The term the "Plan" shall mean the Corporation's 1998
Stock Incentive Plan.
(4) The term "Reserved Employee Shares" shall mean shares of
Common Stock reserved by the Corporation pursuant to the Plan from time to time
for (i) the sale of shares of Common Stock to employees, consultants or
non-employee directors (other than representatives of the holders of Preferred
Stock) of the Corporation or (ii) the exercise of options to purchase Common
Stock granted to employees, consultants or non-employee directors (other than
representatives of the holders of Preferred Stock) of the Corporation, not to
exceed in the aggregate 3,450,000 shares of Common Stock for both clauses (i)
and (ii), with such number including 710,700 shares issued or subject to options
granted prior to the date of the initial issuance of the Series A Convertible
Preferred Stock (the "Option Shares") (appropriately adjusted to reflect an
event described in paragraph 6F hereof); provided that, such number of such
shares subject to the Plan shall be increased by up to 2,519,742 additional
shares of Common Stock (appropriately adjusted to reflect an event described in
paragraph 6F hereof) (collectively, the "Founders' Shares") upon the repurchase
of such Founders' Shares by the Corporation from the Founders pursuant to
contractual rights held by the Corporation. The foregoing numbers of Reserved
Employee Shares may be increased by the affirmative vote or written consent of a
majority of the directors designated solely by the holders of Series A
Convertible Preferred Stock and Series B Convertible Preferred Stock or the
affirmative vote or written consent of the holders of at least 50% of the then
outstanding shares of Series A Convertible Preferred Stock, Series B Convertible
Preferred Stock and Series C Convertible Preferred Stock, voting together as a
single class on a Common Stock equivalent basis.
<PAGE> 62
(5) The term "Series B Conversion Price" shall mean the
conversion price of the Series B Convertible Preferred Stock from time to time
under the terms of the designation of the Series B Convertible Preferred Stock
of the Corporation.
(6) The term "Series B Preferred Stock Issue Date" shall mean
the date on which the Series B Convertible Preferred Stock is originally issued
by the Corporation pursuant to the Purchase Agreement.
(7) The term "Series C Preferred Stock Issue Date" shall mean
the date on which the Series C Convertible Preferred Stock is originally issued
by the Corporation pursuant to the Purchase Agreement.
(8) The term "Subsidiary" or "Subsidiaries" shall mean any
corporation, partnership, trust or other entity of which the Corporation and/or
any of its other subsidiaries directly or indirectly owns at the time a majority
of the outstanding shares of every class of equity security of such corporation,
partnership, trust or other entity.
<PAGE> 63
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
AKAMAI TECHNOLOGIES, INC.
Pursuant to Section 242
of the General Corporation Law of
the State of Delaware
Akamai Technologies, Inc. (hereinafter called the "Corporation"),
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify as follows:
The Board of Directors of the Corporation, by unanimous written consent
in lieu of a meeting, duly adopted a resolution, pursuant to Sections 141(f) and
242 of the General Corporation Law of the State of Delaware, setting forth an
amendment to the Certificate of Incorporation of the Corporation and declaring
said amendment to be advisable. The stockholders of the Corporation duly
approved said proposed amendment by written consent in accordance with Sections
228 and 242 of the General Corporation Law of the State of Delaware, and written
notice of such consent has been or will be given to all stockholders who have
not consented in writing to said amendment. The resolution setting forth the
amendment is as follows:
RESOLVED: That the first paragraph of Article FOURTH of the Certificate
of Incorporation of the Corporation be and hereby is deleted in its entirety and
that the following paragraph be inserted in lieu thereof:
"FOURTH. The total number of shares of all classes of stock
which the Corporation shall have authority to issue is 65,000,000
shares, consisting of (i) 60,000,000 shares of Common Stock, $0.01 par
value per share ("Common Stock"), and (ii) 5,000,000 shares of
Preferred Stock, $0.01 par value per share ("Preferred Stock").
<PAGE> 64
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its Treasurer on this 25th day of May, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Paul Sagan
----------------------------------
Paul Sagan
Treasurer
<PAGE> 65
CERTIFICATE OF DESIGNATIONS
OF
SERIES D CONVERTIBLE PREFERRED STOCK
OF
AKAMAI TECHNOLOGIES, INC.
-----------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-----------------
Akamai Technologies, Inc., a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in Article Fourth of its
Certificate of Incorporation and in accordance with the provisions of Section
151 of the General Corporation Law of the State of Delaware, the Board of the
Directors of the Corporation, at a meeting held on May 18, 1999, duly adopted
the following resolution, which resolution remains in full force and effect on
the date hereof:
RESOLVED, that, pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation, a series of Preferred Stock
of the Corporation be and hereby is established, consisting of 685,194 shares,
$0.01 par value per share, to be designated "Series D Convertible Preferred
Stock" (hereinafter, the "Series D Preferred Stock"); that the Board of
Directors be and hereby is authorized to issue such shares of Series D Preferred
Stock from time to time and for such consideration and on such terms as the
Board of Directors shall determine; and that, subject to the limitations
provided by law and by the Certificate of Incorporation, the voting powers,
preferences and relative, participating, optional and other special rights, and
qualifications, limitations and restrictions thereof shall be as set forth on
Schedule I attached hereto.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
duly executed by its President on this 21st day of June, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Paul Sagan
-------------------------------
Paul Sagan
President
<PAGE> 66
Schedule I
AKAMAI TECHNOLOGIES, INC.
DESIGNATION OF SERIES D CONVERTIBLE PREFERRED STOCK
The series of Preferred Stock designated and known as "Series D
Convertible Preferred Stock" shall consist of 685,194 shares.
1. Voting. Except as may be otherwise provided in these terms of the
Series D Convertible Preferred Stock, in the Certificate of Incorporation (the
"Certificate of Incorporation") of Akamai Technologies, Inc. (the "Corporation")
or by law, the Series D Convertible Preferred Stock shall vote together with all
other classes and series of stock of the Corporation as a single class on all
actions to be taken by the stockholders of the Corporation. Each share of Series
D Convertible Preferred Stock shall entitle the holder thereof to such number of
votes per share on each such action as shall equal the number of shares of
Common Stock (including fractions of a share) into which each share of Series D
Convertible Preferred Stock is then convertible.
2. Ranking. The Series D Convertible Preferred Stock shall rank, with
respect to dividend distributions and distributions upon a Liquidation Event (as
defined in paragraph 4A herein), senior to all classes of common stock of the
Company and to each other class of capital stock or series of preferred stock
(including the Series A Convertible Preferred Stock of the Corporation)
established before the Series B Preferred Stock Issue Date, by the Board of
Directors, pari passu with the Series B Convertible Preferred Stock and the
Series C Convertible Preferred Stock of the Corporation, and senior or pari
passu to any other class of capital stock or series of preferred stock
established after the Preferred Stock Issue Date by the Board of Directors. All
classes of common stock of the Company, the Series A Convertible Preferred Stock
and any other class of capital stock or series of preferred stock established
after the Preferred Stock Issue Date to which the Series D Convertible Preferred
Stock is senior, are collectively referred to herein as "Junior Securities". The
Series B Convertible Preferred Stock and the Series C Convertible Preferred
Stock of the Corporation and any other class of capital stock or series of
preferred stock established after the Preferred Stock Issue Date which ranks
pari passu with the Series D Convertible Preferred Stock, are collectively
referred to herein as "Pari Passu Securities".
3. Dividends. The holders of shares of the Series D Convertible
Preferred Stock shall be entitled to receive, when, as and if dividends are
declared by the Board of Directors out of funds of the Corporation legally
available therefor, cumulative preferential dividends at the annual rate of 8%
on the Series D Liquidation Preference Payments (as defined in paragraph 4A
herein); provided, however, that any such dividends shall only be paid, whether
declared or not, immediately upon the occurrence of (i) a Liquidation Event
pursuant to paragraph 4.A hereof or (ii) a Redemption pursuant to paragraph 7B
hereof. Holders of shares of Series D Convertible Preferred Stork shall be
entitled to receive the dividends provided for herein in preference to and in
priority over any dividends upon any of the Junior Securities. Dividends on the
Series D Convertible Preferred Stock shall accrue on a daily basis from the
Preferred Stock Issue Date and, to the extent they are not paid, shall
accumulate on an annual basis on each December 31,
<PAGE> 67
whether or not the Corporation has earnings or profits, whether or not there are
funds legally available for the payment of such dividends and whether or not
dividends are declared.
4. Liquidation, Dissolution and Winding-up.
4A. Liquidation. Upon any liquidation, dissolution or winding
up of the Corporation (a "Liquidation Event"), whether voluntary or involuntary,
the holders of the shares of Series D Convertible Preferred Stock shall be paid
an amount equal to $18.243 per share plus, in the case of each share, an amount
equal to dividends accrued but unpaid thereon, computed to the date payment
thereof is made available, together with payment to any Pari Passu Securities,
and before any payment shall be made to the holders of any Junior Securities,
such amount payable with respect to one share of Series D Convertible Preferred
Stock being sometimes referred to as the "Series D Liquidation Preference
Payment" and with respect to all shares of Series D Convertible Preferred Stock
being sometimes referred to as the "Series D Liquidation Preference Payments".
If upon any Liquidation Event, the assets to be distributed to the holders of
the Series D Convertible Preferred Stock shall be insufficient to permit payment
to such stockholders of the full preferential amounts aforesaid, then all of the
assets of the Corporation available for distribution to holders of the Series D
Convertible Preferred Stock and Pari Passu Securities shall be distributed to
such holders of the Series D Convertible Preferred Stock and Pari Passu
Securities pro rata, so that each holder receives that portion of the assets
available for distribution as the number of shares of such stock held by such
holder bears to the total number of shares of such stock then outstanding.
4B. Upon any Liquidation Event, immediately after the holders
of Series D Convertible Preferred Stock and holders of any Pari Passu Securities
have been paid in full pursuant to paragraph 4A above, the remaining net assets
of the Corporation available for distribution shall be distributed among the
holders of the shares of Junior Securities.
Written notice of such Liquidation Event, stating a payment date and
the place where said payments shall be made, shall be given by mail, postage
prepaid, or by facsimile to non-U.S. residents, not less than 20 days prior to
the payment date stated therein, to the holders of record of Series D
Convertible Preferred Stock, such notice to be addressed to each such holder at
its address as shown by the records of the Corporation.
The (x) consolidation or merger of the Corporation into or with any
other entity or entities which results in the exchange of outstanding shares of
the Corporation for securities or other consideration issued or paid or caused
to be issued or paid by any such entity or affiliate thereof (except a
consolidation or merger into a Subsidiary or merger in which the Corporation is
the surviving Corporation and the holders of the Corporation's voting stock
outstanding immediately prior to the transaction constitute a majority of the
holders of voting stock outstanding immediately following the transaction), (y)
sale or transfer by the Corporation of all or substantially all of its assets,
or (z) sale or transfer by the Corporation's stockholders of capital stock
representing a majority of the outstanding capital stock of the Corporation
shall be deemed to be a Liquidation Event within the meaning of the provisions
of this paragraph 4 (subject to the provisions of this paragraph 4 and not the
provisions of paragraph 6G hereof, unless paragraph 6G is elected in the
following proviso); provided, however, that if the holders of at
<PAGE> 68
least 60% of the then outstanding shares of Series D Convertible Preferred Stock
shall elect the benefits of the provisions of paragraph 6G in lieu of receiving
payment in a Liquidation Event pursuant to this paragraph 4, then all holders of
shares of Series D Convertible Preferred Stock shall receive the benefits of the
provisions of paragraph 6G in lieu of receiving payment pursuant to this
paragraph 4 for the particular Organic Change (as defined in Section 6G) causing
the rights of Section 6G to be available. The election of the rights under
Section 6G for any particular Organic Change shall not constitute an election of
the rights available under Section 6G for any other Organic Change, for which
the holders of Series D Convertible Preferred Stock shall have a new election
under the foregoing proviso. Whenever the distribution provided for in this
paragraph 4 shall be payable in property other than cash, the value of such
distribution shall be the fair market value of such property as determined in
good faith by the Board of Directors of the Corporation.
5. Restrictions. At any time when at least 50% of the shares of Series
D Convertible Preferred Stock issued pursuant to the Purchase Agreement remain
outstanding, except where the vote or written consent of the holders of a
greater number of shares of the Corporation is required by law or by the
Certificate of Incorporation, and in addition to any other vote required by law
or the Certificate of Incorporation, without the written consent of the holders
of at least 60% of the then outstanding shares of Series D Convertible Preferred
Stock given in writing or by vote at a meeting, consenting or voting (as the
case may be) separately as a series, the Corporation will not:
(1) Consent to any Liquidation Event or merge or consolidate
with or into, or permit any Subsidiary to merge or consolidate with or into, any
other corporation, corporations, entity or entities (except a consolidation or
merger into a Subsidiary or merger in which the Corporation is the surviving
corporation and the holders of the Corporation's voting stock outstanding
immediately prior to the transaction constitute a majority of the holders of
voting stock outstanding immediately following the transaction or a
consolidation or merger pursuant to which the aggregate consideration definitely
and unconditionally payable to all of the stockholders of the Corporation is
greater than $400 million) without the affirmative vote or written consent of
the holders of at least 50% of the then outstanding shares of Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock and Series D
Convertible Preferred Stock, voting together as a single class on a Common Stock
equivalent basis;
(2) Sell, abandon, transfer, lease or otherwise dispose of all
or substantially all of its properties or assets (unless the aggregate
consideration definitely and unconditionally payable to all of the stockholders
of the Corporation is greater than $400 million) without the affirmative vote or
written consent of the holders of at least 50% of the then outstanding shares of
Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and
Series D Convertible Preferred Stock, voting together as a single class on a
Common Stock equivalent basis;
(3) Amend, alter or repeal any provision of its Certificate of
Incorporation or By-laws in a manner adverse to holders of the Series D
Convertible Preferred Stock;
<PAGE> 69
(4) Create or authorize the creation of or issue any
additional class or series of shares of stock (other than the Series C
Convertible Preferred Stock of the Corporation) unless the same ranks junior to
or on parity with the Series D Convertible Preferred Stock as to dividends and
the distribution of assets on a Liquidation Event, or increase the authorized
amount of Series D Convertible Preferred Stock or increase the authorized amount
of any additional class or series of shares of stock unless the same ranks
junior to or on parity with the Series D Convertible Preferred Stock as to
dividends and the distribution of assets on a Liquidation Event, or create or
authorize any obligation or security convertible into shares of Series D
Convertible Preferred Stock or into shares of any other class or series of stock
unless the same ranks junior to or on parity with the Series D Convertible
Preferred Stock as to dividends and the distribution of assets on a Liquidation
Event, whether any such creation, authorization or increase shall be by means of
amendment to the Certificate of Incorporation or by merger, consolidation or
otherwise;
(5) In any manner amend, alter or change the designations or
the powers, preferences or rights, privileges or the restrictions of the Series
D Convertible Preferred Stock, provided, however, that the authorization or
creation of any shares of capital stock on parity with the Series D Convertible
Preferred Stock as to dividends and the distribution of assets on a Liquidation
Event shall not require the approval of holders of Series D Convertible
Preferred Stock;
(6) Purchase or redeem, or set aside any sums for the purchase
or redemption of, or pay any dividend or make any distribution on, any Junior
Securities, except for (i) dividends or other distributions payable on the
Common Stock solely in the form of additional shares of Common Stock or (ii)
repurchases of shares of capital stock (at the original purchase price therefor)
from officers, employees, directors or consultants of the Corporation which are
subject to restrictive stock purchase, right of first refusal or other
agreements under which the Corporation has the option to repurchase such shares
upon the occurrence of certain events, including termination of employment; or
(7) Increase the number of Reserved Employee Shares without
the affirmative vote or written consent of a majority of the directors
designated solely by the holders of Series A Convertible Preferred Stock and
Series B Convertible Preferred Stock or the affirmative vote or written consent
of the holders of at least 50% of the then outstanding shares of Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock, Series C
Convertible Preferred Stock and Series D Convertible Preferred Stock, voting
together as a single class on a Common Stock equivalent basis.
6. Conversion. The holders of shares of Series D Convertible Preferred
Stock shall have the following conversion rights:
6A. Right to Convert. Subject to the terms and conditions of
this paragraph 6, the holder of any share or shares of Series D Convertible
Preferred Stock shall have the right, at its option at any time, to convert any
such shares of Series D Convertible Preferred Stock (except that upon any
Liquidation Event the right of conversion shall terminate at the close of
business on the business day fixed for payment of the amounts distributable on
the Series D
<PAGE> 70
Convertible Preferred Stock) into such number of fully paid and nonassessable
shares of Common Stock as is obtained by (i) multiplying the number of shares of
Series D Convertible Preferred Stock so to be converted by $18.243 and (ii)
dividing the result by the conversion price of $6.081 per share or in case an
adjustment of such price has taken place pursuant to the further provisions of
this paragraph 6, then by the conversion price as last adjusted and in effect at
the date any share or shares of Series D Convertible Preferred Stock are
surrendered for conversion (such price, or such price as last adjusted, being
referred to as the "Series D Conversion Price"). Such rights of conversion shall
be exercised by the holder thereof by giving written notice that the holder
elects to convert a stated number of shares of Series D Convertible Preferred
Stock into Common Stock and by surrender of a certificate or certificates for
the shares so to be converted to the Corporation at its principal office (or
such other office or agency of the Corporation as the Corporation may designate
by notice in writing to the holders of the Series D Convertible Preferred Stock)
at any time during its usual business hours on the date set forth in such
notice, together with a statement of the name or names (with address) in which
the certificate or certificates for shares of Common Stock shall be issued.
6B. Issuance of Certificates; Time Conversion Effected.
Promptly after the receipt of the written notice referred to in paragraph 6A and
surrender of the certificate or certificates for the share or shares of Series D
Convertible Preferred Stock to be converted, the Corporation shall issue and
deliver, or cause to be issued and delivered, to the holder, registered in such
name or names as such holder may direct, a certificate or certificates for the
number of whole shares of Common Stock issuable upon the conversion of such
share or shares of Series D Convertible Preferred Stock. To the extent permitted
by law, such conversion shall be deemed to have been effected and the Series D
Conversion Price shall be determined as of the close of business on the date on
which such written notice shall have been received by the Corporation and the
certificate or certificates for such share or shares shall have been surrendered
as aforesaid, and at such time the rights of the holder of such share or shares
of Series D Convertible Preferred Stock shall cease, and the person or persons
in whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares represented thereby.
6C. Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of Series D Convertible
Preferred Stock into Common Stock and no payment or adjustment shall be made
upon party conversion on account of any cash dividends on the Common Stock
issued upon such conversion. At the time of each conversion, the Corporation
shall pay in cash an amount equal to all dividends declared and unpaid (if any)
on the shares of Series D Convertible Preferred Stock surrendered for conversion
to the date upon which such conversion is deemed to take place as provided in
paragraph 6B. In case the number of shares of Series D Convertible Preferred
Stock represented by the certificate or certificates surrendered pursuant to
paragraph 6A exceeds the number of shares converted, the Corporation shall, upon
such conversion, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Series D Convertible Preferred Stock represented by the certificate or
certificates surrendered which are not to be converted. If any fractional share
of Common Stock would, except for the provisions of the first sentence of this
paragraph 6C, be delivered upon such conversion, the Corporation, in lieu of
delivering such fractional share, shall pay to the holder surrendering the
Series D Convertible Preferred Stock
<PAGE> 71
for conversion an amount in cash equal to the current fair market value of such
fractional share as determined in good faith by the Board of Directors of the
Corporation, and based upon the aggregate number of shares of Series D
Convertible Preferred Stock surrendered by any one holder.
6D. Adjustment of Series D Conversion Price Upon Issuance of
Common Stock. Except as provided in paragraphs 6E and 6F, if and whenever the
Corporation shall issue or sell, or is, in accordance with subparagraphs, 6D(1)
through 6D(7), deemed to have issued or sold, any shares of Common Stock for a
consideration per share less than the Series D Conversion Price in effect
immediately prior to the time of such issue or sale, (such number being
appropriately adjusted to reflect the occurrence of any event described in
paragraph 6F), then, forthwith upon such issue or sale, the Series D Conversion
Price shall be reduced to the price determined by dividing (i) an amount equal
to the sum of (a) the number of shares of Common Stock outstanding immediately
prior to such issue or sale (assuming the conversion of the outstanding shares
of Series D Convertible Preferred Stock) multiplied by the then existing Series
D Conversion Price and (b) the consideration, if any, received by the
Corporation upon such issue or sale, by (ii) the total number of shares of
Common Stock outstanding immediately after such issue or sale (assuming the
conversion of the outstanding shares of Series D Convertible Preferred Stock).
For purposes of this paragraph 6D, the following subparagraphs 6D(1) to
6D(7) shall also be applicable:
6D(1) Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any warrants or other rights to
subscribe for or to purchase, or any options for the purchase of,
Common Stock or any stock or security convertible into or exchangeable
for Common Stock (such warrants, rights or options being called
"Options" and such convertible or exchangeable stock or securities
being called "Convertible Securities") whether or not such Options or
the right to convert or exchange any such Convertible Securities are
immediately exercisable, and the price per share for which Common Stock
is issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (i) the
total amount, if any, received or receivable by the Corporation as
consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the Corporation
upon the exercise of all such Options, plus, in the case of such
Options which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the issue or
sale of all such Convertible Securities and upon the conversion or
exchange thereof, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of such Options or upon the conversion
or exchange of all such Convertible Securities issuable upon the
exercise of such Options) shall be less than the Series D Conversion
Price in effect immediately prior to the time of the granting of such
Options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities
issuable upon the exercise of such Options shall be deemed to have been
issued for such price per share as of the date of granting of such
<PAGE> 72
Options or the issuance of such Convertible Securities and thereafter
shall be deemed to be outstanding. Except as otherwise provided in
subparagraph 6D(3), no adjustment of the Series D Conversion Price
shall be made upon the actual issue of such Common Stock or of such
Convertible Securities upon exercise of such Options or upon the actual
issue of such Common Stock upon conversion or exchange of such
Convertible Securities.
6D(2) Issuance of Convertible Securities. In case the
Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert any such
Convertible Securities are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (i) the total amount received or
receivable by the Corporation as consideration for the issue or sale of
such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the
conversion or exchange of all such Convertible Securities thereof, by
(ii) the total maximum number of shares of Common Stock issuable upon
the conversion or exchange of all such Convertible Securities) shall be
less than the Series D Conversion Price in effect immediately prior to
the time of such issue or sale, then the total maximum number of shares
of Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall be deemed to have been issued for such
price per share as of the date of the issue or sale of such Convertible
Securities and thereafter shall be deemed to be outstanding, provided
that (a) except as otherwise provided in subparagraph 6D(3), no
adjustment of the Series D Conversion Price shall be made upon the
actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities and (b) if any such issue or sale of such
Convertible Securities is made upon exercise of any Options to purchase
any such Convertible Securities for which adjustments of the Series D
Conversion Price have been or are to be made pursuant to other
provisions of this paragraph 6D, no further adjustment of the Series D
Conversion Price shall be made by reason of such issue or sale.
6D(3) Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if the purchase price
provided for in any Option referred to in subparagraph 6D(1), the
additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in subparagraph
6D(1) or 6D(2), or the rate at which Convertible Securities referred to
in subparagraph 6D(1) or 6D(2) are convertible into or exchangeable for
Common Stock shall change at any time (including, but not limited to,
changes under or by reason of provisions designed to protect against
dilution), the Series D Conversion Price in effect at the time of such
event shall forthwith be readjusted to the Series D Conversion Price
which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold; provided,
however, that in no event shall the Series D Conversion Price then in
effect hereunder be increased; and on the expiration of any such Option
or the termination of any such right to convert or exchange such
Convertible Securities, the Series D Conversion Price then in effect
hereunder shall forthwith be increased to the Conversion Price which
would have been
<PAGE> 73
in effect at the time of such expiration or termination had such Option
or Convertible Securities, to the extent outstanding immediately prior
to such expiration or termination, never been issued.
6D(4) Stock Dividends. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the
Corporation payable in Common Stock (except for the issue of stock
dividends or distributions upon the outstanding Common Stock for which
adjustment is made pursuant to paragraph 6F), Options or Convertible
Securities, any Common Stock, Options or Convertible Securities, as the
case may be, issuable in payment of such dividend or distribution shall
be deemed to have been issued or sold without consideration.
6D(5) Consideration for Stock. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the
amount received by the Corporation therefor, without deduction
therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith.
In case any shares of Common Stock, Options or Convertible Securities
shall be issued or sold for consideration other than cash, the amount
of the consideration other than cash received by the Corporation shall
be deemed to be the fair value of such consideration as determined in
good faith by the Board of Directors of the Corporation, without
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith.
In case any Options shall be issued in connection with the issue and
sale of other securities of the Corporation, together comprising one
integral transaction in which no specific consideration is allocated to
such Options by the parties thereto, such Options shall be deemed to
have been issued for such consideration as determined in good faith by
the Board of Directors of the Corporation.
6D(6) Record Date. In case the Corporation shall take a record
of the holders of its Common Stock for the purpose of entitling them
(i) to receive a dividend or other distribution payable in Common
Stock, Options or Convertible Securities or (ii) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such
record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase,
as the case may be.
6D(7) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by
or for the account of the Corporation (or any Subsidiary), and the
disposition of any such shares shall be considered an issue or sale of
Common Stock for the purpose of this paragraph 6D.
6E. Certain Issues Excepted. Anything herein to the contrary
notwithstanding, the Corporation shall not be required to make any adjustment of
the Series D Conversion Price if it first obtains the written consent of the
holders of at least 60% of the then outstanding shares
<PAGE> 74
of Series D Convertible Preferred Stock that no adjustment shall be required. In
no event shall the Corporation be required to make any adjustment to the Series
D Conversion Price in the case of the issuance of (i) shares of Series C
Convertible Preferred Stock pursuant to the Series B Purchase Agreement, (ii)
shares of Common Stock issuable upon conversion of the Series A Convertible
Preferred Stock, Series B Convertible Preferred Stock, Series C Convertible
Preferred Stock or Series D Convertible Preferred Stock, (iii) shares of Common
Stock issued or issuable as a dividend or distribution on Series A Convertible
Preferred Stock, Series B Convertible Preferred Stock, Series C Convertible
Preferred Stock or Series D Convertible Preferred Stock, (iv) Reserved Employee
Shares (as defined in paragraph 9 herein), (v) warrants issued in connection
with senior subordinated notes of the Corporation as contemplated by the
Series B Purchase Agreement or shares of Common Stock issuable upon conversion
of such warrants, or (vi) Options outstanding as of the Preferred Stock Issue
Date.
6F. Subdivision or Combination of Common Stock. In case the
Corporation shall at any time subdivide (by any stock split, stock dividend or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Series D Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced, and, conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Series D Conversion Price in effect immediately prior to such
combination shall be proportionately increased.
6G. Reorganization or Reclassification. If any capital
reorganization, reclassification, recapitalization, consolidation, merger, sale
of all or substantially all of the Corporation's assets or other similar
transaction (any such transaction being referred to herein as an "Organic
Change") shall be effected in such a way that holders of Common Stock shall be
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such Organic Change, lawful and adequate provisions shall be made
whereby each holder of a share or shares of Series D Convertible Preferred Stock
shall thereupon have the right to receive, upon the basis and upon the terms and
conditions specified herein and in lieu of or in addition to, as the case may
be, the shares of Common Stock immediately theretofore receivable upon the
conversion of such share or shares of Series D Convertible Preferred Stock, such
shares of stock, securities or assets as may be issued or payable with respect
to or in exchange for a number of outstanding shares of such Common Stock equal
to the number of shares of such Common Stock immediately theretofore receivable
upon such conversion had such Organic Change not taken place, and in any case of
a reorganization or reclassification only appropriate provisions shall be made
with respect to the rights and Interests of such holder to the end that the
provisions hereof (including without limitation provisions for adjustments of
the Series D Conversion Price) shall thereafter be applicable, as nearly as may
be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of such conversion rights.
6H. Notice of Adjustment. Upon any adjustment of the Series D
Conversion Price, then and in each such case the Corporation shall give written
notice thereof, by first class mail, postage prepaid, or by facsimile
transmission to non-U.S. residents, addressed to each holder of shares of Series
D Convertible Preferred Stock at the address of such holder as shown on the
books of the Corporation, which notice shall state the Series D Conversion Price
resulting
<PAGE> 75
from such adjustment, setting forth in reasonable detail the method upon which
such calculation is based.
6I. Other Notices. In case at any time:
(1) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other distribution to the holders of
its Common Stock;
(2) the Corporation shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of any class or
other rights;
(3) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a consolidation or
merger of the Corporation with or into, or a sale of all or substantially all of
its assets to, another entity or entities; or
(4) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by facsimile transmission to non-U.S. residents,
addressed to each holder of any shares of Preferred Stock at the address of such
holder as shown on the books of the Corporation, (a) at least 20 days' prior
written notice of the date on which the books of the Corporation shall close or
a record shall be taken for such dividend, distribution or subscription rights
or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least 20
days prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (a) shall also specify, in the
case of arty such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto and such notice in
accordance with the foregoing clause (b) shall also specify the date on which
the holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be.
6J. Stock to be Reserved. The Corporation will at all times
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issuance upon the conversion of Series D Convertible Preferred Stock
as herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of all outstanding shares of Series D Convertible
Preferred Stock. The Corporation covenants that all shares of Common Stock which
shall be so issued shall be duly and validly issued and fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, and, without limiting the generality of the foregoing, the
Corporation covenants that it will from time to time take all such action as may
be requisite to assure that the par value per share of the Common Stock is at
all times equal to or less than the Series D Conversion Price in effect at the
time. The Corporation will take all such action as may be necessary to assure
that all such shares of
<PAGE> 76
Common Stock may be so issued without violation of any applicable law or
regulation, or of any requirement of any national securities exchange upon which
the Common Stock may be listed.
6K. No Reissuance of Series D Convertible Preferred Stock.
Shares of Series D Convertible Preferred Stock which are converted into shares
of Common Stock as provided herein shall not be reissued.
6L. Issue Tax. The issuance of certificates for shares of
Common Stock upon conversion of Series D Convertible Preferred Stock shall be
made without charge to the holders thereof for any issuance tax in respect
thereof; provided, that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the holder of the
Series D Convertible Preferred Stock which is being converted.
6M. Closing of Books. The Corporation will at no time close
its transfer books against the transfer of any Series D Convertible Preferred
Stock or of any shares of Common Stock issued or issuable upon the conversion of
any shares of Series D Convertible Preferred Stock in any manner which
interferes with the timely conversion of such Preferred Stock, except as may
otherwise be required to comply with applicable securities laws.
6N. Definition of Common Stock. As used in this paragraph 6,
the term "Common Stock" shall mean and include the Corporation's authorized
Common Stock, par value $.01 per share, as constituted on the date of filing of
these terms of the Series D Convertible Preferred Stock, and shall also include
any capital stock of any class of the Corporation thereafter authorized which
shall neither be limited to a fixed sum or percentage of par value in respect of
the rights of the holders thereof to participate in dividends nor entitled to a
preference in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation; provided that the
shares of Common Stock receivable upon conversion of shares of Series D
Convertible Preferred Stock shall include only shares designated as Common Stock
of the Corporation on the date of filing of this instrument, or in case of any
reorganization or reclassification of the outstanding shares thereof, the stock,
securities or assets provided for in subparagraph 6G.
6O. Mandatory Conversion. All outstanding shares of Series D
Convertible Preferred Stock shall automatically convert to shares of Common
Stock if at any time the Corporation shall effect a public offering of shares of
Common Stock (any such offering, regardless of compliance with subsections (i),
(ii) and (iii) herein, being referred to as a "Public Offering"), provided (i)
the aggregate gross proceeds from such offering to the Corporation shall be at
least $20,000,000; (ii) the price paid by the public for such shares shall be at
least (x) 2.0 times the then Series B Conversion Price if the Public Offering
occurs prior to the 18 month anniversary of the Series B Preferred Stock Issue
Date or (y) 3.0 times the then Series B Conversion Price if the Public Offering
occurs on or after the 18 month anniversary of the Series B Preferred Stock
Issue Date, and (iii) the offering is a firm commitment underwritten Public
Offering, and such automatic conversion shall be effective upon the closing of
the sale of such shares by the Corporation pursuant to such Public Offering.
<PAGE> 77
7. Redemption. The shares of Series D Convertible Preferred Stock shall
be redeemed as follows:
7A. Operational Redemption. The Corporation shall not have the
right to call or redeem at any time all or any shares of Series D Convertible
Preferred Stock. With the approval of the holders of 66% of the then outstanding
shares of Series D Convertible Preferred Stock, one or more holders of shares of
Series D Convertible Preferred Stock may, by giving notice (the "Notice") to the
Corporation, require the Corporation to redeem any or all of the outstanding
Series D Convertible Preferred Stock on the Redemption Date (as defined below).
Upon receipt of the Notice, the Corporation will so notify all other persons
holding Series D Convertible Preferred Stock. After receipt of the Notice, the
Corporation shall fix the first date for redemption, which shall be the date
specified in the Notice, being any date on or after the earlier of (i) the fifth
(5th) anniversary of the Series B Preferred Stock Issue Date and (ii) the date
which is the day before the Corporation is due to redeem any outstanding Junior
Securities (the "Redemption Date"). All holders of Series D Convertible
Preferred Stock shall deliver to the Corporation during regular business hours,
at the office of any transfer agent of the Corporation for the Series D
Convertible Preferred Stock, or at the principal office of the Corporation or at
such other place as may be designated by the Corporation, the certificate or
certificates for the Series D Convertible Preferred Stock, duly endorsed for
transfer to the Corporation (if required by it) on or before the Redemption
Date.
7B. Redemption Price and Payment. The Series D Convertible
Preferred Stock to be redeemed on the Redemption Date shall be redeemed by
paying for each share in cash an amount equal to the Series D Redemption Price
(as defined below). For purposes of this paragraph 7B, the "Series D Redemption
Price" shall mean $18.243 per share, plus an amount equal to all dividends
accrued and unpaid on each such share, provided, however, that if the Redemption
Date is after the fifth (5th) anniversary of the Series B Preferred Stock Issue
Date, then the "Series D Redemption Price" shall mean the greater of (i) $18.243
per share, plus an amount equal to all dividends accrued and unpaid on each such
share and (ii) the Fair Market Value (as defined below) of the Common Stock
underlying the Series D Convertible Preferred Stock. Such payment shall be made
in full on the Redemption Date to the holders entitled thereto. For purposes of
this paragraph 7B, "Fair Market Value" of the Common Stock shall mean the
average of the fair market valuations of the Common Stock performed by two
investment banks (the "Initial Appraisers"), one of which shall be retained by
the Corporation and one of which shall be retained by the holders of a majority
in interest of the Series D Convertible Preferred Stock. Subject to the
following sentence, such determination by the Initial Appraisers of Fair Market
Value shall be final and binding on the parties. If the higher of the two
valuations of the Initial Appraisers is equal to or greater than 110% of the
lower valuation, the Corporation and holders of a majority in interest of the
Series D Convertible Preferred Stock shall select a third investment bank (the
"Final Appraiser"), which shall be mutually agreeable to the Corporation and the
holders of a majority in interest of the Series D Convertible Preferred Stock.
The fair market value of the Common Stock as determined by the Final Appraiser
shall be final and binding on the parties. The fees and expenses of the Initial
Appraisers shall be paid for by the party selecting such Initial Appraiser and
the fees and expenses of the final Appraiser shall be shared by the Corporation
and the holders of the Series D Convertible Preferred Stock.
<PAGE> 78
7C. Redemption Mechanics. At least 15 but not more than 35
days prior to the Redemption Date, written notice (the "Redemption Notice")
shall be given by the Corporation by mail, postage prepaid, or by facsimile
transmission to non-U.S. residents, to each holder of record (at the close of
business on the business day next preceding the day on which the Redemption
Notice is given) of shares of Series D Convertible Preferred Stock notifying
such holder of the redemption and specifying the Series D Redemption Price, the
Redemption Date and the place where said Series D Redemption Price shall be
payable. The Redemption Notice shall be addressed to each holder at his address
as shown by the records of the Corporation. From and after the close of business
on the Redemption Date, unless there shall have been a default in the payment of
the Series D Redemption Price, all rights of holders of shares of Series D
Convertible Preferred Stock (except the right to receive the Series D Redemption
Price) shall cease with respect to such shares, and such shares shall not
thereafter be transferred on the books of the Corporation or be deemed to be
outstanding for any purpose whatsoever. If the funds of the Corporation legally
available for redemption of shares of Series D Convertible Preferred Stock on
the Redemption Date are insufficient to redeem the total number of outstanding
shares of Series D Convertible Preferred Stock to be redeemed on such Redemption
Date, the holders of shares of Series D Convertible Preferred Stock shall share
ratably in any funds legally available for redemption of such shares according
to the respective amounts which would be payable with respect to the full number
of shares owned by them if all such outstanding shares were redeemed in full.
The shares of Series D Convertible Preferred Stock not redeemed shall remain
outstanding and entitled to all rights and preferences provided herein;
provided, however, that such unredeemed shares shall be entitled to receive
interest accruing daily with respect to the applicable Series D Redemption Price
at the rate of 15% per annum, payable quarterly in arrears. At any time
thereafter when additional funds of the Corporation are legally available for
the redemption of such shares of Series D Convertible Preferred Stock, such
funds will be used, at the end of the next succeeding fiscal quarter, to redeem
the balance of such shares, or such portion thereof for which funds are then
legally available, on the basis set forth above.
7D. Redeemed or Otherwise Acquired Shares to be Retired. Any
shares of Series D Convertible Preferred Stock redeemed pursuant to this
paragraph 7 or otherwise acquired by the Corporation in any manner whatsoever
shall be canceled and shall not under any circumstances be reissued; and the
Corporation may from time to time take such appropriate corporate action as may
be necessary to reduce accordingly the number of authorized shares of Series D
Convertible Preferred Stock.
8. Amendments. Except where the vote or written consent of the holders
of a different number of shares of the Corporation is required by these terms of
the Series D Convertible Preferred Stock, by law or by the Certificate of
Incorporation, no provision of these terms of the Series D Convertible Preferred
Stock may be amended, modified or waived without the written consent or
affirmative vote of the holders of at least 60% of the then outstanding shares
of Series D Convertible Preferred Stock.
<PAGE> 79
9. Definitions. As used herein, the following terms shall have the
following meanings:
(1) The term "Founders" shall mean F. Thomson Leighton, Daniel
Lewin, Jonathan Seelig, Randall Kaplan, Gilbert Friesen and David Karger.
(2) The term "Preferred Stock Issue Date" shall mean the date
on which the Series D Convertible Preferred Stock is originally issued by the
Corporation pursuant to the Purchase Agreement.
(3) The term "Purchase Agreement" shall mean the Series D
Convertible Preferred Stock Purchase Agreement dated as of June 21, 1999 between
the Corporation and Apple Computer Inc. Ltd., as in effect on June 21, 1999.
(4) The term the "Plan" shall mean the Corporation's 1998
Stock Incentive Plan.
(5) The term "Reserved Employee Shares" shall mean shares of
Common Stock reserved by the Corporation pursuant to the Plan from time to time
for (i) the sale of shares of Common Stock to employees, consultants or
non-employee directors (other than representatives of the holders of Preferred
Stock) of the Corporation or (ii) the exercise of options to purchase Common
Stock granted to employees, consultants or non-employee directors (other than
representatives of the holders of Preferred Stock) of the Corporation, not to
exceed in the aggregate 11,377,800 shares of Common Stock for both clauses (i)
and (ii), with such number including 2,132,100 shares issued or subject to
options granted prior to the date of the initial issuance of the Series A
Convertible Preferred Stock (the "Option Shares") (appropriately adjusted to
reflect an event described in paragraph 6F hereof); provided that, such number
of such shares subject to the Plan shall be increased by up to 7,559,226
additional shares of Common Stock (appropriately adjusted to reflect an event
described in paragraph 6F hereof) (collectively, the "Founders' Shares") upon
the repurchase of such Founders' Shares by the Corporation from the Founders
pursuant to contractual rights held by the Corporation. The foregoing numbers of
Reserved Employee Shares may be increased by the affirmative vote or written
consent of a majority of the directors designated solely by the holders of
Series A Convertible Preferred Stock and Series B Convertible Preferred Stock or
the affirmative vote or written consent of the holders of at least 50% of the
then outstanding shares of Series A Convertible Preferred Stock, Series B
Convertible Preferred Stock, Series C Convertible Preferred Stock and Series D
Convertible Preferred Stock, voting together as a single class on a Common Stock
equivalent basis.
(6) The term "Series B Conversion Price" shall mean the
conversion price of the Series B Convertible Preferred Stock from time to time
under the terms of the designation of the Series B Convertible Preferred Stock
of the Corporation.
(7) The term "Series B Preferred Stock Issue Date" shall mean
April 16, 1999.
<PAGE> 80
(8) The term "Series B Purchase Agreement" shall mean the
Series B Convertible Preferred Stock and Series C Convertible Preferred Stock
Purchase Agreement dated as of April 16, 1999 among the Corporation and the
purchasers named therein.
(9) The term "Subsidiary" or "Subsidiaries" shall mean any
corporation, partnership, trust or other entity of which the Corporation and/or
any of its other subsidiaries directly or indirectly owns at the time a majority
of the outstanding shares of every class of equity security of such corporation,
partnership, trust or other entity.
<PAGE> 81
CERTIFICATE OF DESIGNATIONS
OF
SERIES E CONVERTIBLE PREFERRED STOCK
OF
AKAMAI TECHNOLOGIES, INC.
-------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-------------
Akamai Technologies, Inc., a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in Article Fourth of its
Certificate of Incorporation and in accordance with the provisions of Section
151 of the General Corporation Law of the State of Delaware, the Board of the
Directors of the Corporation, at a meeting held on August 5, 1999, duly adopted
the following resolution, which resolution remains in full force and effect on
the date hereof:
RESOLVED, that, pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation, a series of Preferred Stock
of the Corporation be and hereby is established, consisting of 1,867,480 shares,
$0.01 par value per share, to be designated "Series E Convertible Preferred
Stock" (hereinafter, the "Series E Preferred Stock"); that the Board of
Directors be and hereby is authorized to issue such shares of Series E Preferred
Stock from time to time and for such consideration and on such terms as the
Board of Directors shall determine; and that, subject to the limitations
provided by law and by the Certificate of Incorporation, the voting powers,
preferences and relative, participating, optional and other special rights, and
qualifications, limitations and restrictions thereof shall be as set forth on
Schedule I attached hereto.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
duly executed by its President on this 6th day of August, 1999
AKAMAI TECHNOLOGIES, INC.
By: /s/ Paul Sagan
-----------------------------------
Paul Sagan
President
<PAGE> 82
Schedule I
AKAMAI TECHNOLOGIES, INC.
DESIGNATION OF SERIES E CONVERTIBLE PREFERRED STOCK
The series of Preferred Stock designated and known as "Series E
Convertible Preferred Stock" shall consist of 1,867,480 shares.
1. Voting. Except as may be otherwise provided in these terms of the
Series E Convertible Preferred Stock, in the Certificate of Incorporation (the
"Certificate of Incorporation") of Akamai Technologies, Inc. (the "Corporation")
or by law, the Series E Convertible Preferred Stock shall vote together with all
other classes and series of stock of the Corporation as a single class on all
actions to be taken by the stockholders of the Corporation. Each share of Series
E Convertible Preferred Stock shall entitle the holder thereof to such number of
votes per share on each such action as shall equal the number of shares of
Common Stock (including fractions of a share) into which each share of Series E
Convertible Preferred Stock is then convertible.
2. Ranking. The Series E Convertible Preferred Stock shall rank, with
respect to dividend distributions and distributions upon a Liquidation Event (as
defined in paragraph 4A herein), senior to all classes of common stock of the
Company and to each other class of capital stock or series of preferred stock
(including the Series A Convertible Preferred Stock of the Corporation)
established before the Series B Preferred Stock Issue Date, by the Board of
Directors, pari passu with the Series B Convertible Preferred Stock, the Series
C Convertible Preferred Stock and the Series D Convertible Preferred Stock of
the Corporation, and senior or pari passu to any other class of capital stock or
series of preferred stock established after the Preferred Stock Issue Date by
the Board of Directors. All classes of common stock of the Company, the Series A
Convertible Preferred Stock and any other class of capital stock or series of
preferred stock established after the Preferred Stock Issue Date to which the
Series E Convertible Preferred Stock is senior, are collectively referred to
herein as "Junior Securities". The Series B Convertible Preferred Stock, the
Series C Convertible Preferred Stock and the Series D Convertible Preferred
Stock of the Corporation and any other class of capital stock or series of
preferred stock established after the Preferred Stock Issue Date which ranks
pari passu with the Series E Convertible Preferred Stock, are collectively
referred to herein as "Pari Passu Securities".
3. Dividends. The holders of shares of the Series E Convertible
Preferred Stock shall be entitled to receive, when, as and if dividends are
declared by the Board of Directors out of funds of the Corporation legally
available therefor, cumulative preferential dividends at the annual rate of 8%
on the Series E Liquidation Preference Payments (as defined in paragraph 4A
herein); provided, however, that any such dividends shall only be paid, whether
declared or not, immediately upon the occurrence of (i) a Liquidation Event
pursuant to paragraph 4A hereof or (ii) a Redemption pursuant to paragraph 7B
hereof. Holders of shares of Series E Convertible Preferred Stock shall be
entitled to receive the dividends provided for herein in preference to and in
priority over any dividends upon any of the Junior Securities. Dividends on the
Series E Convertible Preferred Stock shall accrue on a daily basis from the
Preferred Stock Issue Date and, to the extent they are not paid, shall
accumulate on an annual basis on each December 31,
<PAGE> 83
whether or not the Corporation has earnings or profits, whether or not there are
funds legally available for the payment of such dividends and whether or not
dividends are declared.
4. Liquidation, Dissolution and Winding-up.
4A. Liquidation. Upon any liquidation, dissolution or winding
up of the Corporation (a "Liquidation Event"), whether voluntary or involuntary,
the holders of the shares of Series E Convertible Preferred Stock shall be paid
an amount equal to $26.239 per share plus, in the case of each share, an amount
equal to dividends accrued but unpaid thereon, computed to the date payment
thereof is made available, together with payment to any Pari Passu Securities,
and before any payment shall be made to the holders of any Junior Securities,
such amount payable with respect to one share of Series E Convertible Preferred
Stock being sometimes referred to as the "Series E Liquidation Preference
Payment" and with respect to all shares of Series E Convertible Preferred Stock
being sometimes referred to as the "Series E Liquidation Preference Payments".
If upon any Liquidation Event, the assets to be distributed to the holders of
the Series E Convertible Preferred Stock shall be insufficient to permit payment
to such stockholders of the full preferential amounts aforesaid, then all of the
assets of the Corporation available for distribution to holders of the Series E
Convertible Preferred Stock and Pari Passu Securities shall be distributed to
such holders of the Series E Convertible Preferred Stock and Pari Passu
Securities pro rata, so that each holder receives that portion of the assets
available for distribution as the number of shares of such stock held by such
holder bears to the total number of shares of such stock then outstanding.
4B. Upon any Liquidation Event, immediately after the holders
of Series E Convertible Preferred Stock and holders of any Pari Passu Securities
have been paid in full pursuant to paragraph 4A above, the remaining net assets
of the Corporation available for distribution shall be distributed among the
holders of the shares of Junior Securities.
Written notice of such Liquidation Event, stating a payment date and
the place where said payments shall be made, shall be given by mail, postage
prepaid, or by facsimile to non-U.S. residents, not less than 20 days prior to
the payment date stated therein, to the holders of record of Series E
Convertible Preferred Stock, such notice to be addressed to each such holder at
its address as shown by the records of the Corporation.
The (x) consolidation or merger of the Corporation into or with any
other entity or entities which results in the exchange of outstanding shares of
the Corporation for securities or other consideration issued or paid or caused
to be issued or paid by any such entity or affiliate thereof (except a
consolidation or merger into a Subsidiary or merger in which the Corporation is
the surviving Corporation and the holders of the Corporation's voting stock
outstanding immediately prior to the transaction constitute a majority of the
holders of voting stock outstanding immediately following the transaction), (y)
sale or transfer by the Corporation of all or substantially all of its assets,
or (z) sale or transfer by the Corporation's stockholders of capital stock
representing a majority of the outstanding capital stock of the Corporation
shall be deemed to be a Liquidation Event within the meaning of the provisions
of this paragraph 4 (subject to the provisions of this paragraph 4 and not the
provisions of paragraph 6G hereof, unless paragraph 6G is elected in the
following proviso); provided, however, that if the holders of at least 60% of
the then outstanding shares of Series E Convertible Preferred Stock shall elect
the benefits of the provisions of paragraph 6G in lieu of receiving payment in a
Liquidation Event
<PAGE> 84
pursuant to this paragraph 4, then all holders of shares of Series E Convertible
Preferred Stock shall receive the benefits of the provisions of paragraph 6G in
lieu of receiving payment pursuant to this paragraph 4 for the particular
Organic Change (as defined in Section 6G) causing the rights of Section 6G to be
available. The election of the rights under Section 6G for any particular
Organic Change shall not constitute an election of the rights available under
Section 6G for any other Organic Change, for which the holders of Series E
Convertible Preferred Stock shall have a new election under the foregoing
proviso. Whenever the distribution provided for in this paragraph 4 shall be
payable in property other than cash, the value of such distribution shall be the
fair market value of such property as determined in good faith by the Board of
Directors of the Corporation.
5. Restrictions. At any time when at least 50% of the shares of Series
E Convertible Preferred Stock issued pursuant to the Purchase Agreement remain
outstanding, except where the vote or written consent of the holders of a
greater number of shares of the Corporation is required by law or by the
Certificate of Incorporation, and in addition to any other vote required by law
or the Certificate of Incorporation, without the written consent of the holders
of at least 60% of the then outstanding shares of Series E Convertible Preferred
Stock given in writing or by vote at a meeting, consenting or voting (as the
case may be) separately as a series, the Corporation will not:
(1) Consent to any Liquidation Event or merge or consolidate
with or into, or permit any Subsidiary to merge or consolidate with or into, any
other corporation, corporations, entity or entities (except a consolidation or
merger into a Subsidiary or merger in which the Corporation is the surviving
corporation and the holders of the Corporation's voting stock outstanding
immediately prior to the transaction constitute a majority of the holders of
voting stock outstanding immediately following the transaction or a
consolidation or merger pursuant to which the aggregate consideration definitely
and unconditionally payable to all of the stockholders of the Corporation is
greater than $1.2 billion) without the affirmative vote or written consent of
the holders of at least 50% of the then outstanding shares of Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock, Series D
Convertible Preferred Stock and Series E Convertible Preferred Stock, voting
together as a single class on a Common Stock equivalent basis;
(2) Sell, abandon, transfer, lease or otherwise dispose of all
or substantially all of its properties or assets (unless the aggregate
consideration definitely and unconditionally payable to all of the stockholders
of the Corporation is greater than $1.2 billion) without the affirmative vote or
written consent of the holders of at least 50% of the then outstanding shares of
Series A Convertible Preferred Stock, Series B Convertible Preferred Stock,
Series D Convertible Preferred Stock and Series E Convertible Preferred Stock,
voting together as a single class on a Common Stock equivalent basis;
(3) Amend, alter or repeal any provision of its Certificate of
Incorporation or By-laws in a manner adverse to holders of the Series E
Convertible Preferred Stock;
(4) Create or authorize the creation of or issue any
additional class or series of shares of stock (other than the Series C
Convertible Preferred Stock of the Corporation) unless the same ranks junior to
or on parity with the Series E Convertible Preferred Stock as to dividends and
the distribution of assets on a Liquidation Event, or increase the authorized
<PAGE> 85
amount of Series E Convertible Preferred Stock or increase the authorized amount
of any additional class or series of shares of stock unless the same ranks
junior to or on parity with the Series E Convertible Preferred Stock as to
dividends and the distribution of assets on a Liquidation Event, or create or
authorize any obligation or security convertible into shares of Series E
Convertible Preferred Stock or into shares of any other class or series of stock
unless the same ranks junior to or on parity with the Series E Convertible
Preferred Stock as to dividends and the distribution of assets on a Liquidation
Event, whether any such creation, authorization or increase shall be by means of
amendment to the Certificate of Incorporation or by merger, consolidation or
otherwise;
(5) In any manner amend, alter or change the designations or
the powers, preferences or rights, privileges or the restrictions of the Series
E Convertible Preferred Stock, provided, however, that the authorization or
creation of any shares of capital stock on parity with the Series E Convertible
Preferred Stock as to dividends and the distribution of assets on a Liquidation
Event shall not require the approval of holders of Series E Convertible
Preferred Stock;
(6) Purchase or redeem, or set aside any sums for the purchase
or redemption of, or pay any dividend or make any distribution on, any Junior
Securities, except for (i) dividends or other distributions payable on the
Common Stock solely in the form of additional shares of Common Stock or (ii)
repurchases of shares of capital stock (at the original purchase price therefor)
from officers, employees, directors or consultants of the Corporation which are
subject to restrictive stock purchase, right of first refusal or other
agreements under which the Corporation has the option to repurchase such shares
upon the occurrence of certain events, including termination of employment; or
(7) Increase the number of Reserved Employee Shares without
the affirmative vote or written consent of a majority of the directors
designated solely by the holders of Series A Convertible Preferred Stock and
Series B Convertible Preferred Stock or the affirmative vote or written consent
of the holders of at least 50% of the then outstanding shares of Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock, Series C
Convertible Preferred Stock, Series D Convertible Preferred Stock and Series E
Convertible Preferred Stock, voting together as a single class on a Common Stock
equivalent basis.
6. Conversion. The holders of shares of Series E Convertible Preferred
Stock shall have the following conversion rights:
6A. Right to Convert. Subject to the terms and conditions of
this paragraph 6, the holder of any share or shares of Series E Convertible
Preferred Stock shall have the right, at its option at any time, to convert any
such shares of Series E Convertible Preferred Stock (except that upon any
Liquidation Event the right of conversion shall terminate at the close of
business on the business day fixed for payment of the amounts distributable on
the Series E Convertible Preferred Stock) into such number of fully paid and
nonassessable shares of Common Stock as is obtained by (i) multiplying the
number of shares of Series E Convertible Preferred Stock so to be converted by
$26.239 and (ii) dividing the result by the conversion price of $26.239 per
share or in case an adjustment of such price has taken place pursuant to the
further provisions of this paragraph 6, then by the conversion price as last
adjusted and in effect at the date any share or shares of Series E Convertible
Preferred Stock are surrendered for conversion (such
<PAGE> 86
price, or such price as last adjusted, being referred to as the "Series E
Conversion Price"). Such rights of conversion shall be exercised by the holder
thereof by giving written notice that the holder elects to convert a stated
number of shares of Series E Convertible Preferred Stock into Common Stock and
by surrender of a certificate or certificates for the shares so to be converted
to the Corporation at its principal office (or such other office or agency of
the Corporation as the Corporation may designate by notice in writing to the
holders of the Series E Convertible Preferred Stock) at any time during its
usual business hours on the date set forth in such notice, together with a
statement of the name or names (with address) in which the certificate or
certificates for shares of Common Stock shall be issued.
6B. Issuance of Certificates; Time Conversion Effected.
Promptly after the receipt of the written notice referred to in paragraph 6A and
surrender of the certificate or certificates for the share or shares of Series E
Convertible Preferred Stock to be converted, the Corporation shall issue and
deliver, or cause to be issued and delivered, to the holder, registered in such
name or names as such holder may direct, a certificate or certificates for the
number of whole shares of Common Stock issuable upon the conversion of such
share or shares of Series E Convertible Preferred Stock. To the extent permitted
by law, such conversion shall be deemed to have been effected and the Series E
Conversion Price shall be determined as of the close of business on the date on
which such written notice shall have been received by the Corporation and the
certificate or certificates for such share or shares shall have been surrendered
as aforesaid, and at such time the rights of the holder of such share or shares
of Series E Convertible Preferred Stock shall cease, and the person or persons
in whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares represented thereby.
6C. Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of Series E Convertible
Preferred Stock into Common Stock and no payment or adjustment shall be made
upon any conversion on account of any cash dividends on the Common Stock issued
upon such conversion. At the time of each conversion, the Corporation shall pay
in cash an amount equal to all dividends declared and unpaid (if any) on the
shares of Series E Convertible Preferred Stock surrendered for conversion to the
date upon which such conversion is deemed to take place as provided in paragraph
6B. In case the number of shares of Series E Convertible Preferred Stock
represented by the certificate or certificates surrendered pursuant to paragraph
6A exceeds the number of shares converted, the Corporation shall, upon such
conversion, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Series E Convertible Preferred Stock represented by the certificate or
certificates surrendered which are not to be converted. If any fractional share
of Common Stock would, except for the provisions of the first sentence of this
paragraph 6C, be delivered upon such conversion, the Corporation, in lieu of
delivering such fractional share, shall pay to the holder surrendering the
Series E Convertible Preferred Stock for conversion an amount in cash equal to
the current fair market value of such fractional share as determined in good
faith by the Board of Directors of the Corporation, and based upon the aggregate
number of shares of Series E Convertible Preferred Stock surrendered by any one
holder.
6D. Adjustment of Series E Conversion Price Upon Issuance of
Common Stock. Except as provided in paragraphs 6E and 6F, if and whenever the
Corporation shall issue or sell, or is, in accordance with subparagraphs 6D(1)
through 6D(7), deemed to have issued or sold,
<PAGE> 87
any shares of Common Stock for a consideration per share less than the Series E
Conversion Price in effect immediately prior to the time of such issue or sale,
(such number being appropriately adjusted to reflect the occurrence of any event
described in paragraph 6F), then, forthwith upon such issue or sale, the Series
E Conversion Price shall be reduced to the price determined by dividing (i) an
amount equal to the sum of (a) the number of shares of Common Stock outstanding
immediately prior to such issue or sale (assuming the conversion of the
outstanding shares of Series E Convertible Preferred Stock) multiplied by the
then existing Series E Conversion Price and (b) the consideration, if any,
received by the Corporation upon such issue or sale, by (ii) the total number of
shares of Common Stock outstanding immediately after such issue or sale
(assuming the conversion of the outstanding shares of Series E Convertible
Preferred Stock).
For purposes of this paragraph 6D, the following subparagraphs
6D(1) to 6D(7) shall also be applicable:
6D(1) Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any warrants or other rights to
subscribe for or to purchase, or any options for the purchase of,
Common Stock or any stock or security convertible into or exchangeable
for Common Stock (such warrants, rights or options being called
"Options" and such convertible or exchangeable stock or securities
being called "Convertible Securities") whether or not such Options or
the right to convert or exchange any such Convertible Securities are
immediately exercisable, and the price per share for which Common Stock
is issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (i) the
total amount, if any, received or receivable by the Corporation as
consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the Corporation
upon the exercise of all such Options, plus, in the case of such
Options which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the issue or
sale of all such Convertible Securities and upon the conversion or
exchange thereof, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of such Options or upon the conversion
or exchange of all such Convertible Securities issuable upon the
exercise of such Options) shall be less than the Series E Conversion
Price in effect immediately prior to the time of the granting of such
Options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities
issuable upon the exercise of such Options shall be deemed to have been
issued for such price per share as of the date of granting of such
Options or the issuance of such Convertible Securities and thereafter
shall be deemed to be outstanding. Except as otherwise provided in
subparagraph 6D(3), no adjustment of the Series E Conversion Price
shall be made upon the actual issue of such Common Stock or of such
Convertible Securities upon exercise of such Options or upon the actual
issue of such Common Stock upon conversion or exchange of such
Convertible Securities.
6D(2) Issuance of Convertible Securities. In case the
Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert any such
Convertible Securities are immediately exercisable, and the price per
share for which
<PAGE> 88
Common Stock is issuable upon such conversion or exchange (determined
by dividing (i) the total amount received or receivable by the
Corporation as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion
or exchange of all such Convertible Securities thereof, by (ii) the
total maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities) shall be
less than the Series E Conversion Price in effect immediately prior to
the time of such issue or sale, then the total maximum number of shares
of Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall be deemed to have been issued for such
price per share as of the date of the issue or sale of such Convertible
Securities and thereafter shall be deemed to be outstanding, provided
that (a) except as otherwise provided in subparagraph 6D(3), no
adjustment of the Series E Conversion Price shall be made upon the
actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities and (b) if any such issue or sale of such
Convertible Securities is made upon exercise of any Options to purchase
any such Convertible Securities for which adjustments of the Series E
Conversion Price have been or are to be made pursuant to other
provisions of this paragraph 6D, no further adjustment of the Series E
Conversion Price shall be made by reason of such issue or sale.
6D(3) Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if the purchase price
provided for in any Option referred to in subparagraph 6D(1), the
additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in subparagraph
6D(1) or 6D(2), or the rate at which Convertible Securities referred to
in subparagraph 6D(1) or 6D(2) are convertible into or exchangeable for
Common Stock shall change at any time (including, but not limited to,
changes under or by reason of provisions designed to protect against
dilution), the Series E Conversion Price in effect at the time of such
event shall forthwith be readjusted to the Series E Conversion Price
which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold; provided,
however, that in no event shall the Series E Conversion Price then in
effect hereunder be increased; and on the expiration of any such Option
or the termination of any such right to convert or exchange such
Convertible Securities, the Series E Conversion Price then in effect
hereunder shall forthwith be increased to the Conversion Price which
would have been in effect at the time of such expiration or termination
had such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination, never been issued.
6D(4) Stock Dividends. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the
Corporation payable in Common Stock (except for the issue of stock
dividends or distributions upon the outstanding Common Stock for which
adjustment is made pursuant to paragraph 6F), Options or Convertible
Securities, any Common Stock, Options or Convertible Securities, as the
case may be, issuable in payment of such dividend or distribution shall
be deemed to have been issued or sold without consideration.
<PAGE> 89
6D(5) Consideration for Stock. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the
amount received by the Corporation therefor, without deduction
therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith.
In case any shares of Common Stock, Options or Convertible Securities
shall be issued or sold for consideration other than cash, the amount
of the consideration other than cash received by the Corporation shall
be deemed to be the fair value of such consideration as determined in
good faith by the Board of Directors of the Corporation, without
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith.
In case any Options shall be issued in connection with the issue and
sale of other securities of the Corporation, together comprising one
integral transaction in which no specific consideration is allocated to
such Options by the parties thereto, such Options shall be deemed to
have been issued for such consideration as determined in good faith by
the Board of Directors of the Corporation.
6D(6) Record Date. In case the Corporation shall take a record
of the holders of its Common Stock for the purpose of entitling them
(i) to receive a dividend or other distribution payable in Common
Stock, Options or Convertible Securities or (ii) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such
record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase,
as the case may be.
6D(7) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by
or for the account of the Corporation (or any Subsidiary), and the
disposition of any such shares shall be considered an issue or sale of
Common Stock for the purpose of this paragraph 6D.
6E. Certain Issues Excepted. Anything herein to the contrary
notwithstanding, the Corporation shall not be required to make any adjustment of
the Series E Conversion Price if it first obtains the written consent of the
holders of at least 60% of the then outstanding shares of Series E Convertible
Preferred Stock that no adjustment shall be required. In no event shall the
Corporation be required to make any adjustment to the Series E Conversion Price
in the case of the issuance of (i) shares of Series C Convertible Preferred
Stock pursuant to the Series B Purchase Agreement, (ii) shares of Common Stock
issuable upon conversion of the Series A Convertible Preferred Stock, Series B
Convertible Preferred Stock, Series C Convertible Preferred Stock, Series D
Convertible Preferred Stock or Series E Convertible Preferred Stock, (iii)
shares of Common Stock issued or issuable as a dividend or distribution on
Series A Convertible Preferred Stock, Series B Convertible Preferred Stock,
Series C Convertible Preferred Stock, Series D Convertible Preferred Stock or
Series E Convertible Preferred Stock, (iv) Reserved Employee Shares (as defined
in paragraph 9 herein), (v) warrants issued in connection with senior
subordinated notes of the Corporation as contemplated by the Series B Purchase
Agreement or shares of Common Stock issuable upon conversion of such warrants,
or (vi) Options outstanding as of the Preferred Stock Issue Date.
<PAGE> 90
6F. Subdivision or Combination of Common Stock. In case the
Corporation shall at any time subdivide (by any stock split, stock dividend or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Series E Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced, and, conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Series E Conversion Price in effect immediately prior to such
combination shall be proportionately increased.
6G. Reorganization or Reclassification. If any capital
reorganization, reclassification, recapitalization, consolidation, merger, sale
of all or substantially all of the Corporation's assets or other similar
transaction (any such transaction being referred to herein as an "Organic
Change") shall be effected in such a way that holders of Common Stock shall be
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such Organic Change, lawful and adequate provisions shall be made
whereby each holder of a share or shares of Series E Convertible Preferred Stock
shall thereupon have the right to receive, upon the basis and upon the terms and
conditions specified herein and in lieu of or in addition to, as the case may
be, the shares of Common Stock immediately theretofore receivable upon the
conversion of such share or shares of Series E Convertible Preferred Stock, such
shares of stock, securities or assets as may be issued or payable with respect
to or in exchange for a number of outstanding shares of such Common Stock equal
to the number of shares of such Common Stock immediately theretofore receivable
upon such conversion had such Organic Change not taken place, and in any case of
a reorganization or reclassification only appropriate provisions shall be made
with respect to the rights and interests of such holder to the end that the
provisions hereof (including without limitation provisions for adjustments of
the Series E Conversion Price) shall thereafter be applicable, as nearly as may
be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of such conversion rights.
6H. Notice of Adjustment. Upon any adjustment of the Series E
Conversion Price, then and in each such case the Corporation shall give written
notice thereof, by first class mail, postage prepaid, or by facsimile
transmission to non-U.S. residents, addressed to each holder of shares of Series
E Convertible Preferred Stock at the address of such holder as shown on the
books of the Corporation, which notice shall state the Series E Conversion Price
resulting from such adjustment, setting forth in reasonable detail the method
upon which such calculation is based.
6I. Other Notices. In case at any time:
(1) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other distribution to the holders of
its Common Stock;
(2) the Corporation shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of any class or
other rights;
(3) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a consolidation or
merger of the Corporation with or into, or a sale of all or substantially all of
its assets to, another entity or entities; or
<PAGE> 91
(4) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by facsimile transmission to non-U.S. residents,
addressed to each holder of any shares of Preferred Stock at the address of such
holder as shown on the books of the Corporation, (a) at least 20 days' prior
written notice of the date on which the books of the Corporation shall close or
a record shall be taken for such dividend, distribution or subscription rights
or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least 20
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (a) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto and such notice in
accordance with the foregoing clause (b) shall also specify the date on which
the holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be.
6J. Stock to be Reserved. The Corporation will at all times
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issuance upon the conversion of Series E Convertible Preferred Stock
as herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of all outstanding shares of Series E Convertible
Preferred Stock. The Corporation covenants that all shares of Common Stock which
shall be so issued shall be duly and validly issued and fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, and, without limiting the generality of the foregoing, the
Corporation covenants that it will from time to time take all such action as may
be requisite to assure that the par value per share of the Common Stock is at
all times equal to or less than the Series E Conversion Price in effect at the
time. The Corporation will take all such action as may be necessary to assure
that all such shares of Common Stock may be so issued without violation of any
applicable law or regulation, or of any requirement of any national securities
exchange upon which the Common Stock may be listed.
6K. No Reissuance of Series E Convertible Preferred Stock.
Shares of Series E Convertible Preferred Stock which are converted into shares
of Common Stock as provided herein shall not be reissued.
6L. Issue Tax. The issuance of certificates for shares of
Common Stock upon conversion of Series E Convertible Preferred Stock shall be
made without charge to the holders thereof for any issuance tax in respect
thereof; provided that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the holder of the
Series E Convertible Preferred Stock which is being converted.
6M. Closing of Books. The Corporation will at no time close
its transfer books against the transfer of any Series E Convertible Preferred
Stock or of any shares of Common Stock issued or issuable upon the conversion of
any shares of Series E Convertible Preferred
<PAGE> 92
Stock in any manner which interferes with the timely conversion of such
Preferred Stock, except as may otherwise be required to comply with applicable
securities laws.
6N. Definition of Common Stock. As used in this paragraph 6,
the term "Common Stock" shall mean and include the Corporation's authorized
Common Stock, par value $.01 per share, as constituted on the date of filing of
these terms of the Series E Convertible Preferred Stock, and shall also include
any capital stock of any class of the Corporation thereafter authorized which
shall neither be limited to a fixed sum or percentage of par value in respect of
the rights of the holders thereof to participate in dividends nor entitled to a
preference in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation; provided that the
shares of Common Stock receivable upon conversion of shares of Series E
Convertible Preferred Stock shall include only shares designated as Common Stock
of the Corporation on the date of filing of this instrument, or in case of any
reorganization or reclassification of the outstanding shares thereof, the stock,
securities or assets provided for in subparagraph 6G.
6O. Mandatory Conversion. All outstanding shares of Series E
Convertible Preferred Stock shall automatically convert to shares of Common
Stock if at any time the Corporation shall effect a public offering of shares of
Common Stock (any such offering, regardless of compliance with subsections (i),
(ii) and (iii) herein, being referred to as a "Public Offering"), provided (i)
the aggregate gross proceeds from such offering to the Corporation shall be at
least $20,000,000, (ii) the price paid by the public for such shares shall be at
least (x) 2.0 times the then Series B Conversion Price if the Public Offering
occurs prior to the 18 month anniversary of the Series B Preferred Stock Issue
Date or (y) 3.0 times the then Series B Conversion Price if the Public Offering
occurs on or after the 18 month anniversary of the Series B Preferred Stock
Issue Date and (iii) the offering is a firm commitment underwritten Public
Offering, and such automatic conversion shall be effective upon the closing of
the sale of such shares by the Corporation pursuant to such Public Offering.
<PAGE> 93
7. Redemption. The shares of Series E Convertible Preferred Stock shall
be redeemed as follows:
7A. Optional Redemption. The Corporation shall not have the
right to call or redeem at any time all or any shares of Series E Convertible
Preferred Stock. With the approval of the holders of 66% of the then outstanding
shares of Series E Convertible Preferred Stock, one or more holders of shares of
Series E Convertible Preferred Stock may, by giving notice (the "Notice") to the
Corporation, require the Corporation to redeem any or all of the outstanding
Series E Convertible Preferred Stock on the Redemption Date (as defined below).
Upon receipt of the Notice, the Corporation will so notify all other persons
holding Series E Convertible Preferred Stock. After receipt of the Notice, the
Corporation shall fix the first date for redemption, which shall be the date
specified in the Notice, being any date on or after the earlier of (i) the fifth
(5th) anniversary of the Series B Preferred Stock Issue Date and (ii) the date
which is the day before the Corporation is due to redeem any outstanding Junior
Securities (the "Redemption Date"). All holders of Series E Convertible
Preferred Stock shall deliver to the Corporation during regular business hours,
at the office of any transfer agent of the Corporation for the Series E
Convertible Preferred Stock, or at the principal office of the Corporation or at
such other place as may be designated by the Corporation, the certificate or
certificates for the Series E Convertible Preferred Stock, duly endorsed for
transfer to the Corporation (if required by it) on or before the Redemption
Date.
7B. Redemption Price and Payment. The Series E Convertible
Preferred Stock to be redeemed on the Redemption Date shall be redeemed by
paying for each share in cash an amount equal to the Series E Redemption Price
(as defined below). For purposes of this paragraph 7B, the "Series E Redemption
Price" shall mean $26.239 per share, plus an amount equal to all dividends
accrued and unpaid on each such share; provided, however, that if the Redemption
Date is after the fifth (5th) anniversary of the Series B Preferred Stock Issue
Date, then the "Series E Redemption Price" shall mean the greater of (i) $26.239
per share, plus an amount equal to all dividends accrued and unpaid on each such
share and (ii) the Fair Market Value (as defined below) of the Common Stock
underlying the Series E Convertible Preferred Stock. Such payment shall be made
in full on the Redemption Date to the holders entitled thereto. For purposes of
this paragraph 7B, "Fair Market Value" of the Common Stock shall mean the
average of the fair market valuations of the Common Stock performed by two
investment banks (the "Initial Appraisers"), one of which shall be retained by
the Corporation and one of which shall be retained by the holders of a majority
in interest of the Series E Convertible Preferred Stock. Subject to the
following sentence, such determination by the Initial Appraisers of Fair Market
Value shall be final and binding on the parties. If the higher of the two
valuations of the Initial Appraisers is equal to or greater than 110% of the
lower valuation, the Corporation and holders of a majority in interest of the
Series E Convertible Preferred Stock shall select a third investment bank (the
"Final Appraiser"), which shall be mutually agreeable to the Corporation and the
holders of a majority in interest of the Series E Convertible Preferred Stock.
The fair market value of the Common Stock as determined by the Final Appraiser
shall be final and binding on the parties. The fees and expenses of the Initial
Appraisers shall be paid for by the party selecting such Initial Appraiser and
the fees and expenses of the Final Appraiser shall be shared by the Corporation
and the holders of the Series E Convertible Preferred Stock.
7C. Redemption Mechanics. At least 15 but not more than 35
days prior to the Redemption Date, written notice (the "Redemption Notice")
shall be given by the Corporation
<PAGE> 94
by mail, postage prepaid, or by facsimile transmission to non-U.S. residents, to
each holder of record (at the close of business on the business day next
preceding the day on which the Redemption Notice is given) of shares of Series E
Convertible Preferred Stock notifying such holder of the redemption and
specifying the Series E Redemption Price, the Redemption Date and the place
where said Series E Redemption Price shall be payable. The Redemption Notice
shall be addressed to each holder at his address as shown by the records of the
Corporation. From and after the close of business on the Redemption Date, unless
there shall have been a default in the payment of the Series E Redemption Price,
all rights of holders of shares of Series E Convertible Preferred Stock (except
the right to receive the Series E Redemption Price) shall cease with respect to
such shares, and such shares shall not thereafter be transferred on the books of
the Corporation or be deemed to be outstanding for any purpose whatsoever. If
the funds of the Corporation legally available for redemption of shares of
Series E Convertible Preferred Stock on the Redemption Date are insufficient to
redeem the total number of outstanding shares of Series E Convertible Preferred
Stock to be redeemed on such Redemption Date, the holders of shares of Series E
Convertible Preferred Stock shall share ratably in any funds legally available
for redemption of such shares according to the respective amounts which would be
payable with respect to the full number of shares owned by them if all such
outstanding shares were redeemed in full. The shares of Series E Convertible
Preferred Stock not redeemed shall remain outstanding and entitled to all rights
and preferences provided herein; provided, however, that such unredeemed shares
shall be entitled to receive interest accruing daily with respect to the
applicable Series E Redemption Price at the rate of 15% per annum, payable
quarterly in arrears. At any time thereafter when additional funds of the
Corporation are legally available for the redemption of such shares of Series E
Convertible Preferred Stock, such funds will be used, at the end of the next
succeeding fiscal quarter, to redeem the balance of such shares, or such portion
thereof for which funds are then legally available, on the basis set forth
above.
7D. Redeemed or Otherwise Acquired Shares to be Retired. Any
shares of Series E Convertible Preferred Stock redeemed pursuant to this
paragraph 7 or otherwise acquired by the Corporation in any manner whatsoever
shall be canceled and shall not under any circumstances be reissued; and the
Corporation may from time to time take such appropriate corporate action as may
be necessary to reduce accordingly the number of authorized shares of Series E
Convertible Preferred Stock.
8. Amendments. Except where the vote or written consent of the holders
of a different number of shares of the Corporation is required by these terms of
the Series E Convertible Preferred Stock, by law or by the Certificate of
Incorporation, no provision of these terms of the Series E Convertible Preferred
Stock may be amended, modified or waived without the written consent or
affirmative vote of the holders of at least 60% of the then outstanding shares
of Series E Convertible Preferred Stock.
9. Definitions. As used herein, the following terms shall have the
following meanings:
(1) The term "Founders" shall mean F. Thomson Leighton, Daniel
Lewin, Jonathan Seelig, Randall Kaplan, Gilbert Friesen and David Karger.
<PAGE> 95
(2) The term "Preferred Stock Issue Date" shall mean the date
on which the Series E Convertible Preferred Stock is originally issued by the
Corporation pursuant to the Purchase Agreement.
(3) The term "Purchase Agreement" shall mean the Series E
Convertible Preferred Stock Purchase Agreement dated as of August 6, 1999
between the Corporation and Cisco Systems, Inc., as in effect on August 6, 1999.
(4) The term the "Plan" shall mean the Corporation's 1998
Stock Incentive Plan.
(5) The term "Reserved Employee Shares" shall mean shares of
Common Stock reserved by the Corporation pursuant to the Plan from time to time
for (i) the sale of shares of Common Stock to employees, consultants or
non-employee directors (other than representatives of the holders of Preferred
Stock) of the Corporation or (ii) the exercise of options to purchase Common
Stock granted to employees, consultants or non-employee directors (other than
representatives of the holders of Preferred Stock) of the Corporation, not to
exceed in the aggregate 11,377,800 shares of Common Stock for both clauses (i)
and (ii), with such number including 2,132,100 shares issued or subject to
options granted prior to the date of the initial issuance of the Series A
Convertible Preferred Stock (the "Option Shares") (appropriately adjusted to
reflect an event described in paragraph 6F hereof); provided that, such number
of such shares subject to the Plan shall be increased by up to 7,559,226
additional shares of Common Stock (appropriately adjusted to reflect an event
described in paragraph 6F hereof) (collectively, the "Founders' Shares") upon
the repurchase of such Founders' Shares by the Corporation from the Founders
pursuant to contractual rights held by the Corporation. The foregoing numbers of
Reserved Employee Shares may be increased by the affirmative vote or written
consent of a majority of the directors designated solely by the holders of
Series A Convertible Preferred Stock and Series B Convertible Preferred Stock or
the affirmative vote or written consent of the holders of at least 50% of the
then outstanding shares of Series A Convertible Preferred Stock, Series B
Convertible Preferred Stock, Series C Convertible Preferred Stock, Series D
Convertible Preferred Stock and Series E Convertible Preferred Stock, voting
together as a single class on a Common Stock equivalent basis.
(6) The term "Series B Conversion Price" shall mean the
conversion price of the Series B Convertible Preferred Stock from time to time
under the terms of the designation of the Series B Convertible Preferred Stock
of the Corporation.
(7) The term "Series B Preferred Stock Issue Date" shall mean
April 16, 1999.
(8) The term "Series B Purchase Agreement" shall mean the
Series B Convertible Preferred Stock and Series C Convertible Preferred Stock
Purchase Agreement dated as of April 16, 1999 among the Corporation and the
purchasers named therein.
<PAGE> 96
(9) The term "Subsidiary" or "Subsidiaries" shall mean any
corporation, partnership, trust or other entity of which the Corporation and/or
any of its other subsidiaries directly or indirectly owns at the time a majority
of the outstanding shares of every class of equity security of such corporation,
partnership, trust or other entity.
<PAGE> 97
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
AKAMAI TECHNOLOGIES, INC.
Pursuant to Section 242
of the General Corporation Law of
the State of Delaware
Akamai Technologies, Inc. (hereinafter called the "Corporation"),
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify as follows:
The Board of Directors of the Corporation, at a meeting held on August
5, 1999, duly adopted a resolution, pursuant to Sections 141(f) and 242 of the
General Corporation Law of the State of Delaware, setting forth an amendment to
the Certificate of Incorporation of the Corporation and declaring said amendment
to be advisable. The stockholders of the Corporation duly approved said proposed
amendment by written consent in accordance with Sections 228 and 242 of the
General Corporation Law of the State of Delaware, and written notice of such
consent has been or will be given to all stockholders who have not consented in
writing to said amendment. The resolution setting forth the amendment is as
follows:
RESOLVED: That the first paragraph of Article FOURTH of the
Certificate of Incorporation of the Corporation be and
hereby is deleted in its entirety and that the following
paragraph be inserted in lieu thereof:
"FOURTH. The total number of shares of all classes of stock
which the Corporation shall have authority to issue is 310,000,000
shares, consisting of (i) 300,000,000 shares of Common Stock, $0.01 par
value per share ("Common Stock"), and (ii) 10,000,000 shares of
Preferred Stock, $0.01 par value per share ("Preferred Stock").
<PAGE> 98
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its President on this 5th day of August, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Paul Sagan
-----------------------------
Paul Sagan
President
<PAGE> 1
Exhibit 3.2
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
AKAMAI TECHNOLOGIES, INC.
Akamai Technologies, Inc., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware, does hereby
certify as follows:
1. The Corporation filed its original Certificate of Incorporation with
the Secretary of State of the State of Delaware on August 20, 1998.
2. The Corporation filed a Certificate of Amendment of the Certificate of
Incorporation with the Secretary of State of the State of Delaware on November
18, 1998.
3. The Corporation filed a Certificate of Designations of Series A
Convertible Preferred Stock with the Secretary of State of the State of Delaware
on November 23, 1998.
4. The Corporation filed a Certificate of Amendment of the Certificate of
Incorporation with the Secretary of State of the State of Delaware on January
27, 1999.
5. The Corporation filed a Certificate of Amendment of the Certificate of
Incorporation with the Secretary of State of the State of Delaware on April 16,
1999.
6. The Corporation filed a Certificate of Designations of Series B
Convertible Preferred Stock with the Secretary of State of the State of Delaware
on April 16, 1999.
7. The Corporation filed a Certificate of Designations of Series C
Convertible Preferred Stock with the Secretary of State of the State of Delaware
on April 16, 1999.
8. The Corporation filed a Certificate of Amendment of the Certificate of
Incorporation with the Secretary of State of the State of Delaware on May 25,
1999.
9. The Corporation filed a Certificate of Designations of Series D
Convertible Preferred Stock with the Secretary of State of the State of Delaware
on June 21, 1999.
10. The Corporation filed a Certificate of Amendment of the Certificate of
Incorporation with the Secretary of State of the State of Delaware on August
6, 1999.
<PAGE> 2
11. The Corporation filed a Certificate of Designations of Series E
Convertible Preferred Stock with the Secretary of State of the State of Delaware
on August 6, 1999.
12. An Amended and Restated Certificate of Incorporation was filed with
the Secretary of State of the State of Delaware on August [__], 1999, which
Amended and Restated Certificate of Incorporation was amended by a Certificate
of Retirement of Stock filed on even date herewith.
13. At a duly called meeting of the Board of Directors of the Corporation
at which a quorum was present at all times, a resolution was duly adopted,
pursuant to Sections 242 and 245 of the General Corporation Law of the State of
Delaware, setting forth an Amended and Restated Certificate of Incorporation of
the Corporation and declaring said Amended and Restated Certificate of
Incorporation advisable. The stockholders of the Corporation duly approved said
proposed Amended and Restated Certificate of Incorporation by written consent in
accordance with Sections 228, 242 and 245 of the General Corporation Law of the
State of Delaware. The resolution setting forth the Amended and Restated
Certificate of Incorporation is as follows:
RESOLVED: That the Certificate of Incorporation of the Corporation, be and
hereby is amended and restated in its entirety so that the same
shall read as follows:
FIRST. The name of the Corporation is:
Akamai Technologies, Inc.
SECOND. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD. The nature of the business or purposes to be conducted or promoted
by the Corporation is as follows:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue [305,000,000] shares, consisting of
(i) [300,000,000] shares of Common Stock, $.01 par value per share ("Common
Stock"), and (ii) 5,000,000 shares of Preferred Stock, $.01 par value per share
("Preferred Stock").
2
<PAGE> 3
The following is a statement of the designations and the powers, privileges
and rights, and the qualifications, limitations or restrictions thereof in
respect of each class of capital stock of the Corporation.
A. COMMON STOCK.
1. GENERAL. The voting, dividend and liquidation rights of the holders of
the Common Stock are subject to and qualified by the rights of the holders of
the Preferred Stock of any series as may be designated by the Board of Directors
upon any issuance of the Preferred Stock of any series.
2. VOTING. The holders of the Common Stock are entitled to one vote for
each share held at all meetings of stockholders. There shall be no cumulative
voting.
The number of authorized shares of Common Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the stock of the Corporation
entitled to vote, irrespective of the provisions of Section 242(b)(2) of the
General Corporation Law of Delaware.
3. DIVIDENDS. Dividends may be declared and paid on the Common Stock from
funds lawfully available therefor as and when determined by the Board of
Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.
4. LIQUIDATION. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive all assets of the Corporation available for distribution to its
stockholders, subject to any preferential rights of any then outstanding
Preferred Stock.
B. PREFERRED STOCK.
Preferred Stock may be issued from time to time in one or more series, each
of such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors of the Corporation as hereinafter provided. Any shares of
Preferred Stock which may be redeemed, purchased or acquired by the Corporation
may be reissued except as otherwise provided by law. Different series of
Preferred Stock shall not be construed to constitute different classes of shares
for the purposes of voting by classes unless expressly provided.
Authority is hereby expressly granted to the Board of Directors from time
to time to issue the Preferred Stock in one or more series, and in connection
with the creation of any such series, by resolution or resolutions providing for
the issue of the shares
3
<PAGE> 4
thereof, to determine and fix such voting powers, full or limited, or no voting
powers, and such designations, preferences and relative participating, optional
or other special rights, and qualifications, limitations or restrictions
thereof, including without limitation thereof, dividend rights, conversion
rights, redemption privileges and liquidation preferences, as shall be stated
and expressed in such resolutions, all to the full extent now or hereafter
permitted by the General Corporation Law of Delaware. Without limiting the
generality of the foregoing, the resolutions providing for issuance of any
series of Preferred Stock may provide that such series shall be superior or rank
equally or be junior to the Preferred Stock of any other series to the extent
permitted by law. Except as otherwise provided in this Certificate of
Incorporation, no vote of the holders of the Preferred Stock or Common Stock
shall be a prerequisite to the designation or issuance of any shares of any
series of the Preferred Stock authorized by and complying with the conditions of
this Certificate of Incorporation, the right to have such vote being expressly
waived by all present and future holders of the capital stock of the
Corporation.
FIFTH. The Corporation shall have a perpetual existence.
SIXTH. In furtherance of and not in limitation of powers conferred by
statute, it is further provided that the Board of Directors is expressly
authorized to adopt, amend or repeal the By-Laws of the Corporation.
SEVENTH. Except to the extent that the General Corporation Law of Delaware
prohibits the elimination or limitation of liability of directors for breaches
of fiduciary duty, no director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for any breach of
fiduciary duty as a director, notwithstanding any provision of law imposing such
liability. No amendment to or repeal of this provision shall apply to or have
any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment.
EIGHTH. 1. ACTIONS, SUITS AND PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF
THE CORPORATION. The Corporation shall indemnify each 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, or has agreed to become, a director or
officer of the Corporation, or is or was serving, or has agreed to serve, at the
request of the Corporation, as a director, officer or trustee of, or in a
similar capacity with, another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan) (all such persons being
referred to hereafter as an "Indemnitee"), or by reason of any action alleged to
have been taken or omitted in such capacity, against all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with such action, suit
or proceeding and any appeal therefrom, if he acted
4
<PAGE> 5
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 action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of NOLO CONTENDERE or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in, or not opposed to,
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
Notwithstanding anything to the contrary in this Article, except as set forth in
Section 7 below, the Corporation shall not indemnify an Indemnitee seeking
indemnification in connection with a proceeding (or part thereof) initiated by
the Indemnitee unless the initiation thereof was approved by the Board of
Directors of the Corporation. Notwithstanding anything to the contrary in this
Article, the Corporation shall not indemnify an Indemnitee to the extent such
Indemnitee is reimbursed from the proceeds of insurance, and in the event the
Corporation makes any indemnification payments to an Indemnitee and such
Indemnitee is subsequently reimbursed from the proceeds of insurance, such
Indemnitee shall promptly refund such indemnification payments to the
Corporation to the extent of such insurance reimbursement.
2. ACTIONS OR SUITS BY OR IN THE RIGHT OF THE CORPORATION. The
Corporation shall indemnify any Indemnitee who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was, or has agreed to become, a director or
officer of the Corporation, or is or was serving, or has agreed to serve, at the
request of the Corporation, as a director, officer or trustee of, or in a
similar capacity with, another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan), or by reason of any
action alleged to have been taken or omitted in such capacity, against all
expenses (including attorneys' fees) and, to the extent permitted by law,
amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such action, suit or proceeding and any appeal
therefrom, 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, 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 the Court of Chancery of Delaware shall
determine upon application that, despite the adjudication of such liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses (including attorneys' fees)
which the Court of Chancery of Delaware shall deem proper.
3. INDEMNIFICATION FOR EXPENSES OF SUCCESSFUL PARTY. Notwithstanding the
other provisions of this Article, to the extent that an Indemnitee has been
successful, on the merits or otherwise, in defense of any action, suit or
proceeding referred to in Sections 1 and 2 of this Article, or in defense of any
claim, issue or matter therein, or on
5
<PAGE> 6
appeal from any such action, suit or proceeding, he shall be indemnified against
all expenses (including attorneys' fees) actually and reasonably incurred by him
or on his behalf in connection therewith. Without limiting the foregoing, if any
action, suit or proceeding is disposed of, on the merits or otherwise (including
a disposition without prejudice), without (i) the disposition being adverse to
the Indemnitee, (ii) an adjudication that the Indemnitee was liable to the
Corporation, (iii) a plea of guilty or NOLO CONTENDERE by the Indemnitee, (iv)
an adjudication that the Indemnitee did not act in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and (v) with respect to any criminal proceeding, an adjudication
that the Indemnitee had reasonable cause to believe his conduct was unlawful,
the Indemnitee shall be considered for the purposes hereof to have been wholly
successful with respect thereto.
4. NOTIFICATION AND DEFENSE OF CLAIM. As a condition precedent to his
right to be indemnified, the Indemnitee must notify the Corporation in writing
as soon as practicable of any action, suit, proceeding or investigation
involving him for which indemnity will or could be sought. With respect to any
action, suit, proceeding or investigation of which the Corporation is so
notified, the Corporation will be entitled to participate therein at its own
expense and/or to assume the defense thereof at its own expense, with legal
counsel reasonably acceptable to the Indemnitee. After notice from the
Corporation to the Indemnitee of its election so to assume such defense, the
Corporation shall not be liable to the Indemnitee for any legal or other
expenses subsequently incurred by the Indemnitee in connection with such claim,
other than as provided below in this Section 4. The Indemnitee shall have the
right to employ his own counsel in connection with such claim, but the fees and
expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of the Indemnitee
unless (i) the employment of counsel by the Indemnitee has been authorized by
the Corporation, (ii) counsel to the Indemnitee shall have reasonably concluded
that there may be a conflict of interest or position on any significant issue
between the Corporation and the Indemnitee in the conduct of the defense of such
action or (iii) the Corporation shall not in fact have employed counsel to
assume the defense of such action, in each of which cases the fees and expenses
of counsel for the Indemnitee shall be at the expense of the Corporation, except
as otherwise expressly provided by this Article. The Corporation shall not be
entitled, without the consent of the Indemnitee, to assume the defense of any
claim brought by or in the right of the Corporation or as to which counsel for
the Indemnitee shall have reasonably made the conclusion provided for in clause
(ii) above.
5. ADVANCE OF EXPENSES. Subject to the provisions of Section 6 below, in
the event that the Corporation does not assume the defense pursuant to Section 4
of this Article of any action, suit, proceeding or investigation of which the
Corporation receives notice under this Article, any expenses (including
attorneys' fees) incurred by an Indemnitee in defending a civil or criminal
action, suit, proceeding or investigation or any appeal therefrom shall be paid
by the Corporation in advance of the final disposition
6
<PAGE> 7
of such matter; provided, however, that the payment of such expenses incurred by
an Indemnitee in advance of the final disposition of such matter shall be made
only upon receipt of an undertaking by or on behalf of the Indemnitee to repay
all amounts so advanced in the event that it shall ultimately be determined that
the Indemnitee is not entitled to be indemnified by the Corporation as
authorized in this Article. Such undertaking shall be accepted without reference
to the financial ability of the Indemnitee to make such repayment.
6. PROCEDURE FOR INDEMNIFICATION. In order to obtain indemnification or
advancement of expenses pursuant to Section 1, 2, 3 or 5 of this Article, the
Indemnitee shall submit to the Corporation a written request, including in such
request such documentation and information as is reasonably available to the
Indemnitee and is reasonably necessary to determine whether and to what extent
the Indemnitee is entitled to indemnification or advancement of expenses. Any
such indemnification or advancement of expenses shall be made promptly, and in
any event within 60 days after receipt by the Corporation of the written request
of the Indemnitee, unless with respect to requests under Section 1, 2 or 5 the
Corporation determines within such 60-day period that the Indemnitee did not
meet the applicable standard of conduct set forth in Section 1 or 2, as the case
may be. Such determination shall be made in each instance by (a) a majority vote
of the directors of the Corporation consisting of persons who are not at that
time parties to the action, suit or proceeding in question ("disinterested
directors"), whether or not a quorum, (b) a majority vote of a committee of
disinterested directors designated by majority vote of disinterested directors,
whether or not a quorum, (c) a majority vote of a quorum of the outstanding
shares of stock of all classes entitled to vote for directors, voting as a
single class, which quorum shall consist of stockholders who are not at that
time parties to the action, suit or proceeding in question, (d) independent
legal counsel (who may, to the extent permitted by law, be regular legal counsel
to the Corporation), or (e) a court of competent jurisdiction.
7. REMEDIES. The right to indemnification or advances as granted by this
Article shall be enforceable by the Indemnitee in any court of competent
jurisdiction if the Corporation denies such request, in whole or in part, or if
no disposition thereof is made within the 60-day period referred to above in
Section 6. Unless otherwise required by law, the burden of proving that the
Indemnitee is not entitled to indemnification or advancement of expenses under
this Article shall be on the Corporation. Neither the failure of the Corporation
to have made a determination prior to the commencement of such action that
indemnification is proper in the circumstances because the Indemnitee has met
the applicable standard of conduct, nor an actual determination by the
Corporation pursuant to Section 6 that the Indemnitee has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the Indemnitee has not met the applicable standard of conduct.
The Indemnitee's expenses (including attorneys' fees) incurred in connection
with successfully establishing his right to indemnification, in whole or in
part, in any such proceeding shall also be indemnified by the Corporation.
7
<PAGE> 8
8. SUBSEQUENT AMENDMENT. No amendment, termination or repeal of this
Article or of the relevant provisions of the General Corporation Law of Delaware
or any other applicable laws shall affect or diminish in any way the rights of
any Indemnitee to indemnification under the provisions hereof with respect to
any action, suit, proceeding or investigation arising out of or relating to any
actions, transactions or facts occurring prior to the final adoption of such
amendment, termination or repeal.
9. OTHER RIGHTS. The indemnification and advancement of expenses provided
by this Article shall not be deemed exclusive of any other rights to which an
Indemnitee seeking indemnification or advancement of expenses may be entitled
under any law (common or statutory), agreement or vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in any other capacity while holding office for the Corporation,
and shall continue as to an Indemnitee who has ceased to be a director or
officer, and shall inure to the benefit of the estate, heirs, executors and
administrators of the Indemnitee. Nothing contained in this Article shall be
deemed to prohibit, and the Corporation is specifically authorized to enter
into, agreements with officers and directors providing indemnification rights
and procedures different from those set forth in this Article. In addition, the
Corporation may, to the extent authorized from time to time by its Board of
Directors, grant indemnification rights to other employees or agents of the
Corporation or other persons serving the Corporation and such rights may be
equivalent to, or greater or less than, those set forth in this Article.
10. PARTIAL INDEMNIFICATION. If an Indemnitee is entitled under any
provision of this Article to indemnification by the Corporation for some or a
portion of the expenses (including attorneys' fees), judgments, fines or amounts
paid in settlement actually and reasonably incurred by him or on his behalf in
connection with any action, suit, proceeding or investigation and any appeal
therefrom but not, however, for the total amount thereof, the Corporation shall
nevertheless indemnify the Indemnitee for the portion of such expenses
(including attorneys' fees), judgments, fines or amounts paid in settlement to
which the Indemnitee is entitled.
11. INSURANCE. The Corporation may purchase and maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise (including any employee benefit plan) against any expense, liability
or loss incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify such
person against such expense, liability or loss under the General Corporation Law
of Delaware.
12. MERGER OR CONSOLIDATION. If the Corporation is merged into or
consolidated with another corporation and the Corporation is not the surviving
corporation, the surviving corporation shall assume the obligations of the
Corporation under this Article with respect to any action, suit, proceeding or
investigation arising out of or relating to
8
<PAGE> 9
any actions, transactions or facts occurring prior to the date of such merger or
consolidation.
13. SAVINGS CLAUSE. If this Article or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Indemnitee as to any expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement in
connection with any action, suit, proceeding or investigation, whether civil,
criminal or administrative, including an action by or in the right of the
Corporation, to the fullest extent permitted by any applicable portion of this
Article that shall not have been invalidated and to the fullest extent permitted
by applicable law.
14. DEFINITIONS. Terms used herein and defined in Section 145(h) and
Section 145(i) of the General Corporation Law of Delaware shall have the
respective meanings assigned to such terms in such Section 145(h) and Section
145(i).
15. SUBSEQUENT LEGISLATION. If the General Corporation Law of Delaware is
amended after adoption of this Article to expand further the indemnification
permitted to Indemnitees, then the Corporation shall indemnify such persons to
the fullest extent permitted by the General Corporation Law of Delaware, as so
amended.
NINTH. The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute and this Certificate of Incorporation, and
all rights conferred upon stockholders herein are granted subject to this
reservation.
TENTH. This Article is inserted for the management of the business and for
the conduct of the affairs of the Corporation.
1. NUMBER OF DIRECTORS. The number of directors of the Corporation shall
not be less than three. The exact number of directors within the limitations
specified in the preceding sentence shall be fixed from time to time by, or in
the manner provided in, the Corporation's By-Laws.
2. CLASSES OF DIRECTORS. The Board of Directors shall be and is 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. If a fraction is contained in
the quotient arrived at by dividing the designated number of directors by three,
then, if such fraction is one-third, the extra director shall be a member of
Class I, and if such fraction is two-thirds, one of the extra directors shall be
a member of Class I and one of the extra directors shall be a member of Class
II, unless otherwise provided from time to time by resolution adopted by the
Board of Directors.
3. 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.
9
<PAGE> 10
4. TERMS OF OFFICE. Each director shall serve for a term ending on the
date of the third annual meeting following the annual meeting at which such
director was elected; provided, that each initial director in Class I shall
serve for a term ending on the date of the annual meeting in 2000; each initial
director in Class II shall serve for a term ending on the date of the annual
meeting in 2001; and each initial director in Class III shall serve for a term
ending on the date of the annual meeting in 2002; and provided further, that the
term of each director shall be subject to the election and qualification of his
successor and to his earlier death, resignation or removal.
5. 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 is a member
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 latest dates following such
allocation, and any newly eliminated directorships shall be subtracted from
those classes whose terms of offices are to expire at the earliest dates
following such allocation, unless otherwise provided from time to time by
resolution adopted by the Board of Directors.
6. QUORUM; ACTION AT MEETING. A majority of the directors at any time in
office shall constitute a quorum for the transaction of business. In the event
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 director so disqualified,
provided that in no case shall less than one-third of the number of directors
fixed pursuant to Section 1 above constitute a quorum. If at any meeting of the
Board of Directors there shall be less than such a quorum, a majority of those
present may adjourn the meeting from time to time. Every act or decision done or
made by a majority of the directors present at a meeting duly held at which a
quorum is present shall be regarded as the act of the Board of Directors unless
a greater number is required by law, by the By-Laws of the Corporation or by
this Certificate of Incorporation.
7. REMOVAL. Directors of the Corporation may be removed only for cause by
the affirmative vote of the holders of at least two-thirds of the shares of the
capital stock of the Corporation issued and outstanding and entitled to vote.
8. VACANCIES. Any vacancy in the Board of Directors, however occurring,
including a vacancy resulting from an enlargement of the size of the Board of
Directors, shall be filled only by a vote of a majority of the directors then in
office, although 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
predecessor in office, 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, subject to
10
<PAGE> 11
the election and qualification of his successor and to his earlier death,
resignation or removal.
9. 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 by the By-Laws of the Corporation.
10. AMENDMENTS TO ARTICLE. Notwithstanding any other provisions of law,
this Certificate of Incorporation or the By-Laws of the Corporation, and
notwithstanding the fact that a lesser percentage may be specified by law, the
affirmative vote of the holders of at least seventy-five percent (75%) of the
shares of capital stock of the Corporation issued and outstanding and entitled
to vote shall be required to amend or repeal, or to adopt any provision
inconsistent with, this Article TENTH.
ELEVENTH. Stockholders of the Corporation may not take any action by
written consent in lieu of a meeting. Notwithstanding any other provisions of
law, this Certificate of Incorporation or the By-Laws of the Corporation, and
notwithstanding the fact that a lesser percentage may be specified by law, the
affirmative vote of the holders of at least seventy-five percent (75%) of the
shares of capital stock of the Corporation issued and outstanding and entitled
to vote shall be required to amend or repeal, or to adopt any provision
inconsistent with, this Article ELEVENTH.
TWELFTH. Special meetings of stockholders may be called at any time by only
the Chairman of the Board of Directors, the President or the Board of Directors.
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.
Notwithstanding any other provision of law, this Certificate of Incorporation or
the By-Laws of the Corporation, and notwithstanding the fact that a lesser
percentage may be specified by law, the affirmative vote of the holders of at
least seventy-five percent (75%) of the shares of capital stock of the
Corporation issued and outstanding and entitled to vote shall be required to
amend or repeal, or to adopt any provision inconsistent with, this Article
TWELFTH.
* * * * *
11
<PAGE> 12
IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated
Certificate of Incorporation to be signed by its President this ____ day of
____________________, 1999.
AKAMAI TECHNOLOGIES, INC.
-----------------------------------
Paul Sagan
President
<PAGE> 1
Exhibit 3.3
BY-LAWS
OF
AKAMAI TECHNOLOGIES, INC.
<PAGE> 2
BY-LAWS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 - Stockholders....................................................................................1
1.1 Place of Meetings......................................................................1
1.2 Annual Meeting.........................................................................1
1.3 Special Meetings.......................................................................1
1.4 Notice of Meetings.....................................................................1
1.5 Voting List............................................................................2
1.6 Quorum.................................................................................2
1.7 Adjournments...........................................................................2
1.8 Voting and Proxies.....................................................................2
1.9 Action at Meeting......................................................................2
1.10 Action without Meeting.................................................................3
ARTICLE 2 - Directors.......................................................................................3
2.1 General Powers.........................................................................3
2.2 Number; Election and Qualification.....................................................3
2.3 Enlargement of the Board...............................................................3
2.4 Tenure.................................................................................3
2.5 Vacancies..............................................................................4
2.6 Resignation............................................................................4
2.7 Regular Meetings.......................................................................4
2.8 Special Meetings.......................................................................4
2.9 Notice of Special Meetings.............................................................4
2.10 Meetings by Telephone Conference Calls.................................................4
2.11 Quorum.................................................................................5
2.12 Action at Meeting......................................................................5
2.13 Action by Consent......................................................................5
2.14 Removal................................................................................5
2.15 Committees.............................................................................5
2.16 Compensation of Directors..............................................................6
ARTICLE 3 - Officers........................................................................................6
3.1 Enumeration............................................................................6
3.2 Election...............................................................................6
3.3 Qualification..........................................................................6
3.4 Tenure.................................................................................6
3.5 Resignation and Removal................................................................6
3.6 Vacancies..............................................................................7
3.7 Chairman of the Board and Vice-Chairman of the Board...................................7
3.8 President..............................................................................7
3.9 Vice Presidents........................................................................7
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
3.10 Secretary and Assistant Secretaries....................................................8
3.11 Treasurer and Assistant Treasurers.....................................................8
3.12 Salaries...............................................................................8
ARTICLE 4 - Capital Stock...................................................................................9
4.1 Issuance of Stock......................................................................9
4.2 Certificates of Stock..................................................................9
4.3 Transfers..............................................................................9
4.4 Lost, Stolen or Destroyed Certificates................................................10
4.5 Record Date...........................................................................10
ARTICLE 5 - General Provisions.............................................................................11
5.1 Fiscal Year...........................................................................11
5.2 Corporate Seal........................................................................11
5.3 Waiver of Notice......................................................................11
5.4 Voting of Securities..................................................................11
5.5 Evidence of Authority.................................................................11
5.6 Certificate of Incorporation..........................................................11
5.7 Transactions with Interested Parties..................................................11
5.8 Severability..........................................................................12
5.9 Pronouns..............................................................................12
ARTICLE 6 - Amendments.....................................................................................12
6.1 By the Board of Directors.............................................................12
6.2 By the Stockholders...................................................................12
</TABLE>
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<PAGE> 4
BY-LAWS
OF
AKAMAI TECHNOLOGIES, INC.
ARTICLE 1 - Stockholders
------------------------
1.1 Place of Meetings. All meetings of stockholders shall be held at
such place within or without the State of Delaware as may be designated from
time to time by the Board of Directors or the President or, if not so
designated, at the registered office of the corporation.
1.2 Annual Meeting. The annual meeting of stockholders for the election
of directors and for the transaction of such other business as may properly be
brought before the meeting shall be held on a date to be fixed by the Board of
Directors or the President (which date shall not be a legal holiday in the place
where the meeting is to be held) at the time and place to be fixed by the Board
of Directors or the President and stated in the notice of the meeting. If no
annual meeting is held in accordance with the foregoing provisions, the Board of
Directors shall cause the meeting to be held as soon thereafter as convenient.
If no annual meeting is held in accordance with the foregoing provisions, a
special meeting may be held in lieu of the annual meeting, and any action taken
at that special meeting shall have the same effect as if it had been taken at
the annual meeting, and in such case all references in these By-laws to the
annual meeting of the stockholders shall be deemed to refer to such special
meeting.
1.3 Special Meetings. Special meetings of stockholders may be called at
any time by the President or by the Board of Directors. 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.
1.4 Notice of Meetings. Except as otherwise provided by law, written
notice of each meeting of stockholders, whether annual or special, shall be
given not less than 10 nor more than 60 days before the date of the meeting to
each stockholder entitled to vote at such meeting. The notices of all meetings
shall state the place, date and hour of the meeting. The notice of a special
meeting shall state, in addition, the purpose or purposes for which the meeting
is called. If mailed, notice is given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the corporation.
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<PAGE> 5
1.5 Voting List. The officer who has charge of the stock ledger of the
corporation shall prepare, at least 10 days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, at a place within the city 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 of the meeting, and may be inspected by any
stockholder who is present.
1.6 Quorum. Except as otherwise provided by law, the Certificate of
Incorporation or these By-laws, the holders of a majority of the shares of the
capital stock of the corporation issued and outstanding and entitled to vote at
the meeting, present in person or represented by proxy, shall constitute a
quorum for the transaction of business.
1.7 Adjournments. Any meeting of stockholders may be adjourned to any
other time and to any other place at which a meeting of stockholders may be held
under these By-laws by the stockholders present or represented at the meeting
and entitled to vote, although less than a quorum, or, if no stockholder is
present, by any officer entitled to preside at or to act as Secretary of such
meeting. It shall not be necessary to notify any stockholder of any adjournment
of less than 30 days if the time and place of the adjourned meeting are
announced at the meeting at which adjournment is taken, unless after the
adjournment a new record date is fixed for the adjourned meeting. At the
adjourned meeting, the corporation may transact any business which might have
been transacted at the original meeting.
1.8 Voting and Proxies. Each stockholder shall have one vote for each
share of stock entitled to vote 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, may vote or express such consent or dissent
in person or may authorize another person or persons to vote or act for him by
written proxy executed by the stockholder or his authorized agent 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.
1.9 Action at Meeting. When a quorum is present at any meeting, the
holders of shares of stock representing a majority of the votes cast on a matter
(or if there are two or more classes of stock entitled to vote as separate
classes, then in the case of each such class, the holders of shares of stock of
that class representing a
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<PAGE> 6
majority of the votes cast on a matter) shall decide any matter to be voted upon
by the stockholders at such meeting, except when a different vote is required by
express provision of law, the Certificate of Incorporation or these By-Laws.
When a quorum is present at any meeting, any election by stockholders shall be
determined by a plurality of the votes cast on the election.
1.10 Action without Meeting. Any action required or permitted to be
taken at any annual or special meeting of stockholders of the corporation may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, is signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote on such action were present and voted. Prompt notice of the
taking of corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
ARTICLE 2 - Directors
---------------------
2.1 General Powers. The business and affairs of the corporation shall
be managed by or under the direction of a Board of Directors, who may exercise
all of the powers of the corporation except as otherwise provided by law or the
Certificate of Incorporation. In the event of a vacancy in the Board of
Directors, the remaining directors, except as otherwise provided by law, may
exercise the powers of the full Board until the vacancy is filled.
2.2 Number; Election and Qualification. The number of directors which
shall constitute the whole Board of Directors shall be determined by resolution
of the stockholders or the Board of Directors, but in no event shall be less
than one. The number of directors may be decreased at any time and from time to
time either by the stockholders or 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 stockholders by such
stockholders as have the right to vote on such election. Directors need not be
stockholders of the corporation.
2.3 Enlargement of the Board. The number of directors may be increased
at any time and from time to time by the stockholders or by a majority of the
directors then in office.
2.4 Tenure. Each director shall hold office until the next annual
meeting and until his successor is elected and qualified, or until his earlier
death, resignation or removal.
-3-
<PAGE> 7
2.5 Vacancies. Unless and until filled by the stockholders, any vacancy
in the Board of Directors, however occurring, including a vacancy resulting from
an enlargement of the Board, 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. A director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office, and a director chosen to fill a
position resulting from an increase in the number of directors shall hold office
until the next annual meeting of stockholders and until his successor is elected
and qualified, or until his earlier death, resignation or removal.
2.6 Resignation. Any director may resign by delivering his written
resignation to the corporation at its principal office or to the President or
Secretary. Such resignation shall be effective upon receipt unless it is
specified to be effective at some other time or upon the happening of some other
event.
2.7 Regular Meetings. Regular meetings of the Board of Directors may be
held without notice at such time and place, either within or without the State
of Delaware, as shall be determined from time to time by the Board of Directors;
provided that any director who is absent when such a determination is made shall
be given notice of the determination. A regular meeting of the Board of
Directors may be held without notice immediately after and at the same place as
the annual meeting of stockholders.
2.8 Special Meetings. Special meetings of the Board of Directors may be
held at any time and place, within or without the State of Delaware, designated
in a call by the Chairman of the Board, President, two or more directors, or by
one director in the event that there is only a single director in office.
2.9 Notice of Special Meetings. 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 calling the meeting. Notice shall be duly given to each
director (i) by giving notice to such director in person or by telephone at
least 48 hours in advance of the meeting, (ii) by sending a telegram or telex,
or delivering written notice by hand, to his last known business or home address
at least 48 hours in advance of the meeting, or (iii) by mailing written notice
to his 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.
2.10 Meetings by Telephone Conference Calls. Directors or any members
of any committee designated by the directors may participate in a meeting of the
Board of Directors or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
-4-
<PAGE> 8
meeting can hear each other, and participation by such means shall constitute
presence in person at such meeting.
2.11 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.
In the event 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 number so fixed 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.
2.12 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, the
Certificate of Incorporation or these By-Laws.
2.13 Action by Consent. Any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee of the Board of
Directors may be taken without a meeting, if all members of the Board or
committee, as the case may be, consent to the action in writing, and the written
consents are filed with the minutes of proceedings of the Board or committee.
2.14 Removal. Except as otherwise provided by the General Corporation
Law of Delaware, any one or more or all of the directors may be removed, with or
without cause, by the holders of a majority of the shares then entitled to vote
at an election of directors, except that the directors elected by the holders of
a particular class or series of stock may be removed without cause only by vote
of the holders of a majority of the outstanding shares of such class or series.
2.15 Committees. The Board of Directors may designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The Board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member of a
committee, the member or members of the committee present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors
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
-5-
<PAGE> 9
to be affixed to all papers which may require it. Each such committee shall keep
minutes and make such reports as the Board of Directors may from time to time
request. Except as the Board of Directors may otherwise determine, any committee
may make rules for the conduct of its business, but unless otherwise provided by
the directors or in such rules, its business shall be conducted as nearly as
possible in the same manner as is provided in these By-laws for the Board of
Directors.
2.16 Compensation of Directors. Directors may be paid such compensation
for their services and such reimbursement for expenses of attendance at meetings
as the Board of Directors may from time to time determine. No such payment shall
preclude any director from serving the corporation or any of its parent or
subsidiary corporations in any other capacity and receiving compensation for
such service.
ARTICLE 3 - Officers
--------------------
3.1 Enumeration. The officers of the corporation shall consist of a
President, a Secretary, a Treasurer and such other officers with such other
titles as the Board of Directors shall determine, including a Chairman of the
Board, a Vice-Chairman of the Board, and one or more Vice Presidents, Assistant
Treasurers, and Assistant Secretaries. The Board of Directors may appoint such
other officers as it may deem appropriate.
3.2 Election. The President, Treasurer and Secretary shall be elected
annually by the Board of Directors at its first meeting following the annual
meeting of stockholders. Other officers may be appointed by the Board of
Directors at such meeting or at any other meeting.
3.3 Qualification. No officer need be a stockholder. Any two or more
offices may be held by the same person.
3.4 Tenure. Except as otherwise provided by law, by the Certificate of
Incorporation or by these By-laws, each officer shall hold office until his
successor is elected and qualified, unless a different term is specified in the
vote choosing or appointing him, or until his earlier death, resignation or
removal.
3.5 Resignation and Removal. Any officer may resign by delivering his
written resignation to the corporation at its principal office or to the
President or Secretary. Such resignation shall be effective upon receipt unless
it is specified to be effective at some other time or upon the happening of some
other event.
Any officer may be removed at any time, with or without cause, by vote
of a majority of the entire number of directors then in office.
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<PAGE> 10
Except as the Board of Directors may otherwise determine, no officer
who resigns or is removed shall have any right to any compensation as an officer
for any period following his resignation or removal, or any right to damages on
account of such removal, whether his compensation be by the month or by the year
or otherwise, unless such compensation is expressly provided in a duly
authorized written agreement with the corporation.
3.6 Vacancies. The Board of Directors may fill any vacancy occurring in
any office for any reason and may, in its discretion, leave unfilled for such
period as it may determine any offices other than those of President, Treasurer
and Secretary. Each such successor shall hold office for the unexpired term of
his predecessor and until his successor is elected and qualified, or until his
earlier death, resignation or removal.
3.7 Chairman of the Board and Vice-Chairman of the Board. The Board of
Directors may appoint a Chairman of the Board and may designate the Chairman of
the Board as Chief Executive Officer. If the Board of Directors appoints a
Chairman of the Board, he shall perform such duties and possess such powers as
are assigned to him by the Board of Directors. If the Board of Directors
appoints a Vice-Chairman of the Board, he shall, in the absence or disability of
the Chairman of the Board, perform the duties and exercise the powers of the
Chairman of the Board and shall perform such other duties and possess such other
powers as may from time to time be vested in him by the Board of Directors.
3.8 President. The President shall, subject to the direction of the
Board of Directors, have general charge and supervision of the business of the
corporation. Unless otherwise provided by the Board of Directors, he shall
preside at all meetings of the stockholders and, if he is a director, at all
meetings of the Board of Directors. Unless the Board of Directors has designated
the Chairman of the Board or another officer as Chief Executive Officer, the
President shall be the Chief Executive Officer of the corporation. The President
shall perform such other duties and shall have such other powers as the Board of
Directors may from time to time prescribe.
3.9 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 event of the absence, inability or refusal to act of the
President, the Vice President (or if there shall be more than one, the Vice
Presidents in the order determined by the Board of Directors) shall perform the
duties of the President and when so performing shall have all the powers of and
be subject to all the restrictions upon the President. The Board of Directors
may assign to any Vice President the title of Executive Vice President, Senior
Vice President or any other title selected by the Board of Directors.
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<PAGE> 11
3.10 Secretary and Assistant Secretaries. 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 the
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.
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. In the event of the absence, inability or refusal to act of
the Secretary, the Assistant Secretary, (or if there shall be more than one, the
Assistant Secretaries in the order determined by the Board of Directors) shall
perform the duties and exercise the powers of the Secretary.
In the absence of the Secretary or any Assistant Secretary at any
meeting of stockholders or directors, the person presiding at the meeting shall
designate a temporary secretary to keep a record of the meeting.
3.11 Treasurer and Assistant Treasurers. The Treasurer shall perform
such duties and shall have such powers as may from time to time be assigned to
him by the Board of Directors or the President. 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 of 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.
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. In the event of the absence, inability or refusal to act of
the Treasurer, the Assistant Treasurer, (or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board of Directors) shall
perform the duties and exercise the powers of the Treasurer.
3.12 Salaries. Officers of the corporation shall be entitled to such
salaries, compensation or reimbursement as shall be fixed or allowed from time
to time by the Board of Directors.
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<PAGE> 12
ARTICLE 4 - Capital Stock
-------------------------
4.1 Issuance of Stock. Unless otherwise voted by the stockholders and
subject to the provisions of the Certificate of Incorporation, the whole or any
part of any unissued balance of the authorized capital stock of the corporation
or the whole or any part of any unissued balance of the authorized capital stock
of the corporation held in its treasury may be issued, sold, transferred or
otherwise disposed of by vote of the Board of Directors in such manner, for such
consideration and on such terms as the Board of Directors may determine.
4.2 Certificates of Stock. Every holder of stock of the corporation
shall be entitled to have a certificate, in such form as may be prescribed by
law and by the Board of Directors, certifying the number and class of shares
owned by him in the corporation. Each such certificate shall be signed by, or in
the name of the corporation by, the Chairman or Vice-Chairman, if any, 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. Any or all of the signatures on the certificate may be a facsimile.
Each certificate for shares of stock which are subject to any
restriction on transfer pursuant to the Certificate of Incorporation, the
By-laws, applicable securities laws or any agreement among any number of
shareholders or among such holders and the corporation 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.
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of each certificate representing shares of such
class or series of stock, provided that in lieu of the foregoing requirements
there may be set forth on the face or back of each certificate representing
shares of such class or series of stock a statement that the corporation will
furnish without charge to each stockholder who so requests a copy of the full
text of the powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights.
4.3 Transfers. Except as otherwise established by rules and regulations
adopted by the Board of Directors, and subject to applicable law, shares of
stock may be transferred on the books of the corporation by the surrender to the
corporation or its transfer agent of the certificate representing such shares
properly endorsed or
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<PAGE> 13
accompanied by a written assignment or power of attorney properly executed, and
with such proof of authority or the authenticity of signature as the corporation
or its transfer agent may reasonably require. Except as may be otherwise
required by law, by the Certificate of Incorporation or by these By-laws, the
corporation shall be entitled to treat the record holder of stock as shown on
its books as the owner of such stock for all purposes, including the payment of
dividends and the right to vote with respect to such stock, regardless of any
transfer, pledge or other disposition of such stock until the shares have been
transferred on the books of the corporation in accordance with the requirements
of these By-laws.
4.4 Lost, Stolen or Destroyed Certificates. The corporation may issue a
new certificate of stock in place of any previously issued certificate alleged
to have been lost, stolen, or destroyed, upon such terms and conditions as the
Board of Directors may prescribe, including the presentation of reasonable
evidence of such loss, theft or destruction and the giving of such indemnity as
the Board of Directors may require for the protection of the corporation or any
transfer agent or registrar.
4.5 Record Date. The Board of Directors may fix in advance a date as a
record date for the determination of the stockholders entitled to notice of or
to vote at any meeting of stockholders or to express consent (or dissent) to
corporate action in writing without a meeting, or entitled to receive payment of
any dividend or other distribution or allotment of any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action. Such record date shall not be more than 60 nor less than 10 days before
the date of such meeting, nor more than 10 days after the date of adoption of a
record date for a written consent without a meeting, nor more than 60 days prior
to any other action to which such record date relates.
If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day before the day on which notice is given,
or, if notice is waived, at the close of business on the day before the day on
which the meeting is held. The record date for determining stockholders entitled
to express consent to corporate action in writing without a meeting, when no
prior action by the Board of Directors is necessary, shall be the day on which
the first written consent is properly delivered to the corporation. The record
date for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating to such purpose.
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.
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<PAGE> 14
ARTICLE 5 - General Provisions
------------------------------
5.1 Fiscal Year. Except as from time to time otherwise designated by
the Board of Directors, the fiscal year of the corporation shall begin on the
first day of January in each year and end on the last day of December in each
year.
5.2 Corporate Seal. The corporate seal shall be in such form as shall
be approved by the Board of Directors.
5.3 Waiver of Notice. Whenever any notice whatsoever is required to be
given by law, by the Certificate of Incorporation or by these By-laws, a waiver
of such notice either in writing signed by the person entitled to such notice or
such person's duly authorized attorney, or by telegraph, cable or any other
available method, whether before, at or after the time stated in such waiver, or
the appearance of such person or persons at such meeting in person or by proxy,
shall be deemed equivalent to such notice.
5.4 Voting of Securities. Except as the directors may otherwise
designate, the President or Treasurer may waive notice of, and act as, or
appoint any person or persons to act as, proxy or attorney-in-fact for this
corporation (with or without power of substitution) at, any meeting of
stockholders or shareholders of any other corporation or organization, the
securities of which may be held by this corporation.
5.5 Evidence of Authority. A certificate by the Secretary, or an
Assistant Secretary, or a temporary Secretary, as to any action taken by the
stockholders, directors, a committee or any officer or representative of the
corporation shall as to all persons who rely on the certificate in good faith be
conclusive evidence of such action.
5.6 Certificate of Incorporation. All references in these By-laws to
the Certificate of Incorporation shall be deemed to refer to the Certificate of
Incorporation of the corporation, as amended and in effect from time to time.
5.7 Transactions with Interested Parties. No contract or transaction
between the corporation and one or more of the directors or officers, or between
the corporation and any other corporation, partnership, association, or other
organization in which one or more of the directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or a committee of the
Board of Directors which authorizes the contract or transaction or solely
because his or their votes are counted for such purpose, if:
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(1) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board or committee in good faith authorizes the contract
or transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum;
(2) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the corporation as of the
time it is authorized, approved or ratified, by the Board of Directors, a
committee of the Board of Directors, or the stockholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
5.8 Severability. Any determination that any provision of these By-laws
is for any reason inapplicable, illegal or ineffective shall not affect or
invalidate any other provision of these By-laws.
5.9 Pronouns. All pronouns used in these By-laws shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the person or persons may require.
ARTICLE 6 - Amendments
----------------------
6.1 By the Board of Directors. 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.
6.2 By the Stockholders. 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.
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AMENDMENT NO. 1 TO
BY-LAWS OF
AKAMAI TECHNOLOGIES, INC.
The following sentence shall be inserted immediately following the
first sentence of Article 3 Section 3.2:
"The Chief Executive Officer shall be designated and elected by the
Company's Board of Directors."
The following sentence shall be inserted immediately following the
first sentence of Article 1 Section 1.3:
"Special meetings of stockholders also may be called at any time by (i)
any two members of the Board of Directors or (ii) any holder or holders of at
least 25% of the outstanding Shares of Series A Preferred Stock of the Company."
Approved by the Board of Directors of Akamai Technologies, Inc. on
November 19, 1998.
<PAGE> 17
AMENDMENT NO. 2 TO
BY-LAWS OF
AKAMAI TECHNOLOGIES, INC.
The second sentence of Section 1.3 of Article 1 shall be deleted in its
entirety and the following sentence shall be added in lieu thereof:
"Special meetings of stockholders also may be called at any
time by (i) any two members of the Board of Directors, (ii)
any holder or holders of at least 25% of the outstanding
shares of Series A Convertible Preferred Stock of the Company,
or (iii) any holder or holders of at least 25% of the
outstanding shares of Series B Convertible Preferred Stock of
the Company."
Clause (iii) of the second sentence of Section 2.9 of Article 2 shall
be deleted in its entirety and the following clause shall be added in lieu
thereof:
"(iii) by mailing written notice to his last known business
or home address at least five days in advance of the
meeting."
"1.6 Quorum. Except as otherwise provided by law, the
Certificate of Incorporation or these By-laws, the holders
of a majority of the shares of the capital stock of the
corporation issued and outstanding and entitled to vote at
the meeting (or if there are two or more classes of stock
entitled to vote as separate classes, then in the case of
each such class, the holders of a majority of shares of
stock of that class issued and outstanding and entitled to
vote at the meeting), present in person or represented by
proxy, shall constitute a quorum for the transaction of
business.
Approved by the Board of Directors of Akamai Technologies, Inc. on
April 13, 1999.
<PAGE> 1
Exhibit 3.4
AMENDED AND RESTATED
BY-LAWS
OF
AKAMAI TECHNOLOGIES, INC.
ARTICLE 1 - STOCKHOLDERS
1.1 PLACE OF MEETINGS. All meetings of stockholders shall be held at such
place within or without the State of Delaware as may be designated from time to
time by the Board of Directors, the Chairman of the Board or the President or,
if not so designated, at the registered office of the corporation.
1.2 ANNUAL MEETING. The annual meeting of stockholders for the election of
directors and for the transaction of such other business as may properly be
brought before the meeting shall be held on a date to be fixed by the Board of
Directors, the Chairman of the Board or the President (which date shall not be a
legal holiday in the place where the meeting is to be held) at the time and
place to be fixed by the Board of Directors, the Chairman of the Board or the
President and stated in the notice of the meeting. If no annual meeting is held
in accordance with the foregoing provisions, the Board of Directors shall cause
the meeting to be held as soon thereafter as convenient. If no annual meeting is
held in accordance with the foregoing provisions, a special meeting may be held
in lieu of the annual meeting, and any action taken at that special meeting
shall have the same effect as if it had been taken at the annual meeting, and in
such case all references in these By-Laws to the annual meeting of the
stockholders shall be deemed to refer to such special meeting.
1.3 SPECIAL MEETINGS. Special meetings of stockholders may be called at
any time only by the Chairman of the Board of Directors, the President or the
Board of Directors. 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.
1.4 NOTICE OF MEETINGS. Except as otherwise provided by law, written
notice of each meeting of stockholders, whether annual or special, shall be
given not less than ten nor more than 60 days before the date of the meeting to
each stockholder entitled to vote at such meeting. The notices of all meetings
shall state the place, date and hour of the meeting. The notice of a special
meeting shall state, in addition, the purpose or purposes for which the meeting
is called. If mailed, notice is given when deposited in the United States mail,
postage prepaid, directed to the stockholder at the stockholder's address as it
appears on the records of the corporation.
<PAGE> 2
1.5 VOTING LIST. The officer who has charge of the stock ledger of the
corporation shall prepare, 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, at a place within the city 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 of the meeting, and may be inspected by any
stockholder who is present.
1.6 QUORUM. Except as otherwise provided by law, the Certificate of
Incorporation or these By-Laws, the holders of a majority of the shares of the
capital stock of the corporation issued and outstanding and entitled to vote at
the meeting, present in person or represented by proxy, shall constitute a
quorum for the transaction of business.
1.7 ADJOURNMENTS. Any meeting of stockholders may be adjourned to any
other time and to any other place at which a meeting of stockholders may be held
under these By-Laws by the stockholders present or represented at the meeting
and entitled to vote, although less than a quorum, or, if no stockholder is
present, by any officer entitled to preside at or to act as Secretary of such
meeting. It shall not be necessary to notify any stockholder of any adjournment
of less than 30 days if the time and place of the adjourned meeting are
announced at the meeting at which adjournment is taken, unless after the
adjournment a new record date is fixed for the adjourned meeting. At the
adjourned meeting, the corporation may transact any business which might have
been transacted at the original meeting.
1.8 VOTING AND PROXIES. Each stockholder shall have one vote for each
share of stock entitled to vote held of record by such stockholder and a
proportionate vote for each fractional share so held, unless otherwise provided
by law, the Certificate of Incorporation or these By-Laws. 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, may vote or express
such consent or dissent in person or may authorize another person or persons to
vote or act for him by proxy executed in writing (or in such other manner
permitted by the General Corporation Law of the State of Delaware) by the
stockholder or his authorized agent 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.
1.9 ACTION AT MEETING. When a quorum is present at any meeting, the
holders of a majority of the stock present or represented and voting on a matter
(or if there are two or more classes of stock entitled to vote as separate
classes, then in the case of each
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such class, the holders of a majority of the stock of that class present or
represented and voting on a matter) shall decide any matter to be voted upon by
the stockholders at such meeting, except when a different vote is required by
express provision of law, the Certificate of Incorporation or these By-Laws. Any
election by stockholders shall be determined by a plurality of the votes cast by
the stockholders entitled to vote at the election.
1.10 NOMINATION OF DIRECTORS. Only persons who are nominated in accordance
with the following procedures shall be eligible for election as directors.
Nomination for election to the Board of Directors of the corporation at a
meeting of stockholders may be made by the Board of Directors or by any
stockholder of the corporation entitled to vote for the election of directors at
such meeting who complies with the notice procedures set forth in this Section
1.10. Such nominations, other than those made by or on behalf of the Board of
Directors, shall be made by timely notice in writing to the Secretary of the
corporation. To be timely, a stockholder's notice must be delivered to, or
mailed and received by, the Secretary at the principal executive offices of the
corporation not less than 70 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that (i)
in the event that the date of the annual meeting is advanced by more than 20
days, or delayed by more than 70 days, from such anniversary date, notice by the
stockholder to be timely must be so delivered or received not earlier than the
ninetieth day prior to such annual meeting and not later than the close of
business on the later of the seventieth day prior to such annual meeting or the
tenth day following the day on which notice of the date of such annual meeting
was mailed or public disclosure of the date of such annual meeting was made,
whichever first occurs, and (ii) with respect to the annual meeting of
stockholders of the corporation to be held in the year 2000, to be timely, a
stockholder's notice must be so received not earlier than the ninetieth day
prior to such annual meeting and not later than the close of business on the
later of (A) the sixtieth day prior to such annual meeting and (B) the tenth day
following the day on which notice of the date of such annual meeting was mailed
or public disclosure of the date of such annual meeting was made, whichever
first occurs. A stockholder's notice to the Secretary shall set forth (a) as to
each proposed nominee (i) the name, age, business address and, if known,
residence address of each such nominee, (ii) the principal occupation or
employment of each such nominee, (iii) the number of shares of stock of the
corporation which are beneficially owned by each such nominee, and (iv) any
other information concerning the nominee that must be disclosed as to nominees
in proxy solicitations pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (including such person's written consent to be named as
a nominee and to serve as a director if elected); and (b) as to the stockholder
giving the notice (i) the name and address, as they appear on the corporation's
books, of such stockholder and (ii) the class and number of shares of the
corporation which are beneficially owned by such stockholder. In addition, to be
effective, the stockholder's notice must be accompanied by the written consent
of the proposed nominee to serve as a director if elected. The corporation may
require any proposed nominee to furnish such other information as may reasonably
be required by
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<PAGE> 4
the corporation to determine the eligibility of such proposed nominee to serve
as a director of the corporation.
The chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
1.11 NOTICE OF BUSINESS AT ANNUAL MEETINGS. At an annual meeting of the
stockholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before an annual meeting,
business must be (a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (b) otherwise
brought before the meeting by or at the direction of the Board of Directors, or
(c) otherwise properly brought before an annual meeting by a stockholder. For
business to be properly brought before an annual meeting by a stockholder, if
such business relates to the election of directors of the corporation, the
procedures in Section 1.10 must be complied with. If such business relates to
any other matter, the stockholder must have given timely notice thereof in
writing to the Secretary. To be timely, a stockholder's notice must be delivered
to, or mailed and received by, the Secretary at the principal executive offices
of the corporation not less than 70 days nor more than 90 days prior to the
first anniversary of the preceding year's annual meeting; provided, however,
that (i) in the event that the date of the annual meeting is advanced by more
than 20 days, or delayed by more than 70 days, from such anniversary date,
notice by the stockholder to be timely must be so delivered or received not
earlier than the ninetieth day prior to such annual meeting and not later than
the close of business on the later of the seventieth day prior to such annual
meeting or the tenth day following the day on which notice of the date of such
annual meeting was mailed or public disclosure of the date of such annual
meeting was made, whichever first occurs, and (ii) with respect to the annual
meeting of stockholders of the corporation to be held in the year 2000, to be
timely, a stockholder's notice must be so received not earlier than the
ninetieth day prior to such annual meeting and not later than the close of
business on the later of (A) the sixtieth day prior to such annual meeting and
(B) the tenth day following the day on which notice of the date of such annual
meeting was mailed or public disclosure of the date of such annual meeting was
made, whichever first occurs. A stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the annual
meeting (a) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (b) the name and address, as they appear on the corporation's books, of
the stockholder proposing such business, (c) the class and number of shares of
the corporation which are beneficially owned by the stockholder, and (d) any
material interest of the stockholder in such business. Notwithstanding anything
in these By-Laws to the contrary, no business shall be conducted at any annual
meeting except in accordance with the procedures set forth in this Section 1.11
and except that any stockholder proposal which complies with Rule 14a-
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<PAGE> 5
8 of the proxy rules (or any successor provision) promulgated under the
Securities Exchange Act of 1934, as amended, and is to be included in the
corporation's proxy statement for an annual meeting of stockholders shall be
deemed to comply with the requirements of this Section 1.11.
The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the meeting
in accordance with the provisions of this Section 1.11, and if he should so
determine, the chairman shall so declare to the meeting that any such business
not properly brought before the meeting shall not be transacted.
1.12 ACTION WITHOUT MEETING. Unless otherwise provided in the Certificate
of Incorporation, any action required or permitted to be taken by stockholders
for or in connection with any corporate action may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted and shall be delivered to the corporation by
delivery to its registered office in Delaware by hand or certified or registered
mail, return receipt requested, to its principal place of business or to an
officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Each such written consent
shall bear the date of signature of each stockholder who signs the consent. No
written consent shall be effective to take the corporate action referred to
therein unless written consents signed by a number of stockholders sufficient to
take such action are delivered to the corporation in the manner specified in
this paragraph within sixty days of the earliest dated consent so delivered.
If action is taken by consent of stockholders and in accordance with the
foregoing, there shall be filed with the records of the meetings of stockholders
the writing or writings comprising such consent.
If action is taken by less than unanimous consent of stockholders, prompt
notice of the taking of such action without a meeting shall be given to those
who have not consented in writing and a certificate signed and attested to by
the Secretary of the corporation that such notice was given shall be filed with
the records of the meetings of stockholders.
In the event that the action which is consented to is such as would have
required the filing of a certificate under any provision of the General
Corporation Law of the State of Delaware, if such action had been voted upon by
the stockholders at a meeting thereof, the certificate filed under such
provision shall state, in lieu of any statement required by such provision
concerning a vote of stockholders, that written consent has
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been given under Section 228 of said General Corporation Law and that written
notice has been given as provided in such Section 228.
Notwithstanding the foregoing, if at any time the corporation shall have a
class of stock registered pursuant to the provisions of the Securities Exchange
Act of 1934, as amended, for so long as such class is registered, any action by
the stockholders of such class must be taken at an annual or special meeting of
stockholders and may not be taken by written consent.
1.13 ORGANIZATION. The Chairman of the Board, or in his absence the Vice
Chairman of the Board designated by the Chairman of the Board, or the President,
in the order named, shall call meetings of the stockholders to order, and shall
act as chairman of such meeting; provided, however, that the Board of Directors
may appoint any stockholder to act as chairman of any meeting in the absence of
the Chairman of the Board. The Secretary of the corporation shall act as
secretary at all meetings of the stockholders; but in the absence of the
Secretary at any meeting of the stockholders, the presiding officer may appoint
any person to act as secretary of the meeting.
ARTICLE 2 - DIRECTORS
2.1 GENERAL POWERS. The business and affairs of the corporation shall be
managed by or under the direction of a Board of Directors, who may exercise all
of the powers of the corporation except as otherwise provided by law, the
Certificate of Incorporation or these By-Laws. In the event of a vacancy in the
Board of Directors, the remaining directors, except as otherwise provided by
law, may exercise the powers of the full Board until the vacancy is filled.
2.2 NUMBER; ELECTION AND QUALIFICATION. 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 stockholders
by such stockholders as have the right to vote on such election. Directors need
not be stockholders of the corporation.
2.3 CLASSES OF DIRECTORS. The Board of Directors shall be and is 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. If a fraction is contained in
the quotient arrived at by dividing the designated number of directors by three,
then, if such fraction is one-third, the extra director shall be a member of
Class I, and if such fraction is two-thirds, one of the extra directors shall be
a member of Class I and one of the extra
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directors shall be a member of Class II, unless otherwise provided from time to
time by resolution adopted by the Board of Directors.
2.4 TERMS OF OFFICE. Each director shall serve for a term ending on the
date of the third annual meeting following the annual meeting at which such
director was elected; provided, that each initial director in Class I shall
serve for a term ending on the date of the annual meeting of stockholders in
2000; each initial director in Class II shall serve for a term ending on the
date of the annual meeting of stockholders in 2001; and each initial director in
Class III shall serve for a term ending on the date of the annual meeting of
stockholders in 2002; and provided further, that the term of each director shall
be subject to the election and qualification of his successor and to his earlier
death, resignation or removal.
2.5 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 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 latest dates following such
allocation, and any newly eliminated directorships shall be subtracted from
those classes whose terms of offices are to expire at the earliest dates
following such allocation, unless otherwise provided from time to time by
resolution adopted by the Board of Directors.
2.6 VACANCIES. Any vacancy in the Board of Directors, however occurring,
including a vacancy resulting from an enlargement of the size of the Board,
shall be filled only by vote of a majority of the directors then in office,
although 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 predecessor in
office, 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, subject to the election and
qualification of his successor and to his earlier death, resignation or removal.
2.7 RESIGNATION. Any director may resign by delivering his written
resignation to the corporation at its principal office or to the President or
Secretary. Such resignation shall be effective upon receipt unless it is
specified to be effective at some other time or upon the happening of some other
event.
2.8 REGULAR MEETINGS. Regular meetings of the Board of Directors may be
held without notice at such time and place, either within or without the State
of Delaware,
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as shall be determined from time to time by the Board of Directors; provided
that any director who is absent when such a determination is made shall be given
notice of the determination. A regular meeting of the Board of Directors may be
held without notice immediately after and at the same place as the annual
meeting of stockholders.
2.9 SPECIAL MEETINGS. Special meetings of the Board of Directors may be
held at any time and place, within or without the State of Delaware, designated
in a call by the Chairman of the Board, President, two or more directors, or by
one director in the event that there is only a single director in office.
2.10 NOTICE OF SPECIAL MEETINGS. 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 calling 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, telecopy, telex or
electronic mail message, or delivering written notice by hand, to his last known
business or home address at least 24 hours in advance of the meeting, or (iii)
by mailing written notice to his 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.
2.11 MEETINGS BY TELEPHONE CONFERENCE CALLS. Directors or any members of
any committee designated by the directors may participate in a meeting of the
Board of Directors or such 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 participation by such means shall constitute
presence in person at such meeting.
2.12 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. In the
event 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 number so fixed 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.
2.13 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, the Certificate
of Incorporation or these By-Laws.
2.14 ACTION BY CONSENT. Any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee of the Board of Directors
may be taken without a meeting, if all members of the Board or committee, as the
case may be,
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consent to the action in writing, and the written consents are filed with the
minutes of proceedings of the Board or committee.
2.15 REMOVAL. Directors of the corporation may be removed only for cause by
the affirmative vote of the holders of at least two-thirds of the shares of the
capital stock of the corporation issued and outstanding and entitled to vote.
2.16 COMMITTEES. The Board of Directors may designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The Board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member of a
committee, the member or members of the committee present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors
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. Each such committee shall keep minutes and make such reports as
the Board of Directors may from time to time request. Except as the Board of
Directors may otherwise determine, any committee may make rules for the conduct
of its business, but unless otherwise provided by the directors or in such
rules, its business shall be conducted as nearly as possible in the same manner
as is provided in these By-laws for the Board of Directors.
2.17 COMPENSATION OF DIRECTORS. Directors may be paid such compensation for
their services and such reimbursement for expenses of attendance at meetings as
the Board of Directors may from time to time determine. No such payment shall
preclude any director from serving the corporation or any of its parent or
subsidiary corporations in any other capacity and receiving compensation for
such service.
ARTICLE 3 - OFFICERS
3.1 ENUMERATION. The officers of the corporation shall consist of a
President, a Secretary, a Treasurer and such other officers with such other
titles as the Board of Directors shall determine, including a Chairman of the
Board, a Vice Chairman of the Board, and one or more Vice Presidents, Assistant
Treasurers and Assistant Secretaries. The Board of Directors may appoint such
other officers as it may deem appropriate.
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3.2 ELECTION. The President, Treasurer and Secretary shall be elected
annually by the Board of Directors at its first meeting following the annual
meeting of stockholders. Other officers may be appointed by the Board of
Directors at such meeting or at any other meeting.
3.3 QUALIFICATION. No officer need be a stockholder. Any two or more
offices may be held by the same person.
3.4 TENURE. Except as otherwise provided by law, by the Certificate of
Incorporation or by these By-Laws, each officer shall hold office until his
successor is elected and qualified, unless a different term is specified in the
vote choosing or appointing him, or until his earlier death, resignation or
removal.
3.5 RESIGNATION AND REMOVAL. Any officer may resign by delivering his or
her written resignation to the corporation at its principal office or to the
President or Secretary. Such resignation shall be effective upon receipt unless
it is specified to be effective at some other time or upon the happening of some
other event.
Any officer may be removed at any time, with or without cause, by vote of a
majority of the entire number of directors then in office.
Except as the Board of Directors may otherwise determine, no officer who
resigns or is removed shall have any right to any compensation as an officer for
any period following his resignation or removal, or any right to damages on
account of such removal, whether his compensation be by the month or by the year
or otherwise, unless such compensation is expressly provided in a duly
authorized written agreement with the corporation.
3.6 VACANCIES. The Board of Directors may fill any vacancy occurring in
any office for any reason and may, in its discretion, leave unfilled for such
period as it may determine any offices other than those of President, Treasurer
and Secretary. Each such successor shall hold office for the unexpired term of
his predecessor and until his successor is elected and qualified, or until his
earlier death, resignation or removal.
3.7 CHAIRMAN OF THE BOARD AND VICE CHAIRMAN OF THE BOARD. The Board of
Directors may appoint a Chairman of the Board. If the Board of Directors
appoints a Chairman of the Board, he shall perform such duties and possess such
powers as are assigned to him by the Board of Directors. Unless otherwise
provided by the Board of Directors, he shall preside at all meetings of the
stockholders and at all meetings of the Board of Directors. If the Board of
Directors appoints a Vice Chairman of the Board, he shall, in the absence or
disability of the Chairman of the Board, perform the duties and exercise the
powers of the Chairman of the Board and shall perform such other duties and
possess such other powers as may from time to time be vested in him by the Board
of Directors.
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3.8 PRESIDENT. The President shall, subject to the direction of the Board
of Directors, have general charge and supervision of the business of the
corporation. Unless the Board of Directors has designated the Chairman of the
Board or another officer as Chief Executive Officer, the President shall be the
Chief Executive Officer of the corporation. The President shall perform such
other duties and shall have such other powers as the Board of Directors may from
time to time prescribe.
3.9 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 event of the absence, inability or refusal to act of the
President, the Vice President (or if there shall be more than one, the Vice
Presidents in the order determined by the Board of Directors) shall perform the
duties of the President and when so performing shall have all the powers of and
be subject to all the restrictions upon the President. The Board of Directors
may assign to any Vice President the title of Executive Vice President, Senior
Vice President or any other title selected by the Board of Directors.
3.10 SECRETARY AND ASSISTANT SECRETARIES. 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 the 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.
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. In the event of the absence, inability or refusal to act of the
Secretary, the Assistant Secretary (or if there shall be more than one, the
Assistant Secretaries in the order determined by the Board of Directors) shall
perform the duties and exercise the powers of the Secretary.
In the absence of the Secretary or any Assistant Secretary at any meeting
of stockholders or directors, the person presiding at the meeting shall
designate a temporary secretary to keep a record of the meeting.
3.11 TREASURER AND ASSISTANT TREASURERS. The Treasurer shall perform such
duties and shall have such powers as may from time to time be assigned to him or
her by the Board of Directors or the President. 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
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Directors, to make proper accounts of 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.
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. In the event of the absence, inability or refusal to act of the
Treasurer, the Assistant Treasurer (or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board of Directors) shall
perform the duties and exercise the powers of the Treasurer.
3.12 SALARIES. Officers of the corporation shall be entitled to such
salaries, compensation or reimbursement as shall be fixed or allowed from time
to time by the Board of Directors.
ARTICLE 4 - CAPITAL STOCK
4.1 ISSUANCE OF STOCK. Unless otherwise voted by the stockholders and
subject to the provisions of the Certificate of Incorporation, the whole or any
part of any unissued balance of the authorized capital stock of the corporation
or the whole or any part of any unissued balance of the authorized capital stock
of the corporation held in its treasury may be issued, sold, transferred or
otherwise disposed of by vote of the Board of Directors in such manner, for such
consideration and on such terms as the Board of Directors may determine.
4.2 CERTIFICATES OF STOCK. Every holder of stock of the corporation shall
be entitled to have a certificate, in such form as may be prescribed by law and
by the Board of Directors, certifying the number and class of shares owned by
him or her in the corporation. Each such certificate shall be signed by, or in
the name of the corporation by, the Chairman or Vice Chairman, if any, 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. Any or all of the signatures on the certificate may be a facsimile.
Each certificate for shares of stock which are subject to any restriction
on transfer pursuant to the Certificate of Incorporation, the By-Laws,
applicable securities laws or any agreement among any number of stockholders or
among such holders and the corporation 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.
4.3 TRANSFERS. Except as otherwise established by rules and regulations
adopted by the Board of Directors, and subject to applicable law, shares of
stock may be transferred on the books of the corporation by the surrender to the
corporation or its
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transfer agent of the certificate representing such shares properly endorsed or
accompanied by a written assignment or power of attorney properly executed, and
with such proof of authority or the authenticity of signature as the corporation
or its transfer agent may reasonably require. Except as may be otherwise
required by law, by the Certificate of Incorporation or by these By-Laws, the
corporation shall be entitled to treat the record holder of stock as shown on
its books as the owner of such stock for all purposes, including the payment of
dividends and the right to vote with respect to such stock, regardless of any
transfer, pledge or other disposition of such stock until the shares have been
transferred on the books of the corporation in accordance with the requirements
of these By-Laws.
4.4 LOST, STOLEN OR DESTROYED CERTIFICATES. The corporation may issue a
new certificate of stock in place of any previously issued certificate alleged
to have been lost, stolen or destroyed, upon such terms and conditions as the
Board of Directors may prescribe, including the presentation of reasonable
evidence of such loss, theft or destruction and the giving of such indemnity as
the Board of Directors may require for the protection of the corporation or any
transfer agent or registrar.
4.5 RECORD DATE. The Board of Directors may fix in advance a date as a
record date for the determination of the stockholders entitled to notice of or
to vote at any meeting of stockholders, or entitled to receive payment of any
dividend or other distribution or allotment of any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action. Such record date shall not be more than 60 nor less than ten days before
the date of such meeting, nor more than 60 days prior to any other action to
which such record date relates.
If no record date is fixed, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day before the day on which notice is given, or, if
notice is waived, at the close of business on the day before the day on which
the meeting is held. The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating to such purpose.
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.
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ARTICLE 5 - GENERAL PROVISIONS
5.1 FISCAL YEAR. Except as from time to time otherwise designated by the
Board of Directors, the fiscal year of the corporation shall begin on the first
day of January in each year and end on the last day of December in each year.
5.2 CORPORATE SEAL. The corporate seal shall be in such form as shall be
approved by the Board of Directors.
5.3 WAIVER OF NOTICE. Whenever any notice whatsoever is required to be
given by law, by the Certificate of Incorporation or by these By-Laws, a waiver
of such notice either in writing signed by the person entitled to such notice or
such person's duly authorized attorney, or by telegraph, cable or any other
available method, whether before, at or after the time stated in such waiver, or
the appearance of such person or persons at such meeting in person or by proxy,
shall be deemed equivalent to such notice.
5.4 VOTING OF SECURITIES. Except as the directors may otherwise designate,
the President or Treasurer may waive notice of, and act as, or appoint any
person or persons to act as, proxy or attorney-in-fact for this corporation
(with or without power of substitution) at any meeting of stockholders or
shareholders of any other corporation or organization, the securities of which
may be held by this corporation.
5.5 EVIDENCE OF AUTHORITY. A certificate by the Secretary, or an Assistant
Secretary, or a temporary Secretary, as to any action taken by the stockholders,
directors, a committee or any officer or representative of the corporation shall
as to all persons who rely on the certificate in good faith be conclusive
evidence of such action.
5.6 CERTIFICATE OF INCORPORATION. All references in these By-Laws to the
Certificate of Incorporation shall be deemed to refer to the Certificate of
Incorporation of the corporation, as amended and in effect from time to time.
5.7 TRANSACTIONS WITH INTERESTED PARTIES. No contract or transaction
between the corporation and one or more of the directors or officers, or between
the corporation and any other corporation, partnership, association or other
organization in which one or more of the directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or a committee of the
Board of Directors which authorizes the contract or transaction or solely
because his or their votes are counted for such purpose, if:
(1) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board or committee in good faith
authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum;
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(2) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the corporation as of
the time it is authorized, approved or ratified, by the Board of Directors,
a committee of the Board of Directors, or the stockholders.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.
5.8 SEVERABILITY. Any determination that any provision of these By-Laws is
for any reason inapplicable, illegal or ineffective shall not affect or
invalidate any other provision of these By-Laws.
5.9 PRONOUNS. All pronouns used in these By-Laws shall be deemed to refer
to the masculine, feminine or neuter, singular or plural, as the identity of the
person or persons may require.
ARTICLE 6 - AMENDMENTS
6.1 BY THE BOARD OF DIRECTORS. 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.
6.2 BY THE STOCKHOLDERS. Except as otherwise provided in Section 6.3,
these ByLaws 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 or 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 regular or special meeting.
6.3 CERTAIN PROVISIONS. Notwithstanding any other provision of law, the
Certificate of Incorporation or these By-Laws, and notwithstanding the fact that
a lesser percentage may be specified by law, the affirmative vote of the holders
of at least seventy-five percent (75%) of the shares of the capital stock of the
corporation issued and outstanding and entitled to vote shall be required to
amend or repeal, or to adopt any provision inconsistent with Section 1.3,
Section 1.10, Section 1.11, Section 1.12, Section 1.13, Article 2 or Article 6
of these By-Laws.
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EXHIBIT 4.2
THIRD AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
August 6, 1999
To each of the Purchasers (as defined herein)
and the Founders (as defined herein)
Dear Sirs:
This will confirm that in consideration of the agreement by the Series
E Purchaser (as defined herein) on the date hereof to purchase shares (the
"Series E Preferred Shares") of Series E Convertible Preferred Stock, par value
$.01 per share, of Akamai Technologies, Inc., a Delaware corporation (the
"Company"), pursuant to the Series E Convertible Preferred Stock Purchase
Agreement of even date herewith (the "Series E Purchase Agreement") between the
Company and the Series E Purchaser, and as an inducement to the Series E
Purchaser to consummate the transactions contemplated by the Series E Purchase
Agreement, the Company covenants and agrees with each of you as follows:
1. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act.
"Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Company, as constituted as of the date of this Agreement.
"Conversion Shares" shall mean the Series A Conversion Shares,
the Series B Conversion Shares, the Series C Conversion Shares, the Series D
Conversion Shares and the Series E Conversion Shares.
"Exchange Act" shall mean the Securities Exchange Act of 1934
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Founders" shall mean F. Thomson Leighton, Daniel Lewin,
Jonathan Seelig, Randall Kaplan, David Karger, Gilbert Friesen, Preetish
Nijahwan, Marco Greenberg, Paul Sagan, the F. Thomson Leighton 1998 Irrevocable
Trust, the Daniel Lewin 1998 Irrevocable Trust, and the Arthur H. Bilger 1996
Family Trust.
<PAGE> 2
"Founders' Registrable Shares" shall mean up to 16,140,600
shares of Common Stock held by the Founders.
"Original Restricted Stock" shall mean (1) the Series A
Conversion Shares, excluding Series A Conversion Shares which have been (a)
registered under the Securities Act pursuant to an effective registration
statement filed thereunder and disposed of in accordance with the registration
statement covering them or (b) publicly sold pursuant to Rule 144 under the
Securities Act, and (2) for purposes of Sections 2, 6 and 11(d) hereof, the
Founders' Registrable Shares, but excluding shares of Common Stock which have
been (a) registered under the Securities Act pursuant to an effective
registration statement filed thereunder and disposed of in accordance with the
registration statement covering them or (b) publicly sold pursuant to Rule 144
under the Securities Act.
"Preferred Shares" shall mean the Series A Preferred Shares,
the Series B Preferred Shares, the Series C Preferred Shares, the Series D
Preferred Shares and the Series E Preferred Shares.
"Prior Agreement" shall mean the Second Amended and Restated
Registration Rights Agreement dated June 21, 1999 among the Company, the
Founders, the Series A Purchasers, the Series B Purchasers and the Series D
Purchaser.
"Purchasers" shall mean the Series A Purchasers, the Series B
Purchasers, the Series D Purchaser and the Series E Purchaser.
"Restricted Stock" shall mean Original Restricted Stock and/or
Series B/C/D/E Restricted Stock.
"Registration Expenses" shall mean the expenses so described
in Section 6.
"Securities Act" shall mean the Securities Act of 1933 or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Securities Laws" shall mean the Securities Act and all
applicable state securities laws, rules and regulations in effect at the time.
"Selling Expenses" shall mean the expenses so described in
Section 6.
"Series A Conversion Shares" shall mean shares of Common Stock
issued or issuable upon conversion of the Series A Preferred Shares, and any
shares of capital stock received in respect thereof.
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"Series A Preferred Shares" shall mean the shares of Series A
Convertible Preferred Stock, $0.01 par value per share, of the Company purchased
by the Series A Purchasers pursuant to the Series A Purchase Agreement.
"Series A Purchase Agreement" shall mean the Series A
Convertible Preferred Stock Purchase Agreement dated November 23, 1998, as
amended December 8, 1998, among the Company and the Series A Purchasers.
"Series A Purchasers" shall mean those persons listed on
Exhibit 1.01 to the Series A Purchase Agreement.
"Series B Conversion Shares" shall mean shares of Common Stock
issued or issuable upon conversion of the Series B Preferred Shares, and any
shares of capital stock received in respect thereof.
"Series B Preferred Shares" shall mean any shares of Series B
Convertible Preferred Stock, $0.01 par value per share of the Company purchased
by the Series B Purchasers pursuant to the Series B Purchase Agreement.
"Series B Purchase Agreement" shall mean the Series B
Convertible Preferred Stock and Series C Convertible Preferred Stock Purchase
Agreement dated as of April 16, 1999 among the Company and the Series B
Purchasers.
"Series B Purchasers" shall mean those persons listed on
Exhibit 1.01 to the Series B Purchase Agreement.
"Series B/C/D/E Restricted Stock" shall mean (i) the Series B
Conversion Shares, excluding Series B Conversion Shares which have been (a)
registered under the Securities Act pursuant to an effective registration
statement filed thereunder and disposed of in accordance with the registration
statement covering them or (b) publicly sold pursuant to Rule 144 under the
Securities Act, (ii) the Series C Conversion Shares, excluding Series C
Conversion Shares which have been (a) registered under the Securities Act
pursuant to an effective registration statement filed thereunder and disposed of
in accordance with the registration statement covering them or (b) publicly sold
pursuant to Rule 144 under the Securities Act, (iii) the Series D Conversion
Shares, excluding Series D Conversion Shares which have been (a) registered
under the Securities Act pursuant to an effective registration statement filed
thereunder and disposed of in accordance with the registration statement
covering them or (b) publicly sold pursuant to Rule 144 under the Securities
Act, and (iv) the Series E Conversion Shares, excluding Series E Conversion
Shares which have been (a) registered under the Securities Act pursuant to an
effective registration statement filed thereunder and disposed of in accordance
with the registration statement covering them or (b) publicly sold pursuant to
Rule 144 under the Securities Act.
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"Series C Conversion Shares" shall mean shares of Common Stock
issued or issuable upon conversion of the Series C Preferred Shares, and any
shares of capital stock received in respect thereof.
"Series C Preferred Shares" shall mean any shares of Series C
Convertible Preferred Stock, $0.01 par value per share, of the Company that are
purchased by the Series B Purchasers pursuant to the Series B Purchase
Agreement.
"Series D Conversion Shares" shall mean any shares of Common
Stock issued or issuable upon conversion of the Series D Preferred Shares, and
any shares of capital stock received in respect thereof.
"Series D Preferred Shares" shall mean any shares of Series D
Convertible Preferred Stock, $0.01 par value per share, of the Company that are
purchased by the Series D Purchaser pursuant to the Series D Purchase Agreement.
"Series D Purchase Agreement" shall mean the Series D
Convertible Preferred Stock Purchase Agreement dated as of June 21, 1999 among
the Company and the Series D Purchaser.
"Series D Purchaser" shall mean Apple Computer Inc. Ltd.
"Series E Conversion Shares" shall mean any shares of Common
Stock issued or issuable upon conversion of the Series E Preferred Shares, and
any shares of capital stock received in respect thereof.
"Series E Purchaser" shall mean Cisco Systems, Inc.
For all purposes of this Agreement, each holder of Restricted Stock
shall be treated (i) as a "Purchaser" solely with respect to shares of
Conversion Shares he or it holds as such, and/or (ii) as a "Founder" solely with
respect to shares of Common Stock he holds as such; and this Agreement shall be
interpreted accordingly.
2. Required Registration.
(a) On or after October 30, 2003, (i) the holders of Original
Restricted Stock (excluding the Founders) constituting at least a majority in
interest of the total shares of Series A Preferred Stock then outstanding and/or
(ii) the holders of Original Restricted Stock (excluding the Series A
Purchasers) constituting at least seventy-five percent (75%) of the Common Stock
then outstanding may request the Company to register under the Securities Act
all or any portion of the shares of Original Restricted Stock held by such
requesting holder or holders for sale in the manner specified in such notice
(subject to the limitations set
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forth in subsection 2(g) hereof), provided that the aggregate price to the
public of such offering would exceed $5,000,000.
(b) On or after April 16, 2002, the holders of Series B/C/D/E
Restricted Stock constituting at least 30% in interest of the total shares of
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and
Series E Preferred Stock then outstanding may request the Company to register
under the Securities Act all or any portion of the shares of Series B/C/D/E
Restricted Stock held by such requesting holder or holders for sale in the
manner specified in such notice (subject to the limitations set forth in
subsection 2(g) hereof), provided that the aggregate price to the public of such
offering would exceed $5,000,000.
(c) The only securities which the Company shall be required to
register pursuant to this Section 2 shall be shares of Common Stock; provided,
however, that, in any underwritten public offering contemplated by this Section
2 or Sections 3 and 4, the holders of Preferred Shares shall be entitled to sell
such Preferred Shares to the underwriters for conversion and sale of the shares
of Common Stock issued upon conversion thereof. Notwithstanding anything to the
contrary contained herein, the Company shall not be required to effect a
registration of shares of its Common Stock pursuant to this Section 2 within 180
days after the effective date of a registration statement filed by the Company
covering a firm commitment underwritten public offering in which the holders of
Restricted Stock shall have been entitled to join pursuant to Sections 3 or 4.
(d) Following receipt of any notice under subsection 2(a), the
Company shall immediately notify all holders of Original Restricted Stock
(including the Founders) from whom notice has not been received and such holders
shall then be entitled within 30 days thereafter to request the Company to
include in the requested registration all or any portion of their shares of
Original Restricted Stock. The Company shall use its best efforts to register
under the Securities Act, for public sale in accordance with the method of
disposition described in subsection 2(a), the number of shares of Original
Restricted Stock specified in such notice (and in all notices received by the
Company from other holders within 30 days after the giving of such notice by the
Company). The Company shall be obligated to register Original Restricted Stock
pursuant to subsection 2(a) on two occasions only as follows: (i) one at the
request of Series A Purchasers holding Original Restricted Stock who have so
requested pursuant to clause (i) of subsection 2(a) and (ii) one at the request
of holders of Common Stock who have so requested pursuant to clause (ii) of
subsection 2(a); provided, however, that such obligation shall be deemed
satisfied only when a registration statement, covering all of the offered shares
of Original Restricted Stock specified in notices received as aforesaid for sale
in accordance with the method of disposition specified by the requesting
holders, shall have become effective or if such registration statement has been
withdrawn prior to the consummation of the offering at the request of the Series
A Purchasers (other than as a result of a material adverse change in the
business or financial condition of the
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<PAGE> 6
Company) and, if such method of disposition is a firm commitment underwritten
public offering, all such shares shall have been sold pursuant thereto.
(e) Following receipt of any notice under subsection 2(b), the
Company shall immediately notify all holders of Series B/C/D/E Restricted Stock
from whom notice has not been received and such holders shall then be entitled
within 30 days thereafter to request the Company to include in the requested
registration all or any portion of their shares of Series B/C/D/E Restricted
Stock. The Company shall use its best efforts to register under the Securities
Act, for public sale in accordance with the method of disposition described in
subsection 2(b), the number of shares of Series B/C/D/E Restricted Stock
specified in such notice (and in all notices received by the Company from other
holders within 30 days after the giving of such notice by the Company). The
Company shall be obligated to register Series B/C/D/E Restricted Stock pursuant
to subsection 2(b) on three occasions only; provided, however, that such
obligation shall be deemed satisfied only when a registration statement,
covering all of the offered shares of Series B/C/D/E Restricted Stock specified
in notices received as aforesaid for sale in accordance with the method of
disposition specified by the requesting holders, shall have become effective or
if such registration statement has been withdrawn prior to the consummation of
the offering at the request of the Series B Purchasers, the Series D Purchaser
or the Series E Purchaser (other than as a result of a material adverse change
in the business or financial condition of the Company) and, if such method of
disposition is a firm commitment underwritten public offering, all such shares
shall have been sold pursuant thereto, or, if such method of disposition
includes the resale of the shares from time to time at prevailing market prices,
such registration statement has remained effective and available for resale for
at least 120 days.
(f) The Company (or at the option of the Company, the holders
of Common Stock) shall be entitled to include in any registration statement
referred to in this Section 2, for sale in accordance with the method of
disposition specified by the requesting holders, shares of Common Stock to be
sold by the Company for its own account or the account of such other holders,
except as and to the extent that, in the opinion of the managing underwriter (if
such method of disposition shall be an underwritten public offering), such
inclusion would adversely affect the marketing of the Restricted Stock to be
sold subject to the limitations set forth in subsection 2(g) hereof). Except for
registration statements on Form S-4, S-8 or any successor thereto, the Company
will not file with the Commission any other registration statement with respect
to its Common Stock, whether for its own account or that of other stockholders,
from the date of receipt of a notice from requesting holders pursuant to this
Section 2 until the completion of the period of distribution of the registration
contemplated thereby.
(g) If, in the opinion of the managing underwriter, the
inclusion of all of the Restricted Stock requested to be registered under this
Section would adversely affect the marketing of such shares, then, (i) in the
case of a registration requested pursuant to clause (i)
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of subsection 2(a), shares to be sold by the Company or other holders of Common
Stock (including the Founders) shall first be excluded, and then if necessary,
shares of Original Restricted Stock to be sold by the Series A Purchasers shall
be excluded in such manner that the shares to be sold shall be allocated among
the Series A Purchasers selling Original Restricted Stock pro rata based on
their ownership of Original Restricted Stock, (ii) in the case of a registration
requested pursuant to clause (ii) of subsection 2(a), shares to be sold by the
Company or any other holders of Common Stock (excluding the Founders and
including any shares of Original Restricted Stock held by the Series A
Purchasers) shall first be excluded, and then if necessary, shares of Original
Restricted Stock to be sold by the Founders shall be excluded in such manner
that the shares to be sold shall be allocated among the Founders selling
Original Restricted Stock pro rata based on their ownership of Original
Restricted Stock, and (iii) in the case of a registration requested pursuant to
subsection 2(b), shares to be sold by the Company or other holders of Common
Stock shall first be excluded, and then if necessary, shares of Series B/C/D/E
Restricted Stock to be sold by the Series B Purchasers, the Series D Purchaser
and the Series E Purchaser shall be excluded in such a manner that the shares to
be sold shall be allocated among the Series B Purchasers, the Series D Purchaser
and the Series E Purchaser selling Series B/C/D/E Restricted Stock pro rata
based on their ownership of Series B/C/D/E Restricted Stock; provided, however,
that in any registration in which both the Series A Purchasers and Founders
shall have requested registration pursuant to both clauses (i) and (ii) of
subsection 2(a), then shares to be sold by the Company or other holders of
Common Stock (including the Founders) shall first be excluded, and then if
necessary, shares of Original Restricted Stock to be sold by the Series A
Purchasers shall be excluded in such manner that the shares to be sold shall be
allocated among the Series A Purchasers selling Original Restricted Stock pro
rata based on their ownership of Original Restricted Stock.
3. Incidental Registration. If, following the Company's first
registered public offering of its Common Stock, the Company at any time (other
than pursuant to Section 2 or Section 4) proposes to register any of its
securities under the Securities Act for sale to the public, whether for its own
account only or for its own account and for the account of other security
holders (except with respect to registration statements on Forms S-4, S-8 or
another form not available for registering the Restricted Stock for sale to the
public), each such time it will give written notice to all Purchasers holding
outstanding Restricted Stock of its intention so to do. Upon the written request
of any such holder received by the Company within 30 days after the giving of
any such notice by the Company to register at least 450,000 shares
(appropriately adjusted for any of the events specified in Section 8 herein) of
its Restricted Stock, the Company will use its best efforts to cause the
Restricted Stock as to which registration shall have been so requested to be
included in the securities to be covered by the registration statement proposed
to be filed by the Company, all to the extent requisite to permit the sale or
other disposition by the holder (in accordance with such written request) of
such Restricted Stock so registered. In the event that any registration pursuant
to this Section 3 shall be, in whole or in part, an underwritten public offering
of Common Stock, the
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<PAGE> 8
number of shares of Restricted Stock to be included in such an underwriting may
be reduced (pro rata among the requesting holders based upon the number of
shares of Restricted Stock held by such requesting holders) if and to the extent
that the managing underwriter shall be of the opinion that such inclusion would
adversely affect the marketing of the securities to be sold by the Company
therein, but in no event shall the amount of securities of the requesting
holders be reduced below thirty percent (30%) of the total amount to be included
in such offering; provided, however, that such number of shares of Restricted
Stock shall not be reduced if any shares are to be included in such underwriting
for the account of any person (including the Founders) other than the Company or
requesting Purchasers holding Restricted Stock. Notwithstanding the foregoing
provisions, the Company may withdraw any registration statement referred to in
this Section 3 without thereby incurring any liability to the holders of
Restricted Stock.
4. Registration on Form S-3.
(a) If at any time (i) a holder or holders of Restricted Stock
then outstanding request that the Company file a registration statement on Form
S-3 or any successor thereto for a public offering of all or any portion of the
shares of Restricted Stock held by such requesting holder or holders, the
reasonably anticipated aggregate price to the public of which would exceed
$1,000,000, and (ii) the Company is a registrant entitled to use Form S-3 or any
successor thereto to register such shares, then the Company shall use its best
efforts to register under the Securities Act on Form S-3 or any successor
thereto, for public sale in accordance with the method of disposition specified
in such notice, the number of shares of Restricted Stock specified in such
notice. Whenever the Company is required by this Section 4 to use its best
efforts to effect the registration of Restricted Stock, each of the procedures
and requirements of Section 2 (including but not limited to the requirement that
the Company notify all holders of Restricted Stock from whom notice has not been
received and provide them with the opportunity to participate in the offering)
shall apply to such registration, provided, however, that no more than two (2)
registrations on Form S-3 may be requested and obtained under this Section 4
within any twelve (12) month period preceding the date of such request.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the Company's obligation under this Agreement to register Restricted
Stock under the Securities Act on registration statements ("Registration
Statements") may, upon the reasonable determination of the Board of Directors
made only once during any 12-month period, be suspended in the event and during
such period as unforeseen circumstances (including without limitation (i) an
underwritten primary offering by the Company (which includes no secondary
offering) if the Company is advised in writing by its underwriters that the
registration of the Restricted Stock would have a material adverse effect on the
Company's offering, or (ii) pending negotiations relating to, or consummation
of, a transaction or the occurrence of an event which would require additional
disclosure of material information by the Company
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<PAGE> 9
in Registration Statements or such other filings, as to which the Company has a
bona fide business purpose for preserving confidentiality or which renders the
Company unable to comply with the Commission's requirements) exist (such
unforeseen circumstances being hereinafter referred to as a "Suspension Event")
which would make it impractical or inadvisable for the Company to file the
Registration Statements or such other filings or to cause such to become
effective. Such suspension shall continue only for so long as such event is
continuing but in no event for a period longer than ninety (90) days. The
Company shall notify the Purchasers of the existence and nature of any
Suspension Event.
5. Registration Procedures. If and whenever the Company is
required by the provisions of Sections 2, 3 or 4 to use its best efforts to
effect the registration of any shares of Restricted Stock under the Securities
Act, the Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration
statement (which, in the case of an underwritten public offering pursuant to
Section 2, shall be on Form S-1 or other form of general applicability
satisfactory to the managing underwriter selected as therein provided) with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective for the period of the distribution
contemplated thereby (determined as hereinafter provided);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period specified in paragraph (a) above and comply with the provisions of
the Securities Act with respect to the disposition of all Restricted Stock
covered by such registration statement in accordance with the sellers' intended
method of disposition set forth in such registration statement for such period;
(c) furnish to each seller of Restricted Stock and to each
underwriter such number of copies of the registration statement and each such
amendment and supplement thereto (in each case including all exhibits) and the
prospectus included therein (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate the public sale or other
disposition of the Restricted Stock covered by such registration statement;
(d) use its best efforts to register or qualify the Restricted
Stock covered by such registration statement under the securities or "blue sky"
laws of such jurisdictions as the sellers of Restricted Stock or, in the case of
an underwritten public offering, the managing underwriter reasonably shall
request; provided, however, that the Company shall not for any such purpose be
required to qualify generally to transact business as a foreign corporation in
any jurisdiction where it is not so qualified or to consent to general service
of process in any such jurisdiction;
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(e) use its best efforts to list the Restricted Stock covered
by such registration statement with any securities exchange on which the Common
Stock of the Company is then listed;
(f) immediately notify each seller of Restricted Stock and
each underwriter under such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event of which the Company has knowledge as a
result of which the prospectus contained in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and promptly
prepare and furnish to such seller a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to the purchasers of
such Restricted Stock, such prospectus shall not include 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 not misleading in light of the
circumstances then existing;
(g) if the offering is underwritten and at the request of any
seller of Restricted Stock, use its best efforts to furnish to such seller on
the date that Restricted Stock is delivered to the underwriters for sale
pursuant to such registration: (i) a copy of an opinion dated such date of
counsel representing the Company for the purposes of such registration,
addressed to the underwriters and to such seller, to such effect as reasonably
may be requested by counsel for the underwriters, and (ii) a letter dated such
date from the independent public accountants retained by the Company, addressed
to the underwriters and to such seller, stating that they are independent public
accountants within the meaning of the Securities Act and that, in the opinion of
such accountants, the financial statements of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as to the
period ending no more than five business days prior to the date of such letter)
with respect to such registration as such underwriters reasonably may request;
(h) make available for inspection by each seller of Restricted
Stock, any underwriter participating in any distribution pursuant to such
registration statement, and any attorney, accountant or other agent retained by
such seller or underwriter, reasonable access to all financial and other
records, pertinent corporate documents and properties of the Company, as such
parties may reasonably request, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement;
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(i) cooperate with the selling holders of Restricted Stock and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Restricted Stock to be sold, such
certificates to be in such denominations and registered in such names as such
holders or the managing underwriters may request at least two business days
prior to any sale of Restricted Stock; and
(j) permit any holder of Restricted Stock which holder, in the
sole and exclusive judgment, exercised in good faith, of such holder, might be
deemed to be a controlling person of the Company, to participate in good faith
in the preparation of such registration or comparable statement and to require
the insertion therein of material, furnished to the Company in writing, which in
the reasonable judgment of such holder and its counsel should be included.
For purposes of Section 5(a) and 5(b) and of Section 2(f), the
period of distribution of Restricted Stock in a firm commitment underwritten
public offering shall be deemed to extend until each underwriter has completed
the distribution of all securities purchased by it, and the period of
distribution of Restricted Stock in any other registration shall be deemed to
extend until the earlier of the sale of all Restricted Stock covered thereby and
180 days after the effective date thereof.
In connection with each registration hereunder, the sellers of
Restricted Stock will furnish to the Company in writing such information
requested by the Company with respect to themselves and the proposed
distribution by them as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws and to make the
registration statement correct, accurate and complete in all respects with
respect to such sellers; provided, however, that this requirement shall not be
deemed to limit any disclosure obligation arising out of any seller's
relationship to the Company if one of such seller's agents or affiliates is an
officer, director or control person of the Company. In addition, the sellers
shall, if requested by the Company, execute such other agreements, which are
reasonably satisfactory to them and which shall contain such provisions as may
be customary and reasonable in order to accomplish the registration of the
Restricted Stock.
In connection with each registration pursuant to Sections 2, 3
or 4 covering an underwritten public offering, the Company and each seller agree
to enter into a written agreement with the managing underwriter selected in the
manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment stature.
6. Expenses. All expenses incurred by the Company in complying
with Sections 2, 3 and 4, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the
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Company, fees and expenses (including counsel fees) incurred in connection with
complying with state securities or "blue sky" laws, fees and expenses of one
counsel for the selling holders of Restricted Stock in connection with the
registration of Restricted Stock (which counsel shall be selected (i) by the
Series A Purchasers selling Original Restricted Stock if such registration is
made pursuant to clause (i) of subsection 2(a), (ii) by the Founders selling
Original Restricted Stock if such registration is made pursuant to clause (ii)
of subsection 2(a), and (iii) by the holders of at least 30% in interest of
shares of Series B/C/D/E Restricted Stock if such registration is made pursuant
to subsection 2(b); provided, however, if both the Series A Purchasers and the
Founders register shares of Original Restricted Stock pursuant to subsection
2(a), such counsel shall be selected by the Series A Purchasers, subject to
approval by the Founders (which approval shall not be unreasonably withheld)),
fees of the National Association of Securities Dealers, Inc., transfer taxes,
fees of transfer agents and registrars, costs of any insurance which might be
obtained, but excluding any Selling Expenses, are called "Registration
Expenses". All underwriting discounts and selling commissions applicable to the
sale of Restricted Stock and the fees and expenses of more than one counsel for
the selling holders of Restricted Stock in connection with the registration of
Restricted Stock are called "Selling Expenses".
The Company will pay all Registration Expenses in connection
with each registration statement under Sections 2, 3 or 4. All Selling Expenses
in connection with each registration statement under Sections 2, 3 or 4 shall be
borne by the participating sellers in proportion to the number of shares sold by
each, or by such participating sellers other than the Company (except to the
extent the Company shall be a seller) as they may agree.
7. Indemnification.
(a) In the event of a registration of any of the Restricted
Stock under the Securities Act pursuant to Sections 2, 3 or 4, the Company will
indemnify and hold harmless each holder of Restricted Stock, its officers and
directors, each underwriter of such Restricted Stock thereunder and each other
person, if any, who controls such seller or underwriter within the meaning of
the Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such holder, officer, director, underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
Restricted Stock was registered under the Securities Act pursuant to Sections 2,
3 or 4, any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, (ii) any blue sky application or other document
executed by the Company specifically for that purpose or based upon written
information furnished by the Company filed in any state or other jurisdiction in
order to qualify any or all of the Restricted Stock under the securities laws
thereof (any such application, document or information herein called a "Blue Sky
Application"), (iii) the omission or alleged omission to
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state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, (iv) any violation by the Company or its
agents of any rule or regulation promulgated under the Securities Act applicable
to the Company or its agents and relating to action or inaction required of the
Company in connection with such registration, or (v) any failure to register or
qualify the Restricted Stock in any state where the Company or its agents has
affirmatively undertaken or agreed in writing that the Company (the undertaking
of any underwriter chosen by the Company being attributed to the Company) will
undertake such registration or qualification on the seller's behalf (provided
that in such instance the Company shall not be so liable if it has undertaken
its best efforts to so register or qualify the Restricted Stock) and will
reimburse each such holder, and such officer and director, each such underwriter
and each such controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
be liable in any such case if and 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 so made in conformity
with information furnished by any such seller, any such underwriter or any such
controlling person in writing specifically for use in such registration
statement or prospectus.
(b) In the event of a registration of any of the Restricted
Stock under the Securities Act pursuant to Sections 2, 3 or 4, each seller of
such Restricted Stock thereunder, severally and not jointly, will indemnify and
hold harmless the Company, each person, if any, who controls the Company within
the meaning of the Securities Act, each officer of the Company who signs the
registration statement, each director of the Company, each other holder of
Restricted Stock, each underwriter and each person who controls any underwriter
within the meaning of the Securities Act, against all losses, claims, damages or
liabilities, joint or several, to which the Company or such officer, director,
other seller, underwriter or, controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the registration statement under which such Restricted Stock was registered
under the Securities Act pursuant to Sections 2, 3 or 4, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or any Blue Sky Application or arise out of or are based upon 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, and
will reimburse the Company and each such officer, director, other seller,
underwriter and controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action, provided, however, that such seller will be
liable hereunder in any such case if and only 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 reliance upon
and in conformity with information pertaining to such seller, as such, furnished
in writing to
-13-
<PAGE> 14
the Company by such seller specifically for use in such registration statement
or prospectus, and provided, further, however, that the liability of each seller
hereunder shall be limited to the proportion of any such loss, claim, damage,
liability or expense which is equal to the proportion that the public offering
price of the shares sold by such seller under such registration statement bears
to the total public offering price of all securities sold thereunder, but not in
any event to exceed the proceeds received by such seller from the sale of
Restricted Stock covered by such registration statement.
(c) Promptly after receipt by an indemnified party hereunder
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such indemnified party other than under this Section 7 and shall only relieve
it from any liability which it may have to such indemnified party under this
Section 7 if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action 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 in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 7 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected; provided,
however, that, if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that the interests of the indemnified party reasonably may be deemed
to conflict with the interests of the indemnifying party, the indemnified party
shall have the right to select a separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred.
(d) The indemnities provided in this Section 7 shall survive
the transfer of any Restricted Stock by such holder.
8. Changes in Common Stock or Preferred Stock. If, and as often
as, there is any change in the Common Stock or the Preferred Shares by way of a
stock split, stock dividend, combination or reclassification, or through a
merger, consolidation, reorganization or recapitalization, or by any other
means, appropriate adjustment shall be made in the provisions hereof so that the
rights and privileges granted hereby shall continue with respect to the Common
Stock or the Preferred Shares as so changed.
-14-
<PAGE> 15
9. Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Stock to the public without registration,
at all times after 90 days after any registration statement covering a public
offering of securities of the Company under the Securities Act shall have become
effective, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) furnish to each holder of Restricted Stock forthwith upon
request a written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as such
holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing such holder to sell any Restricted Stock without
registration.
10. Representations and Warranties of the Company. The Company
represents and warrants to you as follows:
(a) The execution, delivery and performance of this Agreement
by the Company have been duly authorized by all requisite corporate action and
will not violate any provision of law, any order of any court or other agency of
government, the Charter or Bylaws of the Company or any provision of any
indenture, agreement or other instrument to which it or any of its properties or
assets is bound, conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any such indenture, agreement
or other instrument or result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any of the properties or assets of
the Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, except to the extent the
indemnification provisions herein may be deemed not enforceable.
11. Miscellaneous.
(a) Transfers; Assigns. All covenants and agreements contained
in this Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of
-15-
<PAGE> 16
the respective successors and assigns of the parties hereto (including without
limitation transferees of any Preferred Shares or Restricted Stock), whether so
expressed or not; provided, however, that registration rights conferred herein
on the holders of Preferred Shares, Common Stock or Restricted Stock shall only
inure to the benefit of a transferee of Preferred Shares, Common Stock or
Restricted Stock if (i) there is transferred to such transferee at least 300,000
shares of such stock (appropriately adjusted for any of the events specified in
Section 8 hereof) to the direct or indirect transferor of such transferee or
(ii) such transferee is a Qualified Transferee (as such term is defined in that
certain Third Amended and Restated Stockholders' Agreement by and among the
Company, the Purchasers and the Founders (the "Stockholders' Agreement")) and
(iii), that such transferee executes a writing agreeing to be bound by the
provisions of this Agreement and the Stockholders' Agreement (to the extent the
same remains in effect).
(b) Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be mailed by certified or
registered mail, return receipt requested, postage prepaid, or telexed, in the
case of non-U.S. residents, addressed as follows:
if to the Company or any other party hereto, at the address of
such party and its counsel set forth in the Series A Purchase Agreement, Series
B Purchase Agreement, the Series D Purchase Agreement, the Series E Purchase
Agreement or in the Stockholders' Agreement with a copy to the Company's counsel
as indicated in the Series A Purchase Agreement;
if to any subsequent holder of Preferred Shares or Restricted
Stock, to it at such address as may have been furnished to the Company in
writing by such holder;
or, in any case, at such other address or addresses as shall have been furnished
in writing to the Company (in the case of a holder of Preferred Shares or
Restricted Stock) or to the holders of Preferred Shares or Restricted Stock (in
the case of the Company) in accordance with the provisions of this paragraph.
(c) Governing Law. This Agreement shall be construed and
enforced in accordance with and governed by the General Corporation Law of the
State of Delaware as to matters within the scope thereof, and as to all other
matters shall be governed by and construed in accordance with the internal laws
of the Commonwealth of Massachusetts.
(d) Amendments; Modifications. This Agreement may not be
amended or modified, and no provision hereof may be waived, without the written
consent of the Company and the holders of (i) at least 50% of the Founders'
Registrable Shares, (ii) at least 50% of the Conversion Shares, and (iii) at
least 60% of the outstanding shares of Series B/C/D Restricted Stock; provided,
however, that any amendment, modification or waiver that would directly or
indirectly impair or adversely affect the rights of the holders of Series
-16-
<PAGE> 17
B/C/D/E Restricted Stock under, or the ability of such holders to exercise their
rights under, Sections 2 and 3 of this Agreement, shall not be effective without
the written consent of the holders of at least 50% of the outstanding shares of
Series B/C/D/E Restricted Stock. Notwithstanding the foregoing, no amendment,
modification or waiver approved in accordance herewith shall be effective if and
to the extent such amendment, modification or waiver directly or indirectly
grants to the holders of any type of Restricted Stock any rights more favorable
than any rights granted hereunder to the holders of any other type of Restricted
Stock or otherwise treats the holders of any type of Restricted Stock
differently than the holders of any other type of Restricted Stock. Any
amendment, modification or waiver to this Section 11(d) shall require the
written consent of the holders of (i) at least 50% of the Founders' Registrable
Shares, (ii) at least 50% of the Conversion Shares, (iii) at least 60% of the
outstanding shares of Series B/C/D Restricted Stock, and (iv) at least 50% of
the outstanding shares of Series B/C/D/E Restricted Stock.
(e) Counterpart Signatures. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(f) Term. The obligations of the Company to register shares of
Restricted Stock under Sections 2, 3 or 4 shall terminate five years after
completion of a Qualified Public Offering (as defined in Section 6.01 of the
Series E Purchase Agreement).
(g) Lock-up Agreement. If requested in writing by the
underwriters for the initial underwritten public offering of securities of the
Company, each holder of Restricted Stock who is a party to this Agreement shall
agree not to sell publicly any shares of Restricted Stock or any other shares of
Common Stock (other than shares of Restricted Stock or other shares of Common
Stock being registered in such offering), without the consent of such
underwriters, for a period of not more than 180 days following the effective
date of the registration statement relating to such offering; provided, however,
that all (i) persons entitled to registration rights with respect to shares of
Common Stock who are not parties to this Agreement, (ii) executive officers,
(iii) directors and (iv) employees who hold, or have been awarded options to
purchase, an aggregate of up to 360,000 shares of Common Stock of the Company,
shall also have agreed not to sell publicly their shares of Common Stock under
the circumstances and pursuant to the terms set forth in this Section 11(g).
(h) Other Registrations. The Company shall not grant to any
third party any registration rights comparable to or more favorable than any of
those contained herein, so long as any of the registration rights under this
Agreement remains in effect.
(i) Severability. If any provision of this Agreement shall be
held to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or
-17-
<PAGE> 18
unenforceable any other provision of this Agreement, and this Agreement shall be
carried out as if any such illegal, invalid or unenforceable provision were not
contained herein.
(j) Amendment of Prior Agreement. The Company, the Founders
and the Series A Purchasers, the Series B Purchasers and the Series D Purchaser
(including the holders of at least (i) 50% of the Founders' Registrable Shares,
(ii) 50% of the Conversion Shares, and (iii) 50% of the outstanding shares of
Series B/C/D Restricted Stock (as such terms are defined in the Prior
Agreement)) hereby agree pursuant to Section 11(d) of the Prior Agreement that
the Prior Agreement is hereby amended and restated in the form of this Agreement
and is of no further force or effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 19
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this letter, whereupon this Agreement
shall be a binding agreement between the Company and you.
Very truly yours,
AKAMAI TECHNOLOGIES, INC.
By: /s/ Paul Sagan
----------------------------
Name:
Title:
AGREED TO AND ACCEPTED as of the date first above written.
FOUNDERS:
/s/ Daniel Lewin
- ---------------------------------
Daniel Lewin
/s/ F. Thomson Leighton
- ---------------------------------
F. Thomson Leighton
- ---------------------------------
Jonathan Seelig
- ---------------------------------
Randall Kaplan
- ---------------------------------
Preetish Nijahwan
-19-
<PAGE> 20
- ---------------------------------
Marco Greenberg
- ---------------------------------
David Karger
- ---------------------------------
Gilbert B. Friesen
/s/ Paul Sagan
- --------------------------------
Paul Sagan
F. Thomson Leighton 1998 Irrevocable Trust
By: /s/ Daniel Lewin
------------------------------
Print Name: Daniel Lewin
----------------------
Title: Trustee
--------------------------
Daniel Lewin 1998 Irrevocable Trust
By: /s/ F.T. Leighton
------------------------------
Print Name: F.T. Leighton
---------------------
Title: Trustee
---------------------------
Arthur H. Bilger 1996 Family Trust
By:
------------------------------
Print Name: ---------------------
Title:
---------------------------
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<PAGE> 21
SERIES A PURCHASERS:
BATTERY VENTURES IV, L.P.
By: Battery Partners IV, LLC
By: /s/ Todd Dagres
--------------------------------
Member Manager
BATTERY INVESTMENT PARTNERS IV, LLC
By: /s/ Todd Dagres
--------------------------------
Member Manager
ADASE PARTNERS, L.P.
By: /s/ Arthur H. Bilger
-------------------------------
Print Name: Arthur H. Bilger
------------------------
Title: Managing Member
----------------------------
/s/ Paul Sagen
- -----------------------------------
Paul Sagan
David Allan Kaplan Revocable Trust Dated
December 19, 1980
By:
--------------------------------
Print Name:
------------------------
Title:
----------------------------
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<PAGE> 22
/s/ Jonathan Seelig
- --------------------------------
Jonathan Seelig
- --------------------------------
Michael Seelig
- --------------------------------
Julie Seelig
- --------------------------------
Gilbert B. Friesen
Ehrenkranz & Ehrenkranz LLP
By:
-----------------------------
Print Name:
---------------------
Title:
--------------------------
Peter Morton Lifetime Trust
By:
-----------------------------
Print Name:
---------------------
Title:
--------------------------
- --------------------------------
Brian T. Bedol
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<PAGE> 23
Richard Donner & Lauren Shuler Donner as
trustees of the R&L Donner Trust under
the amended and restated trust agreement
dated 12/15/95
By:
--------------------------------
Print Name:
------------------------
Title:
----------------------------
Straight Arrow Publishers Company, L.P.
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
- -----------------------------------
Randall Kaplan
- -----------------------------------
Earl P. Galleher III
- -----------------------------------
Linda Eder Ross
Polaris Venture Partners II L.P.
By: /s/ Terence McGuire
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
-23-
<PAGE> 24
Polaris Venture Partners Founders Fund II L.P.
By: /s/ Terence McGuire
--------------------------------
Print Name: Terence McGuire
------------------------
Title:
-----------------------------
/s/ George Conrades
- -----------------------------------
George Conrades
- -----------------------------------
David F. Callan
- -----------------------------------
Scott Morrisse
- -----------------------------------
Thomas A. Herring
SERIES B PURCHASERS:
AT INVESTORS LLC
By: /s/ Arthur H. Bilger
--------------------------------
Print Name: Arthur H. Bilger
------------------------
Title: Managing Member
----------------------------
-24-
<PAGE> 25
BAKER COMMUNICATIONS FUND, L.P.
By: Baker Capital Partners, LLC
its General Partner
By: /s/ Edward W. Scott
--------------------------------
Print Name: Edward W. Scott
------------------------
Title: General Partner
-----------------------------
BATTERY INVESTMENT PARTNERS IV, LLC
By: /s/ Todd Dagres
--------------------------------
Print Name: Todd Dagres
------------------------
Title: Member Manager
----------------------------
BATTERY VENTURES IV, L.P.
By: /s/ Todd Dagres
--------------------------------
Print Name: Todd Dagres
------------------------
Title: Member Manager
-----------------------------
- -----------------------------------
Brian T. Bedol
- -----------------------------------
David F. Callan
/s/ George Conrades
- -----------------------------------
George Conrades
-25-
<PAGE> 26
DAVID ALLAN KAPLAN REVOCABLE TRUST
By:_______________________________________
Print Name:_______________________________
Title:____________________________________
_________________________________
James Dolce
EHRENKRANZ & EHRENKRANZ LLP
By:_______________________________________
Print Name:_______________________________
Title:____________________________________
_________________________________
Gilbert B. Friesen
_________________________________
Earl P. Galleher III
_________________________________
Thomas A. Herring
_________________________________
Randall Kaplan
_________________________________
Scott Morrisse
-26-
<PAGE> 27
PETER MORTON LIFETIME TRUST
By:
---------------------------------------
Print Name:
-------------------------------
Title:
------------------------------------
POLARIS VENTURE PARTNERS FOUNDERS
FUND II L.P.
By: /s/ Terence McGuire
---------------------------------------
Print Name: Terence McGuire
-------------------------------
Title:
-----------------------------------
POLARIS VENTURE PARTNERS II L.P.
By: /s/ Terence McGuire
---------------------------------------
Print Name: Terence McGuire
-------------------------------
Title:
------------------------------------
RICHARD DONNER & LAUREN SHULER DONNER
AS TRUSTEES OF THE R&L DONNER TRUST
UNDER THE AMENDED AND RESTATED TRUST
AGREEMENT DATED 12/15/95
By:
--------------------------------------
Print Name:
------------------------------
Title:
-----------------------------------
- --------------------------------
Linda Eder Ross
-27-
<PAGE> 28
/s/ Paul Sagan
- ----------------------------------
Paul Sagan
/s/ Jonathan Seelig
- ----------------------------------
Jonathan Seelig
- ----------------------------------
Michael Seelig
- ----------------------------------
Julie Seelig
STRAIGHT ARROW PUBLISHERS CO., L.P.
By:
-------------------------------
Print Name:
-----------------------
Title:
---------------------------
SERIES D PURCHASER:
Apple Computer Inc. Ltd.
By:
---------------------------------
Print Name:
-------------------------
Title:
------------------------------
-28-
<PAGE> 29
SERIES E PURCHASER:
Cisco Systems, Inc.
By: /s/ John Chambers
----------------------------------
Print Name: John Chambers
--------------------------
Title:
------------------------------
-29-
<PAGE> 1
Exhibit 10.1
AKAMAI TECHNOLOGIES, INC.
Second Amended and Restated
1998 Stock Incentive Plan
1. Purpose
The purpose of this Amended and Restated 1998 Stock Incentive Plan (the
"Plan") of Akamai Technologies, Inc., a Delaware corporation (the "Company"), is
to advance the interests of the Company's stockholders by enhancing the
Company's ability to attract, retain and motivate persons who make (or are
expected to make) important contributions to the Company by providing such
persons with equity ownership opportunities and performance-based incentives and
thereby better aligning the interests of such persons with those of the
Company's stockholders. Except where the context otherwise requires, the term
"Company" shall include any of the Company's present or future subsidiary
corporations of as defined in Section 424(f) of the Internal Revenue Code of
1986, as amended, and any regulations promulgated thereunder (the "Code").
2. Eligibility
All of the Company's employees, officers, directors, consultants and
advisors (and any individuals who have accepted an offer for employment) are
eligible to be granted options, restricted stock awards, or other stock-based
awards (each, an "Award") under the Plan. Each person who has been granted an
Award under the Plan shall be deemed a "Participant".
3. Administration, Delegation
(a) Administration by Board of Directors. The Plan will be
administered by the Board of Directors of the Company (the "Board"). The Board
shall have authority to grant Awards and to adopt, amend and repeal such
administrative rules, guidelines and practices relating to the Plan as it shall
deem advisable. The Board may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Award 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. All decisions by the Board shall be
made in the Board's sole discretion and shall be final and binding on all
persons having or claiming any interest in the Plan or in any Award. No director
or person acting pursuant to the authority delegated by the Board shall be
liable for any action or determination relating to or under the Plan made in
good faith.
(b) Delegation to Executive Officers. To the extent permitted by
applicable law, the Board may delegate to one or more executive officers of the
Company the power to make Awards and exercise such other powers under the Plan
as the Board may determine, provided that the Board shall fix the maximum number
of shares
<PAGE> 2
subject to Awards and the maximum number of shares for any one Participant to be
made by such executive officers.
(c) Appointment of Committees. To the extent permitted by
applicable law, the Board may delegate any or all of its powers under the Plan
to one or more committees or subcommittees of the Board (a "Committee"). All
references in the Plan to the "Board" shall mean the Board or a Committee of the
Board or the executive officer referred to in Section 3(b) to the extent that
the Board's powers or authority under the Plan have been delegated to such
Committee or executive officer.
4. Stock Available for Awards
(a) Number of Shares. Subject to adjustment under Section 8,
Awards may be made under the Plan for up to 11,377,800 shares of common stock,
$0.01 par value per share, of the Company (the "Common Stock"). If any Award
expires or is terminated, surrendered or canceled without having been fully
exercised or is forfeited in whole or in part or results in any Common Stock not
being issued, the unused Common Stock covered by such Award shall again be
available for the grant of Awards under the Plan, subject, however, in the case
of Incentive Stock Options (as hereinafter defined), to any limitation required
under the Code. Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.
(b) Per-Participant Limit. Subject to adjustment under Section 8,
for Awards granted after the Common Stock is registered under the Securities
Exchange Act of 1934 (the "Exchange Act"), the maximum number of shares of
Common Stock with respect to which an Award may be granted to any Participant
under the Plan shall be 3,600,000 per calendar year. The per-Participant limit
described in this Section 4(b) shall be construed and applied consistently with
Section 162(m) of the Code.
5. Stock Options
(a) General. The Board may grant options to purchase Common Stock
(each, an "Option") and determine the number of shares of Common Stock to be
covered by each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".
(b) Incentive Stock Options. An Option that the Board intends to
be an "incentive stock option" as defined in Section 422 of the Code (an
"Incentive Stock Option") shall only be granted to employees of the Company and
shall be subject to
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<PAGE> 3
and shall be construed consistently with the requirements of Section 422 of the
Code. The Company shall have no liability to a Participant, or any other party,
if an Option (or any part thereof) which is intended to be an Incentive Stock
Option is not an Incentive Stock Option.
(c) Exercise Price. The Board shall establish the exercise price
at the time each Option is granted and specify it in the applicable option
agreement.
(d) Duration of Options. Each Option shall be exercisable at such
times and subject to such terms and conditions as the Board may specify in the
applicable option agreement.
(e) Exercise of Option. Options may be exercised by delivery to
the Company of a written notice of exercise signed by the proper person or by
any other form of notice (including electronic notice) approved by the Board
together with payment in full as specified in Section 5(f) for the number of
shares for which the Option is exercised.
(f) Payment Upon Exercise. Common Stock purchased upon the
exercise of an Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the
Company;
(2) except as the Board may, in its sole discretion,
otherwise provide in an option agreement, by (i) delivery of an irrevocable and
unconditional undertaking by a creditworthy broker to deliver promptly to the
Company sufficient funds to pay the exercise price or (ii) delivery by the
Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the Company cash or
a check sufficient to pay the exercise price;
(3) when the Common Stock is registered under the
Exchange Act, by delivery of shares of Common Stock owned by the Participant
valued at their fair market value as determined by (or in a manner approved by)
the Board in good faith ("Fair Market Value"), which Common Stock was owned by
the Participant at least six months prior to such delivery;
(4) to the extent permitted by the Board, in its sole
discretion by (i) delivery of a promissory note of the Participant to the
Company on terms determined by the Board, or (ii) payment of such other lawful
consideration as the Board may determine; or
(5) by any combination of the above permitted forms of
payment.
-3-
<PAGE> 4
6. Restricted Stock
(a) Grants. The Board may grant Awards entitling recipients to
acquire shares of Common Stock, subject to the right of the Company to
repurchase all or part of such shares at their issue price or other stated or
formula price (or to require forfeiture of such shares if issued at no cost)
from the recipient in the event that conditions specified by the Board in the
applicable Award are not satisfied prior to the end of the applicable
restriction period or periods established by the Board for such Award (each, a
"Restricted Stock Award").
(b) Terms and Conditions. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be registered in the name of
the Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
7. Other Stock-Based Awards
The Board shall have the right to grant other Awards based upon the
Common Stock having such terms and conditions as the Board may determine,
including the grant of shares based upon certain conditions, the grant of
securities convertible into Common Stock and the grant of stock appreciation
rights.
8. Adjustments for Changes in Common Stock and Certain Other Events
(a) Changes in Capitalization. In the event of any stock split,
reverse stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the per-Participant limit set forth in Section 4(b), (iii) the number and
class of securities and exercise price per share subject to each outstanding
Option, (iv) the repurchase price per share subject to each outstanding
Restricted Stock Award, and (v) the terms of each other outstanding Award shall
be appropriately adjusted by the Company (or substituted Awards may be made, if
applicable) to the extent the Board shall determine, in good faith, that such an
adjustment (or substitution) is necessary and appropriate. If this Section 8(a)
-4-
<PAGE> 5
applies and Section 8(c) also applies to any event, Section 8(c) shall be
applicable to such event, and this Section 8(a) shall not be applicable.
(b) Liquidation or Dissolution. In the event of a proposed
liquidation or dissolution of the Company, the Board shall upon written notice
to the Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date. The Board may specify the effect of a liquidation or
dissolution on any Restricted Stock Award or other Award granted under the Plan
at the time of the grant of such Award.
(c) Acquisition and Change in Control Events
(1) Definitions
(a) An "Acquisition Event" shall mean:
(i) any merger or consolidation of the
Company with or into another entity
as a result of which the Common
Stock is converted into or exchanged
for the right to receive cash,
securities or other property; or
(ii) any exchange of shares of the
Company for cash, securities or
other property pursuant to a
statutory share exchange
transaction.
(b) A "Change in Control Event" shall mean:
(i) any merger or consolidation which
results in the voting securities of
the Company outstanding immediately
prior thereto representing
immediately thereafter (either by
remaining outstanding or by being
converted into voting securities of
the surviving or acquiring entity)
less than 50% of the combined
voting power of the voting
securities of the Company or such
surviving or acquiring entity
outstanding immediately after such
merger or consolidation;
(ii) the acquisition by an individual,
entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of
the Exchange Act) (a "Person") of
beneficial
-5-
<PAGE> 6
ownership of any capital stock of
the Company if, after such
acquisition, such Person
beneficially owns (within the
meaning of Rule 13d-3 promulgated
under the Exchange Act) 50% or more
of either (A) the then-outstanding
shares of Common Stock of the
Company (the "Outstanding Company
Common Stock") or (B) the combined
voting power of the then-outstanding
voting securities of the Company
entitled to vote generally in the
election of directors (the
"Outstanding Company Voting
Securities"); provided, however,
that for purposes of this subsection
(ii), the following acquisitions
shall not constitute a Sale: (A) any
acquisition directly from the
Company, (B) any acquisition by the
Company, (C) any acquisition by any
employee benefit plan (or related
trust) sponsored or maintained by
the Company or any corporation
controlled by the Company, or (D)
any acquisition by any corporation
pursuant to a transaction which
results in all or substantially all
of the individuals and entities who
were the beneficial owners of the
Outstanding Company Common Stock and
Outstanding Company Voting
Securities immediately prior to such
transaction beneficially own,
directly or indirectly, more than
50% of the then-outstanding shares
of common stock and the combined
voting power of the then-outstanding
voting securities entitled to vote
generally in the election of
directors, respectively, of the
resulting or acquiring corporation
in such transaction (which shall
include, without limitation, a
corporation which as a result of
such transaction owns the Company or
substantially all of the Company's
assets either directly or through
one or more subsidiaries) in
substantially the same proportions
as their ownership, immediately
prior to such transaction, of the
Outstanding Company Common Stock and
Outstanding Company Voting
Securities, respectively;
(iii) any sale of all or substantially
all of the assets of the Company;
or
(iv) the complete liquidation of the
Company.
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<PAGE> 7
(2) Effect on Options
(a) Acquisition Event. Upon the occurrence of an
Acquisition Event (regardless of whether
such event also constitutes a Change in
Control Event), or the execution by the
Company of any agreement with respect to an
Acquisition Event (regardless of whether
such event will result in a Change in
Control Event), the Board shall provide that
all outstanding Options shall be assumed, or
equivalent options shall be substituted, by
the acquiring or succeeding corporation (or
an affiliate thereof); provided that if such
Acquisition Event also constitutes a Change
in Control Event, except to the extent
specifically provided to the contrary in the
instrument evidencing any Option or any
other agreement between a Participant and
the Company, such assumed or substituted
options shall be immediately exercisable in
full upon the occurrence of such Acquisition
Event. For purposes hereof, an Option shall
be considered to be assumed if, following
consummation of the Acquisition Event, the
Option confers the right to purchase, for
each share of Common Stock subject to the
Option immediately prior to the consummation
of the Acquisition Event, the consideration
(whether cash, securities or other property)
received as a result of the Acquisition
Event by holders of Common Stock for each
share of Common Stock held immediately prior
to the consummation of the Acquisition Event
(and if holders were offered a choice of
consideration, the type of consideration
chosen by the holders of a majority of the
outstanding shares of Common Stock);
provided, however, that if the consideration
received as a result of the Acquisition
Event is not solely common stock of the
acquiring or succeeding corporation (or an
affiliate thereof), the Company may, with
the consent of the acquiring or succeeding
corporation, provide for the consideration
to be received upon the exercise of Options
to consist solely of common stock of the
acquiring or succeeding corporation (or an
affiliate thereof) equivalent in fair market
value to the per share consideration
received by holders of outstanding shares of
Common Stock as a result of the Acquisition
Event.
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<PAGE> 8
Notwithstanding the foregoing, if the
acquiring or succeeding corporation (or an
affiliate thereof) does not agree to assume,
or substitute for, such Options, then the
Board shall, upon written notice to the
Participants, provide that all then
unexercised Options will become exercisable
in full as of a specified time prior to the
Acquisition Event and will terminate
immediately prior to the consummation of
such Acquisition Event, except to the extent
exercised by the Participants before the
consummation of such Acquisition Event;
provided, however, in the event of an
Acquisition Event under the terms of which
holders of Common Stock will receive upon
consummation thereof a cash payment for each
share of Common Stock surrendered pursuant
to such Acquisition Event (the "Acquisition
Price"), then the Board may instead provide
that all outstanding Options shall terminate
upon consummation of such Acquisition Event
and that each Participant shall receive, in
exchange therefor, a cash payment equal to
the amount (if any) by which (A) the
Acquisition Price multiplied by the number
of shares of Common Stock subject to such
outstanding Options (whether or not then
exercisable), exceeds (B) the aggregate
exercise price of such Options.
(b) Change in Control Event that is not an
Acquisition Event. Upon the occurrence of a
Change in Control Event that does not also
constitute an Acquisition Event, except to
the extent specifically provided to the
contrary in the instrument evidencing any
Option or any other agreement between a
Participant and the Company, all Options
then-outstanding shall automatically become
immediately exercisable in full.
(3) Effect on Restricted Stock Awards
(a) Acquisition Event that is not a Change in
Control Event. Upon the occurrence of an
Acquisition Event that is not a Change in
Control Event, the repurchase and other
rights of the Company under each outstanding
Restricted Stock Award shall inure to the
benefit of the Company's successor and shall
apply to the cash, securities or other
property which the Common Stock was
converted into or exchanged for pursuant to
such Acquisition Event in the
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<PAGE> 9
same manner and to the same extent as they
applied to the Common Stock subject to such
Restricted Stock Award.
(b) Change in Control Event. Upon the occurrence
of a Change in Control Event (regardless of
whether such event also constitutes an
Acquisition Event), except to the extent
specifically provided to the contrary in the
instrument evidencing any Restricted Stock
Award or any other agreement between a
Participant and the Company, all
restrictions and conditions on all
Restricted Stock Awards then-outstanding
shall automatically be deemed terminated or
satisfied.
(4) Effect on Other Awards
(a) Acquisition Event that is not a Change in
Control Event. The Board shall specify the
effect of an Acquisition Event that is not a
Change in Control Event on any other Award
granted under the Plan at the time of the
grant of such Award.
(b) Change in Control Event. Upon the occurrence
of a Change in Control Event (regardless of
whether such event also constitutes an
Acquisition Event), except to the extent
specifically provided to the contrary in the
instrument evidencing any other Award or any
other agreement between a Participant and
the Company, all other Awards shall become
exercisable, realizable or vested in full,
or shall be free of all conditions or
restrictions, as applicable to each such
Award.
9. General Provisions Applicable to Awards
(a) Transferability of Awards. Except as the Board may otherwise
determine or provide in an Award, Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they are
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution, and, during the life of the Participant, shall be
exercisable only by the Participant. References to a Participant, to the extent
relevant in the context, shall include references to authorized transferees.
(b) Documentation. Each Award shall be evidenced by a written
instrument in such form as the Board shall determine. Each Award may contain
terms and conditions in addition to those set forth in the Plan.
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<PAGE> 10
(c) Board Discretion. Except as otherwise provided by the Plan,
each Award may be made alone or in addition or in relation to any other Award.
The terms of each Award need not be identical, and the Board need not treat
Participants uniformly.
(d) Termination of Status. The Board shall determine the effect on
an Award of the disability, death, retirement, authorized leave of absence or
other change in the employment or other status of a Participant and the extent
to which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
(e) Withholding. Each Participant shall pay to the Company, or
make provision satisfactory to the Board for payment of, any taxes required by
law to be withheld in connection with Awards to such Participant no later than
the date of the event creating the tax liability. Except as the Board may
otherwise provide in an Award, when the Common Stock is registered under the
Exchange Act, Participants may satisfy such tax obligations in whole or in part
by delivery of shares of Common Stock, including shares retained from the Award
creating the tax obligation, valued at their Fair Market Value. The Company may,
to the extent permitted by law, deduct any such tax obligations from any payment
of any kind otherwise due to a Participant.
(f) Amendment of Award. The Board may amend, modify or terminate
any outstanding Award, including but not limited to, substituting therefor
another Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
(g) Conditions on Delivery of Stock. The Company will not be
obligated to deliver any shares of Common Stock pursuant to the Plan or to
remove restrictions from shares previously delivered under the Plan until (i)
all conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
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<PAGE> 11
(h) Acceleration. The Board may at any time provide that any
Options shall become immediately exercisable in full or in part, that any
Restricted Stock Awards shall be free of restrictions in full or in part or that
any other Awards may become exercisable in full or in part or free of some or
all restrictions or conditions, or otherwise realizable in full or in part, as
the case may be.
10. Miscellaneous
(a) No Right To Employment or Other Status. No person shall have
any claim or right to be granted an Award, and the grant of an Award shall not
be construed as giving a Participant the right to continued employment or any
other relationship with the Company. The Company expressly reserves the right at
any time to dismiss or otherwise terminate its relationship with a Participant
free from any liability or claim under the Plan, except as expressly provided in
the applicable Award.
(b) No Rights As Stockholder. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be distributed
with respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.
(c) Effective Date and Term of Plan. The Plan shall become
effective on the date on which it is adopted by the Board. No Awards shall be
granted under the Plan after the completion of ten years from the earlier of (i)
the date on which the Plan was adopted by the Board or (ii) the date the Plan
was approved by the Company's stockholders, but Awards previously granted may
extend beyond that date.
(d) Amendment of Plan. The Board may amend, suspend or terminate
the Plan or any portion thereof at any time.
(e) Governing Law. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.
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<PAGE> 1
Exhibit 10.2
AKAMAI TECHNOLOGIES, INC.
Form of Restricted Stock Agreement
Granted Under 1998 Stock Incentive Plan
AGREEMENT made this [____] day of [___] (the "Grant Date"), between
Akamai Technologies, Inc., a Delaware corporation (the "Company"), and [____]
(the "Participant").
For valuable consideration, receipt of which is acknowledged, the
parties hereto agree as follows:
1. Purchase of Shares.
The Company shall issue and sell to the Participant, and the
Participant shall purchase from the Company, subject to the terms and conditions
set forth in this Agreement and in the Company's 1998 Stock Incentive Plan (the
"Plan") [____] shares (the "Shares") of common stock, $0.01 par value per share,
of the Company ("Common Stock"), at a purchase price of [______] per share (the
"Option Price"). The aggregate purchase price for the Shares shall be paid in
full by the Participant by check, wire transfer, promissory note or other method
acceptable to the Company. Upon receipt by the Company of payment for the
Shares, the Company shall issue to the Participant one or more certificates in
the name of the Participant for that number of Shares purchased by the
Participant. The Participant agrees that the Shares shall be subject to the
Purchase Option set forth in Sections 2 and 5 of this Agreement and the
restrictions on transfer set forth in Section 4 of this Agreement.
2. Purchase Option.
(a) In the event that the Participant's employment is
terminated prior to [____] (i) by the Company for cause (as defined below), (ii)
by the Participant without Good Reason (as defined below), or (iii) by reason of
death or disability of the Participant, the Company shall have the right and
option (the "Purchase Option") to purchase from the Participant, at the Option
Price, some or all of the Unvested Shares (as defined below) as determined at
the time of such employment termination.
"Unvested Shares" means (i) [____] Shares during the one-year period
commencing on the Grant Date and (ii) [_____] Shares less [____] Shares for each
full three months of employment completed by the Participant with the Company
from and after the one-year period commencing on the Grant Date.
<PAGE> 2
For purposes of this subsection (a), "cause" for termination shall be deemed to
exist upon (a) a good faith finding by the Board of Directors of the Company of
repeated and willful failure of the Participant after written notice to perform
his assigned duties for the Company, gross negligence or misconduct (where such
gross negligence or misconduct is materially adverse to the Company), or (b) the
conviction of the Participant of, or the entry of a pleading of guilty or nolo
contendere by the Participant to, any felony. For purposes of this agreement
Good Reason shall exist upon (i) mutual agreement of the Participant and the
Board of Directors of the Company that Good Reason exists; (ii) the Participant
being required by the Company to relocate more than 20 miles from Boston,
Massachusetts without the consent of the Participant; (iii) reduction of the
Participant's annual base salary or health insurance and similar benefits; (iv)
any material breach by the Company or any successor thereto of any agreement to
which the Participant and the Company are parties, which breach is not cured
within 10 days after written notice thereof; or (v) a change in the Employee's
title or responsibilities mandated by the Board of Directors without the consent
of the Participant.
(b) Notwithstanding subsection 2(a), in the event that
the Participant's employment with the Company is terminated by reason of death
or disability, the number of the Shares then subject to the Purchase Option
shall be reduced by fifty percent (50%). For this purpose, "disability" shall
mean the inability of the Participant, due to a medical reason, to carry out his
duties as an employee of the Company for a period of six consecutive months.
(c) Notwithstanding any other provision of this Section
2, [upon termination of the Participant's employment for any reason or no reason
following a Sale (as defined below), the number of Unvested Shares shall be
equal to zero] [following a Sale (as defined below), the number of Unvested
Shares shall be calculated pursuant to subsection 2(a) as though the Grant Date
were the date one year prior to the Grant Date]. A "Sale" shall mean (a) any
merger or consolidation which results in the voting securities of the Company
outstanding immediately prior thereto representing immediately thereafter
(either by remaining outstanding or by being converted into voting securities of
the surviving or acquiring entity) less than 50% of the combined voting power of
the voting securities of the Company or such surviving or acquiring entity
outstanding immediately after such merger or consolidation; (b) the acquisition
by an individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership of any capital stock of the Company
if, after such acquisition, such Person beneficially owns (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) 50% or more of either (i) the
then-outstanding shares of Common Stock of the Company (the "Outstanding Company
Common Stock") or (ii) the combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (b), the following acquisitions shall not
constitute a Sale: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee
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<PAGE> 3
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, (iv) any acquisition, whether direct or
indirect, by the Participant or a group of which the Participant is a member, or
(v) any acquisition by any corporation pursuant to a transaction which results
in all or substantially all of the individuals and entities who were the
beneficial owners of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such transaction beneficially
own, directly or indirectly, more than 50% of the then-outstanding shares of
common stock and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such transaction
(which shall include, without limitation, a corporation which as a result of
such transaction owns the Company or substantially all of the Company's assets
either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such transaction, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
respectively; (c) any sale of all or substantially all of the assets of the
Company; or (d) the complete liquidation of the Company.
(d) For purposes of this Agreement, employment with the
Company shall include service as a director of the Company or employment as an
employee or consultant with the Company or a parent or subsidiary of the
Company.
3. Exercise of Purchase Option and Closing.
(a) The Company may exercise the Purchase Option by
delivering or mailing to the Participant (or his estate), within 60 days after
the termination of the employment of the Participant with the Company, a written
notice of exercise of the Purchase Option. Such notice shall specify the number
of Shares to be purchased. If and to the extent the Purchase Option is not so
exercised by the giving of such a notice within such 60-day period, the Purchase
Option shall automatically expire and terminate effective upon the expiration of
such 60-day period.
(b) Within 10 days after delivery to the Participant of
the Company's notice of the exercise of the Purchase Option pursuant to
subsection (a) above, the Participant (or his estate) shall tender to the
Company at its principal offices the certificate or certificates representing
the Shares which the Company has elected to purchase in accordance with the
terms of this Agreement, duly endorsed in blank or with duly endorsed stock
powers attached thereto, all in form suitable for the transfer of such Shares to
the Company. Promptly following its receipt of such certificate or certificates,
the Company shall pay to the Participant the aggregate Option Price for such
Shares (provided that any delay in making such payment shall not invalidate the
Company's exercise of the Purchase Option with respect to such Shares).
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<PAGE> 4
(c) After the time at which any Shares are required to be
delivered to the Company for transfer to the Company pursuant to subsection (b)
above, the Company shall not pay any dividend to the Participant on account of
such Shares or permit the Participant to exercise any of the privileges or
rights of a stockholder with respect to such Shares, but shall, in so far as
permitted by law, treat the Company as the owner of such Shares.
(d) The Option Price may be payable, at the option of the
Company, in cancellation of all or a portion of any outstanding indebtedness of
the Participant to the Company or in cash (by check) or both.
(e) The Company shall not purchase any fraction of a
Share upon exercise of the Purchase Option, and any fraction of a Share
resulting from a computation made pursuant to Section 2 of this Agreement shall
be rounded to the nearest whole Share (with any one-half Share being rounded
upward).
(f) The Company may assign its Purchase Option to one or
more persons or entities.
4. Restrictions on Transfer.
The Participant shall not sell, assign, transfer, pledge, hypothecate
or otherwise dispose of, by operation of law or otherwise (collectively
"transfer"):
(a) any Shares, or any interest therein, that are subject
to the Purchase Option, except that the Participant may transfer such Shares to
or for the benefit of any spouse, child or grandchild, or to a trust for their
benefit, provided that such Shares shall remain subject to this Agreement
(including without limitation the restrictions on transfer set forth in this
Section 4, the Purchase Option and the right of first refusal set forth in
Section 5) and such permitted transferee shall, as a condition to such transfer,
deliver to the Company a written instrument confirming that such transferee
shall be bound by all of the terms and conditions of this Agreement; or
(b) any Shares, or any interest therein, that are no
longer subject to the Purchase Option, except in accordance with Section 5
below.
5. Right of First Refusal.
(a) If the Participant proposes to transfer any Shares
that are no longer subject to the Purchase Option (either because they are no
longer Unvested Shares or because the Purchase Option expired unexercised), then
the Participant shall first give written notice of the proposed transfer (the
"Transfer Notice") to the Company. The Transfer Notice shall name the proposed
transferee and state the
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<PAGE> 5
number of such Shares he proposes to transfer (the "Offered Shares"), the price
per share and all other material terms and conditions of the transfer.
(b) For 30 days following delivery to the Company of such
Transfer Notice, the Company shall have the option to purchase all (but not less
than all) of the Offered Shares at the price and upon the terms set forth in the
Transfer Notice. In the event the Company elects to purchase all of the Offered
Shares, it shall give written notice of such election to the Participant within
such 30-day period. Within 10 days after delivery to the Participant of such
notice, the Participant shall tender to the Company at its principal offices the
certificate or certificates representing the Offered Shares, duly endorsed in
blank by the Participant or with duly endorsed stock powers attached thereto,
all in form suitable for transfer of the Offered Shares to the Company. Promptly
following receipt of such certificate or certificates, the Company shall deliver
or mail to the Participant a check in payment of the purchase price for the
Offered Shares; provided that if the terms of payment set forth in the Transfer
Notice were other than cash against delivery, the Company may pay for the
Offered Shares on the same terms and conditions as were set forth in the
Transfer Notice; and provided further that any delay in making such payment
shall not invalidate the Company's exercise of its option to purchase the
Offered Shares.
(c) If the Company does not elect to acquire all of the
Offered Shares, the Participant may, within the 30-day period following the
expiration of the option granted to the Company under subsection (b) above,
transfer the Offered Shares to the proposed transferee, provided that such
transfer shall not be on terms and conditions more favorable to the transferee
than those contained in the Transfer Notice. Notwithstanding any of the above,
all Offered Shares transferred pursuant to this Section 5 shall remain subject
to this Agreement (including without limitation the restrictions on transfer set
forth in Section 4 and the right of first refusal set forth in this Section 5)
and such transferee shall, as a condition to such transfer, deliver to the
Company a written instrument confirming that such transferee shall be bound by
all of the terms and conditions of this Agreement.
(d) After the time at which the Offered Shares are
required to be delivered to the Company for transfer to the Company pursuant to
subsection (b) above, the Company shall not pay any dividend to the Participant
on account of such Offered Shares or permit the Participant to exercise any of
the privileges or rights of a stockholder with respect to such Shares, but
shall, in so far as permitted by law, treat the Company as the owner of such
Offered Shares.
(e) The following transactions shall be exempt from the
provisions of this Section 5:
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<PAGE> 6
(1) a transfer of Shares to or for the benefit
of any spouse, child, grandchild, parent, grandparent, sibling, aunt or uncle
(each a "Family Member") of the Participant, or to a trust for their benefit;
(2) any transfer pursuant to an effective
registration statement filed by the Company under the Securities Act of 1933, as
amended (the "Securities Act");
(3) the sale of all or substantially all of the
shares of capital stock of the Company (including pursuant to a merger or
consolidation); and
(4) a transfer of Shares to a Family Member
pursuant to the laws of descent and distribution;
provided, however, that in the case of a transfer pursuant to clause (1) or (4)
above, such Shares shall remain subject to this Agreement (including without
limitation the restrictions on transfer set forth in Section 4 and the right of
first refusal set forth in this Section 5) and such transferee shall, as a
condition to such transfer, deliver to the Company a written instrument
confirming that such transferee shall be bound by all of the terms and
conditions of this Agreement.
(f) The Company may assign its rights to purchase Offered
Shares in any particular transaction under this Section 5 to one or more persons
or entities.
(g) The provisions of this Section 5 shall terminate upon
the earlier of the following events:
(1) the closing of the sale of shares of Common
Stock in an underwritten public offering pursuant to an effective registration
statement filed by the Company under the Securities Act; or
(2) a Sale (as defined in Section 2(c).
6. Agreement in Connection with Public Offering.
The Participant agrees, in connection with the initial underwritten
public offering of the Company's securities pursuant to a registration statement
under the Securities Act, (i) not to sell, make short sale of, loan, grant any
options for the purchase of, or otherwise dispose of any shares of Common Stock
held by the Participant (other than those shares included in the offering)
without the prior written consent of the Company or the underwriters managing
such initial underwritten public offering of the Company's securities for a
period of 180 days from the effective date of such registration statement, and
(ii) to execute any
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<PAGE> 7
agreement reflecting clause (i) above as may be requested by the Company or the
managing underwriters at the time of such initial offering.
7. Effect of Prohibited Transfer.
The Company shall not be required (a) to transfer on its books any of
the Shares which shall have been sold or transferred in violation of any of the
provisions set forth in this Agreement, or (b) to treat as owner of such Shares
or to pay dividends to any transferee to whom any such Shares shall have been so
sold or transferred.
8. Restrictive Legends.
All certificates representing Shares shall have affixed thereto legends
in substantially the following form, in addition to any other legends that may
be required under federal or state securities laws:
"The shares of stock represented by this certificate are
subject to restrictions on transfer and an option to purchase
set forth in a certain Restricted Stock Agreement between the
corporation and the registered owner of these shares (or his
predecessor in interest), and such Agreement is available for
inspection without charge at the office of the Secretary of
the corporation."
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be sold, transferred or otherwise disposed of in the
absence of an effective registration statement under such Act
or an opinion of counsel satisfactory to the corporation to
the effect that such registration is not required."
9. Provisions of the Plan.
This Agreement is subject to the provisions of the Plan, a copy of
which is furnished to the Participant with this Agreement.
10. Investment Representations.
The Participant represents, warrants and covenants as follows:
(a) The Participant is purchasing the Shares for his own
account for investment only, and not with a view to, or for sale in connection
with, any
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<PAGE> 8
distribution of the Shares in violation of the Securities Act, or any rule or
regulation under the Securities Act.
(b) The Participant has had such opportunity as he has
deemed adequate to obtain from representatives of the Company such information
as is necessary to permit him to evaluate the merits and risks of his investment
in the Company.
(c) The Participant has sufficient experience in
business, financial and investment matters to be able to evaluate the risks
involved in the purchase of the Shares and to make an informed investment
decision with respect to such purchase.
(d) The Participant can afford a complete loss of the
value of the Shares and is able to bear the economic risk of holding such Shares
for an indefinite period.
(e) The Participant understands that (i) the Shares have
not been registered under the Securities Act and are "restricted securities"
within the meaning of Rule 144 under the Securities Act, (ii) the Shares cannot
be sold, transferred or otherwise disposed of unless they are subsequently
registered under the Securities Act or an exemption from registration is then
available; (iii) in any event, the exemption from registration under Rule 144
will not be available for at least one year and even then will not be available
unless a public market then exists for the Common Stock, adequate information
concerning the Company is then available to the public, and other terms and
conditions of Rule 144 are complied with; and (iv) there is now no registration
statement on file with the Securities and Exchange Commission with respect to
any stock of the Company and the Company has no obligation or current intention
to register the Shares under the Securities Act.
11. Withholding Taxes; Section 83(b) Election.
(a) The Participant acknowledges and agrees that the
Company has the right to deduct from payments of any kind otherwise due to the
Participant any federal, state or local taxes of any kind required by law to be
withheld with respect to the purchase of the Shares by the Participant or the
lapse of the Purchase Option.
(b) The Participant acknowledges that he has been
informed of the availability of making an election in accordance with Section
83(b) of the Internal Revenue Code of 1986, as amended; that such election must
be filed with the Internal Revenue Service within 30 days of the transfer of
shares to the Participant; and that the Participant is solely responsible for
making such election.
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<PAGE> 9
12. Severability.
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, and each other provision of this Agreement shall be severable and
enforceable to the extent permitted by law.
13. Waiver.
Any provision for the benefit of the Company contained in this
Agreement may be waived, either generally or in any particular instance, by the
Board of Directors of the Company.
14. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
Company and the Participant and their respective heirs, executors,
administrators, legal representatives, successors and assigns, subject to the
restrictions on transfer set forth in Sections 4 and 5 of this Agreement.
15. Notice.
All notices required or permitted hereunder shall be in writing and
deemed effectively given upon personal delivery or five days after deposit in
the United States Post Office, by registered or certified mail, postage prepaid,
addressed to the other party hereto at the address shown beneath his or its
respective signature to this Agreement, or at such other address or addresses as
either party shall designate to the other in accordance with this Section 15.
16. Pronouns.
Whenever the context may require, any pronouns used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural, and vice versa.
17. Entire Agreement.
This Agreement and the Plan constitutes the entire agreement between
the parties, and supersedes all prior agreements and understandings, relating to
the subject matter of this Agreement.
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<PAGE> 10
18. Amendment.
This Agreement may be amended or modified only by a written instrument
executed by both the Company and the Participant.
19. Governing Law.
This Agreement shall be construed, interpreted and enforced in
accordance with the internal laws of the State of Delaware without regard to any
applicable conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
AKAMAI TECHNOLOGIES, INC.
By:_____________________________
Daniel M. Lewin
President
Address: 201 Broadway, 4th Floor
Cambridge, MA 02139
PARTICIPANT
________________________________
[Name of Participant]
Address: _______________________
_______________________
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<PAGE> 1
Exhibit 10.3
AKAMAI TECHNOLOGIES, INC.
Form of Incentive Stock Option Agreement
Granted Under 1998 Stock Incentive Plan
1. Grant of Option.
This Incentive Stock Option Agreement (this "Agreement") evidences the
grant by Akamai Technologies, Inc., a Delaware corporation (the "Company"), on
[____] (the "Grant Date") to [_____], an employee of the Company (the
"Participant"), of an option to purchase, in whole or in part, on the terms
provided herein and in the Company's 1998 Stock Incentive Plan (the "Plan"), a
total of [____] shares (the "Shares") of common stock, $0.01 par value per
share, of the Company ("Common Stock") at $[___] per Share. Unless earlier
terminated, this option shall expire on [____] (the "Final Exercise Date").
It is intended that the option evidenced by this agreement shall be an
incentive stock option as defined in Section 422 of the Internal Revenue Code of
1986, as amended and any regulations promulgated thereunder (the "Code"). Except
as otherwise indicated by the context, the term "Participant", as used in this
option, shall be deemed to include any person who acquires the right to exercise
this option validly under its terms.
2. Vesting Schedule.
(a) General. This option will become exercisable ("vest") as to
25% of the original number of Shares on the first anniversary of the Grant Date
and as to an additional 6.25% of the original number of Shares at the end of
each successive full three-month period following the first anniversary of the
Grant Date until the fourth anniversary of the Grant Date.
The right of exercise shall be cumulative so that to the extent the
option is not exercised in any period to the maximum extent permissible it shall
continue to be exercisable, in whole or in part, with respect to all shares for
which it is vested until the earlier of the Final Exercise Date or the
termination of this option under Section 3 hereof or the Plan.
(b) Change in Control. Upon a Change in Control Event (as defined
in the Plan), the number of Shares as to which this option has vested shall be
calculated pursuant to Section 2(a) as though the Grant Date were the date that
is one year prior to the Grant Date.
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<PAGE> 2
3. Exercise of Option.
(a) Form of Exercise. Each election to exercise this option shall
be in writing, signed by the Participant, and received by the Company at its
principal office, accompanied by this agreement, and payment in full in the
manner provided in the Plan. The Participant may purchase less than the number
of shares covered hereby, provided that no partial exercise of this option may
be for any fractional share.
(b) Continuous Relationship with the Company Required. Except as
otherwise provided in this Section 3, this option may not be exercised unless
the Participant, at the time he or she exercises this option, is, and has been
at all times since the Grant Date, an employee, officer or director of, or
consultant or advisor to, the Company or any parent or subsidiary of the Company
as defined in Section 424(e) or (f) of the Code (an "Eligible Participant").
(c) Termination of Relationship with the Company. If the
Participant ceases to be an Eligible Participant for any reason, then, except as
provided in paragraphs (d) and (e) below, the right to exercise this option
shall terminate three months after such cessation (but in no event after the
Final Exercise Date), provided that this option shall be exercisable only to the
extent that the Participant was entitled to exercise this option on the date of
such cessation. Notwithstanding the foregoing, if the Participant, prior to the
Final Exercise Date, violates the non-competition or confidentiality provisions
of any employment contract, confidentiality and nondisclosure agreement or other
agreement between the Participant and the Company, the right to exercise this
option shall terminate immediately upon such violation.
(d) Exercise Period Upon Death or Disability. If the Participant
dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code)
prior to the Final Exercise Date while he or she is an Eligible Participant and
the Company has not terminated such relationship for "cause" as specified in
paragraph (e) below, this option shall be exercisable, within the period of one
year following the date of death or disability of the Participant by the
Participant, provided that this option shall be exercisable only to the extent
that this option was exercisable by the Participant on the date of his or her
death or disability, and further provided that this option shall not be
exercisable after the Final Exercise Date.
(e) Discharge for Cause. If the Participant, prior to the Final
Exercise Date, is discharged by the Company for "cause" (as defined below), the
right to exercise this option shall terminate immediately upon the effective
date of such discharge. "Cause" shall mean willful misconduct by the Participant
or willful failure by the Participant to perform his or her responsibilities to
the Company (including, without limitation, breach by the Participant of any
provision of any employment, consulting,
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<PAGE> 3
advisory, nondisclosure, non-competition or other similar agreement between the
Participant and the Company), as determined by the Company, which determination
shall be conclusive. The Participant shall be considered to have been discharged
for "Cause" if the Company determines, within 30 days after the Participant's
resignation, that discharge for cause was warranted.
4. Right of First Refusal.
(a) If the Participant proposes to sell, assign, transfer, pledge,
hypothecate or otherwise dispose of, by operation of law or otherwise
(collectively, "transfer") any Shares acquired upon exercise of this option,
then the Participant shall first give written notice of the proposed transfer
(the "Transfer Notice") to the Company. The Transfer Notice shall name the
proposed transferee and state the number of such Shares the Participant proposes
to transfer (the "Offered Shares"), the price per share and all other material
terms and conditions of the transfer.
(b) For 30 days following its receipt of such Transfer Notice, the
Company shall have the option to purchase all (but not less than all) of the
Offered Shares at the price and upon the terms set forth in the Transfer Notice.
In the event the Company elects to purchase all of the Offered Shares, it shall
give written notice of such election to the Participant within such 30-day
period. Within 10 days after his receipt of such notice, the Participant shall
tender to the Company at its principal offices the certificate or certificates
representing the Offered Shares, duly endorsed in blank by the Participant or
with duly endorsed stock powers attached thereto, all in a form suitable for
transfer of the Offered Shares to the Company. Upon receipt of such certificate
or certificates, the Company shall deliver or mail to the Participant a check in
payment of the purchase price for the Offered Shares; provided that if the terms
of payment set forth in the Transfer Notice were other than cash against
delivery, the Company may pay for the Offered Shares on the same terms and
conditions as were set forth in the Transfer Notice.
(c) At and after the time at which the Offered Shares are required
to be delivered to the Company for transfer to the Company pursuant to
subsection (b) above, the Company shall not pay any dividend to the Participant
on account of such Shares or permit the Participant to exercise any of the
privileges or rights of a stockholder with respect to such Offered Shares, but
shall, in so far as permitted by law, treat the Company as the owner of such
Offered Shares.
(d) If the Company does not elect to acquire all of the Offered
Shares, the Participant may, within the 30-day period following the expiration
of the option granted to the Company under subsection (b) above, transfer the
Offered Shares to the proposed transferee, provided that such transfer shall not
be on terms and conditions more favorable to the transferee than those contained
in the Transfer Notice. Notwithstanding any of the above, all Offered Shares
transferred pursuant to
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<PAGE> 4
this Section 4 shall remain subject to the right of first refusal set forth in
this Section 4 and such transferee shall, as a condition to such transfer,
deliver to the Company a written instrument confirming that such transferee
shall be bound by all of the terms and conditions of this Section 4.
(e) The following transactions shall be exempt from the provisions
of this Section 4:
(1) any transfer of Shares to or for the benefit of any
spouse, child or grandchild of the Participant, or to a trust for their benefit;
(2) any transfer pursuant to an effective registration
statement filed by the Company under the Securities Act of 1933, as amended (the
"Securities Act"); and
(3) any transfer of the Shares pursuant to the sale of
all or substantially all of the business of the Company;
provided, however, that in the case of a transfer pursuant to clause (1) above,
such Shares shall remain subject to the right of first refusal set forth in this
Section 4 and such transferee shall, as a condition to such transfer, deliver to
the Company a written instrument confirming that such transferee shall be bound
by all of the terms and conditions of this Section 4.
(f) The Company may assign its rights to purchase Offered Shares
in any particular transaction under this Section 4 to one or more persons or
entities.
(g) The provisions of this Section 4 shall terminate upon the
earlier of the following events:
(1) the closing of the sale of shares of Common Stock in
an underwritten public offering pursuant to an effective registration statement
filed by the Company under the Securities Act; or
(2) the sale of all or substantially all of the capital
stock, assets or business of the Company, by merger, consolidation, sale of
assets or otherwise.
(h) The Company shall not be required (a) to transfer on its books
any of the Shares which shall have been sold or transferred in violation of any
of the provisions set forth in this Section 4, or (b) to treat as owner of such
Shares or to pay dividends to any transferee to whom any such Shares shall have
been so sold or transferred.
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<PAGE> 5
5. Agreement in Connection with Public Offering.
The Participant agrees, in connection with the initial underwritten
public offering of the Company's securities pursuant to a registration statement
under the Securities Act, (i) not to sell, make short sale of, loan, grant any
options for the purchase of, or otherwise dispose of any shares of Common Stock
held by the Participant (other than those shares included in the offering)
without the prior written consent of the Company or the underwriters managing
such initial underwritten public offering of the Company's securities for a
period of 180 days from the effective date of such registration statement, and
(ii) to execute any agreement reflecting clause (i) above as may be requested by
the Company or the managing underwriters at the time of such offering.
6. Withholding.
No Shares will be issued pursuant to the exercise of this option unless
and until the Participant pays to the Company, or makes provision satisfactory
to the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.
7. Nontransferability of Option.
This option may not be sold, assigned, transferred, pledged or
otherwise encumbered by the Participant, either voluntarily or by operation of
law, except by will or the laws of descent and distribution, and, during the
lifetime of the Participant, this option shall be exercisable only by the
Participant.
8. Disqualifying Disposition.
If the Participant disposes of Shares acquired upon exercise of this
option within two years from the Grant Date or one year after such Shares were
acquired pursuant to exercise of this option, the Participant shall notify the
Company in writing of such disposition.
9. Provisions of the Plan.
This option is subject to the provisions of the Plan, a copy of which
is furnished to the Participant with this option.
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<PAGE> 6
IN WITNESS WHEREOF, the Company has caused this option to be executed
under its corporate seal by its duly authorized officer. This option shall take
effect as a sealed instrument.
AKAMAI TECHNOLOGIES, INC.
Dated: By:_____________________________
Name:
Title:
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<PAGE> 7
PARTICIPANT'S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the
terms and conditions thereof. The undersigned hereby acknowledges receipt of a
copy of the Company's 1998 Stock Incentive Plan.
PARTICIPANT:
________________________________
(signature)
Address: _______________________
_______________________
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<PAGE> 1
EXHIBIT 10.4
AKAMAI TECHNOLOGIES, INC.
Form Nonstatutory Stock Option Agreement
Granted Under 1998 Stock Incentive Plan
1. Grant of Option.
This agreement evidences the grant by Akamai Technologies, Inc., a
Delaware corporation (the "Company"), on , 19___ (the "Grant Date") to
, a consultant of the Company (the "Participant"), of an option to
purchase, in whole or in part, on the terms provided herein and in the Company's
1998 Stock Incentive Plan (the "Plan"), a total of shares (the "Shares") of
common stock, $0.01 par value per share, of the Company ("Common Stock") at $
per Share. Unless earlier terminated, this option shall expire on
______________, 19___ (the "Final Exercise Date").
It is intended that the option evidenced by this agreement shall not be
an incentive stock option as defined in Section 422 of the Internal Revenue Code
of 1986, as amended and any regulations promulgated thereunder (the "Code").
Except as otherwise indicated by the context, the term "Participant", as used in
this option, shall be deemed to include any person who acquires the right to
exercise this option validly under its terms.
2. Vesting Schedule.
This option will become exercisable ("vest") as to % of the original
number of Shares on the [FIRST] anniversary of the Grant Date and as to an
additional % of the original number of Shares at the end of each successive
full [THREE- MONTH] period following the first anniversary of the Grant Date
until the [FIFTH] anniversary of the Grant Date. This option shall expire upon,
and will not be exercisable after, the Final Exercise Date.
The right of exercise shall be cumulative so that to the extent the
option is not exercised in any period to the maximum extent permissible it shall
continue to be exercisable, in whole or in part, with respect to all shares for
which it is vested until the earlier of the Final Exercise Date or the
termination of this option under Section 3 hereof or the Plan.
3. Exercise of Option.
(a) Form of Exercise. Each election to exercise this option shall be in
writing, signed by the Participant, and received by the Company at its principal
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<PAGE> 2
office, accompanied by this agreement, and payment in full in the manner
provided in the Plan. The Participant may purchase less than the number of
shares covered hereby, provided that no partial exercise of this option may be
for any fractional share.
(b) Discharge for Cause. If the Participant, prior to the Final
Exercise Date, is discharged by the Company for "cause" (as defined below), the
right to exercise this option shall terminate immediately upon the effective
date of such discharge. "Cause" shall mean willful misconduct by the Participant
or willful failure by the Participant to perform its responsibilities to the
Company (including, without limitation, breach by the Participant of any
provision of any consulting, advisory, nondisclosure, non-competition or other
similar agreement between the Participant and the Company), as determined by the
Company, which determination shall be conclusive. The Participant shall be
considered to have been discharged for "Cause" if the Company determines, within
30 days after the Participant's resignation, that discharge for cause was
warranted.
4. Right of First Refusal.
(a) If the Participant proposes to sell, assign, transfer, pledge,
hypothecate or otherwise dispose of, by operation of law or otherwise
(collectively, "transfer") any Shares acquired upon exercise of this option,
then the Participant shall first give written notice of the proposed transfer
(the "Transfer Notice") to the Company. The Transfer Notice shall name the
proposed transferee and state the number of such Shares the Participant proposes
to transfer (the "Offered Shares"), the price per share and all other material
terms and conditions of the transfer.
(b) For 30 days following its receipt of such Transfer Notice, the
Company shall have the option to purchase all (but not less than all) of the
Offered Shares at the price and upon the terms set forth in the Transfer Notice.
In the event the Company elects to purchase all of the Offered Shares, it shall
give written notice of such election to the Participant within such 30-day
period. Within 10 days after its receipt of such notice, the Participant shall
tender to the Company at its principal offices the certificate or certificates
representing the Offered Shares, duly endorsed in blank by the Participant or
with duly endorsed stock powers attached thereto, all in a form suitable for
transfer of the Offered Shares to the Company. Upon receipt of such certificate
or certificates, the Company shall deliver or mail to the Participant a check in
payment of the purchase price for the Offered Shares; provided that if the terms
of payment set forth in the Transfer Notice were other than cash against
delivery, the Company may pay for the Offered Shares on the same terms and
conditions as were set forth in the Transfer Notice.
(c) At and after the time at which the Offered Shares are required to
be delivered to the Company for transfer to the Company pursuant to subsection
(b)
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<PAGE> 3
above, the Company shall not pay any dividend to the Participant on account of
such Shares or permit the Participant to exercise any of the privileges or
rights of a stockholder with respect to such Offered Shares, but shall, in so
far as permitted by law, treat the Company as the owner of such Offered Shares.
(d) If the Company does not elect to acquire all of the Offered Shares,
the Participant may, within the 30-day period following the expiration of the
option granted to the Company under subsection (b) above, transfer the Offered
Shares to the proposed transferee, provided that such transfer shall not be on
terms and conditions more favorable to the transferee than those contained in
the Transfer Notice. Notwithstanding any of the above, all Offered Shares
transferred pursuant to this Section 4 shall remain subject to the right of
first refusal set forth in this Section 4 and such transferee shall, as a
condition to such transfer, deliver to the Company a written instrument
confirming that such transferee shall be bound by all of the terms and
conditions of this Section 4.
(e) The following transactions shall be exempt from the provisions of
this Section 4:
(1) any transfer pursuant to an effective registration
statement filed by the Company under the Securities Act of 1933, as amended (the
"Securities Act"); and
(2) any transfer of the Shares pursuant to the sale of all or
substantially all of the business of the Company.
(f) The Company may assign its rights to purchase Offered Shares in any
particular transaction under this Section 4 to one or more persons or entities.
(g) The provisions of this Section 4 shall terminate upon the earlier
of the following events:
(1) the closing of the sale of shares of Common Stock in an
underwritten public offering pursuant to an effective registration statement
filed by the Company under the Securities Act; or
(2) the sale of all or substantially all of the capital stock,
assets or business of the Company, by merger, consolidation, sale of assets or
otherwise.
(h) The Company shall not be required (a) to transfer on its books any
of the Shares which shall have been sold or transferred in violation of any of
the provisions set forth in this Section 4, or (b) to treat as owner of such
Shares or to pay dividends to any transferee to whom any such Shares shall have
been so sold or transferred.
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<PAGE> 4
5. Agreement in Connection with Public Offering.
The Participant agrees, in connection with the initial underwritten
public offering of the Company's securities pursuant to a registration statement
under the Securities Act, (i) not to sell, make short sale of, loan, grant any
options for the purchase of, or otherwise dispose of any shares of Common Stock
held by the Participant (other than those shares included in the offering)
without the prior written consent of the Company or the underwriters managing
such initial underwritten public offering of the Company's securities for a
period of 180 days from the effective date of such registration statement, and
(ii) to execute any agreement reflecting clause (i) above as may be requested by
the Company or the managing underwriters at the time of such offering.
6. Withholding.
No Shares will be issued pursuant to the exercise of this option unless
and until the Participant pays to the Company, or makes provision satisfactory
to the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.
7. Nontransferability of Option.
This option may not be sold, assigned, transferred, pledged or
otherwise encumbered by the Participant, either voluntarily or by operation of
law, and this option shall be exercisable only by the Participant.
8. Provisions of the Plan.
This option is subject to the provisions of the Plan, a copy of which
is furnished to the Participant with this option.
IN WITNESS WHEREOF, the Company has caused this option to be executed
under its corporate seal by its duly authorized officer. This option shall take
effect as a sealed instrument.
AKAMAI TECHNOLOGIES, INC.
Dated:__________, 19__ By:
Name:
Title:
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<PAGE> 5
PARTICIPANT'S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the
terms and conditions thereof. The undersigned hereby acknowledges receipt of a
copy of the Company's 1998 Stock Incentive Plan.
PARTICIPANT:__________________
By:___________________________
Name:
Title
Address:______________________
______________________
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<PAGE> 1
Exhibit 10.6
FIRST AMENDMENT OF
BROADWAY/HAMPSHIRE ASSOCIATES LEASE
AKAMAI TECHNOLOGIES, INC.
CAMBRIDGE, MASSACHUSETTS
This agreement is the First Amendment of that certain lease dated March 8,
1999 (the "Lease"), by and between BROADWAY HAMPSHIRE ASSOCIATES LIMITED
PARTNERSHIP, a Massachusetts limited partnership, as lessor (the "Lessor"), and
AKAMAI TECHNOLOGIES, INC., a Delaware corporation, as lessee (the "Lessee"),
relating to that certain premises initially comprised of approximately 2,130
square feet of rentable area and further described in the Lease (the "Demised
Premises", sometimes referred to as the "Original Space") and located on the
third floor of the building known as and numbered 201 Broadway, Cambridge,
Massachusetts (the "Building").
WHEREAS, Lessor and Lessee desire to increase the size of the Demised
Premises by approximately 6,386 square feet of rentable area, which represents a
portion of the sixth floor of the Building as shown on the attached Exhibit A-1
(the "Expansion Space"); and
WHEREAS, Lessor and Lessee desire to set forth the effective date for the
addition of the Expansion Space and increase the annual rent and common area
percentage set forth in the Lease accordingly; and
WHEREAS, Lessor and Lessee wish to set forth other agreements with respect
to the Lease.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by the parties hereto, Lessor and Lessee hereby agree as
follows:
1. Effective on May 1, 1999 (the "Expansion Space Commencement Date"):
(a) Section 1.01 of the Lease is hereby amended such that the Demised
Premises shall include the Expansion Space (as defined below) by
adding in the second line after "3rd floor" the words "and 6th floor";
by deleting "2,130 square feet" in the fourth line and replacing it
with "8,516 square feet"; and by adding at the end of Section 1.01,
the following, words: "The portion of the Demised Premises located on
the third floor shall from time to time, where the context so permits,
be hereinafter referred to separately as the "Third Floor Space" or
the "Original Space" and the portion of the Demised Premises located
on the sixth floor shall from time to time, where the context so
permits, be hereinafter referred to as the "Sixth Floor Space" or the
"Expansion Space."
(b) The plan attached to this First Amendment as Exhibit A-1 is added
to the Lease after Exhibit A.
<PAGE> 2
Lessee agrees, upon request of the Lessor, to execute a Lease
Commencement Agreement in the form to be presented by Lessor,
identifying the Expansion Space Commencement Date and the expiration
date(s) of this Lease.
2. Effective immediately, Section 1.02 of the Lease is modified by deleting
the first paragraph and by substituting the following therefor: "The five year
term of this Lease for the Original Space commenced on April 1, 1999 (the
"Commencement Date") and shall expire on March 31, 2004 ("the Original Space
Expiration Date"). The Expansion Space shall be added to the Demised Premises as
of the Expansion Space Commencement Date for a five year term expiring on April
30, 2004 ("the Expansion Space Expiration Date") unless this Lease is sooner
terminated or extended as hereinafter provided (the "Initial Term")."
3. Effective the later of May 1, 1999 or the date on which the Lessor delivers
the Expansion Space vacant and broom clean, the first paragraph of Section 2.01
shall be deleted and replaced with the following:
"Section 2.01. The Lessee covenants and agrees to pay to Lessor
minimum rent (hereinafter called "Base Rent") for said Demised
Premises up to and until the Expansion Space Commencement Date at the
annual rate of Seventy six thousand six hundred eighty and 00/100
($76,680.00) dollars payable in equal monthly installments of Six
thousand three hundred ninety and 00/100 ($6,390.00) dollars.
Effective upon the Expansion Space Commencement Date, the annual base
rent shall be as follows: a) from May 1, 1999 through April 30, 2000
at the annual rate of $293,804.00, payable monthly in advance in equal
monthly installments of $24,483.67; b) from May 1, 2000 through April
30, 2002 at the annual rate of $300,190.00, payable monthly in advance
in equal monthly installments of $25,015.83; c) from May 1, 2002
through March 31, 2004 at the annual rate of $306,576.00, payable
monthly in advance in equal monthly installments of $25,548.00 and d)
from April 1, 2004 through May 31, 2004 at the annual rate of
$229,896.00, payable monthly in advance in equal monthly installments
of $19,158.00. The Base Rent increase as of May 1, 1999 is a result of
the addition of the Expansion Space to the Demised Premises. The Base
Rent decrease as of April 1, 2004 is a result of the end of the Term
for 2,130 square foot Original Space as of March 31, 2004."
4. Effective May 1, 1999, Section 2.02 is modified by replacing all references
to "1.8%" with "7.15% from May 1, 1999 through March 31, 2004, and 5.4% from
April 1, 2004 through April 30, 2004".
5. Section 2.04 is modified by deleting the first sentence thereof and
inserting the following in its place: "Lessor affirms it is currently holding
$12,780.00 and Lessee agrees to provide an additional $37,465.00 upon its
execution of this First Amendment, for a total of $50,245.00, as security for
the payment of all rent and the performance and observance of the agreements and
conditions in this Lease contained on the part of Lessee to be performed and
observed (the "Security Deposit")."
<PAGE> 3
6. Exhibit B to the Lease is hereby modified by adding the following language
at the end of the Exhibit: "The Expansion Space is leased in its "as
is"condition". Notwithstanding the foregoing, Lessor will deliver the Expansion
Space vacant and broom clean, and demised from the adjacent space."
7. Section 20.10 is hereby modified by (a) deleting the words "during the Term
of this Lease" in the second and third lines and substituting therefor "through
April 30, 1999", and (b) by adding the following new third and fourth sentences:
"Effective May 1, 1999 Lessee shall be entitled to the use of an additional nine
(9) parking spaces for a total of thirteen (13) parking spaces at market rates,
currently $140.00 per space per month, for a total amount equal to $1,820.00 per
month. Effective May 1, 2004, the number of parking spaces shall be reduced to
nine (9) at market rates.
8. Section 20.13 of the Lease is modified by adding at the end thereof the
following language: "Lessee and Lessor acknowledge and confirm to the other that
no brokerage commission is due from the Lessor in connection with this First
Amendment to Lease."
9. Lessor and Lessee confirm to each other that the Original Space has been
delivered in accordance with the terms and provisions of the Lease and accepted
by Lessee as of April 1, 1999.
10. Except as specifically and otherwise provided for in this First Amendment,
wherever the words "Demised Premises" shall appear in the Lease, they shall be
deemed to include the Expansion Space as well as the balance of the Demised
Premises.
Except as modified by this First Amendment, the Lease shall remain
unmodified and in full force and effect.
EXECUTED as a sealed instrument this 29th day of April, 1999.
LESSOR: BROADWAY/HAMPSHIRE
ASSOCIATES LIMITED PARTNERSHIP
By: BROHAM CORP.
Its General Partner
By: _______________________________
Jonathan G. Davis, President
LESSEE: AKAMAI TECHNOLOGIES, INC.
By: /s/ Paul Sagan
-------------------------------
Its: VP & COO
------------------------------
<PAGE> 4
BROADWAY HAMPSHIRE ASSOCIATES LEASE
AKAMAI TECHNOLOGIES, INC.
CAMBRIDGE, MASSACHUSETTS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Article 1 - Demised Premises - Term of Lease......................................................................2
Article 2 - Rent..................................................................................................3
Article 3 - Utility Services......................................................................................4
Article 4 - Insurance.............................................................................................6
Article 5 - Use of Demised Premises...............................................................................7
Article 6 - Compliance with Legal Requirements....................................................................8
Article 7 - Renovation, Condition, Repairs and Maintenance Demised Premises.......................................9
Article 8 - Alterations and Additions............................................................................10
Article 9 - Discharge of Liens...................................................................................10
Article 10 - Subordination.......................................................................................11
Article 11 - Fire, Casualty and Eminent Domain...................................................................14
Article 12 - Indemnification.....................................................................................14
Article 13 - Mortgages, Assignments and Subleases by Lessee......................................................15
Article 14 - Default.............................................................................................17
Article 15 - Surrender...........................................................................................20
Article 16 - Quiet Enjoyment.....................................................................................20
Article 17 - Acceptance of Surrender.............................................................................20
Article 18 - Notices - Service of Process........................................................................21
Article 19 - Separability of Provisions..........................................................................21
Article 20 - Miscellaneous.......................................................................................21
</TABLE>
<PAGE> 5
BROADWAY HAMPSHIRE ASSOCIATES LEASE
AKAMAI TECHNOLOGIES, INC.
CAMBRIDGE, MASSACHUSETTS
LEASE by and between BROADWAY HAMPSHIRE ASSOCIATES LIMITED PARTNERSHIP, a
Massachusetts limited partnership (hereinafter called "Lessor"), and AKAMAI
TECHNOLOGIES, INC., a Delaware corporation (hereinafter called "Lessee").
ARTICLE 1
DEMISED PREMISES - TERM OF LEASE
Section 1.01. Upon and subject to the conditions and limitations
hereinafter set forth, Lessor does hereby lease and demise unto Lessee a portion
of the 3rd floor of the building ("Building") located at, known as and numbered
201 Broadway, Cambridge, Middlesex County, Massachusetts (the "Premises")
containing approximately 2,130 square feet of rentable area, as shown on the
plan attached hereto and labeled Exhibit "A" (hereinafter referred to as the
"Demised Premises") together with the right to use, in common with others
entitled thereto, driveways, walkways, hallways, stairways and passenger
elevators convenient for access the Demised Premises and lavatories nearest
thereto. Loading docks and areas and freight elevators may be used by Lessee in
common with other lessees entitled to the use thereof subject to the rules and
regulations established from time to time by Lessor.
Section 1.02. The term of this Lease shall commence on the earlier to occur
of April 1, 1999 or that date upon which Lessee takes occupancy of the space
(the "Commencement Date") and the term shall expire five years after the
Commencement Date, unless this Lease is sooner terminated as hereinafter
provided. If the Commencement Date is other than the first day of the month, the
balance of the month during which the Commencement Date occurs (the
"Commencement Month") shall be added to the first year of the term. Lessor and
Lessee agree to execute a document identifying the exact Commencement Date which
shall be recordable if required under any Notice of Lease.
Notwithstanding the foregoing, if Lessee shall take possession of the
Demised Premises prior to the Commencement Date, such possession and occupancy
shall be under all of the terms, covenants, conditions and provisions of this
Lease, including rent. Lessee agrees, upon request of the Lessor, to execute an
estoppel letter in the form to be presented by Lessor, identifying the
Commencement Date and the Expiration Date of this Lease.
THIS LEASE IS MADE UPON THE FOLLOWING COVENANTS, AGREEMENTS, TERMS,
PROVISIONS, CONDITIONS AND LIMITATIONS, ALL OF WHICH LESSEE COVENANTS AND AGREES
TO PERFORM AND COMPLY WITH, EXCEPTING ONLY THE COVENANTS OF THE LESSOR:
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ARTICLE 2
RENT
Section 2.01. The Lessee covenants and agrees to pay to Lessor minimum rent
(hereinafter called "Base Rent") for said Premises of Three hundred eighty three
thousand four hundred and 00/100 ($383,400.00) dollars for the term hereof which
shall accrue at the annual rate of Seventy six thousand six hundred eighty and
00/100 ($76,680.00) dollars payable in equal monthly installments of Six
thousand three hundred ninety and 00/100 ($6,390.00) dollars.
Rent for any partial month shall be prorated and paid on the first of that
month. All monthly payments are due and payable in advance on the first day of
each calendar month, without demand, deduction, counterclaim or setoff. Lessee
agrees to pay to Lessor on the date hereof and Lessor acknowledged that it has
received from Lessee this day rent for the first month of the term of the Lease.
Section 2.02. The Lessee shall pay as additional rent to the Lessor 1.8% of
any increase over: (i) the annual fiscal year 1999 real estate taxes and other
municipal or public assessments (excluding assessments for water and sewer which
shall be paid by Lessee pursuant to Section 3.01 hereof) levied against the land
and building of which the Demised Premises are a part; and/or (ii) the annual
calendar year 1998 operating expenses for the land and building of which the
Demised Premises are a part.
The additional rent computed under this Section 2.02 shall be prorated
should this Lease commence or terminate before: (i) the end of any fiscal tax
year for that portion related to taxes; or (ii) the end of any calendar year for
that portion related to operating expenses. The Lessee shall pay to Lessor such
additional rent within fifteen (15) days after written notice from Lessor to
Lessee that it is due. Upon request of Lessor, Lessee shall make monthly
payments of additional rent on the first of each month equal to one-twelfth
(1/12) of the amount of such additional rent last paid by Lessee or as
reasonably projected by Lessor to be due from Lessee, with a final accounting
and payment for each tax and operating period to be made within thirty (30) days
after written notice from Lessor of the exact amount of such additional rent. In
the event taxes on the Demised Premises, based upon which Lessee shall have paid
additional rent, are subsequently reduced or abated, Lessee shall be entitled to
receive a rebate of 1.8% of the amount abated, provided that the amount of the
rebate allocable to Lessee shall in no event exceed the amount of additional
rent paid by Lessee for such fiscal year on account of real estate taxes under
this Section 2.02, and further provided the rebate allocable to Lessee shall be
reduced by 1.8% of the cost of obtaining such reduction or abatement. Operating
expenses for the purpose of this section shall include all costs incurred by
Lessor in connection with the operation of the building of any name, nature or
kind, excluding expense of renting space in the building, mortgage debt service
and income or corporate excise taxes assessed against the Lessor, and excluding
all capital expenditures except for an annual charge-off for (a) capital items
required to be made by local, state or federal authorities pursuant to law,
regulation or ordinance or (b) expenditures for capital items required to
replace or repair worn out or obsolete items or (c)
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expenditures for items reasonably expected to effect savings in operating
expenses. Such capital expenditures to be included in operating expenses as
described above, which are not properly includible in operating expenses for the
calendar year in which they were made shall nevertheless be included in
operating expenses in each calendar year in which they are made and each year
after such capital expenditure is made in the form of an annual charge-off of
such capital expenditure determined by: (i) dividing the original cost of the
capital expenditure by the number of years of useful life thereof as reasonably
determined by Lessor in accordance with generally accepted accounting principals
and practices then in effect, and (ii) adding to such quotient an interest
factor computed on the unamortized balance of such capital expenditure based
upon an interest rate reasonable determined by Lessor, but in no case less than
12%. If Lessor reasonably concludes on the basis of professional knowledge and
estimates that a particular capital expenditure will effect savings in operating
expenses and that such annual projected savings will exceed the annual
charge-off of capital expenditure computed as aforesaid, then and in such
events, the annual charge-off shall be determined by dividing the amount of such
capital expenditure by the number of years over which the projected amount of
such savings shall fully amortize the cost of such capital item or the amount of
such capital expenditure; and by adding the interest factor, as aforesaid.
Section 2.03. All payments of rent and additional rent shall be made to the
Lessor at c/o The Davis Companies, One Appleton Street, Boston, Massachusetts
02116, or as may be otherwise directed by the Lessor in writing.
Section 2.04. Upon execution of this Lease, Lessee shall deposit with
Lessor the sum of $12,780.00 as security for the payment of all rent and the
performance and observance of the agreements and conditions in this Lease
contained on the part of Lessee to be performed and observed (the "Security
Deposit"). In the event of any default or defaults in such payments, performance
or observance, Lessor may apply said sum or any part thereof, including any
interest then accrued thereon, towards the curing of any such default or
defaults and/or towards compensating Lessor for any loss or damage arising from
any such default or defaults. If Lessor shall apply said sum or any part
thereof, as aforesaid, Lessee shall on demand pay to Lessor the amount so
applied by Lessor, to restore the security deposit to the original amount. Upon
the yielding up of the Demised Premises at the expiration or earlier termination
of this Lease, if Lessee shall not then be in default or otherwise liable to
Lessor, said sum or the then unapplied balance thereof shall be returned to
Lessee. In the event Lessor's interest in the Premises shall be transferred or
assigned and the assigning Lessor shall credit or turn over to such assignee the
sum of money referred to above or the unpaid balance thereof, Lessee agrees to
look only to the assignee of such assignor with respect to the sum referred to
above, its application and return.
ARTICLE 3
UTILITY SERVICES
Section 3.01. Lessee agrees to pay, or cause to be paid, as additional
rent, all charges for Lessee's utilities, including, without limiting the
generality of the foregoing, heat, air
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conditioning, water (if separately metered to the Demised Premises) and
electricity; and Lessee will comply with all contracts relating to any such
services. Lessee's charges for such utility usage shall be based upon Lessee's
actual usage if separately metered, it being agreed that electricity to power
the heat pumps producing heating and air conditioning to the Demised Premises,
and electricity to the Demised Premises will be paid for by the Lessee and, as
applicable, thermostatically controlled by Lessee. However, if such usage is not
separately metered, such usage and billing shall be based upon a percentage of
the total bill for such unmetered utilities based upon a fraction equal to
Lessee's square footage over the total square footage served by such
non-separately metered utilities on a "net rentable" basis. Such additional rent
for non-separately metered utilities may be estimated monthly by Lessor, based
upon prior usage at the building or as projected by the appropriate utility
company, and shall be paid monthly by Lessee as billed with a final accounting
based upon actual bills every six (6) months. In the event Lessee is billed
directly by the utility company for separately metered utilities, then Lessee
shall pay such bills directly to the utility company.
Section 3.02. Lessor agrees to furnish reasonable heat and air conditioning
(HVAC) to the Demised Premises, common hallways and lavatories during normal
business hours on regular business days during the heating or air conditioning
season, as applicable, to light common passageways twenty-four (24) hours a day,
to provide hot water to lavatories, and to furnish reasonable cleaning services,
including vacuuming and emptying ashtrays and wastebaskets throughout the
building and clean common areas, common area glass, common lavatories and glass
main entry doorways to the Demised Premises Mondays through Fridays, in
substantially the same fashion as furnished in similar buildings in the City of
Cambridge all subject to interruption due to accident, to the making of repairs,
alterations or improvements, to labor difficulties, to trouble in obtaining
fuel, electricity, service or supplies from the sources from which they are
usually obtained for such building, governmental restraints, or to any cause
beyond the Lessor's control. In no event shall Lessor be liable for any
interruption or delay in any of the above services for any of such causes. For
the purposes of this clause, reasonable heat to common areas shall be defined as
a minimum of 66 degrees Fahrenheit between the hours of 7:00 a.m. to
6:00 p.m. Monday through Friday and 7:00 a.m. to 1:00 p.m. on Saturday during
the months from November through April. Reasonable cooling of common areas shall
be provided between the hours of 7:00 a.m. and 6:00 p.m. Monday through Friday
and 7:00 a.m. to 1:00 p.m. Saturday during the cooling season. Except as noted
below, the building will be open for access to the Demised Premises daily,
Monday through Friday, between the hours of 7:00 a.m. and 6:00 p.m. and Saturday
between the hours of 7:00 a.m. and 1:00 p.m. The Building will be closed from
6:00 p.m. to 7:00 a.m. Monday through Saturday, inclusive, Saturday from 1:00
p.m. to midnight, all day Sunday and on legal, state and federal holidays, at
which time the building will be locked and secured with access cards provided to
Lessor, Lessee and other tenants, and Lessee shall be entitled to use such
access cards for access to the Demised Premises 24 hours per day, 365 days per
year. Lessor reserves the right, upon 30 days prior notice to Lessee, to charge
Lessee at a reasonable rate, consistent with amounts as may be charged at other
similar first class Cambridge office buildings with similar HVAC systems and
energy sources, for its after hours HVAC usage.
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ARTICLE 4
INSURANCE
Section 4.01. The Lessee shall not permit any use of the Demised Premises
which will make voidable any insurance on the property of which the Demised
Premises are a part, or on the contents of said property, or which shall be
contrary to any requirements or recommendations from time to time established or
made by the Lessor's insurer. The Lessee shall, on demand, reimburse the Lessor,
and all other tenants, in full for all extra insurance premiums caused by the
Lessee's use of the Demised Premises. The use of the Demised Premises for
general office purposes will not make voidable Lessor's insurance or cause an
increase in Lessor's rate.
Section 4.02. The Lessee shall maintain with respect to the Demised
Premises and the property of which the Demised Premises are a part, Commercial
General Liability insurance in the amount of at least $1,000,000.00 combined
single limit, bodily injury and property damage per occurrence; $2,000,000.00
annual aggregate with a deductible of no more than $500.00, with companies
having Best Insurance Guide Rating of A- or better, qualified to do business in
Massachusetts and in good standing therein, insuring the Lessor and its
mortgagees, any ground lessors, as well as the Lessee, against injury to persons
or damage to property. The Lessee shall also maintain property insurance,
including so-called "Improvements and Betterments" coverage, on the Demised
Premises and the contents thereon, including any improvements made by Lessee.
The Lessee shall deposit with the Lessor certificates of such insurance at or
prior to the commencement of the term, and thereafter, at least thirty (30) days
prior to the expiration of any such policies. All such insurance certificates
shall provide that such policy shall not be canceled or modified without at
least thirty (30) days prior written notice to each insured named therein and
that Lessor, its mortgagees, any ground lessors and Managing Agent shall each be
named as an additional insured.
Section 4.03. The Lessor shall maintain at least One Million
($1,000,000.00) Dollars of Commercial General Liability insurance (including
so-called umbrella coverage) covering the land and buildings of which the
Demised Premises are a part. Lessor shall maintain property insurance on the
Premises in the amount of its full replacement value as reasonably determined by
Lessor.
Section 4.04. During all construction by Lessee, if any, Lessee shall
maintain adequate builder's risk, liability and workmen's compensation insurance
to Lessor's reasonable satisfaction, and Lessor, its mortgagees, any ground
lessors and Managing Agent shall each be named as an additional insured on such
policies.
Section 4.05. To the extent obtainable from each party's insurance carrier,
Lessor and Lessee agree that their insurance policies shall contain waiver of
subrogation provisions. Each of Lessor and Lessee, on behalf of itself and its
insurers, hereby waives all rights of subrogation and recovery against the other
with respect to any damage to property to the extent covered by insurance
maintained by the waiving party.
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Section 4.06. Within fifteen (15) days of the date hereof, Lessee shall
provide Lessor with Certificates of all insurance maintained or required to be
maintained by Lessee.
ARTICLE 5
USE OF DEMISED PREMISES
Section 5.01. The Lessee covenants and agrees to use the Demised Premises
only for the purposes of general office use only, and for no other purpose.
Section 5.02. Lessee will not make or permit any occupancy or use of any
part of the Demised Premises for any hazardous, offensive, dangerous, noxious or
unlawful occupation, trade, business or purpose or any occupancy or use thereof
which is contrary to any law, by-law, ordinance, rule, permit or license, and
will not cause, maintain or permit any nuisance in, at or on the Demised
Premises. The Lessee hereby agrees not to maintain or permit noises, odors,
operating methods, or conditions of cleanliness of the Demised Premises or any
appurtenance thereto which are reasonably objectionable to Lessor or other
tenants. No hazardous substances or wastes shall be brought, kept or maintained
on the Demised Premises except in compliance with applicable law. No hazardous
waste shall be discharged on the Premises. Customary office supplies may be
maintained in amounts and in a manner consistent with reasonable commercial
office practices and in compliance with all laws.
Section 5.03.
A. Lessor and Lessee shall indemnify, defend with counsel reasonably
acceptable to Lessor and hold the other, Lessor's managing agent and any
mortgagee or ground lessor of the Premises, fully harmless from and against any
and all liability, loss, suits, claims, actions, causes of action, proceedings,
demands, costs, penalties, damages, fines and expenses, including, without
limitation, reasonable attorneys' fees, consultants' fees, laboratory fees and
clean up costs, and the costs and expenses of investigating and defending any
claims or proceedings, resulting from, or attributable to (i) the presence of
any oils or hazardous substances on the Premises or the Demised Premises arising
from the action or negligence of the party against whom indemnity is sought, its
officers, employees, contractors, agents and invitees, or arising out of the
generation, storage, treatment, handling, transportation, disposal or release by
such party of any oils or hazardous substances at or near the Premises or the
Demised Premises, and (ii) any violation(s) by such party of any applicable law
regarding oils or hazardous substances. This hold harmless and indemnity shall
survive the expiration of the term, but shall not include consequential damage
or damage to or loss of personal property.
B. Lessor represents that, to the best of Lessor's knowledge and belief,
there are no hazardous substances or oils at the Premises exceeding legal limits
and that, to the best of its knowledge and belief, there have been no violations
of applicable laws relating to hazardous substances at the Premises by Lessor.
C. Lessor represents to Lessee that, to the best of its knowledge and
belief, there is no
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friable asbestos in violation of applicable law in the Premises.
Section 5.04. No sign, antenna or other structure or thing, shall be
erected or placed on the Demised Premises or any part of the exterior of any
building or on the land comprising the Premises or erected so as to be visible
from the exterior of the building containing the Demised Premises without first
securing the written consent of the Lessor. Lessee shall not post any paper
signs in or around the Demised Premises visible from the exterior of the
Building or any interior common areas. Lessee shall be given one standard sign
to Lessor's specifications at the entry to Demised Premises and on the directory
in the lobby of the Building.
Section 5.05. Lessee will not permit any abandonment of the Demised
Premises or any part thereof except
(a) to the extent caused by condemnation,
(b) to the extent caused by damage to or alterations of the Demised
Premises pending restoration thereof, or
(c) as herein otherwise specifically provided or consented to in writing
by the Lessor.
The cessation of business operations by Lessee at the Demised Premises
shall not per se be considered abandonment if Lessee timely observes and
performs all of its other obligations under this Lease and properly and with
reasonable continuity monitors and maintains the security of and at the Demised
Premises so as to prevent any vandalism thereat or improper use thereof.
Section 5.06. Lessee will not cause or permit any waste, overloading,
stripping, damage, disfigurement or injury of or to the Premises or the Demised
Premises or any part thereof. Lessor reserves the right to prescribe the weight
and position of all safes, business machines and mechanical equipment. Such
installation shall be placed and maintained by Lessee, at Lessee's expense, in
setting sufficient, in Lessor's judgment, to absorb and prevent vibration, noise
and annoyance.
Section 5.07. Rules and regulations, provided the same are not inconsistent
with or in limitation of the provisions of this Lease, affecting the
cleanliness, safety, occupation and use of the Demised Premises, which in the
judgment of the Lessor are reasonable shall be observed by the Lessee, its
employees, agents, customers and business invitees.
ARTICLE 6
COMPLIANCE WITH LEGAL REQUIREMENTS
Section 6.01. Throughout the term of this Lease, Lessee, at its sole cost
and expense, will promptly comply with all requirements of law related
specifically to Lessee's specific use and occupation of the Demised Premises or
with respect to any modifications or renovation to the Demised Premises proposed
by Lessee and not to the Premises generally, and will procure and maintain all
permits, licenses and other authorizations required with respect to the Demised
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Premises, or any part thereof, for the lawful and proper operation, use and
maintenance of the Demised Premises or any part thereof. Lessee shall in each
and every event and instance, at its sole cost and expense, be responsible for
compliance with all codes and regulations with respect or relating to the
Demised Premises, including, without limitation, those occasioned by work
performed by, for or with consent of Lessor at the Premises. Lessor shall be
responsible for compliance of the Building and Premises with all requirements of
law in all other cases.
Section 6.02. Lessor represents that, to the best of Lessor's knowledge and
belief, there are no violations in the public areas of the Building of the
provisions of the Massachusetts Architectural Barriers Board to the extent those
provisions relate to items under the Lessor's control.
ARTICLE 7
RENOVATION, CONDITION, REPAIRS AND MAINTENANCE DEMISED PREMISES
Section 7.01. Lessor has made no representations, warranties or
undertakings as to the present or future condition of the Premises or the
fitness or availability of the Premises for any particular use, except as
specifically set forth in Exhibit B hereto. Lessor reserves the right to modify
the work contemplated in Exhibit B provided that such modifications do not
unreasonably interfere with Lessee's use of the Demised Premises.
Section 7.02. Lessor agrees to construct the Demised Premises, in a good
and workmanlike manner, substantially in accordance with the provisions of
Exhibit B attached to and made a part of this Lease ("Landlord's Work"). It is
understood and agreed that any changes in Landlord's Work other than substantial
changes, which may be reasonably necessary or, in the opinion of Lessor,
advisable, may be made by Lessor prior to completion of construction of the
Demised Premises and that such changes shall not require the approval of Lessee.
Substantial changes in Landlord's Work which affect the Demised Premises shall
require the approval of Lessee but Lessee agrees that it will not unreasonably
withhold or delay its approval thereof. No such change or changes in Landlord's
work will in any way affect this Lease or the validity thereof. Lessor and
Lessee agree that the opening of the Demised Premises by Lessee for its business
shall constitute an acknowledgment by Lessee that the Demised Premises are in
the condition they are required to be in by this Lease and that Lessor has
satisfactorily performed the construction required of Lessor and Landlord's Work
has been satisfactorily completed, except as may be noted on a written punchlist
prepared by Lessee and Lessor. Lessee shall perform all work required beyond
Lessor's Work to make the Demised Premises completed for Lessee's use.
Section 7.03. Throughout the term of this Lease, the Lessee agrees to
maintain all portions of the Demised Premises not required to be maintained by
Lessor in the same condition as they are in on the Commencement Date or as they
may be put in during the term of this Lease, reasonable wear and tear, damage by
fire or other insured casualty only excepted, and whenever necessary, to replace
bulbs and ballasts in lighting fixtures and to replace plate glass and other
glass therein. Lessee shall maintain all improvements and alterations made by
it.
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Section 7.04. Lessor, or agents or prospective lenders of Lessor, at
reasonable times, shall be permitted to enter upon the Demised Premises to
examine the condition thereof, to make repairs, alterations and additions as
Lessor should elect to do, to show the Demised Premises to others, and at any
time within nine (9) months before the expiration of the term, and for such
purposes, Lessee hereby grants to Lessor and any prospective lessees
accompanying Lessor a right of access to the Demised Premises.
Section 7.05. Lessor shall maintain and repair all common areas and all
structural components of the building and mechanical components of the building
serving more than one tenant, provided the same were not installed by Lessee, at
Lessor's sole cost and expense (subject to reimbursement in accordance with the
provisions of Article 2), provided, however, Lessee shall repair any damage
caused by it or its licensees, invitees, guests, agents or employees.
ARTICLE 8
ALTERATIONS AND ADDITIONS
Section 8.01. The Lessee shall not make any alterations or additions,
structural or non-structural, to the Demised Premises without first obtaining
the written consent of Lessor on each occasion which consent shall not be
unreasonably withheld. Wherever consent is required, it shall include approval
of plans and contractors. All such allowed alterations, including reasonable
costs of review in seeking Lessor's approval, shall be made at Lessee's expense,
in compliance with all laws, and shall be in quality at least equal to the
present construction. Except as set forth below, any alterations or additions
made by the Lessee which are permanently affixed to the Demised Premises or
affixed in a manner so that they cannot be removed without defacing or damaging
the Demised Premises shall, if Lessor so elects, become property of the Lessor
at the termination of occupancy as provided herein. If Lessor elects not to
retain such alterations or additions, upon termination of this Lease, they shall
be removed by Lessee, at its expense, with minimal disturbance to the Demised
Premises. Alterations or additions not affixed and which may be removed with
minimal disturbance or repairable damage may be removed by Lessee provided such
disturbance or damage is restored and repaired so that the Demised Premises are
left in at least as good a condition as they were in at the commencement of the
term, reasonable wear, tear and damage by fire or other casualty not required to
be insured by Lessee or taking or condemnation excepted. All other alterations
and additions made by Lessee and not to be retained by Lessor shall be removed
by Lessee, at its expense, at the end of the term and the Demised Premises shall
be left in the same condition as at the commencement of the term, reasonable
wear, tear and damage by fire, if insured, or other insured casualty or taking
or condemnation by public authority excepted.
ARTICLE 9
DISCHARGE OF LIENS
Section 9.01. Lessee will not create or permit to be created or to remain,
and will promptly discharge, at its sole cost and expense any lien, encumbrance
or charge (on account of
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any mechanic's, laborer's, materialmen's or vendor's lien, or any mortgage, or
otherwise) made or suffered by Lessee which is or might be or become a lien,
encumbrance or charge upon the Demised Premises or any part thereof upon
Lessee's leasehold interest therein, having any priority or preference over or
ranking on a parity with the estate, rights and interest of Lessor in the
Demised Premises or any part thereof, or the rents, issues, income or profits
accruing to Lessor therefrom, and Lessee will not suffer any other matter or
thing within its control whereby the estate, rights and interest of Lessor in
the Demised Premises or any part thereof might be materially impaired.
ARTICLE 10
SUBORDINATION
Section 10.01.
(a) If any holder of a mortgage or holder of a ground lease of property
which includes the Demised Premises and executed and recorded
subsequent to the date of this Lease, shall so elect, the interest of
the Lessee hereunder shall be subordinate to the rights of such
holder, provided that such holder shall agree to recognize in writing
the right of the Lessee to use and occupy the Premises upon the
payment of rent and other charges payable by the Lessee under this
Lease, and the performance by the Lessee of the Lessee's obligations
hereunder (but without any assumption by such holder of the Lessor's
obligations under this Lease); or
(b) If any holder of a mortgage or holder of a ground lease of property
which includes the Demised Premises shall so elect, this Lease, and
the rights of the Lessee hereunder, shall be superior in right to the
rights of such holder, with the same force and effect as if this Lease
had been executed and delivered, and recorded, or a statutory notice
hereof recorded, prior to the execution, delivery and recording of any
such mortgage.
The election of any such holder as to Subsection (a) above shall be
exercised by notice to the Lessee, in the same fashion as notices
under this Lease are given by the Lessor to the Lessee, and, if such
notice is given, such subordination shall be effective with reference
to advances then or thereafter made by such holder under such mortgage
or in connection with such ground lease financing. Any election as to
Subsection (b) above shall become effective upon either notice from
such holder to the Lessee in the same fashion as notices from the
Lessor to the Lessee are to be given hereunder or by the recording in
the appropriate registry or recorder's office of an instrument, in
which such holder subordinates its rights under such mortgage or
ground lease to this Lease.
In the event any holder shall succeed to the interest of Lessor, the
Lessee shall, and does hereby agree to attorn to such holder and to
recognize such holder as its Lessor and Lessee shall promptly execute
and deliver any instrument that such
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holder may reasonably request to evidence such attornment provided
such document contains satisfactory non-disturbance provisions to
allow Lessee to remain in occupancy pursuant to this Lease as long as
Lessee remains current and not in default of its obligations
hereunder. Upon such attornment, the holder shall not be: (i) liable
in any way to the Lessee for any act or omission, neglect or default
on the part of Lessor under this Lease; (ii) responsible for any
monies owing by or on deposit with Lessor to the credit of Lessee
unless received by the holder; (iii) subject to any counterclaim or
setoff which theretofore accrued to Lessee against Lessor; (iv) bound
by any modification of this Lease subsequent to such mortgage or by
any previous prepayment of regularly scheduled monthly installments of
fixed rent for more than (1) month, which was not approved in writing
by the holder; (v) liable to the Lessee beyond the holder's interest
in the Premises and the rents, income, receipts, revenues, issues and
profits issuing from such Property; or (vi) responsible for the
performance of any work to be done by the Lessor under this Lease to
render the Demised Premises ready for occupancy by the Lessee; or
(vii) liable for any portion of a security deposit not actually
received by the holder.
(c) The covenant and agreement contained in this Lease with respect to the
rights, powers and benefits of any such holder constitute a continuing
offer to any person, corporation or other entity, which by accepting
or requiring an assignment of this Lease or by entry of foreclosure
assumes the obligations herein set forth with respect to such holder;
every such holder is hereby constituted a party to this Lease and an
obligee hereunder to the same extent as though its name was written
hereon as such; and such holder shall at its written election be
entitled to enforce such provisions in its own name.
(d) No assignment of this Lease and no agreement to make or accept any
surrender, termination or cancellation of this Lease and no agreement
to modify so as to reduce the rent, change the term, or otherwise
materially change the rights of the Lessor under this Lease, or to
relieve the Lessee of any obligations or liability under this Lease,
shall be valid unless consented to in writing by the Lessor's
mortgagees or ground lessors of record, if any.
(e) The Lessee agrees on request of the Lessor to execute and deliver from
time to time any agreement, in recordable form, which may reasonably
be deemed necessary to implement the provisions of this Section
10.01.
Section 10.02. Lessee agrees to furnish to Lessor, within ten (10) business
days after request therefor from time to time, a written statement setting forth
the following information:
(i) The then remaining term of this Lease;
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(ii) The applicable rent then being paid, including all additional rent
based upon the additional rent most recently established;
(iii) That the Lease is current and not in default or specifying any
default;
(iv) That the Lessee has no current claims for offsets against the Lessor,
or specifically listing any such claims;
(v) The date through which rent has then been paid;
(vi) Such other information relevant to the Lease as Lessor may reasonably
request; and
(vii) A statement that any prospective mortgage lender and/or purchaser may
rely on all such information.
Section 10.03. After receiving notice from any person, firm or other entity
that it holds a mortgage which includes the Demised Premises as part of the
mortgaged premises, or that it is the ground lessor under a lease with the
Lessor, as ground lessee, which includes the Demised Premises as a part of the
mortgaged premises, no notice from the Lessee to the Lessor shall be effective
unless and until a copy of the same is given in the same manner as required for
notice in this Lease to such holder or ground lessor, and the curing of any of
the Lessor's defaults by such holder or ground lessor shall be treated as
performance by the Lessor. Accordingly, no act or failure to act on the part of
the Lessor which would entitle the Lessee under the terms of this Lease, or by
law, to be relieved of the Lessee's obligations hereunder, to exercise any right
of self-help or to terminate this Lease, shall result in a release or
termination of such obligations or a termination of this Lease unless (i) the
Lessee shall have first given written notice of the Lessor's act or failure to
act on the part of the Lessor which could or would give basis for the Lessee's
rights; and (ii) such holder or ground lessor, after receipt of such notice, has
failed or refused to correct or cure the condition complained of within the cure
period allowed the Lessor or within such reasonable time that provides Mortgagee
time to take possession and to cure the default. As of the execution of this
Lease, CitiCorp USA, Inc. is the current mortgagee of the Premises and notices
to the mortgagee should be sent to CRIIMI MAE Services LP, 11200 Rockville Pike,
Rockville, MD 20852, Re: Portfolio 98MC2, CitiCorp USA Loan.
Section 10.04. With reference to any assignment by the Lessor of the
Lessor's interest in this Lease, or the rents payable hereunder, conditional in
nature or otherwise, which assignment is made to the holder of a mortgage or a
ground lessor on property which includes the Demised Premises, the Lessee
agrees:
(a) That the execution thereof by the Lessor, and the acceptance thereof
by the holder of such mortgage or ground lessor, shall never be
treated as an assumption by such holder or ground lessor of any of the
obligations of the Lessor hereunder,
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unless such holder or ground lessor shall, by notice sent to the
Lessee, specifically make such election; and
(b) That, except as aforesaid, such holder or ground lessor shall be
treated as having assumed the Lessor's obligations hereunder only upon
foreclosure of such holder's mortgage and the taking of possession of
the Premises, or, in the case of a ground lessor, the assumption of
the Lessor's position hereunder by such ground lessor.
ARTICLE 11
FIRE, CASUALTY AND EMINENT DOMAIN
Section 11.01. Should a substantial portion of the Demised Premises or the
property of which they are a part be damaged by fire or other casualty, or be
taken by eminent domain, the Lessor, at its sole option, may elect to terminate
this Lease. When fire or other unavoidable casualty or taking renders the
Demised Premises substantially unsuitable for its intended use, a just and
proportionate abatement of rent shall be made, and the Lessee may elect to
terminate this Lease if:
(a) The Lessor fails to give written notice within sixty (60) days after
such casualty of its intention to restore the Demised Premises or
provide alternate access, if access has been taken or destroyed; or
(b) If Lessor gives notice of its intention to restore and the Lessor
fails to restore the Demised Premises to a condition substantially
suitable for their intended use or fails to provide alternate access
within one hundred twenty (120) days of such fire or other unavoidable
casualty, or taking.
The Lessor reserves, and the Lessee grants to the Lessor, all rights which
the Lessee may have for damages or injury to the Demised Premises for any taking
by eminent domain, except for damages specifically awarded on account of the
Lessee's fixtures, property or equipment, which may be removed at the end of the
term. For purposes of this Section, a taking or damage shall be substantial if
it shall affect more than twenty-five (25%) percent of the Demised Premises or
the property of which they are a part.
ARTICLE 12
INDEMNIFICATION
Section 12.01. Except as provided in Section 12.02, Lessee shall protect,
indemnify and save harmless Lessor, its managing agent and any mortgagee or
ground lessor from and against all liabilities, obligations, damages, penalties,
claims, causes of action, costs, charges and expenses, including all reasonable
attorneys' fees and expenses of employees, which may be imposed upon or incurred
by or asserted against them by reason of any of the following occurring during
the term of this Lease:
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(a) any work or thing done in or on the Demised Premises;
(b) any use, non-use, possession, occupation, condition, operation,
maintenance or management of the Demised Premises or any part thereof,
including, without limiting the generality of the foregoing, the use
or escape of water or the bursting of pipes, or any nuisance made or
suffered on the Demised Premises;
(c) any act or omission (with respect to the Demised Premises, or the use
or management thereof, or this Lease) on the part of Lessee or any of
its agents, contractors, customers, servants, employees, licensees,
invitees, mortgagees, assignees, sub-tenants or occupants;
(d) any accident, injury or damage to any person or property occurring in
or on the Demised Premises.
Section 12.02. Subject in any and all events to the limitations of Section
20.16, Lessor shall protect, indemnify and save harmless Lessee from and against
all liabilities, obligations, damages, penalties, claims, causes of action,
costs, charges and expenses, including all reasonable attorneys' fees and
expenses of employees, which may be imposed upon or incurred by or asserted
against Lessee during the term of this Lease as a result of:
(a) any negligent act or omission or willful misconduct on the part of
Lessor or any of its agents, contractors, customers, servants, or
employees; or
(b) any accident, injury or damage to any person or property occurring in
or on common areas at the Premises open to all tenants, unless caused by an
act or omission described in Section 12.01(c) above.
Section 12.03. In case any action or proceeding is brought against either
party by reason of any such occurrence, the party required to provide
indemnification, upon written notice from the party entitled to indemnification,
will, at the sole cost and expense of the party required to provide
indemnification, resist and defend such action or proceeding or cause the same
to be resisted and defended, by counsel designated by the party required to
provide indemnification and approved in writing by the party to be defended,
which approval shall not be unreasonably withheld.
ARTICLE 13
MORTGAGES, ASSIGNMENTS AND SUBLEASES BY LESSEE
Section 13.01. Lessee's interest in this Lease may not be mortgaged,
encumbered, assigned or otherwise transferred, or made the subject of any
license or other privilege, by Lessee or by operation of law or otherwise, and
the Demised Premises may not be sublet, as a whole or in part, without in each
case the prior written consent of Lessor, which shall not be unreasonably
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withheld or delayed, and the execution and delivery to Lessor by the assignee or
transferee of a good and sufficient instrument whereby such assignee or
transferee assumes all obligations of Lessee under this Lease. In connection
with any request by Lessee for such consent to assignment or sublet, Lessee
shall provide Lessor with all relevant information requested by Lessor
concerning the proposed assignee's or subtenant's financial responsibility,
credit worthiness and business experience to enable Lessor to make an informed
decision. Lessee shall reimburse Lessor promptly for all reasonable
out-of-pocket expenses incurred by Lessor including reasonable attorneys' fees
in connection with the review of Lessee's request for approval of any assignment
or sublease. Upon receipt from Lessee of such request and information, Lessor
shall have the right, but not the obligation, to be exercised in writing within
ten (10) calendar days after its receipt from Lessee of such request and
information, (i) if the request is to assign the Lease through the end of the
then current term, to terminate this Lease, or (ii) if the request is to sublet
a portion of the Demised Premises through the end of the then current term, to
release Lessee from its obligations under this Lease with respect to the portion
of the Demised Premises subject to the proposed sublet for the term of the
proposed sublease or if the request is to sublet all of the Demised Premises
through the end of the then current term to terminate this Lease for the term of
the proposed sublease; in each case as of the date set forth in Lessor's notice
of exercise of such option, which date shall not be less than thirty (30) days
nor more than ninety (90) days following the giving of such notice. In the event
of an assignment or a sublet of the Demised Premises where Lessor exercised its
option to terminate this Lease, Lessee shall surrender possession of the entire
Demised Premises on a date to be mutually agreed upon, but not later than the
termination date, in accordance with the provisions of this Lease relating to
surrender of the Demised Premises at the expiration of the term, and thereafter
neither Lessor nor Lessee shall have any further liability with respect thereto.
In the event of a sublet of the Demised Premises where Lessor does not terminate
this Lease but releases Lessee from its obligations under this Lease with
respect to the portion of the Demised Premises subject to the sublet, Lessee
shall surrender the portion of the Demised Premises subject to the sublease on
the date set forth in such notice in accordance with the provisions of this
Lease relating to surrender of the Demised Premises at the expiration of the
term, and, at Lessee's option, at the end of the term of the sublet the space
subject to the sublet shall be included in the Demised Premises and thereafter
Lessee shall be responsible for all obligations of Lessee hereunder with respect
to such space as a primary obligator, or Lessee shall be released of its
obligations with respect to such space and thereafter shall have no right to
occupy that space. If this Lease shall be canceled as to a portion of the
Demised Premises only, annual Base Rent and Lessee's pro-rata share of Operating
Expenses and Real Estate Taxes shall be readjusted proportionately according to
the ratio that the number of square feet and the portion of the space
surrendered compares to the floor area of Lessee's Demised Premises during the
term of the proposed sublet. Lessee shall not offer to make, or enter into
negotiations with respect to an assignment, sublease or transfer to: (i) any
entity owned by, or under the common control of, whether directly or indirectly,
a tenant in the Premises; or (ii) any party with whom Lessor is then negotiating
with respect to other space in the Premises; or (iii) any party which would be
of such type, character, or condition as to be inappropriate as a tenant for the
building. It shall not be unreasonable for Lessor to disapprove any proposed
assignment, sublet or transfer to any of the foregoing entities. Any purported
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assignment, sublet or transfer under this Article 13 without Lessor's prior
written consent shall be void and of no effect. From and after any such
assignment or transfer, the obligations of each such assignee and transferee and
of the original Lessee named as such in this Lease to fulfill all of the
obligations of Lessee under this Lease shall be joint and several. No acceptance
of rent by Lessor from or recognition in any way of the occupancy of the Demised
Premises by a sublessee or assignee shall be deemed a consent to such sublease
or assignment. In the event Lessee assigns or sublets the Demised Premises or
any part thereof, Lessee shall, after deducting all reasonable out-of-pocket
costs and expenses incurred by Lessee to third parties in connection therewith,
share equally with Lessor in any rents received by Lessee in excess of the rents
and other expenses due to Lessor. Notwithstanding the above, provided Lessee is
not in default of this Lease, Lessee shall have the right to assign this Lease
without Lessor's consent: (a) to any subsidiary, parent, or affiliate controlled
by, controlling, or under common control with Lessee; or (b) in the event of a
sale or transfer of all or substantially all of the assets of Lessee; provided,
however, that in any such event: (i) use of the Demised Premises shall be for
general office purposes only; (ii) in the case of an asset sale the assignee
shall after the transaction in question be at least as creditworthy as the
original Lessee on the date or execution of this Lease and Lessor has been
provided with audited financial statements or equivalent evidence of the same;
and (iii) Lessee's liability hereunder shall continue. In such event, the Lessor
does not have a right to recapture.
Section 13.02. No assignment or transfer of any interest in this Lease, no
sublease of the Demised Premises or any part thereof, and no execution and
delivery of any instrument of assumption pursuant to Section 13.01 hereof shall
in any way affect or reduce any of the obligations of Lessee under this Lease,
but this Lease and all of the obligations of Lessee under this Lease shall
continue in full force and effect as the obligations of a principal (and not as
the obligations of a guarantor or surety). Each violation of any of the
covenants, agreements, terms or conditions of this Lease, whether by act or
omission, by any of Lessee's permitted encumbrances, assignees, employees,
transferees, licensees, grantees of a privilege, sub-tenants or occupancy, shall
constitute a violation thereof by Lessee.
ARTICLE 14
DEFAULT
Section 14.01. In the event that:
(a) the Lessee shall default in the due and punctual payment of any
installment of rent, or any part thereof, when and as the same shall
become due and payable and such default shall continue for more than
five (5) days after written notice that such payment is due, provided
that Lessee shall not be entitled to written notice more than one time
per calendar year.
(b) the Lessee shall default in the payment of any additional rent payable
under this Lease or any part thereof, when and as the same shall
become due and payable,
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and, except for the payment of additional rent for increased real
estate taxes which shall be due and payable without grace period at
least ten (10) days prior to the date specified in a written notice
from Lessor to Lessee, provided that Lessee shall not be entitled to
written notice more than one time per calendar year, and such default
shall continue for a period of ten (10) days; or
(c) the Lessee shall default in the observance or performance of any of
the Lessee's covenants, agreements or obligations hereunder, other
than those referred to in the foregoing clauses (a) and (b), and such
default shall not be corrected within twenty-one (21) days after
written notice; or
(d) the Lessee shall file a voluntary petition in bankruptcy or shall be
adjudicated a bankrupt or insolvent, shall file any petition or answer
seeking any reorganization, arrangement, composition, dissolution or
similar relief under any present or future federal, state or other
statute, law or regulation relating to bankruptcy, insolvency or other
relief for debtors, or shall seek, or consent, or acquiesce in the
appointment of any trustee, receiver or liquidator of Lessee or of all
or any substantial part of its properties, or of the Demised Premises,
or shall make any general assignment for the benefit of creditors; or
(e) any court enters an order, judgment or decree approving a petition
filed against Lessee seeking any reorganization, arrangement,
composition, dissolution or similar relief under any present or future
federal, state or other statute, law or regulation relating to
bankruptcy, insolvency or other relief for debtors, and such order,
judgment or decree shall remain unvacated or unstayed for an aggregate
of sixty (60) days; or
(f) the Demised Premises shall be abandoned (unless approved by the
Lessor);
then Lessor shall have the right thereafter to re-enter and take complete
possession of the Demised Premises, to declare this Lease terminated and to
remove the Lessee's effects without prejudice to any remedies which might be
otherwise used for arrears of rent or other default. The Lessee shall indemnify
the Lessor against all loss of rent and other payments which the Lessor may
incur by reason of such termination during the residue of the term.
Section 14.02. If the Lessee shall default in the observance or performance
of any condition or covenant on Lessee's part to be observed or performed under
or by virtue of any of the provisions and/or any Article of this Lease, the
Lessor, after any applicable notice to Lessee and opportunity to cure provided
elsewhere in this Lease, without being under any obligations to do so and
without thereby waiving such default, may remedy such default for the account
and at the expense of the Lessee. If the Lessor makes any expenditures or incurs
any obligations for the payment of money in connection therewith, including but
not limited to reasonable attorneys' fees in instituting, prosecuting or
defending any action or proceeding, such sums paid or
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obligations incurred, with interest at the rate of eighteen (18%) percent per
annum and costs, shall be paid upon demand to the Lessor by the Lessee as
additional rent.
Section 14.03. No failure by Lessor to insist upon strict performance of
any covenant, agreement, term or condition of this Lease, or to exercise any
right or remedy consequent upon breach thereof, and no acceptance of full or
partial rent during the continuance of any breach, shall constitute a waiver of
any such or of any covenant, agreement, term or condition. No covenant,
agreement, term or condition of this Lease to be performed or complied with by
Lessee, and no breach thereof, shall be waived, altered or modified except by
written instrument executed by Lessor. No waiver of any breach shall affect or
alter this Lease, but each and every covenant, agreement, term and condition of
this Lease shall continue in full force and effect with respect to any other
then existing or subsequent breach thereof.
Section 14.04. In the event (i) any payment of rent (or additional rent) is
not paid within five (5) business days of the due date, or (ii) a check received
by Lessor from Lessee shall be dishonored, then because actual damages for a
late payment or for a dishonored check are extremely difficult to fix or
ascertain, but recognizing that damage and injury result therefrom, Lessee
agrees to pay as an administrative fee and not as a penalty: (I) the greater of
(a) 5% of the amount due in (i) above or (b) $150.00 as liquidated damages for
each late payment and (II) the greater of 2.5% of the amount due in (ii) or
$45.00 as liquidated damages for each time a check is dishonored. (The grace
period herein provided is strictly related to the fee for a late payment and
shall in no way modify or stay Lessee's obligation to pay rent when it is due,
nor shall the same preclude Lessor from pursuing its remedies under this Section
14, or as otherwise allowed by law.) In the event that two (2) or more Lessee's
checks are dishonored, Lessor shall have the right, in addition to all other
rights under this lease, to demand all future payments by certified check or
money order. Furthermore, if any payment of rent (annual or additional) or any
other payment payable hereunder by Lessee to Lessor shall not be paid within the
applicable grace period, the same shall bear interest, from the date when the
same was due until the date paid, at the rate of eighteen percent (18%) per
annum. Such interest shall constitute additional rent payable hereunder.
Section 14.05. Each right and remedy of Lessor provided for in this Lease
shall be cumulative and concurrent and shall be in addition to every other right
or remedy provided for in this Lease now or hereafter existing at law or in
equity or by statute or otherwise, and the exercise or beginning of the exercise
by Lessor of any one or more of the rights or remedies provided for in this
Lease now or hereafter existing at law or in equity or by statute or otherwise
shall not preclude the simultaneous exercise by Lessor of any or all other
rights or remedies provided for in this Lease or now or hereafter existing at
law or in equity or by statute or otherwise.
Section 14.06. Whenever, under any provision of this Lease, Lessee shall be
entitled to receive any payment from Lessor or to exercise any privilege or
right under this Lease, Lessor shall not be obligated to make any such payment
and Lessee shall not be entitled to exercise any
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such privilege or right so long as Lessee shall be in default under any of the
provisions of this Lease, and until after such default shall have been cured, if
cured prior to the expiration or termination of this Lease pursuant to the
provisions of Section 14.01 hereof, Lessee shall not be entitled to offset
against rent or any other charges payable under this Lease any payments due from
Lessor to Lessee or any Mortgagee.
ARTICLE 15
SURRENDER
Section 15.01. Lessee shall, upon any expiration or earlier termination of
this Lease, remove all of Lessee's goods and effects from the Demised Premises.
Lessee shall peaceably vacate and surrender to the Lessor the Demised Premises
and deliver all keys, locks thereto, and other fixtures connected thereto,
unless Lessor requests removal of the same, and all alterations and additions
made to or upon the Demised Premises, in the same condition as they were at the
commencement of the term, or as they were put in during the term hereof,
reasonable wear and tear and damage by insured fire or other unavoidable
casualty or taking or condemnation by public authority or as a result of
Lessor's negligence only excepted. In the event of the Lessee's failure to
remove any of Lessee's property from the Demised Premises, Lessor is hereby
authorized, without liability to Lessee for loss or damage thereat, and at the
sole risk of Lessee, to remove and store any of the property at Lessee's
expense, or to retain same under Lessor's control or to sell at public or
private sale, after thirty (30) days notice to Lessee at its address last known
to Lessor, any or all of the property not so removed and to apply the net
proceeds of such sale to the payment of any sum due hereunder, or to destroy
such property.
ARTICLE 16
QUIET ENJOYMENT
Section 16.01. Lessee, subject to any ground leases, deeds of trust and
mortgages to which this Lease is subordinate upon paying the rent and other
charges herein provided for and performing and complying with all covenants,
agreements, terms and conditions of this Lease on its part to be performed or
complied with, shall not be prevented by the Lessor from lawfully and quietly
holding, occupying and enjoying the Demised Premises during the term of this
Lease, except as specifically provided for by the terms hereof.
ARTICLE 17
ACCEPTANCE OF SURRENDER
Section 17.01. No surrender to Lessor of this Lease or of the Demised
Premises or any part thereof or of any interest therein by Lessee shall be valid
or effective unless required by the provisions of this Lease or unless agreed to
and accepted in writing by Lessor. No act on the part of any representative or
agent of Lessor, and no act on the part of Lessor other than such a written
agreement and acceptance by Lessor, shall constitute or be deemed an acceptance
of any such surrender.
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ARTICLE 18
NOTICES - SERVICE OF PROCESS
Section 18.01. All notices, demands, requests and other instruments which
may or are required to be given by either party to the other under this Lease
shall be in writing. All notices, demands, requests and other instruments from
Lessor to Lessee shall be deemed to have been properly given if sent by United
States certified mail, return receipt requested, postage prepaid, or if sent by
prepaid Federal Express or other similar overnight delivery service which
provides a receipt, addressed to Lessee at the Demised Premises, or at such
other address or addresses as the Lessee from time to time may have designated
by written notice to Lessor, or if left on the Demised Premises. All notices,
demands, requests and other instruments from Lessee to Lessor shall be deemed to
have been properly given if sent by United States certified mail, return receipt
requested, postage prepaid or if sent by prepaid Federal Express or other
similar overnight delivery service which provides a receipt, addressed to Lessor
at One Appleton Street, Boston, MA 02116, or at such other address as Lessor
from time to time may have designated by written notice to Lessee. Any notice
shall be deemed to be effective upon receipt by, or attempted delivery to, the
intended recipient.
ARTICLE 19
SEPARABILITY OF PROVISIONS
Section 19.01. If any term or provision of this Lease or the application
thereof to any person or circumstance shall, to any extent, be invalid or
contrary to applicable law or unenforceable, the remainder of this Lease, and
the application of such term or provision to persons or circumstances other than
those as to which it is held invalid or contrary to applicable law or
unenforceable, as the case may be, shall not be affected thereby, and each term
and provision of this Lease shall be legally valid and enforced to the fullest
extent permitted by law.
ARTICLE 20
MISCELLANEOUS
Section 20.01. This Lease may not be modified or amended except by written
agreement duly executed by the parties hereto.
Section 20.02. This Lease shall be governed by and construed and enforced
in accordance with the laws of the Commonwealth of Massachusetts.
Section 20.03. This Lease may be executed in several counterparts, each of
which shall be an original but all of which shall constitute but one and the
same instrument.
Section 20.04. The covenants and agreements herein contained shall, subject
to the provisions of this Lease, bind and inure to the benefit of Lessor, his
successors and assigns, and Lessee, and Lessee's permitted successors and
assigns, and no extension, modification or change
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in the terms of this Lease effected with any successor, assignee or transferee
shall cancel or affect the obligations of the original Lessee hereunder unless
agreed to in writing by Lessor. The term "Lessor" as used herein and throughout
the Lease shall mean only the owner or owners at the time in question of
Lessor's interest in this Lease. Upon any transfer of such interest, from and
after the date of such transfer, Lessor herein named (and in case of any
subsequent transfers the then transferor), shall be relieved of all liability
for the performance or observance of any agreements, conditions or obligations
on the part of the Lessor contained in this Lease except for defaults by Lessor
prior to such transfer or monies owed by Lessor to Lessee and which were not
assigned to and repayment thereof assumed by such transferee, provided that if
any monies are in the hands of Lessor or the then transferor at the time of such
transfer, and in which Lessee has an interest, shall be delivered to the
transferee, then Lessee shall look only to such transferee for the return
thereof.
Section 20.05. This instrument contains the entire and only agreement
between the parties, and no oral statements or representations or prior written
matter not contained in this instrument shall have any force or effect.
Section 20.06. In the event this Lease or a copy thereof shall be recorded
by Lessee, then such recording shall constitute a default by Lessee under
Article 14 hereof entitling Lessor to immediately terminate this Lease. Within a
reasonable time after the Commencement Date upon request by Lessee, Lessor and
Lessee shall execute a document in recordable form containing only such
information as is necessary to constitute a Notice of Lease, including the first
sentence of Section 10.01 hereof. All costs of preparation and recording such
notice shall be borne by Lessee.
Section 20.07. The submission of this Lease for review or comment shall not
constitute an agreement between Lessor and Lessee until both have signed and
delivered copies thereof.
Section 20.08. Whenever Lessee is required to obtain Lessor's approval
hereunder, Lessee agrees to reimburse Lessor all out-of-pocket expenses incurred
by Lessor, including reasonable attorney fees in order to review documentation
or otherwise determine whether to give its consent.
Section 20.09. Lessee shall furnish to Lessor on the execution of this
Lease and within one hundred twenty (120) days after each calendar year of each
year during the Term an accurate, up-to-date, audited if available, financial
statement of Lessee showing Lessee's financial condition for the twelve (12)
month period ending the immediately preceding December 31.
Section 20.10. Lessee will be entitled to the use of four (4) parking
spaces at the Premises on a non-exclusive basis for the parking of passenger
motor vehicles during the term of this Lease. Lessee shall pay to Lessor as
additional rent for the right to use such four (4) spaces a total amount equal
to $560.00 per month, which payment shall be made monthly together with Base
Rent. Upon thirty days prior written notice to Lessee, Lessor shall be entitled
to increase
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the monthly parking charge, which is currently based on a charge of $140.00 per
space per month, to reflect the then fair market rate for comparable parking
spaces in Cambridge. Lessee agrees to use these spaces only for its officers,
employees, guests, invitees and clients, in connection with the operation of its
business, in accordance with reasonable rules and regulations adopted from time
to time by Lessor.
Section 20.11. Lessee warrants and represents that it is not a tax-exempt
or foreign entity and that it will not assign, sublet or otherwise permit such
an entity to occupy the Demised Premises.
Section 20.12. Lessor may relocate Lessee to substantially comparable space
in the building of which the Demised Premises are a part (including finish work
comparable to that in the Demised Premises), provided Lessor pays for all of
Lessee's out-of-pocket moving costs incurred in connection with such relocation
to compensate the Lessee for relocating.
Section 20.13. Lessor and Lessee each represent and warrant that they have
not directly or indirectly dealt with any broker with respect to the leasing of
the Demised Premises. Each party agrees to exonerate and save harmless and
indemnify the other against any claims for a commission by any broker, person or
firm with whom such party has dealt in connection with the execution and
delivery of this Lease or out of negotiations between Lessor and Lessee with
respect to the leasing of the space in the Premises.
Section 20.14. The obligations of the Lessee hereunder shall be joint and
several obligations of Lessee and any guarantors or successors. The Lessor may
proceed against any or all of Lessee, any guarantors and any and all of their
heirs, legal representatives, successors and assigns in the event of a default
hereunder.
Section 20.15. Lessee shall conform to all building exterior and interior
signage in accordance with Lessor's standard signage specifications. All signage
must receive Lessor approval prior to installation.
Section 20.16. Limitation of Liability. None of the provisions of this
Lease shall cause Lessor to be liable to Lessee, or anyone claiming through or
on behalf of Lessee, for any special, indirect or consequential damages,
including, without limitation, lost profits or revenues. In no event shall any
individual partner, officer, shareholder, trustee, beneficiary, director,
manager, member or similar party, including, without limitation, Lessor's
managing agent, be liable to Lessee, or anyone claiming by through or under
Lessee for the performance of or by Lessor or Lessee under this Lease or any
amendment, modification or agreement with respect to this Lease. Lessee agrees
to took solely to Lessor's interest in the Premises in connection with the
enforcement of Lessor's obligations in this Lease or for recovery of any
judgment from Lessor, it being agreed that Lessor shall never be personally
liable for any judgment, or incidental or consequential damages sustained by
Lessee from whatever cause.
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Section 20.17. Emergency Action. In the event of an emergency, as
reasonably determined by Lessor or Lessee, as applicable, in order and to the
extent necessary to protect life or property, the party making that
determination, where it is not practical to notify the other party, may take
action and incur out-of-pocket cost to third parties for matters otherwise the
obligation of the other party hereunder and, to the extent the party taking
action incurs expense in so acting, which expense, but for such emergency would
have been the expense of the other, then the party on behalf of whom such action
was taken and expense incurred will, within fourteen (14) days after receipt of
documentation of such expenses, reimburse the party which incurred such expense.
Section 20.18. In the event Lessor shall be delayed or hindered in or
prevented from the performance of any act required under this Lease to be
performed by Lessor by reason of strikes, lockouts, labor troubles, inability to
procure materials, failure of power, restricted governmental law or regulations,
riots, insurrection, war or other reason of a like nature not within the
reasonable control of the Lessor, then performance of such act shall be excused
for the period of the delay, and the period for the performance of any such act
shall be extended for a period equivalent to the period of such delay.
It is intended that this instrument will take effect as a sealed
instrument.
IN WITNESS WHEREOF, the Lessor and Lessee have signed the same as of this
8th day of March, 1999.
LESSOR: BROADWAY/HAMPSHIRE
ASSOCIATES LIMITED PARTNERSHIP
By: BROHAM CORP.
Its General Partner
By: /s/ Jonathan G. Davis
------------------------------
Jonathan G. Davis, President
LESSEE: AKAMAI TECHNOLOGY, INC.
By: /s/ Paul Sagan
------------------------------
Its: VP & COO
-----------------------------
24
<PAGE> 1
Exhibit 10.7
LOAN AND SECURITY AGREEMENT
AKAMAI TECHNOLOGIES, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1 ACCOUNTING AND OTHER TERMS...............................................................................4
2 LOAN AND TERMS OF PAYMENT................................................................................4
2.1 Credit Extensions...............................................................................4
2.2 Interest Rate, Payments.........................................................................5
2.3 Fees............................................................................................6
3 CONDITIONS OF LOANS......................................................................................6
3.1 Conditions Precedent to Initial Credit Extension................................................6
3.2 Conditions Precedent to all Credit Extensions...................................................6
4 CREATION OF SECURITY INTEREST............................................................................7
4.1 Grant of Security Interest......................................................................7
5 REPRESENTATIONS AND WARRANTIES...........................................................................7
5.1 Due Organization and Authorization..............................................................7
5.2 Collateral......................................................................................7
5.3 Litigation......................................................................................7
5.4 No Material Adverse Change in Financial Statements..............................................7
5.5 Solvency........................................................................................7
5.6 Regulatory Compliance...........................................................................7
5.7 Full Disclosure.................................................................................8
6 AFFIRMATIVE COVENANTS....................................................................................8
6.1 Government Compliance...........................................................................8
6.2 Financial Statements, Reports...................................................................8
6.3 Taxes...........................................................................................8
6.4 Insurance.......................................................................................9
6.5 Primary Accounts................................................................................9
6.6 Further Assurances..............................................................................9
6.7 Loss; Destruction; or Damage....................................................................9
7 NEGATIVE COVENANTS.......................................................................................9
7.1 Borrower will not do any of the following.......................................................9
8 EVENTS OF DEFAULT.......................................................................................10
8.1 Payment Default................................................................................10
8.2 Covenant Default...............................................................................10
8.3 Material Adverse Change........................................................................10
8.4 Attachment.....................................................................................10
8.5 Insolvency.....................................................................................10
8.6 Other Agreements...............................................................................11
8.7 Judgments......................................................................................11
8.8 Misrepresentations.............................................................................11
9 BANK'S RIGHTS AND REMEDIES..............................................................................11
9.1 Rights and Remedies............................................................................11
9.2 Power of Attorney..............................................................................11
9.3 Bank Expenses..................................................................................12
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
9.4 Bank's Liability for Collateral................................................................12
9.5 Remedies Cumulative............................................................................12
9.6 Demand Waiver..................................................................................12
10 NOTICES.................................................................................................12
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER..............................................................12
12 GENERAL PROVISIONS......................................................................................13
12.1 Successors and Assigns.........................................................................13
12.2 Indemnification. ..............................................................................13
12.3 Time of Essence................................................................................13
12.4 Severability of Provision......................................................................13
12.5 Amendments in Writing, Integration.............................................................13
12.6 Counterparts...................................................................................13
12.7 Survival.......................................................................................13
12.8 Confidentiality................................................................................14
12.9 Countersignature...............................................................................14
12.10 Attorneys' Fees, Costs and Expenses............................................................14
13 DEFINITIONS.............................................................................................14
13.1 Definitions....................................................................................14
</TABLE>
3
<PAGE> 4
This LOAN AND SECURITY AGREEMENT dated January 27,1999, between SILICON
VALLEY BANK ("Bank"), a California-chartered bank with its principal place of
business at 3003 Tasman Drive, Santa Clara, California 95054 with a loan
production office located at 40 William St., Ste. 350, Wellesley, Massachusetts
02481 doing business as "Silicon Valley East" and AKAMAI TECHNOLOGIES, INC.
("Borrower"), whose address is 201 Broadway, 4th Floor, Cambridge, Massachusetts
02139 provides the terms on which Bank will lend to Borrower and Borrower will
repay Bank. The parties agree as follows:
1 ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement will be construed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation," in this or any Loan Document. This Agreement shall be construed to
impart upon Bank a duty to act reasonably at all times.
2 LOAN AND TERMS OF PAYMENT
2.1 CREDIT EXTENSIONS.
Borrower will pay Bank the unpaid principal amount of all Credit
Extensions and interest on the unpaid principal amount of the Credit Extensions.
2.1.1 EQUIPMENT FACILITY.
Subject to the terms and conditions of this Agreement, Bank agrees to
lend to Borrower, from time to time prior to the Commitment Termination Date,
equipment advances (each an "Equipment Advance" and collectively the "Equipment
Advances"). If prepaid, the principal of the Equipment Advances may not be
re-borrowed. The proceeds of the Equipment Advances will be used solely to
reimburse Borrower for the purchase of Eligible Equipment. Each Equipment
Advance shall be considered a promissory note evidencing the amounts due
hereunder for all purposes. Bank's obligation to lend hereunder shall terminate
on the earlier of (i) the occurrence and continuance of an Event of Default, and
(ii) the Commitment Termination Date. For purposes of this Section, the minimum
amount of each Equipment Advance is $50,000 and the maximum number of Equipment
Advances that will be made are 6.
(a) To obtain an Equipment Advance, Borrower will deliver to Bank a
completed supplement in substantially the form attached ("Loan Supplement"),
together with invoices and such additional information as Bank may request at
least five (5) Business Days before the proposed funding date (the "Funding
Date"). On each Funding Date, Bank will specify in the Loan Supplement for each
Equipment Advance, the Basic Rate, the Loan Factor, the Payment Dates, and a
table of Stipulated Loan Values, together with a UCC Financing Statement
covering the Equipment described on the Loan Supplement. If Borrower satisfies
the conditions of each Equipment Advance specified from time to time by Bank,
Bank will disburse such Equipment Advance by internal transfer to Borrower's
deposit account with Bank.
(b) Bank's obligation to lend the undisbursed portion of the Committed
Equipment Line will terminate if, in Bank's sole discretion, there has been a
material adverse change in the general affairs, management, results of
operation, condition (financial or otherwise) or the prospects of Borrower,
whether or not arising from transactions in the ordinary course of business, or
there has been material adverse deviation by Borrower from the most recent
business plan of Borrower presented to and accepted by Bank prior to the
execution of this Agreement.
4
<PAGE> 5
2.2 INTEREST RATE, PAYMENTS.
(a) Principal and Interest Payments On Payment Dates. Borrower will
make payments monthly in advance of principal and accrued interest for each
Equipment Advance (collectively, "Scheduled Payments"), on the first Business
Day of the month following the Funding Date (or commencing on the Funding Date
if the Funding Date is the first Business Day of the month) with respect to such
Equipment Advance and continuing thereafter during the Repayment Period on the
first Business Day of each calendar month (each a "Payment Date"), in an amount
equal to the Loan Factor multiplied by the Loan Amount for such Equipment
Advance as of such Payment Date. All unpaid principal and accrued interest is
due and payable in full on the last Payment Date with respect to such Equipment
Advance. An Equipment Advance may be prepaid only upon payment of a prepayment
premium specified by Bank.
(b) Interest Rate. Borrower will pay interest on the unpaid principal
amount of each Equipment Advance from the first Payment Date after the Funding
Date of such Equipment Advance until the Equipment Advance has been paid in
full, at the per annum rate of interest equal to the Basic Rate determined by
Bank as of the Funding Date for each Equipment Advance in accordance with the
definition of the Basic Rate. "Basic Rate" is, as of the Funding Date, the per
annum rate of interest (based on a year of 360 days) equal to the sum of (a) the
U.S. Treasury note yield to maturity for a term equal to the Treasury Note
Maturity as quoted in The Wall Street Journal on the day the applicable Loan
Terms Schedule is prepared, plus (b) the applicable Loan Margin for the type of
Eligible Equipment being financed. The Loan Margin is 275 basis points. The
Treasury Note Maturity is 36 months.
(c) Interim Payment. In addition to the Scheduled Payments, on the
Funding Date for each Equipment Advance (unless the Funding Date is the first
Business Day of the month) Borrower shall pay to Bank, on behalf of Bank, an
amount (the "Interim Payment") equal to the initial Equipment Advance multiplied
by the product of (i) the quotient derived from dividing the initial Loan Factor
with respect to such Equipment Advance multiplied by 30, and (ii) the number of
days from the Funding Date of the Equipment Advance Loan until the first Payment
Date with respect to such Equipment Advance.
(d) Final Payment. On the Maturity Date with respect to such Equipment
Advance, Borrower will pay, in addition to the unpaid principal and accrued
interest and all other amounts due on such date with respect to such Equipment
Advance, an amount equal to the Final Payment. "Final Payment" is with respect
to each Equipment Advance, a payment (in addition to and not a substitution for
the regular monthly payments of principal plus accrued interest) due on the
maturity date for such Equipment Advance equal to the Loan Amount for such
Equipment Advance at such time multiplied by the Final Payment Percentage.
"Final Payment Percentage" is, for each Equipment Advance, 7.5%.
"Loan Amount" is the original principal amount of the Equipment Advance
less the aggregate of all Prepayment Amounts relating to payments of such
Equipment Advance prior to such dates.
Prepayment Amount means in the case of the mandatory repayment in
accordance with Section 2.2(e) and Section 6.7, the Original Stated Cost of the
item of Financed Equipment with respect to which such prepayment relates.
"Original Stated Cost" is (i) the original cost of the New Equipment,
the original cost to the Borrower of the item of New Equipment net of any and
all freight, installation, tax or (ii) the fair market value assigned to such
item of Used Equipment by mutual agreement of Borrower and Bank at the time of
making of the Equipment Advance.
(e) Prepayment Upon an Event of Loss. If any Financed Equipment is
subject to an Event of Loss and Borrower is required to or elects to prepay the
Equipment Advance with respect to such
5
<PAGE> 6
Financed Equipment pursuant to Section 6.7, then such Equipment Advance shall be
prepaid to the extent and in the manner provided in such section.
(f) Mandatory Prepayment Upon an Acceleration. If the Equipment
Advances are accelerated following the occurrence of an Event of Default or
otherwise (other than following an Event of Loss), then Borrower will
immediately pay to Bank (i) all unpaid Scheduled Payments with respect to each
Equipment Advance due prior to the date of prepayment, (ii) the Stipulated Loss
Value with respect to each Equipment Advance, and (iii) all other sums, if any,
that shall have become due and payable with respect to any Equipment Advance.
(g) Borrower will repay the Equipment Advances on the terms provided in
the Loan Supplement. An Equipment Advance may be prepaid only upon payment of a
prepayment premium specified from time to time by Bank. Any amounts outstanding
during the continuance of an Event of Default shall bear interest at a per annum
rate equal to the Basic Rate plus 5 percent. If any change in the law increases
Bank's expenses or decreases its return from the Equipment Advances, Borrower
will pay Bank upon request the amount of such increase or decrease.
(h) Bank may debit any of Borrower's deposit accounts including Account
Number _____________ for principal and interest payments or any amounts Borrower
owes Bank. Bank will notify Borrower when it debits Borrower's accounts. These
debits are not a set-off. Payments received after 12:00 noon Eastern time are
considered received at the opening of business on the next Business Day. When a
payment is due on a day that is not a Business Day, the payment is due the next
Business Day and additional fees or interest accrue.
2.3 FEES.
Borrower will pay:
(a) Bank Expenses. All Bank Expenses (including reasonable attorneys'
fees and expenses) incurred through and after the date of this Agreement, are
payable when due.
3 CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION.
Bank's obligation to make the initial Credit Extension is subject to
the condition precedent that it receive the agreements, documents and fees it
requires.
3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS.
Bank's obligations to make each Credit Extension, including the initial
Credit Extension, is subject to the following:
(a) timely receipt of any Payment/Advance Form, together with an
invoice for the Equipment purchased; and
(b) the representations and warranties in Section 5 must be materially
true on the date of the Payment/Advance Form and on the effective date of each
Credit Extension and no Event of Default may have occurred and be continuing, or
result from the Credit Extension. Each Credit Extension is Borrower's
representation and warranty on that date that the representations and warranties
of Section 5 remain true.
6
<PAGE> 7
4 CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST.
Borrower grants Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and performance
of each of Borrowers duties under the Loan Documents. Any security interest will
be a first priority security interest in the Collateral. Bank may place a "hold"
on any deposit account pledged as Collateral.
5 REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION.
Borrower and each Subsidiary is duly existing and in good standing in
its state of formation and qualified and licensed to do business in, and in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be qualified.
The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's formation documents, nor
constitute an event of default under any material agreement by which Borrower is
bound. Borrower is not in default under any agreement to which or by which it is
bound in which the default could cause a Material Adverse Change.
5.2 COLLATERAL.
Borrower has good title to the Collateral, free from liens. All
Inventory is in all material respects of good and marketable quality, free from
material defects.
5.3 LITIGATION.
Except as shown in the Schedule, there are no actions or proceedings
pending or, to Borrower's knowledge, threatened by or against Borrower or any
Subsidiary in which an adverse decision could cause a Material Adverse Change.
5.4 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.
All consolidated financial statements for Borrower, and any Subsidiary,
delivered to Bank fairly present in all material respects Borrower's
consolidated financial condition and Borrower's consolidated results of
operations. There has not been any material deterioration in Borrower's
consolidated financial condition since the date of the most recent financial
statements submitted to Bank.
5.5 SOLVENCY.
The fair salable value of Borrowers assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; the Borrower is
not left with unreasonably small capital after the transactions in this
Agreement; and Borrower is able to pay its debts (including trade debts) as they
mature.
5.6 REGULATORY COMPLIANCE.
Borrower is not an "investment company" or a company "controlled" by an
"investment company" under the Investment Company Act. Borrower is not engaged
as one of its important activities in extending credit for margin stock (under
Regulations G, T and U of the Federal Reserve Board of Governors). Borrower has
complied with the Federal Fair Labor Standards Act. Borrower has not violated
7
<PAGE> 8
any laws, ordinances or rules, the violation of which could cause a Material
Adverse Change. None of Borrower's or any Subsidiary's properties or assets has
been used by Borrower or any Subsidiary or, to the best of Borrower's knowledge,
by previous Persons, in disposing, producing, storing, treating, or transporting
any hazardous substance other than legally. Borrower and each Subsidiary has
timely filed all required tax returns and paid, or made adequate provision to
pay, all taxes, except those being contested in good faith with adequate
reserves under GAAP. Borrower and each Subsidiary has obtained all consents,
approvals and authorizations of, made all declarations or filings with, and
given all notices to, all government authorities that are necessary to continue
its business as currently conducted.
5.7 FULL DISCLOSURE.
No representation, warranty or other statement of Borrower in any
certificate or written statement given to Bank contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
statements contained in the certificates or statements not misleading.
6 AFFIRMATIVE COVENANTS
Borrower will do all of the following:
6.1 GOVERNMENT COMPLIANCE.
Borrower will maintain its and all Subsidiaries' legal existence and
good standing in its jurisdiction of formation and maintain qualification in
each jurisdiction in which the failure to so qualify could have a material
adverse effect on Borrower's business or operations. Borrower will comply, and
have each Subsidiary comply, with all laws, ordinances and regulations to which
it is subject, noncompliance with which could have a material adverse effect on
Borrower's business or operations or cause a Material Adverse Change.
6.2 FINANCIAL STATEMENTS, REPORTS.
(a) Borrower will deliver to Bank: (i) as soon as available, but not
later than 30 days after the last day of each month, a company prepared
consolidated balance sheet and income statement covering Borrower's consolidated
operations during the period, in a form and certified by a Responsible Officer
acceptable to Bank; (ii) as soon as available, but not later than 90 days after
the last day of Borrower's fiscal year, audited consolidated financial
statements prepared under GAAP, consistently applied, together with an
unqualified opinion on the financial statements from Pricewaterhouse Coopers,
LLP or another independent certified public accounting firm reasonable
acceptable to Bank; (iii) a prompt report of any legal actions pending or
threatened against Borrower or any Subsidiary that could result in damages or
costs to Borrower or any Subsidiary of $100,000 or more; and (iv) budgets, sales
projections, operating plans or other financial information Bank requests.
(b) Bank has the right to audit Borrower's Collateral upon an Event of
Default has occurred and is continuing.
6.3 TAXES.
Borrower will make, and cause each Subsidiary to make, timely payment
of all material federal, state, and local taxes or assessments and will deliver
to Bank, on demand, appropriate certificates attesting to the payment.
8
<PAGE> 9
6.4 INSURANCE.
Borrower will keep its business and the Collateral insured for risks
and in amounts, as Bank requests. Insurance policies will be in a form, with
companies, and in amounts that are satisfactory to Bank. All property policies
will have a lender's loss payable endorsement showing Bank as an additional loss
payee and all liability policies will show the Bank as an additional insured and
provide that the insurer must give Bank at least 20 days notice before canceling
its policy. At Bank's request, Borrower will deliver certified copies of
policies and evidence of all premium payments. Proceeds payable under any policy
will, at Bank's option, be payable to Bank on account of the Obligations.
6.5 PRIMARY ACCOUNTS.
Borrower will maintain its primary depository and operating accounts
with Bank.
6.6 FURTHER ASSURANCES.
Borrower will execute any further instruments and take further action
as Bank requests to perfect or continue Bank's security interest in the
Collateral or to effect the purposes of this Agreement.
6.7 LOSS; DESTRUCTION; OR DAMAGE.
Borrower will bear the risk of the Collateral being lost, stolen,
destroyed, or damaged. If any item of Collateral is lost, stolen, destroyed, or
damaged, then Borrower will pay Bank an amount equal to the sum of (i) all
accrued and unpaid Scheduled Payments due prior to the next such Payment Date
and (ii) a prepayment in an amount equal to the Stipulated Loan Value as to such
Collateral. If during the term of this Agreement any item of Financed Equipment
is lost, stolen, destroyed, damaged beyond repair, rendered permanently unfit
for use, or seized by a governmental authority for any reason whatsoever for a
period equal to at least the remainder of the term of this Agreement (an "Event
of Loss"), then in each case Bank will receive from the proceeds of insurance
maintained pursuant to Section 6, from any award paid by the seizing
governmental authority or, to the extent not received from the proceeds of
insurance or award or both, from Borrower, on or before the Payment Date next
succeeding such Event of Loss for each such item of Financed Equipment subject
to an Event of Loss, an amount equal to the sum of: (i) all accrued and unpaid
Scheduled Payments with respect to such Loan due prior to the next such Payment
Date, (ii) a prepayment in an amount equal to the Stipulated Loss Value and
(iii) all other sums, if any, that shall have become due and payable, including
interest at the Default Rate with respect to any past due amounts. On the date
of receipt by Bank of the amount specified above with respect to each such item
of Financed Equipment subject to an Event of Loss, this Agreement shall
terminate as to such Financed Equipment. Any proceeds of insurance maintained by
Borrower pursuant to this Section and received by Borrower will be paid to Bank,
promptly upon their receipt by Borrower. If any proceeds of insurance or awards
received from governmental authorities are in excess of the amount owed under
this Section, Bank shall promptly remit to Borrower the amount in excess of the
amount owed to Bank.
7 NEGATIVE COVENANTS
7.1 BORROWER WILL NOT DO ANY OF THE FOLLOWING:
Change its name or the chief executive office or principal place of
business, move or dispose of any interest in the Collateral, permit any lien or
security interest to attach to the Collateral, or enter into any transaction
outside the ordinary course of Borrower's business.
9
<PAGE> 10
Become an "investment company" or a company controlled by an
"investment company," under the Investment Company Act of 1940 or undertake as
one of its important activities extending credit to purchase or carry margin
stock, or use the proceeds of any Advance for that purpose; fail to meet the
minimum funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, as defined in ERISA, to occur, fail to comply with the Federal Fair
Labor Standards Act or violate any other law or regulation, if the violation
could have a material adverse effect on Borrower's business or operations or
cause a Material Adverse Change, or permit any of its Subsidiaries to do so.
8 EVENTS OF DEFAULT
Any one of the following is an Event of Default:
8.1 PAYMENT DEFAULT.
Borrower fails to pay any of the Obligations when due;
8.2 COVENANT DEFAULT.
If Borrower violates any covenant in Section 7 or does not perform or
observe any other material term, condition or covenant in this Agreement, any
Loan Documents, or in any agreement between Borrower and Bank and as to any
default under a term, condition or covenant that can be cured, has not cured the
default within 10 days after it occurs, or if the default cannot be cured within
10 days or cannot be cured after Borrower's attempts within 10 day period, and
the default may be cured within a reasonable time, then Borrower has an
additional period (of not more than 30 days) to attempt to cure the default.
During the additional time, the failure to cure the default is not an Event of
Default (but no Credit Extensions will be made during the cure period);
8.3 MATERIAL ADVERSE CHANGE.
If there (i) occurs a material adverse change in the business,
operations, or condition (financial or otherwise) of the Borrower, or (ii) is a
material impairment of the prospect of repayment of any portion of the
Obligations.
8.4 ATTACHMENT.
If any material portion of Borrower's assets is attached, seized,
levied on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in 10 days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business or if a judgment or other claim becomes a Lien on a material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed against
any of Borrower's assets by any government agency and not paid within 10 days
after Borrower receives notice. These are not Events of Default if stayed or if
a bond is posted pending contest by Borrower (but no Credit Extensions will be
made during the cure period);
8.5 INSOLVENCY.
If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within 30 days (but no Credit Extensions will be made before
any Insolvency Proceeding is dismissed);
10
<PAGE> 11
8.6 OTHER AGREEMENTS.
If there is a default in any agreement between Borrower and a third
party that gives the third party the right to accelerate any Indebtedness
exceeding $100,000 or that could cause a Material Adverse Change;
8.7 JUDGMENTS.
If a money judgment(s) in the aggregate of at least $50,000 is rendered
against Borrower and is unsatisfied and unstayed for 10 days (but no Advances
will be made before the judgment is stayed or satisfied);or
8.8 MISREPRESENTATIONS.
If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document.
9 BANK'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES.
When an Event of Default occurs and continues Bank may, without notice
or demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but if an
Event of Default described in Section 8.5 occurs all Obligations are immediately
due and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrower's benefit
under this Agreement or under any other agreement between Borrower and Bank;
(c) Make any payments and do any acts it considers necessary or
reasonable to protect its security interest in the Collateral. Borrower will
assemble the Collateral if Bank requires and make it available as Bank
designates. Bank may enter premises where the Collateral is located, take and
maintain possession of any part of the Collateral, and pay, purchase, contest,
or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter
and occupy any of its premises, without charge, to exercise any of Bank's rights
or remedies;
(d) Apply to the Obligations any (i) balances and deposits of Borrower
it holds, or (ii) any amount held by Bank owing to or for the credit or the
account of Borrower;
(e) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell the Collateral; and
(f) Dispose of the Collateral according to the Code.
9.2 POWER OF ATTORNEY.
Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to: (i) transfer the Collateral
into the name of Bank or a third party as the Code permits. Bank may exercise
the power of attorney to sign Borrower's name on any documents necessary to
perfect or continue the perfection of any security interest regardless of
whether an Event of Default has occurred. Bank's appointment as Borrower's
attorney in fact, and all of Bank's rights and powers, coupled
11
<PAGE> 12
with an interest, are irrevocable until all Obligations have been fully repaid
and performed and Bank's obligation to provide Credit Extensions terminates.
9.3 BANK EXPENSES.
If Borrower fails to pay any amount or furnish any required proof of
payment to third persons Bank may make all or part of the payment or obtain
insurance policies required in Section 6.4, and take any action under the
policies Bank deems prudent Any amounts paid by Bank are Bank Expenses and
immediately due and payable, bearing interest at the then applicable rate and
secured by the Collateral. No payments by Bank are deemed an agreement to make
similar payments in the future or Bank's waiver of any Event of Default.
9.4 BANK'S LIABILITY FOR COLLATERAL.
If Bank complies with reasonable banking practices it is not liable for
(a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral;
(c) any diminution in the value of the Collateral; or (d) any act or default of
any carrier, warehouseman, bailee, or other person. Borrower bears all risk of
loss, damage or destruction of the Collateral.
9.5 REMEDIES CUMULATIVE.
Bank's rights and remedies under this Agreement, the Loan Documents,
and all other agreements are cumulative. Bank has all rights and remedies
provided under the Code, by law, or in equity. Bank's exercise of one right or
remedy is not an election, and Bank's waiver of any Event of Default is not a
continuing waiver. Bank's delay is not a waiver, election, or acquiescence. No
waiver is effective unless signed by Bank and then is only effective for the
specific instance and purpose for which it was given.
9.6 DEMAND WAIVER.
Borrower waives demand, notice of default or dishonor, notice of
payment and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on, which Borrower is
liable.
10 NOTICES
All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile to the addresses set forth at the beginning of
this Agreement. A Party may change its notice address by giving the other Party
written notice.
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE COMMONWEALTH OF MASSACHUSETTS WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF BORROWER AND BANK HEREBY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE
COMMONWEALTH OF MASSACHUSETTS, BUT IF FOR ANY REASON THE BANK IS DENIED ACCESS
TO SUCH COURTS, THEN THE VENUE WILL BE IN THE STATE AND FEDERAL COURTS LOCATED
IN THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA.
BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE
LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
12
<PAGE> 13
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH
PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
12 GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS.
This Agreement binds and is for the benefit of the successors and
permitted assigns of each party. Borrower may not assign this Agreement or any
rights under it without Bank's prior written consent which may be granted or
withheld in Bank's discretion. Bank has the right, without the consent of or
notice to Borrower, to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank's obligations, rights and benefits
under this Agreement.
12.2 INDEMNIFICATION.
Borrower will indemnify, defend and hold harmless Bank and its
officers, employees, and agents against: (a) all obligations, demands, claims,
and liabilities asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by Bank from, following, or consequential to transactions
between Bank and Borrower (including reasonable attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.
12.3 TIME OF ESSENCE.
Time is of the essence for the performance of all obligations in this
Agreement.
12.4 SEVERABILITY OF PROVISION.
Each provision of this Agreement is severable from every other
provision in determining the enforceability of any provision.
12.5 AMENDMENTS IN WRITING, INTEGRATION.
All amendments to this Agreement must be in writing and signed by
Borrower and Bank. This Agreement represents the entire agreement about this
subject matter, and supersedes prior negotiations or agreements. All prior
agreements, understandings, representations, warranties, and negotiations
between the parties about the subject matter of this Agreement merge into this
Agreement and the Loan Documents.
12.6 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, are an original, and all taken together, constitute one Agreement.
12.7 SURVIVAL.
All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The obligations
of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of
limitations for actions that may be brought against Bank have run.
13
<PAGE> 14
12.8 CONFIDENTIALITY.
In handling any confidential information, Bank will exercise the same
degree of care that it exercises for its own proprietary information, but
disclosure of information may be made (i) to Bank's subsidiaries or affiliates
in connection with their business with Borrower, (ii) to prospective transferees
or purchasers of any interest in the Loans, (iii) as required by law,
regulation, subpoena, or other order, (iv) as required in connection with Bank's
examination or audit and (v) as Bank considers appropriate exercising remedies
under this Agreement. Confidential information does not include information that
either: (a) is in the public domain or in Bank's possession when disclosed to
Bank, or becomes part of the public domain after disclosure to Bank; or (b) is
disclosed to Bank by a third party, if Bank does not know that the third party
is prohibited from disclosing the information.
12.9 COUNTERSIGNATURE.
This Agreement shall become effective only when it shall have been
executed by Borrower and Bank (provided, however, in no event shall this
Agreement become effective until signed by an officer of Bank in California).
12.10 ATTORNEYS' FEES, COSTS AND EXPENSES.
In any action or proceeding between Borrower and Bank arising out of
the Loan Documents, the prevailing party will be entitled to recover its
reasonable attorneys' fees and other costs and expenses incurred, in addition to
any other relief to which it may be entitled.
13 DEFINITIONS
13.1 DEFINITIONS.
In this Agreement:
"ACCOUNTS" are all existing and later arising accounts, contract
rights, and other obligations owed Borrower in connection with its sale or lease
of goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.
"AFFILIATE" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.
"BANK EXPENSES" are all audit fees and expenses and reasonable costs or
expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).
"BORROWER'S BOOKS" are all Borrower's books and records including
ledgers, records regarding Borrower's assets or liabilities, the Collateral,
business operations or financial condition and all computer programs or discs or
any equipment containing the information.
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on
which the Bank is closed.
"CLOSING DATE" is the date of this Agreement.
"CODE" is the Massachusetts Uniform Commercial Code.
14
<PAGE> 15
"COLLATERAL" is the property described on Exhibit A.
"COMMITMENT TERMINATION DATE" is January 27, 2000.
"COMMITTED EQUIPMENT LINE" is a Credit Extension of up to $1,500,000.
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.
"CREDIT EXTENSION" is each Equipment Advance or any other extension of
credit by Bank for Borrower's benefit.
"EQUIPMENT ADVANCE" or "EQUIPMENT ADVANCES" is a loan advance (or
advances) under the Committed Equipment Line.
"ELIGIBLE EQUIPMENT" is general purpose computer equipment, office
equipment, test and laboratory equipment, furnishings, and, subject to the
limitations set forth below, Other Equipment that complies with all of
Borrower's representations and warranties to Bank and which is acceptable to
Bank in all respects. Unless otherwise agreed to by Bank: not more than 25% of
the Equipment financed with the proceeds of each Equipment Advance shall consist
of Other Equipment. All Equipment financed with the proceeds of Equipment
Advances shall be new and purchased within 120 days from the date of the
Equipment Advance. Equipment to be located outside of the United States shall be
limited to a maximum of $150,000.
"EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
"EQUIPMENT ADVANCE" is defined in Section 2.1.1.
"EQUIPMENT AVAILABILITY END DATE" is defined in Section 2.1.1.
"EQUIPMENT MATURITY DATE" is defined in Section 2.1.1.
"ERISA" is the Employment Retirement Income Security Act of 1974,
and its regulations.
"FINAL PAYMENT PERCENTAGE" is defined in Section 2.2 (d).
"FINANCED EQUIPMENT" is defined in the Loan Supplement.
"FUNDING DATE" is any date on which an Equipment Advance is made to
or on account of Borrower.
"GAAP" is generally accepted accounting principles.
15
<PAGE> 16
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
"INSOLVENCY PROCEEDING" are proceedings by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"INVESTMENT" is any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LOAN DOCUMENTS" are, collectively, this Agreement, any note, or notes
or guaranties executed by Borrower or Guarantor, and any other present or future
agreement between Borrower and/or for the benefit of Bank in connection with
this Agreement, all as amended, extended or restated.
"LOAN FACTOR" is the amount set forth as a percentage in the Loan
Supplement calculated using the Basic Rate.
"LOAN SUPPLEMENT" is attached as Exhibit C.
"MATERIAL ADVERSE CHANGE" is defined in Section 8.3.
"OBLIGATIONS" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including letters of credit and
exchange contracts and including interest accruing after Insolvency Proceedings
begin and debts, liabilities, or obligations of Borrower assigned to Bank.
"ORIGINAL STATED COST" is defined in Section 2.2 (d).
"OTHER EQUIPMENT" is leasehold improvements, intangible property such
as computer software and software licenses, equipment specifically designed or
manufactured for Borrower, other intangible property, limited use property and
other similar property and soft costs, including sales tax, freight and
installation expenses.
"PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.
"PRIME RATE" is Bank's most recently announced "prime rate," even if it
is not Bank's lowest rate.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.
"SCHEDULE" is any attached schedule of exceptions.
"STATED COST" is (i) with respect to new equipment, the original cost
to Borrower of the item of new equipment net of any and all freight,
installation, tax and other soft costs or (ii) with respect to used equipment,
the net book value assigned to such item of used equipment by Bank, after
consultation with Borrower, at the time of the making of the equipment Advance
such item of used equipment.
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<PAGE> 17
"STIPULATED LOSS VALUE" is the percentage set forth with respect to
each Equipment Advance in the Loan Supplement, determined as of the Payment Date
on which payment of such amount is to be made, or if such date is not a Payment
Date, on the Payment Date immediately succeeding such date multiplied by the
Loan Amount.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrowers debt to Bank (and identified as subordinated by Borrower and Bank).
"SUBSIDIARY" is for any Person, or any other business entity of which
more than 50% of the voting stock or other equity interests is owned or
controlled, directly or indirectly, by the Person or one or more Affiliates of
the Person.
BORROWER:
Akamai Technologies, Inc.
By: /s/ Paul Sagan
-----------------------------
Title: VP and COO
---------------------------
BANK:
SILICON VALLEY BANK, doing business as SILICON VALLEY EAST
By: /s/ Nancy E. Funkhouser
-----------------------------
Title: Assistant Vice President
---------------------------
SILICON VALLEY BANK
By: /s/ [illegible]
-----------------------------
Title: AVP
---------------------------
executed in Santa Clara County, California
17
<PAGE> 1
Exhibit 10.10
AKAMAI TECHNOLOGIES, INC.
SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
DATED AS OF NOVEMBER 23, 1998
<PAGE> 2
AKAMAI TECHNOLOGIES, INC.
SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
DATED AS OF NOVEMBER 23, 1998
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
ARTICLE I........................................................................ 1
PURCHASE, SALE AND TERMS OF SHARES............................................... 1
1.01. The Preferred Shares.................................................... 1
1.02. The Converted Shares.................................................... 1
1.03. The Shares.............................................................. 1
1.04. Purchase Price and Closing.............................................. 2
1.05. Use of Proceeds......................................................... 3
1.06. Representations and Warranties by the Purchasers........................ 3
ARTICLE II....................................................................... 4
CONDITIONS TO PURCHASERS' OBLIGATION............................................. 4
2.01. Representations and Warranties.......................................... 4
2.02. Documentation at Closing................................................ 4
2.03. Additional Closing Conditions........................................... 5
2.04. Consents, Waivers, Etc.................................................. 6
2.04. Subsequent Closing Bring-Down Representations and Warranties............ 6
ARTICLE III...................................................................... 6
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................... 6
3.01. Organization and Standing............................................... 6
3.02. Corporate Action........................................................ 7
3.03. Governmental Approvals.................................................. 7
3.04. Litigation.............................................................. 7
3.05. Certain Agreements of Officers and Key Employees........................ 8
3.06. Compliance with Other Instruments....................................... 8
3.07. Condition, Absence of Activities........................................ 8
3.08. ERISA................................................................... 9
3.09. Transactions with Affiliates............................................ 9
3.10. Assumptions or Guaranties of Indebtedness of Other Persons.............. 9
3.11. Investments in Other Persons............................................ 9
3.12. Securities Act of 1933.................................................. 9
3.13. Disclosure.............................................................. 9
</TABLE>
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<TABLE>
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3.14. Brokers or Finders...................................................... 10
3.15. Capitalization; Status of Capital Stock................................. 10
3.16. Registration Rights..................................................... 11
3.17. Books and Records....................................................... 11
3.18. Title to Assets, Patents................................................ 11
3.19. The Year 2000........................................................... 11
ARTICLE IV....................................................................... 12
COVENANTS OF THE COMPANY......................................................... 12
4.01. Affirmative Covenants of the Company Other Than Reporting
Requirements............................................................ 12
4.02. Negative Covenants of the Company....................................... 15
4.03. Reporting Requirements.................................................. 17
ARTICLE V........................................................................ 19
RIGHT OF FIRST REFUSAL........................................................... 19
5.01. Right of First Refusal.................................................. 19
5.02. Notice of Acceptance.................................................... 19
5.03. Conditions to Acceptances and Purchase.................................. 19
5.04. Further Sale............................................................ 20
5.05. Termination of Right of First Refusal................................... 20
5.06. Exception............................................................... 20
ARTICLE VI....................................................................... 21
DEFINITIONS AND ACCOUNTING TERMS................................................. 21
6.01. Certain Defined Terms................................................... 21
6.02. Accounting Terms........................................................ 24
6.03. Knowledge............................................................... 24
ARTICLE VII...................................................................... 24
MISCELLANEOUS.................................................................... 24
7.01. No Waiver; Cumulative Remedies.......................................... 24
7.02. Amendments, Waivers and Consents........................................ 24
7.03. Addresses for Notices................................................... 25
7.04. Costs, Expenses and Taxes............................................... 25
7.05. Binding Effect; Assignment.............................................. 25
7.06. Survival of Representations and Warranties.............................. 26
7.07. Prior Agreements........................................................ 26
7.08. Severability............................................................ 26
7.09. Governing Law........................................................... 26
7.10. Headings................................................................ 26
7.11. Counterparts............................................................ 26
7.12. Further Assurances...................................................... 26
</TABLE>
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<TABLE>
<S> <C>
7.13. Indemnification......................................................... 26
EXHIBITS
1.01 List of Purchasers
1.01A Designation of Series A Convertible Preferred Stock
1.04(b) Additional Purchasers not requiring Battery Ventures IV, L.P. Approval
2.02B Opinion of Counsel
2.03B Stockholders Agreement
2.03E Registration Rights Agreement
2.03GA Form of Noncompetition and Nonsolicitation Agreement
2.03GB Form of Invention and Nondisclosure Agreement
2.03HA Form of Stock Restriction Agreement
2.03HB Form of Right of First Refusal Agreement
3.01 Foreign Qualifications
3.04 Litigation
3.07 Condition, Absence of Activities
3.09 Transactions with Affiliates
3.11 Investments in Other Persons
3.15 Capitalization; Status of Capital Stock
3.18(a) Title of Assets; Patents
3.18(b) List of patents, trademarks, tradenames, permits and licenses
3.18(c) Compensation for use of patents and other intellectual property rights
</TABLE>
-iii-
<PAGE> 5
AKAMAI TECHNOLOGIES, INC.
One Kendall Square
Cambridge, Massachusetts 02139
As of November 23, 1998
TO: The Persons listed on Exhibit 1.01 hereto
Re: Series A Convertible Preferred Stock
Ladies and Gentlemen:
Akamai Technologies, Inc., a Delaware corporation (the "Company"),
agrees with each of you as follows:
ARTICLE I
PURCHASE, SALE AND TERMS OF SHARES
1.01. The Preferred Shares. The Company has authorized the issuance and
sale of up to 1,100,000 shares (the "Preferred Shares") of its previously
authorized but unissued shares of Series A Convertible Preferred Stock, par
value $.01 per share (the "Series A Preferred Stock"), at a purchase price of
$7.60 per share to the persons (collectively, the "Purchasers" and,
individually, a "Purchaser") and in the respective amounts set forth in Exhibit
1.01 hereto. The designation, rights, preferences and other terms and conditions
relating to the Series A Preferred Stock are as set forth on Exhibit 1.01A
hereto.
1.02. The Converted Shares. The Company has authorized and has reserved
and covenants to continue to reserve, free of preemptive rights and other
preferential rights, a sufficient number of its previously authorized but
unissued shares of Common Stock to satisfy the rights of conversion of the
holders of the Preferred Shares. Any shares of Common Stock issuable upon
conversion of the Preferred Shares, and such shares when issued, are herein
referred to as the "Converted Shares."
1.03. The Shares. The Preferred Shares and the Converted Shares are
sometimes collectively referred to herein as the "Shares."
<PAGE> 6
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1.04. Purchase Price and Closing.
(a) The Initial Closing. The Company agrees to issue and sell
to the Purchasers and, subject to and in reliance upon the representations,
warranties, covenants, terms and conditions of this Agreement, the Purchasers,
severally but not jointly, agree to purchase that number of the Preferred Shares
set forth opposite their respective names in Exhibit 1.01. The aggregate
purchase price of the Preferred Shares being purchased by each Purchaser is set
forth opposite such Purchaser's name in Exhibit 1.01. The purchase and sale
shall take place at a closing (the "Initial Closing") to be held on or before
November 23, 1998, at 10:00 A.M., at such location and at such time as may be
mutually agreed upon, subject to the satisfaction of all of the conditions to
the Closing specified in Article II herein. At the Initial Closing the Company
will issue and deliver certificates evidencing the Preferred Shares to be sold
at the Initial Closing to each of the Purchasers (or its nominee) against
payment of the full purchase price therefor by(i) wire transfer of immediately
available funds to an account designated by the Company, (ii) check payable to
the order of the Company or its designee (iii) delivery to the Company for
cancellation promissory notes issued by the Company, or (iv) any combination of
(i), (ii) and (iii) above.
(b) Subsequent Closings. In the event that the Company shall
not have sold all 1,100,000 shares of the Preferred Shares at the Initial
Closing, the Company and the Purchasers agree that at one or more subsequent
closings (collectively, the "Subsequent Closings" and, individually, a
"Subsequent Closing"; the Initial Closing and each Subsequent Closing referred
to herein as a "Closing" and collectively as the "Closings"), the Company may
issue and sell any of the unsold Preferred Shares ("Additional Shares") to one
or more accredited investors who shall be subject to the approval (which
approval shall not be unreasonably withheld) of each of Battery Ventures IV,
L.P. ("Battery") and the Board of Directors of the Company (the "Additional
Purchasers", which Additional Purchasers may also be Purchasers or affiliates of
Purchasers); provided, however, that no such approval of Battery shall be
required with respect to any Additional Purchasers who (i) are listed on Exhibit
1.04(b) or (ii) are admitted as Additional Purchasers after January 1, 1999. In
all events each such Subsequent Closing (other than with respect to the option
of Battery and Battery Investments Partners IV, LLC to purchase Additional
Shares as set forth below) shall occur on or before January 31, 1999 and,
provided, further, any shares sold to any of the Additional Purchasers (other
than Battery or any of its affiliates) shall not exceed 501,320 of the Preferred
Shares, of which no more than 80,264 of such Preferred Shares shall be issuable
pursuant to conversion of existing indebtedness or contractual obligations of
the Company. The Company and the Purchasers further agree that (i) the Company
shall amend this Agreement solely to provide for the issuance of the Additional
Shares to the Additional Purchasers under the terms and conditions of this
Agreement and (ii) the Additional Purchasers shall become parties to this
Agreement as amended by executing counterparts hereof. At least 20 days prior to
the date of each Subsequent Closing, the Company shall notify Battery, and
provide Battery with the right (but not the obligation) to exercise the option
(described in Section 1.04(c) below) at the time of such Subsequent Closing.
Notwithstanding the foregoing, in the event that the Company sells at least
263,158 Additional Shares to a single Additional Purchaser (or group of
affiliated Additional Purchasers) at any Subsequent Closing, then the option
provided to Battery (as described in Section 1.04(c)) shall
<PAGE> 7
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expire if not exercised at such Subsequent Closing following the notice provided
for in the preceding sentence.
(c) In the event the Company shall not have sold all 1,100,000
shares of the Preferred Shares by January 31, 1999 the Company, Battery and
Battery Investment Partners IV, LLC agree that on such date Battery and Battery
Investment Partners IV, LLC, pro rata in accordance with their respective
purchases of Preferred Shares at the Initial Closing (i.e., 98.5% and 1.5%,
respectively), shall have the option, exercisable in their sole discretion upon
not less than ten (10) days' notice to the Company given no later than March 1,
1999, to purchase from the Company up to a maximum of 131,579 of any unsold
Preferred Shares at a Subsequent Closing under the terms and conditions of this
Agreement. The terms "Preferred Shares", "Purchaser" and "Purchasers", when used
in this Agreement, shall respectively be deemed to include such Additional
Shares as are issued and such Additional Purchaser and Additional Purchasers as
exist from time to time.
(d) Each Subsequent Closing shall be held at such location and
at such times and dates, but on or before January 31, 1999, as shall be
specified by the Company and the Additional Purchasers. At each Subsequent
Closing, the Company will issue and deliver certificates evidencing the
Additional Shares to be sold at such Subsequent Closing against payment of the
full purchase price by (i) wire transfer of immediately available funds to an
account designated by the Company, (ii) check payable to the order of the
Company or its designee (iii) delivery to the Company for cancellation
promissory notes issued by the Company, or (iv) any combination of (i), (ii) and
(iii) above. The purchase price for Additional Shares to be sold at Subsequent
Closings shall not be less than the purchase price of the shares of Preferred
Stock sold at the Initial Closing. At each Subsequent Closing from and after
December 1, 1998, the Purchasers purchasing Additional Preferred Shares at such
Subsequent Closing shall have received a certificate from the President of the
Company stating that the representations and warranties of the Company contained
in Article III hereof and otherwise made by the Company in writing in connection
with the transactions contemplated hereby are true and correct (giving effect to
updates, if any, to the exhibits setting forth exceptions to the representations
and warranties of the Company) and that all conditions required to be performed
prior to or at each such Subsequent Closing have been performed as of such
Subsequent Closing (each such certificate referred to herein as a "Bring-Down
Certificate").
1.05. Use of Proceeds. The Company shall use the proceeds for working
capital and general corporate purposes.
1.06. Representations and Warranties by the Purchasers. Each of the
Purchasers represents and warrants severally, but not jointly, that (a) it will
acquire the Preferred Shares to be acquired by it for its own account and that
the Preferred Shares are being and will be acquired by it for the purpose of
investment and not with a view to distribution or resale thereof; (b) the
execution of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of such Purchaser, and this Agreement has been duly executed and delivered,
and constitutes a valid, legal, binding and enforceable agreement of such
Purchaser; (c) it has taken no action which would give rise to any claim by
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any other person for any brokerage commissions, finders' fees or the like
relating to this Agreement or the transactions contemplated hereby; (d) such
Purchaser has had the opportunity to ask questions of and receive answers from
representatives of the Company concerning the terms of the offering of the
Preferred Shares and to obtain additional information concerning the Company and
its business; and (e) such Purchaser has the ability to evaluate the merits and
risks of an investment in the Preferred Shares and can bear the economic risks
of such investment. The acquisition by each Purchaser of the Preferred Shares
acquired by it shall constitute a confirmation of the representations and
warranties made by each such Purchaser as at the date of such acquisition. Each
of the Purchasers further represents that it understands and agrees that, until
registered under the Securities Act or transferred pursuant to the provisions of
Rule 144 as promulgated by the Commission, all certificates evidencing any of
the Shares, whether upon initial issuance or upon any transfer thereof, shall
bear a legend, prominently stamped or printed thereon, reading substantially as
follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD, MORTGAGED,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF
1933 AND APPLICABLE STATE SECURITIES LAWS, OR THE AVAILABILITY OF AN
EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE SECURITIES ACT OF
1933 AND APPLICABLE STATE SECURITIES LAWS."
ARTICLE II
CONDITIONS TO PURCHASERS' OBLIGATION
The obligation of each Purchaser to purchase and pay for the Preferred
Shares to be purchased by it at the Initial Closing is subject to the
satisfaction of the following conditions:
2.01. Representations and Warranties. Each of the representations and
warranties of the Company set forth in Article III hereof shall be true and
correct on the date of the Initial Closing.
2.02. Documentation at Closing. The Purchasers shall have received
prior to or at the Closing all of the following documents or instruments, or
evidence of completion thereof, each in form and substance satisfactory to the
Purchasers and their special counsel:
(a) A copy of the Certificate of Incorporation of the Company
(the "Certificate of Incorporation"), certified by the Secretary of State of the
State of Delaware together with a certified copy of the Certificate of
Designation of the Series A Preferred Stock, a copy of the resolutions of the
Board of Directors and, if required, the stockholders of the Company evidencing
the adoption of the Company's Certificate of Designation of the Series A
Preferred Stock, the approval of this Agreement, the issuance of the Preferred
Shares and the
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other matters contemplated hereby, and a copy of the By-laws of the Company, all
of which shall have been certified by the Secretary of the Company to be true,
complete and correct in every particular, and certified copies of all documents
evidencing other necessary corporate or other action and governmental approvals,
if any, with respect to this Agreement and the Shares.
(b) The opinion of Hale and Dorr LLP, counsel to the Company,
in the form of Exhibit 2.02B attached hereto.
(c) A certificate of the Secretary of the Company which shall
certify the names of the officers of the Company authorized to sign this
Agreement, the certificates for the Preferred Shares and the other documents,
instruments or certificates to be delivered pursuant to this Agreement by the
Company or any of its officers, together with the true signatures of such
officers. The Purchasers may conclusively rely on such certificate until they
shall receive a further certificate of the Secretary or an Assistant Secretary
of the Company canceling or amending the prior certificate and submitting the
signatures of the officers named in such further certificate.
(d) A certificate of the President of the Company stating that
the representations and warranties of the Company contained in Article III
hereof and otherwise made by the Company in writing in connection with the
transactions contemplated hereby are true and correct and that all conditions
required to be performed prior to or at the Initial Closing have been performed
as of the Initial Closing.
(e) Certificates of Good Standing for the Company from the
Secretaries of State of the States of Delaware and California, and the
Commonwealth of Massachusetts shall have been provided to counsel to the
Purchasers.
2.03. Additional Closing Conditions. The Purchasers shall have received
prior to or at the Closing evidence of satisfaction or completion of the
following, in form and substance satisfactory to the Purchasers and their
special counsel:
(a) The Certificate of Designation of the Series A Preferred
Stock shall provide for the designation of the rights and preferences of the
Series A Preferred Stock in the form set forth in Exhibit 1.01A attached hereto
(the "Certificate of Designation").
(b) A Stockholders Agreement in the form set forth in Exhibit
2.03B shall have been executed by the parties named therein.
(c) The Company shall have paid the costs, expenses, taxes and
filing fees identified in Section 7.04.
(d) The Board of Directors of the Company following the
Initial Closing shall consist of five (5) members, of which the members shall
be: Daniel Lewin, F. Thomson Leighton and Todd Dagres, with the remaining
members to be designated in accordance with the terms of the Stockholders
Agreement.
<PAGE> 10
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(e) The Company and the Purchasers shall have entered into a
Registration Rights Agreement in the form set forth in Exhibit 2.03E.
(f) The Company's By-laws shall be in form and substance
reasonably satisfactory to the Purchasers and their special counsel; and not in
limitation of the foregoing, shall provide that the Chief Executive Officer
shall be designated and elected by the Company's Board of Directors.
(g) Each of the Founders shall have entered into a
non-competition and non-solicitation agreement and an invention and
non-disclosure agreement in the forms attached hereto as Exhibit 2.03GA and
Exhibit 2.03GB, respectively.
(h) Each of the Founders and each of Arthur Bilger and Paul
Sagan shall have entered into a Stock Restriction Agreement substantially in the
form attached hereto as Exhibit 2.03HA. Each of Marco Greenberg and Preetish
Nijahwan shall have entered into a Right of First Refusal Agreement
substantially in the form attached hereto as Exhibit 2.03HB.
2.04. Consents, Waivers, Etc. Prior to the Initial Closing, the Company
shall have obtained all consents or waivers, if any, necessary to execute and
deliver this Agreement, issue the Preferred Shares and to carry out the
transactions contemplated hereby and thereby, and all such consents and waivers
shall be in full force and effect. All corporate and other action and
governmental filings necessary to effectuate the terms of this Agreement, the
Preferred Shares and other agreements and instruments executed and delivered by
the Company in connection herewith shall have been made or taken, except for any
post-sale filing that may be required under federal or state securities laws. In
addition to the documents set forth above, the Company shall have provided to
the Purchasers any other information or copies of documents that they may
reasonably request.
2.05. Bring-Down Certificate. At each Subsequent Closing from and after
December 1, 1998, the Purchasers purchasing Additional Preferred Shares at such
Subsequent Closing shall have received a Bring-Down Certificate.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants as follows as of the date
hereof and as of the date of the Initial Closing:
3.01. Organization and Standing. The Company is a duly organized and
validly existing corporation in good standing under the corporate laws of the
State of Delaware and has all requisite corporate power and authority for the
ownership and operation of its properties and
<PAGE> 11
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for the carrying on of its business as now conducted or as now proposed to be
conducted. The Company is duly licensed or qualified and in good standing as a
foreign corporation authorized to do business in all jurisdictions wherein the
character of the property owned or leased, or the nature of the activities
conducted, by it makes such licensing or qualification necessary as set forth in
Exhibit 3.01, except where the failure to so qualify would not have a material
adverse effect on the business, operations, affairs or condition of the Company
or in its properties or assets taken as a whole, or which might call into
question the validity of this Agreement, any of the Shares, or any action taken
or to be taken pursuant hereto or thereto (a "Material Adverse Effect").
3.02. Corporate Action. The Company has all necessary corporate power
and has taken all corporate action required to enter into and perform this
Agreement, the Registration Rights Agreement, the Stockholders Agreement and any
other agreements and instruments executed in connection herewith (collectively,
the "Financing Documents"). The Financing Documents are valid and binding
obligations of the Company, enforceable in accordance with their terms. The
issuance, sale and delivery of the Preferred Shares in accordance with this
Agreement, and the issuance, sale and delivery of the Converted Shares have been
duly authorized and reserved for issuance, as the case may be, by all necessary
corporate action on the part of the Company. Sufficient authorized but unissued
shares of Common Stock have been reserved by appropriate corporate action in
connection with the prospective conversion of the Preferred Shares at the
initial conversion price, and the issuance of the Preferred Shares is not, and
the issuance of the Converted Shares upon the conversion of the Preferred Shares
will not be, subject to preemptive rights or other preferential rights in any
present stockholders of the Company and will not conflict with any provision of
any agreement or instrument to which the Company is a party or by which it or
its property is bound.
3.03. Governmental Approvals. Except for the filing of any notice
subsequent to the Closing that may be required under applicable state and/or
federal securities laws (which, if required, shall be filed on a timely basis
and a copy of which shall be provided to the Purchasers and their counsel), no
authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or will be necessary
for the execution and delivery by the Company of this Agreement, for the offer,
issue, sale and delivery of the Preferred Shares, or for the performance by the
Company of its obligations under this Agreement or the Shares.
3.04. Litigation. Except as set forth in Exhibit 3.04, there is no
litigation or governmental proceeding or investigation pending or, to the
knowledge of the Company, threatened against the Company affecting any of its
respective properties or assets, or against any officer, Key Employee or holder
of more than 5% of the capital stock of the Company (other than any Purchaser)
relating to such person's performance of duties for the Company or relating to
his stock ownership in the Company or otherwise relating to the business of the
Company, nor to the knowledge of the Company has there occurred any event or
does there exist any condition on the basis of which any such litigation,
proceeding or investigation might property be instituted. Neither the Company
nor, to the knowledge of the Company, any officer, Key Employee or holder of
more than 5% of the capital stock of the Company (other than any
<PAGE> 12
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Purchaser) is in default with respect to any order, writ, injunction, decree,
ruling or decision of any court, commission, board or other government agency
specifically naming the Company such officer, Key Employee or holder of more
than 5% of the capital stock of the Company. Except as set forth in Exhibit
3.04, there are no actions or proceedings pending or, to the knowledge of the
Company, threatened against the Company or against any officer or Key Employee
which could reasonably be expected to result, either in any case or in the
aggregate, in any Material Adverse Effect. The foregoing sentences include,
without limiting their generality, actions pending or, to the knowledge of the
Company, threatened (or any basis therefor), involving the prior employment of
any of the Company's officers or employees (including any Key Employees) or
their use in connection with the Company's business of any information or
techniques allegedly proprietary to any of their former employers.
3.05. Certain Agreements of Officers and Key Employees.
(a) To the knowledge of the Company, no officer or Key
Employee of the Company is in violation of any term of any employment contract,
patent disclosure agreement, proprietary information agreement, noncompetition
agreement, or any other contract or agreement or any restrictive covenant
relating to the right of any such officer or Key Employee to be employed by the
Company because of the nature of the business conducted or to be conducted by
the Company or relating to the use of trade secrets or proprietary information
of others, and, to the Company's knowledge, the continued employment of the
Company's officers and Key Employees does not subject the Company or any
Purchaser to any liability to third parties.
(b) To the knowledge of the Company, no officer of the Company
nor any Key Employee of the Company whose termination, either individually or in
the aggregate, would have a Material Adverse Effect, has expressed any present
intention of terminating his employment with the Company.
3.06. Compliance with Other Instruments. The Company is in compliance
in all respects with the terms and provisions of this Agreement and of its
Certificate of Incorporation and By-laws, and in all material respects with the
terms and provisions of all mortgages, indentures, leases, agreements and other
instruments by which it is bound or to which it or any of its respective
properties or assets are subject. The Company is in compliance with all
judgments specifically naming the Company or any of the Founders, decrees,
governmental orders specifically naming the Company or any of the Founders,
statutes, rules or regulations by which it is bound or to which any of its
properties or assets are subject. Neither the execution and delivery of this
Agreement or the issuance of the Shares, nor the consummation of any transaction
contemplated by this Agreement, has constituted or resulted in or will
constitute or result in a default or violation of any term or provision of any
of the foregoing documents, instruments, judgments, agreements, decrees, orders,
statutes, rules and regulations.
3.07. Condition, Absence of Activities. The Company was incorporated as
a Delaware corporation on August 20, 1998. Except as set forth in Exhibit 3.07,
the Company owns no assets and has no liabilities of any kind, including
contingent liabilities, liabilities for taxes or
<PAGE> 13
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agreements or commitments, but excluding trade payables that have occurred in
the ordinary course of business since August 20, 1998. Except as set forth in
Exhibit 3.07 the Company has not conducted any business activities or executed
any material agreements. Not in limitation of the foregoing, the Company has
entered into "beta" agreements with each of Buena Vista Internet Group (an
affiliate of Disney), Universal Studios Online Inc., and Metro-Goldwyn Mayer
Studios Inc. The Company has not paid any dividends or made any distributions on
or purchased or otherwise acquired any shares of its capital stock.
3.08. ERISA. The Company does not make and has no present intentions to
make any contributions to any employee pension benefit plans for its employees
that are subject to ERISA.
3.09. Transactions with Affiliates. Except as set forth on Exhibit
3.09, as contemplated hereby or consented to by the Purchasers in accordance
with this Agreement, there are no loans, leases, royalty agreements or other
continuing transactions between any Founder, officer, employee or director of
the Company or any Person owning 5% or more of any class of capital stock of the
Company or any member of the immediate family of such Founder, officer,
employee, director or stockholder or any corporation or other entity controlled
by such officer, employee, director or stockholder or a member of the immediate
family of such officer, employee, director or stockholder.
3.10. Assumptions or Guaranties of Indebtedness of Other Persons.
Except as contemplated hereby or consented to by the Purchasers in accordance
with this Agreement, the Company has not assumed, guaranteed, endorsed or
otherwise become directly or contingently liable on (including, without
limitation, liability by way of agreement, contingent or otherwise, to purchase,
to provide funds for payment, to supply funds to or otherwise invest in the
debtor or otherwise to assure the creditor against loss), any Indebtedness of
any other Person.
3.11. Investments in Other Persons. Except as contemplated hereby or
consented to by the Purchasers in accordance with this Agreement, the Company
has not made any loan or advance to any Person which is outstanding on the date
of this Agreement, nor is it committed or obligated to make any such loan or
advance, nor does the Company own any capital stock, assets comprising the
business of, obligations of, or any interest in, any Person except as disclosed
in this Agreement. The Company has no Subsidiaries.
3.12. Securities Act of 1933. The Company has complied with all
applicable federal and state securities laws in connection with the offer,
issuance and sale of the Shares. Prior to the Closing, neither the Company nor
anyone acting on its behalf has sold, offered to sell or solicited offers to buy
the Shares or similar securities to, or solicit offers with respect thereto
from, or entered into any preliminary conversations or negotiations relating
thereto with, any Person, so as to bring the issuance and sale of the Shares
under the registration provisions of the Securities Act, and applicable state
securities laws.
3.13. Disclosure. Neither this Agreement nor any other agreement,
document, certificate or written statement furnished to the Purchasers or their
special counsel by or on behalf of the Company in connection with the
transactions contemplated hereby contains any
<PAGE> 14
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untrue statement of a material fact or omits to state a material fact relating
directly to the Company necessary in order to make the statements contained
herein or therein not misleading. There is no fact within the knowledge of the
Company which has not been disclosed herein or in writing to the Purchasers and
which taken by itself would constitute a circumstance having a Material Adverse
Affect. The projections contained in the Business Plan were prepared in good
faith and with a good faith belief in the reasonableness of the assumptions used
therein, but which the Company cannot and does not assure or guarantee the
attainment of in any manner. Without limiting the generality of the foregoing,
the Company does not have any knowledge that there exists, or there is pending
or planned, any statute, rule, law, regulation, standard or code which would
have a Material Adverse Affect on the Company's business.
3.14. Brokers or Finders. No Person has or will have, as a result of
the transactions contemplated by this Agreement, any right, interest or valid
claim against or upon the Company for any commission, fee or other compensation
as a finder or broker because of any act or omission by the Company or any of
their respective agents.
3.15. Capitalization; Status of Capital Stock. The Company has a total
authorized capitalization consisting of (i) 5,000,000 shares of Common Stock,
par value $.01 per share, of which 1,832,400 shares are issued and outstanding
and (ii) 2,000,000 shares of Preferred Stock, par value $.01 per share, of which
1,100,000 shares are designated as Series A Convertible Preferred Stock, of
which no shares are issued and outstanding on the date hereof, prior to giving
effect to the transactions contemplated hereby. A complete list of the capital
stock of the Company that has been previously issued and the names in which such
capital stock is registered on the stock transfer books of the Company is set
forth in Exhibit 3.15 hereto. All the outstanding shares of capital stock of the
Company have been duly authorized, and are validly issued, fully paid and
non-assessable. The Preferred Shares, when issued and delivered in accordance
with the terms hereof and after payment of the purchase price therefor, and the
Converted Shares, when issued and delivered upon conversion of the Preferred
Shares, will be duly authorized, validly issued, fully-paid and non-assessable.
Except as otherwise set forth in Exhibit 3.15, no options, warrants,
subscriptions or purchase rights of any nature to acquire from the Company
shares of capital stock or other securities are authorized, issued or
outstanding, nor is the Company obligated in any other manner to issue shares of
its capital stock or other securities except as contemplated by this Agreement.
Except as set forth in Exhibit 3.15, there are no restrictions on the transfer
of shares of capital stock of the Company other than those imposed by relevant
federal and state securities laws and as otherwise contemplated by this
Agreement, the Stockholders' Agreement referred to in Section 2.03(b), the
Registration Rights Agreement referred to in Section 2.03(e), the Certificate of
Designation referred to in Section 2.03(a) and the Stock Restriction and Right
of First Refusal Agreements referred to in Section 2.03(h). Other than as
provided in this Section, there are no agreements, understandings, trusts or
other collaborative arrangements or understandings concerning the voting of the
capital stock of the Company. The offer and sale of all capital stock and other
securities of the Company issued before the Closing complied with or were exempt
from all applicable federal and state securities laws and no stockholder has a
right of rescission with respect thereto.
<PAGE> 15
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3.16. Registration Rights. Except for the rights granted to the
Purchasers pursuant to Registration Rights Agreement referred to in Section
2.03(e) hereof, no Person has demand or other rights to cause the Company to
file any registration statement under the Securities Act relating to any
securities of the Company or any right to participate in any such registration
statement.
3.17. Books and Records. The books of account, ledgers, order books,
records and documents of the Company accurately and completely reflect all
material information relating to the business of the Company, the location and
collection of its assets, and the nature of all transactions giving rise to the
obligations or accounts receivable of the Company.
3.18. Title to Assets, Patents. The Company has good and marketable
title in fee to such of its fixed assets, if any, as are real property, and good
and marketable title to all of its other assets and properties, free of any
mortgages, pledges, charges, liens, security interests or other encumbrances,
except those occurring in the ordinary course of business and those indicated on
Exhibit 3.18(a). The Company enjoys peaceful and undisturbed possession under
all leases under which it is operating, and all said leases are valid and
subsisting and in full force and effect. The Company does not know of any
adverse claim that would interfere with the Company's right to use the patents,
patent rights, permits, licenses, trade secrets, trademarks, trademark rights,
trade names or trade name rights or franchises, copyrights, inventions, software
and intellectual property rights being used to conduct its business as now
operated and as now proposed to be operated (a list of all such patents,
trademarks, trade names, permits, and licenses used by the Company in the
operation of its business and all material is attached hereto as Exhibit
3.18(b)); and the Company does not have any reason to believe that the conduct
of the Company's business as now operated and as now proposed to be operated
conflicts or will conflict with valid patents, patent rights, permits, licenses
granted to the Company (other than off the shelf), trade secrets, trademarks,
trademark rights, trade names or trade name rights or franchises, copyrights,
inventions, and intellectual property rights of any other Person. To the
Company's knowledge, no product or process presently used or proposed to be
manufactured, marketed, offered, sold or used by the Company will violate any
license or infringe on any intellectual property rights of any other Person; and
neither the Company's intellectual property rights nor the operation or proposed
operation of the Company's business is known by the Company to conflict with the
asserted rights of others, nor does there exist any known basis for any such
conflict. No claim is known by the Company to be pending or threatened to the
effect that any such intellectual property owned or licensed by the Company, or
which the Company otherwise has the right to use, is invalid or unenforceable by
the Company, and the Company does not have any reason to believe that any
patents or intellectual property rights owned or used by the Company may be
invalid. Except as set forth in Exhibit 3.18(c), the Company has no obligation
known by the Company to compensate any Person for the use of any such patents or
other intellectual property rights, and the Company has not granted any Person
any license or other rights to use in any manner any of the patents or rights of
the Company, whether requiring the payment of royalties or not.
3.19. The Year 2000. The Company has used reasonable procedures to
verify that its software will recognize and process date fields after the turn
of the century, and perform date-
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dependent calculations and operations (including sorting, comparing and
reporting) after the turn of the century correctly, and has used reasonable
efforts to ensure that its software will not produce invalid and/or incorrect
results as a result of the change of century (all without human intervention,
other than original data entry of valid dates), provided that the software
receives correct and properly formatted date inputs from all software and
hardware that exchanges data with or provides data to the software.
ARTICLE IV
COVENANTS OF THE COMPANY
4.01. Affirmative Covenants of the Company Other Than Reporting
Requirements. Without limiting any other covenants and provisions hereof, the
Company covenants and agrees that until the consummation of a Qualified Public
Offering, it will perform and observe the following covenants and provisions,
and will cause each Subsidiary, if and when such Subsidiary exists, to perform
and observe such of the following covenants and provisions as are applicable to
such Subsidiary:
(a) Payment of Taxes and Trade Debt. Pay and discharge, and
cause each Subsidiary to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income, profits or
business, or upon any properties belonging to it, prior to the date on which
penalties attach thereto, and all lawful claims which, if unpaid, might become a
lien or charge upon any properties of the Company or any Subsidiary, provided
that neither the Company nor any Subsidiary shall be required to pay any such
tax, assessment, charge, levy or claim which is being contested in good faith
and by appropriate proceedings if the Company or any Subsidiary shall have set
aside on its books sufficient reserves, if any, with respect thereto. Pay and
cause each Subsidiary to pay, when due, or in conformity with customary trade
terms, all lease obligations, all trade debt, and all other Indebtedness
incident to the operations of the Company or its Subsidiaries, except such as
are being contested in good faith and by proper proceedings if the Company or
Subsidiary concerned shall have set aside on its books sufficient reserves, if
any, with respect thereto.
(b) Maintenance of Insurance. Obtain and maintain from
reputable insurance companies or associations a term life insurance policy on
the lives of each of Thomson Leighton and Daniel Lewin the face amount equal to
$2,000,000 each (so long as each remains an employee of the Company), which
proceeds will be payable to the order of the Company. Within ten (10) days after
the Initial Closing, obtain insurance with a reputable insurance company or
association in such amount and covering such risks as is customary coverage
covering its properties and businesses customarily carried by companies engaged
in similar businesses and owning similar properties in the same general areas in
which the Company or any Subsidiary operates for the type and scope of its
properties and businesses and maintain, and cause each Subsidiary to maintain,
such insurance. The Company will not cause or permit any assignment of the
proceeds of the life insurance policies specified in the first sentence of this
paragraph and will not borrow against such policies. The Company will add
Battery
<PAGE> 17
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Ventures IV, L.P. as a notice party to such policies and will request that the
issuer(s) of such policies provide such designee with at least ten (10) days'
notice before either such policy is terminated (for failure to pay premiums or
otherwise) or assigned, or before any change is made in the designation of a
beneficiary thereof.
(c) Preservation of Corporate Existence. Preserve and
maintain, and, unless the Company deems it not to be in its best interests,
cause each Subsidiary to preserve and maintain, its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified, and cause each Subsidiary to qualify and remain qualified,
as a foreign corporation in each jurisdiction in which such qualification is
necessary or desirable in view of its business and operations or the ownership
or lease of its properties. Use commercially reasonable best efforts to secure,
preserve and maintain, and cause each Subsidiary to use commercially reasonable
best efforts to secure, preserve and maintain, all licenses and other rights to
use patents, processes, licenses, permits, trademarks, trade names, inventions,
intellectual property rights or copyrights owned or possessed by it and deemed
by the Company to be material to the conduct of its business or the business of
any Subsidiary.
(d) Compliance with Laws. Comply, and cause each Subsidiary to
comply, with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority, where noncompliance would have a Material
Adverse Affect.
(e) Inspection. Permit, upon reasonable request and notice,
each of the Purchasers who holds at least 65,789 shares of the outstanding
Preferred Shares (as equitably adjusted for stock splits, stock dividends and
the like) or any authorized agents or representatives thereof to examine and
make copies of and extracts from the records and books of account of, and visit
and inspect the properties of the Company and any Subsidiary, to discuss the
affairs, finances and accounts of the Company and any Subsidiary with any of its
officers, directors or Key Employees and independent accountants, and consult
with and advise the management of the Company and any Subsidiary as to their
affairs, finances and accounts, all at reasonable times and upon reasonable
notice. Each Purchaser agrees that it will maintain the confidentiality of any
information so obtained by it which is not otherwise available from other
sources, subject to the disclosure of information of a non-technical nature,
including financial information, which such Purchaser discloses to its partners
and/or shareholders generally.
(f) Keeping of Records and Books of Account. Keep, and cause
each Subsidiary to keep, adequate records and books of account in which complete
entries will be made in accordance with generally accepted accounting principles
consistently applied, reflecting all financial transactions of the Company and
any Subsidiary, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, return of merchandise, obsolescence, amortization,
taxes, bad debts and other purposes in connection with its business shall be
made.
(g) Maintenance of Properties; Material Assets. Use
commercially reasonable best efforts to maintain and preserve, and cause each
Subsidiary to use commercially reasonable best efforts to maintain and preserve,
all of its properties and assets, necessary for the proper conduct of its
business, in good repair, working order and condition, ordinary wear and
<PAGE> 18
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tear excepted; including, without limitation, the maintenance and preservation
of any material patents, licenses, permits or agreements being used by the
Company in its business as now operated and as now proposed to be operated,
including that certain patent and license agreement dated October 26, 1998 by
and between the Massachusetts Institute of Technology ("MIT") and the Company
(the "License Agreement"). The Company shall continue to use its best efforts to
seek to obtain the assignment of all rights (including any and all patent rights
and copyrights) of those individuals known to be authors of the Program as such
term is defined in the License Agreement.
(h) Compliance with ERISA. Comply, and cause each Subsidiary
to comply, with all minimum funding requirements applicable to any pension,
employee benefit plans or employee contribution plans which are subject to ERISA
or to the Internal Revenue Code of 1986, as amended (the "Code"), and comply,
and cause each Subsidiary to comply, in all other material respects with the
provisions of ERISA and the Code, and the rules and regulations thereunder,
which are applicable to any such plan. Neither the Company nor any Subsidiary
will permit any event or condition to exist which could permit any such plan to
be terminated under circumstances which would cause the lien provided for in
Section 4068 of ERISA to attach to the assets of the Company or any Subsidiary.
(i) Budgets Approval. Not later than 45 days prior to the
commencement of each fiscal year, prepare and submit to, and obtain the approval
of a majority of the Board of Directors of, a business plan and monthly
operating budgets in reasonable detail for the next fiscal year, including
capital and operating expense budgets, cash flow projections and profit and loss
projections, all itemized in reasonable detail (including itemization of
provisions for officers' compensation). The budget and business plan shall be
reviewed by the Company periodically, and all changes therein and all material
deviations therefrom shall be resubmitted to the Board of Directors. The Company
shall not enter into any activity not in the ordinary course of business and not
envisioned by the budget and business plan, unless approved by the affirmative
vote of a majority of the members of the Board of Directors.
(j) Financings. Promptly, fully and in detail, inform the
Board of Directors of any substantive discussions, offers or contracts relating
to possible financings of any nature for the Company, whether initiated by the
Company or any other Person, except for (A) arrangements with trade creditors,
and (B) utilization by the Company or any Subsidiary of commercial lending
arrangements with financial institutions.
(k) By-laws. The Company shall at all times cause its By-laws
to provide that, unless otherwise required by the laws of the State of Delaware,
(i) any two directors or (ii) any holder or holders of at least 25% of the
outstanding Preferred Shares, shall have the right to call a meeting of the
Board of Directors or stockholders. The Company shall at all times maintain
provisions in its By-laws or Certificate of Incorporation indemnifying all
directors against liability to the maximum extent permitted under the laws of
the State of Delaware.
(l) Noncompetition and Nonsolicitation Agreements; Invention
and Nondisclosure Agreements. The Company shall obtain a Noncompetition and
Nonsolicitation
<PAGE> 19
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Agreement, and Invention and Nondisclosure Agreement in the form attached hereto
as Exhibits 2.03HA and 2.03HB, respectively, from each Key Employee of the
Company.
(m) The Board of Directors. Call, and to the extent a quorum
can be maintained, hold meetings of the Company's Board of Directors as
determined by a majority of the Board of Directors (which majority shall include
at least one representative of the Purchasers), but in any event not less than
on a quarterly basis. Promptly pay all direct out-of-pocket expenses reasonably
incurred by each non-management director of the Company in attending each
meeting of the Board of Directors or any committee thereof.
(n) Chief Executive Office. Subject to Section 4.02(j) herein,
the Company shall continue the executive search currently in effect for a Chief
Executive Officer.
4.02. Negative Covenants of the Company. Without limiting any other
covenants and provisions hereof, the Company covenants and agrees that, for so
long as at least 50% of the shares of Series A Preferred Stock which were issued
pursuant to this Agreement remain outstanding, it will comply with and observe
the following covenants and provisions, and will cause each Subsidiary, if and
when such Subsidiary exists, to comply with and observe such of the following
covenants and provisions as are applicable to such Subsidiary, and will not,
without the consent of at least 60% in interest of the holders of the Preferred
Shares:
(a) Restrictions on Indebtedness. Create, incur, assume or
suffer to exist, or permit any Subsidiary to create, incur, assume or suffer to
exist, any liability with respect to any Indebtedness for money borrowed except
the following:
(i) Indebtedness of the Company, not to exceed, in
the aggregate, $6,000,000; and
(ii) Indebtedness of the Company in respect of
Capital Expenditures subject to Section 4.02(i) herein.
(b) Merger or Sale. Except as contemplated by this Agreement
and subject to the terms of the Series A Convertible Preferred Stock, merge with
or into any other entity (except a Subsidiary or merger in which the Company is
the surviving Company and the holders of Company voting stock outstanding
immediately prior to the transaction constitute a majority of the holders of
voting stock outstanding immediately following the transaction or a
consolidation or merger pursuant to which the aggregate consideration
definitively and unconditionally payable to all of the stockholders of the
Corporation is greater than $50 million), sell to any person or entity any
assets constituting all or substantially all of the assets of the Company, or
agree to do or permit any Subsidiary to do any of the foregoing (unless the
aggregate consideration definitively and unconditionally payable to all of the
stockholders as a result of any such transaction is greater than $50 million).
(c) Assumptions or Guaranties of Indebtedness of Other
Persons. Assume, guarantee, endorse or otherwise become directly or contingently
liable on, or permit any
<PAGE> 20
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Subsidiary to assume, guarantee, endorse or otherwise become directly or
contingently liable on (including, without limitation, liability by way of
agreement, contingent or otherwise, to purchase, to provide funds for payment,
to supply funds to or otherwise invest in the debtor or otherwise to assure the
creditor against loss) any Indebtedness of any other Person, except for
guaranties by endorsement of negotiable instruments for deposit or collection in
the ordinary course of business, and except for the guaranties of the permitted
obligations of any wholly-owned Subsidiary.
(d) Distributions. Declare or pay any dividends, purchase,
redeem, retire, or otherwise acquire for value any of its capital stock (or
rights, options or wan-ants to purchase such shares) now or hereafter
outstanding, return any capital to its stockholders as such, or make any
distribution of assets to its stockholders as such, or permit any Subsidiary to
do any of the foregoing (such transactions being hereinafter referred to as
"Distributions"), except that any such Subsidiary may declare and make payment
of cash and stock dividends, return capital and make distributions of assets to
the Company, and except as specifically provided for in the Company's
Certificate of Incorporation or the Certificate of Designation, provided,
however, that nothing herein contained shall prevent the Company from:
(i) effecting a stock split (except for a reverse
stock split) or declaring or paying any dividend consisting of shares of any
class of capital stock to the holders of shares of such class of capital stock,
or
(ii) redeeming any stock of a deceased stockholder
out of insurance held by the Company on that stockholder's life, or
(iii) repurchasing the shares of Common Stock at the
original cost thereof (in accordance with the Stock Restriction and Right of
First Refusal Agreements in the form of Exhibits 2.03HA and 2.03HB,
respectively, attached hereto or similar agreement) held by officers, employees,
directors or consultants of the Company which are subject to restrictive stock
purchase agreements under which the Company has the option to repurchase such
shares upon the occurrence of certain events, including the termination of
employment,
if in the case of any such transaction the payment can be made in compliance
with the other terms of this Agreement.
(e) Change in Nature of Business. Make or permit any
Subsidiary to make, any material change in the nature of its business as
contemplated in written materials delivered to the Purchasers prior to the date
hereof.
(f) Ownership of Subsidiaries. Purchase or hold beneficially
any stock, other securities or evidences of Indebtedness in, or make any
investment in any other Person, excluding a wholly-owned subsidiary of the
Company.
(g) Issuance of Reserved Employee Shares. Grant to any of its
employees awards, options or other rights to purchase Reserved Employee Shares
unless
<PAGE> 21
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authorized by vote of the Company's Board of Directors which shall include at
least two members who arc elected solely by the Purchasers.
(h) Dealings with Affiliates and Others. Other than as
contemplated by this Agreement, and other than transactions in the ordinary
course of business involving less than $50,000, enter into any transaction,
including, without limitation, any loans or extensions of credit or royalty
agreements, with any officer or director of the Company or any Subsidiary or
holder of any class of capital stock of the Company, or any member of their
respective immediate families or any corporation or other entity directly or
indirectly affiliated with one or more of such officers, directors or
stockholders or members of their immediate families unless such transaction is
approved in advance by a majority of disinterested members of the Board of
Directors, or absent such Board of Directors approval, by a majority in interest
of the Purchasers.
(i) Capital Expenditures. Incur any Capital Expenditures in
any fiscal year in excess of the agreed upon budget therefor.
(j) Chief Executive Officer. Elect a Chief Executive Officer
unless such person has received the prior approval of those members of the Board
of Directors specified in Sections 4(i) and (ii) of the Stockholders' Agreement.
4.03. Reporting Requirements. For as long as any of the Preferred
Shares remain outstanding, the Company will furnish the following to each
Purchaser who holds at least 65,789 shares (as equitably adjusted for stock
splits, stock dividends and the like) of the Series A Preferred Stock which were
issued pursuant to this Agreement (provided, that any notice required to be
delivered pursuant to Section 4.03(e) shall be deemed delivered by providing
such notice to the directors elected by the holders of the Series A Preferred
Stock):
(a) Monthly Reports: as soon as available and in any event
within 30 days after the end of each calendar month, unaudited consolidated and
consolidating balance sheets of the Company and its Subsidiaries as of the end
of such month and consolidated and consolidating statements of income and
retained earnings of the Company and its Subsidiaries for such month and for the
period commencing at the end of the previous fiscal year and ending with the end
of such month, setting forth in each case in comparative form the corresponding
figures for the corresponding period of the preceding fiscal year, and including
comparisons to monthly budgets, a cash flow analysis for such month, a schedule
showing each expenditure of a capital nature during such month, and a summary
discussion of the Company's principal functional areas, all in reasonable detail
and duly certified (subject to year-end audit adjustments) by the chief
financial officer of the Company as having been prepared in accordance with
generally accepted accounting principles consistently applied;
(b) Quarterly Reports: to the extent not otherwise provided to
any Person, as soon as available and in any event within 45 days after the end
of each of the first three quarters of each fiscal year of the Company,
unaudited consolidated balance sheets of the Company and its Subsidiaries as of
the end of such quarter and consolidated statements of income and cash flows of
the Company and its Subsidiaries for such quarter and for the period
<PAGE> 22
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commencing at the end of the previous fiscal year and ending with the end of
such quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding period of the preceding fiscal year, and including
comparisons to quarterly budgets and a summary discussion of the Company's
principal functional areas, all in reasonable detail and duly certified (subject
to year-end audit adjustments) by the chief financial officer of the Company as
having been prepared in accordance with generally accepted accounting principles
consistently applied;
(c) Annual Reports: as soon as available and in any event
within 120 days after the end of each fiscal year of the Company (other than the
fiscal year ended December 31, 1998), a copy of the annual audit report for such
year for the Company and its Subsidiaries, including therein consolidated
balance sheets of the Company and its Subsidiaries as of the end of such fiscal
year and consolidated statements of income of the Company and its Subsidiaries
for such fiscal year, setting forth in each case in comparative form the
corresponding figures for the preceding fiscal year, all such consolidated
statements to be duly certified by the chief financial officer of the Company
and by such independent public accountants of recognized national standing
approved by a majority of the Board of Directors;
(d) Budgets: as soon as available after approval by the Board
of Directors, a business plan and monthly operating budgets for the forthcoming
fiscal year;
(e) Notice of Adverse Changes: promptly after the occurrence
thereof and in any event within 10 days after each occurrence, notice of any
material adverse change in the operations or financial condition of the Company
or any material default in any other material agreement to which the Company is
a party;
(f) Written Reports: promptly upon receipt or publication
thereof, any written reports submitted to the Company by independent public
accountants in connection with an annual or interim audit of the books of the
Company and its Subsidiaries made by such accountants or by consultants or other
experts in connection with such consultant's or other expert's review of the
Company's operations or industry, and written reports prepared by the Company to
comply with other investment or loan agreements;
(g) Notice of Proceedings: promptly after the commencement
thereof, notice of all material actions, suits and proceedings of the type
described in Section 3.04 before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting the Company or any Subsidiary; and
(h) Stockholders' and Commission Reports: promptly upon
sending, making available, or filing the same, such reports and financial
statements as the Company or any Subsidiary shall send or make available to the
stockholders of the Company or file with the Commission.
<PAGE> 23
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ARTICLE V
RIGHT OF FIRST REFUSAL
5.01. Right of First Refusal. The Company shall not issue, sell or
exchange, agree or obligate itself to issue, sell or exchange, or reserve or set
aside for issuance, sale or exchange, any (i) shares of Common Stock, (ii) any
other equity security of the Company, including without limitation, shares of
Series A Preferred Stock, (iii) any debt security of the Company (other than
debt with no equity feature) including without limitation, any debt security
which by its terms is convertible into or exchangeable for any equity security
of the Company, (iv) any security of the Company that is a combination of debt
and equity, or (v) any option, warrant or other right to subscribe for, purchase
or otherwise acquire any such equity security or any such debt security of the
Company, unless in each case the Company shall have first offered to sell such
securities (the "Offered Securities") to the Purchasers as follows: The Company
shall offer to sell to each Purchaser (a) that portion of the Offered Securities
as the number of shares of Preferred Shares then held by such Purchaser bears to
the total number of Preferred Shares held by all Purchasers (the "Basic
Amount"), and (b) such additional portion of the Offered Securities as such
Purchaser shall indicate it will purchase should the other Purchasers subscribe
for less than their Basic Amounts (the "Undersubscription Amount"), at a price
and on such other terms as shall have been specified by the Company in writing
delivered to such Purchaser (the "Offer"), which Offer by its terms shall remain
open and irrevocable for a period of fifteen (15) days from receipt of the
Offer.
5.02. Notice of Acceptance. Notice of each Purchaser's intention to
accept, in whole or in part, any Offer made pursuant to Section 5.01 shall be
evidenced by a writing signed by such Purchaser and delivered to the Company
prior to the end of the 15-day period of such offer, setting forth such of the
Purchaser's Basic Amount as such Purchaser elects to purchase and, if such
Purchaser shall elect to purchase all of its Basic Amount, such
Undersubscription Amount as such Purchaser shall elect to purchase (the "Notice
of Acceptance"). If the Basic Amounts subscribed for by all Purchasers are less
than the total Offered Securities, then each Purchaser who has set forth
Undersubscription Amounts in its Notice of Acceptance shall be entitled to
purchase, in addition to the Basic Amounts subscribed for, all Undersubscription
Amounts it has subscribed for; provided, however, that should the
Undersubscription Amounts subscribed for exceed the difference between the
Offered Securities and the Basic Amounts subscribed for (the "Available
Undersubscription Amount"), each Purchaser who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion of the
Available Undersubscription Amount as the Undersubscription Amount subscribed
for by such Purchaser bears to the total Undersubscription Amounts subscribed
for by all Purchasers subject to rounding by the Board of Directors to the
extent it reasonably deems necessary.
5.03. Conditions to Acceptances and Purchase.
(a) Permitted Sales of Refused Securities. In the event that
Notices of Acceptance are not given by the Purchasers in respect of all the
Offered Securities, the Company shall have ninety (90) days from the expiration
of the period set forth in Section 5.01 to close the
<PAGE> 24
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sale of all or any part of such Offered Securities as to which a Notice of
Acceptance has not been given by the Purchasers (the "Refused Securities") to
the Person or Persons specified in the Offer, but only for cash and otherwise in
all respects upon terms and conditions, including, without limitation, unit
price and interest rates, which are no more favorable, in the aggregate, to such
other Person or Persons or less favorable to the Company than those set forth in
the Offer.
(b) Reduction in Amount of Offered Securities. In the event
the Company shall propose to sell less than all the Refused Securities (any such
sale to be in the manner and on the terms specified in Section 5.03(a) above),
then each Purchaser shall reduce the number of, or other units of the Offered
Securities specified in its respective Notices of Acceptance to an amount which
shall be not less than the amount of the Offered Securities which the Purchaser
elected to purchase pursuant to Section 5.02 multiplied by a fraction, (i) the
numerator of which shall be the amount of Offered Securities which the Company
actually proposes to sell, and (ii) the denominator of which shall be the amount
of all Offered Securities. In the event that any Purchaser so elects to reduce
the number or amount of Offered Securities specified in its respective Notices
of Acceptance, the Company may not sell or otherwise dispose of more than the
reduced amount of the Offered Securities until such securities have again been
offered to the Purchasers in accordance with Section 5.01.
(c) Closing. Upon the closing, which shall include full
payment to the Company, of the sale to such other Person or Persons of all or
less than all the Refused Securities, the Purchasers shall purchase from the
Company, and the Company shall sell to the Purchasers, the number of Offered
Securities specified in the Notices of Acceptance, as reduced pursuant to
Section 5.03(b) if the Purchasers have so elected, upon the terms and conditions
specified in the Offer. The purchase by the Purchasers of any Offered Securities
is subject in all cases to the preparation, execution and delivery by the
Company and the Purchasers of a purchase agreement relating to such Offered
Securities reasonably satisfactory in form and substance to the Purchasers and
their respective counsel.
5.04. Further Sale. In each case, any Offered Securities not purchased
by the Purchasers or other Person or Persons in accordance with Section 5.03 may
not be sold or otherwise disposed of until they are again offered to the
Purchasers under the procedures specified in Sections 5.01, 5.02 and 5.03.
5.05. Termination of Right of First Refusal. The rights of the
Purchasers under this Article V shall terminate immediately prior to the
consummation of a Qualified Public Offering or when the Purchasers own less than
50% of the shares of Series A Preferred Stock purchased pursuant to this
Agreement, whichever is earlier, provided that the right of the Purchasers under
this Article V may be waived by the affirmative vote or consent of holders of at
least a majority of the then outstanding Preferred Shares.
5.06. Exception. The rights of the Purchasers under this Article V
shall not apply to:
(a) any Additional Shares issued at any Subsequent Closing;
<PAGE> 25
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(b) Common Stock or rights to purchase Common Stock issued or
issuable to MIT pursuant to the License Agreement;
(c) Common Stock or rights to purchase Common Stock issued or
issuable to any strategic partner of the Company, which strategic partner and
the issuance of Common Stock thereto shall be approved by both of the directors
elected solely by the holders of the Series A Preferred Stock as set forth in
the Stockholders' Agreement;
(d) Common Stock or rights to purchase Common Stock issued as
a stock dividend to holders of Common Stock or upon any subdivision or
combination of shares of Common Stock;
(e) Series A Preferred Stock issued as a dividend to holders
of Series A Preferred Stock upon any subdivision or combination of shares of
Series A Preferred Stock;
(f) the Converted Shares;
(g) any Reserved Employee Shares;
(h) Any securities issued in connection with the acquisition
by the Company of another entity by merger, purchase of all or substantially all
of the assets of, or purchase of all or substantially all of the capital stock
of such entity; or
(i) any warrants to purchase Common Stock issued in connection
with a commercial bank loan or lease with a financial institution if approved by
a majority of the Board of Directors, which majority includes the approval of
two representatives of the Purchasers.
ARTICLE VI
DEFINITIONS AND ACCOUNTING TERMS
6.01. Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Agreement" means this Series A Preferred Stock Purchase Agreement as
from time to time amended and in effect between the parties, including all
Exhibits hereto.
"Board of Directors" means the board of directors of the Company as
constituted from time to time.
"Business Plan" means the Business Plan of the Company dated as of
August 28, 1998.
"Closing" shall have the meaning attributable to it in Section 1.04 of
this Agreement.
<PAGE> 26
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"Capital Expenditures" for any period shall mean all amounts debited or
required to be debited to the fixed asset accounts on the balance sheet of the
Company during such period in accordance with generally accepted accounting
principles in respect of (a) the acquisition, construction, improvement,
replacement or betterment of land, buildings, machinery, equipment or of any
other fixed assets or leaseholds, and (b) to the extent related to and not
included in (a) above, materials, contract labor and direct labor (excluding
expenditures properly chargeable to repairs or maintenance in accordance with
generally accepted accounting principles).
"Commission" means the Securities and Exchange Commission (or any other
federal agency administering the securities laws).
"Common Stock" includes (a) the Company's Common Stock, par value $.01
per share, as authorized on the date of this Agreement, (b) any other capital
stock of any class or classes (however designated) of the Company, authorized on
or after the date hereof, the holders of which shall have the right, without
limitation as to amount, either to all or to a share of the balance of current
dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference, and the holders of which
shall ordinarily, in the absence of contingencies or in the absence of any
provision to the contrary in the Company's Certificate of Incorporation, be
entitled to vote for the election of a majority of directors of the Company
(even though the right so to vote has been suspended by the happening of such a
contingency or provision), and (c) any other securities into which or for which
any of the securities described in (a) or (b) may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.
"Company" means and shall include Akamai Technologies, Inc., a Delaware
corporation, and its successors and assigns.
"Consolidated" and "consolidating" when used with reference to any term
defined herein mean that term as applied to the accounts of the Company and its
Subsidiaries consolidated in accordance with generally accepted accounting
principles.
"Converted Shares" shall have that meaning attributable to it in
Section 1.02 of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Founders" shall mean F. Thomson Leighton, Daniel Lewin, Jonathan
Seelig, Randall Kaplan, Gilbert Friesen and David Karger.
"Indebtedness" means all obligations, contingent and otherwise, which
should, in accordance with generally accepted accounting principles, be
classified upon the obligor's balance sheet (or the notes thereto) as
liabilities, but in any event including liabilities secured by any mortgage on
property owned or acquired subject to such mortgage, whether or not the
liability secured thereby shall have been assumed, and also including (i) all
guaranties,
<PAGE> 27
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endorsements and other contingent obligations, in respect of Indebtedness of
others, whether or not the same are or should be so reflected in said balance
sheet (or the notes thereto), except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business and (ii) the present value of any lease payments due under
leases required to be capitalized in accordance with applicable Statements of
Financial Accounting Standards, determined by discounting all such payments at
the interest rate determined in accordance with applicable Statements of
Financial Accounting Standards.
"Key Employee" means and includes any Founder, the President, chief
executive officer, chief financial officer, chief operating officer, vice
president of operations, research, development, sales or marketing, or any other
individual who performs a significant role in the operations of the Company or a
Subsidiary as may be reasonably designated by the Board of Directors of the
Company.
"Person" means an individual, corporation, partnership, joint venture,
trust, or unincorporated organization, or a government or any agency or
political subdivision thereof.
"Preferred Shares" shall have the meaning attributable to it in Section
1.01 of this Agreement.
"Purchaser"and "Purchasers" shall have that meaning attributable to
those words in Section 1.01 of this Agreement and shall include the Purchasers
and also any other holder of any of the Shares.
"Qualified Public Offering" means a fully underwritten, firm commitment
public offering pursuant to an effective registration under the Securities Act
covering the offer and sale by the Company of its Common Stock in which the
aggregate net proceeds to the Company equal or exceed $20,000,000, in which the
price per share of such Common Stock equals or exceeds $22.80 (such price
subject to equitable adjustment in the event of any stock split, stock dividend,
combination, reorganization, reclassification or other similar event).
"Reserved Employee Shares" means shares of Common Stock, not to exceed
in the aggregate 650,000 shares (appropriately adjusted to reflect stock splits,
stock dividends, combinations of shares and the like with respect to the Common
Stock and subject to the provisions of the Section 4.02(g) hereof), reserved by
the Company for issuance pursuant to the Company's 1998 Stock Incentive Plan,
provided that, such number may be increased by up to 839,914 additional shares
of Common Stock (the "Founders' Shares") (appropriately adjusted to reflect
stock splits, stock dividends, combinations of shares and the like with respect
to the Common Stock and subject to the provisions of the Section 4.02(g) hereof
and including 236,900 shares previously issued or subject to options prior to
the date hereof) held by the Founders upon the repurchase of such Founders
Shares by the Company from the Founders pursuant to contractual rights held by
the Company. The foregoing numbers of Reserved Employee Shares may be increased
by the affirmative vote or written consent of the directors elected solely by
the holders of Series A Convertible Preferred Stock or the affirmative vote or
written consent of the holders of at least 60% of the then outstanding shares of
Series A Convertible Preferred Stock.
<PAGE> 28
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"Securities Act" means the Securities Act of 1933, or any similar
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
"Series A Preferred Stock" means the Series A Convertible Preferred
Stock of the Company, par value $.01 per share, having the rights, powers,
privileges and preferences set forth in Exhibit 1.01A hereto.
"Shares" shall have that meaning attributable to it in Section 1.03 of
this Agreement.
"Subsidiary" or "Subsidiaries" means any corporation, partnership,
trust or other entity of which the Company and/or any of its other Subsidiaries
(as herein defined) directly or indirectly owns at the time a majority of the
outstanding shares of every class of equity securities of such corporation,
partnership, trust or other entity.
6.02. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistently applied, and all financial data submitted pursuant to
this Agreement shall be prepared in accordance with such principles.
6.03. Knowledge. All references to the knowledge or awareness of the
Company shall mean the actual knowledge of any of F. Thomson Leighton, Daniel
Lewin, Jonathan Sileeg, Randall Kaplan, Gilbert Friesen and David Karger.
ARTICLE VII
MISCELLANEOUS
7.01. No Waiver; Cumulative Remedies. No failure or delay on the part
of any party to this Agreement in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
7.02. Amendments, Waivers and Consents. Any provision in this Agreement
to the contrary notwithstanding, and except as hereinafter provided changes in
or additions to this Agreement may be made, and compliance with any covenant or
provision set forth herein may be omitted or waived, if the Company (i) shall
obtain consent thereto in writing from the holder or holders of at least 60% of
the then outstanding shares of Series A Convertible Preferred Stock, and (ii)
shall deliver copies of such consent in writing to any holders who did not
execute such consent. Any waiver or consent may be given subject to satisfaction
of conditions stated therein and any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given. The
Company shall not offer, or agree to pay, any fee or other consideration to any
Purchaser in connection with any amendment, modification or waiver of any
<PAGE> 29
-25-
provision of this Agreement, the Certificate of Designations for the Series A
Preferred Stock, the Stockholders Agreement or the Registration Rights Agreement
unless such amendment, modification or waiver relates solely to the rights and
remedies of such Purchaser and does not adversely affect any rights or remedies
of any other holder of the Series A Preferred Stock or such fee or other
consideration is offered and paid to all Purchasers pro-rata to their holdings
of Preferred Stock. In addition, the Company shall not directly or indirectly
repurchase or retire any Series A Preferred Stock (other through the conversion
thereof in accordance with the terms of the Certificate of Designations) except
on terms and conditions offered to all Purchasers pro-rata to their holdings of
the Series A Preferred Stock.
7.03. Addresses for Notices. All notices, requests, demands and other
communications provided for hereunder shall be in writing and mailed, faxed or
delivered to each applicable party at the address set forth in Exhibit 1.01
hereto or at such other address as to which such party may inform the other
parties in writing in compliance with the terms of this Section.
If to any other holder of the Shares: at such holder's address for
notice as set forth in the register maintained by the Company, or, as to each of
the foregoing, at the addresses set forth on Exhibit 1.01 hereto or at such
other address as shall be designated by such Person in a Written notice to the
other parties complying as to delivery with the terms of this Section 7.03.
If to the Company: at the address set forth on page 1 hereof, or at
such other address as shall be designated by the Company in a written notice to
the other parties complying as to delivery with the terms of this Section, with
a copy to: Hale and Dorr LLP, 60 State Street, Boston, MA 02109, Attention: John
H. Chory, Esq.
All such notices, requests, demands and other communications shall,
when mailed (which mailing must be accomplished by first class mail, postage
prepaid; express overnight courier service; or registered mail, return receipt
requested) or transmitted by facsimile, be effective three days after deposited
in the mails or upon transmission by facsimile, respectively, addressed as
aforesaid, unless otherwise provided herein.
7.04. Costs, Expenses and Taxes. The Company agrees to pay in
connection with the preparation, execution and delivery of this Agreement and
the issuance of the Preferred Shares, the reasonable fees and expenses of Testa,
Hurwitz & Thibeault, LLP, special counsel for the Purchasers, up to a maximum of
$20,000. In addition, the Company shall pay any and all stamp and other taxes
payable or determined to be payable in connection with the execution and
delivery of this Agreement, the issuance of the Preferred Shares and the other
instruments and documents to be delivered hereunder or thereunder, and agrees to
save the Purchasers harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes.
7.05. Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the Company and the Purchasers and their respective
heirs, successors and assigns, except that the Company shall not have the right
to delegate any of its respective obligations
<PAGE> 30
-26-
hereunder or to assign its respective rights hereunder or any interest herein
without the prior written consent of the holders of at least a majority in
interest of the Shares.
7.06. Survival of Representations and Warranties. All representations
and warranties made in this Agreement, the Shares, or any other instrument or
document delivered in connection herewith or therewith, shall survive the
execution and delivery hereof or thereof.
7.07. Prior Agreements. This Agreement constitutes the entire agreement
between the parties and supersedes any prior understandings or agreements
concerning the purchase and sale of the Shares.
7.08. Severability. The provisions of this Agreement and the terms of
the Series A Preferred Stock are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or
part of a provision contained in this Agreement or the Series A Preferred Stock
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision or part of a provision of this Agreement or the terms of the
Series A Preferred Stock; but this Agreement and the terms of the Series A
Preferred Stock shall be reformed and construed as if such invalid or illegal or
unenforceable provision, or part of a provision, had never been contained
herein, and such provisions or part reformed so that it would be valid, legal
and enforceable to the maximum extent possible.
7.09. Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the General Corporation Law of the State of
Delaware as to matters within the scope thereof, and as to all other matters
shall be governed by and construed in accordance with the internal laws of the
Commonwealth of Massachusetts.
7.10. Headings. Article, Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
7.11. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
7.12. Further Assurances. From and after the date of this Agreement,
upon the request of any Purchaser or the Company, the Company and the Purchasers
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement and the Shares.
7.13. Indemnification.
(a) The Company shall, with respect to the representations,
warranties and agreement made by it herein, indemnify, defend and hold the
Purchasers harmless against all
<PAGE> 31
-27-
liability, loss or damage, together with all reasonable costs and expenses
related thereto (including legal and accounting fees and expenses (collectively,
"Losses" and individually, a "Loss")), arising from the untruth, inaccuracy or
breach of any such representations, warranties or agreements of the Company.
Without limiting the generality of the foregoing, the Purchasers shall be deemed
to have suffered Loss as a result of the untruth, inaccuracy or breach of any
such representations or warranties if such liability, loss or damage shall be
suffered by the Company as a result of, or in connection with, such untruth,
inaccuracy or breach of any facts or circumstances constituting such untruth,
inaccuracy or breach. To claim a Loss, one or more Purchasers shall deliver to
the Company a notice (the "Loss Notice") specifying in reasonable detail the
nature and estimated amount of the Loss. At the time of delivery of the Loss
Notice to the Company, a duplicate copy of the Loss Notice shall be delivered to
the other Purchasers. A determination as to the existence and amount of the Loss
claimed in the Loss Notice shall be made in accordance with Section 7.13(c)
below. At the election of the Purchasers (made within 10 days after
determination of the existence and amount of a Loss in accordance with Section
7.13(c)), the Loss shall be payable to the Purchasers in (i) cash, (ii) by means
of an adjustment in the Series A Conversion Price (as defined in Section 5A of
the Designation of the Series A Preferred Stock) as provided in Section 5H of
the Designation of the Series A Preferred Stock or (iii) by a combination of (i)
and (ii) above. Any dispute regarding a Loss shall be determined as set forth in
Section 7.13(c) herein.
(b) The representations and warranties of the Company set
forth in this Agreement shall survive the Closing until November 23, 2000 and be
of no further force or effect as of such date, except that (i) the
representations and warranties set forth in Section 3.07 shall survive until the
delivery to the Purchasers of the report described in Section 4.03(c) of this
Agreement covering the Company's fiscal year ended December 31, 1999, (ii) the
representations and warranties set forth in Sections 3.13 and 3.18 shall survive
the Closing until November 23, 1999, and (iii) the representations and
warranties set forth in Section 3.15 shall survive the Closing forever and shall
not terminate.
(c) Within 10 days after delivery of the Loss Notice, the
Purchasers shall designate a representative (the "Purchaser Representative").
The Company and the Purchaser Representative shall thereafter attempt in good
faith for 30 days to agree upon the amount of the Loss claimed in the Loss
Notice (the "Loss Amount") and the then fair market value of one share of Series
A Preferred Stock after giving effect to the Loss (the "Current Series A
Value"). If no such agreement can be reached, the Company and the Purchaser
Representative shall each promptly select an arbitrator and thereafter the two
arbitrators shall select a third arbitrator. The three arbitrators shall
thereafter determine, by majority vote and pursuant to the then rules of the
American Arbitration Association, the Loss Amount and the Current Series A
Value. Each of the arbitrators shall be a member in good standing of the
American Arbitration Association. The Company and the Purchaser Representative
shall each be permitted to submit written positions and arguments to the
arbitrators concerning the matters at issue before the arbitrators. The fees and
expenses of the arbitrators shall be borne (i) 100% by the Company, if the Loss
amount as determined by the arbitrators is greater than or equal to 50% of the
estimated amount of the Loss as set forth in the Loss Notice, or (ii) 100% by
the Purchaser or Purchasers submitting the Loss
<PAGE> 32
-28-
Notice, if the Loss Amount as determined by the arbitrators is less than 50% of
the estimated amount of the Loss as set forth in the Loss Notice.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 33
-29-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
************
THE COMPANY: PURCHASERS:
AKAMAI TECHNOLOGIES, INC. BATTERY VENTURES IV, L.P.
By: Battery Partners, IV, LLC
By: /s/ Daniel Lewin By: /s/ Todd Dagres
------------------------- ---------------------------------------
Name: Daniel Lewin Member Manager
Title: President
BATTERY INVESTMENT PARTNERS IV,
LLC
By: /s/ Todd Dagres
-----------------------------------------
Member Manager
ADASE PARTNERS, L.P.
By: ADASE PARTNERS, LLC
/s/ Arthur H. Bilger
--------------------------------------------
By: Arthur H. Bilger - Managing Member
/s/ Paul Sagan
--------------------------------------------
Paul Sagan
David Allan Kaplan Revocable Trust Dated
December 19, 1980
By: /s/ David Allan Kaplan
----------------------------------------
Name: David Allan Kaplan
---------------------------------------
Title Trustee
---------------------------------------
/s/ Jonathan Seelig
--------------------------------------------
Jonathan Seelig
<PAGE> 34
-30-
/s/ Michael Seelig
--------------------------------------------
Michael Seelig
/s/ Julie Seelig
--------------------------------------------
Julie Seelig
<PAGE> 35
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series A Convertible Preferred Stock Purchase Agreement dated as of
November 23, 1998 among Akamai Technologies, Inc. (the "Company") and the
individuals and entities named therein (the "Purchase Agreement"), (ii) joins in
and agrees to be a "Purchaser" under that certain Registration Rights Agreement
dated as of November 23, 1998 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be an "Investor" under that certain Stockholders' Agreement dated as of
November 23, 1998 among the Company and the individuals and entities named
therein (the "Stockholders' Agreement") and (iv) authorizes this signature page
to be attached to the Purchase Agreement, the Registration Rights Agreement and
the Stockholders' Agreement.
Name of Purchaser:
Gilbert B. Friesen
--------------------------------------------
Authorized Signature:
/s/ Gilbert B. Friesen
--------------------------------------------
Address:
770 Bonhill Road
--------------------------------------------
Los Angeles, CA 90049
--------------------------------------------
--------------------------------------------
Number of Shares of Series A Convertible
Preferred Stock Being Purchased:
65,789 Shares
-------
Aggregate Purchase Price ($7.60 per
Share):
$499,996.40
---------------
Agreed to and accepted this
30th day of November, 1998
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
-----------------------------
Daniel M. Lewin
President
<PAGE> 36
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series A Convertible Preferred Stock Purchase Agreement dated as of
November 23, 1998 among Akamai Technologies, Inc. (the "Company") and the
individuals and entities named therein (the "Purchase Agreement"), (ii) joins in
and agrees to be a "Purchaser" under that certain Registration Rights Agreement
dated as of November 23, 1998 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be an "Investor" under that certain Stockholders' Agreement dated as of
November 23, 1998 among the Company and the individuals and entities named
therein (the "Stockholders' Agreement") and (iv) authorizes this signature page
to be attached to the Purchase Agreement, the Registration Rights Agreement and
the Stockholders' Agreement.
Name of Purchaser:
Ehrenkranz & Ehrenkranz LLP
--------------------------------------------
Authorized Signature:
/s/ Joel S. Ehrenkranz
--------------------------------------------
Address:
375 Park Avenue
--------------------------------------------
New York, NY 10152
--------------------------------------------
--------------------------------------------
Number of Shares of Series A Convertible
Preferred Stock Being Purchased:
32,894 Shares
--------
Aggregate Purchase Price ($7.60 per
Share):
$249,994.40
-------------
Agreed to and accepted this
30th day of November, 1998.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel M. Lewin
------------------------
Daniel M. Lewin
President
<PAGE> 37
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series A Convertible Preferred Stock Purchase Agreement dated as of
November 23, 1998 among Akamai Technologies, Inc. (the "Company") and the
individuals and entities named therein (the "Purchase Agreement"), (ii) joins in
and agrees to be a "Purchaser" under that certain Registration Rights Agreement
dated as of November 23, 1998 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be an "Investor" under that certain Stockholders' Agreement dated as of
November 23, 1998 among the Company and the individuals and entities named
therein (the "Stockholders' Agreement") and (iv) authorizes this signature page
to be attached to the Purchase Agreement, the Registration Rights Agreement and
the Stockholders' Agreement.
Name of Purchaser:
Peter Morton Lifetime Trust
--------------------------------------------
Authorized Signature:
/s/ [Illegible]
--------------------------------------------
Address:
510 N. Robertson Blvd.
--------------------------------------------
Los Angeles, CA 90048
--------------------------------------------
--------------------------------------------
Number of Shares of Series A Convertible
Preferred Stock Being Purchased:
32,894 Shares
--------
Aggregate Purchase Price ($7.60 per
Share):
$249,994.40
-----------
Agreed to and accepted this
30th day of November, 1998.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel M. Lewin
------------------------
Daniel M. Lewin
President
<PAGE> 38
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series A Convertible Preferred Stock Purchase Agreement dated as of
November 23, 1998 among Akamai Technologies, Inc. (the "Company") and the
individuals and entities named therein (the "Purchase Agreement"), (ii) joins in
and agrees to be a "Purchaser" under that certain Registration Rights Agreement
dated as of November 23, 1998 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be an "Investor" under that certain Stockholders' Agreement dated as of
November 23, 1998 among the Company and the individuals and entities named
therein (the "Stockholders' Agreement") and (iv) authorizes this signature page
to be attached to the Purchase Agreement, the Registration Rights Agreement and
the Stockholders' Agreement.
Name of Purchaser:
Brian T. Bedol
--------------------------------------------
Authorized Signature:
/s/ Brian T. Bedol
--------------------------------------------
Address:
31 Eagle Rock Way
--------------------------------------------
Montclair, NJ 07042
--------------------------------------------
--------------------------------------------
Number of Shares of Series A Convertible
Preferred Stock Being Purchased:
19,736 Shares
-------
Aggregate Purchase Price ($7.60 per
Share):
$149,993.60
------------
Agreed to and accepted this
30th day of November, 1998.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel M. Lewin
-------------------------
Daniel M. Lewin
President
<PAGE> 39
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series A Convertible Preferred Stock Purchase Agreement dated as of
November 23, 1998 among Akamai Technologies, Inc. (the "Company") and the
individuals and entities named therein (the "Purchase Agreement"), (ii) joins in
and agrees to be a "Purchaser" under that certain Registration Rights Agreement
dated as of November 23, 1998 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be an "Investor" under that certain Stockholders' Agreement dated as of
November 23, 1998 among the Company and the individuals and entities named
therein (the "Stockholders' Agreement") and (iv) authorizes this signature page
to be attached to the Purchase Agreement, the Registration Rights Agreement and
the Stockholders' Agreement.
Name of Purchaser:
Richard Donner & Lauren Shuler Donner as
trustees of the R&L Donner Trust under the
amended and restated trust agreement dated
12/15/95
---------------------------------------------
Authorized Signature:
/s/ [Illegible]
---------------------------------------------
Address:
10345 W. Olympic Blvd., 2nd Floor
---------------------------------------------
Los Angeles, CA 90064
---------------------------------------------
---------------------------------------------
Number of Shares of Series A Convertible
Preferred Stock Being Purchased:
16,447 Shares
-------
Aggregate Purchase Price ($7.60 per
Share):
$124,997.20
------------
Agreed to and accepted this
30th day of November, 1998.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel M. Lewin
-------------------------
Daniel M. Lewin
President
<PAGE> 40
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series A Convertible Preferred Stock Purchase Agreement dated as of
November 23, 1998 among Akamai Technologies, Inc. (the "Company") and the
individuals and entities named therein (the "Purchase Agreement"), (ii) joins in
and agrees to be a "Purchaser" under that certain Registration Rights Agreement
dated as of November 23, 1998 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be an "Investor" under that certain Stockholders' Agreement dated as of
November 23, 1998 among the Company and the individuals and entities named
therein (the "Stockholders' Agreement") and (iv) authorizes this signature page
to be attached to the Purchase Agreement, the Registration Rights Agreement and
the Stockholders' Agreement.
Name of Purchaser:
Straight Arrow Publishers Company, L.P.
---------------------------------------------
Authorized Signature:
/s/ John M. Lagana
---------------------------------------------
John M. Lagana, VP and CFO
Address:
c/o Rolling Stone
---------------------------------------------
1290 Avenue of the Americas
---------------------------------------------
New York, NY 10104
---------------------------------------------
Number of Shares of Series A Convertible
Preferred Stock Being Purchased:
16,447 Shares
--------
Aggregate Purchase Price ($7.60 per
Share):
$124,997.20
--------------
Agreed to and accepted this
30th day of November, 1998.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel M. Lewin
------------------------
Daniel M. Lewin
President
<PAGE> 41
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series A Convertible Preferred Stock Purchase Agreement dated as of
November 23, 1998 among Akamai Technologies, Inc. (the "Company") and the
individuals and entities named therein (the "Purchase Agreement"), (ii) joins in
and agrees to be a "Purchaser" under that certain Registration Rights Agreement
dated as of November 23, 1998 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be an "Investor" under that certain Stockholders' Agreement dated as of
November 23, 1998 among the Company and the individuals and entities named
therein (the "Stockholders' Agreement") and (iv) authorizes this signature page
to be attached to the Purchase Agreement, the Registration Rights Agreement and
the Stockholders' Agreement.
Name of Purchaser:
Jonathan Seelig
---------------------------------------------
Authorized Signature:
/s/ Jonathan Seelig
---------------------------------------------
Address:
334 Harvard Street
---------------------------------------------
Cambridge, MA 02139
---------------------------------------------
---------------------------------------------
Number of Shares of Series A Convertible
Preferred Stock Being Purchased:
1,316 Shares
------
Aggregate Purchase Price ($7.60 per
Share):
$10,001.60
-------------
Agreed to and accepted this
30th day of November, 1998.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel M. Lewin
-------------------------
Daniel M. Lewin
President
<PAGE> 42
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series A Convertible Preferred Stock Purchase Agreement dated as of
November 23, 1998 among Akamai Technologies, Inc. (the "Company") and the
individuals and entities named therein (the "Purchase Agreement"), (ii) joins in
and agrees to be a "Purchaser" under that certain Registration Rights Agreement
dated as of November 23, 1998 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be an "Investor" under that certain Stockholders' Agreement dated as of
November 23, 1998 among the Company and the individuals and entities named
therein (the "Stockholders' Agreement") and (iv) authorizes this signature page
to be attached to the Purchase Agreement, the Registration Rights Agreement and
the Stockholders' Agreement.
Name of Purchaser:
Randall Kaplan
---------------------------------------------
Authorized Signature:
/s/ Randall Kaplan
---------------------------------------------
Address:
1657 Veteran Ave. #203
---------------------------------------------
Los Angeles, CA 90024
---------------------------------------------
---------------------------------------------
Number of Shares of Series A Convertible
Preferred Stock Being Purchased:
13,157 Shares
---------
Aggregate Purchase Price ($7.60 per
Share):
$99,993.20
-------------
Agreed to and accepted this
30th day of November, 1998.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel M. Lewin
------------------------
Daniel M. Lewin
President
<PAGE> 43
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series A Convertible Preferred Stock Purchase Agreement dated as of
November 23, 1998 among Akamai Technologies, Inc. (the "Company") and the
individuals and entities named therein (the "Purchase Agreement"), (ii) joins in
and agrees to be a "Purchaser" under that certain Registration Rights Agreement
dated as of November 23, 1998 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be an "Investor" under that certain Stockholders' Agreement dated as of
November 23, 1998 among the Company and the individuals and entities named
therein (the "Stockholders' Agreement") and (iv) authorizes this signature page
to be attached to the Purchase Agreement, the Registration Rights Agreement and
the Stockholders' Agreement.
Name of Purchaser:
Earl P. Galleher III
---------------------------------------------
Authorized Signature:
/s/ Earl P. Galleher III
---------------------------------------------
Address:
5910 Cranston Road
---------------------------------------------
Bethesda, MD 20816
---------------------------------------------
---------------------------------------------
Number of Shares of Series A Convertible
Preferred Stock Being Purchased:
3,289 Shares
---------
Aggregate Purchase Price ($7.60 per
Share):
$24,996.40
------------
Agreed to and accepted this
30th day of November, 1998.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel M. Lewin
-----------------------
Daniel M. Lewin
President
<PAGE> 44
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series A Convertible Preferred Stock Purchase Agreement dated as of
November 23, 1998 among Akamai Technologies, Inc. (the "Company") and the
individuals and entities named therein (the "Purchase Agreement"), (ii) joins in
and agrees to be a "Purchaser" under that certain Registration Rights Agreement
dated as of November 23, 1998 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be an "Investor" under that certain Stockholders' Agreement dated as of
November 23, 1998 among the Company and the individuals and entities named
therein (the "Stockholders' Agreement") and (iv) authorizes this signature page
to be attached to the Purchase Agreement, the Registration Rights Agreement and
the Stockholders' Agreement.
Name of Purchaser:
Linda Eder Ross
---------------------------------------------
Authorized Signature:
/s/ Linda Eder Ross
---------------------------------------------
Address:
24650 North Cromwell
---------------------------------------------
Franklin, MI 48025
---------------------------------------------
---------------------------------------------
Number of Shares of Series A Convertible
Preferred Stock Being Purchased:
3,289 Shares
---------
Aggregate Purchase Price ($7.60 per
Share):
$24,996.40
-----------
Agreed to and accepted this
30th day of November, 1998.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel M. Lewin
-------------------------
Daniel M. Lewin
President
<PAGE> 45
AKAMAI TECHNOLOGIES, INC.
Amendment No. 1 to Series A Convertible
Preferred Stock Purchase Agreement
This Amendment No. 1 to Series A Convertible Preferred Stock Purchase
Agreement (this "Amendment") is dated as of December 8, 1998 by and among Akamai
Technologies, Inc., a Delaware corporation (the "Company"), and the individuals
and entities whose signatures are set forth below (the "Purchasers").
WHEREAS, the Company and the Purchasers are parties to a Series A
Convertible Preferred Stock Purchase Agreement dated as of November 23, 1998
(the "Purchase Agreement");
WHEREAS, the Company and the Purchasers desire Polaris Venture Partners
II L.P. and Polaris Venture Partners Founders Fund II L.P. (together, the
"Polaris Funds") to join in and become parties to the Purchase Agreement as
Additional Purchasers pursuant to Section 1.04(b) thereof; and
WHEREAS, the amendment of the Purchase Agreement as provided herein is
a condition to the Polaris Funds' joining in and becoming parties to the
Purchase Agreement as Additional Purchasers;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. Effective immediately prior to the Polaris Funds' joining in and
becoming parties to the Purchase Agreement as Additional Purchasers, Section
5.01 of the Purchase Agreement shall be deleted in its entirety and the
following shall be inserted in lieu thereof:
"5.01 Right of First Refusal. The Company shall not issue,
sell or exchange, agree or obligate itself to issue, sell or exchange,
or reserve or set aside for issuance, sale or exchange, any (i) shares
of Common Stock, (ii) any other equity security of the Company,
including without limitation, shares of Series A Preferred Stock, (iii)
any debt security of the Company (other than debt with no equity
feature) including without limitation, any debt security which by its
terms is convertible into or exchangeable for any equity security of
the Company, (iv) any security of the Company that is a combination of
debt and equity, or (v) any option, warrant or other right to subscribe
for, purchase or otherwise acquire any such equity security or any such
debt security of the Company, unless in each such case the Company
shall have first offered to sell such securities (the "Offered
Securities") to the Purchasers as follows: The Company shall offer to
sell to each Purchaser (a) that portion of the Offered Securities as
the number of Preferred Shares then held by such Purchaser bears to the
total number of Preferred Shares held by all Purchasers (assuming for
these purposes that (i) the number of Preferred Shares then held by
Polaris Venture Partners II L.P. and Polaris Venture Partners Founders
Fund II L.P. equals twice the number of Preferred Shares actually held
by Polaris Venture Partners II L.P. and Polaris Venture Partners
Founders Fund II L.P., respectively, and (ii) the number of Preferred
Shares then held by all Purchasers equals the sum of (X) the number of
<PAGE> 46
Preferred Shares then held by all Purchasers other than Polaris Venture
Partners II L.P. and Polaris Venture Partners Founders Fund II L.P.
plus (Y) twice the number of Preferred Shares actually held by Polaris
Venture Partners II L.P. and Polaris Venture Partners Founders Fund II
L.P.) (the "Basic Amount"), and (b) such additional portion of the
Offered Securities as such Purchaser shall indicate it will purchase
should the other Purchasers subscribe for less than their Basic Amounts
(the "Undersubscription Amount"), at a price and on such other terms as
shall have been specified by the Company in writing delivered to such
Purchaser (the "Offer"), which Offer by its terms shall remain open and
irrevocable for a period of fifteen (15) days from receipt of the
Offer."
2. Other than as set forth above, the Purchase Agreement is ratified
and confirmed in all respects.
EXECUTED as of the date first set forth above.
COMPANY:
AKAMAI TECHNOLOGIES, INC.
By:/s/ Daniel Lewin
---------------------------------------------
Name: Daniel Lewin
Title: President
PURCHASERS:
BATTERY VENTURES IV, L.P.
By: Battery Partners IV, LLC
By:/s/ Todd Dagres
---------------------------------------------
Member Manager
BATTERY INVESTMENT PARTNERS
IV, LLC
By:/s/ Todd Dagres
---------------------------------------------
Member Manager
-2-
<PAGE> 47
ADASE PARTNERS, L.P.
By: ADASE Partners, LLC
By:/s/ Arthur Bilger
-----------------------------------------
Managing Member
/s/ Paul Sagan
-----------------------------------------
Paul Sagan
DAVID ALLAN KAPLAN REVOCABLE
TRUST DATED DECEMBER 19, 1980
By:
-----------------------------------------
David Allan Kaplan
Trustee
/s/ Jonathan Seelig
-------------------------------------------
Jonathan Seelig
/s/ Michael Seelig
-------------------------------------------
Michael Seelig
/s/ Julie Seelig
-------------------------------------------
Julie Seelig
/s/ Gilbert B. Friesen
-------------------------------------------
Gilbert B. Friesen
EHRENKRANZ & EHRENKRANZ LLP
By: /s/ Joel S. Ehrenkranz
-------------------------------------------
Name:
Title:
-3-
<PAGE> 48
PETER MORTON LIFETIME TRUST
By:/s/ Peter Morton
-------------------------------------------
Name: Peter Morton
Title: Trustee
-------------------------------------------
Brian T. Bedol
RICHARD DONNER & LAUREN SHULER
DONNER AS TRUSTEES OF THE R&L
DONNER TRUST UNDER THE
AMENDED AND RESTATED TRUST
AGREEMENT DATED 12/15/95
By:
-------------------------------------------
Name:
Title:
STRAIGHT ARROW PUBLISHERS
COMPANY, L.P.
By:
-------------------------------------------
Name:
Title:
/s/ Randall Kaplan
-------------------------------------------
Randall Kaplan
/s/ Earl P. Galleher III
-------------------------------------------
Earl P. Galleher III
/s/ Linda Eder Ross
-------------------------------------------
Linda Eder Ross
-4-
<PAGE> 49
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series A Convertible Preferred Stock Purchase Agreement dated as of
November 23, 1998 among Akamai Technologies, Inc. (the "Company") and the
individuals and entities named therein (the "Purchase Agreement"), (ii) joins in
and agrees to be a "Purchaser" under that certain Registration Rights Agreement
dated as of November 23, 1998 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be an "Investor" under that certain Stockholders' Agreement dated as of
November 23, 1998 among the Company and the individuals and entities named
therein (the "Stockholders' Agreement") and (iv) authorizes this signature page
to be attached to the Purchase Agreement, the Registration Rights Agreement and
the Stockholders' Agreement.
Name of Purchaser:
Battery Ventures IV, L.P.
-------------------------------------------
Authorized Signature:
/s/ [Illegible]
-------------------------------------------
Address:
20 William Street
-------------------------------------------
Wellesley, MA 02481
-------------------------------------------
-------------------------------------------
Number of Shares of Series A Convertible
Preferred Stock Being Purchased:
116,454 Shares
--------
Aggregate Purchase Price ($7.60 per
Share):
$885,050.40
-----------
Agreed to and accepted this
14th day of December, 1998.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel M. Lewin
-----------------------
Daniel M. Lewin
President
<PAGE> 50
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series A Convertible Preferred Stock Purchase Agreement dated as of
November 23, 1998 among Akamai Technologies, Inc. (the "Company") and the
individuals and entities named therein (the "Purchase Agreement"), (ii) joins in
and agrees to be a "Purchaser" under that certain Registration Rights Agreement
dated as of November 23, 1998 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be an "Investor" under that certain Stockholders' Agreement dated as of
November 23, 1998 among the Company and the individuals and entities named
therein (the "Stockholders' Agreement") and (iv) authorizes this signature page
to be attached to the Purchase Agreement, the Registration Rights Agreement and
the Stockholders' Agreement.
Name of Purchaser:
Battery Investment Partners IV, LLC
-------------------------------------------
Authorized Signature:
/s/ [Illegible]
-------------------------------------------
Address:
20 William Street
-------------------------------------------
Wellesley, MA 02481
-------------------------------------------
-------------------------------------------
Number of Shares of Series A Convertible
Preferred Stock Being Purchased:
1,974 Shares
--------
Aggregate Purchase Price ($7.60 per
Share):
$15,002.40
-----------
Agreed to and accepted this
14th day of December, 1998
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
-------------------------
Daniel M. Lewin
President
<PAGE> 51
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series A Convertible Preferred Stock Purchase Agreement dated as of
November 23, 1998 among Akamai Technologies, Inc. (the "Company") and the
individuals and entities named therein (the "Purchase Agreement"), (ii) joins in
and agrees to be a "Purchaser" under that certain Registration Rights Agreement
dated as of November 23, 1998 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be an "Investor" under that certain Stockholders' Agreement dated as of
November 23, 1998 among the Company and the individuals and entities named
therein (the "Stockholders' Agreement") and (iv) authorizes this signature page
to be attached to the Purchase Agreement, the Registration Rights Agreement and
the Stockholders' Agreement.
Name of Purchaser:
Polaris Venture Partners II L.P.
-------------------------------------------
Authorized Signature:
/s/ Terrance McGuire
-------------------------------------------
Address:
1000 Winter Street, Suite 3350
-------------------------------------------
Waltham, MA 02451
-------------------------------------------
-------------------------------------------
Number of Shares of Series A Convertible
Preferred Stock Being Purchased:
257,119 Shares
----------
Aggregate Purchase Price ($7.60 per
Share):
$1,954,104.40
--------------
Agreed to and accepted this
14th day of December, 1998
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
------------------------
Daniel M. Lewin
President
<PAGE> 52
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series A Convertible Preferred Stock Purchase Agreement dated as of
November 23, 1998 among Akamai Technologies, Inc. (the "Company") and the
individuals and entities named therein (the "Purchase Agreement"), (ii) joins in
and agrees to be a "Purchaser" under that certain Registration Rights Agreement
dated as of November 23, 1998 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be an "Investor" under that certain Stockholders' Agreement dated as of
November 23, 1998 among the Company and the individuals and entities named
therein (the "Stockholders' Agreement") and (iv) authorizes this signature page
to be attached to the Purchase Agreement, the Registration Rights Agreement and
the Stockholders' Agreement.
Name of Purchaser:
Polaris Venture Partners
Founders Fund II L.P.
-------------------------------------------
Authorized Signature:
/s/ Terrance McGuire
-------------------------------------------
Address:
1000 Winter Street, Suite 3350
-------------------------------------------
Waltham, MA 02451
-------------------------------------------
-------------------------------------------
Number of Shares of Series A Convertible
Preferred Stock Being Purchased:
6,044 Shares
--------
Aggregate Purchase Price ($7.60 per
Share):
$45,934.40
--------------
Agreed to and accepted this
14th day of December, 1998
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
------------------------
Daniel M. Lewin
President
<PAGE> 53
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series A Convertible Preferred Stock Purchase Agreement dated as of
November 23, 1998 among Akamai Technologies, Inc. (the "Company") and the
individuals and entities named therein (the "Purchase Agreement"), (ii) joins in
and agrees to be a "Purchaser" under that certain Registration Rights Agreement
dated as of November 23, 1998 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be an "Investor" under that certain Stockholders' Agreement dated as of
November 23, 1998 among the Company and the individuals and entities named
therein (the "Stockholders' Agreement") and (iv) authorizes this signature page
to be attached to the Purchase Agreement, the Registration Rights Agreement and
the Stockholders' Agreement.
Name of Purchaser:
George Conrades
-------------------------------------------
Authorized Signature:
/s/ George Conrades
-------------------------------------------
Address:
c/o Polaris Venture Partners
-------------------------------------------
1000 Winter Street, Suite 3350
-------------------------------------------
Waltham, MA 02451
-------------------------------------------
Number of Shares of Series A Convertible
Preferred Stock Being Purchased:
29,605 Shares
---------
Aggregate Purchase Price ($7.60 per
Share):
$224,998.00
-------------
Agreed to and accepted this
14th day of December, 1998
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
------------------------------
Daniel M. Lewin
President
<PAGE> 54
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series A Convertible Preferred Stock Purchase Agreement dated as of
November 23, 1998 among Akamai Technologies, Inc. (the "Company") and the
individuals and entities named therein (the "Purchase Agreement"), (ii) joins in
and agrees to be a "Purchaser" under that certain Registration Rights Agreement
dated as of November 23, 1998 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be an "Investor" under that certain Stockholders' Agreement dated as of
November 23, 1998 among the Company and the individuals and entities named
therein (the "Stockholders' Agreement") and (iv) authorizes this signature page
to be attached to the Purchase Agreement, the Registration Rights Agreement and
the Stockholders' Agreement.
Name of Purchaser:
David F. Callan
-------------------------------------------
Authorized Signature:
/s/ David F. Callan
-------------------------------------------
Address:
300 Commercial St #806
-------------------------------------------
Boston, MA 02109
-------------------------------------------
-------------------------------------------
Number of Shares of Series A Convertible
Preferred Stock Being Purchased:
6,578 Shares
---------
Aggregate Purchase Price ($7.60 per
Share):
$49,992.80
---------------
Agreed to and accepted this
14th day of December, 1998
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
-------------------------
Daniel M. Lewin
President
<PAGE> 55
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series A Convertible Preferred Stock Purchase Agreement dated as of
November 23, 1998 among Akamai Technologies, Inc. (the "Company") and the
individuals and entities named therein (the "Purchase Agreement"), (ii) joins in
and agrees to be a "Purchaser" under that certain Registration Rights Agreement
dated as of November 23, 1998 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be an "Investor" under that certain Stockholders' Agreement dated as of
November 23, 1998 among the Company and the individuals and entities named
therein (the "Stockholders' Agreement") and (iv) authorizes this signature page
to be attached to the Purchase Agreement, the Registration Rights Agreement and
the Stockholders' Agreement.
Name of Purchaser:
Scott Morrisse
-------------------------------------------
Authorized Signature:
/s/ Scott Morrisse
-------------------------------------------
Address:
69 Spinnaker Way
-------------------------------------------
Portsmouth, NH 03801
-------------------------------------------
-------------------------------------------
Number of Shares of Series A Convertible
Preferred Stock Being Purchased:
6,578 Shares
---------
Aggregate Purchase Price ($7.60 per
Share):
$49,992.80
--------------
Agreed to and accepted this
14th day of December, 1998
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------------
Daniel M. Lewin
President
<PAGE> 56
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series A Convertible Preferred Stock Purchase Agreement dated as of
November 23, 1998 among Akamai Technologies, Inc. (the "Company") and the
individuals and entities named therein (the "Purchase Agreement"), (ii) joins in
and agrees to be a "Purchaser" under that certain Registration Rights Agreement
dated as of November 23, 1998 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be an "Investor" under that certain Stockholders' Agreement dated as of
November 23, 1998 among the Company and the individuals and entities named
therein (the "Stockholders' Agreement") and (iv) authorizes this signature page
to be attached to the Purchase Agreement, the Registration Rights Agreement and
the Stockholders' Agreement.
Name of Purchaser:
Thomas A. Herring
-------------------------------------------
Authorized Signature:
/s/ Thomas A. Herring
-------------------------------------------
Address:
c/o Polaris Venture Partners
-------------------------------------------
1000 Winter Street, Suite 3350
-------------------------------------------
Waltham, MA 02451
-------------------------------------------
Number of Shares of Series A Convertible
Preferred Stock Being Purchased:
3,289 Shares
---------
Aggregate Purchase Price ($7.60 per
Share):
$24,996.40
-------------
Agreed to and accepted this
14th day of December, 1998
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
--------------------------
Daniel M. Lewin
President
<PAGE> 1
Exhibit 10.11
AKAMAI TECHNOLOGIES, INC.
Series B Convertible Preferred Stock
and
Series C Convertible Preferred Stock
PURCHASE AGREEMENT
Dated as of April 16, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PURCHASE AGREEMENT ............................................................. 1
ARTICLE I - PURCHASE, SALE AND TERMS OF SHARES ................................. 1
1.01 The Preferred Shares ...................................................... 1
1.02 The Converted Shares ...................................................... 1
1.03 The Shares ................................................................ 1
1.04 Purchase Price and Closing ................................................ 2
1.05 Use of Proceeds ........................................................... 4
1.06 Representations and Warranties by the Purchasers .......................... 5
ARTICLE II - CONDITIONS TO THE PURCHASERS' OBLIGATION .......................... 5
2.01 Representations and Warranties ............................................ 5
2.02 Documentation at Closing .................................................. 6
2.03 Additional Closing Conditions ............................................. 6
2.04 Consents, Waivers, Etc .................................................... 7
2.05 Bring-Down Certificate .................................................... 7
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY .................... 7
3.01 Organization and Standing ................................................. 8
3.02 Corporate Action .......................................................... 8
3.03 Governmental Approvals .................................................... 8
3.04 Litigation ................................................................ 9
3.05 Certain Agreements of Officers and Key Employees .......................... 9
3.06 Compliance with Other Instruments ......................................... 9
3.07 Material Contracts ........................................................ 10
3.08 ERISA ..................................................................... 10
3.09 Transactions with Affiliates .............................................. 10
3.10 Assumptions or Guaranties of Indebtedness of Other Persons ................ 11
3.11 Investments in Other Persons; Subsidiaries ................................ 11
3.12 Securities Laws ........................................................... 11
3.13 Disclosure ................................................................ 11
3.14 Brokers or Finders ........................................................ 11
3.15 Capitalization; Status of Capital Stock ................................... 12
3.16 Registration Rights ....................................................... 12
3.17 Books and Records ......................................................... 12
3.18 Title to Assets; Patents .................................................. 12
3.19 The Year 2000 ............................................................. 13
3.20 Financial Statements ...................................................... 13
3.21 No Undisclosed Liabilities ................................................ 14
3.22 Technology ................................................................ 14
ARTICLE IV - COVENANTS OF THE COMPANY .......................................... 14
4.01 Affirmative Covenants of the Company Other Than Reporting Requirements .... 14
4.02 Negative Covenants of the Company ......................................... 17
4.03 Reporting Requirements .................................................... 19
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V - DEFINITIONS AND ACCOUNTING TERMS ................................... 21
5.01 Certain Defined Terms ..................................................... 21
5.02 Accounting Terms .......................................................... 24
5.03 Knowledge ................................................................. 24
ARTICLE VI - MISCELLANEOUS ..................................................... 24
6.01 No Waiver; Cumulative Remedies ............................................ 24
6.02 Amendments, Waivers and Consents .......................................... 25
6.03 Addresses for Notices ..................................................... 25
6.04 Costs, Expenses and Taxes ................................................. 26
6.05 Binding Effect; Assignment ................................................ 26
6.06 Survival of Representations and Warranties ................................ 26
6.07 Prior Agreements .......................................................... 26
6.08 Severability .............................................................. 26
6.09 Governing Law ............................................................. 26
6.10 Headings .................................................................. 26
6.11 Counterparts .............................................................. 27
6.12 Further Assurances ........................................................ 27
6.13 Indemnification ........................................................... 27
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
EXHIBITS
- --------
<S> <C>
1.01 List of Purchasers of Preferred Stock
1.01A Designation of Series B Convertible Preferred Stock
1.01B Designation of Series C Convertible Preferred Stock
1.04(d)(i) List of Purchasers of Debt Securities
1.04(d)(ii) Terms of Debt Securities
1.04(e) Second Closing
2.02B Opinion of Counsel
2.03B Amended and Restated Stockholders Agreement
2.03E Amended and Restated Registration Rights Agreement
2.03GA Form of Noncompetition and Nonsolicitation Agreement
2.03GB Form of Invention and Nondisclosure Agreement
2.03HA Form of Stock Restriction Agreement
2.03HB Form of Right of First Refusal Agreement
3.01 Foreign Qualifications
3.04 Litigation
3.07 Material Contracts
3.08 ERISA
3.09 Transactions with Affiliates
3.11 Investments in Other Persons; Subsidiaries
3.15 Capitalization; Status of Capital Stock
3.16 Registration Rights
3.18(a) Title to Assets
3.18(b) Intellectual Property
3.18(c) Compensation for use of Intellectual Property Rights
3.20 Financial Statements
3.21 Undisclosed Liabilities
3.22 Technology
</TABLE>
iii
<PAGE> 5
AKAMAI TECHNOLOGIES, INC.
One Kendall Square
Cambridge, Massachusetts 02139
As of April 16, 1999
TO: The Persons listed on Exhibit 1.01 hereto
Re: Series B Convertible Preferred Stock and Series C Convertible Preferred
Stock
Ladies and Gentlemen:
Akamai Technologies, Inc., a Delaware corporation (the "Company"), agrees
with each of you as follows:
ARTICLE I
PURCHASE, SALE AND TERMS OF SHARES
1.01 The Preferred Shares. The Company has authorized the issuance and sale
of up to 1,327,500 shares of its previously authorized but unissued shares of
Series B Convertible Preferred Stock, par value $.01 per share (the "Series B
Preferred Stock"), at a purchase price of $15.066 per share to the Persons
(collectively, the "Purchasers" and, individually, a "Purchaser") and in the
respective amounts set forth in Exhibit 1.01 hereto. The designation, rights,
preferences and other terms and conditions relating to the Series B Preferred
Stock are as set forth on Exhibit 1.01A hereto. The Company has authorized the
issuance and sale of up to 145,195 shares of its previously authorized but
unissued shares of Series C Convertible Preferred Stock, par value $.01 per
share (the "Series C Preferred Stock"), at a purchase price of $34.436 per share
to the Purchasers and in the respective amounts set forth in Exhibit 1.01
hereto. The designation, rights, preferences and other terms and conditions
relating to the Series C Preferred Stock are as set forth on Exhibit 1.01B
hereto. The Series B Preferred Stock and the Series C Preferred Stock are
sometimes referred to herein as the "Preferred Shares."
1.02 The Converted Shares. The Company has authorized and has reserved and
covenants to continue to reserve, free of preemptive rights and other
preferential rights, a sufficient number of its previously authorized but
unissued shares of Common Stock to satisfy the rights of conversion of the
holders of the Preferred Shares. Any shares of Common Stock issuable upon
conversion of the Preferred Shares, and such shares when issued, are herein
referred to as the "Converted Shares."
1.03 The Shares. The Preferred Shares and the Converted Shares are
sometimes collectively referred to herein as the "Shares."
<PAGE> 6
1.04 Purchase Price and Closing.
(a) The Closing. The Company agrees to issue and sell to the
Purchasers and, subject to and in reliance upon the representations, warranties,
covenants, terms and conditions of this Agreement, the Purchasers, severally but
not jointly, agree to purchase that number of the shares of Series B Preferred
Stock set forth opposite their respective names in Exhibit 1.01. The aggregate
purchase price of the shares of Series B Preferred Stock being purchased by each
Purchaser is set forth opposite such Purchaser's name in Exhibit 1.01. The
purchase and sale shall take place at a closing (the "Closing") to be held on or
before April 16, 1999, at 10:00 A.M., at such location and at such time as may
be mutually agreed upon, subject to the satisfaction of all of the conditions to
the Closing specified in Article II herein. At the Closing the Company will
issue and deliver certificates evidencing the shares of Series B Preferred Stock
to be sold at the Closing to each of the Purchasers (or its nominee) against
payment of the full purchase price therefor by (i) wire transfer of immediately
available funds to an account designated by the Company, (ii) check payable to
the order of the Company or its designee, or (iii) any combination of (i) and
(ii) above.
(b) Option. The Baker Fund shall have the option (the "Option"),
exercisable in whole or in part in its sole discretion, to purchase from the
Company up to a maximum of 145,195 shares of Series C Preferred Stock (the
"Option Shares") at a subsequent closing (the "Subsequent Closing") at a
purchase price of $34.436 per share, under the terms and conditions of this
Agreement. The Baker Fund shall exercise the Option by giving notice (the
"Option Notice") to the Company of its intent to exercise its Option. The Option
Notice shall indicate the number of Option Shares to be purchased by the Baker
Fund at the Subsequent Closing and shall fix the date for the Subsequent
Closing, which shall be any date no earlier than the date of the Closing and no
later than the earlier of (i) December 31, 1999 and (ii) the date immediately
prior to the consummation of a Qualified Public Offering.
(c) Subsequent Closing. The Subsequent Closing shall be held at such
location and at such time as shall be specified by the Company and the
respective Purchaser. At the Subsequent Closing, the Company will issue and
deliver certificates evidencing the shares of Series C Preferred Stock to be
sold at such Subsequent Closing against payment of the full purchase price by
(i) wire transfer of immediately available funds to an account designated by the
Company, or (ii) check payable to the order of the Company or its designee, or
(iii) any combination of (i) and (ii) above. At the Subsequent Closing, the
Purchaser purchasing shares of Series C Preferred Stock shall have received a
certificate from the President of the Company stating that the representations
and warranties of the Company contained in Article III hereof and otherwise made
by the Company in writing in connection with the transactions contemplated
hereby are true and correct (giving effect to updates, if any, to the exhibits
setting forth exceptions to the representations and warranties of the Company)
and that all conditions required to be performed prior to or at the Subsequent
Closing have been performed as of the Subsequent Closing (such certificate
referred to herein as a "Bring-Down Certificate") and shall be entitled to
receive such other certificates, opinions and other documents as shall be
reasonably requested.
2
<PAGE> 7
(d) Debt Securities.
(i) In the event that the Board of Directors so determines, the
Company may require each of the Purchasers to purchase, severally and not
jointly, a new issue of senior subordinated notes and warrants (the "Debt
Securities") of the Company in the respective amounts set forth in Exhibit
1.4(d)(i), and having the terms substantially as set forth in Exhibit
1.4(d)(ii). The Company may exercise such right one time only on at least five
(5) business days' prior notice to the Purchasers, and the closing of the sale
and purchase of the Debt Securities (the "Debt Closing") shall occur no earlier
than the purchase and sale of all of the Series B Preferred Stock to be sold
hereunder and no later than thirty-five (35) days from the date of the Closing
hereunder; provided, however, that the date of the Debt Closing may be extended
with the consent of the Company and the affirmative vote or consent of the
Purchasers having 60% of the commitments set forth in Exhibit 1.4(d)(i). The
obligation of any Purchaser to purchase its respective portion of Debt
Securities shall be subject to the preparation, execution and delivery of
definitive documentation, including a Purchase Agreement, Forms of Senior Note
and Warrant, based on this Agreement (to the extent applicable) and reasonably
satisfactory to the parties, which documentation shall contain (i)
representations and warranties substantially the same as contained in Article
III herein (with appropriate adjustments to reflect the terms of the Debt
Securities) and (ii) conditions substantially equivalent to those contained in
Article II herein, and shall be subject to the further condition of there having
been no material adverse change in the business, operations, affairs or
condition of the Company or in its properties or assets taken as a whole, from
that as of the date hereof.
(ii) If, for any reason other than the Company's unwillingness to
sell or other material breach of this Agreement or the Amended and Restated
Stockholders Agreement, any Purchaser does not purchase its respective portion
of Debt Securities as contemplated by Section 1.04(d)(i) (including due to a
material adverse change in the business, operations, affairs or condition of the
Company or in its properties or assets), the Company shall have the right to
repurchase, and, if the Company so elects, the Purchaser not purchasing its
respective portion of Debt Securities shall be obligated to sell to the Company,
such Purchaser's shares of Series B Preferred Stock at the price per share paid
for such shares by such Purchaser hereunder. The Company may exercise its right
to repurchase such shares by delivering written notice (the "Repurchase Notice")
to the Purchaser within sixty (60) days after such Purchaser's failure to
purchase its respective portion of Debt Securities. Such Purchaser shall be
obligated to sell such shares to the Company within ten (10) days after receipt
of the Repurchase Notice.
(e) Second Closing.
(i) In the event that the Company shall not have sold all
1,327,500 shares of the Series B Preferred Stock at the Closing, the Company and
the Purchasers agree that at a second closing (the "Second Closing"), the
Company may issue and sell any of the unsold shares of the Series B Preferred
Stock ("Additional Shares") to one or more of the Persons listed on Exhibit
1.04(e) (the "Additional Purchasers"). The Company and the Purchasers further
agree that (i) the Company shall amend this Agreement solely to provide for the
issuance of the Additional Shares to the Additional Purchasers at the same price
and under the terms and conditions of this Agreement and (ii) the Additional
Purchasers shall become
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parties to this Agreement as amended by executing counterparts hereof. The terms
"Series B Preferred Stock", "Preferred Shares", "Purchaser" and "Purchasers",
when used in this Agreement, shall respectively be deemed to include such
Additional Shares as are issued and such Additional Purchaser and Additional
Purchasers as exist from time to time and the term "Closing" shall include the
Second Closing where appropriate.
(ii) The Second Closing shall be held at such location and at such
times and dates, but on or before May 14, 1999, as shall be specified by the
Company and the Additional Purchasers. At the Second Closing, the Company will
issue and deliver certificates evidencing the Additional Shares to be sold at
the Second Closing against payment of the full purchase price by (i) wire
transfer of immediately available funds to an account designated by the Company,
(ii) check payable to the order of the Company or its designee, or (iii) any
combination of (i) and (ii) above. At the Second Closing, the Additional
Purchasers purchasing Additional Shares at the Second Closing shall have
received a certificate from the President of the Company stating that the
representations and warranties of the Company contained in Article III hereof
and otherwise made by the Company in writing in connection with the transactions
contemplated hereby are true and correct (giving effect to updates, if any, to
the exhibits setting forth exceptions to the representations and warranties of
the Company) and that all conditions required to be performed prior to or at the
Second Closing have been performed as of such Subsequent Closing.
(f) Special Option. The Baker Fund shall have the option (the "Special
Option"), exercisable in whole or in part in its sole discretion, to purchase up
to five percent (5%) of the total number of shares of Common Stock or other
securities (the "Special Option Shares") offered in the initial public offering
of the Company (including in respect of the Special Option Shares) at a purchase
price per share equal to the price per share at which such shares are offered to
the public and on the same settlement and other terms as offered to the public.
The Baker Fund shall exercise the Special Option by giving notice to the Company
of its intent to exercise its Special Option no later than the pricing of the
initial public offering, specifying the number of Special Option Shares in
respect of which the Special Option is being exercised. All of the Special
Option Shares in respect of which the Special Option is exercised shall be fully
registered under the Securities Act. The Company agrees to cause each
underwriter of the Company's initial public offering to abide by the terms of
the Baker Fund's Special Option. The Baker Fund agrees not to offer, sell,
contract to sell, grant any option for the sale of or otherwise transfer or
dispose of any Special Option Shares for the period of the "lock-up" applicable
to other existing investors generally (not to exceed one hundred eighty (180)
days following the date of such initial public offering) without the prior
written consent of the managing underwriter of such initial public offering.
1.05 Use of Proceeds. The Company shall use the proceeds from the sale of
the Preferred Shares under this Agreement for working capital purposes,
including Capital Expenditures, and general corporate purposes.
1.06 Representations and Warranties by the Purchasers. Each of the
Purchasers represents and warrants, severally, but not jointly, that (a) it will
acquire the Preferred Shares and, if applicable, any Option Shares to be
acquired by it for its own account and that the
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Preferred Shares and, if applicable, any Option Shares are being and will be
acquired by it for the purpose of investment and not with a view to distribution
or resale thereof; (b) the execution of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
action on the part of such Purchaser, and this Agreement has been duly executed
and delivered, and constitutes a valid, legal, binding and enforceable agreement
of such Purchaser; (c) it has taken no action which would give rise to any claim
by any other person for any brokerage commissions, finders' fees or the like
relating to this Agreement or the transactions contemplated hereby; (d) such
Purchaser has had the opportunity to ask questions of and receive answers from
representatives of the Company concerning the terms of the offering of the
Preferred Shares and the Option Shares and to obtain additional information
concerning the Company and its business; and (e) such Purchaser has the ability
to evaluate the merits and risks of an investment in the Preferred Shares and
the Option Shares and can bear the economic risks of such investment. The
acquisition by each Purchaser of the Preferred Shares and the Option Shares
acquired by it shall constitute a confirmation of the representations and
warranties made by each such Purchaser as at the date of such acquisition. Each
of the Purchasers further represents that it understands and agrees that, until
registered under the Securities Act or transferred pursuant to the provisions of
Rule 144 as promulgated by the Commission, all certificates evidencing any of
the Shares, whether upon initial issuance or upon any transfer thereof, shall
bear a legend, prominently stamped or printed thereon, reading substantially as
follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD, MORTGAGED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND APPLICABLE STATE SECURITIES LAWS, OR THE AVAILABILITY OF AN EXEMPTION
FROM THE REGISTRATION PROVISIONS OF THE SECURITIES ACT OF 1933, AS AMENDED,
AND APPLICABLE STATE SECURITIES LAWS."
ARTICLE II
CONDITIONS TO THE PURCHASERS' OBLIGATION
The obligation of any Purchaser to purchase and pay for the Preferred
Shares to be purchased by it at the Closing or, if it exercises the Option, to
purchase and pay for the Option Shares at the Subsequent Closing, is subject to
the satisfaction of the following conditions:
2.01 Representations and Warranties. Each of the representations and
warranties of the Company set forth in Article III hereof shall be true and
correct on the date of the Closing.
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2.02 Documentation at Closing. The Purchasers shall have received prior to
or at the Closing all of the following documents or instruments, or evidence of
completion thereof, each in form and substance satisfactory to the Purchasers
and their counsel:
(a) A copy of the Certificate of Incorporation of the Company (the
"Certificate of Incorporation"), certified by the Secretary of State of the
State of Delaware together with a certified copy of the Certificate of
Designation of the Series B Preferred Stock and the Certificate of Designation
of the Series C Preferred Stock, a copy of the resolutions of the Board of
Directors and, if required, the stockholders of the Company evidencing the
adoption of the Company's Certificate of Designation of the Series B Preferred
Stock and the Certificate of Designation of the Series C Preferred Stock, the
approval of this Agreement, the issuance of the Preferred Shares and the Option
Shares and the other matters contemplated hereby, and a copy of the By-laws of
the Company, all of which shall have been certified by the Secretary of the
Company to be true, complete and correct in every particular, and certified
copies of all documents evidencing other necessary corporate or other action and
governmental approvals, if any, with respect to this Agreement and the Shares.
(b) The opinion of Hale and Dorr LLP, counsel to the Company, in the
form of Exhibit 2.02B attached hereto.
(c) A certificate of the Secretary of the Company which shall certify
the names of the officers of the Company authorized to sign this Agreement, the
certificates for the Preferred Shares and the Option Shares and the other
documents, instruments or certificates to be delivered pursuant to this
Agreement by the Company or any of its officers, together with the true
signatures of such officers. The Purchasers may conclusively rely on such
certificate until they shall receive a further certificate of the Secretary or
an Assistant Secretary of the Company canceling or amending the prior
certificate and submitting the signatures of the officers named in such further
certificate.
(d) A certificate of the President of the Company stating that the
representations and warranties of the Company contained in Article III hereof
and otherwise made by the Company in writing in connection with the transactions
contemplated hereby are true and correct and that all conditions required to be
performed prior to or at the Closing have been performed as of the Closing.
(e) Certificates of Good Standing for the Company from the Secretaries
of State of the States of Delaware and California, and the Commonwealth of
Massachusetts shall have been provided to counsel to the Purchasers.
2.03 Additional Closing Conditions. The Purchasers shall have received
prior to or at the Closing evidence of satisfaction or completion of the
following, in form and substance satisfactory to the Purchasers and their
counsel:
(a) The Certificate of Designation of the Series B Preferred Stock and
the Certificate of Designation of the Series C Preferred Stock shall provide for
the designation of the rights and preferences of the Series B Preferred Stock
and the Series C Preferred Stock, respectively, in the forms set forth in
Exhibit 1.01A attached hereto (the "Series B Certificate of
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Designation") and set forth in Exhibit 1.01B attached hereto (the "Series C
Certificate of Designation").
(b) An Amended and Restated Stockholders Agreement in the form set
forth in Exhibit 2.03B (the "Amended and Restated Stockholders Agreement") shall
have been executed by the parties named therein.
(c) The Company shall have paid the costs, expenses, taxes and filing
fees identified in Section 6.04.
(d) The Company, the Purchasers and the other parties named therein
shall have entered into an Amended and Restated Registration Rights Agreement in
the form set forth in Exhibit 2.03E (the "Amended and Restated Registration
Rights Agreement").
(e) The Company's By-laws shall be in form and substance reasonably
satisfactory to the Purchasers and their counsel; and not in limitation of the
foregoing, shall provide that the Chief Executive Officer shall be designated
and elected by the Board of Directors.
(f) Each of the Founders and Key Employees shall have entered into a
non-competition and non-solicitation agreement and an invention and
non-disclosure agreement in the forms attached hereto as Exhibit 2.03GA and
Exhibit 2.03GB, respectively.
2.04 Consents, Waivers, Etc. Prior to the Closing, the Company shall have
obtained all consents or waivers, if any, necessary to execute and deliver this
Agreement, issue the Preferred Shares and the Option Shares and to carry out the
transactions contemplated hereby and thereby, including without limitation the
waivers and/or consents of the holders of Series A Convertible Preferred Stock
of the Company in connection with the transactions contemplated hereby, and all
such consents and waivers shall be in full force and effect. All corporate and
other action and governmental filings necessary to effectuate the terms of this
Agreement, the Preferred Shares and the Option Shares and other agreements and
instruments executed and delivered by the Company in connection herewith shall
have been made or taken, except for any post-sale filing that may be required
under federal or state securities laws. In addition to the documents set forth
above, the Company shall have provided to the Purchasers any other information
or copies of documents that they may reasonably request.
2.05 Bring-Down Certificate. At each of the Second Closing and the
Subsequent Closing, the Baker Fund and/or the Purchaser(s) purchasing shares of
Series B Preferred Stock or Series C Preferred Stock (as the case may be) at the
applicable closing shall have received a Bring-Down Certificate and shall be
entitled to receive such other certificates, opinions and other documents as
shall be reasonably requested.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants as follows as of the date hereof
and as of
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the date of the Closing:
3.01 Organization and Standing. The Company is a duly organized and validly
existing corporation in good standing under the corporate laws of the State of
Delaware and has all requisite corporate power and authority for the ownership
and operation of its properties and for the carrying on of its business as now
conducted or as now proposed to be conducted. The Company is duly licensed or
qualified and in good standing as a foreign corporation authorized to do
business in all jurisdictions wherein the character of the property owned or
leased, or the nature of the activities conducted, by it makes such licensing or
qualification necessary as set forth in Exhibit 3.01, except where the failure
to so qualify would not have a material adverse effect on the business,
operations, affairs or condition of the Company or in its properties or assets
taken as a whole, or which might call into question the validity of this
Agreement, any of the Shares, or any action taken or to be taken pursuant hereto
or thereto (a "Material Adverse Effect").
3.02 Corporate Action. The Company has all necessary corporate power and
has taken all corporate action required to enter into and perform this
Agreement, the Amended and Restated Registration Rights Agreement, the Amended
and Restated Stockholders Agreement and any other agreements and instruments
executed in connection herewith (collectively, the "Financing Documents"). The
Financing Documents are valid and binding obligations of the Company,
enforceable in accordance with their terms. The issuance, sale and delivery of
the Preferred Shares in accordance with this Agreement, the issuance, sale and
delivery of the Option Shares have been duly authorized and reserved for
issuance, and the issuance, sale and delivery of the Converted Shares have been
duly authorized and reserved for issuance, as the case may be, by all necessary
corporate action on the part of the Company. Sufficient authorized but unissued
shares of Common Stock have been reserved by appropriate corporate action in
connection with the prospective conversion of the Preferred Shares and the
Option Shares at the initial conversion price, and the issuance of the Preferred
Shares and the Option Shares is not, and the issuance of the Converted Shares
upon the conversion of the Preferred Shares and the Option Shares will not be,
subject to preemptive rights or other preferential rights in any present
stockholders of the Company and will not conflict with any provision of any
agreement or instrument to which the Company is a party or by which it or its
property is bound.
3.03 Governmental Approvals. Except for the filing of any notice subsequent
to the Closing that may be required under applicable state and/or federal
securities laws (which, if required, shall be filed on a timely basis and a copy
of which shall be provided to the Purchasers and their counsel), no
authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or will be necessary
for the execution and delivery by the Company of this Agreement, for the offer,
issue, sale and delivery of the Preferred Shares and the Option Shares, or for
the performance by the Company of its obligations under this Agreement or the
Shares.
3.04 Litigation. Except as set forth in Exhibit 3.04, there is no
litigation or governmental proceeding or investigation pending or, to the
knowledge of the Company, threatened against the Company affecting any of its
respective properties or assets, or against any
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officer or Key Employee relating to such person's performance of duties for the
Company or relating to his stock ownership in the Company or otherwise relating
to the business of the Company, nor to the knowledge of the Company has there
occurred any event or does there exist any condition on the basis of which any
such litigation, proceeding or investigation might properly be instituted.
Neither the Company nor, to the knowledge of the Company, any officer, Key
Employee or holder of more than 5% of the Common Stock of the Company (other
than any Purchaser) is in default with respect to any order, writ, injunction,
decree, ruling or decision of any court, commission, board or other governmental
agency specifically naming the Company, such officer, Key Employee or holder of
more than 5% of the Common Stock of the Company. Except as set forth in Exhibit
3.04, there are no actions or proceedings pending or, to the knowledge of the
Company, threatened against the Company or against any officer or Key Employee
which could reasonably be expected to result, either in any case or in the
aggregate, in any Material Adverse Effect. The foregoing sentences include,
without limiting their generality, actions pending or, to the knowledge of the
Company, threatened (or any basis therefor), involving the prior employment of
any of the Company's officers or employees (including any Key Employees) or
their use in connection with the Company's business of any information or
techniques allegedly proprietary to any of their former employers.
3.05 Certain Agreements of Officers and Key Employees.
(a) To the knowledge of the Company, no officer or Key Employee of
the Company is in violation of any term of any employment contract, patent
disclosure agreement, proprietary information agreement, noncompetition
agreement, or any other contract or agreement or any restrictive covenant
relating to the employment of any such officer or Key Employee by the Company,
the nature of the business conducted or to be conducted by the Company or
relating to the use of trade secrets or proprietary or confidential information
of others. The Company has no reason to believe that the employment of the
Company's officers and Key Employees will subject the Company or any Purchaser
to any liability to third-parties. The Company has entered into Noncompetition
and Nonsolicitation Agreements and Invention and Nondisclosure Agreements with
each of its employees.
(b) To the knowledge of the Company, no officer of the Company nor
any Key Employee of the Company whose termination, either individually or in the
aggregate, would have a Material Adverse Effect, has expressed any present
intention of terminating his employment with the Company.
3.06 Compliance with Other Instruments. The Company is in compliance in all
respects with the terms and provisions of this Agreement and of its Certificate
of Incorporation and By-laws, and in all material respects with the terms and
provisions of all mortgages, indentures, leases, agreements and other
instruments by which it is bound or to which it or any of its respective
properties or assets are subject. The Company is in compliance with all
judgments specifically naming the Company or any of the Founders, decrees,
governmental orders specifically naming the Company or any of the Founders,
statutes, rules or regulations by which it is bound or to which any of its
properties or assets are subject. Neither the execution and delivery of this
Agreement or the issuance of the Shares, nor the consummation of any transaction
contemplated by this Agreement, has constituted or resulted in or will
constitute or
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result in a default or violation of any term or provision of any of the
foregoing documents, instruments, judgments, agreements, decrees, orders,
statutes, rules and regulations.
3.07 Material Contracts.
(a) Except as set forth on Exhibit 3.07, neither the Company nor any
of its properties or assets is a party to or bound by any (i) contract not made
in the ordinary course of business, or involving a commitment or payment by the
Company in excess of $50,000 or, in the Company's belief, otherwise material to
the business of the Company; (ii) contract among stockholders or granting a
right of first refusal or for a partnership or a joint venture or for the
acquisition, sale or lease of any assets or capital stock of the Company or any
other Person or involving a sharing of profits; (iii) mortgage, pledge,
conditional sales contract, security agreement, factoring agreement or other
similar contract with respect to any real or tangible personal property of the
Company; (iv) loan agreement, credit agreement, promissory note, guarantee,
subordination agreement, letter of credit or any other similar type of contract;
(v) contract with any governmental agency; or (vi) binding commitment or
agreement to enter into any of the foregoing. The Company has delivered or
otherwise made available to the Purchasers true, correct and complete copies of
the contracts listed on Exhibit 3.07 (except as noted thereon), together with
all amendments, modifications, supplements or side letters affecting the
obligations of any party thereunder.
(b) (i) Each of the contracts listed on Exhibit 3.07 is valid and
enforceable in accordance with its terms, and there is no default under any
contract listed on Exhibit 3.07 by the Company or, to the knowledge of the
Company, by any other party thereto, and no event has occurred that with the
lapse of time or the giving of notice or both would constitute a default
thereunder except where such default is not reasonably expected to have a
Material Adverse Effect and (ii) no previous or current party to any contract
has given written notice to the Company of or made a written claim with respect
to any breach or default thereunder and the Company has no knowledge of any
notice of or claim with respect to any such breach or default.
(c) With respect to the contracts listed on Exhibit 3.07 that were
assigned to the Company by a third party, all necessary consents to such
assignment have been obtained.
3.08 ERISA. Except as set forth on Exhibit 3.08, the Company does not make
and has no present intentions to make any contributions to any employee pension
benefit plans for its employees that are subject to ERISA.
3.09 Transactions with Affiliates. Except as set forth on Exhibit 3.09, as
contemplated hereby or consented to by the Purchasers in accordance with this
Agreement, there are no loans, leases, royalty agreements or other continuing
transactions between any Founder, officer, employee or director of the Company
or any Person owning 5% or more of any class of capital stock of the Company or
any member of the immediate family of such Founder, officer, employee, director
or stockholder or any corporation or other entity controlled by such officer,
employee, director or stockholder or a member of the immediate family of such
officer, employee, director or stockholder.
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3.10 Assumptions or Guaranties of Indebtedness of Other Persons. Except as
contemplated hereby or consented to by the Purchasers in accordance with this
Agreement, the Company has not assumed, guaranteed, endorsed or otherwise become
directly or contingently liable on (including, without limitation, liability by
way of agreement, contingent or otherwise, to purchase, to provide funds for
payment, to supply funds to or otherwise invest in the debtor or otherwise to
assure the creditor against loss), any Indebtedness of any other Person.
3.11 Investments in Other Persons; Subsidiaries. Except as set forth on
Exhibit 3.11 or consented to by the Purchasers in accordance with this
Agreement, the Company has not made any loan or advance to any Person which is
outstanding on the date of this Agreement, nor is it committed or obligated to
make any such loan or advance, nor does the Company own any capital stock,
assets comprising the business of, obligations of, or any interest in, any
Person except as disclosed in this Agreement. The Company has no Subsidiaries.
3.12 Securities Laws. The Company has complied with all applicable federal
and state securities laws in connection with the offer, issuance and sale of the
Shares. Prior to the Closing, neither the Company nor anyone acting on its
behalf has sold, offered to sell or solicited offers to buy the Shares or
similar securities to, or solicit offers with respect thereto from, or entered
into any preliminary conversations or negotiations relating thereto with, any
Person, so as to bring the issuance and sale of the Shares under the
registration provisions of the Securities Act, and applicable state securities
laws.
3.13 Disclosure. Neither this Agreement nor any other agreement, document,
certificate or written statement furnished to the Purchasers or their counsel by
or on behalf of the Company in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits to state a
material fact relating directly to the Company necessary in order to make the
statements contained herein or therein not misleading. There is no fact within
the knowledge of the Company which has not been disclosed herein or in writing
to the Purchasers and which taken by itself would constitute a circumstance
having a Material Adverse Effect. Without limiting the generality of the
foregoing, the Company does not have any knowledge that there exists, or there
is pending or planned, any statute, rule, law, regulation, standard or code
which would have a Material Adverse Effect on the Company's business.
3.14 Brokers or Finders. No Person has or will have, as a result of the
transactions contemplated by this Agreement, any right, interest or valid claim
against or upon the Company for any commission, fee or other compensation as a
finder or broker because of any act or omission by the Company or any of their
respective agents.
3.15 Capitalization; Status of Capital Stock. The Company has a total
authorized capitalization consisting of (i) 22,000,000 shares of Common Stock,
par value $.01 per share, of which 7,080,885 shares are issued and outstanding
and (ii) 5,000,000 shares of Preferred Stock, par value $.01 per share, of which
(A) 3,300,000 shares are designated as Series A Convertible Preferred Stock, (B)
1,327,500 shares are designated as Series B Convertible Preferred Stock, of
which no shares are issued and outstanding on the date hereof, prior to giving
effect to the transactions contemplated hereby, and (C) 145,195 shares are
designated as Series C Convertible Preferred Stock, of which no shares are
issued and outstanding on the date hereof, prior to giving
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effect to the transactions contemplated hereby. A complete list of the capital
stock of the Company that has been previously issued and the names in which such
capital stock is registered on the stock transfer books of the Company is set
forth in Exhibit 3.15 hereto. All the outstanding shares of capital stock of the
Company have been duly authorized, and are validly issued, fully paid and
non-assessable. The Preferred Shares, when issued and delivered in accordance
with the terms hereof and after payment of the purchase price therefor, the
Option Shares, when issued and delivered in accordance with the terms hereof and
after payment of the purchase price therefor and the Converted Shares, when
issued and delivered upon conversion of the Preferred Shares and the Option
Shares, will be duly authorized, validly issued, fully-paid and non-assessable.
Except as otherwise set forth in Exhibit 3.15, no options, warrants,
subscriptions or purchase rights of any nature to acquire from the Company
shares of capital stock or other securities are authorized, issued or
outstanding, nor is the Company obligated in any other manner to issue shares of
its capital stock or other securities except as contemplated by this Agreement.
Except as set forth in Exhibit 3.15, there are no restrictions on the transfer
of shares of capital stock of the Company other than those imposed by relevant
federal and state securities laws and as otherwise contemplated by this
Agreement, the Amended and Restated Stockholders Agreement referred to in
Section 2.03(b), the Amended and Restated Registration Rights Agreement referred
to in Section 2.03(e), the Series B Certificate of Designation referred to in
Section 2.03(a), the Series C Certificate of Designation referred to in Section
2.03(a) and the Stock Restriction and Right of First Refusal Agreements referred
to in Section 2.03(h). Other than as provided in this Section and in the Amended
and Restated Stockholders Agreement, there are no agreements, understandings,
trusts or other collaborative arrangements or understandings concerning the
voting of the capital stock of the Company. The offer and sale of all capital
stock and other securities of the Company issued before the Closing complied
with or were exempt from all applicable federal and state securities laws and no
stockholder has a right of rescission with respect thereto.
3.16 Registration Rights. Except as set forth in Exhibit 3.16 and except
for the rights granted to the Purchasers and certain other parties pursuant to
the Amended and Restated Registration Rights Agreement referred to in Section
2.03(e) hereof, no Person has demand or other rights to cause the Company to
file any registration statement under the Securities Act relating to any
securities of the Company or any right to participate in any such registration
statement.
3.17 Books and Records. The books of account, ledgers, order books, records
and documents of the Company accurately and completely reflect all material
information relating to the business of the Company, the location and collection
of its assets, and the nature of all transactions giving rise to the obligations
or accounts receivable of the Company.
3.18 Title to Assets; Patents.
(a) The Company has good and marketable title in fee to such of its
fixed assets, if any, as are real property, and good and marketable title to all
of its other assets and properties, free of any mortgages, pledges, charges,
liens, security interests or other encumbrances, except those occurring in the
ordinary course of business and those indicated on Exhibit 3.18(a). The Company
enjoys peaceful and undisturbed possession under all leases
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under which it is operating, and all said leases are valid and subsisting and in
full force and effect.
(b) The Company does not know of any claim, previously asserted,
pending, threatened or which may otherwise be asserted ("Claim") that would
interfere with, or adversely impact upon, the Company's unencumbered right to
use, make, sell, license, distribute, promote, apply, develop and make
derivative works of ("Use"), the patents, patent rights, permits, licenses,
trade secrets, trademarks (registered or unregistered), trademark rights, trade
names, trade name rights, franchises, copyrights (registered or unregistered),
inventions (regardless of whether patentable or not), software, confidential
information, innovations and other intellectual property rights being used to
conduct its business as now operated and as now proposed to be operated, or in
the development, manufacture, use, distribution or licensing of the Company's
proprietary technology, information, products, processes, or services
(collectively, the "Intellectual Property Rights") (a list of all patents,
trademarks, trade names, permits, and licenses Used by the Company is attached
hereto as Exhibit 3.18(b)); and the Company does not have any reason to believe
that the Use of the Intellectual Property Rights infringes, conflicts or will
conflict with valid rights of any other Person. No claim is known by the Company
to be pending or threatened to the effect that, and the Company has no reason to
believe that, any such Intellectual Property Right is invalid or unenforceable
by the Company or its licensor. Except as set forth in Exhibit 3.18(c), the
Company has no obligation known by the Company to compensate any Person for the
use of any such Intellectual Property Rights, and the Company has not granted
any Person any license or other rights to use in any manner any of the
Intellectual Property Rights of the Company, whether requiring the payment of
royalties or not.
3.19 The Year 2000. Each item of hardware, software, information
technology, embedded, or processor based system and/or any combination thereof,
used, developed, manufactured, distributed, licensed, transferred or delivered,
by the Company (collectively, the "System"), shall be able to correctly
function, operate, process data or perform date related calculations, including,
but not limited to, calculating, comparing and sequencing, from, into and
between the years 1999 and 2000, accurately process, provide and/or receive date
data, including leap year calculations, into and between the years 1999, 2000
and beyond, shall otherwise function as per the specifications thereof both
before, during and following January 1, 2000. Neither performance nor
functionality of the System shall be affected by dates prior to, during and
after January 1, 2000. A System containing or calling on a calendar function
including, without limitation, any function indexed to the CPU clock, and any
function providing specific dates or days, or calculating spans of dates or days
shall record, store, process, provide and, where appropriate, insert, true and
accurate dates and calculations for dates and spans, before, during and
following January 1, 2000. The System shall have no lesser functionality or
operability with respect to records containing dates, before, during or after
January 1, 2000 than heretofore with respect to dates prior to January 1, 2000.
The System shall be fully interoperable and interface with any and all other
system, software and/or hardware used by the Company before, during or after
January 1, 2000, and/or otherwise exchange data, including date related data
therewith.
3.20 Financial Statements. Attached hereto as Exhibit 3.20 are copies of
the unaudited balance sheet of the Company as of December 31, 1998, the
statements of income and retained
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earnings of the Company for the period ended December 31, 1998, and the
statements of cash flows of the Company for the period ended December 31, 1998
(the "Financial Statements"). Each of the Financial Statements was prepared in
good faith, is complete and correct in all material respects, has been prepared
in accordance with generally accepted accounting principles and in conformity
with the practices consistently applied by the Company and presents fairly the
financial position, results of operations and cash flows of the Company as of
the dates and for the periods indicated.
3.21 No Undisclosed Liabilities. Except as set forth on Exhibit 3.21, the
Company has no liabilities (whether accrued, absolute, contingent or otherwise,
and whether due or to become due or asserted or unasserted), except (a)
obligations under contracts described in Exhibit 3.07 or under contracts that
are not required to be disclosed thereon as a result of dollar thresholds
therein; (b) liabilities provided for in the Financial Statements (other than
liabilities which, in accordance with generally accepted accounting principles,
need not be disclosed); (c) liabilities (other than accounts payable) incurred
since the Audited Financial Statements, in the ordinary course of business
consistent with past practice, the sum of which is, in the aggregate, no greater
than $200,000; and (d) accounts payable in excess of those shown on the
Financial Statements, incurred in the ordinary course of business consistent
with past practice, the sum of which is, in the aggregate, not greater than
$200,000.
3.22 Technology. Except as set forth in Exhibit 3.22 and other than the
Intellectual Property Rights licensed to the Company pursuant to the License
Agreement, the products, processes, proprietary technology and other proprietary
know-how owned or used by the Company were completely developed by the Company's
full-time employees only; the concepts, inventions and original works of
authorship owned or used by the Company were developed or conceived by employees
within the scope of their employment by the Company and are connected with
Company's underlying products, processes and proprietary technology. No
independent contractors or consultants were used or employed by the Company in
the development of the products, processes, proprietary technology and other
proprietary know-how owned or used by the Company.
ARTICLE IV
COVENANTS OF THE COMPANY
4.01 Affirmative Covenants of the Company Other Than Reporting
Requirements. Without limiting any other covenants and provisions hereof, the
Company covenants and agrees that until the consummation of a Qualified Public
Offering, it will perform and observe the following covenants and provisions,
and will cause each Subsidiary, if and when such Subsidiary exists, to perform
and observe such of the following covenants and provisions as are applicable to
such Subsidiary:
(a) Payment of Taxes and Trade Debt. Pay and discharge, and cause
each Subsidiary to pay and discharge, all taxes, assessments and governmental
charges or levies imposed upon it or upon its income, profits or business, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might
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become a lien or charge upon any properties of the Company or any Subsidiary,
provided that neither the Company nor any Subsidiary shall be required to pay
any such tax, assessment, charge, levy or claim which is being contested in good
faith and by appropriate proceedings if the Company or any Subsidiary shall have
set aside on its books sufficient reserves, if any, with respect thereto. Pay
and cause each Subsidiary to pay, when due, or in conformity with customary
trade terms, all lease obligations, all trade debt, and all other Indebtedness
incident to the operations of the Company or its Subsidiaries, except such as
are being contested in good faith and by proper proceedings if the Company or
Subsidiary concerned shall have set aside on its books sufficient reserves, if
any, with respect thereto.
(b) Maintenance of Insurance. Obtain and maintain from reputable
insurance companies or associations a term life insurance policy on the lives of
each of F. Thomson Leighton and Daniel Lewin the face amount equal to $2,000,000
each (so long as each remains an employee of the Company), which proceeds will
be payable to the order of the Company, and maintain insurance with a reputable
insurance company or association in such amount and covering such risks as is
customary coverage covering its properties and businesses customarily carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which the Company or any Subsidiary operates for the type
and scope of its properties and businesses and maintain, and cause each
Subsidiary to maintain, such insurance. The Company will not cause or permit any
assignment of the proceeds of the life insurance policies specified in the first
sentence of this paragraph and will not borrow against such policies. The
Company will add the Baker Fund as a notice party to such policies and will
request that the issuer(s) of such policies provide such designee with at least
ten (10) days' notice before either such policy is terminated (for failure to
pay premiums or otherwise) or assigned, or before any change is made in the
designation of a beneficiary thereof.
(c) Preservation of Corporate Existence. Preserve and maintain, and,
unless the Company deems it not to be in its best interests, cause each
Subsidiary to preserve and maintain, its corporate existence, rights, franchises
and privileges in the jurisdiction of its incorporation, and qualify and remain
qualified, and cause each Subsidiary to qualify and remain qualified, as a
foreign corporation in each jurisdiction in which such qualification is
necessary or desirable in view of its business and operations or the ownership
or lease of its properties. Use commercially reasonable best efforts to secure,
preserve and maintain, and cause each Subsidiary to use commercially reasonable
best efforts to secure, preserve and maintain, all licenses and other rights to
use patents, processes, licenses, permits, trademarks, trade names, inventions,
intellectual property rights or copyrights owned or possessed by it and deemed
by the Company to be material to the conduct of its business or the business of
any Subsidiary.
(d) Compliance with Laws. Comply, and cause each Subsidiary to
comply, with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority, where noncompliance would have a Material
Adverse Effect.
(e) Inspection. Permit, upon reasonable request and notice, each of
the Purchasers who holds at least 35,000 shares of the outstanding Preferred
Shares (as equitably adjusted for stock splits, stock dividends and the like) or
any authorized agents or representatives thereof to examine and make copies of
and extracts from the records and books of account of,
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and visit and inspect the properties of the Company and any Subsidiary, to
discuss the affairs, finances and accounts of the Company and any Subsidiary
with any of its officers, directors or Key Employees and independent
accountants, and consult with and advise the management of the Company and any
Subsidiary as to their affairs, finances and accounts, all at reasonable times
and upon reasonable notice. Each Purchaser agrees that it will maintain the
confidentiality of any information so obtained by it which is not otherwise
available from other sources, subject to the disclosure of information of a
non-technical nature, including financial information, which such Purchaser
discloses to its partners and/or shareholders generally.
(f) Keeping of Records and Books of Account. Keep, and cause each
Subsidiary to keep, adequate records and books of account in which complete
entries will be made in accordance with generally accepted accounting principles
consistently applied, reflecting all financial transactions of the Company and
any Subsidiary, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, returns of merchandise, obsolescence, amortization,
taxes, bad debts and other purposes in connection with its business shall be
made.
(g) Maintenance of Properties; Material Assets. Use commercially
reasonable best efforts to maintain and preserve, and cause each Subsidiary to
use commercially reasonable best efforts to maintain and preserve, all of its
properties and assets, necessary for the proper conduct of its business, in good
repair, working order and condition, ordinary wear and tear excepted, including,
without limitation, the maintenance and preservation of any material patents,
licenses, permits or agreements being used by the Company in its business as now
operated and as now proposed to be operated, including that certain patent and
license agreement dated October 26, 1998 by and between the Massachusetts
Institute of Technology ("MIT") and the Company (the "License Agreement"). The
Company shall continue to use its best efforts to seek to obtain the assignment
of all rights (including any and all patent rights and copyrights) of those
individuals known to be authors of the Program as such term is defined in the
License Agreement.
(h) Compliance with ERISA. Comply, and cause each Subsidiary to
comply, with all minimum funding requirements applicable to any pension,
employee benefit plans or employee contribution plans which are subject to ERISA
or to the Internal Revenue Code of 1986, as amended (the "Code"), and comply,
and cause each Subsidiary to comply, in all other material respects with the
provisions of ERISA and the Code, and the rules and regulations thereunder,
which are applicable to any such plan. Neither the Company nor any Subsidiary
will permit any event or condition to exist which could permit any such plan to
be terminated under circumstances which would cause the lien provided for in
Section 4068 of ERISA to attach to the assets of the Company or any Subsidiary.
(i) Budgets Approval. Not later than 45 days prior to the commencement
of each fiscal year, prepare and submit to, and obtain the approval of a
majority of the Board of Directors of, a business plan and monthly operating
budgets in reasonable detail for the next fiscal year, including capital and
operating expense budgets, cash flow projections and profit and loss
projections, all itemized in reasonable detail (including itemization of
provisions for officers' compensation). The budget and business plan shall be
reviewed by the Company periodically, and all changes therein and all material
deviations therefrom shall be resubmitted to
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the Board of Directors. The Company shall not enter into any activity not in the
ordinary course of business and not envisioned by the budget and business plan,
unless approved by the affirmative vote of a majority of the members of the
Board of Directors.
(j) Financings. Promptly, fully and in detail, inform the Board of
Directors of any substantive discussions, offers or contracts relating to
possible financings of any nature for the Company, whether initiated by the
Company or any other Person, except for (i) arrangements with trade creditors,
and (ii) utilization by the Company or any Subsidiary of commercial lending
arrangements with financial institutions.
(k) By-laws. The Company shall at all times cause its By-laws to
provide that, unless otherwise required by the laws of the State of Delaware,
(i) any two directors or (ii) any holder or holders of at least 25% of the
outstanding Series A Preferred Stock or Series B Preferred Stock, shall have the
right to call a meeting of the stockholders. The Company shall at all times
maintain provisions in its By-laws or Certificate of Incorporation indemnifying
all directors against liability to the maximum extent permitted under the laws
of the State of Delaware.
(l) Noncompetition and Nonsolicitation Agreements; Invention and
Nondisclosure Agreements. The Company shall obtain a Noncompetition and
Nonsolicitation Agreement ("Noncompetition and Nonsolicitation Agreement"), and
Invention and Nondisclosure Agreement ("Invention and Nondisclosure Agreement")
in the form attached hereto as Exhibits 2.03HA and 2.03HB, respectively, from
each Key Employee of the Company.
(m) The Board of Directors. Call, and to the extent a quorum can be
maintained, hold meetings of the Board of Directors as determined by a majority
of the Board of Directors (which majority shall include at least one
representative designated by holders of Preferred Stock of the Company), but in
any event not less than on a quarterly basis. Promptly pay all direct
out-of-pocket expenses reasonably incurred by each non-management director of
the Company in attending each meeting of the Board of Directors or any committee
thereof.
4.02 Negative Covenants of the Company. Without limiting any other
covenants and provisions hereof, the Company covenants and agrees that, for so
long as at least 50% of the shares of Series A Preferred Stock outstanding as of
the date hereof or 50% of the shares of Series B Preferred Stock which were
issued pursuant to this Agreement remain outstanding, it will comply with and
observe the following covenants and provisions, and will cause each Subsidiary,
if and when such Subsidiary exists, to comply with and observe such of the
following covenants and provisions as are applicable to such Subsidiary, and
will not, without the consent of at least 50% in interest of the holders of the
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock,
voting together as a single class on a Common Stock equivalent basis:
(a) Restrictions on Indebtedness. Create, incur, assume or suffer to
exist, or permit any Subsidiary to create, incur, assume or suffer to exist, any
liability with respect to any Indebtedness for money borrowed except the
following:
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(i) Indebtedness for money borrowed by the Company, not to exceed,
in the aggregate, $25,000,000; and
(ii) Indebtedness of the Company in respect of Capital
Expenditures subject to Section 4.02(i) herein.
(b) Merger or Sale. Merge with or into any other entity (except a
Subsidiary or merger in which the Company is the surviving Company and the
holders of Company voting stock outstanding immediately prior to the transaction
constitute a majority of the holders of voting stock outstanding immediately
following the transaction or a consolidation or merger pursuant to which the
aggregate consideration definitively and unconditionally payable to all of the
stockholders of the Company is greater than $400 million), sell to any person or
entity any assets constituting all or substantially all of the assets of the
Company, or agree to do or permit any Subsidiary to do any of the foregoing
(unless the aggregate consideration definitively and unconditionally payable to
the Company or all of the stockholders as a result of any such transaction is
greater than $400 million).
(c) Assumptions or Guaranties of Indebtedness of Other Persons.
Assume, guarantee, endorse or otherwise become directly or contingently liable
on, or permit any Subsidiary to assume, guarantee, endorse or otherwise become
directly or contingently liable on (including, without limitation, liability by
way of agreement, contingent or otherwise, to purchase, to provide funds for
payment, to supply funds to or otherwise invest in the debtor or otherwise to
assure the creditor against loss) any Indebtedness of any other Person, except
for guaranties by endorsement of negotiable instruments for deposit or
collection in the ordinary course of business, and except for the guaranties of
the permitted obligations of any wholly-owned Subsidiary.
(d) Distributions. Declare or pay any dividends, purchase, redeem,
retire, or otherwise acquire for value any of its capital stock (or rights,
options or warrants to purchase such shares) now or hereafter outstanding,
return any capital to its stockholders as such, or make any distribution of
assets to its stockholders as such, or permit any Subsidiary to do any of the
foregoing (such transactions being hereinafter referred to as "Distributions"),
except that any such Subsidiary may declare and make payment of cash and stock
dividends, return capital and make distributions of assets to the Company, and
except as specifically provided for in the Company's Certificate of
Incorporation, the Series B Certificate of Designation or the Series C
Certificate of Designation; provided, however, that nothing herein contained
shall prevent the Company from:
(i) effecting a stock split (except for a reverse stock split) or
declaring or paying any dividend consisting of shares of any class of capital
stock to the holders of shares of such class of capital stock, or
(ii) redeeming any stock of a deceased stockholder out of
insurance held by the Company on that stockholder's life, or
(iii) repurchasing the shares of Common Stock at the original
cost thereof (in accordance with the Stock Restriction and Right of First
Refusal Agreements substantially in
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the form of Exhibits 2.03HA and 2.03HB, respectively, attached hereto or similar
agreement) held by officers, employees, directors or consultants of the Company
which are subject to restrictive stock purchase agreements under which the
Company has the option to repurchase such shares upon the occurrence of certain
events, including the termination of employment,
if in the case of any such transaction the payment can be made in compliance
with the other terms of this Agreement.
(e) Change in Nature of Business. Make or permit any Subsidiary to
make, any material change in the nature of its business as contemplated in
written materials delivered to the Purchasers prior to the date hereof.
(f) Ownership of Subsidiaries. Purchase or hold beneficially any
stock, other securities or evidences of Indebtedness in, or make any investment
in any other Person, excluding a wholly-owned subsidiary of the Company.
(g) Issuance of Reserved Employee Shares. Grant to any of its
employees awards, options or other rights to purchase Reserved Employee Shares
unless authorized by vote of a majority of the Board of Directors which shall
include at least two members designated by holders of Preferred Stock of the
Company.
(h) Dealings with Affiliates and Others. Other than as contemplated by
this Agreement, and other than transactions in the ordinary course of business
involving less than $50,000, enter into any transaction, including, without
limitation, any loans or extensions of credit or royalty agreements, with any
officer or director of the Company or any Subsidiary or holder of any class of
capital stock of the Company, or any member of their respective immediate
families or any corporation or other entity directly or indirectly affiliated
with one or more of such officers, directors or stockholders or members of their
immediate families unless such transaction is approved in advance by a majority
of disinterested members of the Board of Directors, or absent such Board of
Directors approval, by a majority in interest of the Purchasers.
(i) Capital Expenditures. Incur any Capital Expenditures in any fiscal
year in excess of the agreed upon budget therefor.
(j) Chief Executive Officer. Elect a Chief Executive Officer unless
such person has received the prior approval of those members of the Board of
Directors specified in Sections 4(i) and (ii) of the Amended and Restated
Stockholders Agreement.
4.03 Reporting Requirements. For as long as any of the Preferred Shares
remain outstanding, the Company will furnish the following to each Purchaser who
holds at least 35,000 shares (as equitably adjusted for stock splits, stock
dividends and the like) of the Series B Preferred Stock which were issued
pursuant to this Agreement (provided, that any notice required to be delivered
pursuant to Section 4.03(e) shall be deemed delivered by providing such notice
to the director elected by the holders of the Series B Preferred Stock):
(a) Monthly Reports: as soon as available and in any event within 30
days after the end of each calendar month, unaudited consolidated and
consolidating balance sheets of
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the Company and its Subsidiaries as of the end of such month and consolidated
and consolidating statements of income and retained earnings of the Company and
its Subsidiaries for such month and for the period commencing at the end of the
previous fiscal year and ending with the end of such month, setting forth in
each case in comparative form the corresponding figures for the corresponding
period of the preceding fiscal year, and including comparisons to monthly
budgets, a cash flow analysis for such month, a schedule showing each
expenditure of a capital nature during such month, and a summary discussion of
the Company's principal functional areas, all in reasonable detail and duly
certified (subject to year-end audit adjustments) by the chief financial officer
of the Company as having been prepared in accordance with generally accepted
accounting principles consistently applied;
(b) Quarterly Reports: to the extent not otherwise provided to any
Person, as soon as available and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of the Company, unaudited
consolidated balance sheets of the Company and its Subsidiaries as of the end of
such quarter and consolidated statements of income and cash flows of the Company
and its Subsidiaries for such quarter and for the period commencing at the end
of the previous fiscal year and ending with the end of such quarter, setting
forth in each case in comparative form the corresponding figures for the
corresponding period of the preceding fiscal year, and including comparisons to
quarterly budgets and a summary discussion of the Company's principal functional
areas, all in reasonable detail and duly certified (subject to year-end audit
adjustments) by the chief financial officer of the Company as having been
prepared in accordance with generally accepted accounting principles
consistently applied;
(c) Annual Reports: as soon as available and in any event within 120
days after the end of each fiscal year of the Company, a copy of the annual
audit report for such year for the Company and its Subsidiaries, including
therein consolidated balance sheets of the Company and its Subsidiaries as of
the end of such fiscal year and consolidated statements of income of the Company
and its Subsidiaries for such fiscal year, setting forth in each case in
comparative form the corresponding figures for the preceding fiscal year, all
such consolidated statements to be duly certified by the chief financial officer
of the Company and by such independent public accountants of recognized national
standing approved by a majority of the Board of Directors;
(d) Budgets: as soon as available after approval by the Board of
Directors, a business plan and monthly operating budgets for the forthcoming
fiscal year;
(e) Notice of Adverse Changes: promptly after the occurrence thereof
and in any event within 10 days after each occurrence, notice of any material
adverse change in the operations or financial condition of the Company or any
material default in any other material agreement to which the Company is a
party;
(f) Written Reports: promptly upon receipt or publication thereof, any
written reports submitted to the Company by independent public accountants in
connection with an annual or interim audit of the books of the Company and its
Subsidiaries made by such accountants or by consultants or other experts in
connection with such consultant's or other
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expert's review of the Company's operations or industry, and written reports
prepared by the Company to comply with other investment or loan agreements;
(g) Notice of Proceedings: promptly after the commencement thereof,
notice of all material actions, suits and proceedings of the type described in
Section 3.04 before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, affecting the Company or
any Subsidiary; and
(h) Stockholders' and Commission Reports: promptly upon sending,
making available, or filing the same, such reports and financial statements as
the Company or any Subsidiary shall send or make available to the stockholders
of the Company or file with the Commission.
ARTICLE V
DEFINITIONS AND ACCOUNTING TERMS
5.01 Certain Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Agreement" means this Series B Convertible Preferred Stock and Series C
Convertible Preferred Stock Purchase Agreement as from time to time amended and
in effect between the parties, including all Exhibits hereto.
"Baker Fund" means Baker Communications Fund, L.P., a Delaware limited
partnership, and its and its successors and assigns holding at least 2,000
shares of Series B Preferred Stock and/or Series C Preferred Stock.
"Board of Directors" means the board of directors of the Company as
constituted from time to time.
"Capital Expenditures" for any period shall mean all amounts debited or
required to be debited to the fixed asset accounts on the balance sheet of the
Company during such period in accordance with generally accepted accounting
principles in respect of (a) the acquisition, construction, improvement,
replacement or betterment of land, buildings, machinery, equipment or of any
other fixed assets or leaseholds, and (b) to the extent related to and not
included in (a) above, materials, contract labor and direct labor (excluding
expenditures properly chargeable to repairs or maintenance in accordance with
generally accepted accounting principles).
"Closing" shall have the meaning attributable to it in Section 1.04 of this
Agreement.
"Commission" means the Securities and Exchange Commission (or any other
federal agency administering the securities laws).
"Common Stock" includes (a) the Company's Common Stock, par value $.01 per
share,
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as authorized on the date of this Agreement, (b) any other capital stock of any
class or classes (however designated) of the Company, authorized on or after the
date hereof, the holders of which shall have the right, without limitation as to
amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on any
shares entitled to preference, and the holders of which shall ordinarily, in the
absence of contingencies or in the absence of any provision to the contrary in
the Company's Certificate of Incorporation, be entitled to vote for the election
of a majority of directors of the Company (even though the right so to vote has
been suspended by the happening of such a contingency or provision), and (c) any
other securities into which or for which any of the securities described in (a)
or (b) may be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
"Company" means and shall include Akamai Technologies, Inc., a Delaware
corporation, and its successors and assigns.
"Consolidated" and "consolidating" when used with reference to any term
defined herein mean that term as applied to the accounts of the Company and its
Subsidiaries consolidated in accordance with generally accepted accounting
principles.
"Converted Shares" shall have that meaning attributable to it in Section
1.02 of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Founders" shall mean F. Thomson Leighton, Daniel Lewin, Jonathan Seelig,
Randall Kaplan, Gilbert Friesen and David Karger.
"Indebtedness" means all obligations, contingent and otherwise, for
borrowed money which should, in accordance with generally accepted accounting
principles, be classified upon the obligor's balance sheet (or the notes
thereto) as liabilities, but in any event including liabilities secured by any
mortgage on property owned or acquired subject to such mortgage, whether or not
the liability secured thereby shall have been assumed, and also including (a)
all guaranties, endorsements and other contingent obligations, in respect of
Indebtedness of others, whether or not the same are or should be so reflected in
said balance sheet (or the notes thereto), except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business and (b) the present value of any lease payments due
under leases required to be capitalized in accordance with applicable Statements
of Financial Accounting Standards, determined by discounting all such payments
at the interest rate determined in accordance with applicable Statements of
Financial Accounting Standards.
"Key Employee" means and includes any Founder, the President, chief
executive officer, chief financial officer, chief operating officer, vice
president of operations, research, development, sales or marketing, or any other
individual who performs a significant role in the operations of the Company or a
Subsidiary as may be reasonably designated by the Board of Directors.
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"Option" shall have the meaning attributable to it in Section 1.04(b) of
this Agreement.
"Option Shares" shall have the meaning attributable to it in Section
1.04(b) of this Agreement.
"Person" means an individual, corporation, partnership, joint venture,
trust, or unincorporated organization, or a government or any agency or
political subdivision thereof.
"Preferred Shares" shall have the meaning attributable to it in Section
1.01 of this Agreement.
"Preferred Stock" means the Series A Preferred Stock, the Series B
Preferred Stock and the Series C Preferred Stock.
"Purchaser" and "Purchasers" shall have that meaning attributable to those
words in Section 1.01 of this Agreement and shall include the Purchasers and
also any other holder of the Shares who holds at least 2,000 shares of Series B
Preferred Stock and/or Series C Preferred Stock.
"Qualified Public Offering" means a fully underwritten, firm commitment
public offering pursuant to an effective registration under the Securities Act
covering the offer and sale by the Company of its Common Stock in which (i) the
aggregate gross proceeds from such offering to the Company shall be at least
$20,000,000; and (ii) the price paid by the public for such shares shall be at
least (x) 2.0 times the then Series B Conversion Price if the public offering
occurs prior to the 18 month anniversary of the date of the Closing, or (y) 3.0
times the then Series B Conversion Price if the public offering occurs on or
after the 18 month anniversary of the date of the Closing.
"Reserved Employee Shares" means shares of Common Stock, not to exceed in
the aggregate 3,450,000 shares (appropriately adjusted to reflect stock splits,
stock dividends, combinations of shares and the like with respect to the Common
Stock and subject to the provisions of the Section 4.02(g) hereof), reserved by
the Company for issuance pursuant to the Company's 1998 Stock Incentive Plan,
provided that such number may be increased by up to 2,519,742 additional shares
of Common Stock (the "Founders' Shares") (appropriately adjusted to reflect
stock splits, stock dividends, combinations of shares and the like with respect
to the Common Stock and subject to the provisions of the Section 4.02(g) hereof
and including 710,700 shares previously issued or subject to options prior to
the date hereof) held by the Founders upon the repurchase of such Founders
Shares by the Company from the Founders pursuant to contractual rights held by
the Company. The foregoing numbers of Reserved Employee Shares may be increased
by the affirmative vote or written consent of a majority of the directors
elected solely by the holders of Series A Preferred Stock and Series B Preferred
Stock or the affirmative vote or written consent of the holders of at least 50%
of the then outstanding shares of Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock, voting together as a single class on a
Common Stock equivalent basis.
"Securities Act" means the Securities Act of 1933, or any similar federal
statute, and the
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rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"Series B Conversion Price" shall have the meaning attributable to it in
the Series B Certificate of Designation.
"Series C Conversion Price" shall have the meaning attributable to it in
the Series C Certificate of Designation.
"Series A Preferred Stock" means the Series A Convertible Preferred Stock
of the Company, par value $.01 per share.
"Series B Preferred Stock" means the Series B Convertible Preferred Stock
of the Company, par value $.01 per share, having the rights, powers, privileges
and preferences set forth in Exhibit 1.01A hereto.
"Series C Preferred Stock" means the Series C Convertible Preferred Stock
of the Company, par value $.01 per share, having the rights, powers, privileges
and preferences set forth in Exhibit 1.01B hereto.
"Shares" shall have that meaning attributable to it in Section 1.03 of this
Agreement.
"Subsidiary" or "Subsidiaries" means any corporation, partnership, trust or
other entity of which the Company and/or any of its other Subsidiaries (as
herein defined) directly or indirectly owns at the time a majority of the
outstanding shares of every class of equity securities of such corporation,
partnership, trust or other entity.
5.02 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted accounting principles
consistently applied, and all financial data submitted pursuant to this
Agreement shall be prepared in accordance with such principles.
5.03 Knowledge. All references to the knowledge or awareness of the Company
shall mean the knowledge of any director or Key Employee of the Company.
ARTICLE VI
MISCELLANEOUS
6.01 No Waiver; Cumulative Remedies. No failure or delay on the part of any
party to this Agreement in exercising any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
6.02 Amendments, Waivers and Consents. Any provision in this Agreement to
the contrary notwithstanding, and except as hereinafter provided changes in or
additions to this
24
<PAGE> 29
Agreement may be made, and compliance with any covenant or provision set forth
herein may be omitted or waived, if the Company (i) shall obtain consent thereto
in writing from the holder or holders of at least 60% of the then outstanding
shares of Series B Preferred Stock, and (ii) shall deliver copies of such
consent in writing to any holders who did not execute such consent; provided,
however, that any provision set forth in Section 4.02 of this Agreement (except
for Section 4.02(b) and 4.02(h), the waiver or amendment of which shall require
consent thereto in writing from the holder or holders of at least 60% of the
then outstanding shares of Series B Preferred Stock) may be amended or waived
with the written consent of more than 50% in interest of the holders of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, voting
together as a single class on a Common Stock equivalent basis. Any waiver or
consent may be given subject to satisfaction of conditions stated therein and
any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given. The Company shall not offer, or agree to
pay, any fee or other consideration to any Purchaser in connection with any
amendment, modification or waiver of any provision of this Agreement, the Series
B Certificate of Designation, the Series C Certificate of Designation, the
Amended and Restated Stockholders Agreement or the Amended and Restated
Registration Rights Agreement unless such amendment, modification or waiver
relates solely to the rights and remedies of such Purchaser and does not
adversely affect any rights or remedies of any other holder of the Series B
Preferred Stock or of the Series C Preferred Stock or such fee or other
consideration is offered and paid to all Purchasers pro rata to their holdings
of Series B Preferred Stock and Series C Preferred Stock. In addition, the
Company shall not directly or indirectly repurchase or retire any Series B
Preferred Stock or Series C Preferred Stock (other through the conversion
thereof in accordance with the terms of the Series B Certificate of Designation
or the Series C Certificate of Designation, as the case may be).
6.03 Addresses for Notices. All notices, requests, demands and other
communications provided for hereunder shall be in writing and mailed, faxed or
delivered to each applicable party at the address set forth in Exhibit 1.01
hereto or at such other address as to which such party may inform the other
parties in writing in compliance with the terms of this Section.
If to any other holder of the Shares: at such holder's address for notice
as set forth in the register maintained by the Company, or, as to each of the
foregoing, at the addresses set forth on Exhibit 1.01 hereto or at such other
address as shall be designated by such Person in a written notice to the other
parties complying as to delivery with the terms of this Section 6.03.
If to the Company: at the address set forth on page 1 hereof, or at such
other address as shall be designated by the Company in a written notice to the
other parties complying as to delivery with the terms of this Section, with a
copy to: Hale and Dorr LLP, 60 State Street, Boston, MA 02109, Attention: John
H. Chory, Esq.
All such notices, requests, demands and other communications shall, when
mailed (which mailing must be accomplished by first class mail, postage prepaid;
express overnight courier service; or registered mail, return receipt requested)
or transmitted by facsimile, be effective three days after deposited in the
mails or upon transmission by facsimile, respectively, addressed as aforesaid,
unless otherwise provided herein.
25
<PAGE> 30
6.04 Costs, Expenses and Taxes. The Company agrees to pay in connection
with the preparation, execution and delivery of this Agreement and the issuance
of the Preferred Shares, the reasonable out-of-pocket expenses of the Baker Fund
(including legal, accounting and other expenses), up to a maximum of $30,000. In
addition, the Company shall pay any and all stamp and other taxes payable or
determined to be payable in connection with the execution and delivery of this
Agreement, the issuance of the Preferred Shares and the other instruments and
documents to be delivered hereunder or thereunder, and agrees to save the
Purchasers harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes.
6.05 Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the Company and the Purchasers and their respective
heirs, successors and assigns, except that the Company shall not have the right
to delegate any of its respective obligations hereunder or to assign its
respective rights hereunder or any interest herein without the prior written
consent of the holders of at least a majority in interest of the Shares.
6.06 Survival of Representations and Warranties. All representations and
warranties made in this Agreement, the Shares, or any other instrument or
document delivered in connection herewith or therewith, shall survive the
execution and delivery hereof or thereof.
6.07 Prior Agreements. This Agreement constitutes the entire agreement
between the parties and supersedes any prior understandings or agreements
concerning the purchase and sale of the Shares.
6.08 Severability. The provisions of this Agreement and the terms of the
Series B Preferred Stock and the Series C Preferred Stock are severable and, in
the event that any court of competent jurisdiction shall determine that any one
or more of the provisions or part of a provision contained in this Agreement or
the Series B Preferred Stock or the Series C Preferred Stock shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
or part of a provision of this Agreement or the terms of the Series B Preferred
Stock or the Series C Preferred Stock; but this Agreement and the terms of the
Series B Preferred Stock and the Series C Preferred Stock, as the case may be,
shall be reformed and construed as if such invalid or illegal or unenforceable
provision, or part of a provision, had never been contained herein, and such
provisions or part reformed so that it would be valid, legal and enforceable to
the maximum extent possible.
6.09 Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the General Corporation Law of the State of
Delaware as to matters within the scope thereof, and as to all other matters
shall be governed by and construed in accordance with the internal laws of the
Commonwealth of Massachusetts.
6.10 Headings. Article, Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
26
<PAGE> 31
6.11 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
6.12 Further Assurances. From and after the date of this Agreement, upon
the request of any Purchaser or the Company, the Company and the Purchasers
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement and the Shares.
6.13 Indemnification.
(a) The Company shall, with respect to the representations, warranties
and agreements made by it herein, indemnify, defend and hold the Purchasers
harmless against all liability, loss or damage, together with all reasonable
costs and expenses related thereto (including legal and accounting fees and
expenses (collectively, "Losses" and individually, a "Loss")), arising from the
untruth, inaccuracy or breach of any such representations, warranties or
agreements of the Company. Without limiting the generality of the foregoing, the
Purchasers shall be deemed to have suffered a Loss as a result of the untruth,
inaccuracy or breach of any such representations or warranties if such Loss
shall be suffered by the Company as a result of, or in connection with, such
untruth, inaccuracy or breach of any facts or circumstances constituting such
untruth, inaccuracy or breach. To claim a Loss, one or more Purchasers shall
deliver to the Company a notice (the "Loss Notice") specifying in reasonable
detail the nature and estimated amount of the Loss. At the time of delivery of
the Loss Notice to the Company, a duplicate copy of the Loss Notice shall be
delivered to the other Purchasers. A determination as to the existence and
amount of the Loss claimed in the Loss Notice shall be made in accordance with
Section 6.13(c) below. Any dispute regarding a Loss shall be determined as set
forth in Section 6.13(c) herein.
(b) The representations and warranties of the Company set forth in
this Agreement shall survive the Closing until April 16, 2001 and be of no
further force or effect as of such date, except that (i) the representations and
warranties set forth in Sections 3.13 and 3.18 shall survive the Closing until
April 16, 2000, and (ii) the representations and warranties set forth in Section
3.15 shall survive the Closing forever and shall not terminate.
(c) Within 10 days after delivery of the Loss Notice, the Purchasers
shall designate a representative (the "Purchaser Representative"). The Company
and the Purchaser Representative shall thereafter attempt in good faith for 30
days to agree upon the amount of the Loss claimed in the Loss Notice (the "Loss
Amount") and the then fair market value of one share of Series B Preferred Stock
and one share of Series C Preferred Stock after giving effect to the Loss
(respectively, the "Current Series B Value" and the "Current Series C Value").
If no such agreement can be reached, the Company and the Purchaser
Representative shall each promptly select an arbitrator and thereafter the two
arbitrators shall select a third arbitrator. The three arbitrators shall
thereafter determine, by majority vote and pursuant to the then rules of the
American Arbitration Association, the Loss Amount, the Current Series B Value
and the Current Series C Value. Each of the arbitrators shall be a member in
good standing of the American
27
<PAGE> 32
Arbitration Association. The Company and the Purchaser Representative shall each
be permitted to submit written positions and arguments to the arbitrators
concerning the matters at issue before the arbitrators. The fees and expenses of
the arbitrators shall be borne (i) 100% by the Company, if the Loss Amount as
determined by the arbitrators is greater than or equal to 50% of the estimated
amount of the Loss as set forth in the Loss Notice, or (ii) 100% by the
Purchaser or Purchasers submitting the Loss Notice, if the Loss Amount as
determined by the arbitrators is less than 50% of the estimated amount of the
Loss as set forth in the Loss Notice.
28
<PAGE> 33
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
THE COMPANY: AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------
Name: Daniel Lewin
Title: President
PURCHASERS: BAKER COMMUNICATIONS FUND, L.P.
By: /s/ Edward W. Scott
-------------------
Name: Edward W. Scott
Title: General Partner
29
<PAGE> 34
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
AT Investors LLC
Authorized Signature:
/s/ Arthur Bilger
--------------------
Address:
480 Bel Air Road
Los Angeles, CA 90077
Number of Shares of Series B Convertible
Preferred Stock Being Purchased:
9,610 Shares
Aggregate Purchase Price ($15.066 per Share):
$144,784.26
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------
<PAGE> 35
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
Battery Investment Partners IV, LLC
Authorized Signature:
/s/ Todd Dagres
----------------
Address:
20 Williams Street
Wellesley, MA 02481
Number of Shares of Series B Convertible
Preferred Stock Being Purchased:
969 Shares
Aggregate Purchase Price ($15.066 per Share):
$14,598.95
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------
<PAGE> 36
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
Battery Ventures IV, L.P.
Authorized Signature:
/s/ Todd Dagres
----------------
Address:
20 Williams Street
Wellesley, MA 02481
Number of Shares of Series B Convertible
Preferred Stock Being Purchased:
62,087 Shares
Aggregate Purchase Price ($15.066 per Share):
$935,402.74
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------
<PAGE> 37
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
Brian T. Bedol
Authorized Signature:
/s/ Brian T. Bedol
------------------
Address:
31 Eagle Rock Way
Montclair, NJ 07042
Number of Shares of Series B Convertible
Preferred Stock Being Purchased:
5,766 Shares
Aggregate Purchase Price ($15.066 per Share):
$86,870.56
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------
<PAGE> 38
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
David F. Callan
Authorized Signature:
/s/ David F. Callan
-------------------
Address:
300 Commercial Street
#806
Boston, MA 02109
Number of Shares of Series B Convertible
Preferred Stock Being Purchased:
1,922 Shares
Aggregate Purchase Price ($15.066 per Share):
$28,956.85
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------
<PAGE> 39
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
George Conrades
Authorized Signature:
/s/ George H. Conrades
----------------------
Address:
3 Channing Place
Cambridge, MA 02138
Number of Shares of Series B Convertible
Preferred Stock Being Purchased:
8,649 Shares
Aggregate Purchase Price ($15.066 per Share):
$130,305.83
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------
<PAGE> 40
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
David Allan Kaplan Revocable Trust
dated December 19, 1980
Authorized Signature:
/s/ David Allan Kaplan
----------------------
Address:
30833 Northwestern
Suite 204
Farmington Hills, MI 48334
Number of Shares of Series B Convertible
Preferred Stock Being Purchased:
3,844 Shares
Aggregate Purchase Price ($15.066 per Share):
$57,913.70
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------
<PAGE> 41
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
James Dolce
Authorized Signature:
/s/ James A. Dolce Jr.
----------------------
Address:
9 Stonegale Road
Hopkinton, MA 01748
Number of Shares of Series B Convertible
Preferred Stock Being Purchased:
3,319 Shares
Aggregate Purchase Price ($15.066 per Share):
$50,004.05
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------
<PAGE> 42
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
Ehrenkranz & Ehrenkranz LLP
Authorized Signature:
/s/ Joel S. Ehrenkranz, General Partner
---------------------------------------
Address:
375 Park Avenue
New York, NY 10152
Number of Shares of Series B Convertible
Preferred Stock Being Purchased:
9,610 Shares
Aggregate Purchase Price ($15.066 per Share):
$144,784.26
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------
<PAGE> 43
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
Gilbert B. Friesen
Authorized Signature:
/s/ Gilbert B. Friesen
----------------------
Address:
770 BonHill Road
Los Angeles, CA 90049
Number of Shares of Series B Convertible
Preferred Stock Being Purchased:
19,221 Shares
Aggregate Purchase Price ($15.066 per Share):
$289,583.56
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------
<PAGE> 44
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
Earl P. Galleher III
Authorized Signature:
/s/ Earl P. Galleher III
------------------------
Address:
5910 Cranston Road
Bethesda, MD 20816
Number of Shares of Series B Convertible
Preferred Stock Being Purchased:
961 Shares
Aggregate Purchase Price ($15.066 per Share):
$14,478.43
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------
<PAGE> 45
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
Thomas A. Herring
Authorized Signature:
/s/ Thomas A. Herring
---------------------
Address:
2305 Barton Creek Blvd.
#44
Austin, TX 78735
Number of Shares of Series B Convertible
Preferred Stock Being Purchased:
961 Shares
Aggregate Purchase Price ($15.066 per Share):
$14,478.43
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------
<PAGE> 46
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
Randall Kaplan
Authorized Signature:
/s/ Randall Kaplan
------------------
Address:
1657 Veteran Avenue
#203
Los Angeles, CA 90024
Number of Shares of Series B Convertible
Preferred Stock Being Purchased:
3,844 Shares
Aggregate Purchase Price ($15.066 per Share):
$57,913.70
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------
<PAGE> 47
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
Scott Morrisee
Authorized Signature:
/s/ Scott Morrisse
----------------------------------
Address:
69 Spinnakers Way
----------------------------------
Portsmouth, NH 03801
----------------------------------
Number of Shares of Series B Convertible
Preferred Stock Being Purchased:
1,922 Shares
Aggregate Purchase Price ($15.066 per Share):
$28,956.85
Agreed to and accepted this 30th
day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------------------------
<PAGE> 48
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
Peter Morton Lifetime Trust
Authorized Signature:
/s/ [Illegible]
----------------------------------
Address:
510 N. Robertson Blvd.
----------------------------------
Los Angeles, CA 90048
----------------------------------
Number of Shares of Series B Convertible
Preferred Stock Being Purchases:
9,610 Shares
Aggregate Purchase Price ($15.066 per Share):
$144,784.26
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By:/s/ Daniel Lewin
----------------------------------
<PAGE> 49
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
Polaris Venture Partners Founders Fund II L.P.
By: Polaris Venture Management Co. II LLC,
its General Partner
Authorized Signature:
/s/ Terrence McGuire
----------------------------------
Address:
1000 Winter Street, Suite 3350
----------------------------------
Waltham, MA 02451
----------------------------------
Number of Shares of Series B Convertible
Preferred Stock Being Purchases:
Preferred Stock Being Purchased:
5,631 Shares
Aggregate Purchase Price ($15.066 per Share):
$84,836.65
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------------------------
<PAGE> 50
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
Polaris Venture Partners II L.P.
By: Polaris Venture Management Co. II LLC,
its General Partner
Authorized Signature
/s/ Terrance McGuire
----------------------------------
Address:
1000 Winter Street, Suite 3350
----------------------------------
Watham, MA 02451
----------------------------------
Number of Shares of Series B Convertible
Preferred Stock Being Purchases:
231,687 Shares
Aggregate Purchase Price ($15.066 per Share):
$3,490,596.30
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------------------------
<PAGE> 51
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
Richard Donner & Lauren Shuler Donner
as trustees of the R&L Donner Trust under
the amended and restated trust agreement
dated 12/15/95
Authorized Signature
/s/ [Illegible]
----------------------------------
Address:
----------------------------------
----------------------------------
Number of Shares of Series B Convertible
Preferred Stock Being Purchases:
4,805 Shares
Aggregate Purchase Price ($15.066 per Share):
$72,392.13
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------------------------
<PAGE> 52
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
Linda Eder Ross
Authorized Signature
/s/ Linda Eder Ross
----------------------------------
Address:
24650 North Cromwell
----------------------------------
Franklin, Michigan 48025
----------------------------------
Number of Shares of Series B Convertible
Preferred Stock Being Purchases:
961 Shares
Aggregate Purchase Price ($15.066 per Share):
$14,478.43
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------------------------
<PAGE> 53
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
Paul Sagan
Authorized Signature
/s/ Paul Sagan
----------------------------------
Address:
5 Sunset Ridge
----------------------------------
Lexington, MA 02421
----------------------------------
Number of Shares of Series B Convertible
Preferred Stock Being Purchases:
1,922 Shares
Aggregate Purchase Price ($15.066 per Share):
$28,956.85
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------------------------
<PAGE> 54
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
Jonathan Seelig
Authorized Signature
/s/ Jonathan Seelig
----------------------------------
Address:
334 Harvard St.
----------------------------------
Cambridge, MA 02139
----------------------------------
Number of Shares of Series B Convertible
Preferred Stock Being Purchases:
4,228 Shares
Aggregate Purchase Price ($15.066 per Share):
$63,699.05
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------------------------
<PAGE> 55
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
Michael and Julie Seelig
Authorized Signature
/s/ Michael Seelig
----------------------------------
/s/ Julie Seelig
----------------------------------
Address:
6049 Hudson St.
----------------------------------
Vancouver, BC
----------------------------------
V6M 2Z4 Canada
----------------------------------
Number of Shares of Series B Convertible
Preferred Stock Being Purchases:
1,922 Shares
Aggregate Purchase Price ($15.066 per Share):
$28,956.85
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------------------------
<PAGE> 56
ADDITIONAL PURCHASER SIGNATURE PAGE
By his, her or its execution and delivery of this signature page, the
undersigned hereby (i) joins in and agrees to be an "Additional Purchaser" under
that certain Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock Purchase Agreement dated as of April 16, 1999 among Akamai
Technologies, Inc. (the "Company") and the individuals and entities named
therein (the "Purchase Agreement"), (ii) joins in and agrees to be a "Series B
Purchaser" under that certain Amended and Restated Registration Rights Agreement
dated as of April 16, 1999 among the Company and the individuals and entities
named therein (the "Registration Rights Agreement"), (iii) joins in and agrees
to be a "Series B Investor" under that certain Amended and Restated
Stockholders' Agreement dated as of April 16, 1999 among the Company and the
individuals and entities named therein (the "Stockholders' Agreement") and (iv)
authorizes this signature page to be attached to the Purchase Agreement, the
Registration Rights Agreement and the Stockholders' Agreement.
Name of Purchaser:
Straight Arrow Publishers Company, L.P.
Authorized Signature
/s/ John M. Logana
----------------------------------
Vice President and CFO
Address:
1290 Ave. of the Americas
----------------------------------
NY, NY 10104
----------------------------------
Number of Shares of Series B Convertible
Preferred Stock Being Purchases:
4,805 Shares
Aggregate Purchase Price ($15.066 per Share):
$72,392.13
Agreed to and accepted this
30th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------------------------
<PAGE> 1
Exhibit 10.12
AKAMAI TECHNOLOGIES, INC.
SERIES D CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
DATED AS OF JUNE 21, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I - PURCHASE, SALE AND TERMS OF SHARES................................................................. 1
1.01 The Preferred Shares......................................................................... 1
1.02 The Converted Shares......................................................................... 1
1.03 The Shares................................................................................... 1
1.04 Purchase Price, Closing and Repurchase Option................................................ 1
1.05 Restrictions on Transfer and Standstill Agreement............................................ 3
1.06 Use of Proceeds.............................................................................. 4
1.07 Representations and Warranties by the Purchaser.............................................. 4
ARTICLE II - CONDITIONS TO THE PURCHASER'S OBLIGATION.......................................................... 5
2.01 Representations and Warranties............................................................... 5
2.02 Documentation at Closing..................................................................... 5
2.03 Additional Closing Conditions................................................................ 6
2.04 Consents, Waivers, Etc....................................................................... 7
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................... 7
3.01 Organization and Standing.................................................................... 7
3.02 Corporate Action............................................................................. 7
3.03 Governmental Approvals....................................................................... 8
3.04 Litigation................................................................................... 8
3.05 Certain Agreements of Officers, Founders and Key Employees................................... 8
3.06 Compliance with Other Instruments............................................................ 9
3.07 Material Contracts........................................................................... 9
3.08 ERISA........................................................................................ 10
3.09 Transactions with Affiliates................................................................. 10
3.10 Assumptions or Guaranties of Indebtedness of Other Persons................................... 10
3.11 Investments in Other Persons; Subsidiaries................................................... 10
3.12 Securities Laws.............................................................................. 10
3.13 Disclosure................................................................................... 10
3.14 Brokers or Finders........................................................................... 11
3.15 Capitalization; Status of Capital Stock...................................................... 11
3.16 Registration Rights.......................................................................... 11
3.17 Books and Records............................................................................ 11
3.18 Title to Assets; Patents..................................................................... 12
3.19 The Year 2000................................................................................ 12
3.20 Financial Statements......................................................................... 13
3.21 No Undisclosed Liabilities................................................................... 13
3.22 Technology................................................................................... 13
ARTICLE IV - COVENANTS OF THE COMPANY.......................................................................... 13
4.01 Affirmative Covenants of the Company Other Than Reporting
Requirements................................................................................. 13
4.02 Negative Covenants of the Company............................................................ 15
</TABLE>
- i -
<PAGE> 3
<TABLE>
<S> <C>
4.03 Reporting Requirements....................................................................... 17
ARTICLE V - DEFINITIONS AND ACCOUNTING TERMS................................................................... 19
5.01 Certain Defined Terms........................................................................ 19
ARTICLE VI - MISCELLANEOUS..................................................................................... 22
6.01 No Waiver; Cumulative Remedies............................................................... 22
6.02 Amendments, Waivers and Consents............................................................. 22
6.03 Addresses for Notices........................................................................ 22
6.04 Costs, Expenses and Taxes.................................................................... 23
6.05 Binding Effect; Assignment................................................................... 23
6.06 Survival of Representations and Warranties................................................... 23
6.07 Prior Agreements............................................................................. 23
6.08 Severability................................................................................. 23
6.09 Governing Law................................................................................ 23
6.10 Headings..................................................................................... 24
6.11 Counterparts................................................................................. 24
6.12 Further Assurances........................................................................... 24
6.13 Indemnification.............................................................................. 24
</TABLE>
- ii -
<PAGE> 4
EXHIBITS
<TABLE>
<S> <C>
1.01 Designation of Series D Convertible Preferred Stock
2.02B Opinion of Counsel
2.03B Second Amended and Restated Stockholders Agreement
2.03D Second Amended and Restated Registration Rights Agreement
3.01 Foreign Qualifications
3.04 Litigation
3.07 Defaults under Material Contracts
3.08 ERISA
3.09 Transactions with Affiliates
3.11 Investments in Other Persons; Subsidiaries
3.15 Capitalization; Status of Capital Stock
3.16 Registration Rights
3.18(a) Title to Assets
3.18(b) Intellectual Property
3.18(c) Compensation for use of Intellectual Property Rights
3.20 Financial Statements
3.21 Undisclosed Liabilities
3.22 Technology
</TABLE>
- iii -
<PAGE> 5
AKAMAI TECHNOLOGIES, INC.
201 Broadway
Cambridge, Massachusetts 02139
As of June 21, 1999
TO: Apple Computer Inc. Ltd.
Re: Series D Convertible Preferred Stock
Ladies and Gentlemen:
Akamai Technologies, Inc., a Delaware corporation (the "Company"),
agrees with you as follows:
ARTICLE I
PURCHASE, SALE AND TERMS OF SHARES
1.01 The Preferred Shares. The Company has authorized the issuance and
sale of up to 685,194 shares of its previously authorized but unissued shares of
Series D Convertible Preferred Stock, par value $.01 per share (the "Series D
Preferred Stock"), at a purchase price of $18.243 per share to Apple Computer
Inc. Ltd. (the "Purchaser"). The designation, rights, preferences and other
terms and conditions relating to the Series D Preferred Stock are as set forth
on Exhibit 1.01 hereto. The Series D Preferred Stock is sometimes referred to
herein as the "Preferred Shares."
1.02 The Converted Shares. The Company has authorized and has reserved
and covenants to continue to reserve, free of preemptive rights and other
preferential rights, a sufficient number of its previously authorized but
unissued shares of Common Stock to satisfy the rights of conversion of the
holders of the Preferred Shares. Any shares of Common Stock issuable upon
conversion of the Preferred Shares, and such shares when issued, are herein
referred to as the "Converted Shares."
1.03 The Shares. The Preferred Shares and the Converted Shares are
sometimes collectively referred to herein as the "Shares."
1.04 Purchase Price, Closing and Repurchase Option.
(a) The Closing. The Company agrees to issue and sell to the
Purchaser and, subject to and in reliance upon the representations, warranties,
covenants, terms and conditions of this Agreement, the Purchaser agrees to
purchase 685,194 shares of Series D Preferred Stock for an aggregate purchase
price of $12,499,994.14. The purchase and sale shall take place at a closing
(the "Closing") to be held on or before June 21, 1999, at 10:00 A.M., at such
location and at such time as may be mutually agreed upon, subject to the
satisfaction of all of the conditions to the Closing specified in Article II
herein. At the Closing the Company will issue and deliver
<PAGE> 6
certificates evidencing the shares of Series D Preferred Stock to be sold at the
Closing to the Purchaser (or its nominee) against payment of the full purchase
price therefor by (i) wire transfer of immediately available funds to an account
designated by the Company, (ii) check payable to the order of the Company or its
designee, or (iii) any combination of (i) and (ii) above.
(b) Repurchase Option. The Company and the Purchaser
acknowledge that, simultaneously with the execution of this Agreement, the
Company and Apple Computer, Inc. ("Apple") are entering into a Strategic
Alliance and Master Services Agreement relating to, among other things, the
network that supports QT-TV (the "Services Agreement"). If at any time prior to
the first anniversary of the effective date of this Agreement, Apple
discontinues QT-TV pursuant to Section 7.4 of the Services Agreement (the
discontinuance described in the foregoing clause being hereinafter referred to
as the "Triggering Event"), then the Company shall have the right and option to
purchase all (but not less than all) of the Shares (or the Converted Shares, if
applicable) from the Purchaser (or its successor or assigns), and the Purchaser
(or its successor or assigns) shall be obligated to sell such Shares (or
Converted Shares, if applicable) to the Company, at a purchase price per share
equal to the Market Price. For purposes of this Section 1.04(b), the "Market
Price" shall be determined as follows:
(i) If the Company's Common Stock is listed on a
national securities exchange, the NASDAQ National Market System, the NASDAQ
system, or another nationally recognized exchange or trading system (an
"Exchange") as of the date of the Triggering Event, then the Market Price shall
be deemed to be the average closing price per share of the Company's Common
Stock on such Exchange for the 20 trading days ending on the trading day prior
to the date of the Triggering Event; provided that if the Company's Common Stock
has been listed on an Exchange for fewer than 21 trading days, the Market Price
shall be deemed to be the average closing price per share of the Company's
Common Stock since it has been listed on such Exchange.
(ii) If the Company's Common Stock is not listed on
an Exchange as of the date of the Triggering Event, then the Market Price shall
be the fair market value per share of the Shares as of the date of the
Triggering Event as determined in good faith by the Company's Board of
Directors; provided, however, that the Purchaser shall have the right to contest
such determination by giving notice thereof to the Company within ten days of
such determination, and in such event the Market Price shall be the fair market
value per share of the Shares as of the date of the Triggering Event as
determined by an independent appraiser to be selected by the Company and
approved by the Purchaser, which approval shall not be unreasonably withheld.
The independent appraiser's fees and expenses shall be paid as follows:
(A) If the Market Price as determined by the
independent appraiser is less than or equal to 110% of the Market Price
determined by the Company's Board of Directors, then the independent appraiser's
fees and expenses shall be paid by the Purchaser.
(B) If the Market Price as determined by the
independent appraiser is greater than 110% of the Market Price determined by the
Company's Board of Directors, then the independent appraiser's fees and expenses
shall be paid by the Company.
The Company may exercise its right to repurchase Shares pursuant to this Section
1.04(b) by delivering written notice (the "Repurchase Notice") to the Purchaser
no later than forty (40) days
2
<PAGE> 7
after the Triggering Event. The Purchaser (or its successor or assigns) shall be
obligated to sell such Shares to the Company within ten (10) days after receipt
of the Repurchase Notice upon receipt of the purchase price therefor; provided,
however, that in the event such purchase price shall be determined by an
independent appraiser pursuant to clause (iii) above, the Purchaser shall not be
obligated to sell such Shares to the Company until such determination has been
made and such purchase price has been paid.
1.05 Restrictions on Transfer and Standstill Agreement.
(a) Transfer Restrictions. Without the prior written
permission of the Company, no more than 25% of the Shares may be sold or
transferred by the Purchaser (except to a wholly-owned subsidiary or a
wholly-owned subsidiary of a wholly-owned subsidiary of the Purchaser, or the
like); provided, however, that if the Purchaser wishes to sell or transfer any
Shares to a third party, it shall first submit a written offer to sell such
Shares to the Company on terms and conditions, including price, not less
favorable to the Company than those on which it proposes to sell such Shares to
such third party (the "Offer"). The Offer shall disclose the identity of the
proposed purchaser or transferee, the Shares proposed to be sold or transferred
and the agreed terms of the sale or transfer. If the Offer provides that the
purchase price for the Shares shall be paid other than in cash, then the
per-Share purchase price for the Shares subject to the Offer shall be deemed to
be the Section 1.05 Market Price (as defined below). Within five days after
receipt of the Offer, the Company shall give written notice to the Purchaser of
its intent to purchase all or none of the offered Shares on the same terms and
conditions as set forth in the Offer. The Company can pay the cash equivalent of
any non-cash consideration based on the Section 1.05 Market Price. If the
Company does not purchase all of the Shares offered by the Purchaser pursuant to
the Offer, such Shares may be sold by the Purchaser at any time within 90 days
after the date of the Offer at not less than the price and upon other terms and
conditions, if any, not more favorable to such proposed purchaser or transferee
than those specified in the Offer. All restrictions set forth in this Section
1.05(a) shall terminate upon the earlier of the date one year after the date of
(i) closing of a Qualified Public Offering (as defined in Section 5.01 of the
Agreement) or (ii) registration of a class of the Company's securities under the
Securities Exchange Act of 1934, as amended (the "1934 Act"). For purposes of
this Section 1.05(a), the "Section 1.05 Market Price" shall be determined as
follows:
(i) If the Company's Common Stock is listed on an
Exchange as of the date of the Offer, then the Section 1.05 Market Price shall
be deemed to be the average closing price per share of the Company's Common
Stock on such Exchange for the 20 trading days ending on the trading day prior
to the date of the Offer; provided that if the Company's Common Stock has been
listed on an Exchange for fewer than 21 trading days, the Section 1.05 Market
Price shall be deemed to be the average closing price per share of the Company's
Common Stock since it has been listed on such Exchange.
(ii) If the Company's Common Stock is not listed on
an Exchange as of the date of the Offer, then the Section 1.05 Market Price
shall be the fair market value per share of the Shares as of the date of the
Offer as determined in good faith by the Purchaser's Board of Directors;
provided, however, that the Company shall have the right to contest such
determination by giving notice thereof to the Purchaser within ten days of such
determination, and in such event the Section 1.05 Market Price shall be the fair
market value per share of the
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Shares as of the date of the Offer as determined by an independent appraiser to
be selected by the Purchaser and approved by the Company, which approval shall
not be unreasonably withheld. The independent appraiser's fees and expenses
shall be paid as follows:
(A) If the Section 1.05 Market Price as
determined by the independent appraiser is less than or equal to 110% of the
Section 1.05 Market Price determined by the Purchaser's Board of Directors, then
the independent appraiser's fees and expenses shall be paid by the Company.
(B) If the Section 1.05 Market Price as
determined by the independent appraiser is greater than 110% of the Section 1.05
Market Price determined by the Purchaser's Board of Directors, then the
independent appraiser's fees and expenses shall be paid by the Purchaser.
(b) Standstill Agreement. The Purchaser hereby agrees that
from and after the date hereof until the earlier of the date one year after the
date of (i) closing of a Qualified Public Offering (as defined in Section 5.01
of this Agreement) or (ii) registration of a class of the Company's securities
under the 1934 Act, unless such shall have been specifically invited in writing
by the Company, neither Purchaser nor any of its affiliates (as such term is
defined under the 1934 Act) or agents will in any manner, directly or
indirectly, (a) effect or seek, offer or propose (whether publicly or otherwise)
to effect, or cause or participate in or in any way assist any other Person to
effect or seek, offer or propose (whether publicly or otherwise) to effect or
participate in, (i) any acquisition of any securities (or beneficial ownership
thereof) or assets of the Company, except that during the one-year period from
and after a Qualified Public Offering, the Purchaser may acquire capital stock
of the Company provided that after any such acquisition, the Purchaser and its
affiliates shall beneficially own no more than 10% of each class of the
Company's voting securities; (ii) any tender or exchange offer, merger or other
business combination involving the Company; (iii) any recapitalization,
restructuring, liquidation, dissolution or other extraordinary transaction with
respect to the Company; or (iv) any "solicitation" of "proxies" (as such terms
are used in the proxy rules of the Commission) or consents to vote any voting
securities of the Company; (b) otherwise act, alone or in concert with others,
to seek control of the Company's Board of Directors; or (c) take any action
which might require the Company to make a public announcement regarding any of
the types of matters set forth in (a) above. Notwithstanding the above in this
Section 1.05(b), if (i) following the Company's initial public offering a bona
fide tender offer that seeks to acquire more than 50% of the outstanding voting
securities of the Company is commenced by a third party unaffiliated with the
Purchaser, or (ii) prior to the Company's initial public offering any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the 1934 Act) other than the Purchaser and its affiliates acquires more than
50% of the Company's outstanding voting securities, then any above restriction
contained in this Section 1.05(b) imposed on the Purchaser will immediately
terminate, and the Purchaser shall be free to acquire or offer to acquire any or
all outstanding shares of the Company. Prior to the Company's initial public
offering, the Company will provide written notice to the Purchaser immediately
after the Company learns of any such individual, entity or group acquiring more
than 25% of the Company's outstanding voting securities. Notwithstanding
anything to the contrary in this Section, the Purchaser shall be entitled to
acquire securities of the Company pursuant to Section 4.1 of the Amended and
Restated Stockholders' Agreement (as defined in Section 2.03(b) below).
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(c) "Most Favored Nation". If (i) the Company sells securities
to a Strategic Investor (as defined in Section 4.6(m) of the Amended and
Restated Stockholders' Agreement) and (ii) in connection with its purchase of
such securities, such Strategic Investor is subject to provisions less
restrictive than those set forth in Sections 1.05(a) or 1.05(b) above to
purchase and/or sell securities of the Company, then the Company shall amend
such sections, and/or take such other actions as may be required (including
releasing restrictions imposed by Sections 1.05(a) or 1.05(b)), in order that
the Purchaser obtains rights no less favorable than those obtained by such
Strategic Investor to purchase and/or sell securities of the Company.
1.06 Use of Proceeds. The Company shall use the proceeds from the sale
of the Preferred Shares under this Agreement for working capital and general
corporate purposes.
1.07 Representations and Warranties by the Purchaser. The Purchaser
represents and warrants that (a) it will acquire the Preferred Shares for its
own account and that the Preferred Shares are being acquired by it for the
purpose of investment and not with a view to distribution or resale thereof; (b)
the execution of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of the Purchaser, and this Agreement has been duly executed and delivered,
and constitutes a valid, legal, binding and enforceable agreement of the
Purchaser; (c) it has taken no action which would give rise to any claim by any
other person for any brokerage commissions, finders' fees or the like relating
to this Agreement or the transactions contemplated hereby; (d) the Purchaser has
had the opportunity to ask questions of and receive answers from representatives
of the Company concerning the terms of the offering of the Preferred Shares and
to obtain additional information concerning the Company and its business; and
(e) the Purchaser has the ability to evaluate the merits and risks of an
investment in the Preferred Shares and can bear the economic risks of such
investment. The acquisition by the Purchaser of the Preferred Shares shall
constitute a confirmation of the representations and warranties made by the
Purchaser as at the date of such acquisition. The Purchaser further represents
that it understands and agrees that, until registered under the Securities Act
or transferred pursuant to the provisions of Rule 144 as promulgated by the
Commission, all certificates evidencing any of the Shares, whether upon initial
issuance or upon any transfer thereof, shall bear a legend, prominently stamped
or printed thereon, reading substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD, MORTGAGED,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR THE
AVAILABILITY OF AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES
LAWS."
The Purchaser further represents that it understands and agrees that all
certificates evidencing any of the Shares, whether upon initial issuance or upon
any transfer thereof, shall bear legends, prominently stamped or printed
thereon, reading substantially as follows:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
REPURCHASE BY THE CORPORATION UNDER A SERIES D CONVERTIBLE
PREFERRED STOCK PURCHASE AGREEMENT DATED AS OF JUNE 21, 1999."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER UNDER A SERIES D CONVERTIBLE PREFERRED
STOCK PURCHASE AGREEMENT DATED AS OF JUNE 21, 1999."
ARTICLE II
CONDITIONS TO THE PURCHASER'S OBLIGATION
The obligation of the Purchaser to purchase and pay for the Preferred
Shares at the Closing is subject to the satisfaction of the following
conditions:
2.01 Representations and Warranties. Each of the representations and
warranties of the Company set forth in Article III hereof shall be true and
correct on the date of the Closing.
2.02 Documentation at Closing. The Purchaser shall have received prior
to or at the Closing all of the following documents or instruments, or evidence
of completion thereof, each in form and substance satisfactory to the Purchaser:
(a) A copy of the Certificate of Incorporation of the Company
(the "Certificate of Incorporation"), certified by the Secretary of State of the
State of Delaware together with a certified copy of the Certificate of
Designation of the Series D Preferred Stock, a copy of the resolutions of the
Board of Directors and, if required, the stockholders of the Company evidencing
the adoption of the Company's Certificate of Designation of the Series D
Preferred Stock, the approval of this Agreement, the issuance of the Preferred
Shares and the other matters contemplated hereby, and a copy of the By-laws of
the Company, all of which shall have been certified by the Secretary of the
Company to be true, complete and correct in every particular, and certified
copies of all documents evidencing other necessary corporate or other action and
governmental approvals, if any, with respect to this Agreement and the Shares.
(b) The opinion of Hale and Dorr LLP, counsel to the Company,
in the form of Exhibit 2.02B attached hereto.
(c) A certificate of the Secretary of the Company which shall
certify the names of the officers of the Company authorized to sign this
Agreement, the certificates for the Preferred Shares and the other documents,
instruments or certificates to be delivered pursuant to this Agreement by the
Company or any of its officers, together with the true signatures of such
officers. The Purchaser may conclusively rely on such certificate until it shall
receive a further certificate of the Secretary or an Assistant Secretary of the
Company canceling or amending the prior certificate and submitting the
signatures of the officers named in such further certificate.
(d) A certificate of the President of the Company stating that
the representations and warranties of the Company contained in Article III
hereof and otherwise
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made by the Company in writing in connection with the transactions contemplated
hereby are true and correct and that all conditions required to be performed
prior to or at the Closing have been performed as of the Closing.
(e) Certificates of Good Standing for the Company from the
Secretaries of State of the States of Delaware and California, and the
Commonwealth of Massachusetts shall have been provided to the Purchaser.
(f) The Company and the Purchaser shall have entered into the
Services Agreement.
2.03 Additional Closing Conditions. The Purchaser shall have received
prior to or at the Closing evidence of satisfaction or completion of the
following, in form and substance satisfactory to the Purchaser:
(a) The Certificate of Designation of the Series D Preferred
Stock shall provide for the designation of the rights and preferences of the
Series D Preferred Stock in the forms set forth in Exhibit 1.01A attached hereto
(the "Series D Certificate of Designation").
(b) A Second Amended and Restated Stockholders' Agreement in
the form set forth in Exhibit 2.03B (the "Amended and Restated Stockholders'
Agreement") shall have been executed by the parties named therein.
(c) The Company shall have paid the costs, expenses, taxes and
filing fees identified in Section 6.04.
(d) The Company, the Purchaser and the other parties named
therein shall have entered into a Second Amended and Restated Registration
Rights Agreement in the form set forth in Exhibit 2.03D (the "Amended and
Restated Registration Rights Agreement").
(e) The Company's By-laws shall be in form and substance
reasonably satisfactory to the Purchaser.
2.04 Consents, Waivers, Etc. Prior to the Closing, the Company shall
have obtained all consents or waivers, if any, necessary to execute and deliver
this Agreement, issue the Preferred Shares and to carry out the transactions
contemplated hereby and thereby, including without limitation the waivers and/or
consents of the holders of Series A Convertible Preferred Stock and Series B
Convertible Preferred Stock of the Company in connection with the transactions
contemplated hereby, and all such consents and waivers shall be in full force
and effect. All corporate and other action and governmental filings necessary to
effectuate the terms of this Agreement, the Preferred Shares and other
agreements and instruments executed and delivered by the Company in connection
herewith shall have been made or taken, except for any post-sale filing that may
be required under federal or state securities laws. In addition to the documents
set forth above, the Company shall have provided to the Purchaser any other
information or copies of documents that they may reasonably request.
ARTICLE III
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REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants as follows as of the date
hereof and as of the date of the Closing:
3.01 Organization and Standing. The Company is a duly organized and
validly existing corporation in good standing under the corporate laws of the
State of Delaware and has all requisite corporate power and authority for the
ownership and operation of its properties and for the carrying on of its
business as now conducted or as now proposed to be conducted. The Company is
duly licensed or qualified and in good standing as a foreign corporation
authorized to do business in all jurisdictions wherein the character of the
property owned or leased, or the nature of the activities conducted, by it makes
such licensing or qualification necessary as set forth in Exhibit 3.01, except
where the failure to so qualify would not have a material adverse effect on the
business, operations, affairs or condition of the Company or in its properties
or assets taken as a whole, or which might call into question the validity of
this Agreement, any of the Shares, or any action taken or to be taken pursuant
hereto or thereto (a "Material Adverse Effect").
3.02 Corporate Action. The Company has all necessary corporate power
and has taken all corporate action required to enter into and perform this
Agreement, the Amended and Restated Registration Rights Agreement, the Amended
and Restated Stockholders Agreement and any other agreements and instruments
executed in connection herewith (collectively, the "Financing Documents"). The
Financing Documents are valid and binding obligations of the Company,
enforceable in accordance with their terms. The issuance, sale and delivery of
the Preferred Shares in accordance with this Agreement, and the issuance, sale
and delivery of the Converted Shares, have been duly authorized by all necessary
corporate action on the part of the Company. Sufficient authorized but unissued
shares of Common Stock have been reserved by appropriate corporate action in
connection with the prospective conversion of the Preferred Shares at the
initial conversion price, and the issuance of the Preferred Shares is not, and
the issuance of the Converted Shares upon the conversion of the Preferred Shares
will not be, subject to preemptive rights or other preferential rights in any
present stockholders of the Company and will not conflict with any provision of
any agreement or instrument to which the Company is a party or by which it or
its property is bound.
3.03 Governmental Approvals. Except for the filing of any notice
subsequent to the Closing that may be required under applicable state and/or
federal securities laws (which, if required, shall be filed on a timely basis
and a copy of which shall be provided to the Purchaser), no authorization,
consent, approval, license, exemption of or filing or registration with any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary for the execution
and delivery by the Company of this Agreement, for the offer, issue, sale and
delivery of the Preferred Shares, or for the performance by the Company of its
obligations under this Agreement or the Shares.
3.04 Litigation. Except as set forth in Exhibit 3.04, there is no
litigation or governmental proceeding or investigation pending or, to the
knowledge of the Company, threatened against the Company affecting any of its
respective properties or assets, or against any officer or Key Employee relating
to such person's performance of duties for the Company
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or relating to his stock ownership in the Company or otherwise relating to the
business of the Company, nor to the knowledge of the Company has there occurred
any event or does there exist any condition on the basis of which any such
litigation, proceeding or investigation might properly be instituted. Neither
the Company nor, to the knowledge of the Company, any officer or Key Employee of
the Company (other than the Purchaser) is in default with respect to any order,
writ, injunction, decree, ruling or decision of any court, commission, board or
other governmental agency specifically naming the Company or an officer or Key
Employee of the Company. Except as set forth in Exhibit 3.04, there are no
actions or proceedings pending or, to the knowledge of the Company, threatened
against the Company or against any officer or Key Employee which could
reasonably be expected to result, either in any case or in the aggregate, in any
Material Adverse Effect. The foregoing sentences include, without limiting their
generality, actions pending or, to the knowledge of the Company, threatened (or
any basis therefor), involving the prior employment of any of the Company's
officers or employees (including any Key Employees) or their use in connection
with the Company's business of any information or techniques allegedly
proprietary to any of their former employers.
3.05 Certain Agreements of Officers, Founders and Key Employees.
(a) To the knowledge of the Company, no officer or Key
Employee of the Company is in violation of any term of any employment contract,
patent disclosure agreement, proprietary information agreement, noncompetition
agreement, or any other contract or agreement or any restrictive covenant
relating to the employment of any such officer or Key Employee by the Company,
the nature of the business conducted or to be conducted by the Company or
relating to the use of trade secrets or proprietary or confidential information
of others. The Company has no reason to believe that the employment of the
Company's officers and Key Employees will subject the Company or the Purchaser
to any liability to third-parties. The Company has entered into noncompetition
and nonsolicitation agreements and invention and nondisclosure agreements with
each of its employees.
(b) To the knowledge of the Company, no officer of the Company
nor any Key Employee of the Company whose termination, either individually or in
the aggregate, would have a Material Adverse Effect, has expressed any present
intention of terminating his employment with the Company.
3.06 Compliance with Other Instruments. The Company is in compliance in
all respects with the terms and provisions of this Agreement and of its
Certificate of Incorporation and By-laws, and in all material respects with the
terms and provisions of all mortgages, indentures, leases, agreements and other
instruments by which it is bound or to which it or any of its respective
properties or assets are subject. The Company is in compliance with all
judgments specifically naming the Company or any of the Founders, decrees,
governmental orders specifically naming the Company or any of the Founders,
statutes, rules or regulations by which it is bound or to which any of its
properties or assets are subject. Neither the execution and delivery of this
Agreement or the issuance of the Shares, nor the consummation of any transaction
contemplated by this Agreement, has constituted or resulted in or will
constitute or result in a default or violation of any term or provision of any
of the foregoing documents, instruments, judgments, agreements, decrees, orders,
statutes, rules and regulations.
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3.07 Material Contracts.
(a) Except as set forth on Exhibit 3.07, the Company is not in
default under any (i) contract not made in the ordinary course of business, or
involving a commitment or payment by the Company in excess of $100,000 or, in
the Company's belief, otherwise material to the business of the Company; (ii)
contract among stockholders or granting a right of first refusal or for a
partnership or a joint venture or for the acquisition, sale or lease of any
assets or capital stock of the Company or any other Person or involving a
sharing of profits; (iii) mortgage, pledge, conditional sales contract, security
agreement, factoring agreement or other similar contract with respect to any
real or tangible personal property of the Company; (iv) loan agreement, credit
agreement, promissory note, guarantee, subordination agreement, letter of credit
or any other similar type of contract; (v) contract with any governmental
agency; or (vi) binding commitment or agreement to enter into any of the
foregoing (collectively, the "Material Contracts"). The Company has delivered or
otherwise made available to the Purchaser true, correct and complete copies of
the Material Contracts, other than those related to the Company's customers,
licensees, licensors, strategic partners or suppliers, together with all
amendments, modifications, supplements or side letters affecting the obligations
of any party thereunder.
(b) (i) Each of the Material Contracts is valid and
enforceable in accordance with its terms, and there is no default under any
Material Contract by the Company or, to the knowledge of the Company by any
other party thereto, and no event has occurred with respect to any of the
Material Contracts that with the lapse of time or the giving of notice or both
would constitute a default by the Company thereunder except where such default
is not reasonably expected to have a Material Adverse Effect and (ii) no
previous or current party to any Material Contract has given written notice to
the Company of or made a written claim with respect to any breach or default
thereunder and the Company has no knowledge of any notice of or claim with
respect to any such breach or default.
(c) With respect to the Material Contracts that were assigned
to the Company by a third party, all necessary consents to such assignment have
been obtained.
3.08 ERISA. Except as set forth on Exhibit 3.08, the Company does not
make and has no present intentions to make any contributions to any employee
pension benefit plans for its employees that are subject to ERISA.
3.09 Transactions with Affiliates. Except as set forth on Exhibit 3.09,
as contemplated hereby or consented to by the Purchaser in accordance with this
Agreement, there are no loans, leases, royalty agreements or other continuing
transactions between any Founder, officer, employee or director of the Company
or any Person owning 5% or more of any class of capital stock of the Company or
any member of the immediate family of such Founder, officer, employee, director
or stockholder or any corporation or other entity controlled by such officer,
employee, director or stockholder or a member of the immediate family of such
officer, employee, director or stockholder.
3.10 Assumptions or Guaranties of Indebtedness of Other Persons. Except
as contemplated hereby or consented to by the Purchaser in accordance with this
Agreement, the Company has not assumed, guaranteed, endorsed or otherwise become
directly or contingently
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liable on (including, without limitation, liability by way of agreement,
contingent or otherwise, to purchase, to provide funds for payment, to supply
funds to or otherwise invest in the debtor or otherwise to assure the creditor
against loss), any Indebtedness of any other Person.
3.11 Investments in Other Persons; Subsidiaries. Except as set forth on
Exhibit 3.11 or consented to by the Purchaser in accordance with this Agreement,
the Company has not made any loan or advance to any Person which is outstanding
on the date of this Agreement, nor is it committed or obligated to make any such
loan or advance, nor does the Company own any capital stock, assets comprising
the business of, obligations of, or any interest in, any Person except as
disclosed in this Agreement. The Company has no Subsidiaries.
3.12 Securities Laws. The Company has complied with all applicable
federal and state securities laws in connection with the offer, issuance and
sale of the Shares. Prior to the Closing, neither the Company nor anyone acting
on its behalf has sold, offered to sell or solicited offers to buy the Shares or
similar securities to, or solicited offers with respect thereto from, or entered
into any preliminary conversations or negotiations relating thereto with, any
Person, so as to bring the issuance and sale of the Shares under the
registration provisions of the Securities Act, and applicable state securities
laws.
3.13 Disclosure. Neither this Agreement nor any other agreement,
document, certificate or written statement furnished to the Purchaser by or on
behalf of the Company in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits to state a material
fact relating directly to the Company necessary in order to make the statements
contained herein or therein not misleading. There is no fact within the
knowledge of the Company which has not been disclosed herein or in writing to
the Purchasers and which taken by itself would constitute a circumstance having
a Material Adverse Effect. Without limiting the generality of the foregoing, the
Company does not have any knowledge that there exists, or there is pending or
planned, any statute, rule, law, regulation, standard or code which would have a
Material Adverse Effect on the Company's business.
3.14 Brokers or Finders. No Person has or will have, as a result of the
transactions contemplated by this Agreement, any right, interest or valid claim
against or upon the Company for any commission, fee or other compensation as a
finder or broker because of any act or omission by the Company or any of their
respective agents.
3.15 Capitalization; Status of Capital Stock. The Company has a total
authorized capitalization consisting of (i) 65,000,000 shares of Common Stock,
par value $.01 per share, of which 21,542,655 shares are issued and outstanding
and (ii) 5,000,000 shares of Preferred Stock, par value $.01 per share, of which
(A) 1,100,000 shares are designated as Series A Convertible Preferred Stock, all
of which shares are issued and outstanding on the date hereof, (B) 1,327,500
shares are designated as Series B Convertible Preferred Stock, all of which
shares are issued and outstanding on the date hereof, (C) 145,195 shares are
designated as Series C Convertible Preferred Stock, of which no shares are
issued and outstanding on the date hereof, and (D) 685,194 shares are designated
as Series D Convertible Preferred Stock, of which no shares are issued and
outstanding on the date hereof, prior to giving effect to the transactions
contemplated hereby. Set forth on Exhibit 3.15 is the number of issued and
outstanding shares of the capital stock of the Company. All the outstanding
shares of capital stock of the Company have been duly authorized, and are
validly issued, fully paid and non-assessable. The Preferred Shares,
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when issued and delivered in accordance with the terms hereof and after payment
of the purchase price therefor and the Converted Shares, when issued and
delivered upon conversion of the Preferred Shares, will be duly authorized,
validly issued, fully-paid and non-assessable. Except as otherwise set forth in
Exhibit 3.15, no options, warrants, subscriptions or purchase rights of any
nature to acquire from the Company shares of capital stock or other securities
are authorized, issued or outstanding, nor is the Company obligated in any other
manner to issue shares of its capital stock or other securities except as
contemplated by this Agreement. Except as set forth in Exhibit 3.15, there are
no restrictions on the transfer of shares of capital stock of the Company other
than those imposed by relevant federal and state securities laws and as
otherwise contemplated by this Agreement, the Amended and Restated Stockholders
Agreement, the Amended and Restated Registration Rights Agreement, the
Certificate of Incorporation, the Series D Certificate of Designation and stock
restriction and right of first refusal agreements between the Company and
certain of its employees. Other than as provided in this Section and in the
Amended and Restated Stockholders Agreement, there are no agreements,
understandings, trusts or other collaborative arrangements or understandings
concerning the voting of the capital stock of the Company. The offer and sale of
all capital stock and other securities of the Company issued before the Closing
complied with or were exempt from all applicable federal and state securities
laws and no stockholder has a right of rescission with respect thereto.
3.16 Registration Rights. Except as set forth in Exhibit 3.16 and
except for the rights granted to the Purchaser and certain other parties
pursuant to the Amended and Restated Registration Rights Agreement, no Person
has demand or other rights to cause the Company to file any registration
statement under the Securities Act relating to any securities of the Company or
any right to participate in any such registration statement.
3.17 Books and Records. The books of account, ledgers, order books,
records and documents of the Company accurately and completely reflect all
material information relating to the business of the Company, the location and
collection of its assets, and the nature of all transactions giving rise to the
obligations or accounts receivable of the Company.
3.18 Title to Assets; Patents.
(a) The Company has good and marketable title in fee to such
of its fixed assets, if any, as are real property, and good and marketable title
to all of its other assets and properties, free of any mortgages, pledges,
charges, liens, security interests or other encumbrances, except those occurring
in the ordinary course of business and those indicated on Exhibit 3.18(a). The
Company enjoys peaceful and undisturbed possession under all leases under which
it is operating, and all said leases are valid and subsisting and in full force
and effect.
(b) The Company does not know of any claim, previously
asserted, pending, threatened or which may otherwise be asserted ("Claim") that
would interfere with, or adversely impact upon, the Company's unencumbered right
to use, make, sell, license, distribute, promote, apply, develop and make
derivative works of ("Use"), the patents, patent rights, permits, licenses,
trade secrets, trademarks (registered or unregistered), trademark rights, trade
names, trade name rights, franchises, copyrights (registered or unregistered),
inventions (regardless of whether patentable or not), software, confidential
information, innovations and other intellectual property rights being used to
conduct its business as now operated and as now proposed to be
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operated, or in the development, manufacture, use, distribution or licensing of
the Company's proprietary technology, information, products, processes, or
services (collectively, the "Intellectual Property Rights") (a list of all
patents, trademarks, trade names, permits, and licenses Used by the Company is
attached hereto as Exhibit 3.18(b)); and the Company does not have any reason to
believe that the Use of the Intellectual Property Rights infringes, conflicts or
will conflict with valid rights of any other Person. No claim is known by the
Company to be pending or threatened to the effect that, and the Company has no
reason to believe that, any such Intellectual Property Right is invalid or
unenforceable by the Company or its licensor. Except as set forth in Exhibit
3.18(c), the Company has no obligation known by the Company to compensate any
Person for the use of any such Intellectual Property Rights, and the Company has
not granted any Person any license or other rights to use in any manner any of
the Intellectual Property Rights of the Company, whether requiring the payment
of royalties or not.
3.19 The Year 2000. Each item of hardware, software, or processor based
system and/or any combination thereof, developed, manufactured, distributed,
licensed or delivered, by the Company (collectively, the "System"), shall in all
material respects be able to correctly function, operate, process data or
perform date related calculations, including, but not limited to, calculating,
comparing and sequencing, from, into and between the years 1999 and 2000,
accurately process, provide and/or receive date data, including leap year
calculations, into and between the years 1999, 2000 and beyond, shall otherwise
function as per the specifications thereof both before, during and following
January 1, 2000. Neither performance nor functionality of the System shall be
affected by dates prior to, during and after January 1, 2000. A System
containing or calling on a calendar function including, without limitation, any
function indexed to the CPU clock, and any function providing specific dates or
days, or calculating spans of dates or days shall record, store, process,
provide and, where appropriate, insert, true and accurate dates and calculations
for dates and spans, before, during and following January 1, 2000. The System
shall have no lesser functionality or operability with respect to records
containing dates, before, during or after January 1, 2000 than heretofore with
respect to dates prior to January 1, 2000.
3.20 Financial Statements. Attached hereto as Exhibit 3.20 are copies
of the unaudited balance sheet of the Company as of December 31, 1998, the
statements of income and retained earnings of the Company for the period ended
December 31, 1998, and the statements of cash flows of the Company for the
period ended December 31, 1998 (the "Financial Statements"). Each of the
Financial Statements was prepared in good faith, is complete and correct in all
material respects, has been prepared in accordance with generally accepted
accounting principles and in conformity with the practices consistently applied
by the Company and presents fairly the financial position, results of operations
and cash flows of the Company as of the dates and for the periods indicated.
3.21 No Undisclosed Liabilities. Except as set forth on Exhibit 3.21,
the Company has no liabilities (whether accrued, absolute, contingent or
otherwise, and whether due or to become due or asserted or unasserted), except
(a) obligations under contracts described in Exhibit 3.07 or under contracts
that are not required to be disclosed thereon as a result of dollar thresholds
therein; (b) liabilities provided for in the Financial Statements (other than
liabilities which, in accordance with generally accepted accounting principles,
need not be disclosed); (c) liabilities (other than accounts payable) incurred
since the Financial Statements, in the ordinary course of business consistent
with past practice, the sum of which is, in the aggregate, no greater than
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$300,000; and (d) accounts payable in excess of those shown on the Financial
Statements, incurred in the ordinary course of business consistent with past
practice, the sum of which is, in the aggregate, not greater than $300,000.
3.22 Technology. Except as set forth in Exhibit 3.22 and other than the
Intellectual Property Rights licensed to the Company pursuant to the License
Agreement, the proprietary technology, information, products, processes and
services and other proprietary know-how owned or used by the Company were
completely developed by the Company's full-time employees only; the concepts,
inventions and original works of authorship owned or used by the Company were
developed or conceived by employees within the scope of their employment by the
Company and are connected with Company's underlying proprietary products,
processes and technology. No independent contractors or consultants were used or
employed by the Company in the development of proprietary technology and other
proprietary know-how owned or used by the Company.
ARTICLE IV
COVENANTS OF THE COMPANY
4.01 Affirmative Covenants of the Company Other Than Reporting
Requirements. Without limiting any other covenants and provisions hereof, the
Company covenants and agrees that until the consummation of a Qualified Public
Offering, it will perform and observe the following covenants and provisions,
and will cause each Subsidiary, if and when such Subsidiary exists, to perform
and observe such of the following covenants and provisions as are applicable to
such Subsidiary:
(a) Payment of Taxes and Trade Debt. Pay and discharge, and
cause each Subsidiary to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income, profits or
business, or upon any properties belonging to it, prior to the date on which
penalties attach thereto, and all lawful claims which, if unpaid, might become a
lien or charge upon any properties of the Company or any Subsidiary, provided
that neither the Company nor any Subsidiary shall be required to pay any such
tax, assessment, charge, levy or claim which is being contested in good faith
and by appropriate proceedings if the Company or any Subsidiary shall have set
aside on its books sufficient reserves, if any, with respect thereto. Pay and
cause each Subsidiary to pay, when due, or in conformity with customary trade
terms, all lease obligations, all trade debt, and all other Indebtedness
incident to the operations of the Company or its Subsidiaries, except such as
are being contested in good faith and by proper proceedings if the Company or
Subsidiary concerned shall have set aside on its books sufficient reserves, if
any, with respect thereto.
(b) Maintenance of Insurance. Obtain and maintain from
reputable insurance companies or associations a term life insurance policy on
the lives of each of F. Thomson Leighton and Daniel Lewin the face amount equal
to $2,000,000 each (so long as each remains an employee of the Company), which
proceeds will be payable to the order of the Company, and maintain insurance
with a reputable insurance company or association in such amount and covering
such risks as is customary coverage covering its properties and businesses
customarily carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which the Company or any
Subsidiary operates for the type and scope of its properties and businesses and
maintain, and cause each Subsidiary to maintain, such insurance. The Company
will not cause or permit any assignment of the proceeds of the life insurance
policies specified in the first sentence of this paragraph and will not borrow
against such policies.
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(c) Preservation of Corporate Existence. Preserve and
maintain, and, unless the Company deems it not to be in its best interests,
cause each Subsidiary to preserve and maintain, its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified, and cause each Subsidiary to qualify and remain qualified,
as a foreign corporation in each jurisdiction in which such qualification is
necessary or desirable in view of its business and operations or the ownership
or lease of its properties. Use commercially reasonable best efforts to secure,
preserve and maintain, and cause each Subsidiary to use commercially reasonable
best efforts to secure, preserve and maintain, all licenses and other rights to
use patents, processes, licenses, permits, trademarks, trade names, inventions,
intellectual property rights or copyrights owned or possessed by it and deemed
by the Company to be material to the conduct of its business or the business of
any Subsidiary.
(d) Compliance with Laws. Comply, and cause each Subsidiary to
comply, with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority, where noncompliance would have a Material
Adverse Effect.
(e) Inspection. Permit, upon reasonable request and notice to
the President of the Company, the Purchaser (provided the Purchaser holds at
least 35,000 shares of the outstanding Preferred Shares (as equitably adjusted
for stock splits, stock dividends and the like)) or any authorized agents or
representatives thereof to examine and make copies of and extracts from the
financial and employment records and books of the Company, to visit and inspect
the properties of the Company and any Subsidiary, to discuss the finances and
other matters of the Company and any Subsidiary not related to the Company's
customers, licensees, licensors, strategic partners and suppliers with any of
its officers, directors or Key Employees and independent accountants, and to
consult with and advise the management of the Company and any Subsidiary as to
their finances and other matters not related to the Company's customers,
licensees, licensors, strategic partners and suppliers, all at reasonable times
and upon reasonable notice to the President of the Company. The Purchaser agrees
that it will maintain the confidentiality of any information so obtained by it
which is not otherwise available from other sources.
(f) Keeping of Records and Books of Account. Keep, and cause
each Subsidiary to keep, adequate records and books of account in which complete
entries will be made in accordance with generally accepted accounting principles
consistently applied, reflecting all financial transactions of the Company and
any Subsidiary, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, returns of merchandise, obsolescence, amortization,
taxes, bad debts and other purposes in connection with its business shall be
made.
(g) Maintenance of Properties; Material Assets. Use
commercially reasonable best efforts to maintain and preserve, and cause each
Subsidiary to use commercially reasonable best efforts to maintain and preserve,
all of its properties and assets, necessary for the proper conduct of its
business, in good repair, working order and condition, ordinary wear and tear
excepted, including, without limitation, the maintenance and preservation of any
material patents, licenses, permits or agreements being used by the Company in
its business as now operated and as now proposed to be operated, including that
certain patent and license agreement dated October 26, 1998 by and between the
Massachusetts Institute of Technology ("MIT") and the Company.
(h) Compliance with ERISA. Comply, and cause each Subsidiary
to comply, with all minimum funding requirements applicable to any pension,
employee benefit plans or employee contribution plans which are subject to ERISA
or to the Internal Revenue Code of 1986, as amended (the "Code"), and comply,
and cause each Subsidiary to comply, in all other material respects with the
provisions of ERISA and the Code, and the rules and regulations thereunder,
which are applicable to any such plan. Neither the Company nor any Subsidiary
will permit any event or condition to exist which could permit any such plan to
be terminated under circumstances which would cause the lien provided for in
Section 4068 of ERISA to attach to the assets of the Company or any Subsidiary.
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4.02 Negative Covenants of the Company. Without limiting any other
covenants and provisions hereof, the Company covenants and agrees that, for so
long as at least 50% of the shares of Series D Preferred Stock which were issued
pursuant to this Agreement remain outstanding, it will comply with and observe
the following covenants and provisions, and will cause each Subsidiary, if and
when such Subsidiary exists, to comply with and observe such of the following
covenants and provisions as are applicable to such Subsidiary, and will not,
without the consent of at least 50% in interest of the holders of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock, voting together as a single class on a Common Stock equivalent
basis:
(a) Restrictions on Indebtedness. Create, incur, assume or
suffer to exist, or permit any Subsidiary to create, incur, assume or suffer to
exist, any liability with respect to any Indebtedness for money borrowed except
the following:
(i) Indebtedness for money borrowed by the Company,
not to exceed, in the aggregate, $25,000,000; and
(ii) Indebtedness of the Company in respect of
Capital Expenditures subject to Section 4.02(i) herein.
(b) Merger or Sale. Merge with or into any other entity
(except a merger with a Subsidiary or a consolidation or merger in which the
Company is the surviving Company and the holders of Company voting stock
outstanding immediately prior to the transaction constitute a majority of the
holders of voting stock outstanding immediately following the transaction or a
consolidation or merger pursuant to which the aggregate consideration
definitively and unconditionally payable to all of the stockholders of the
Company is greater than $400 million), sell to any person or entity any assets
constituting all or substantially all of the assets of the Company, or agree to
do or permit any Subsidiary to do any of the foregoing (unless the aggregate
consideration definitively and unconditionally payable to the Company or all of
the stockholders as a result of any such transaction is greater than $400
million).
(c) Assumptions or Guaranties of Indebtedness of Other
Persons. Assume, guarantee, endorse or otherwise become directly or contingently
liable on, or permit any Subsidiary to assume, guarantee, endorse or otherwise
become directly or contingently liable on (including, without limitation,
liability by way of agreement, contingent or otherwise, to purchase, to provide
funds for payment, to supply funds to or otherwise invest in the debtor or
otherwise to assure the creditor against loss) any Indebtedness of any other
Person, except for guaranties by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business, and except for the
guaranties of the permitted obligations of any wholly-owned Subsidiary.
(d) Distributions. Declare or pay any dividends, purchase,
redeem, retire, or otherwise acquire for value any of its capital stock (or
rights, options or warrants to purchase such shares) now or hereafter
outstanding, return any capital to its stockholders as such, or make any
distribution of assets to its stockholders as such, or permit any Subsidiary to
do any of the foregoing (such transactions being hereinafter referred to as
"Distributions"), except that any such Subsidiary may declare and make payment
of cash and stock dividends, return capital and make distributions of assets to
the Company, and except as specifically provided for in the Company's
Certificate of Incorporation or the Series D Certificate of Designation;
provided, however, that nothing herein contained shall prevent the Company from:
(i) effecting a stock split (except for a reverse
stock split) or declaring or paying any dividend consisting of shares of any
class of capital stock to the holders of shares of such class of capital stock,
or
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(ii) redeeming any stock of a deceased stockholder
out of insurance held by the Company on that stockholder's life, or
(iii) repurchasing the shares of Common Stock at the
original cost thereof (in accordance with stock restriction and right of first
refusal agreements or similar agreements) held by officers, employees, directors
or consultants of the Company which are subject to restrictive stock purchase
agreements under which the Company has the option to repurchase such shares upon
the occurrence of certain events, including the termination of employment, if in
the case of any such transaction the payment can be made in compliance with the
other terms of this Agreement, or
(iv) repurchasing securities pursuant to Section
1.04(b) of this Agreement.
(e) Change in Nature of Business. Make or permit any
Subsidiary to make any material change in the nature of its business as
contemplated in written materials delivered to the Purchaser prior to the date
hereof.
(f) Ownership of Subsidiaries. Purchase or hold beneficially
any stock, other securities or evidences of Indebtedness in, or make any
investment in any other Person, excluding a wholly-owned subsidiary of the
Company.
(g) Issuance of Reserved Employee Shares. Grant to any of its
employees awards, options or other rights to purchase Reserved Employee Shares
unless authorized by vote of a majority of the Board of Directors which shall
include at least two members designated by holders of Preferred Stock of the
Company.
(h) Dealings with Affiliates and Others. Other than as
contemplated by this Agreement, and other than transactions in the ordinary
course of business involving less than $50,000, enter into any transaction,
including, without limitation, any loans or extensions of credit or royalty
agreements, with any officer or director of the Company or any Subsidiary or
holder of any class of capital stock of the Company, or any member of their
respective immediate families or any corporation or other entity directly or
indirectly affiliated with one or more of such officers, directors or
stockholders or members of their immediate families unless such transaction is
approved in advance by a majority of disinterested members of the Board of
Directors, or absent such Board of Directors approval, by the Purchaser.
(i) Capital Expenditures. Incur any Capital Expenditures in
any fiscal year in excess of the agreed upon budget therefor.
4.03 Reporting Requirements. For as long as at least 35,000 of the
Preferred Shares remain outstanding (as equitably adjusted for stock splits,
stock dividends and the like), the Company will furnish the Purchaser:
(a) Monthly Reports: as soon as available and in any event
within 30 days after the end of each calendar month, unaudited consolidated and
consolidating balance sheets of the Company and its Subsidiaries as of the end
of such month and consolidated and consolidating statements of income and
retained earnings of the Company and its Subsidiaries for such month and for the
period commencing at the end of the previous fiscal year and ending with the end
of such month, setting forth in each case in comparative form the corresponding
figures for the corresponding period of the preceding fiscal year, and including
comparisons to monthly budgets, a cash flow analysis for such month, a schedule
showing each expenditure of a capital nature during such month, and a summary
discussion of the Company's principal functional areas, all in reasonable detail
and duly certified (subject to year-end audit
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adjustments) by the chief financial officer of the Company as having been
prepared in accordance with generally accepted accounting principles
consistently applied;
(b) Quarterly Reports: as soon as available and in any event
within 45 days after the end of each of the first three quarters of each fiscal
year of the Company, unaudited consolidated balance sheets of the Company and
its Subsidiaries as of the end of such quarter and consolidated statements of
income and cash flows of the Company and its Subsidiaries for such quarter and
for the period commencing at the end of the previous fiscal year and ending with
the end of such quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding period of the preceding fiscal year,
and including comparisons to quarterly budgets and a summary discussion of the
Company's principal functional areas, all in reasonable detail and duly
certified (subject to year-end audit adjustments) by the chief financial officer
of the Company as having been prepared in accordance with generally accepted
accounting principles consistently applied;
(c) Annual Reports: as soon as available and in any event
within 120 days after the end of each fiscal year of the Company, a copy of the
annual audit report for such year for the Company and its Subsidiaries,
including therein consolidated balance sheets of the Company and its
Subsidiaries as of the end of such fiscal year and consolidated statements of
income of the Company and its Subsidiaries for such fiscal year, setting forth
in each case in comparative form the corresponding figures for the preceding
fiscal year, all such consolidated statements to be duly certified by the chief
financial officer of the Company and by such independent public accountants of
recognized national standing approved by a majority of the Board of Directors;
(d) Budgets for the forthcoming fiscal year: as soon as
available after approval by the Board of Directors;
(e) Notice of Adverse Changes: promptly after the occurrence
thereof and in any event within 10 days after each occurrence, notice of any
material adverse change in the operations or financial condition of the Company
or any material default in any other material agreement to which the Company is
a party;
(f) Written Reports: promptly upon receipt or publication
thereof, any written reports submitted to the Company by independent public
accountants in connection with an annual or interim audit of the books of the
Company and its Subsidiaries made by such accountants or by consultants or other
experts in connection with such consultant's or other expert's review of the
Company's operations or industry, and written reports prepared by the Company to
comply with other investment or loan agreements;
(g) Notice of Proceedings: promptly after the commencement
thereof, notice of all material actions, suits and proceedings of the type
described in Section 3.04 before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting the Company or any Subsidiary; and
(h) Stockholders' and Commission Reports: promptly upon
sending, making available, or filing the same, such reports and financial
statements as the Company or any Subsidiary shall send or make available to the
stockholders of the Company or file with the Commission.
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ARTICLE V
DEFINITIONS AND ACCOUNTING TERMS
5.01 Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Agreement" means this Series D Convertible Preferred Stock Purchase
Agreement as from time to time amended and in effect between the parties,
including all Exhibits hereto.
"Board of Directors" means the board of directors of the Company as
constituted from time to time.
"Capital Expenditures" for any period shall mean all amounts debited or
required to be debited to the fixed asset accounts on the balance sheet of the
Company during such period in accordance with generally accepted accounting
principles in respect of (a) the acquisition, construction, improvement,
replacement or betterment of land, buildings, machinery, equipment or of any
other fixed assets or leaseholds, and (b) to the extent related to and not
included in (a) above, materials, contract labor and direct labor (excluding
expenditures properly chargeable to repairs or maintenance in accordance with
generally accepted accounting principles).
"Closing" shall have the meaning attributable to it in Section 1.04 of
this Agreement.
"Commission" means the Securities and Exchange Commission (or any other
federal agency administering the securities laws).
"Common Stock" includes (a) the Company's Common Stock, par value $.01
per share, as authorized on the date of this Agreement, (b) any other capital
stock of any class or classes (however designated) of the Company, authorized on
or after the date hereof, the holders of which shall have the right, without
limitation as to amount, either to all or to a share of the balance of current
dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference, and the holders of which
shall ordinarily, in the absence of contingencies or in the absence of any
provision to the contrary in the Company's Certificate of Incorporation, be
entitled to vote for the election of a majority of directors of the Company
(even though the right so to vote has been suspended by the happening of such a
contingency or provision), and (c) any other securities into which or for which
any of the securities described in (a) or (b) may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.
"Company" means and shall include Akamai Technologies, Inc., a Delaware
corporation, and its successors and assigns.
"Consolidated" and "consolidating" when used with reference to any term
defined herein mean that term as applied to the accounts of the Company and its
Subsidiaries consolidated in accordance with generally accepted accounting
principles.
"Converted Shares" shall have that meaning attributable to it in
Section 1.02 of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Founders" shall mean F. Thomson Leighton, Daniel Lewin, Jonathan
Seelig, Randall Kaplan, Gilbert Friesen and David Karger.
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"Indebtedness" means all obligations, contingent and otherwise, for
borrowed money which should, in accordance with generally accepted accounting
principles, be classified upon the obligor's balance sheet (or the notes
thereto) as liabilities, but in any event including liabilities secured by any
mortgage on property owned or acquired subject to such mortgage, whether or not
the liability secured thereby shall have been assumed, and also including (a)
all guaranties, endorsements and other contingent obligations, in respect of
Indebtedness of others, whether or not the same are or should be so reflected in
said balance sheet (or the notes thereto), except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business and (b) the present value of any lease payments due
under leases required to be capitalized in accordance with applicable Statements
of Financial Accounting Standards, determined by discounting all such payments
at the interest rate determined in accordance with applicable Statements of
Financial Accounting Standards.
"Key Employee" means and includes any Founder, the President, chief
executive officer, chief financial officer, chief operating officer, vice
president of operations, research, development, sales or marketing, or any other
individual who performs a significant role in the operations of the Company or a
Subsidiary as may be reasonably designated by the Board of Directors.
"Person" means an individual, corporation, partnership, joint venture,
trust, or unincorporated organization, or a government or any agency or
political subdivision thereof.
"Preferred Shares" shall have the meaning attributable to it in Section
1.01 of this Agreement.
"Preferred Stock" means the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock.
"Purchaser" shall have that meaning attributable to it in Section 1.01
of this Agreement.
"Qualified Public Offering" means a fully underwritten, firm commitment
public offering pursuant to an effective registration under the Securities Act
covering the offer and sale by the Company of its Common Stock in which (i) the
aggregate gross proceeds from such offering to the Company shall be at least
$20,000,000; and (ii) the price paid by the public for such shares shall be at
least (x) 2.0 times the then Series B Conversion Price if the public offering
occurs prior to October 16, 2000, or (y) 3.0 times the then Series B Conversion
Price if the public offering occurs on or after October 16, 2000.
"Reserved Employee Shares" means shares of Common Stock, not to exceed
in the aggregate 11,377,800 shares (appropriately adjusted to reflect stock
splits, stock dividends, combinations of shares and the like with respect to the
Common Stock and subject to the provisions of the Section 4.02(g) hereof),
reserved by the Company for issuance pursuant to the Company's 1998 Stock
Incentive Plan, provided that such number may be increased by up to 7,559,226
additional shares of Common Stock (the "Founders' Shares") (appropriately
adjusted to reflect stock splits, stock dividends, combinations of shares and
the like with respect to the Common Stock and subject to the provisions of the
Section 4.02(g) hereof and including 2,132,100 shares previously issued or
subject to options prior to the date hereof) held by the Founders upon the
repurchase of such Founders Shares by the Company from the Founders pursuant to
contractual rights held by the Company. The foregoing numbers of Reserved
Employee Shares may be increased by the affirmative vote or written consent of a
majority of the directors elected solely by the holders of Series A Preferred
Stock and Series B Preferred Stock or the affirmative vote or written consent of
the holders of at least 50% of the then outstanding shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock, voting together as a single class on a Common Stock equivalent basis.
"Securities Act" means the Securities Act of 1933, or any similar
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
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"Series B Conversion Price" shall have the meaning attributable to it
in the Series B Certificate of Designation.
"Series A Preferred Stock" means the Series A Convertible Preferred
Stock of the Company, par value $.01 per share.
"Series B Preferred Stock" means the Series B Convertible Preferred
Stock of the Company, par value $.01 per share.
"Series C Preferred Stock" means the Series C Convertible Preferred
Stock of the Company, par value $.01 per share.
"Series D Preferred Stock" means the Series D Convertible Preferred
Stock of the Company, par value $.01 per share, having the rights, powers,
privileges and preferences set forth in Exhibit 1.01 hereto.
"Shares" shall have that meaning attributable to it in Section 1.03 of
this Agreement.
"Subsidiary" or "Subsidiaries" means any corporation, partnership,
trust or other entity of which the Company and/or any of its other Subsidiaries
(as herein defined) directly or indirectly owns at the time a majority of the
outstanding shares of every class of equity securities of such corporation,
partnership, trust or other entity.
5.02 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistently applied, and all financial data submitted pursuant to
this Agreement shall be prepared in accordance with such principles.
5.03 Knowledge. All references to the knowledge or awareness of the
Company shall mean the knowledge of any director or Key Employee of the Company.
ARTICLE VI
MISCELLANEOUS
6.01 No Waiver; Cumulative Remedies. No failure or delay on the part of
any party to this Agreement in exercising any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
6.02 Amendments, Waivers and Consents. Any provision in this Agreement
to the contrary notwithstanding, and except as hereinafter provided changes in
or additions to this Agreement may be made, and compliance with any covenant or
provision set forth herein may be omitted or waived, if the Company (i) shall
obtain consent thereto in writing from the holder or holders of at least 60% of
the then outstanding shares of Series D Preferred Stock, and (ii) shall deliver
copies of such consent in writing to any holders who did not execute such
consent; provided, however, that any provision set forth in Section 4.02 of this
Agreement may be amended or waived with the written consent of more than 50% in
interest of the holders of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock, voting together as a
single class on a Common Stock equivalent basis. Notwithstanding the foregoing
proviso, no amendment or waiver approved in accordance herewith shall be
effective if and to the extent such amendment or waiver treats the holders of
any series of preferred stock of the Company differently than the holders of any
other series of preferred stock of the Company,
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unless the written consent of a majority of such series shall have been
obtained. Any waiver or consent may be given subject to satisfaction of
conditions stated therein and any waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
6.03 Addresses for Notices. All notices, requests, demands and other
communications provided for hereunder shall be in writing and mailed, faxed or
delivered to each applicable party at the address set forth below or at such
other address as to which such party may inform the other parties in writing in
compliance with the terms of this Section.
If to the Purchaser: at 1 Infinite Loop, Cupertino, California 95014 or
at such other address as shall be designated by the Purchaser in a written
notice to the Company complying as to delivery with the terms of this Section
6.03.
If to the Company: at the address set forth on page 1 hereof, or at
such other address as shall be designated by the Company in a written notice to
the Purchaser complying as to delivery with the terms of this Section, with a
copy to: Hale and Dorr LLP, 60 State Street, Boston, MA 02109, Attention: John
H. Chory, Esq.
All such notices, requests, demands and other communications shall,
when mailed (which mailing must be accomplished by first class mail, postage
prepaid; express overnight courier service; or registered mail, return receipt
requested) or transmitted by facsimile, be effective three days after deposited
in the mails or upon transmission by facsimile, respectively, addressed as
aforesaid, unless otherwise provided herein.
6.04 Costs, Expenses and Taxes. The Company agrees to pay in connection
with the preparation, execution and delivery of this Agreement and the issuance
of the Preferred Shares, the reasonable out-of-pocket expenses of the Purchaser,
including legal (both in-house and outside counsel), accounting and other
expenses, up to a maximum of $10,000. In addition, the Company shall pay any and
all stamp and other taxes payable or determined to be payable in connection with
the execution and delivery of this Agreement, the issuance of the Preferred
Shares and the other instruments and documents to be delivered hereunder or
thereunder, and agrees to save the Purchaser harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes.
6.05 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the Company and the Purchaser and their respective
heirs, successors and assigns, except that the Company shall not have the right
to delegate any of its respective obligations hereunder or to assign its
respective rights hereunder or any interest herein without the prior written
consent of the holders of at least a majority in interest of the Shares. Any
transfer of Shares by the Purchaser shall be in accordance with Section 1.05(a)
and shall be subject to the concurrent assumption by the transferee of all the
rights and obligations of the Purchaser hereunder (including without limitation
the obligations of the Purchaser set forth in Section 1.04(b)). The rights and
obligations of the parties hereunder (including without limitation the rights
and obligations under Sections 1.04(b) and 1.05) shall remain in effect
indefinitely unless terminated in accordance with their terms or upon written
agreement of the Company and the Purchaser.
6.06 Survival of Representations and Warranties. All representations
and warranties made in this Agreement, the Shares, or any other instrument or
document delivered in connection herewith or therewith, shall survive the
execution and delivery hereof or thereof.
6.07 Prior Agreements. This Agreement constitutes the entire agreement
between the parties and supersedes any prior understandings or agreements
concerning the purchase and sale of the Shares.
22
<PAGE> 27
6.08 Severability. The provisions of this Agreement and the terms of
the Series D Preferred Stock are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or
part of a provision contained in this Agreement or the Series D Preferred Stock
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision or part of a provision of this Agreement or the terms of the
Series D Preferred Stock; but this Agreement and the terms of the Series D
Preferred Stock, shall be reformed and construed as if such invalid or illegal
or unenforceable provision, or part of a provision, had never been contained
herein, and such provisions or part reformed so that it would be valid, legal
and enforceable to the maximum extent possible.
6.09 Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the General Corporation Law of the State of
Delaware as to matters within the scope thereof, and as to all other matters
shall be governed by and construed in accordance with the internal laws of the
Commonwealth of Massachusetts.
6.10 Headings. Article, Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
6.11 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
6.12 Further Assurances. From and after the date of this Agreement,
upon the request of the Purchaser or the Company, the Company and the Purchaser
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement and the Shares.
6.13 Indemnification.
(a) The Company shall, with respect to the representations,
warranties and agreements made by it herein, indemnify, defend and hold the
Purchaser harmless against all liability, loss or damage, together with all
reasonable costs and expenses related thereto (including legal and accounting
fees and expenses (collectively, "Losses" and individually, a "Loss")), arising
from the untruth, inaccuracy or breach of any such representations, warranties
or agreements of the Company. Without limiting the generality of the foregoing,
the Purchaser shall be deemed to have suffered a Loss as a result of the
untruth, inaccuracy or breach of any such representations or warranties if a
Loss shall be suffered by the Company as a result of, or in connection with,
such untruth, inaccuracy or breach of any facts or circumstances constituting
such untruth, inaccuracy or breach. To claim a Loss, the Purchaser shall deliver
to the Company a notice (the "Loss Notice") specifying in reasonable detail the
nature and estimated amount of the Loss. A determination as to the existence and
amount of the Loss claimed in the Loss Notice shall be made in accordance with
Section 6.13(c) below. Any dispute regarding a Loss shall be determined as set
forth in Section 6.13(c) herein.
(b) The representations and warranties of the Company set
forth in this Agreement shall survive the Closing until June 21, 2001 and be of
no further force or effect as of such date, except that (i) the representations
and warranties set forth in Sections 3.13 and 3.18 shall survive the Closing
until June 21, 2000, and (ii) the representations and warranties set forth in
Section 3.15 shall survive the Closing forever and shall not terminate.
(c) Beginning 10 days after delivery of the Loss Notice, the
Company and the Purchaser shall attempt in good faith for 30 days to agree upon
the amount of the Loss claimed in the Loss Notice (the "Loss Amount") and the
then fair market value of one share of Series D Preferred Stock
23
<PAGE> 28
after giving effect to the Loss (the "Current Series D Value"). If no such
agreement can be reached, the Company and the Purchaser shall each promptly
select an arbitrator and thereafter the two arbitrators shall select a third
arbitrator. The three arbitrators shall thereafter determine, by majority vote
and pursuant to the then rules of the American Arbitration Association, the Loss
Amount and the Current Series D Value. Each of the arbitrators shall be a member
in good standing of the American Arbitration Association. The Company and the
Purchaser shall each be permitted to submit written positions and arguments to
the arbitrators concerning the matters at issue before the arbitrators. The fees
and expenses of the arbitrators shall be borne (i) 100% by the Company, if the
Loss Amount as determined by the arbitrators is greater than or equal to 50% of
the estimated amount of the Loss as set forth in the Loss Notice, or (ii) 100%
by the Purchaser submitting the Loss Notice, if the Loss Amount as determined by
the arbitrators is less than 50% of the estimated amount of the Loss as set
forth in the Loss Notice.
24
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
THE COMPANY: AKAMAI TECHNOLOGIES, INC.
By: /s/ Paul Sagan
----------------------
Name: Paul Sagan
Title: President and CEO
PURCHASER: APPLE COMPUTER INC. LTD.
By: /s/ Gary Wipfler
----------------------
Name: Gary Wipfler
Title: Director
25
<PAGE> 1
EXHIBIT 10.13
AKAMAI TECHNOLOGIES, INC.
SERIES E CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
DATED AS OF AUGUST 6, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I - PURCHASE, SALE AND TERMS OF SHARES.................................................................. 1
1.01 The Preferred Shares.......................................................................... 1
1.02 The Converted Shares.......................................................................... 1
1.03 The Shares.................................................................................... 1
1.04 Purchase Price and Closing.................................................................... 1
1.05 Restrictions on Transfer and Standstill Agreement............................................. 3
1.06 Use of Proceeds............................................................................... 4
1.07 Representations and Warranties by the Purchaser............................................... 4
ARTICLE II - CONDITIONS TO THE PURCHASER'S OBLIGATION........................................................... 5
2.01 Representations and Warranties................................................................ 5
2.02 Documentation at Closing...................................................................... 5
2.03 Additional Closing Conditions................................................................. 6
2.04 Consents, Waivers, Etc.........................................................................7
2.05 Performance....................................................................................7
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................... 7
3.01 Organization and Standing..................................................................... 7
3.02 Corporate Action.............................................................................. 7
3.03 Governmental Approvals........................................................................ 8
3.04 Litigation.................................................................................... 8
3.05 Certain Agreements of Officers, Founders and Key Employees.................................... 8
3.06 Compliance with Other Instruments............................................................. 9
3.07 Material Contracts............................................................................ 9
3.08 ERISA........................................................................................ 10
3.09 Transactions with Affiliates................................................................. 10
3.10 Assumptions or Guaranties of Indebtedness of Other Persons................................... 10
3.11 Investments in Other Persons; Subsidiaries................................................... 10
3.12 Securities Laws.............................................................................. 10
3.13 Disclosure................................................................................... 10
3.14 Brokers or Finders........................................................................... 11
3.15 Capitalization; Status of Capital Stock...................................................... 11
3.16 Registration Rights.......................................................................... 11
3.17 Books and Records............................................................................ 11
3.18 Title to Assets; Patents..................................................................... 12
3.19 The Year 2000................................................................................ 12
3.20 Financial Statements......................................................................... 13
3.21 Changes.......................................................................................13
3.22 No Undisclosed Liabilities................................................................... 13
3.23 Technology................................................................................... 13
3.24 Permits.......................................................................................13
3.25 Environmental and Safety Laws.................................................................13
</TABLE>
- i -
<PAGE> 3
<TABLE>
<S> <C>
3.26 Corporate Documents; Minute Books.............................................................13
3.27 Labor Agreements and Actions..................................................................13
ARTICLE IV - COVENANTS OF THE COMPANY.......................................................................... 13
4.01 Affirmative Covenants of the Company Other Than Reporting
Requirements................................................................................. 13
4.02 Negative Covenants of the Company............................................................ 15
4.03 Reporting Requirements....................................................................... 17
ARTICLE V - DEFINITIONS AND ACCOUNTING TERMS................................................................... 19
5.01 Certain Defined Terms........................................................................ 19
ARTICLE VI - MISCELLANEOUS..................................................................................... 22
6.01 No Waiver; Cumulative Remedies............................................................... 22
6.02 Amendments, Waivers and Consents............................................................. 22
6.03 Addresses for Notices........................................................................ 22
6.04 Costs, Expenses and Taxes.................................................................... 23
6.05 Binding Effect; Assignment................................................................... 23
6.06 Survival of Representations and Warranties................................................... 23
6.07 Prior Agreements............................................................................. 23
6.08 Severability................................................................................. 23
6.09 Governing Law................................................................................ 23
6.10 Headings..................................................................................... 24
6.11 Counterparts................................................................................. 24
6.12 Further Assurances........................................................................... 24
6.13 Indemnification.............................................................................. 24
</TABLE>
- ii -
<PAGE> 4
EXHIBITS
1.01 Designation of Series E Convertible Preferred Stock
2.02B Opinion of Counsel
2.03B Third Amended and Restated Stockholders Agreement
2.03D Third Amended and Restated Registration Rights Agreement
3.01 Foreign Qualifications
3.04 Litigation
3.07 Material Contracts
3.08 ERISA
3.09 Transactions with Affiliates
3.11 Investments in Other Persons; Subsidiaries
3.15 Capitalization; Status of Capital Stock
3.16 Registration Rights
3.18(a) Title to Assets
3.18(b) Intellectual Property
3.18(c) Compensation for use of Intellectual Property Rights
3.20 Financial Statements
3.21 Changes
3.22 Undisclosed Liabilities
3.23 Technology
3.27 Labor Agreements and Actions
- iii -
<PAGE> 5
AKAMAI TECHNOLOGIES, INC.
201 Broadway
Cambridge, Massachusetts 02139
As of August 6, 1999
TO: Cisco Systems, Inc.
Re: Series E Convertible Preferred Stock
Ladies and Gentlemen:
Akamai Technologies, Inc., a Delaware corporation (the "Company"),
agrees with you as follows:
ARTICLE I
PURCHASE, SALE AND TERMS OF SHARES
1.01 The Preferred Shares. The Company has authorized the issuance and
sale of up to 1,867,480 shares of its previously authorized but unissued shares
of Series E Convertible Preferred Stock, par value $.01 per share (the "Series E
Preferred Stock"), at a purchase price of $26.239 per share to Cisco Systems,
Inc. (the "Purchaser"). The designation, rights, preferences and other terms and
conditions relating to the Series E Preferred Stock are as set forth on Exhibit
1.01 hereto. The Series E Preferred Stock is sometimes referred to herein as the
"Preferred Shares."
1.02 The Converted Shares. The Company has authorized and has reserved
and covenants to continue to reserve, free of preemptive rights and other
preferential rights, a sufficient number of its previously authorized but
unissued shares of Common Stock to satisfy the rights of conversion of the
holders of the Preferred Shares. Any shares of Common Stock issuable upon
conversion of the Preferred Shares, and such shares when issued, are herein
referred to as the "Converted Shares."
1.03 The Shares. The Preferred Shares and the Converted Shares are
sometimes collectively referred to herein as the "Shares."
1.04 Purchase Price and Closing. The Company agrees to issue and sell
to the Purchaser and, subject to and in reliance upon the representations,
warranties, covenants, terms and conditions of this Agreement, the Purchaser
agrees to purchase 1,867,480 shares of Series E Preferred Stock for an aggregate
purchase price of $49,000,807.72. The purchase and sale shall take place at a
closing (the "Closing") to be held on or before August 6, 1999, at 10:00 A.M.,
at such location and at such time as may be mutually agreed upon, subject to the
satisfaction of all of the conditions to the Closing specified in Article II
herein. At the Closing the Company will issue and deliver certificates
evidencing the shares of Series E Preferred Stock to be sold at the Closing to
the Purchaser (or its nominee) against payment of the full purchase price
therefor
<PAGE> 6
by (i) wire transfer of immediately available funds to an account designated by
the Company, (ii) check payable to the order of the Company or its designee, or
(iii) any combination of (i) and (ii) above.
1.05 Restrictions on Transfer and Standstill Agreement.
(a) Transfer Restrictions. Without the prior written
permission of the Company, no more than 25% of the Shares may be sold or
transferred by the Purchaser (except to a wholly-owned subsidiary or a
wholly-owned subsidiary of a wholly-owned subsidiary of the Purchaser, or the
like); provided, however, that if the Purchaser wishes to sell or transfer any
of such 25% of the Shares to a third party, it shall first submit a written
offer to sell such Shares to the Company on terms and conditions, including
price, not less favorable to the Company than those on which it proposes to sell
such Shares to such third party (the "Offer"). The Offer shall disclose the
identity of the proposed purchaser or transferee, the Shares proposed to be sold
or transferred and the agreed terms of the sale or transfer. If the Offer
provides that the purchase price for the Shares shall be paid other than in
cash, then the per-Share purchase price for the Shares subject to the Offer
shall be deemed to be the Market Price (as defined below). Within five days
after receipt of the Offer, the Company shall give written notice to the
Purchaser of its intent to purchase all or none of the offered Shares on the
same terms and conditions as set forth in the Offer. The Company can pay the
cash equivalent of any non-cash consideration based on the Market Price. If the
Company does not purchase all of the Shares offered by the Purchaser pursuant to
the Offer, such Shares may be sold by the Purchaser at any time within 90 days
after the date of the Offer at not less than the price and upon other terms and
conditions, if any, not more favorable to such proposed purchaser or transferee
than those specified in the Offer. All restrictions set forth in this Section
1.05(a) shall terminate upon the earlier of the date one year after the date of
(i) closing of a Qualified Public Offering (as defined in Section 5.01 of the
Agreement) or (ii) registration of a class of the Company's securities under the
Securities Exchange Act of 1934, as amended (the "1934 Act"). For purposes of
this Section 1.05(a), the "Market Price" shall be determined as follows:
(i) If the Company's Common Stock is listed on a
national securities exchange, the NASDAQ National Market System, the NASDAQ
system, or another nationally recognized exchange or trading system (an
"Exchange") as of the date of the Offer, then the Market Price shall be deemed
to be the average closing price per share of the Company's Common Stock on such
Exchange for the 20 trading days ending on the trading day prior to the date of
the Offer; provided that if the Company's Common Stock has been listed on an
Exchange for fewer than 21 trading days, the Market Price shall be deemed to be
the average closing price per share of the Company's Common Stock since it has
been listed on such Exchange.
(ii) If the Company's Common Stock is not listed on
an Exchange as of the date of the Offer, then the Market Price shall be the fair
market value per share of the Shares as of the date of the Offer as determined
in good faith by the Purchaser's Board of Directors; provided, however, that the
Company shall have the right to contest such determination by giving notice
thereof to the Purchaser within ten days of such determination, and in such
event the Market Price shall be the fair market value per share of the Shares as
of the date of the Offer as determined by an independent appraiser to be
selected by the Purchaser and approved by the Company, which approval shall not
be unreasonably withheld. The independent appraiser's fees and expenses shall be
paid as follows:
2
<PAGE> 7
(A) If the Market Price as determined by the
independent appraiser is less than or equal to 110% of the Market Price
determined by the Purchaser's Board of Directors, then the independent
appraiser's fees and expenses shall be paid by the Company.
(B) If the Market Price as determined by the
independent appraiser is greater than 110% of the Market Price determined by the
Purchaser's Board of Directors, then the independent appraiser's fees and
expenses shall be paid by the Purchaser.
(b) Standstill Agreement. The Purchaser hereby agrees that
from and after the date hereof until the earlier of the date one year after the
date of (i) closing of a Qualified Public Offering (as defined in Section 5.01
of this Agreement) or (ii) registration of a class of the Company's securities
under the 1934 Act, unless such shall have been specifically invited in writing
by the Company, neither Purchaser nor any of its affiliates (as such term is
defined under the 1934 Act) or agents will in any manner, directly or
indirectly, (a) effect or seek, offer or propose (whether publicly or otherwise)
to effect, or cause or participate in or in any way assist any other Person to
effect or seek, offer or propose (whether publicly or otherwise) to effect or
participate in, (i) any acquisition of any securities (or beneficial ownership
thereof) or assets of the Company, except that during the one-year period from
and after a Qualified Public Offering, the Purchaser may acquire capital stock
of the Company provided that after any such acquisition, the Purchaser and its
affiliates shall beneficially own no more than 10% of each class of the
Company's voting securities; (ii) any tender or exchange offer, merger or other
business combination involving the Company; (iii) any recapitalization,
restructuring, liquidation, dissolution or other extraordinary transaction with
respect to the Company; or (iv) any "solicitation" of "proxies" (as such terms
are used in the proxy rules of the Commission) or consents to vote any voting
securities of the Company; (b) otherwise act, alone or in concert with others,
to seek control of the Company's Board of Directors; or (c) take any action
which might require the Company to make a public announcement regarding any of
the types of matters set forth in (a) above. Notwithstanding the above in this
Section 1.05(b), if (i) following the Company's initial public offering a bona
fide tender offer that seeks to acquire more than 50% of the outstanding voting
securities of the Company is commenced by a third party unaffiliated with the
Purchaser, or (ii) prior to the Company's initial public offering any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the 1934 Act) other than the Purchaser and its affiliates acquires more than
50% of the Company's outstanding voting securities, then any above restriction
contained in this Section 1.05(b) imposed on the Purchaser will immediately
terminate, and the Purchaser shall be free to acquire or offer to acquire any or
all outstanding shares of the Company. Prior to the Company's initial public
offering, the Company will provide written notice to the Purchaser immediately
after the Company learns of any such individual, entity or group acquiring more
than 25% of the Company's outstanding voting securities. Notwithstanding
anything to the contrary in this Section, the Purchaser shall be entitled to
acquire securities of the Company pursuant to Section 4.1 of the Amended and
Restated Stockholders' Agreement (as defined in Section 2.03(b) below).
(c) "Most Favored Nation". If (i) the Company sells securities
to a Strategic Investor (as defined in Section 4.6(l) of the Amended and
Restated Stockholders' Agreement) and (ii) in connection with its purchase of
such securities, such Strategic Investor is subject to provisions less
restrictive than those set forth in Sections 1.05(a) or 1.05(b) above to
purchase and/or sell securities of the Company, then the Company shall amend
such sections, and/or
3
<PAGE> 8
take such other actions as may be required (including releasing restrictions
imposed by Sections 1.05(a) or 1.05(b)), in order that the Purchaser obtains
rights no less favorable than those obtained by such Strategic Investor to
purchase and/or sell securities of the Company.
1.06 Use of Proceeds. The Company shall use the proceeds from the sale
of the Preferred Shares under this Agreement for working capital and general
corporate purposes.
1.07 Representations and Warranties by the Purchaser. The Purchaser
represents and warrants that (a) it will acquire the Preferred Shares for its
own account and that the Preferred Shares are being acquired by it for the
purpose of investment and not with a view to distribution or resale thereof; (b)
the execution of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of the Purchaser, and this Agreement has been duly executed and delivered,
and constitutes a valid, legal, binding and enforceable agreement of the
Purchaser, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) to the extent the indemnification provisions contained in the
Third Amended and Restated Registration Rights Agreement (as defined in Section
2.04(b)) may be limited by applicable federal or state securities laws; (c) it
has taken no action which would give rise to any claim by any other person for
any brokerage commissions, finders' fees or the like relating to this Agreement
or the transactions contemplated hereby; (d) the Purchaser has had the
opportunity to ask questions of and receive answers from representatives of the
Company concerning the terms of the offering of the Preferred Shares and to
obtain additional information concerning the Company and its business; and (e)
the Purchaser has the ability to evaluate the merits and risks of an investment
in the Preferred Shares and can bear the economic risks of such investment. The
acquisition by the Purchaser of the Preferred Shares shall constitute a
confirmation of the representations and warranties made by the Purchaser as at
the date of such acquisition. The Purchaser further represents that it
understands and agrees that, until registered under the Securities Act or
transferred pursuant to the provisions of Rule 144 as promulgated by the
Commission, all certificates evidencing any of the Shares, whether upon initial
issuance or upon any transfer thereof, shall bear a legend, prominently stamped
or printed thereon, reading substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD, MORTGAGED,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR THE
AVAILABILITY OF AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES
LAWS."
The Purchaser further represents that it understands and agrees that all
certificates evidencing any of the Shares, whether upon initial issuance or upon
any transfer thereof, shall bear legends, prominently stamped or printed
thereon, reading substantially as follows:
4
<PAGE> 9
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER UNDER A SERIES E CONVERTIBLE PREFERRED
STOCK PURCHASE AGREEMENT."
ARTICLE II
CONDITIONS TO THE PURCHASER'S OBLIGATION
The obligation of the Purchaser to purchase and pay for the Preferred
Shares at the Closing is subject to the satisfaction of the following
conditions:
2.01 Representations and Warranties. Each of the representations and
warranties of the Company set forth in Article III hereof shall be true and
correct on the date of the Closing.
2.02 Documentation at Closing. The Purchaser shall have received prior
to or at the Closing all of the following documents or instruments, or evidence
of completion thereof, each in form and substance satisfactory to the Purchaser:
(a) A copy of the Certificate of Incorporation of the Company
(the "Certificate of Incorporation"), certified by the Secretary of State of the
State of Delaware together with a certified copy of the Certificate of
Designation of the Series E Preferred Stock, a copy of the resolutions of the
Board of Directors and, if required, the stockholders of the Company evidencing
the adoption of the Company's Certificate of Designation of the Series E
Preferred Stock, the approval of this Agreement, the issuance of the Preferred
Shares and the other matters contemplated hereby, and a copy of the By-laws of
the Company, all of which shall have been certified by the Secretary of the
Company to be true, complete and correct in every particular, and certified
copies of all documents evidencing other necessary corporate or other action and
governmental approvals, if any, with respect to this Agreement and the Shares.
(b) The opinion of Hale and Dorr LLP, counsel to the Company,
in the form of Exhibit 2.02B attached hereto.
(c) A certificate of the Secretary of the Company which shall
certify the names of the officers of the Company authorized to sign this
Agreement, the certificates for the Preferred Shares and the other documents,
instruments or certificates to be delivered pursuant to this Agreement by the
Company or any of its officers, together with the true signatures of such
officers. The Purchaser may conclusively rely on such certificate until it shall
receive a further certificate of the Secretary or an Assistant Secretary of the
Company canceling or amending the prior certificate and submitting the
signatures of the officers named in such further certificate.
(d) A certificate of the President of the Company stating that
the representations and warranties of the Company contained in Article III
hereof and otherwise made by the Company in writing in connection with the
transactions contemplated hereby are true and correct and that all covenants and
conditions required to be performed prior to or at the Closing have been
performed as of the Closing.
5
<PAGE> 10
(e) Certificates of Good Standing for the Company from the
Secretaries of State of the States of Delaware and California, and the
Commonwealth of Massachusetts shall have been provided to the Purchaser.
(f) The Company and the Purchaser shall have entered into a
Strategic Alliance and Joint Development Agreement relating to the integration
of the Purchaser's router and switch hardware and equipment technologies with
the Company's Internet content distribution technologies.
2.03 Additional Closing Conditions. The Purchaser shall have received
prior to or at the Closing evidence of satisfaction or completion of the
following, in form and substance satisfactory to the Purchaser:
(a) The Certificate of Designation of the Series E Preferred
Stock shall provide for the designation of the rights and preferences of the
Series E Preferred Stock in the forms set forth in Exhibit 1.01A attached hereto
(the "Series E Certificate of Designation").
(b) A Third Amended and Restated Stockholders' Agreement in
the form set forth in Exhibit 2.03B (the "Amended and Restated Stockholders'
Agreement") shall have been executed by the parties named therein.
(c) The Company, the Purchaser and the other parties named
therein shall have entered into a Third Amended and Restated Registration Rights
Agreement in the form set forth in Exhibit 2.03D (the "Amended and Restated
Registration Rights Agreement").
(d) The Company shall have paid the costs, expenses, taxes and
filing fees identified in Section 6.04.
2.04 Consents, Waivers, Etc. Prior to the Closing, the Company shall
have obtained all consents or waivers, if any, necessary to execute and deliver
this Agreement, issue the Preferred Shares and to carry out the transactions
contemplated hereby and thereby, including without limitation the waivers and/or
consents of the holders of preferred stock of the Company in connection with the
transactions contemplated hereby, and all such consents and waivers shall be in
full force and effect. All corporate and other action and governmental filings
necessary to effectuate the terms of this Agreement, the Preferred Shares and
other agreements and instruments executed and delivered by the Company in
connection herewith shall have been made or taken, except for any post-sale
filing that may be required under federal or state securities laws. In addition
to the documents set forth above, the Company shall have provided to the
Purchaser any other information or copies of documents that they may reasonably
request.
2.05 Performance. The Company shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
6
<PAGE> 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants as follows as of the date
hereof and as of the date of the Closing:
3.01 Organization and Standing. The Company is a duly organized and
validly existing corporation in good standing under the corporate laws of the
State of Delaware and has all requisite corporate power and authority for the
ownership and operation of its properties and for the carrying on of its
business as now conducted or as now proposed to be conducted. The Company is
duly licensed or qualified and in good standing as a foreign corporation
authorized to do business in all jurisdictions wherein the character of the
property owned or leased, or the nature of the activities conducted, by it makes
such licensing or qualification necessary as set forth in Exhibit 3.01, except
where the failure to so qualify would not have a material adverse effect on the
business, operations, affairs or condition of the Company or in its properties
or assets taken as a whole, or which might call into question the validity of
this Agreement, any of the Shares, or any action taken or to be taken pursuant
hereto or thereto (a "Material Adverse Effect").
3.02 Corporate Action. The Company has all necessary corporate power
and has taken all corporate action required to enter into and perform this
Agreement, the Amended and Restated Registration Rights Agreement, the Amended
and Restated Stockholders Agreement and any other agreements and instruments
executed in connection herewith (collectively, the "Financing Documents"). The
Financing Documents are valid and legally binding obligations of the Company,
enforceable in accordance with their terms. The issuance, sale and delivery of
the Preferred Shares in accordance with this Agreement, and the issuance, sale
and delivery of the Converted Shares, have been duly authorized by all necessary
corporate action on the part of the Company. Sufficient authorized but unissued
shares of Common Stock have been reserved by appropriate corporate action in
connection with the prospective conversion of the Preferred Shares at the
initial conversion price, and the issuance of the Preferred Shares is not, and
the issuance of the Converted Shares upon the conversion of the Preferred Shares
will not be, subject to preemptive rights or other preferential rights in any
present stockholders of the Company and will not conflict with any provision of
any agreement or instrument to which the Company is a party or by which it or
its property is bound.
3.03 Governmental Approvals. Except for the filing of any notice
subsequent to the Closing that may be required under applicable state and/or
federal securities laws (which, if required, shall be filed on a timely basis
and a copy of which shall be provided to the Purchaser), no authorization,
consent, approval, license, exemption of or filing or registration with any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary for the execution
and delivery by the Company of this Agreement, for the offer, issue, sale and
delivery of the Preferred Shares, or for the performance by the Company of its
obligations under this Agreement or the Shares.
3.04 Litigation. Except as set forth in Exhibit 3.04, there is no
litigation or governmental proceeding or investigation pending or, to the
knowledge of the Company, threatened against the Company affecting any of its
respective properties or assets, or against
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any officer or Key Employee relating to such person's performance of duties for
the Company or relating to his stock ownership in the Company or otherwise
relating to the business of the Company, nor to the knowledge of the Company has
there occurred any event or does there exist any condition on the basis of which
any such litigation, proceeding or investigation might properly be instituted.
Neither the Company nor, to the knowledge of the Company, any officer or Key
Employee of the Company is in default with respect to any order, writ,
injunction, decree, ruling or decision of any court, commission, board or other
governmental agency specifically naming the Company or an officer or Key
Employee of the Company. Except as set forth in Exhibit 3.04, there are no
actions or proceedings pending or, to the knowledge of the Company, threatened
against the Company or against any officer or Key Employee which could
reasonably be expected to result, either in any case or in the aggregate, in any
Material Adverse Effect. The foregoing sentences include, without limiting their
generality, actions pending or, to the knowledge of the Company, threatened (or
any basis therefor), involving the prior employment of any of the Company's
officers or employees (including any Key Employees) or their use in connection
with the Company's business of any information or techniques allegedly
proprietary to any of their former employers. Except as set forth in Exhibit
3.04, there is no action, suit, proceeding or investigation by the Company
currently pending or that the Company intends to initiate.
3.05 Certain Agreements of Officers, Founders and Key Employees.
(a) To the knowledge of the Company, no officer or Key
Employee of the Company is in violation of any term of any employment contract,
patent disclosure agreement, proprietary information agreement, noncompetition
agreement, or any other contract or agreement or any restrictive covenant
relating to the employment of any such officer or Key Employee by the Company,
the nature of the business conducted or to be conducted by the Company or
relating to the use of trade secrets or proprietary or confidential information
of others. The Company has no reason to believe that the employment of the
Company's officers and Key Employees will subject the Company or the Purchaser
to any liability to third-parties. The Company has entered into noncompetition
and nonsolicitation agreements and invention and nondisclosure agreements with
each of its employees.
(b) To the knowledge of the Company, no officer of the Company
nor any Key Employee of the Company whose termination, either individually or in
the aggregate, would have a Material Adverse Effect, has expressed any present
intention of terminating his employment with the Company.
3.06 Compliance with Other Instruments. The Company is in compliance in
all respects with the terms and provisions of this Agreement and of its
Certificate of Incorporation and By-laws, and in all material respects with the
terms and provisions of all mortgages, indentures, leases, agreements and other
instruments by which it is bound or to which it or any of its respective
properties or assets are subject. The Company is in compliance with all
judgments specifically naming the Company or any of the Founders, decrees,
governmental orders specifically naming the Company or any of the Founders,
statutes, rules or regulations by which it is bound or to which any of its
properties or assets are subject. Neither the execution and delivery of this
Agreement or the issuance of the Shares, nor the consummation of any transaction
contemplated by this Agreement, has constituted or resulted in or will
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constitute or result in a default or violation of any term or provision of any
of the foregoing documents, instruments, judgments, agreements, decrees, orders,
statutes, rules and regulations.
3.07 Material Contracts.
(a) Except as set forth on Exhibit 3.07, there are no (i)
contracts not made in the ordinary course of business, or involving a commitment
or payment by the Company in excess of $100,000 or, in the Company's belief,
otherwise material to the business of the Company; (ii) contracts among
stockholders or granting a right of first refusal or for a partnership or a
joint venture or for the acquisition, sale or lease of any assets or capital
stock of the Company or any other Person or involving a sharing of profits;
(iii) mortgages, pledges, conditional sales contracts, security agreements,
factoring agreements or other similar contracts with respect to any real or
tangible personal property of the Company; (iv) loan agreements, credit
agreements, promissory notes, guarantees, subordination agreements, letters of
credit or any other similar type of contracts; (v) contracts with any
governmental agency; (vi) licenses of any patent, copyright, trade secret or
other proprietary right to or from the Company, other than licenses arising from
the purchase of "off the shelf" or other standard products; (vii) provisions
restricting or affecting the development, manufacture or distribution of the
Company's products or services; or (viii) binding commitments or agreements to
enter into any of the foregoing (collectively, the "Material Contracts"). The
Company has delivered or otherwise made available to the Purchaser true, correct
and complete copies of the Material Contracts, other than those specifically
agreed upon by the Company and the Purchaser to not be delivered, together with
all amendments, modifications, supplements or side letters affecting the
obligations of any party thereunder.
(b) (i) Each of the Material Contracts is valid and
enforceable in accordance with its terms, and there is no default under any
Material Contract by the Company or, to the knowledge of the Company by any
other party thereto, and no event has occurred with respect to any of the
Material Contracts that with the lapse of time or the giving of notice or both
would constitute a default by the Company thereunder except where such default
is not reasonably expected to have a Material Adverse Effect and (ii) no
previous or current party to any Material Contract has given written notice to
the Company of or made a written claim with respect to any breach or default
thereunder and the Company has no knowledge of any notice of or claim with
respect to any such breach or default.
(c) With respect to the Material Contracts that were assigned
to the Company by a third party, all necessary consents to such assignment have
been obtained.
(d) The Company has not engaged in the past three (3) months
in any discussion (i) with any representative of any corporation or corporations
regarding the consolidation or merger of the Company with or into any such
corporation or corporations, (ii) with any corporation, partnership, association
or other business entity or any individual regarding the sale, conveyance or
disposition of all or substantially all of the assets of the Company or a
transaction or series of related transactions in which more than fifty percent
(50%) of the voting power of the Company is disposed of, or (iii) regarding any
other form of acquisition, liquidation, dissolution or winding up of the
Company.
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3.08 ERISA. Except as set forth on Exhibit 3.08, the Company does not
make and has no present intentions to make any contributions to any employee
pension benefit plans for its employees that are subject to ERISA.
3.09 Transactions with Affiliates. Except as set forth on Exhibit 3.09,
as contemplated hereby or consented to by the Purchaser in accordance with this
Agreement, there are no loans, leases, royalty agreements or other continuing
transactions between any Founder, officer, employee or director of the Company
or any Person owning 5% or more of any class of capital stock of the Company or
any member of the immediate family of such Founder, officer, employee, director
or stockholder or any corporation or other entity controlled by such officer,
employee, director or stockholder or a member of the immediate family of such
officer, employee, director or stockholder.
3.10 Assumptions or Guaranties of Indebtedness of Other Persons. Except
as contemplated hereby or consented to by the Purchaser in accordance with this
Agreement, the Company has not assumed, guaranteed, endorsed or otherwise become
directly or contingently liable on (including, without limitation, liability by
way of agreement, contingent or otherwise, to purchase, to provide funds for
payment, to supply funds to or otherwise invest in the debtor or otherwise to
assure the creditor against loss), any Indebtedness of any other Person.
3.11 Investments in Other Persons; Subsidiaries. Except as set forth on
Exhibit 3.11 or consented to by the Purchaser in accordance with this Agreement,
the Company has not made any loan or advance to any Person which is outstanding
on the date of this Agreement, nor is it committed or obligated to make any such
loan or advance, nor does the Company own any capital stock, assets comprising
the business of, obligations of, or any interest in, any Person except as
disclosed in this Agreement. The Company has no Subsidiaries.
3.12 Securities Laws. The Company has complied with all applicable
federal and state securities laws in connection with the offer, issuance and
sale of the Shares. Prior to the Closing, neither the Company nor anyone acting
on its behalf has sold, offered to sell or solicited offers to buy the Shares or
similar securities to, or solicited offers with respect thereto from, or entered
into any preliminary conversations or negotiations relating thereto with, any
Person, so as to bring the issuance and sale of the Shares under the
registration provisions of the Securities Act, and applicable state securities
laws.
3.13 Disclosure. Neither this Agreement nor any other agreement,
document, certificate or written statement furnished to the Purchaser by or on
behalf of the Company in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits to state a material
fact relating directly to the Company necessary in order to make the statements
contained herein or therein not misleading. There is no fact within the
knowledge of the Company which has not been disclosed herein or in writing to
the Purchasers and which taken by itself would constitute a circumstance having
a Material Adverse Effect. Without limiting the generality of the foregoing, the
Company does not have any knowledge that there exists, or there is pending or
planned, any statute, rule, law, regulation, standard or code which would have a
Material Adverse Effect on the Company's business.
3.14 Brokers or Finders. No Person has or will have, as a result of the
transactions contemplated by this Agreement, any right, interest or valid claim
against or upon the Company
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for any commission, fee or other compensation as a finder or broker because of
any act or omission by the Company or any of their respective agents.
3.15 Capitalization; Status of Capital Stock. The Company has a total
authorized capitalization consisting of (i) 300,000,000 shares of Common Stock,
par value $.01 per share, of which 19,222,655 shares are issued and outstanding
and (ii) 10,000,000 shares of Preferred Stock, par value $.01 per share, of
which (A) 1,100,000 shares are designated as Series A Convertible Preferred
Stock, all of which shares are issued and outstanding on the date hereof, (B)
1,327,500 shares are designated as Series B Convertible Preferred Stock, all of
which shares are issued and outstanding on the date hereof, (C) 145,195 shares
are designated as Series C Convertible Preferred Stock, of which no shares are
issued and outstanding on the date hereof, (D) 685,194 shares are designated as
Series D Convertible Preferred Stock, all of which shares are issued and
outstanding on the date hereof, and (D) 1,867,480 shares are designated as
Series E Convertible Preferred Stock, of which no shares are issued and
outstanding on the date hereof, prior to giving effect to the transactions
contemplated hereby. Set forth on Exhibit 3.15 is the number of issued and
outstanding shares of the capital stock of the Company. All the outstanding
shares of capital stock of the Company have been duly authorized, and are
validly issued, fully paid and non-assessable. The Preferred Shares, when issued
and delivered in accordance with the terms hereof and after payment of the
purchase price therefor and the Converted Shares, when issued and delivered upon
conversion of the Preferred Shares, will be duly authorized, validly issued,
fully-paid and non-assessable. Except as otherwise set forth in Exhibit 3.15, no
options, warrants, subscriptions or purchase rights of any nature to acquire
from the Company shares of capital stock or other securities are authorized,
issued or outstanding, nor is the Company obligated in any other manner to issue
shares of its capital stock or other securities except as contemplated by this
Agreement. Except as set forth in Exhibit 3.15, there are no restrictions on the
transfer of shares of capital stock of the Company other than those imposed by
relevant federal and state securities laws and as otherwise contemplated by this
Agreement, the Amended and Restated Stockholders Agreement, the Amended and
Restated Registration Rights Agreement, the Certificate of Incorporation and
stock restriction and right of first refusal agreements between the Company and
certain of its employees. Other than as provided in this Section and in the
Amended and Restated Stockholders Agreement, there are no agreements,
understandings, trusts or other collaborative arrangements or understandings
concerning the voting of the capital stock of the Company. The offer and sale of
all capital stock and other securities of the Company issued before the Closing
complied with or were exempt from all applicable federal and state securities
laws and no stockholder has a right of rescission with respect thereto.
3.16 Registration Rights. Except as set forth in Exhibit 3.16 and
except for the rights granted to the Purchaser and certain other parties
pursuant to the Amended and Restated Registration Rights Agreement, no Person
has demand or other rights to cause the Company to file any registration
statement under the Securities Act relating to any securities of the Company or
any right to participate in any such registration statement.
3.17 Books and Records. The books of account, ledgers, order books,
records and documents of the Company accurately and completely reflect all
material information relating to the business of the Company, the location and
collection of its assets, and the nature of all transactions giving rise to the
obligations or accounts receivable of the Company.
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3.18 Title to Assets; Patents.
(a) The Company has good and marketable title in fee to such
of its fixed assets, if any, as are real property, and good and marketable title
to all of its other assets and properties, free of any mortgages, pledges,
charges, liens, security interests or other encumbrances, except those occurring
in the ordinary course of business and those indicated on Exhibit 3.18(a). The
Company enjoys peaceful and undisturbed possession under all leases under which
it is operating, and all said leases are valid and subsisting and in full force
and effect.
(b) The Company does not know of any claim, previously
asserted, pending, threatened or which may otherwise be asserted ("Claim") that
would interfere with, or adversely impact upon, the Company's unencumbered right
to use, make, sell, license, distribute, promote, apply, develop and make
derivative works of ("Use"), the patents, patent rights, permits, licenses,
trade secrets, trademarks (registered or unregistered), trademark rights, trade
names, trade name rights, franchises, copyrights (registered or unregistered),
inventions (regardless of whether patentable or not), software, confidential
information, innovations and other intellectual property rights being used to
conduct its business as now operated and as now proposed to be operated, or in
the development, manufacture, use, distribution or licensing of the Company's
proprietary technology, information, products, processes, or services
(collectively, the "Intellectual Property Rights") (a list of all patents,
trademarks, trade names, permits, and licenses Used by the Company is attached
hereto as Exhibit 3.18(b)); and the Company does not have any reason to believe
that the Use of the Intellectual Property Rights infringes, conflicts or will
conflict with valid rights of any other Person. No claim is known by the Company
to be pending or threatened to the effect that, and the Company has no reason to
believe that, any such Intellectual Property Right is invalid or unenforceable
by the Company or its licensor. The Company has taken all reasonable and
customary actions to maintain and protect its Intellectual Property Rights.
Except as set forth in Exhibit 3.18(c), the Company has no obligation known by
the Company to compensate any Person for the use of any such Intellectual
Property Rights, and the Company has not granted any Person any license or other
rights to use in any manner any of the Intellectual Property Rights of the
Company, whether requiring the payment of royalties or not.
3.19 The Year 2000. Each item of hardware, software, or processor based
system and/or any combination thereof, developed, manufactured, distributed,
licensed or delivered, by the Company (collectively, the "System"), shall in all
material respects be able to correctly function, operate, process data or
perform date related calculations, including, but not limited to, calculating,
comparing and sequencing, from, into and between the years 1999 and 2000,
accurately process, provide and/or receive date data, including leap year
calculations, into and between the years 1999, 2000 and beyond, shall otherwise
function as per the specifications thereof both before, during and following
January 1, 2000. Neither performance nor functionality of the System shall be
affected by dates prior to, during and after January 1, 2000. A System
containing or calling on a calendar function including, without limitation, any
function indexed to the CPU clock, and any function providing specific dates or
days, or calculating spans of dates or days shall record, store, process,
provide and, where appropriate, insert, true and accurate dates and calculations
for dates and spans, before, during and following January 1, 2000. The System
shall have no lesser functionality or operability with respect to records
containing dates,
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before, during or after January 1, 2000 than heretofore with respect to dates
prior to January 1, 2000.
3.20 Financial Statements. Attached hereto as Exhibit 3.20 are copies
of the unaudited balance sheets of the Company as of December 31, 1998 and May
31, 1999, the statements of income and retained earnings of the Company for the
period ended December 31, 1998 and for the five months ended May 31, 1999, and
the statements of cash flows of the Company for the period ended December 31,
1998 and for the five months ended May 31, 1999 (the "Financial Statements").
Each of the Financial Statements was prepared in good faith, is complete and
correct in all material respects, has been prepared in accordance with generally
accepted accounting principles and in conformity with the practices consistently
applied by the Company and presents fairly the financial position, results of
operations and cash flows of the Company as of the dates and for the periods
indicated.
3.21 Changes. Except as set forth in Exhibit 3.21, since May 31, 1999,
there has not been:
(a) any adverse change in the assets, liabilities, financial
condition or operating results of the Company from that reflected in the
Financial Statements, except changes in the ordinary course of business that
have not been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results or business of the Company;
(c) any waiver by the Company of any valuable right or of a
debt owed to it;
(d) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the assets, properties, financial
condition, operating results or business of the Company;
(e) any change or amendment to a material contract or
arrangement by which the Company or any of its assets or properties is bound or
subject;
(f) any change in any compensation arrangement or agreement
with any employee;
(g) any sale, assignment or transfer of any patents or patent
applications, trademarks or trademark applications, service marks, trade names,
corporate names, copyrights or copyright registrations, trade secrets or other
intangible assets, or disclosure of any proprietary information to any person;
(h) any resignation or termination of employment of any key
officer of the Company; and the Company, to the best of its knowledge, does not
know of the impending resignation or termination of employment of any such
officer;
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(i) any declaration, payment, setting aside or other
distribution of cash or other property to its holders with respect to its
capital stock or other equity securities (including without limitation any
warrants, options or other rights to acquire its capital stock or other equity
securities;
(j) any mortgage, pledge, transfer of a security interest in,
or lien, created by the Company, with respect to any of its properties or
assets, except liens for taxes not yet due or payable;
(k) receipt of notice that there has been a loss of, or order
cancellation by, any major customer of the Company;
(l) made any charitable contributions or pledges;
(m) make capital expenditures or commitments (other than with
respect to the deployment of servers) therefor that aggregate in excess of
$100,000;
(n) make any loans or advances to, guarantees for the benefit
of, or any investments in, any person (including but not limited to any of the
Company's employees, officers or directors, or any members of their immediate
families), corporation, partnership, joint venture or other entity;
(o) to the best of the Company's knowledge, any other event or
condition of any character that might materially and adversely affect the
assets, properties, financial condition, operating results or business of the
Company; or any agreement or commitment by the Company to do any of the things
described in this Section 3.21.
3.22 No Undisclosed Liabilities. Except as set forth on Exhibit 3.22,
the Company has no liabilities (whether accrued, absolute, contingent or
otherwise, and whether due or to become due or asserted or unasserted), except
(a) obligations under contracts described in Exhibit 3.07 or under contracts
that are not required to be disclosed thereon as a result of dollar thresholds
therein; (b) liabilities provided for in the Financial Statements (other than
liabilities which, in accordance with generally accepted accounting principles,
need not be disclosed); (c) liabilities (other than accounts payable) incurred
since the Financial Statements, in the ordinary course of business consistent
with past practice, the sum of which is, in the aggregate, no greater than
$300,000; and (d) accounts payable in excess of those shown on the Financial
Statements, incurred in the ordinary course of business consistent with past
practice, the sum of which is, in the aggregate, not greater than $300,000.
3.23 Technology. Except as set forth in Exhibit 3.23, the proprietary
technology, information, products, processes and services and other proprietary
know-how owned or used by the Company were completely developed by the Company's
full-time employees only; the concepts, inventions and original works of
authorship owned or used by the Company were developed or conceived by employees
within the scope of their employment by the Company and are connected with
Company's underlying proprietary products, processes and technology. No
independent contractors or consultants were used or employed by the Company in
the development of proprietary technology and other proprietary know-how owned
or used by the Company.
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3.24 Permits. The Company has all franchises, permits, licenses and any
similar authority necessary for the conduct of its business, and the Company
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted. The Company is not
in default in any material respect under any of such franchises, permits,
licenses or any other similar authority.
3.25 Environmental and Safety Laws. The Company, the operation of its
business and any real property that the Company owns or has owned, leases or has
leased or otherwise occupies or uses or has occupied or used (the "Premises")
are, to the best of the Company's knowledge, in compliance with all applicable
Environmental Laws (as defined below) and orders or directives of any
governmental authorities having jurisdiction over such Environmental Laws. The
Company has not received any citation, directive, letter or other communication,
written or oral, or any notice of any proceeding, claim or lawsuit, from any
person arising out of the ownership or occupation of the Premises, or the
conduct of its operations, and the Company is not aware of any basis therefor.
To the best of the Company's knowledge, no material expenditures are or will be
required in order to comply with any Environmental Laws. For purposes of this
Agreement, the term "Environmental Laws" shall mean any Federal, state, local or
foreign law, ordinance, rule, regulation, permit and authorization pertaining to
the protection of human health or the environment.
3.26 Corporate Documents; Minute Books. Except for amendments necessary
to satisfy representations and warranties or conditions contained herein (the
forms of which amendments have been approved by the Purchaser or its counsel),
the Company's Certificate of Incorporation, as amended, and By-laws, as amended,
are in the forms previously provided to counsel to the Purchaser. The minute
books of the Company provided to the Purchaser or its counsel contain a summary
of all meetings of directors and stockholders since the time of incorporation
and reflect all transactions referred to in such minutes accurately in all
material respects.
3.27 Labor Agreements and Actions. Except as set forth in Exhibit 3.27,
the Company is not aware that any officer or key employee, or that any group of
employees of the Company, intends to terminate their employment with the
Company, nor does the Company have a present intention to terminate the
employment of any of the foregoing. The employment of each officer and employee
of the Company is terminable at the will of the Company. The Company has
complied in all material respects with all applicable state and federal equal
employment opportunity and other laws related to employment (including without
limitation provisions thereof relating to wages, hours, equal opportunity,
collective bargaining and the payment of social security and other taxes), and
the Company is not aware that it has any labor relations problems (including
without limitation any union organization activities, threatened or actual
strikes or work stoppages or material grievances). The Company is not bound by
or subject to (and none of its assets or properties is bound by or subject to)
any written or oral, express or implied, contract, commitment or arrangement
with any labor union.
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ARTICLE IV
COVENANTS OF THE COMPANY
4.01 Affirmative Covenants of the Company Other Than Reporting
Requirements. Without limiting any other covenants and provisions hereof, the
Company covenants and agrees that until the consummation of a Qualified Public
Offering, it will perform and observe the following covenants and provisions,
and will cause each Subsidiary, if and when such Subsidiary exists, to perform
and observe such of the following covenants and provisions as are applicable to
such Subsidiary:
(a) Payment of Taxes and Trade Debt. Pay and discharge, and
cause each Subsidiary to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income, profits or
business, or upon any properties belonging to it, prior to the date on which
penalties attach thereto, and all lawful claims which, if unpaid, might become a
lien or charge upon any properties of the Company or any Subsidiary, provided
that neither the Company nor any Subsidiary shall be required to pay any such
tax, assessment, charge, levy or claim which is being contested in good faith
and by appropriate proceedings if the Company or any Subsidiary shall have set
aside on its books sufficient reserves, if any, with respect thereto. Pay and
cause each Subsidiary to pay, when due, or in conformity with customary trade
terms, all lease obligations, all trade debt, and all other Indebtedness
incident to the operations of the Company or its Subsidiaries, except such as
are being contested in good faith and by proper proceedings if the Company or
Subsidiary concerned shall have set aside on its books sufficient reserves, if
any, with respect thereto.
(b) Maintenance of Insurance. Obtain and maintain from
reputable insurance companies or associations a term life insurance policy on
the lives of each of F. Thomson Leighton and Daniel Lewin the face amount equal
to $2,000,000 each (so long as each remains an employee of the Company), which
proceeds will be payable to the order of the Company, and maintain insurance
with a reputable insurance company or association in such amount and covering
such risks as is customary coverage covering its properties and businesses
customarily carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which the Company or any
Subsidiary operates for the type and scope of its properties and businesses and
maintain, and cause each Subsidiary to maintain, such insurance. The Company
will not cause or permit any assignment of the proceeds of the life insurance
policies specified in the first sentence of this paragraph and will not borrow
against such policies.
(c) Preservation of Corporate Existence. Preserve and
maintain, and, unless the Company deems it not to be in its best interests,
cause each Subsidiary to preserve and maintain, its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified, and cause each Subsidiary to qualify and remain qualified,
as a foreign corporation in each jurisdiction in which such qualification is
necessary or desirable in view of its business and operations or the ownership
or lease of its properties. Use commercially reasonable best efforts to secure,
preserve and maintain, and cause each Subsidiary to use commercially reasonable
best efforts to secure, preserve and maintain, all licenses and other rights to
use patents, processes, licenses, permits, trademarks, trade names,
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inventions, intellectual property rights or copyrights owned or possessed by it
and deemed by the Company to be material to the conduct of its business or the
business of any Subsidiary.
(d) Compliance with Laws. Comply, and cause each Subsidiary to
comply, with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority, where noncompliance would have a Material
Adverse Effect.
(e) Inspection. Permit, upon reasonable request and notice to
the President of the Company, the Purchaser (provided the Purchaser holds at
least 35,000 shares of the outstanding Preferred Shares (as equitably adjusted
for stock splits, stock dividends and the like) or any authorized agents or
representatives thereof to examine and make copies of and extracts from the
financial and employment records and books of the Company, to visit and inspect
the properties of the Company and any Subsidiary, to discuss the finances and
other matters of the Company and any Subsidiary not related to the Company's
customers, licensees, licensors, strategic partners and suppliers with any of
its officers, directors or Key Employees and independent accountants, and to
consult with and advise the management of the Company and any Subsidiary as to
their finances and other matters not related to the Company's customers,
licensees, licensors, strategic partners and suppliers, all at reasonable times
and upon reasonable notice to the President of the Company. The Purchaser agrees
that it will maintain the confidentiality of any information so obtained by it
which is not otherwise available from other sources.
(f) Keeping of Records and Books of Account. Keep, and cause
each Subsidiary to keep, adequate records and books of account in which complete
entries will be made in accordance with generally accepted accounting principles
consistently applied, reflecting all financial transactions of the Company and
any Subsidiary, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, returns of merchandise, obsolescence, amortization,
taxes, bad debts and other purposes in connection with its business shall be
made.
(g) Maintenance of Properties; Material Assets. Use
commercially reasonable best efforts to maintain and preserve, and cause each
Subsidiary to use commercially reasonable best efforts to maintain and preserve,
all of its properties and assets, necessary for the proper conduct of its
business, in good repair, working order and condition, ordinary wear and tear
excepted, including, without limitation, the maintenance and preservation of any
material patents, licenses, permits or agreements being used by the Company in
its business as now operated and as now proposed to be operated.
(h) Compliance with ERISA. Comply, and cause each Subsidiary
to comply, with all minimum funding requirements applicable to any pension,
employee benefit plans or employee contribution plans which are subject to ERISA
or to the Internal Revenue Code of 1986, as amended (the "Code"), and comply,
and cause each Subsidiary to comply, in all other material respects with the
provisions of ERISA and the Code, and the rules and regulations thereunder,
which are applicable to any such plan. Neither the Company nor any Subsidiary
will permit any event or condition to exist which could permit any such plan to
be terminated under circumstances which would cause the lien provided for in
Section 4068 of ERISA to attach to the assets of the Company or any Subsidiary.
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<PAGE> 22
(i) Public Announcements. Subject to applicable laws that may
require disclosure by the Company, any public announcements by the Company
relating to this Series E Preferred Stock financing shall be mutually agreed
upon by the Company and the Purchaser.
4.02 Negative Covenants of the Company. Without limiting any other
covenants and provisions hereof, the Company covenants and agrees that, for so
long as at least 50% of the shares of Series E Preferred Stock which were issued
pursuant to this Agreement remain outstanding, it will comply with and observe
the following covenants and provisions, and will cause each Subsidiary, if and
when such Subsidiary exists, to comply with and observe such of the following
covenants and provisions as are applicable to such Subsidiary, and will not,
without the consent of at least 50% in interest of the holders of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock, voting together as a single class
on a Common Stock equivalent basis:
(a) Restrictions on Indebtedness. Create, incur, assume or
suffer to exist, or permit any Subsidiary to create, incur, assume or suffer to
exist, any liability with respect to any Indebtedness for money borrowed except
the following:
(i) Indebtedness for money borrowed by the Company,
not to exceed, in the aggregate, $25,000,000; and
(ii) Indebtedness of the Company in respect of
Capital Expenditures subject to Section 4.02(i) herein.
(b) Merger or Sale. Merge with or into any other entity
(except a merger with a Subsidiary or a consolidation or merger in which the
Company is the surviving Company and the holders of Company voting stock
outstanding immediately prior to the transaction constitute a majority of the
holders of voting stock outstanding immediately following the transaction or a
consolidation or merger pursuant to which the aggregate consideration
definitively and unconditionally payable to all of the stockholders of the
Company is greater than $1.2 billion), sell to any person or entity any assets
constituting all or substantially all of the assets of the Company, or agree to
do or permit any Subsidiary to do any of the foregoing (unless the aggregate
consideration definitively and unconditionally payable to the Company or all of
the stockholders as a result of any such transaction is greater than $1.2
billion).
(c) Assumptions or Guaranties of Indebtedness of Other
Persons. Assume, guarantee, endorse or otherwise become directly or contingently
liable on, or permit any Subsidiary to assume, guarantee, endorse or otherwise
become directly or contingently liable on (including, without limitation,
liability by way of agreement, contingent or otherwise, to purchase, to provide
funds for payment, to supply funds to or otherwise invest in the debtor or
otherwise to assure the creditor against loss) any Indebtedness of any other
Person, except for guaranties by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business, and except for the
guaranties of the permitted obligations of any wholly-owned Subsidiary.
(d) Distributions. Declare or pay any dividends, purchase,
redeem, retire, or otherwise acquire for value any of its capital stock (or
rights, options or warrants to purchase such shares) now or hereafter
outstanding, return any capital to its stockholders as such, or make
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<PAGE> 23
any distribution of assets to its stockholders as such, or permit any Subsidiary
to do any of the foregoing (such transactions being hereinafter referred to as
"Distributions"), except that any such Subsidiary may declare and make payment
of cash and stock dividends, return capital and make distributions of assets to
the Company, and except as specifically provided for in the Company's
Certificate of Incorporation or the Series E Certificate of Designation;
provided, however, that nothing herein contained shall prevent the Company from:
(i) effecting a stock split (except for a reverse
stock split) or declaring or paying any dividend consisting of shares of any
class of capital stock to the holders of shares of such class of capital stock,
or
(ii) redeeming any stock of a deceased stockholder
out of insurance held by the Company on that stockholder's life, or
(iii) repurchasing the shares of Common Stock at the
original cost thereof (in accordance with stock restriction and right of first
refusal agreements or similar agreements) held by officers, employees, directors
or consultants of the Company which are subject to restrictive stock purchase
agreements under which the Company has the option to repurchase such shares upon
the occurrence of certain events, including the termination of employment, if in
the case of any such transaction the payment can be made in compliance with the
other terms of this Agreement.
(e) Change in Nature of Business. Make or permit any
Subsidiary to make any material change in the nature of its business as
contemplated in written materials delivered to the Purchaser prior to the date
hereof.
(f) Ownership of Subsidiaries. Purchase or hold beneficially
any stock, other securities or evidences of Indebtedness in, or make any
investment in any other Person, excluding a wholly-owned subsidiary of the
Company.
(g) Issuance of Reserved Employee Shares. Grant to any of its
employees awards, options or other rights to purchase Reserved Employee Shares
unless authorized by vote of a majority of the Board of Directors which shall
include at least two members designated by holders of Preferred Stock of the
Company.
(h) Dealings with Affiliates and Others. Other than as
contemplated by this Agreement, and other than transactions in the ordinary
course of business involving less than $50,000, enter into any transaction,
including, without limitation, any loans or extensions of credit or royalty
agreements, with any officer or director of the Company or any Subsidiary or
holder of any class of capital stock of the Company, or any member of their
respective immediate families or any corporation or other entity directly or
indirectly affiliated with one or more of such officers, directors or
stockholders or members of their immediate families unless such transaction is
approved in advance by a majority of disinterested members of the Board of
Directors, or absent such Board of Directors approval, by the Purchaser.
(i) Capital Expenditures. Incur any Capital Expenditures in
any fiscal year in excess of the agreed upon budget therefor.
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<PAGE> 24
4.03 Reporting Requirements. For as long as at least 35,000 of the
Preferred Shares remain outstanding (as equitably adjusted for stock splits,
stock dividends and the like), the Company will furnish the Purchaser:
(a) Monthly Reports: as soon as available and in any event
within 30 days after the end of each calendar month, unaudited consolidated and
consolidating balance sheets of the Company and its Subsidiaries as of the end
of such month and consolidated and consolidating statements of income and
retained earnings of the Company and its Subsidiaries for such month and for the
period commencing at the end of the previous fiscal year and ending with the end
of such month, setting forth in each case in comparative form the corresponding
figures for the corresponding period of the preceding fiscal year, and including
comparisons to monthly budgets, a cash flow analysis for such month, a schedule
showing each expenditure of a capital nature during such month, and a summary
discussion of the Company's principal functional areas, all in reasonable detail
and duly certified (subject to year-end audit adjustments) by the chief
financial officer of the Company as having been prepared in accordance with
generally accepted accounting principles consistently applied;
(b) Quarterly Reports: as soon as available and in any event
within 45 days after the end of each of the first three quarters of each fiscal
year of the Company, unaudited consolidated balance sheets of the Company and
its Subsidiaries as of the end of such quarter and consolidated statements of
income and cash flows of the Company and its Subsidiaries for such quarter and
for the period commencing at the end of the previous fiscal year and ending with
the end of such quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding period of the preceding fiscal year,
and including comparisons to quarterly budgets and a summary discussion of the
Company's principal functional areas, all in reasonable detail and duly
certified (subject to year-end audit adjustments) by the chief financial officer
of the Company as having been prepared in accordance with generally accepted
accounting principles consistently applied;
(c) Annual Reports: as soon as available and in any event
within 120 days after the end of each fiscal year of the Company, a copy of the
annual audit report for such year for the Company and its Subsidiaries,
including therein consolidated balance sheets of the Company and its
Subsidiaries as of the end of such fiscal year and consolidated statements of
income of the Company and its Subsidiaries for such fiscal year, setting forth
in each case in comparative form the corresponding figures for the preceding
fiscal year, all such consolidated statements to be duly certified by the chief
financial officer of the Company and by such independent public accountants of
recognized national standing approved by a majority of the Board of Directors;
(d) Budgets for the forthcoming fiscal year: as soon as
available after approval by the Board of Directors;
(e) Notice of Adverse Changes: promptly after the occurrence
thereof and in any event within 10 days after each occurrence, notice of any
material adverse change in the operations or financial condition of the Company
or any material default in any other material agreement to which the Company is
a party;
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<PAGE> 25
(f) Written Reports: promptly upon receipt or publication
thereof, any written reports submitted to the Company by independent public
accountants in connection with an annual or interim audit of the books of the
Company and its Subsidiaries made by such accountants or by consultants or other
experts in connection with such consultant's or other expert's review of the
Company's operations or industry, and written reports prepared by the Company to
comply with other investment or loan agreements;
(g) Notice of Proceedings: promptly after the commencement
thereof, notice of all material actions, suits and proceedings of the type
described in Section 3.04 before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting the Company or any Subsidiary; and
(h) Stockholders' and Commission Reports: promptly upon
sending, making available, or filing the same, such reports and financial
statements as the Company or any Subsidiary shall send or make available to the
stockholders of the Company or file with the Commission.
ARTICLE V
DEFINITIONS AND ACCOUNTING TERMS
5.01 Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Agreement" means this Series E Convertible Preferred Stock Purchase
Agreement as from time to time amended and in effect between the parties,
including all Exhibits hereto.
"Board of Directors" means the board of directors of the Company as
constituted from time to time.
"Capital Expenditures" for any period shall mean all amounts debited or
required to be debited to the fixed asset accounts on the balance sheet of the
Company during such period in accordance with generally accepted accounting
principles in respect of (a) the acquisition, construction, improvement,
replacement or betterment of land, buildings, machinery, equipment or of any
other fixed assets or leaseholds, and (b) to the extent related to and not
included in (a) above, materials, contract labor and direct labor (excluding
expenditures properly chargeable to repairs or maintenance in accordance with
generally accepted accounting principles).
"Closing" shall have the meaning attributable to it in Section 1.04 of
this Agreement.
"Commission" means the Securities and Exchange Commission (or any other
federal agency administering the securities laws).
"Common Stock" includes (a) the Company's Common Stock, par value $.01
per share, as authorized on the date of this Agreement, (b) any other capital
stock of any class or classes (however designated) of the Company, authorized on
or after the date hereof, the holders of
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which shall have the right, without limitation as to amount, either to all or to
a share of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference, and
the holders of which shall ordinarily, in the absence of contingencies or in the
absence of any provision to the contrary in the Company's Certificate of
Incorporation, be entitled to vote for the election of a majority of directors
of the Company (even though the right so to vote has been suspended by the
happening of such a contingency or provision), and (c) any other securities into
which or for which any of the securities described in (a) or (b) may be
converted or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.
"Company" means and shall include Akamai Technologies, Inc., a Delaware
corporation, and its successors and assigns.
"Consolidated" and "consolidating" when used with reference to any term
defined herein mean that term as applied to the accounts of the Company and its
Subsidiaries consolidated in accordance with generally accepted accounting
principles.
"Converted Shares" shall have that meaning attributable to it in
Section 1.02 of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Founders" shall mean F. Thomson Leighton, Daniel Lewin, Jonathan
Seelig, Randall Kaplan, Gilbert Friesen and David Karger.
"Indebtedness" means all obligations, contingent and otherwise, for
borrowed money which should, in accordance with generally accepted accounting
principles, be classified upon the obligor's balance sheet (or the notes
thereto) as liabilities, but in any event including liabilities secured by any
mortgage on property owned or acquired subject to such mortgage, whether or not
the liability secured thereby shall have been assumed, and also including (a)
all guaranties, endorsements and other contingent obligations, in respect of
Indebtedness of others, whether or not the same are or should be so reflected in
said balance sheet (or the notes thereto), except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business and (b) the present value of any lease payments due
under leases required to be capitalized in accordance with applicable Statements
of Financial Accounting Standards, determined by discounting all such payments
at the interest rate determined in accordance with applicable Statements of
Financial Accounting Standards.
"Key Employee" means and includes any Founder, the President, chief
executive officer, chief financial officer, chief operating officer, vice
president of operations, research, development, sales or marketing, or any other
individual who performs a significant role in the operations of the Company or a
Subsidiary as may be reasonably designated by the Board of Directors.
"Person" means an individual, corporation, partnership, joint venture,
trust, or unincorporated organization, or a government or any agency or
political subdivision thereof.
"Preferred Shares" shall have the meaning attributable to it in Section
1.01 of this Agreement.
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<PAGE> 27
"Preferred Stock" means the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and
the Series E Preferred Stock.
"Purchaser" shall have that meaning attributable to it in Section 1.01
of this Agreement.
"Qualified Public Offering" means a fully underwritten, firm commitment
public offering pursuant to an effective registration under the Securities Act
covering the offer and sale by the Company of its Common Stock in which (i) the
aggregate gross proceeds from such offering to the Company shall be at least
$20,000,000 and (ii) the price paid by the public for such shares shall be at
least (x) 2.0 times the then Series B Conversion Price if the public offering
occurs prior to October 16, 2000, or (y) 3.0 times the then Series B Conversion
Price if the public offering occurs on or after October 16, 2000.
"Reserved Employee Shares" means shares of Common Stock, not to exceed
in the aggregate 11,377,800 shares (appropriately adjusted to reflect stock
splits, stock dividends, combinations of shares and the like with respect to the
Common Stock and subject to the provisions of the Section 4.02(g) hereof),
reserved by the Company for issuance pursuant to the Company's 1998 Stock
Incentive Plan, provided that such number may be increased by up to 7,559,226
additional shares of Common Stock (the "Founders' Shares") (appropriately
adjusted to reflect stock splits, stock dividends, combinations of shares and
the like with respect to the Common Stock and subject to the provisions of the
Section 4.02(g) hereof and including 2,132,100 shares previously issued or
subject to options prior to the date hereof) held by the Founders upon the
repurchase of such Founders Shares by the Company from the Founders pursuant to
contractual rights held by the Company. The foregoing numbers of Reserved
Employee Shares may be increased by the affirmative vote or written consent of a
majority of the directors elected solely by the holders of Series A Preferred
Stock and Series B Preferred Stock or the affirmative vote or written consent of
the holders of at least 50% 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 together as a single class on a
Common Stock equivalent basis.
"Securities Act" means the Securities Act of 1933, or any similar
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
"Series B Conversion Price" shall have the meaning attributable to it
in the Series B Certificate of Designation.
"Series A Preferred Stock" means the Series A Convertible Preferred
Stock of the Company, par value $.01 per share.
"Series B Preferred Stock" means the Series B Convertible Preferred
Stock of the Company, par value $.01 per share.
"Series C Preferred Stock" means the Series C Convertible Preferred
Stock of the Company, par value $.01 per share.
"Series D Preferred Stock" means the Series D Convertible Preferred
Stock of the Company, par value $.01 per share.
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"Series E Preferred Stock" means the Series E Convertible Preferred
Stock of the Company, par value $.01 per share, having the rights, powers,
privileges and preferences set forth in Exhibit 1.01 hereto.
"Shares" shall have that meaning attributable to it in Section 1.03 of
this Agreement.
"Subsidiary" or "Subsidiaries" means any corporation, partnership,
trust or other entity of which the Company and/or any of its other Subsidiaries
(as herein defined) directly or indirectly owns at the time a majority of the
outstanding shares of every class of equity securities of such corporation,
partnership, trust or other entity.
5.02 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistently applied, and all financial data submitted pursuant to
this Agreement shall be prepared in accordance with such principles.
5.03 Knowledge. All references to the knowledge or awareness of the
Company shall mean the knowledge of any director or Key Employee of the Company.
ARTICLE VI
MISCELLANEOUS
6.01 No Waiver; Cumulative Remedies. No failure or delay on the part of
any party to this Agreement in exercising any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
6.02 Amendments, Waivers and Consents. Any provision in this Agreement
to the contrary notwithstanding, and except as hereinafter provided changes in
or additions to this Agreement may be made, and compliance with any covenant or
provision set forth herein may be omitted or waived, if the Company (i) shall
obtain consent thereto in writing from the holder or holders of at least 60% of
the then outstanding shares of Series E Preferred Stock, and (ii) shall deliver
copies of such consent in writing to any holders who did not execute such
consent; provided, however, that any provision set forth in Section 4.02 of this
Agreement may be amended or waived with the written consent of more than 50% in
interest of the holders of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock,
voting together as a single class on a Common Stock equivalent basis.
Notwithstanding the foregoing proviso, no amendment or waiver approved in
accordance herewith shall be effective if and to the extent such amendment or
waiver treats the holders of any series of preferred stock of the Company
differently than the holders of any other series of preferred stock of the
Company, unless the written consent of a majority of such series shall have been
obtained. Any waiver or consent may be given subject to satisfaction of
conditions stated therein and any waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
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6.03 Addresses for Notices. All notices, requests, demands and other
communications provided for hereunder shall be in writing and mailed, faxed or
delivered to each applicable party at the address set forth below or at such
other address as to which such party may inform the other parties in writing in
compliance with the terms of this Section.
If to the Purchaser: at 170 West Tasman Drive, San Jose, California
95134 or at such other address as shall be designated by the Purchaser in a
written notice to the Company complying as to delivery with the terms of this
Section 6.03.
If to the Company: at the address set forth on page 1 hereof, or at
such other address as shall be designated by the Company in a written notice to
the Purchaser complying as to delivery with the terms of this Section, with a
copy to: Hale and Dorr LLP, 60 State Street, Boston, MA 02109, Attention: John
H. Chory, Esq.
All such notices, requests, demands and other communications shall,
when mailed (which mailing must be accomplished by first class mail, postage
prepaid; express overnight courier service; or registered mail, return receipt
requested) or transmitted by facsimile, be effective three days after deposited
in the mails or upon transmission by facsimile, respectively, addressed as
aforesaid, unless otherwise provided herein.
6.04 Costs, Expenses and Taxes. The Company agrees to pay in connection
with the preparation, execution and delivery of this Agreement and the issuance
of the Preferred Shares, the reasonable out of pocket expenses of the Purchaser,
including legal, accounting and other expenses, up to a maximum of $20,000. The
Company shall pay any and all stamp and other taxes payable or determined to be
payable in connection with the execution and delivery of this Agreement, the
issuance of the Preferred Shares and the other instruments and documents to be
delivered hereunder or thereunder, and agrees to save the Purchaser harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes.
6.05 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the Company and the Purchaser and their respective
heirs, successors and assigns, except that the Company shall not have the right
to delegate any of its respective obligations hereunder or to assign its
respective rights hereunder or any interest herein without the prior written
consent of the holders of at least a majority in interest of the Shares. Any
transfer of Shares by the Purchaser shall be in accordance with Section 1.05(a)
and shall be subject to the concurrent assumption by the transferee of all the
rights and obligations of the Purchaser hereunder. The rights and obligations of
the parties hereunder (including without limitation the rights and obligations
under Section 1.05) shall remain in effect indefinitely unless terminated in
accordance with their terms or upon written agreement of the Company and the
Purchaser.
6.06 Survival of Representations and Warranties. All representations
and warranties made in this Agreement, the Shares, or any other instrument or
document delivered in connection herewith or therewith, shall survive the
execution and delivery hereof or thereof.
6.07 Prior Agreements. This Agreement and the documents referred to
herein constitute the entire agreement between the parties and supersedes any
prior understandings or agreements concerning the purchase and sale of the
Shares.
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<PAGE> 30
6.08 Severability. The provisions of this Agreement and the terms of
the Series E Preferred Stock are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or
part of a provision contained in this Agreement or the Series E Preferred Stock
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision or part of a provision of this Agreement or the terms of the
Series E Preferred Stock; but this Agreement and the terms of the Series E
Preferred Stock, shall be reformed and construed as if such invalid or illegal
or unenforceable provision, or part of a provision, had never been contained
herein, and such provisions or part reformed so that it would be valid, legal
and enforceable to the maximum extent possible.
6.09 Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the General Corporation Law of the State of
Delaware as to matters within the scope thereof, and as to all other matters
shall be governed by and construed in accordance with the internal laws of the
Commonwealth of Massachusetts.
6.10 Headings. Article, Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
6.11 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
6.12 Further Assurances. From and after the date of this Agreement,
upon the request of the Purchaser or the Company, the Company and the Purchaser
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement and the Shares.
6.13 Indemnification.
(a) The Company shall, with respect to the representations,
warranties and agreements made by it herein, indemnify, defend and hold the
Purchaser harmless against all liability, loss or damage, together with all
reasonable costs and expenses related thereto (including legal and accounting
fees and expenses (collectively, "Losses" and individually, a "Loss")), arising
from the untruth, inaccuracy or breach of any such representations, warranties
or agreements of the Company. Without limiting the generality of the foregoing,
the Purchaser shall be deemed to have suffered a Loss as a result of the
untruth, inaccuracy or breach of any such representations or warranties if a
Loss shall be suffered by the Company as a result of, or in connection with,
such untruth, inaccuracy or breach of any facts or circumstances constituting
such untruth, inaccuracy or breach. To claim a Loss, the Purchaser shall deliver
to the Company a notice (the "Loss Notice") specifying in reasonable detail the
nature and estimated amount of the Loss. A determination as to the existence and
amount of the Loss claimed in the Loss Notice shall be made in accordance with
Section 6.13(c) below. Any dispute regarding a Loss shall be determined as set
forth in Section 6.13(c) herein.
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(b) The representations and warranties of the Company set
forth in this Agreement shall survive the Closing until August 6, 2001 and be of
no further force or effect as of such date, except that (i) the representations
and warranties set forth in Sections 3.13 and 3.18 shall survive the Closing
until August 6, 2000, and (ii) the representations and warranties set forth in
Section 3.15 shall survive the Closing forever and shall not terminate.
(c) Beginning 10 days after delivery of the Loss Notice, the
Company and the Purchaser shall attempt in good faith for 30 days to agree upon
the amount of the Loss claimed in the Loss Notice (the "Loss Amount") and the
then fair market value of one share of Series E Preferred Stock after giving
effect to the Loss (the "Current Series E Value"). If no such agreement can be
reached, the Company and the Purchaser shall each promptly select an arbitrator
and thereafter the two arbitrators shall select a third arbitrator. The three
arbitrators shall thereafter determine, by majority vote and pursuant to the
then rules of the American Arbitration Association, the Loss Amount and the
Current Series E Value. Each of the arbitrators shall be a member in good
standing of the American Arbitration Association. The Company and the Purchaser
shall each be permitted to submit written positions and arguments to the
arbitrators concerning the matters at issue before the arbitrators. The fees and
expenses of the arbitrators shall be borne (i) 100% by the Company, if the Loss
Amount as determined by the arbitrators is greater than or equal to 50% of the
estimated amount of the Loss as set forth in the Loss Notice, or (ii) 100% by
the Purchaser submitting the Loss Notice, if the Loss Amount as determined by
the arbitrators is less than 50% of the estimated amount of the Loss as set
forth in the Loss Notice.
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<PAGE> 32
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
THE COMPANY: AKAMAI TECHNOLOGIES, INC.
By: /s/ Paul Sagan
----------------------------
Paul Sagan
President
PURCHASER: CISCO SYSTEMS, INC.
By: /s/ John Chambers
-----------------------------
Name: John Chambers
Title:
28
<PAGE> 1
Exhibit 10.14
MASTER SERVICES AGREEMENT
BY AND BETWEEN
AKAMAI TECHNOLOGIES, INC.
201 BROADWAY
CAMBRIDGE, MASSACHUSETTS, U.S.A. 02139
PHONE: 617-250-3000
FAX: 617-250-3001
("AKAMAI")
AND
PHONE:_______________
FAX:___________________
("CUSTOMER")
<TABLE>
<CAPTION>
CUSTOMER CONTACT AKAMAI CONTACT
<S> <C>
NAME:____________________________ NAME:____________________________
TITLE:_____________________________ TITLE:_____________________________
PHONE:____________________________ PHONE:____________________________
FAX:______________________________ FAX:______________________________
EMAIL:____________________________ EMAIL:____________________________
CUSTOMER CONTACT FOR AKAMAI CONTACT FOR NOTICES
NOTICES
NAME: ____________________________ CONTROLLER, AKAMAI TECHNOLOGIES, INC.
ADDRESS:__________________________ 201 BROADWAY
__________________________ CAMBRIDGE, MASSACHUSETTS, U.S.A. 02139
PHONE: __________________________ PHONE: 617-250-3000
FAX: __________________________ FAX: 617-250-3001
</TABLE>
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MASTER SERVICES AGREEMENT
This MASTER SERVICES AGREEMENT, consisting of the terms and conditions
set forth below and the attached schedules, each of which is incorporated into
and made a part hereof by this reference (the "Agreement"), is entered into by
and between AKAMAI TECHNOLOGIES, INC., a Delaware corporation ("Akamai"), having
its principal place of business as set forth on the cover page of this
Agreement, and CUSTOMER, a ______ corporation ("Customer"), having its principal
place of business as set forth on the cover page of this Agreement, effective as
of date set forth in the attached FREEFLOW(SM) ORDER FORM (the "Effective
Date").
TERMS AND CONDITIONS
1. SERVICES. Pursuant to the terms and subject to the conditions of this
Agreement, Akamai agrees to provide to Customer during the Term (as defined in
Section 10.1), the FREEFLOW(SM) services ordered by Customer and described on
the attached SCHEDULE A: FREEFLOW(SM) ORDER FORM (the "Services").
2. AKAMAI NETWORK
2.1 NETWORK AVAILABILITY AND OPERATIONS. Akamai shall provision, maintain and
operate on a twenty-four hour per day, seven days per week, 365 days per year
basis, Akamai's geographically distributed network of proprietary web servers
(the "Akamai Network"), all network software and peripherals, and all Internet
connectivity, as necessary to perform the Services in accordance with this
Agreement. Akamai shall also staff its Network Operating Center ("NOC")
twenty-four hours per day, seven days per week, 365 days per year.
2.2 ACCESS TO AKAMAI NETWORK. Akamai shall deliver to Customer one copy of
the Software (as defined in Section 4.1), together with all user IDs and
passwords as necessary for Customer to access the Akamai Network and utilize the
Services in accordance with this Agreement.
2.3 NETWORK SECURITY. Akamai shall keep in place network security as
reasonably necessary to monitor and protect against unauthorized access to
Customer Content (as defined in Section 3.1) while on or within the Akamai
Network. Customer acknowledges, however, that the portion of the Akamai Network
through which Customer Content will pass and the web servers on which Customer
Content will be stored will not be segregated or in a separate physical location
from web servers on which Akamai's other customers' content is or will be
transmitted or stored.
2.4 CAPACITY AND RELIABILITY. Akamai shall maintain adequate capacity on the
Akamai Network during the Term as necessary to meet Customer's committed network
usage as set forth in the FREEFLOW(SM) ORDER FORM. The Akamai Network will
remain distributed geographically and Akamai will keep in place numerous and
distributed Internet network connections.
2.5 ADDITIONAL SERVICES. Akamai shall provide Customer with such
installation, support, training or other additional services as may be specified
in the FREEFLOW(SM) ORDER FORM or as may be requested by Customer from time to
time during the Term and set forth in a separate schedule or addendum agreed to
and executed by both parties.
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3. CUSTOMER RESPONSIBILITIES.
3.1 CUSTOMER CONTENT; ACCEPTABLE USE GUIDELINES. Customer is and shall be
solely responsible for the creation, renewal, updating, deletion, editorial
content, control and all other aspects of any files, software, scripts,
multimedia images, graphics, audio, video, text, data or other objects
originating or transmitted from any web site owned or operated by Customer and
routed to, passed through and/or stored on or within the Akamai Network or
otherwise transmitted or routed using the Services ("Customer Content").
Customer agrees to comply with any "Acceptable Use Guidelines" or other
restrictions that may be adopted and made available to Customer by Akamai from
time to time during the Term.
3.2 TAGGING OF CONTENT. Without limiting the generality of Section 3.1 above,
Customer shall be responsible for utilizing the RENAME(SM) Software as provided
in the Documentation therefore to tag/rename the uniform resource locator
("URL") of the Customer Content to route such Customer Content to the Akamai
Network. In the event Customer becomes aware that any Customer Content infringes
the intellectual property or other rights of a third party, Customer shall
remove such Customer Content from Customer's origin server and/or remove the
RENAME(SM) URL/tag from such Customer Content so that it will not be routed to
and not pass through the Akamai Network.
3.3 MAINTAIN CUSTOMER WEB SITE(S). Customer shall be solely responsible for
maintaining the availability of its web site(s), the connectivity of its web
site(s) to the Internet, and all Customer Content, IP addresses, domain names,
hyperlinks, databases, applications and other resources as necessary for
Customer to operate and maintain its web site(s) to meet Customer's business
purposes and objectives.
4. SOFTWARE; RESTRICTIONS.
4.1 LICENSE OF AKAMAI SOFTWARE. Akamai grants Customer a limited,
nontransferable and nonexclusive license to use, during the Term, the
GeoFlow(SM) and RENAME(SM) software (collectively, the "Software"), together
with all related documentation (the "Documentation"), in object code form only,
subject to the restrictions set forth below.
4.2 LICENSE RESTRICTIONS. Customer's use of the Software is limited as
follows:
4.2.1 Customer shall use the RENAME(SM) software in accordance with the
RENAME(SM) Documentation, solely for the purpose of renaming the URL of Customer
Content;
4.2.2 Customer shall use the GeoFlow(SM) software for Customer's internal
purposes only, solely in conjunction with analyzing the flow of Customer Content
that is delivered using the Services.
4.2.3 Customer acknowledges that the GeoFlow(SM) software contains certain
third party software elements, including without limitation software relating to
the GeoFlow(SM) mapping functions, and Customer agrees with respect to such
elements that Customer shall be prohibited from replicating or distributing such
mapping images or otherwise using the same other than for Customer's internal
business purposes.
4.2.4 Customer shall not, for itself, any affiliate of Customer or any third
party: sell, license, assign, or transfer the Software or any Documentation;
decompile, disassemble, or reverse engineer the Software; copy the Software or
any Documentation, except that Customer may make one copy of the Software for
backup purposes only (provided Customer reproduces on such copy all proprietary
notices of Akamai or its suppliers); or
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remove from the Software or any Documentation any language or designation
indicating the confidential nature thereof or the proprietary rights of Akamai
or its suppliers in such items.
4.3 ADDITIONAL CUSTOMER RESTRICTIONS. Customer shall not: (a) alter or
duplicate any aspect of the Software or Documentation, except as expressly
permitted under this Agreement; (b) assign, transfer, distribute, or otherwise
provide access to the Software or Services to any third party; (c) provide
access to the Software to any third party or use the Software in connection with
any third party content; or (d) export, re-export or permit any third party to
export or re-export the Software or Documentation outside of the territorial
limits of the country in which it was originally delivered without appropriate
licenses and clearances.
5. INTELLECTUAL PROPERTY RIGHTS.
5.1 CUSTOMER CONTENT; LIMITED LICENSE TO USE. As between Customer and Akamai,
Customer shall own all right, title and interest in and to any Customer Content.
During the term of this Agreement, Customer grants to Akamai a limited
non-exclusive license to use the Customer Content solely for all reasonable and
necessary purposes required or contemplated by this Agreement and for Akamai to
perform the Services as contemplated hereunder. Akamai shall not assign,
transfer, sell, license, sublicense or grant any or its rights to the Customer
Content to any other person or entity. Akamai acknowledges that the Customer
Content constitutes proprietary information and/or trade secrets of Customer or
its providers and that the Customer Content is or may be protected by U.S.
copyright, trade secret and similar laws and certain international treaty
provisions. This Agreement does not transfer or convey to Akamai or any third
party any right, title or interest in or to the Customer Content or any
associated intellectual property rights, but only a limited right of use
revocable in accordance with the terms of this Agreement.
5.2 SOFTWARE, DOCUMENTATION AND SERVICES. As between Customer and Akamai,
Akamai shall own all right, title and interest in and to the Software,
Documentation and Services. Customer acknowledges that the Software,
Documentation and Services constitute proprietary information and trade secrets
which are the sole and exclusive property of Akamai or its licensors and that
the Software and Documentation are protected by U.S. copyright, trade secret and
similar laws and certain international treaty provisions. This Agreement does
not transfer or convey to Customer or any third party any right, title or
interest in or to the Software, Documentation or Services or any associated
intellectual property rights, but only a limited right of use revocable in
accordance with the terms of this Agreement.
6. PUBLICITY; TRADEMARKS.
6.1 PUBLICITY. Akamai shall be permitted to identify Customer as a customer,
to use Customer's name in connection with proposals to prospective customers, to
hyperlink from Akamai's web site to Customer's home page, to display Customer's
logo on the Akamai web site, and to otherwise refer to Customer in print or
electronic form for marketing or reference purposes. Customer agrees to serve as
a reference in Akamai's proposals for contact by prospective Akamai customers
and analysts. On or about the Effective Date, the parties agree to issue a joint
press release announcing Customer's adoption of FreeFlow Services. The press
release shall be subject to the approval of each party,
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which approval shall not be unreasonably withheld or delayed.
6.2 MARKS; USAGE RESTRICTIONS.
6.2.1 In addition to the rights granted in Section 6.1, each party may display
or refer to the other party's proprietary indicia, trademarks, service marks,
trade names, logos, symbols and/or brand names (collectively "Marks") upon the
advance written approval of that party, which approval shall not be unreasonably
withheld. Neither party may remove, destroy or alter the other party's Marks.
Each party agrees that it shall not challenge or assist others to challenge the
rights of the other party or its suppliers or licensors in the Marks or the
registration of the Marks, or attempt to register any trademarks, trade names or
other proprietary indicia confusingly similar to the Marks. All use of a party's
Marks shall be subject to such party's logo and trademark usage guide, as
provided to the other party and as the same may be updated from time to time.
6.2.2 All Marks appearing on or incorporated in the Customer Content are and
shall remain, as between Akamai and Customer, the exclusive property of Customer
or its providers. All Marks appearing on or incorporated in the Software,
Documentation or Services are and shall remain, as between Akamai and Customer,
the exclusive property of Akamai or its suppliers. Neither party grants any
rights in the Marks or in any other trademark, trade name, service mark,
business name or goodwill of the other except as expressly permitted hereunder
or by separate written agreement of the parties.
7. FEES; PRICING AND PAYMENT TERMS.
7.1 FEES; PAYMENT TERMS. Akamai's current fees for the Services (including
license fees, installation charges, service usage fees and other fees) are set
forth in the attached FREEFLOW(SM) ORDER FORM. Akamai reserves the right to
amend the fees payable hereunder at any time during the Term upon sixty-(60)
days' prior notice to Customer. All prices are in United States dollars and do
not include sales, use, value-added or import taxes, customs duties or similar
taxes that may be assessed by any jurisdiction. Amounts due hereunder are
payable upon receipt of invoice. Customer agrees to pay a late charge of two
percent (2%) per month or the maximum lawful rate, whichever is less, for all
amounts not paid within thirty (30) days of receipt of invoice.
7.2 TAXES. All taxes, duties, fees and other governmental charges of any kind
(including sales and use taxes, but excluding taxes based on the gross revenues
or net income of Akamai) which are imposed by or under the authority of any
government or any political subdivision thereof on the fees for any of the
Services provided by Akamai under this Agreement shall be borne by Customer and
shall not be considered a part of, a deduction from or an offset against such
fees.
7.3 ACCURATE RECORDS; RIGHT TO AUDIT. Akamai shall maintain complete and
accurate records and log files to support and document the usage fees charged to
Customer in connection with this Agreement. Akamai shall, upon written request
from Customer, provide access to such records during regular business hours at
Akamai's convenience, to an independent auditor(s) chosen by Customer for the
purposes of audit. Customer's right to conduct such audits shall be limited to
twice in any one calendar year.
8. REPRESENTATIONS AND WARRANTIES.
8.1 AKAMAI'S REPRESENTATIONS AND WARRANTIES. Akamai represents and warrants
to Customer as follows:
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8.1.1 Akamai and its licensors own or possess the necessary rights, title and
licenses in and to the Software and Services necessary to perform the Services
hereunder. Akamai has the right to enter into this Agreement and to perform its
obligations hereunder.
8.1.2 Akamai has obtained any and all consents, approvals and other
authorizations necessary for the performance of its obligations hereunder.
8.1.3 Akamai shall meet or exceed the network availability, capacity and
operations levels as set forth in Section 2 above; provided that Customer's sole
remedy for the breach of this provision by Akamai shall be the termination
rights set forth in Section 10.2 below.
8.1.4 YEAR 2000 READINESS WARRANTY. Akamai warrants that the Software will be
Year 2000 Ready. "Year 2000 Ready" means the ability to: (1) accept input and
provide output of data involving dates correctly and without ambiguity as to the
twentieth or twenty-first centuries; (ii) manage, store, sort, perform
calculations, and otherwise process data involving dates before, during, and
after January 1, 2000 without malfunction, abends or aborts; and (iii) correctly
process leap years including the year 2000. The foregoing warranty is subject to
the condition that all other products (e.g., hardware, software, and firmware)
which interface with the Services or are used with the Software (including any
Customer Content or other elements) properly exchange date data with the
Services and/or Software, as the case may be; provided, however, that Akamai
covenants that it will undertake to obtain a Year 2000 readiness warranty from
all hardware vendors, third party software licensors and Internet connectivity
providers. In the event Akamai becomes aware that the Software is not Year 2000
Ready, Akamai shall immediately notify Customer and promptly correct the
Software to eliminate such problem. If Akamai fails to correct any portion of
the Software that does not meet the foregoing warranty within a reasonable
period of time, Customer shall have the right to immediately terminate this
Agreement.
8.1.5 WARRANTY DISCLAIMER. EXCEPT AS SPECIFICALLY PROVIDED IN THIS SECTION 8.1,
AKAMAI EXPRESSLY DISCLAIMS ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, TO
THE FULLEST EXTENT PERMITTED BY LAW, INCLUDING BUT NOT LIMITED TO THE IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT.
8.2 CUSTOMER'S REPRESENTATIONS AND WARRANTIES. Customer represents and
warrants to Akamai as follows:
8.2.1 Customer has the right to enter into this Agreement and to perform its
obligations hereunder.
8.2.2 Customer owns and shall own all right, title, and interest in the
Customer Content, or possesses or shall possess all legally valid rights in the
Customer Content necessary for the uses of the Customer Content contemplated by
this Agreement. Customer will not transmit or route to the Akamai Network or
otherwise direct via the Services any Customer Content that (a) violates the
property rights of others, including without limitation, unauthorized
copyrighted text, images or programs, trade secrets or other confidential
proprietary information, or trademarks or service marks used in an infringing
fashion, or (b) contains any libelous, defamatory, or obscene material.
9. CONFIDENTIAL INFORMATION. All information disclosed by either party
("Disclosing Party") to the other party
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("Receiving Party"), if disclosed in writing, labeled as proprietary or
confidential, or if disclosed orally, reduced to writing within thirty (30) days
and labeled as proprietary or confidential (collectively, "Confidential
Information") shall remain the sole property of the Disclosing Party. Except for
the specific rights granted by this Agreement, the Receiving Party shall not use
any Confidential Information of the Disclosing Party for its own account. The
Receiving Party shall use the highest commercially reasonable degree of care to
protect the Disclosing Party's Confidential Information. Confidential
Information to any third party without the express written consent of the
Disclosing Party (except solely for Receiving Party's internal business needs,
to employees or consultants who are bound by a written agreement with Receiving
Party to restrict the disclosure and use of such Confidential Information in a
manner consistent with this Agreement). Confidential Information shall exclude
information (i) available to the public other than by a breach of this
Agreement; (ii) rightfully received from a third party not in breach of an
obligation of confidentiality; (iii) independently developed by the Receiving
Party without access to Confidential Information; (iv) known to the Receiving
Party at the time of disclosure; or (v) produced in compliance with applicable
law or a court order, provided the Disclosing Party is given reasonable notice
of such law or order and an opportunity to attempt to preclude or limit such
production. Subject to the above, the Receiving Party agrees to cease using any
and all materials embodying Confidential Information, and to promptly return
such materials to the Disclosing Party upon request.
10. TERM AND TERMINATION.
10.1 TERM; INITIAL TERM; RENEWALS. This Agreement shall become effective as of
the Effective Date and remain in full force and effect for the initial term
specified in the FREEFLOW(SM) ORDER FORM (the "Initial Term"). Upon the
expiration of the Initial Term, this Agreement will automatically renew for one
or more additional terms of one (1) year (each, a "Renewal Term") unless and
until either party notifies the other party of its intent to terminate at least
(90) days prior to the expiration of the Initial Term or a Renewal Term. The
Initial Term, together with any and all Renewal Terms, is sometimes collectively
referred to as the "Term."
10.2 TERMINATION UPON DEFAULT. Either party may terminate this Agreement in
the event that the other party materially defaults in performing any obligation
under this Agreement and such default continues unremedied for a period of
thirty (30) days following, written notice of default; provided, however, that
in the event this Agreement is terminated by Customer due to Akamai's breach of
its representations under Section 8.1.3 above and failure to cure, Customer's
sole remedy shall be its election to terminate the Agreement without further
liability to either party (except for Customer's obligation to pay all accrued
and unpaid fees outstanding at the date of termination).
10.3 TERMINATION UPON INSOLVENCY. This Agreement shall terminate, effective
upon delivery of written notice by a party: (i) upon the institution of
Insolvency, receivership or bankruptcy proceedings or any other proceedings for
the settlement of debts of the other party; (ii) upon the making of an
assignment for the benefit of creditors by the other party; or (iii) upon the
dissolution of the other party.
10.4 TERMINATION FOR CONVENIENCE.
10.4.1 Either party may terminate this Agreement during the first sixty (60)
days of the Initial Term without liability upon written notice to the other
party; provided
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that if Customer terminates during such period, Customer agrees to pay Akamai
all unpaid fees accrued as of the termination date, including without limitation
any installation, set-up and training fees.
10.4.2 Customer may cancel the Service at any time after the first sixty (60)
days of the Initial Term or during any Renewal Term for convenience upon written
notice to Akamai; provided, however, that if Customer cancels the Service during
the Initial Term or any Renewal Term pursuant to this Section 10.4.2, then
Customer agrees to pay to Akamai: (a) all unpaid Service fees accrued as of the
cancellation date; plus (b) an early cancellation fee equal to the minimum usage
fees (as set forth in the FREEFLOW(SM) ORDER FORM) that will become due during
the canceled portion of the Initial Term, or the Renewal Term, as applicable.
10.5 EFFECT OF TERMINATION. The provisions of Sections 3.1, 4, 7, 8, 9, 11,
12, 13, 14.4-14.8, and 14.11-14.13 shall survive termination of this Agreement.
All other rights and obligations of the parties shall cease upon termination of
this Agreement. The term of any license granted hereunder shall expire upon
expiration or termination of this Agreement.
11. DISPUTE RESOLUTION.
11.1 INFORMAL DISPUTE RESOLUTION. In the case of any disputes under this
Agreement, the parties shall first attempt in good faith to resolve their
dispute informally, or by means of commercial mediation, without the necessity
of a formal proceeding.
11.2 ARBITRATION OF DISPUTES.
11.2.1 Any controversy or dispute arising out of or relating to this Agreement,
or the breach thereof, which cannot otherwise be resolved as provided above
shall be resolved by arbitration conducted in accordance with the commercial
arbitration rules of the American Arbitration Association ("AAA") and judgment
upon the award rendered by the arbitral tribunal may be entered in any court
having jurisdiction thereof. The arbitration tribunal shall consist of a single
arbitrator mutually agreed by the parties, or in the absence of such agreement
within thirty (30) calendar days from the first referral of the dispute to the
AAA, designated by the AAA. The place of arbitration shall be Boston,
Massachusetts, U.S.A., unless the parties shall have agreed to another location
within fifteen (15) calendar days from the first referral of the dispute to the
AAA. The arbitral award shall be final and binding. The parties waive any right
to appeal the arbitral award, to the extent a right to appeal may be lawfully
waived. Each party retains the right to seek judicial assistance: (i) to compel
arbitration; (ii) to obtain interim measures of protection prior to or pending
arbitration, (iii) to seek injunctive relief in the courts of any jurisdiction
as may be necessary and appropriate to protect the unauthorized disclosure of
its proprietary or confidential information, and (iv) to enforce any decision of
the arbitrator, including the final award.
11.2.2 The arbitration proceedings contemplated by this Section shall be as
confidential and private as permitted by law. To that end, the parties shall not
disclose the existence, content or results of any proceedings conducted in
accordance with this Section, and materials submitted in connection with such
proceedings shall not be admissible in any other proceeding, provided, however,
that this confidentiality provision shall not prevent a petition to vacate or
enforce an arbitral award, and shall not bar disclosures required by law.
12. INDEMNIFICATION.
12.1 MUTUAL INDEMNIFICATION. Each party shall indemnify and hold the other,
its
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assignees, agents, officers and employees harmless from and against any damages
to real or tangible personal property and/or bodily injury to persons, including
death, resulting from its or its employees or agents negligence or willful
misconduct.
12.2 AKAMAI INDEMNIFICATION OBLIGATIONS.
12.2.1 Akamai shall defend, indemnify and hold harmless Customer from and
against any suit, proceeding, or assertion of a third party against Customer
based upon a claim that any of the Software, other than third party Software
delivered with or included in the Software, infringes any valid patent,
copyright, trade secret, or other intellectual property right under the laws of
the United States, provided that: (i) Customer promptly notifies Akamai, in
writing, of the suit, claim or proceeding or a threat of suit, claim or
proceeding; (ii) at Akamai's reasonable request and expense, Customer provides
Akamai with reasonable assistance for the defense of the suit, claim or
proceeding; and (iii) Akamai has sole control of the defense of any claim and
all negotiations for settlement or compromise.
12.2.2 If a claim of infringement under this Section 12.2 occurs, or if Akamai
determines that a claim is likely to occur, Akamai will have the right, in its
sole discretion, to either: (i) procure for Customer the right or license to
continue to use the Software free of the infringement claim; or (ii) replace or
modify the Software to make it non-infringing provided that the replacement
software substantially conforms to Akamai's then-current specification for the
Software. If these remedies are not reasonably available to Akamai, Akamai may,
at its option, terminate this Agreement and return any fees paid by Customer in
advance.
12.2.3 Despite the provisions of this Section 12.2, Akamai has no obligation
with respect to any claim of infringement that is based upon or arises out of:
(i) any modification to the Software if the modification was not made by Akamai;
or (ii) the use or combination of the Software with any hardware, software,
products, data or other materials not specified or provided by Akamai; or (iii)
Customer's use of the Services other than in accordance with the Documentation
or Akamai's written directions or policies.
12.2.4 THE PROVISIONS OF THIS SECTION 12.2 STATE THE SOLE AND EXCLUSIVE
OBLIGATIONS AND LIMITATION OF LIABILITY OF AKAMAI FOR ANY PATENT, COPYRIGHT,
TRADEMARK, TRADE SECRET OR OTHER INTELLECTUAL PROPERTY RIGHTS INFRINGEMENT AND
ARE IN LIEU OF ANY WARRANTIES OF NON-INFRINGEMENT, ALL OF WHICH ARE DISCLAIMED.
12.3 CUSTOMER INDEMNIFICATION OBLIGATIONS. Customer acknowledges that by
entering into and performing its obligations under this Agreement, Akamai does
not assume and should not be exposed to the business and operational risks
associated with Customer's business, or any aspects of the operation or contents
of Customer's web site(s). Accordingly, Customer shall defend, indemnify, and
hold harmless Akamai and its affiliates, licensors, suppliers, officers,
directors, employees and agents from and against any and all damage, cost,
liability, and expenses (including court costs and reasonable attorneys' fees)
incurred as a result of claims of customers or other third parties arising from
or connected with any Customer Content, Customer's web site(s) (including
without limitation any activities or aspects thereof or commerce conducted
thereon), or Customer's use of the Services, provided that: (i) Akamai promptly
notifies Customer, in writing, of the suit, claim or proceeding or a threat of
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suit, claim or proceeding; (ii) at Customer's reasonable request and expense,
Akamai provides Customer with reasonable assistance for the defense of the suit,
claim or proceeding; and (iii) Customer has sole control of the defense of any
claim and all negotiations for settlement or compromise.
13. LIMITATION OF LIABILITY AND DAMAGES.
13.1 LIMITATION OF LIABILITY. AKAMAI'S LIABILITY FOR ALL CLAIMS ARISING OUT OF
THIS AGREEMENT, WHETHER IN CONTRACT, TORT OR OTHERWISE, SHALL BE LIMITED TO THE
AMOUNT OF FEES PAID BY CUSTOMER TO AKAMAI UNDER THIS AGREEMENT DURING THE
PRECEDING SIX (6) MONTHS.
13.2 LIMITATION OF DAMAGES. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER OR ANY THIRD PARTY FOR ANY LOSS OF DATA, LOSS OF BUSINESS PROFITS,
BUSINESS INTERRUPTION, OR OTHER SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT
DAMAGES ARISING FROM OR IN RELATION TO THIS AGREEMENT OR THE USE OF THE
SERVICES, HOWEVER CAUSED AND REGARDLESS OF THEORY OF LIABILITY. THIS LIMITATION
WILL APPLY EVEN IF SUCH PARTY HAS BEEN ADVISED OR IS AWARE OF THE POSSIBILITY OF
SUCH DAMAGES.
14. MISCELLANEOUS.
14.1 INDEPENDENT CONTRACTOR. The relationship of Akamai and Customer
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement shall be construed to (i) give either party the
power to direct and control the day-to-day activities of the other; (ii) deem
the parties to be acting as partners, joint venturers, co-owners or otherwise as
participants in a joint undertaking; or (iii) allow either party to create or
assume any obligation on behalf of the other party for any purpose whatsoever.
14.2 NOTICES. Any notice required or permitted hereunder shall be in writing
and shall be delivered as follows (with notice deemed given as indicated): (i)
by personal delivery when delivered personally; (ii) by established overnight
courier upon written verification of receipt; (iii) by facsimile transmission
when receipt is confirmed orally; or (iv) by certified or registered mail,
return receipt requested, upon verification of receipt. All notices must be sent
to the contact person for notices at the address listed on the cover page of
this Agreement. Either party may change its contact person for notices and/or
address for notice by means of notice to the other party given in accordance
with this Section 14.2.
14.3 ASSIGNMENT. Customer may not, without the prior written consent of
Akamai, assign this Agreement, in whole or in part, either voluntarily or by
operation of law, and any attempt to do so shall be a material default of this
Agreement and shall be void. Akamai's rights and obligations, in whole or in
part, under this Agreement may be assigned or transferred by Akamai.
14.4 THIRD PARTY BENEFICIARIES. This Agreement is solely for the benefit of
the parties and their successors and permitted assigns, and does not confer any
rights or remedies on any other person or entity.
14.5 GOVERNING LAW. This Agreement shall be interpreted according to the laws
of the Commonwealth of Massachusetts without regard to or application of
choice-of-law rules or principles.
14.6 ENTIRE AGREEMENT AND WAIVER. This Agreement and any Schedules hereto
shall constitute the entire agreement between Akamai and Customer with respect
to the subject matter hereof and all prior
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agreements, representations, and statement with respect to such subject matter
are superseded hereby, including without limitation any non-disclosure agreement
previously executed between the parties. The terms of this Agreement shall
control in the event of any inconsistency with the terms of any Schedule hereto.
This Agreement may be changed only by written agreement signed by both Akamai
and Customer. No failure of either party to exercise or enforce any of its
rights under this Agreement shall act as a waiver of subsequent breaches; and
the waiver of any breach shall not act as a waiver of subsequent breaches.
14.7 SEVERABILITY. In the event any provision of this Agreement is held by a
court of other tribunal of competent jurisdiction to be unenforceable, that
provision will be enforced to the maximum extent permissible under applicable
law, and the other provisions of this Agreement will remain in full force and
effect. The parties further agree that in the event such provision is an
essential part of this Agreement, they begin negotiations for a suitable
replacement provision.
14.8 NON-DISCLOSURE OF AGREEMENT TERMS. Neither party shall disclose to third
parties, other than its agents and representatives on a need-to-know basis, the
terms of this Agreement or any Schedule hereto without the prior written consent
of the other party, except either party shall be entitled to disclose (i) such
terms to the extent required by law; and (ii) the existence of this Agreement.
14.9 FORCE MAJEURE. If either party is prevented from performing any of its
obligations under this Agreement due to any cause beyond the party's reasonable
control, including, without limitation, an act of God, fire, flood, explosion,
war, strike, embargo, government regulation, civil or military authority, acts
or omissions of carriers, transmitters, providers, vandals, or hackers (a "force
majeure event") the time for that party's performance will be extended for the
period of the delay or inability to perform due to such occurrence; provided,
however, that Customer will not be excused from the payment of any sums of money
owed by Customer to Akamai; and provided further, however, that if a party
suffering a force majeure event is unable to cure that event within thirty (30)
days, the other party may terminate this Agreement.
14.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when so executed and delivered, shall be deemed an
original, and all of which shall constitute one and the same Agreement.
14.11 CONSTRUCTION. This Agreement shall be construed and interpreted fairly,
in accordance with the plain meaning of its terms, and there shall be no
presumption or inference against the party drafting this Agreement in construing
or interpreting the provisions hereof.
14.12 REMEDIES. Except as provided herein, the rights and remedies of Akamai
set forth in this Agreement are not exclusive and are in addition to any other
rights and remedies available to it at law or in equity.
14.13 BINDING EFFECT. This Agreement shall be binding upon and shall inure to
the benefit of the respective parties hereto, their respective
successors-in-interest, legal representatives, heirs and assigns.
11
<PAGE> 12
IN WITNESS WHEREOF, each of the parties, by its duty authorized
representative, has entered into this Agreement as of the Effective Date.
<TABLE>
<CAPTION>
<S> <C>
CUSTOMER AKAMAI TECHNOLOGIES, INC.
By: ________________________________ By:________________________________
Name: _____________________________ Name:_____________________________
Title: ______________________________ Title: _____________________________
</TABLE>
12
<PAGE> 13
[CORPORATE LOGO] Order #
SCHEDULE A - FREEFLOW ORDER FORM 1
CONTRACT
EFFECTIVE DATE: SALES REP:
TYPE: New Upgrade Renewal
CUSTOMER INFORMATION:
Company
Name:
Billing
Address:
BILLING CONTACT: (if different than Customer Contact)
Name:
Phone:
Fax:
E-Mail:
CUSTOMER CONTACT:
Name:
Phone:
Fax:
E-Mail:
TECHNICAL CONTACT:
Name:
Phone:
Fax:
E-Mail:
UPGRADE/ACCOUNT CHANGE AUTHORITY:
(Check contacts with authority to upgrade contract)
Customer Contract Billing Contact
Technical Contact Other (See Special Instructions)
TOTAL CHARGES SUMMARY:(see attached detailed products and services descriptions)
<TABLE>
<S> <C> <C>
INITIAL FEE: One-time fee after installation is complete INITIAL FEE:
PRICE PER MBPS: Rate per Mpbs for FreeFlow services: PRICE PER MBPS:
COMMITTED INFORMATION
RATE(CIR): Committed Monthly Usage of FreeFlow service CIR:
MONTHLY RECURRING Monthly fees billed in advance (based on CIR), STANDARD
FEES: = Price per Mpbs X CIR MONTHLY RECURRING:
</TABLE>
INITIAL TERM: THE TERM OF THIS AGREEMENT WILL BE , STARTING WITH THE EFFECTIVE
DATE
Customer hereby orders from Akamai Technologies, Inc., a Delaware Corporation
("Akamai"), the Services described above for the Initial Term specified in this
Order Form. This Order Form shall become valid when executed by Customer and
accepted by an authorized representative of Akamai. The Initial Term begins on
the date Akamai provides access codes and software to the Customer ("Effective
Date"). This Service Order Form is issued pursuant to and is subject to the
Terms & Conditions contained in the Master Services Agreement entered into by
and between Customer and Akamai (the "Master Services Agreement"). Capitalized
terms used in this Order Form and not otherwise defined have the meanings
ascribed to them in the Master Services Agreement.
CUSTOMER HAS READ AND AGREES TO BE BOUND BY THE TERMS AND CONDITIONS OF THIS
ORDER FORM. CUSTOMER AND AKAMAI AGREE THAT THE TERMS AND CONDITIONS OF THIS
ORDER FORM SUPERSEDE ANY PROVISIONS OF ANY CUSTOMER DRAFTED PURCHASE ORDER AND
SUPERSEDE ALL PROPOSALS, WRITTEN OR ORAL, AS WELL AS OTHER COMMUNICATIONS
BETWEEN CUSTOMER AND AKAMAI RELATING TO THIS ORDER. IN THE EVENT OF ANY CONFLICT
BETWEEN THE TERMS OF THIS ORDER AND THE MASTER SERVICES AGREEMENT, THIS ORDER
SHALL TAKE PRECEDENCE.
ACCEPTED BY CUSTOMER:
SIGNATURE
NAME DATE
TITLE
ACCEPTED BY AKAMAI:
SIGNATURE
NAME DATE
TITLE
Page 1 of 2
<PAGE> 14
Order #
Akamai Products & Services Detailed Descriptions
FreeFlow Service Configuration
<TABLE>
<CAPTION>
Initial Recurring
Fees Charges
<S> <C> <C> <C>
FreeFlow
Integration
Details and
Requirements
FreeFlow
Service Billing to be based on 95th percentile of Free Flow usage
Network
Utilization
- Committed Rate fees are billed in advance
- Usage over the CIR is billed in arrears
SUB-TOTAL:
Adjustments (if applicable):
TOTAL (at Committed Rate): $ $
</TABLE>
Special Instructions:
Page 2 of 2
<PAGE> 15
FREEFLOW SERVICE SCHEDULE B
PRESENTED BY:
AKAMAI TECHNOLOGIES
201 BROADWAY AVENUE, 4TH FLOOR
CAMBRIDGE, MA 02138
[LOGO]
<PAGE> 16
Proposal Date April 27, 1999
Valid 30 days
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
1.1.1 24x7 Monitoring........................................................................................1
1.1.2 GeoFlow Monitoring Suite...............................................................................1
1.1.3 RENAME Application and Process.........................................................................1
1.1.4 Content Provider Code..................................................................................1
1.1.5 The "Fingerprint"......................................................................................1
1.1.6 AKAMAI ACCOUNT MANAGEMENT..............................................................................2
2 IMPLEMENTATION...........................................................................................2
3 XYZCO FREEFLOW SERVICE PRICING...........................................................................2
3.1 INITIAL FEES...........................................................................................2
3.2 MONTHLY RECURRING FEES.................................................................................2
4 SERVICE LEVEL AGREEMENT -- FREEFLOW SERVICE..............................................................3
</TABLE>
ii
<PAGE> 17
1.1.1 24X7 MONITORING
Akamai staffs its NOC 24x7x365 to respond to any problem that may arise
on the FreeFlow network. All systems on the FreeFlow network are
monitored to ensure that key processes are running, systems have not
exceeded capacity, and regions are interacting properly.
1.1.2 GEOFLOW MONITORING SUITE
GeoFlow Monitoring Suite is a set of tools that provide site usage
statistics. The suits includes tools for both real-time and historic
analysis of customer data.
GeoFlow Traffic Analyzer is the real-time component of the GeoFlow
tools suite. Traffic Analyzer's multiple monitoring views enable quick
access to network and customer-specific traffic information with the
option to export data to other applications for more detailed offline
analysis.
GeoFlow Log Analyzer complements Traffic Analyzer by extending its
reporting capabilities to allow for full viewing of historical data.
Log Analyzer culls its information from existing web server log files
to provide for exploration of site traffic patters in the data.
1.1.3 RENAME APPLICATION AND PROCESS
The RENAME tool allows customers to include content for delivery via
the FreeFlow content delivery service. The RENAME application is a
small, flexible script that is run on URLs or certain pieces of content
to tag them with a customer-specific code ("Content Provider Code"),
and a unique identifier ("Fingerprint"). RENAME is a passive process,
typically run in the staging environment, as opposed to the "live"
production environment. Because each customer's needs are different,
Akamai provides initial and ongoing support for RENAME planning and
integration.
1.1.4 CONTENT PROVIDER CODE
The Content Provider Code is a numerical account reference within the
serial number portion of a RENAMEd URL. The Content Provider Code (CPC)
is used by Akamai to collect and sort customer-specific information.
The Content Provider Code is used by Akamai to represent data on the
GeoFlow Traffic Analyzer real-time reporting interface. Content
Provider Codes are also used to aggregate network utilization data for
billing and reporting to Akamai customers.
1.1.5 THE "FINGERPRINT"
Another component of the RENAMEd URL is the "Fingerprint". This is a
unique identifier, which ensures that the object or image being served
is "fresh". This feature of the RENAMEd URL is very important, as it
guarantees that the Akamai FreeFlow network will not serve "stale"
content to your users.
Posted below is an example of an XYZCO URL followed by the
corresponding RENAMEd URL:
Original URL:
Http://www.xyzco.com/foo.gif (Regular URL)
Format for RENAMEd URL:
http://serial#.akamai.com/serial#/type_code/cpc_code/fingerprint
Http://www.xyzco.com/foo.gif
URL after running RENAME:
http://a941.akamai.com/7/941/51/256097340036aa/
Http://www.xyzco.com/foo.gif
<PAGE> 18
Proposal Date
Valid 30 days
1.1.6 AKAMAI ACCOUNT MANAGEMENT
Akamai provides XYZCO with a dedicate account manager who serves as the
XYZCO advocate within the company. The account manager directs all
internal resources at Akamai on behalf of the customer, providing
proactive communications and reporting, and serves as a single point of
contact for all XYZCO requirements.
1.1.7 INVOICES
Invoices are sent on the 5th of the month in which service is
delivered. Initial fees appear on the first bill, as do any fees
associated with customer services and equipment. Fees associated with
bursting above the Committed Rate are billed in arrears for period of
usage on the following month's invoice.
2 XYZCO COMPUTER IMPLEMENTATION
Akamai will provide the consulting and engineering resources necessary
to assist XYZCO with integration of the RENAME process and other
appropriate services. After execution of the Master Services Agreement,
XYZCO and Akamai will create a plan for integration of the process for
tagging XYZCO web content for inclusion on the FreeFlow service
network.
3 XYZCO FREEFLOW SERVICE PRICING
3.1 INITIAL FEES
3.2 XYZCO MONTHLY RECURRING FEES
XYZCO will be billed at the standard 95th percentile of aggregate
FreeFlow network utilization on a monthly basis. XYZCO will have a
Committed Rate of traffic per month. Usage above the committed rate
Mbps is allowed at any time, with no premium for usage by XYZCO.
XYZCO is entering into a two-phase agreement for Akamai services. These
phases are as follows:
PHASE I
- Timeline:
- Committed Rate:
- Pricing:
- All rates are additive, applying to the aggregate XYZCO content
served from FreeFlow
PHASE II
- Timeline:
- Committed Rate:
- Pricing:
- All rates are additive, applying to the aggregate XYZCO content
served from FreeFlow
2
<PAGE> 19
Proposal Date
Valid 30 days
4 SERVICE LEVEL AGREEMENT -- FREEFLOW SERVICE
I. Service Level Agreement:
Akamai agrees to provide a level of service demonstrating:
a) Measurable Performance Enhancement: The Akamai FreeFlow service will deliver
content measurably faster than the Customer's web site.
b) 100% Uptime: The Akamai FreeFlow service will serve content 100% of the time
without qualification.
c) Penalties: If the Akamai FreeFlow service fails to meet either of the above
service levels, the Customer will receive a credit equal to fees for the day in
which the failure occurs.
II. Metric Methods:
The following methodology will be employed to measure FreeFlow service
availability and performance enhancement:
1. Agents and Polling Frequency
A. From six (6) geographically and network-diverse locations in major
metropolitan areas, Akamai will simultaneously poll a test file
residing on the Customer's production services and on Akamai's
network. Sites will include the following areas:
Northern Virginia
New Jersey
Chicago
Houston
Los Angeles
Palo Alto
B. The polling mechanism will perform two (2) simultaneous http GET
operations:
i. one GET operation will be performed on a test file residing on
the appropriate customer server (e.g.,
http://www.customerxyz.com/images/testgif.gif)
ii. the other GET operation will be performed from the Akamai
FreeFlow Service:
(http://a564.g.akamaitech.net/7/564/24/2c1db486/
www.customerxyz.com/images/testgif.gif).
C. The test GIF will be a file of 80 Kbytes or greater in size.
D. Polling will occur at approximately 12-minute intervals.
3
<PAGE> 20
Proposal Date
Void 30 days
E. Based on the http GET operations described in 1.B. above, the response
times received from the two sources, (a) the Customer server, and (b)
the Akamai network, will be compared for the purpose of measuring
performance metrics and outages.
2. Performance metrics -
A. The performance metric will be based on a daily average of
performance for the FreeFlow service and the Customer's
production web server, computed from data captured across all
regions and hits. Each time will be weighted to reflect peak
traffic conditions or "primetime" usage. The primetime period
is 10 AM to 7 PM EST. All times recorded during this period
will be weighted by a factor of three. If on a given day the
Akamai weighted average time exceeds the Customer's weighted
daily average time, then the Customer will receive a credit
equivalent to fees for that day of service.
3. Outages
A. An outage is defined as a 12-minute period of consecutive
failed attempts by a single agent to "get" a file from the
FreeFlow network while succeeding to "get" the test file from
the Customer web site. If an outage is identified by this
method, the customer will receive a credit equivalent to the
fees for the day in which the failure occurred.
4
<PAGE> 1
EXHIBIT 10.15
Severance Agreement
AGREEMENT, made this 26th day of March, 1999, by and between George
Conrades ("Executive") and Akamai Technologies, Inc. (the "Company").
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its shareholders
for the Company to agree to provide benefits under circumstances described below
to the Executive in connection with his employment by the Company and due to his
responsibility for the policy-making functions of the Company; and
WHEREAS, the Executive has entered into a Non-Competition Agreement
under which he has agreed to not compete with the Company for the one-year
period following the termination of his employment with the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto agree as follows:
1. If, within 24 months following a "Change of Control" (as defined in
paragraph 2 below), Executive's employment with the Company terminates for any
reason, either voluntary or involuntary, other than for death or total
disability and other than for "Cause" (as defined in paragraph 3 below):
(a) the Company will pay to Executive within 30 days of such
termination of employment a lump-sum cash payment equal to 299% of his
average annual base salary and bonus for the most recent three calendar
years ended before the Change of Control (or for such shorter portion
of that period as Executive performed services for the Company); and
(b) Executive, together with his dependents, will continue
following such termination of employment to participate fully in all
accident and health plans maintained or sponsored by the Company
immediately prior to the Change of Control, or receive substantially
the equivalent coverage (or the full value thereof in cash) from the
Company, until the first anniversary of such termination; and
(c) the Company will promptly reimburse Executive for any and
all legal fees and expenses incurred by him to enforce the provisions
of this Agreement.
2. A Change of Control will occur for purposes of this Agreement if
there occurs a "Sale" as defined in the Stock Restriction Agreement dated as of
the date hereof between the Executive and the Company (the "Stock Restriction
Agreement").
<PAGE> 2
3. "Cause" shall have the meaning ascribed to it in the Stock
Restriction Agreement.
4. If there has been a termination to which paragraph 1 applies, and
the Company and Executive agree that Executive shall provide post-termination
consulting or other services to the Company, the Company shall be entitled to
reduce its payment for such post-termination consulting or other services to the
extent of the payment made by it pursuant to paragraph 1. This paragraph 4 shall
not obligate either the Company or Executive to agree to Executive's provision
of post-termination services.
5. In the case of any dispute under this Agreement, Executive may
initiate binding arbitration in Boston, Massachusetts, before the American
Arbitration Association by serving a notice to arbitrate upon the Company or, at
Executive's election, institute judicial proceedings, in either case within 90
days of the effective date of his termination or, if later, his receipt of
notice of termination, or such longer period as may be reasonably necessary for
Executive to take such action if illness or incapacity should impair his taking
such action within the 90-day period. The Company shall not have the right to
initiate binding arbitration, and agrees that upon the initiation of binding
arbitration by Executive pursuant to this paragraph 5 the Company shall cause to
be dismissed any judicial proceedings it has brought against Executive relating
to this Agreement. The Company authorizes Executive from time to time to retain
counsel of his choice to represent Executive in connection with any and all
actions, proceedings, and/or arbitration, whether by or against the Company or
any director, officer, shareholder, or other person affiliated with the Company,
which may affect Executive's rights under this Agreement. The Company agrees (i)
to pay the fees and expenses of such counsel, (ii) to pay the cost of such
arbitration and/or judicial proceeding, and (iii) to pay interest to Executive
on all amounts owed to Executive under this Agreement during any period of time
that such amounts are withheld pending arbitration and/or judicial proceedings.
Such interest will be at the base rate as announced from time to time by The
First National Bank of Boston, or its successor.
In addition, notwithstanding any existing prior attorney-client
relationship between the Company and counsel retained by Executive, the Company
irrevocably consents to Executive entering into an attorney-client relationship
with such counsel and agrees that a confidential relationship shall exist
between Executive and such counsel.
6. If the Company is at any time before or after a Change of Control
merged or consolidated into or with any other corporation or other entity
(whether or not the Company is the surviving entity), or if substantially all of
the assets thereof are transferred to another corporation or other entity, the
provisions of this Agreement will be binding upon and inure to the benefit of
the corporation or other
-2-
<PAGE> 3
entity resulting from such merger or consolidation or the acquirer of such
assets, and this paragraph 6 will apply in the event of any subsequent merger or
consolidation or transfer of assets.
In the event of any merger, consolidation, or sale of assets described
above, nothing contained in this Agreement will detract from or otherwise limit
Executive's right to or privilege of participation in any stock option or
purchase plan or any bonus, profit sharing, pension, group insurance,
hospitalization, or other incentive or benefit plan or arrangement which may be
or become applicable to executives of the corporation resulting from such merger
or consolidation or the corporation acquiring such assets of the Company.
In the event of any merger, consolidation or sale of assets described
above, references to the Company in this Agreement shall unless the context
suggests otherwise be deemed to include the entity resulting from such merger or
consolidation or the acquirer of such assets of the Company.
7. All payments required to be made by the Company hereunder to
Executive or his dependents, beneficiaries, or estate will be subject to the
withholding of such amounts relating to tax and/or other payroll deductions as
may be required by law.
8. There shall be no requirement on the part of the Executive to seek
other employment or otherwise mitigate damages in order to be entitled to the
full amount of any payments and benefits to which Executive is entitled under
this Agreement, and the amount of such payments and benefits shall not be
reduced by any compensation or benefits received by Executive from other
employment.
9. Nothing contained in this Agreement shall be construed as a contract
of employment between the Company and the Executive, or as a right of the
Executive to continue in the employ of the Company, or as a limitation of the
right of the Company to discharge the Executive with or without Cause; provided
that the Executive shall have the right to receive upon termination of his
employment the payments and benefits provided in this Agreement and shall not be
deemed to have waived any rights he may have either at law or in equity in
respect of such discharge.
10. No amendment, change, or modification of this Agreement may be made
except in writing, signed by both parties.
11. This Agreement shall not apply to a Change of Control which takes
place after the third anniversary of the date first written above.
-3-
<PAGE> 4
Payments made by the Company pursuant to this Agreement shall be in
lieu of severance payments, if any, which might otherwise be available to
Executive.
The provisions of this Agreement, shall be binding upon and shall inure
to the benefit of Executive, his executors, administrators, legal
representatives, and assigns, and the Company and its successors.
The validity, interpretation, and effect of this Agreement shall be
governed by the laws of The Commonwealth of Massachusetts.
The Company shall have no right of set-off or counterclaims, in respect
of any claim, debt, or obligation, against any payments to Executive, his
dependents, beneficiaries, or estate provided for in this Agreement.
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
No right or interest to or in any payments shall be assignable by the
Executive; provided, however, that this provision shall not preclude him from
designating one or more beneficiaries to receive any amount that may be payable
after his death and shall not preclude the legal representative of his estate
from assigning any right hereunder to the person or persons entitled thereto
under his will or, in the case of intestacy, to the person or persons entitled
thereto under the laws of intestacy applicable to his estate. The term
"beneficiaries" as used in this Agreement shall mean a beneficiary or
beneficiaries so designated to receive any such amount, or if no beneficiary has
been so designated, the legal representative of the Executive's estate.
No right, benefit, or interest hereunder, shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt, or obligation, or to
execution, attachment, levy, or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void, and of no effect.
IN WITNESS WHEREOF, the Company and Executive have each caused this
Agreement to be duly executed and delivered as of the date set forth above.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin /s/ George Conrades
---------------------------- -----------------------------
Daniel Lewin, President George Conrades
-4-
<PAGE> 1
EXHIBIT 10.17
PROMISSORY NOTE
March 26, 1999
$ 1,980,000 Hobe Sound, Florida
FOR VALUE RECEIVED, George Conrades (the "Maker"), promises to pay to
AKAMAI Technologies, Inc. (the "Company"), or order, at its offices or at such
other place as the holder of this Note may designate, the principal sum of $
1,980,000, together with interest on the unpaid principal balance of this Note
from time to time outstanding at the rate of 5.3% per year, compounded annually,
until paid in full. Principal and interest shall be paid in full on March 26,
2009; provided, however, if the Maker sells any shares of the Company, he shall
make a prepayment on this Note equal to the proceeds of such sale (net of
taxes), such payment applied first to accrued and unpaid interest and then to
principal until paid in full.
Interest on this Note shall be computed on the basis of a year of 365
days for the actual number of days elapsed. All payments by the Maker under this
Note shall be in immediately available funds.
This Note shall become immediately due and payable without notice
(except as provided in paragraph (1) below) or demand upon the occurrence at any
time of any of the following events of default (individually, "an Event of
Default" and collectively, "Events of Default"):
(1) default in the payment or performance of this or any other
liability or obligation of the Maker under a written contract
to the holder that is not cured within 30 days after written
notice of default thereof, including the payment when due of
any principal, premium or interest under this Note;
(2) the insolvency of the Maker, or the appointment of a receiver
or custodian for the Maker or any part of its property if such
appointment is not terminated or dismissed within thirty (30)
days;
(3) the institution against the Maker or any indorser or guarantor
of this Note of any proceedings under the United States
Bankruptcy Code or any other federal or state bankruptcy,
reorganization, receivership, insolvency or other similar law
affecting the rights of creditors generally, which proceeding
is not dismissed within thirty (30) days of filing; or
(4) the institution by the Maker or any indorser or guarantor of
this Note of any proceedings under the United States
Bankruptcy Code or any other federal or state bankruptcy,
reorganization, receivership, insolvency or other similar law
affecting the rights of creditors generally or the making by
the Maker or any indorser or guarantor of this Note of a
composition or an assignment or trust mortgage for the benefit
of creditors.
Upon the occurrence of an Event of Default, the holder shall have then,
or at any time thereafter, all of the rights and remedies afforded by the
Uniform Commercial Code
<PAGE> 2
as from time to time in effect in the Commonwealth of Massachusetts or afforded
by other applicable law.
All payments by the Maker under this Note shall be made without set-off
or counterclaim and be free and clear and without any deduction or withholding
for any taxes or fees of any nature whatever, unless the obligation to make such
deduction or withholding is imposed by law. The Maker shall pay and save the
holder harmless from all liabilities with respect to or resulting from any delay
or omission to make any such deduction or withholding required by law.
No reference in this Note to any guaranty or other document shall
impair the obligation of the Maker, which is absolute and unconditional, to pay
all amounts under this Note strictly in accordance with the terms of this Note.
The Maker agrees to pay on demand all costs of collection, including
reasonable attorneys' fees, incurred by the holder in enforcing the obligations
of the Maker under this Note.
No delay or omission on the part of the holder in exercising any right
under this Note shall operate as a waiver of such right or of any other right of
such holder, nor shall any delay, omission or waiver on any one occasion be
deemed a bar to or waiver of the same or any other right on any future occasion.
The Maker and every indorser or guarantor of this Note regardless of the time,
order or place of signing waives presentment, demand, protest and notices of
every kind and assents to any extension or postponement of the time of payment
or any other indulgence, to any substitution, exchange or release of collateral,
and to the addition or release of any other party or person primarily or
secondarily liable.
This Note may be prepaid in whole or in part at any time or from time
to time. Any such prepayment shall be without premium or penalty.
None of the terms or provisions of this Note may be excluded, modified
or amended except by a written instrument duly executed on behalf of the holder
expressly referring to this Note and setting forth the provision so excluded,
modified or amended.
All rights and obligations hereunder shall be governed by the laws of
the Commonwealth of Massachusetts and this Note is executed as an instrument
under seal.
/s/ George Conrades
George Conrades
-2-
<PAGE> 1
EXHIBIT 10.18
PROMISSORY NOTE
May 18, 1999
$500,000 Boston, Massachusetts
FOR VALUE RECEIVED, Paul Sagan (the "Maker"), promises to pay to Akamai
Technologies, Inc. (the "Company"), or order, at its offices or at such other
place as the holder of this Note may designate, the principal sum of $500,000,
together with interest on the unpaid principal balance of this Note from time to
time outstanding at the rate of 5.3% per year, compounded annually, until paid
in full. Principal and interest shall be paid in full on May 18, 2009; provided,
however, if the Maker sells any shares of the Company, he shall make a
prepayment on this Note equal to the proceeds of such sale (net of taxes), such
payment applied first to accrued and unpaid interest and then to principal until
paid in full.
Interest on this Note shall be computed on the basis of a year of 365
days for the actual number of days elapsed. All payments by the Maker under this
Note shall be in immediately available funds.
This Note shall become immediately due and payable without notice
(except as provided in paragraph (1) below) or demand upon the occurrence at any
time of any of the following events of default (individually, "an Event of
Default" and collectively, "Events of Default"):
(1) default in the payment or performance of this or any other
liability or obligation of the Maker under a written contract
to the holder that is not cured within 30 days after written
notice of default thereof, including the payment when due of
any principal, premium or interest under this Note;
(2) the insolvency of the Maker, or the appointment of a receiver
or custodian for the Maker or any part of its property if such
appointment is not terminated or dismissed within thirty (30)
days;
(3) the institution against the Maker or any indorser or guarantor
of this Note of any proceedings under the United States
Bankruptcy Code or any other federal or state bankruptcy,
reorganization, receivership, insolvency or other similar law
affecting the rights of creditors generally, which proceeding
is not dismissed within thirty (30) days of filing; or
(4) the institution by the Maker or any indorser or guarantor of
this Note of any proceedings under the United States
Bankruptcy Code or any other federal or state bankruptcy,
reorganization, receivership, insolvency or other similar law
affecting the rights of creditors generally or the making by
the Maker or any indorser or guarantor of this Note of a
composition or an assignment or trust mortgage for the benefit
of creditors.
Upon the occurrence of an Event of Default, the holder shall have then,
or at any time thereafter, all of the rights and remedies afforded by the
Uniform Commercial Code
<PAGE> 2
as from time to time in effect in the Commonwealth of Massachusetts or afforded
by other applicable law.
All payments by the Maker under this Note shall be made without set-off
or counterclaim and be free and clear and without any deduction or withholding
for any taxes or fees of any nature whatever, unless the obligation to make such
deduction or withholding is imposed by law. The Maker shall pay and save the
holder harmless from all liabilities with respect to or resulting from any delay
or omission to make any such deduction or withholding required by law.
No reference in this Note to any guaranty or other document shall
impair the obligation of the Maker, which is absolute and unconditional, to pay
all amounts under this Note strictly in accordance with the terms of this Note.
The Maker agrees to pay on demand all costs of collection, including
reasonable attorneys' fees, incurred by the holder in enforcing the obligations
of the Maker under this Note.
No delay or omission on the part of the holder in exercising any right
under this Note shall operate as a waiver of such right or of any other right of
such holder, nor shall any delay, omission or waiver on any one occasion be
deemed a bar to or waiver of the same or any other right on any future occasion.
The Maker and every indorser or guarantor of this Note regardless of the time,
order or place of signing waives presentment, demand, protest and notices of
every kind and assents to any extension or postponement of the time of payment
or any other indulgence, to any substitution, exchange or release of collateral,
and to the addition or release of any other party or person primarily or
secondarily liable.
This Note may be prepaid in whole or in part at any time or from time
to time. Any such prepayment shall be without premium or penalty.
None of the terms or provisions of this Note may be excluded, modified
or amended except by a written instrument duly executed on behalf of the holder
expressly referring to this Note and setting forth the provision so excluded,
modified or amended.
All rights and obligations hereunder shall be governed by the laws of
the Commonwealth of Massachusetts and this Note is executed as an instrument
under seal.
/s/ Paul Sagan
Paul Sagan
-2-
<PAGE> 1
EXHIBIT 10.19
PROMISSORY NOTE
July 23, 1999
$ 623,750 Cambridge, Massachusetts
FOR VALUE RECEIVED, Robert O. Ball III (the "Maker"), promises to pay
to Akamai Technologies, Inc. (the "Company"), or order, at its offices or at
such other place as the holder of this Note may designate, the principal sum of
$ 623,750, together with interest on the unpaid principal balance of this Note
from time to time outstanding at the rate of 6.1% per year, compounded annually,
until paid in full. Principal and interest shall be paid in full on July 23,
2009; provided, however, if the Maker sells any shares of capital stock of the
Company, he shall make a prepayment on this Note equal to the proceeds of such
sale (net of taxes), such payment applied first to accrued and unpaid interest
and then to principal until paid in full.
Interest on this Note shall be computed on the basis of a year of 365
days for the actual number of days elapsed. All payments by the Maker under this
Note shall be in immediately available funds.
This Note shall become immediately due and payable without notice
(except as provided in paragraph (1) below) or demand upon the occurrence at any
time of any of the following events of default (individually, "an Event of
Default" and collectively, "Events of Default"):
(1) default in the payment or performance of this or any other
liability or obligation of the Maker under a written contract
to the holder that is not cured within 30 days after written
notice of default thereof, including the payment when due of
any principal, premium or interest under this Note;
(2) the insolvency of the Maker, or the appointment of a receiver
or custodian for the Maker or any part of its property if such
appointment is not terminated or dismissed within thirty (30)
days;
(3) the institution against the Maker or any indorser or guarantor
of this Note of any proceedings under the United States
Bankruptcy Code or any other federal or state bankruptcy,
reorganization, receivership, insolvency or other similar law
affecting the rights of creditors generally, which proceeding
is not dismissed within thirty (30) days of filing; or
(4) the institution by the Maker or any indorser or guarantor of
this Note of any proceedings under the United States
Bankruptcy Code or any other federal or state bankruptcy,
reorganization, receivership, insolvency or other similar law
affecting the rights of creditors generally or the making by
the Maker or any indorser or guarantor of this Note of a
composition or an assignment or trust mortgage for the benefit
of creditors.
<PAGE> 2
Upon the occurrence of an Event of Default, the holder shall have then,
or at any time thereafter, all of the rights and remedies afforded by the
Uniform Commercial Code as from time to time in effect in the Commonwealth of
Massachusetts or afforded by other applicable law.
All payments by the Maker under this Note shall be made without set-off
or counterclaim and be free and clear and without any deduction or withholding
for any taxes or fees of any nature whatever, unless the obligation to make such
deduction or withholding is imposed by law. The Maker shall pay and save the
holder harmless from all liabilities with respect to or resulting from any delay
or omission to make any such deduction or withholding required by law.
No reference in this Note to any guaranty or other document shall
impair the obligation of the Maker, which is absolute and unconditional, to pay
all amounts under this Note strictly in accordance with the terms of this Note.
The Maker agrees to pay on demand all costs of collection, including
reasonable attorneys' fees, incurred by the holder in enforcing the obligations
of the Maker under this Note.
No delay or omission on the part of the holder in exercising any right
under this Note shall operate as a waiver of such right or of any other right of
such holder, nor shall any delay, omission or waiver on any one occasion be
deemed a bar to or waiver of the same or any other right on any future occasion.
The Maker and every indorser or guarantor of this Note regardless of the time,
order or place of signing waives presentment, demand, protest and notices of
every kind and assents to any extension or postponement of the time of payment
or any other indulgence, to any substitution, exchange or release of collateral,
and to the addition or release of any other party or person primarily or
secondarily liable.
This Note may be prepaid in whole or in part at any time or from time
to time. Any such prepayment shall be without premium or penalty.
None of the terms or provisions of this Note may be excluded, modified
or amended except by a written instrument duly executed on behalf of the holder
expressly referring to this Note and setting forth the provision so excluded,
modified or amended.
All rights and obligations hereunder shall be governed by the laws of
the Commonwealth of Massachusetts and this Note is executed as an instrument
under seal.
/s/ Robert O. Ball III
Robert O. Ball III
-2-
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-1 of our
report dated August 10, 1999 relating to the financial statements of Akamai
Technologies, Inc. which appear in such Registration Statement. We also consent
to the reference to us under the heading "Experts" in such Registration
Statement.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
August 20, 1999
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<FISCAL-YEAR-END> DEC-31-1999
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<COMMON> 215,427
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<EPS-BASIC> (1.07)
<EPS-DILUTED> (1.07)
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> AUG-20-1998
<PERIOD-END> DEC-31-1998
<CASH> 6,579,909
<SECURITIES> 224,880
<RECEIVABLES> 0
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<BONDS> 24,859
8,283,758
0
<COMMON> 172,827
<OTHER-SE> (321,151)
<TOTAL-LIABILITY-AND-EQUITY> 8,865,640
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 900,076
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,586
<INCOME-PRETAX> (890,490)
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