<PAGE>
As filed with the Securities and Exchange Commission on February 1, 2000
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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iBEAM BROADCASTING CORPORATION
(Exact name of Registrant as specified in its charter)
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Delaware 7389 94-3296895
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification Number)
incorporation or Classification Code
organization) Number)
645 Almanor Avenue, Suite 100
Sunnyvale, CA 94086
(408) 523-1600
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------
Chris Dier
Chief Financial Officer
iBEAM Broadcasting Corporation
645 Almanor Avenue, Suite 100
Sunnyvale, CA 94086
(408) 523-1600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
Copies to:
Barry Taylor, Esq. Bruce Dallas, Esq.
David Dayan, Esq. Davis Polk & Wardwell
Charles Prober, Esq. 1600 El Camino Real
Wilson Sonsini Goodrich Menlo Park, CA 94025
& Rosati (650) 752-2000
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
(650) 493-9300 ---------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
---------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If 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
<TABLE>
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<CAPTION>
Proposed Maximum
Title of Each Class of Aggregate Offering Amount of
Securities To be Registered Price(1) Registration Fee
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<S> <C> <C>
Common Stock, $0.0001 par
value (1)................... $170,000,000 $44,880
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</TABLE>
(1)Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457 (o) under the Securities Act of 1933.
Includes shares subject to sale pursuant to the underwriters' over-allotment
option.
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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>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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 becomes effective. This prospectus is not +
+an offer to sell nor does it seek an offer to buy these securities in any +
+jurisdiction where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion)
Issued February , 2000
Shares
[Logo]
COMMON STOCK
-----------
iBEAM Broadcasting Corporation is offering shares of its 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 the common stock on the Nasdaq National Market under
the symbol "IBEM."
-----------
Investing in our common stock involves risks.
See "Risk Factors" beginning on page 6.
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PRICE $ A SHARE
-----------
<TABLE>
<CAPTION>
Price Underwriting
to Discounts and Proceeds
Public Commissions to iBEAM
------ ------------- --------
<S> <C> <C> <C>
Per Share............................. $ $ $
Total................................. $ $ $
</TABLE>
We have granted the underwriters the right to purchase up to an additional
shares of common stock to cover over-allotments.
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.
Morgan Stanley & Co. Incorporated expects to deliver the shares of common stock
to purchasers on , 2000.
-----------
MORGAN STANLEY DEAN WITTER
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
ROBERTSON STEPHENS
, 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.................. 3
Risk Factors........................ 7
Use of Proceeds..................... 19
Dividend Policy..................... 19
Capitalization...................... 20
Dilution............................ 21
Selected Financial Data............. 22
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 23
Business............................ 28
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Management......................... 41
Certain Relationships and Related
Transactions...................... 54
Principal Stockholders............. 57
Description of Capital Stock....... 59
Shares Eligible for Future Sale.... 61
Underwriters....................... 63
Legal Matters...................... 65
Experts............................ 65
Where You Can Find More
Information....................... 65
Index to Financial Statements...... F-1
</TABLE>
----------------
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. This prospectus is not an offer to sell nor is
it seeking an offer to buy these securities in any jurisdiction where the
offer or sale is not permitted. The information contained in this prospectus
is correct only as of the date of this prospectus, regardless of the time of
the delivery of this prospectus or any sale of these securities.
Until , 2000 (25 days after the date of this prospectus), all
dealers that buy, sell or trade our common stock, whether or not participating
in this offering, may be required to deliver a prospectus. This delivery
requirement is in addition to the dealers' obligation to deliver a prospectus
when acting as underwriter with respect to their unsold allotments or
subscriptions.
Our logo and certain titles and logos of our services are our trademarks.
Each trademark, trade name or service mark of any other company appearing in
this prospectus belongs to its holder. The terms iBEAM Broadcasting, iBEAM and
MaxCaster are our service marks or trademarks that are registered or otherwise
protected under the laws of various jurisdictions.
----------------
We were incorporated in Delaware in March 1998. Our principal executive
offices are located at 645 Almanor Avenue, Suite 100, Sunnyvale, CA 94086 and
our telephone number is (408) 523-1600. Our website is www.ibeam.com. The
information on the website is not a part of this prospectus.
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
This summary is not complete and may not contain all of the information that
you should consider before investing in our common stock. You should read the
entire prospectus, including the more detailed information and the financial
statements and related notes appearing elsewhere in this prospectus.
iBEAM BROADCASTING
We provide an Internet broadcast network that delivers streaming media with
viewing and listening quality that approaches television and radio, at lower
cost than current Internet solutions and with the ability to scale to serve
large audiences of simultaneous users. Our breadth of services enables content
providers to more easily and cost effectively broadcast content over the
Internet. Our network uses point-to-multipoint satellite broadcasting of
Internet content to our intelligent iBEAM servers located at the edge of
Internet, which is the Internet access point closest to the end user. Our
network currently uses iBEAM servers located in the facilities of network
providers, hosting companies and Internet service providers, or ISPs. Our
proprietary technology and the software incorporated into our intelligent
servers enable us to deliver high quality video and audio streams. We believe
our investment in intelligent servers at the edge of the Internet provides us
with competitive advantages and allows for the development of new value-added
services for both content providers and ISPs.
Investments in "last mile" high-speed Internet connections to homes and
businesses, intended to improve viewing and listening quality, are increasing
the traffic load on the Internet causing web congestion and degradation of
viewing and listening quality. Despite these limitations, existing websites,
traditional media companies, such as Time Warner and Sony, new media companies,
such as Launch Media and ProWebCast.com, and creators of new applications, such
as online education, are aggressively trying to attract and retain Internet
users by using greater amounts of streaming audio-visual content. The Gartner
Group projects that more than 50% of websites will include some streaming media
by 2001, a five-fold increase from 1998. Through our focus on the edge of the
Internet and the use of satellite delivery, our approach to webcasting
overcomes the inherent design limitations that disrupt the delivery of
streaming audio-visual media and degrade viewing and listening quality.
Our solution is built on nearly 40 man years of proprietary software
development by technical specialists from CNN, Bloomberg, and Microsoft which
led to early developments in the delivery of rich video and audio content over
the Internet. We commercially introduced our service in October 1999. As of
January 25, 2000, our network investment, which we will continue to develop, is
sufficient to support 300,000 simultaneous 20 kilobit streams of data. As of
January 25, 2000, we have over 40 customers including MSNBC, Warner Bros.
Interactive, Launch Media and Pixelworld. In addition, we have agreements with
over 40 ISPs, including Covad Communications and Northpoint, that enable us to
broadcast directly through their local distribution networks.
Business Strategy
Our goal is to become the leading provider of high-fidelity Internet
broadcast services by developing the world's largest, premier quality and most
cost efficient distributed streaming network. To this end, we are capitalizing
upon our innovative network architecture, proprietary technology and first
mover advantage to position us as the broadcast network of choice for reliable,
high-fidelity Internet broadcasting. Our strategy comprises the following
initiatives:
. Expand Our Customer Base of Leading Media and Entertainment Companies
. Globally Build Out Our High-Fidelity Internet Broadcast Network
. Further Leverage Our Intelligent Network to Drive Economies of Scale
. Introduce New Value Added Features and Services
. Pursue Additional Strategic Relationships
. Create Open Platform for New Applications
3
<PAGE>
Our Internet Broadcast Network
We have developed and deployed an Internet broadcast network that combines
the quality, scalability and efficiency of the traditional television and radio
broadcast networks with the interactivity and personalization of the Internet.
The architecture of our network is conceptually similar to the architecture of
traditional broadcast television and cable. Traditional television is collected
over a dedicated acquisition network, then broadcast by satellite to a network
of downlinks at television affiliates or cable facilities geographically
dispersed across the country. We collect streaming Internet media from
providers, then broadcast it via satellite to our network of servers, which we
call MaxCasters, located in the facilities of ISPs. We then deliver these high-
fidelity video and audio streams to the end user. Our services require no
special end user hardware or software. In addition to the efficient
distribution of streaming content, the iBEAM MaxCasters are intelligent servers
that can perform a wide range of other value-added applications, including
usage reporting and targeted advertising.
The key benefits of our network to our customers include:
. High-Fidelity Video and Audio Streams
. Low Cost Distribution
. Scalability
. Transparent to the End User
. Turnkey Solution
. Advanced Reporting Capability
. Flexible Network Design
Our main executive offices are located at 645 Almanor Avenue, Suite 100,
Sunnyvale, California 94086, and our phone number is (408) 523-1600. Our
website address is www.ibeam.com. The information on our website is not part of
this prospectus.
4
<PAGE>
THE OFFERING
<TABLE>
<C> <S>
Common stock offered................................ shares
Common stock to be outstanding after this offering.. shares
Use of proceeds..................................... For general corporate
purposes, including
working capital and
capital expenditures
Proposed Nasdaq National Market symbol.............. IBEM
</TABLE>
The number of shares of common stock to be outstanding after the offering is
based on shares of common stock outstanding as of December 31, 1999. This
number includes 45,740,355 shares of common stock to be issued upon automatic
conversion of all outstanding shares of our preferred stock upon completion of
this offering. This number excludes:
. 16,004,625 shares of common stock authorized for issuance under our
stock option plans, of which 6,857,817 shares at a weighted average
exercise price of $1.20 were subject to outstanding options as of
December 31, 1999; and
. 1,025,676 shares of common stock issuable upon exercise and conversion
of outstanding preferred stock warrants as of December 31, 1999 at a
weighted average exercise price of $1.63.
Unless otherwise indicated, all of the information in this prospectus:
. reflects the conversion of all outstanding shares of preferred stock
into 45,740,355 shares of common stock upon completion of this offering;
. reflects a 3-for-1 stock split of our common stock effected in January
2000; and
. assumes no exercise of the underwriters' over-allotment option.
5
<PAGE>
SUMMARY FINANCIAL DATA
Weighted average shares used in computing the pro forma basic and diluted
net loss per share have been calculated assuming the conversion of all
outstanding shares of convertible preferred stock outstanding into common stock
as if the shares had converted immediately upon issuance.
The pro forma column in the balance sheet data below gives effect to the
conversion of all shares of convertible preferred stock outstanding into
45,740,355 shares of common stock upon the closing of this offering. The pro
forma as adjusted column also reflects the sale of shares of common
stock in this offering at an assumed initial public offering price of
$ , after deducting the underwriting discounts and commissions and
estimated offering expenses payable by us.
<TABLE>
<CAPTION>
Period from
March 20, 1998
(Inception) to Year Ended
December 31, 1998 December 31, 1999
----------------- -----------------
(in thousands, except per share
data)
<S> <C> <C>
Statements of Operations Data:
Revenue................................... $ -- $ 149
Total operating costs and expenses........ 4,352 30,317
Loss from operations...................... (4,352) (30,168)
Net loss.................................. (4,227) (29,968)
Net loss per share--basic and diluted..... $ (0.78) $ (4.74)
Weighted average common shares
outstanding.............................. 5,438 6,320
Pro forma net loss per share--basic and
diluted.................................. $ (0.87)
Weighted average common shares
outstanding.............................. 34,431
</TABLE>
<TABLE>
<CAPTION>
As of December 31, 1999
-----------------------------
Pro Forma
Actual Pro Forma As Adjusted
------- --------- -----------
(in thousands)
<S> <C> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and investments.......... $29,840 $29,840 $
Working capital................................. 24,751 24,751
Total assets.................................... 44,741 44,741
Capital lease obligations, net of current
portion........................................ 3,627 3,627 3,627
Total stockholders' equity...................... 35,159 35,159
</TABLE>
6
<PAGE>
RISK FACTORS
You should consider carefully the following risks before you decide to buy
our common stock. If any of the following risks actually materializes, 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 could
lose all or part of the money paid to buy our common stock.
Risks Related to Our Business
We are a development stage company and our business is difficult to
evaluate because we have a limited operating history.
We were founded in March 1998 and began offering our Internet broadcasting
services for streaming video and audio in October 1999. The revenue and income
potential of our business and market is unproven. 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 for the
foreseeable future. You should consider the risks and difficulties frequently
encountered by development stage companies, particularly companies in the
rapidly evolving Internet infrastructure market.
We are entirely dependent on our Internet broadcasting services and our
future revenue depends on their commercial success.
Our future growth depends on the commercial success of our Internet
broadcasting services. We have recently begun to commercially introduce our
services for the delivery of streaming video and audio, and our future revenue
growth will depend upon customer demand for these services. Failure of our
current and planned services to operate as expected could delay or prevent
customer acceptance. We have only limited experience offering our services and
we may incur service interruptions or encounter technical problems as we
expand our customer base. 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. In addition, to the extent we attempt to
establish any portion of our technology as an industry standard by making it
readily available to users for little or no charge, we could face increased
competition and may not receive revenue that might otherwise have been
received by us.
Our business strategy is based on our ability to build our broadcast
network to the edge of the Internet, which is dependent on our relationship
with Internet service providers.
The success of our business strategy is dependent on our ability to build
our broadcast network to the edge of the Internet, which is the access point
closest to the end user. Our ability to provide content providers with high
quality, low-cost distribution of streaming video and audio content is
dependent on the development of an edge network. To accomplish our business
strategy, we will need to deploy our edge servers in the facilities of
Internet service providers. Although we provide Internet service providers
with our servers at no cost and we believe deployment of our network will
reduce incoming bandwidth costs for these providers, Internet service
providers may nevertheless refuse to allow us to install our equipment in
their facilities. If we are unable to successfully deploy our edge servers
close to the end user, our business and results of operation will suffer
greatly.
We do not have exclusive contracts with Internet service providers for the
deployment of our servers within their networks and we expect that many
Internet service providers will allow our competitors to install equipment at
their sites.
Because our Internet broadcasting network is complex and is deployed in
complex environments, it may have errors or defects that could seriously harm
our business.
Our Internet broadcasting network is highly complex. Because of the nature
of our services, we can only fully test it when it is fully deployed in very
large networks with high traffic. We and our customers have from time to
7
<PAGE>
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 sales 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; or
. Legal action by our customers.
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 high quality and
low-cost Internet broadcasting services through our network. 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; and
. Sabotage and vandalism.
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. In addition, because
our servers are located in the facilities of others such as Internet service
providers and Internet hosting companies, we must rely on others to protect
our equipment.
Our network architecture uses satellite transmission to bypass the
congestion of the Internet backbone by broadcasting directly to our edge-
servers thereby providing high quality, low-cost services to our customers.
Although we have deployed three layers of redundancy in our network--edge
servers, regional data centers and our master data centers--our costs are
generally higher and quality of service is generally lower when we deliver
content to end users from our data centers rather than our edge servers.
Therefore, the failure of one or more of the satellites we use could prevent
us from broadcasting content directly to the edge of the Internet and
therefore have a negative impact on our ability to cost-effectively broadcast
high-quality streaming video and audio content.
If we are unable to provide our network services to our customers we could
face legal action by our customers. Although our contracts with our customers
contain limitation on liability provisions, we cannot assure you that such
customers would not attempt to seek damages greater than such limitations.
We may have inaccurately predicted our satellite capacity needs and may
find it difficult to add capacity when needed on reasonable terms.
While we have entered into a three year renewable agreement for satellite
capacity, if we find that we contracted for insufficient capacity, there is no
assurance that we could obtain additional capacity when needed or on
reasonable terms. Failure to obtain capacity would limit revenue growth.
8
<PAGE>
The market for Internet broadcasting services is new and our business will
suffer if it does not develop as we expect.
The market for Internet broadcasting services is new and rapidly evolving.
While we believe content providers such as existing Web-based companies and
traditional media and entertainment companies will increasingly seek to
broadcast streaming video and audio over the Internet, we cannot be certain
that a viable market for our services 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.
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 a market that is 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 and 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 to offer content providers an integrated solution
which we do not currently match. This may discourage content providers from
purchasing services we offer or Internet service providers from installing our
servers in their facilities.
As competition in the Internet broadcasting market continues to intensify,
new solutions will come to market. We are aware of other companies that are
focusing or may in the future focus significant resources on developing and
marketing products and services that will compete with ours. We believe our
competitors primarily come from four market segments:
. Streaming media hosting companies;
. Internet content distribution networks;
. Internet device venders who utilize caching systems, switches and local
balancers; and
. Fiber-based network operators.
Increased competition could result in:
. Price and revenue reductions and lower profit margins;
. Increased cost of service from telecommunications providers;
. Loss of customers; and
. Loss of market share.
Any one of these results could materially and adversely affect our
business, financial condition and results of operations.
We do not have exclusive contracts with our customers and these Internet
content providers may shift from using our services to those of our
competitors at any time without penalty.
In addition, some content providers may determine that it is more cost
effective for them to develop and deploy their own Internet broadcasting or
content delivery systems than it is to outsource such services to companies
such as iBEAM. This competitive threat is particularly great from content
providers that own content distribution networks.
9
<PAGE>
We believe that the Internet broadcasting and content delivery industry is
likely to encounter consolidation in the future. Such consolidation could lead
to the formation of more formidable competitors and could result in increased
pressure on us to decrease our prices. In addition, consolidation among
Internet content providers could reduce the number of potential customers for
our services and may increase the bargaining power of these organizations,
which could force us to lower prices.
If any of our strategic alliances terminate, then our business could be
adversely affected.
We entered into a strategic alliance with Microsoft Corporation in
September 1999 and with Covad Communications in October 1999. Under each of
these agreements, we are seeking to jointly develop technology and services
with our strategic alliance partners and we may not be successful. Our
agreement with Microsoft may be terminated by either Microsoft or us if the
other party materially breaches the agreement. Within the first year of our
agreement with Covad, either party may terminate the agreement with 60 days
notice. During the second and third years of the agreement, either party may
terminate the agreement upon a material breach by the other. A termination of,
or significant adverse change in, our relationship with Microsoft or Covad
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 deployed our Internet broadcasting network only on a limited basis
to date, and we cannot be certain that our network can connect and manage a
substantially larger number of end users at high transmission speeds. Our
network may not be scalable to expected end user levels while maintaining
superior performance. In addition, for a portion of our network, as usage of
bandwidth by end users 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 a reasonable 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, which would reduce our revenue
and cause our business and financial results to suffer.
Our business will suffer if we do not respond rapidly to technological
changes or if new technological developments make our services non-competitive
or obsolete.
The market for Internet broadcasting services is characterized by rapid
technological change, frequent new product and service 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 that are better than ours or that gain greater market
acceptance, or if new industry standards emerge, our services may become non-
competitive or obsolete, which would materially and adversely affect our
business, results of operations and financial condition. In addition,
technological developments could eventually make Internet infrastructure much
faster and more reliable such that performance enhancing services like those
we provide would be less relevant to content providers.
In developing our service, we have made, and will continue to make,
assumptions about the standards that our customers and competitors may adopt.
If the standards adopted are different from those which we may now or in the
future promote or support, market acceptance of our service may be
significantly reduced or delayed and our business will be seriously harmed. In
addition, the emergence of new industry standards could render our existing
services non-competitive or obsolete.
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 increasing losses in the future. As
of December 31, 1999, we had an accumulated deficit of $34.2 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
10
<PAGE>
sales and marketing, product development, administrative and other expenses,
including fees to obtain access to bandwidth transport of data over our
network while we build out our network to the edge of the Internet. 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 and installation cycles for our service may
cause revenue and operating results to vary significantly from quarter to
quarter, which could adversely affect our stock price.
Because of our limited operating history and the nature of our business, we
cannot predict these sales and installation cycles. The uncertain sales and
installation 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.
We expect the rates we can charge for our services to decline over time
which could reduce our revenue and could cause our business and financial
results to suffer.
We expect the prices we can charge for our Internet broadcasting services
will decline over time as a result of, among other things, the increasing
availability of bandwidth at reduced costs and existing and new competition in
the markets we address. 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 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.
We are currently pricing our services at levels that exceed our variable
costs, but are insufficient to cover indirect costs such as our network
operations center and billing system. We believe revenues will increase to
cover these indirect costs which are relatively fixed, however there is no
assurance this will happen or that we have accurately estimated indirect
costs. If we fail to increase revenues as we expect, we may not be able to
achieve or maintain profitability.
Our business and prospects depend on consumer demand for streaming video
and audio content over the Internet.
Consumer demand for streaming video and audio content on the Internet has
only begun to build in recent years, and our success will depend in large part
on continued growth in the use of the Internet for such purposes. Market
demand for streaming video and audio content on the Internet is subject to a
high level of uncertainty and is dependant on a number of factors, including:
. The growth in consumer access to interactive technologies such as the
Internet;
. Consumer acceptance of new interactive technologies; and
. Increases in user bandwidth.
If the Internet as a source for video and audio content fails to develop or
develops more slowly than expected, our business and prospects will suffer. In
addition, critical issues concerning the 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 also likely to affect the development of the market for our
services.
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
11
<PAGE>
to customer requirements and offer services that meet these 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 demand. Our inability to
effectively manage this transition would harm our business, results of
operations and financial condition.
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 and limited
trained sales personnel. Our limited experience may restrict our success in
commercializing our services. Our services require a sophisticated sales
effort targeted at a limited number of key people within our prospective
customers' organization. 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 with a greater number of
organizations and generate increased revenue. We are in the process of
building 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 for indirect sales 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 increasing our revenue and achieving and maintaining
profitability.
Hiring customer service and support 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 these
personnel, they require extensive training in our Internet broadcasting. If we
are unable to expand our customer service and support organization or train
these personnel as rapidly as necessary, we may not be able to maintain
satisfied existing customers of our service, which would seriously harm our
business.
We may engage in future acquisitions that dilute the ownership interests of
our stockholders, cause us to incur debt and assume contingent liabilities.
As part of our business strategy, we review acquisition and strategic
investment prospects that would complement our current service offerings,
augment our market coverage or enhance our technical capabilities, or that may
otherwise offer growth opportunities. While we have no current agreements or
negotiations underway with respect to any such acquisitions, we are reviewing
investments in new businesses and we may acquire businesses, products or
technologies in the future. In the event of any future acquisitions, we could:
. Issue equity securities which would dilute current stockholders'
percentage ownership;
. Incur substantial debt; or
. Assume contingent liabilities.
These actions by us could materially adversely affect our operating results
and/or the price of our common stock. Acquisitions and investments may require
us to incur significant amortization and depreciation charges and acquisition
related costs impacting our financial results. Acquisitions and investment
activities also entail numerous risks, including:
. Difficulties in the assimilation of acquired operations, technologies or
services;
. Unanticipated costs associated with the acquisition or investment
transaction;
12
<PAGE>
. Diversion of management's attention from other businesses concerns;
. Adverse effects on existing business relationships with suppliers and
customers;
. Risks associated with entering markets in which we have no or limited
prior experience; and
. Potential loss of key employees of acquired organizations.
We cannot assure you that we will be able to successfully integrate any
business, products, technologies or personnel that we might acquire in the
future, and our failure to do so could materially adversely affect our
business, operating results and financial condition.
We will require additional capital in the future and may not be able to
secure adequate funds on terms acceptable to us.
The expansion and development of our business will require significant
capital, which we may be unable to obtain, to fund our capital expenditures
and operating expenses, including working capital needs. During the next
twelve months, we expect to meet our cash requirements with existing cash,
cash equivalents and short-term investments, the net proceeds from this
offering and cash flow from sales of our services. However, our revenues may
not reach expected levels, and we may have to incur unforseen capital
expenditures and investments to maintain our competitive position. If our
capital requirements vary materially from those currently planned, or if we
fail to generate sufficient cash flow from the sales of our services, we may
require additional financing sooner than anticipated or we may have to delay
or abandon some or all of our development and expansion plans or otherwise
forego market opportunities.
We will have to raise additional capital in the future. We may not be able
to obtain future equity or debt financing on favorable terms, if at all.
Future borrowing instruments such as credit facilities and lease agreements
are likely to contain restrictive covenants and may require us to pledge
assets as security for borrowings thereunder. Our inability to obtain
additional capital on satisfactory terms may delay or prevent the expansion of
our business.
Our business will suffer if we fail to manage the expansion of our
operations properly.
We have grown rapidly and expect to continue to grow rapidly by hiring new
employees and by expanding our offering of services. Our total number of
employees grew from 40 on March 4, 1999 to 189 on January 25, 2000 and several
members of our senior management team have only recently joined us. 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 services 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 Silicon
Valley. 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 including
additional senior management level personnel; and
. Effectively manage and multiply relationships with our customers,
suppliers, and other third parties.
Failure to accomplish the above objectives 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
13
<PAGE>
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.
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 broadcasting 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 and introduce new products and deliver new
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, and availability of, the products, services
or components we purchase, including bandwidth;
. Our ability to attain and maintain quality levels for our services;
. Expenses related to testing 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 the build-
out of our broadcast network, accelerate engineering and development, expand
our sales and marketing operations, broaden our customer support capabilities
and continue to 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 substantially 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.
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 and marketing and support personnel
who have critical industry experience and relationships that we rely on in
implementing our business plan. We do not have "key person" life insurance
covering any of our key employees. The loss of services of any of our key
employees could delay the development and introduction of and negatively
impact our ability to sell our services.
14
<PAGE>
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 be unable to
maintain or increase market demand for our service internationally, which may
harm our business. As we expand internationally, we will be increasingly
subject to a number of risks associated with international business activities
that could increase our costs, lengthen our sales cycle and require
significant management attention. These risks include:
. Potential difficulty in enforcing intellectual property rights in
certain foreign countries;
. Compliance with and unexpected changes in regulatory requirements
resulting in unanticipated costs and delays;
. Lack of availability of trained personnel in international locations;
. Tariffs, export controls and other trade barriers;
. Longer accounts receivable payment cycles than in the United States;
. Potential difficulty in obtaining access to additional satellite and
telecommunication transmission capacity;
. Potential difficulty of enforcing agreements and collecting receivables
in some foreign legal systems;
. Potentially adverse tax consequences, including restrictions on the
repatriation and earnings;
. General economic conditions in international markets; and
. Currency exchange rate fluctuations.
Risks Related to Legal Uncertainty
We could incur substantial costs defending our intellectual property from
infringement or a claim of infringement.
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. 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
patents rights.
Any litigation or claims, whether or not valid, could result in substantial
costs and diversion of resources. In January 2000, we received a letter from
another company which suggested that we review patents to which this company
claims rights. These patents purport to cover "a system and method for
delivery of video and data over a computer network." We believe that we do not
infringe any claims of these patents. However, there can be no assurance that
this company will agree with our conclusion or not pursue a claim or
litigation against us.
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 if at all;
and
. Redesign products or services that incorporate the disputed technology.
15
<PAGE>
If we are forced to take any of the foregoing actions, we could face
substantial costs and our business may be seriously harmed. Although we carry
general liability insurance, our insurance may not cover potential claims of
this type or be adequate to indemnify us for all liability that may be
imposed.
We may in the future initiate claims or litigation against third parties
for infringement of our proprietary rights or to determine the scope and
validity of our proprietary rights or the proprietary rights of competitors.
These claims could result in costly litigation and the diversion of our
technical and management personnel. As a result, our operating results could
suffer and our financial condition could be harmed.
Internet-related laws could adversely affect our business.
Laws and regulations that apply to communications and commerce over the
Internet are becoming more prevalent. The most recent session of the U.S.
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 effect of traditional laws and regulations on 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
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 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 actions or other
liabilities in jurisdictions in which we do not have a physical presence.
We provide our Internet broadcasting services 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 and we could find we
are subject to regulation, taxation, enforcement or other liability in such
jurisdictions, which could materially and 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 which could result in litigation against us
and substantial losses for investors purchasing shares in this offering.
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 in the public market to fluctuate significantly from the price
paid by investors in this offering:
. Announcements by us or our competitors of significant contracts, new
products or services offerings or enhancements, acquisitions,
distribution partnerships, joint ventures or capital commitments;
. Variations in our quarter-to-quarter operating results including our
failure to meet estimates of financial analysts;
16
<PAGE>
. 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;
. The addition or departure of our personnel; and
. Fluctuations in stock market prices and volumes.
Volatility in the market price of our common stock may prevent investors
from being able to sell their common stock at or above our initial public
offering price.
In the past, class action litigation has often been brought against
companies following periods of volatility in the market price of those
companies' common stock. We may become involved in this type of litigation in
the future. Litigation is often expensive and diverts management's attention
and resources, which could materially and adversely affect our business and
results of operations.
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 iBEAM after this
offering and could limit investors' 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 even if the change in control would be
beneficial to our stockholders.
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.
The sale of a substantial number of shares of common stock could cause the
market price of our common stock to decline.
After this offering, we will have a total of shares of common
stock outstanding ( shares if the underwriters exercise their entire
over-allotment option). The sale by us or the resale by stockholders of shares
of our common stock in the public market after the offering could cause the
market price of the common stock to decline. The federal securities laws
impose restrictions on the ability of certain stockholders to resell their
shares of common stock. In addition, we, our executive officers, directors and
certain other stockholders have agreed with Morgan Stanley & Co. Incorporated,
one of the representatives of the underwriters, not to sell our and their
shares for a period ending 180 days following the offering. Morgan Stanley &
Co. Incorporated may decide at any time, without notice, to allow these
stockholders to sell some or all of their shares prior to
17
<PAGE>
180 days following the offering. Accordingly, the shares of common
stock outstanding after this offering will be available for resale in the
public market as follows:
<TABLE>
<CAPTION>
Number of Shares Date Available for Resale
---------------- -------------------------
<S> <C>
......................................... Immediately
......................................... 180 days after this offering
</TABLE>
After this offering and expiration or release of the lock-up agreements,
holders of 45,740,355 shares of the common stock and the holders of warrants
to purchase approximately 654,360 shares of common stock may require us to
register their shares for resale under the federal securities laws. We also
intend to file a registration statement following this offering to permit the
sale of approximately shares of common stock under our stock plans.
Registration of such shares would result in these stockholders being able to
immediately resell their shares in the public market after expiration or
release of the lock-up agreements. Any such sales or anticipation thereof
could cause the market price of the common stock to decline.
As of the date of this prospectus, options to purchase shares of
common stock with a weighted average exercise price per share of $ were
outstanding, all of which are subject to agreements with Morgan Stanley & Co.
Incorporated not to sell such shares for 180 days after the offering.
You will experience immediate and significant dilution of book value per
share.
The initial public offering price of our common stock will be substantially
higher than the net tangible book value per share of the outstanding common
stock immediately after this offering. Therefore, based upon an assumed
initial public offering price of $ per share, if you purchase our
common stock in this offering, you will incur immediate dilution of $
per share. If additional shares are sold by the underwriters following
exercise of their over-allotment option, or if outstanding options or warrants
to purchase shares of common stock are exercised, there will be further
dilution.
You should not rely on forward-looking statements.
This prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as "anticipates," "believes," "plans,"
"expects," "future," "intends" "may," "will," "should," "estimates,"
"predicts," "potential," "continue" and similar expressions to identify such
forward-looking statements. This prospectus also contains forward-looking
statements attributed to certain third parties relating to their estimates
regarding the growth of certain markets. You should not rely on forward-
looking statements in this prospectus. Forward-looking statements are subject
to known and unknown risks, uncertainties and other factors that may cause our
actual results to differ materially from expectations. These risks,
uncertainties and other factors include, among others, those identified under
"Risk Factors" and elsewhere in this prospectus.
These forward-looking statements apply only as of the date of this
prospectus. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
18
<PAGE>
USE OF PROCEEDS
The net proceeds to us from the sale of shares of common stock
in this offering at an assumed public offering price of $ per share are
estimated to be approximately $ million (approximately $ million if
the underwriters' over-allotment option is exercised in full), after deducting
underwriting discounts and commissions and estimated offering expenses payable
by us.
The principal purposes of this offering are to obtain additional working
capital, to establish a public market for our common stock, to increase our
visibility in the marketplace and to facilitate future access to public
capital markets.
We expect to use the net proceeds for general corporate purposes, including
working capital and capital expenditures. During 2000, we anticipate spending
approximately $16.0 million on capital expenditures. Our management will
retain broad discretion in the allocation of the net proceeds of this
offering. Although we may use a portion of the proceeds to acquire other
businesses, products or technologies that are complementary to our business,
we have no specific acquisitions planned.
Pending such uses, we intend to invest the net proceeds of this offering in
short-term, investment-grade, interest-bearing securities.
DIVIDEND POLICY
We have never paid cash dividends on our common stock. We currently intend
to retain any of our future earnings to finance the growth and development of
our business. We do not intend to pay cash dividends on our common stock in
the foreseeable future.
19
<PAGE>
CAPITALIZATION
The following table sets forth our cash, cash equivalents, investments, and
capitalization at December 31, 1999:
. on an actual basis;
. on a pro forma basis to reflect the conversion of each outstanding share
of preferred stock into three shares of common stock upon the closing of
this offering; and
. on a pro forma basis as adjusted for this offering at an assumed initial
public offering price of $ per share and application of the
net proceeds therefrom.
<TABLE>
<CAPTION>
As of December 31, 1999
------------------------------
Pro Forma
Actual Pro Forma As Adjusted
------- --------- -----------
(in thousands, except per
share data)
<S> <C> <C> <C>
Cash, cash equivalents, and investments......... $29,840 $29,840 $
======= ======= =======
Capital lease obligations, net of current
portion........................................ $ 3,627 $ 3,627 $ 3,627
------- ------- -------
Stockholders' equity:
Convertible preferred stock, $0.0001 par
value; actual--20,000 shares authorized;
15,247 shares issued and outstanding; pro
forma and pro forma as adjusted--10,000
shares authorized; no shares issued or
outstanding.................................. 61,192 --
Common stock, $0.0001 par value; actual--
40,000 shares authorized; 12,442 shares
issued and outstanding; pro forma--300,000
shares authorized; 58,182 shares issued and
outstanding; pro forma as adjusted--300,000
shares authorized; shares issued and
outstanding.................................. 1 6
Additional paid-in capital.................... 21,054 82,241
Unearned stock-based compensation............. (12,893) (12,893) (12,893)
Deficit accumulated during development stage.. (34,195) (34,195) (34,195)
------- ------- -------
Total stockholders' equity.................. 35,159 35,159
------- ------- -------
Total capitalization........................ $38,786 $38,786 $
======= ======= =======
</TABLE>
This capitalization table excludes the following shares as of December 31,
1999:
. 16,004,625 shares of common stock authorized for issuance under our
stock option plans, of which 6,857,817 shares at a weighted average
exercise price of $1.20 per share were subject to outstanding options as
of December 31, 1999; and
. 1,025,676 shares of common stock issuable upon exercise and conversion
of outstanding convertible preferred stock warrants as of December 31,
1999 at a weighted average exercise price of $1.63 per share.
For the period from January 1, 2000 to , we issued shares and
options to purchase shares to employees and consultants at a weighted
average exercise price of $ per share. We expect to continue to issue
additional shares as we increase our hiring.
20
<PAGE>
DILUTION
Our pro forma net tangible book value as of December 31, 1999, was $35.2
million or $0.60 per share of common stock. Our pro forma net tangible book
value per share as of December 31, 1999 represents the amount of our total
tangible assets reduced by the amount of our total liabilities and divided by
the total number of shares of our common stock outstanding including the
automatic conversion of all outstanding shares of our preferred stock into
common stock. After giving effect to the sale by us of the shares
of common stock offered hereby at an assumed initial public offering price of
$ per share, (after deduction of underwriting discounts and commissions
and estimated offering expenses) our pro forma as adjusted net tangible book
value at December 31, 1999 would have been $ or $ per share. This
represents an immediate increase in net tangible book value to existing
stockholders of $ per share and an immediate dilution to new investors of
$ per share. The following table illustrates the per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.................. $
Pro forma net tangible book value per share as of December 31,
1999........................................................... $0.60
Increase in pro forma net tangible book value per share
attributable to new investors..................................
-----
Pro forma as adjusted net tangible book value per share after the
offering........................................................
---
Dilution per share to new investors.............................. $
===
</TABLE>
The following table sets forth on a pro forma basis as of December 31,
1999, the difference between the number of shares of common stock purchased
from us, the total consideration paid and the average price per share paid by
the existing stockholders and by the new investors in this offering (before
deduction of underwriting discounts and commissions and estimated offering
expenses):
<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
------------------ ------------------- Price
Number Percent Amount Percent Per Share
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders........ 58,181,967 % $62,334,609 % $1.07
New investors in this
offering....................
---------- --- ----------- ---
Total...................... % $ %
========== === =========== ===
</TABLE>
The table assumes no exercise of the underwriters over-allotment option and
no exercise of stock options outstanding at December 31, 1999. As of December
31, 1999, there were options outstanding to purchase a total of 6,857,817
shares at a weighted average exercise price of $1.20 per share, while
2,251,071 shares were reserved for future grants under our 1998 Stock Plan. As
of December 31, 1999, there were warrants outstanding to purchase 1,025,676
shares of common stock issuable upon exercise and conversion of outstanding
convertible preferred stock warrants at a weighted average exercise price of
$1.63 per share. Subsequent to December 31, 1999, the Board of Directors
issued shares and granted options to purchase an additional shares of
common stock at a weighted average exercise price of $ per share. To the
extent of these share issuances and exercise of any of these options, there
will be further dilution to new investors. See "Capitalization," "Management--
Compensation of Directors," and "--Executive Compensation."
21
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with,
and are qualified by reference to, our audited financial statements and notes
and "Management's Discussion and Analysis of Financial Condition and Results
of Operations" appearing elsewhere in this prospectus. The statement of
operations data for the period from March 20, 1998 (Inception) to December 31,
1998 and for the year ended December 31, 1999, and the balance sheet data as
of December 31, 1998 and 1999 are derived from, and are qualified by reference
to, our audited financial statements.
<TABLE>
<CAPTION>
Period from
March 20, 1998
(Inception) to
December 31, Year Ended
1998 December 31, 1999
------------------- -------------------
(in thousands, except per share data)
<S> <C> <C>
Statements of Operations Data:
Revenue........................ $ -- $ 149
------------------ -------------------
Operating costs and expenses:
Cost of services (direct and
indirect)................... -- 7,488
Engineering and development.. 1,449 4,202
Sales and marketing.......... 1,780 9,759
General and administrative... 1,084 3,475
Amortization of stock-based
compensation................ 39 5,393
------------------ -------------------
Total operating costs and
expenses.................. 4,352 30,317
------------------ -------------------
Loss from operations........... (4,352) (30,168)
Other income and expense, net.. 125 200
------------------ -------------------
Net loss....................... $ (4,227) $ (29,968)
================== ===================
Net loss per share--basic and
diluted....................... $ (0.78) $ (4.74)
================== ===================
Weighted average common shares
outstanding................... 5,438 6,320
================== ===================
Pro forma net loss per share--
basic and diluted
(unaudited)................... $ (0.87)
===================
Weighted average common shares
outstanding (unaudited) ...... 34,431
===================
<CAPTION>
As of December 31,
-------------------------------------------
1998 1999
------------------- -------------------
(in thousands)
<S> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and
investments................... $ 2,198 $ 29,840
Working capital................ 1,071 24,751
Total assets................... 4,207 44,741
Capital lease obligations, net
of current portion............ -- 3,627
Total stockholders' equity..... 2,955 35,159
</TABLE>
22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of
operations should be read in conjunction with the financial statements and
notes included elsewhere in this prospectus. This prospectus contains forward-
looking statements that involve risks and uncertainties. Our actual results
could differ significantly from those discussed in these forward-looking
statements as a result of certain factors, including those set forth under
"Risk Factors" and elsewhere in this prospectus.
Overview
We provide an Internet broadcast network that delivers streaming media with
viewing and listening quality that approaches television and radio, at lower
cost than current Internet solutions and with the ability to scale to serve
large audiences of simultaneous users. Our breadth of services enables content
providers to more easily and cost effectively broadcast content over the
Internet. Our network uses point-to-multipoint satellite broadcasting of
Internet content to our intelligent iBEAM servers located at the edge of the
Internet, which is the Internet access point closest to the end user. The
network currently uses iBEAM servers located in the facilities of network
providers, hosting companies and Internet service providers, or ISPs. Our
proprietary technology and the software incorporated into our intelligent
servers at the edge of the Internet provide us with competitive advantages and
allow for the development of new value-added services for both content
providers and ISPs.
We commenced operations in April 1998 and began offering monthly streaming
media delivery service in October 1999. Since our inception, we have incurred
significant losses and as of December 31, 1999, we had an accumulated deficit
of $34.2 million. We have not achieved profitability on a quarterly or 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.
Revenue
We derive our revenue from the sale of our streaming media delivery service
under contracts with terms typically ranging from three to twelve months. We
recognize revenue based on fees for the amount of Internet content delivered
through our service or content stored on our network as performed. We offer
three basic services: On-Air which provides continuous delivery of Internet
content, such as Internet radio; On-Demand which provides delivery of stored
content, such as movie or video clip downloads, based on requests by end
users; and, On-Stage which provides for one-time broadcasts of content, such
as live music concerts. We expect the revenue for each of our three basic
services to increase in future periods. In the future, we may also derive
revenue from services to encode video streams and from general consulting
assistance to content providers.
To date, all of our revenue has been derived from customers based in the
United States. We expect that revenue from customers outside the United States
will commence in future periods. All of our revenue has been derived through
direct sales. We expect to commence distribution through indirect channels in
future periods.
Cost of Services (Direct and Indirect)
We provide our service by broadcasting Internet content to our servers
located either at the edge of the Internet at ISP facilities, or third-party
data centers known as co-location sites. Direct cost of services consists of
those costs that vary directly with the volume of content delivered and our
network size, including depreciation of network servers deployed in the field,
monthly fees paid to co-location sites for use of space and network bandwidth
and satellite transmission. For edge delivery we do not pay for bandwidth to
deliver content from the ISP to the end user, however, under some of our
contracts with ISPs we will pay fees to the ISP based on revenue derived from
content delivered into their network. Overall, our direct cost of services for
delivery to the edge of the Internet is typically significantly lower than
delivery through co-location sites. Because our costs are lower than typical
communications providers', which generally charge ISPs for bandwidth, we have
elected not to
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charge ISPs for content delivery to facilitate the rapid build-out of our
network. We intend to invest more rapidly in the deployment of edge servers,
however we cannot assure you that additional ISPs will permit us access to
their facilities. Indirect cost of services includes primarily the operations
personnel salaries and expenses and depreciation of equipment in our
centralized network operations center. In general, indirect costs do not vary
directly with the amount of content being delivered over the iBEAM network,
however indirect costs may increase as we increase the capabilities of the
network operations center and add additional locations abroad.
Engineering and Development
Engineering and development expenses consist primarily of salaries and
personnel costs related to the design, development and enhancement of our
service and the development of new applications that may be added to our
network. We believe that engineering and development is critical to our
strategic business development objectives and intend to enhance our technology
to meet the changing requirements of market demand. As a result, we expect our
engineering and development expenses to increase in the future.
Sales and Marketing
Sales and marketing expenses consist primarily of salaries, advertising,
promotions and related costs of sales and marketing personnel. We expect that
sales and marketing expenses will increase in the future as we hire additional
personnel, expand our operations domestically and internationally, initiate
additional marketing programs and establish sales offices in new locations.
General and Administrative
General and administrative expenses consist primarily of salaries and
related costs, operations and finance personnel, recruiting expenses,
professional fees and legal and accounting services. We expect that general
and administrative expenses will increase in the future as we hire additional
personnel, expand our operations domestically and internationally and incur
additional costs related to the growth of our operations as a public company.
Amortization of Stock-based Compensation
In connection with the grant of stock options to employees and non-employee
directors in 1998 and 1999, we recorded unearned stock-based compensation of
$17.9 million, representing the difference between the deemed fair value of
our common stock at the date of grant and the exercise price of such options.
Such an amount, net of amortization, is presented as a reduction of
stockholders' equity and amortized over the vesting period of the applicable
option. As a result, we expect to amortize unearned stock-based compensation
of $7.3 million in 2000, $3.5 million in 2001, $1.5 million in 2002 and $0.6
million 2003.
Stock-based compensation expense related to stock options granted to
consultants is recognized as earned. At each reporting date, we re-value the
stock-based compensation using the Black-Scholes option pricing model. As a
result, the stock-based compensation expense will fluctuate as the fair market
value of our common stock fluctuates. As of December 31, 1999, we expect to
amortize stock-based compensation expense of $0.7 million over future periods
assuming no change in the underlying value of our common stock.
For the period from January 1, 2000 to , we issued shares and
options to purchase shares to employees and consultants at a weighted
average exercise price of $ per share. In connection with such grants,
we will record an additional $ million of unearned stock-based
compensation. We expect to amortize additional stock-based compensation
expense related to these issuances and grants of $ million in 2000, $
million in 2001, $ million in 2002, $ million in 2003 and $
million in 2004.
Period from March 20, 1998 (Inception) to December 31, 1998 and the Year Ended
December 31, 1999
Revenue. We began generating revenue in August 1999 after we commercially
introduced our content delivery service and have recognized $149,000 through
December 1999. As we continue to expand our network and as more companies
distribute content over our network, we expect our revenue will increase in
future periods.
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Cost of Services (Direct and Indirect). Cost of services increased from
zero in 1998 to $7.5 million in 1999. This increase was primarily due to
network bandwidth, satellite transmission, co-location, and content
acquisition expenses of $1.4 million, network server and software depreciation
of $0.8 million, consulting expenses of $0.7 million, and salaries, bonuses
and related taxes of $2.4 million as we began to deploy and manage our network
in 1999.
Engineering and Development. Engineering and development expenses increased
by $2.8 million, or 190%, from $1.4 million in 1998 to $4.2 million in 1999.
This increase was primarily due to an increase in salaries and related taxes
of $1.0 million as additional engineers were hired in 1999.
Sales and Marketing. Sales and marketing expenses increased by $8.0
million, or 448%, from $1.8 million in 1998 to $9.8 million in 1999. This
increase was primarily due to salaries, bonuses and related taxes of
$2.9 million and advertising and promotional expenses of $4.5 million,
resulting from the development of a sales and marketing organization and the
marketing of our network and corporate brand, which was publicly launched in
October 1999.
General and Administrative. General and administrative expenses increased
by $2.4 million, or 221%, from $1.1 million in 1998 to $3.5 million in 1999.
This increase was primarily due to salaries and related taxes of $1.0 million
as we began to provide infrastructure to support our growing operations.
Amortization of Stock-Based Compensation. Amortization of employee stock-
based compensation increased by $4.9 million from $31,000 in 1998 to $5.0
million in 1999 due primarily to the grant of stock options to newly hired
employees. In connection with the grant of stock options to consultants, we
recorded stock-based compensation of $8,000 in 1998 and $0.4 million in 1999.
Other Income and Expense, Net. Other income and expense, net increased from
$125,000 in 1998 to $200,000 primarily due to an increase in interest income
based on higher cash balances.
Income Taxes. We have incurred operating losses for all periods. As of
December 31, 1999, we had net operating loss carryforwards for federal and
state tax purposes of approximately $25.8 million. These federal and state tax
loss carryforwards are available to reduce future taxable income and expire in
varying amounts beginning in 2004. Under the provisions of the Internal
Revenue Code, some substantial changes in our ownership may limit the amount
of net operating loss carryforwards that could be utilized annually in the
future to offset taxable income.
Liquidity and Capital Resources
Since inception, we have funded our operations primarily through capital
lease obligations and the sale of our capital stock. We have raised an
aggregate of $61.2 million from the sale of our preferred stock.
Net cash used in operating activities was $3.2 million in 1998 and $19.2
million in 1999, resulting primarily from our net loss partially offset by
increases in accounts payable and accrued liabilities.
Net cash used in investing activities was $1.5 million in 1998, resulting
from the purchase of property and equipment. Net cash used in investing
activities was $12.5 million in 1999 and consisted of $7.5 million in
purchases of computers, equipment for network infrastructure and software and
$5.0 million of investments of surplus funds received from the issuance of our
preferred stock.
Net cash provided by financing activities was $6.9 million in 1998 and
$54.3 million in 1999. Cash provided by financing activities was the result of
net proceeds from the sales of our preferred stock and, to a lesser extent,
our common stock, partially offset by payments on our capital lease
obligations in 1999.
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We entered into a master lease agreement with a leasing company in November
1998 with aggregate lines of credit totaling $4.5 million, which expire in
January 2000. We received additional lines totaling $1.0 million in September
1999, which expire in September 2000, and an extension to existing lines for
an additional $3.0 million in December 1999, which expire in January 2000.
Advances under lines are to be repaid over periods ranging from 30 months to
48 months, bear interest at rates ranging from 7% to 8%, and are
collateralized by the purchased equipment. As of December 31, 1999, we had
$2.9 million available under our lease lines, of which $0.9 million could be
used for software, tenant improvements and tooling specifically approved by
the leasing company and $2.0 million could be used for equipment specifically
approved by the leasing company. Warrants were issued to the lender in
conjunction with the master lease agreement and each additional increase in
credit. "See Description of Capital Stock--Warrants."
As of December 31, 1999, we had approximately $29.8 million in cash, cash
equivalents, and investments. During 2000, we anticipate capital expenditures
of approximately $16.0 million. Our capital expenditures may increase in the
future consistent with our anticipated growth in network infrastructure,
operations and personnel. We anticipate continued growth in our operating
expenses for the forseeable future, particularly in network operations and
sales and marketing expenses and, to a lesser extent, engineering and
development and general and administrative expenses. As a result, we expect
our capital expenditures and operating expenses to constitute the primary use
of our cash resources. In addition, we may require cash resources to fund
acquisitions or investment in complementary businesses, technologies or
service offerings. We believe that the net proceeds from the offering,
together with our current cash and cash equivalents, will be sufficient to
meet our anticipated cash requirements for working capital and capital
expenditures for the next twelve months. Thereafter, we will require
additional capital. We could decide to raise additional capital sooner
depending on market conditions.
Qualitative and Quantitative Disclosures About Market Risk
We offer our services in the United States and anticipate distributing
U.S.-based content in Asia and Europe in 2000. As a result, our financial
results could be affected by factors including weak economic conditions in
foreign markets. Our interest income is sensitive to changes in the general
level of U.S. interest rates. Due to the short-term nature of our investments,
we believe that there is no material risk exposure; therefore, no quantitative
tabular disclosures are required.
Year 2000 Readiness Disclosure
The year 2000 issue is the potential for system and processing failures of
date-related data and is the result of the 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 using
"00" as the year 1900 rather than the year 2000. This could result in 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.
We have designed our network and our service for use in the year 2000 and
beyond. To date, our service and our networks have not revealed any
significant year 2000 problems. Our network generally integrates sophisticated
hardware and software products incorporating the latest technologies at the
time of purchase.
As of January 25, 2000, we have not experienced any significant issues as a
result of year 2000 problems and do not anticipate incurring material
incremental costs in future periods due to such issues.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued 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 balance sheet and measure those
instruments at fair value. To date, we have not engaged in derivative and
hedging activities, and accordingly, do not believe that the adoption of SFAS
No. 133 will have a material impact
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on our financial statements and related disclosures. We will adopt SFAS No.
133 as required by SFAS No. 137, "Deferral of the Effective Date of the FASB
Statement No. 133," beginning with the third quarter of fiscal 2000.
In December 1999, the Securities and Exchange Commission issued SAB No.
101, "Revenue Recognition in Financial Statements," which provides guidance on
the recognition, presentation, and disclosure of revenue in financial
statements filed with the SEC. SAB No. 101 outlines the basic criteria that
must be met to recognize revenue and provides guidance for disclosures related
to revenue recognition policies. We believe that the impact of SAB No. 101
will have no material effect on our financial position or results of
operations.
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BUSINESS
Overview
We provide an Internet broadcast network that delivers streaming media with
viewing and listening quality that approaches television and radio, at lower
cost than current Internet solutions and with the ability to scale to serve
large audiences of simultaneous users. Our breadth of services enables content
providers to more easily and cost effectively broadcast content over the
Internet. The network uses point-to-multipoint satellite broadcasting of
Internet content to our intelligent iBEAM servers located at the "edge" of
Internet, which is the Internet access point closest to the end user. Our
network uses iBEAM servers located in the facilities of network providers,
hosting companies and Internet service providers, or ISPs. Our proprietary
technology and the software incorporated into our intelligent servers enable
us to deliver high quality video and audio streams. We believe our investment
in intelligent servers at the edge of Internet provides us with competitive
advantages and allows for the development of new value-added services for both
content providers and ISPs.
Investments in "last mile" high-speed Internet connections to homes and
businesses, intended to improve viewing and listener quality, are increasing
the traffic load on the Internet, causing web congestion and degradation of
viewing and listening quality. Despite these limitations, existing websites,
traditional media companies such as Time Warner and Sony, new media companies
such as Launch Media and ProWebCast.com and creators of new applications, such
as online education, are aggressively trying to attract and retain Internet
users by using greater amounts of streaming audio-visual content. The Gartner
Group projects that more than 50% of websites will include some streaming
media by 2001, a five-fold increase from 1998. Through our focus on the edge
of the Internet, our approach to webcasting overcomes the inherent design
limitations that disrupt the delivery of streaming audio-visual media and
degrade viewing and listening quality.
Our solution is built on nearly 40 man years of proprietary software
development by technical specialists with prior experience at CNN, Bloomberg,
and Microsoft that led to early developments the delivery of rich video and
audio content over the Internet. We commercially introduced our service in
October 1999. As of January 25, 2000, our network investment, which we will
continue to develop, is sufficient to support 300,000 simultaneous 20 kilobit
streams of data. As of January 25, 2000, we have over 40 customers including
MSNBC, Warner Bros. Interactive, Launch Media and Pixelworld. In addition, we
have agreements with over 40 ISPs including Covad Communications, and
Northpoint that enable us to broadcast directly through their local
distribution networks.
Industry Background
The Internet has evolved from a static information source to a dynamic
medium for commerce, communications, and most recently, media. However, the
Internet's inherent design limitations disrupt the delivery of streaming
visual and audio content and degrade viewing and listening quality. To date,
Internet broadcasts have been inferior to television and radio broadcasts due
to high Internet transmission costs, the low quality of the viewing and
listening experience, and the inability to serve large audiences of
simultaneous users. Despite these limitations, existing and new website
owners, traditional media and entertainment companies and creators of new
applications, such as online education, are aggressively trying to attract and
retain end users by using greater amounts of streaming visual and audio
content.
Burgeoning Demand for Streaming Media
Owners of Existing Websites
Owners of existing websites are trying to attract and retain users with
rich content. Richer content, such as an audio sample of a compact disc music
recording or a video tour of a product, combined with the interactive and
user-controlled capability of the Internet, are factors that increase consumer
interest and purchases. This enriched content is made possible through
streaming media. New media companies, such as Launch Media and
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ProWebCast.com, have emerged to address the growing audience of Internet users
with news and entertainment content. RHK Research recently reported that
streaming media now comprises 10% of total Internet traffic.
Traditional Media and Entertainment Companies
Traditional media and entertainment companies such as Time Warner and Sony
are emerging as another factor driving the demand for Internet distribution of
streaming content. This demand is in part to provide new content and to retain
existing audiences which are increasingly finding the Internet an attractive
alternative to television. Forrester Research recently reported that consumers
between the ages of 16 and 24 watch 47% less television because of the
Internet.
Platform for New Applications
The demand for streaming media, at both the enterprise and consumer level,
will be driven by a host of new applications that currently are under
development or are not yet commercially available for sustained on-line usage.
At the enterprise level, corporate broadcasts, sales calls and product
launches are increasingly incorporating sophisticated web pages and streaming
media to reduce the number of face to face meetings, generating significant
savings in planning and travel costs. Other enterprise-wide processes being
migrated onto the Internet include business-to-business transactions such as
ordering, purchasing, auctions, supply chain management and large file
distribution. Enterprises and educational institutions are also offering
streaming training videos on the web to facilitate Internet-based distance
learning. We believe that the ability to view and hear streaming media on-
demand will also drive consumer demand for other online products and services
such as advanced video games, interactive television and pay-per-view use of
many forms of entertainment.
Internet Design Limitations for Streaming Media
The Internet was originally designed to ensure delivery of static data,
such as text and data files, and was not designed to ensure the continuous
flow of streaming media. The Internet's design goal of ensuring bulk data
delivery is accomplished by breaking transmissions into small packets of data
that can be routed through different delivery points at different times and,
subsequently, be interwoven with other data transmissions. Should an Internet
connection point, such as a server or router, receive traffic that exceeds its
capacity, packets are dropped temporarily. These "lost" packets are either
lost permanently or are eventually requested and re-sent, but the sequence of
receipt may be out of order and irregularities may occur in intervals of
receipt. Due to limited capacity on the Internet, today most streaming content
is transmitted in the UDP format (user datagram protocol) where lost packets
are not recovered.
While static web pages can experience lost packets or delays without a
noticeable deterioration in quality, streaming media is much more sensitive to
these problems. The impact of packet loss and irregular latency causes a
"jitter" in viewing and listening to streaming media as streams stop and
restart waiting for packets to arrive. In addition, lost packets may include
"key frames" in the content that contain information needed to ensure the
proper decoding and playback of subsequent frames.
The rate of packet loss is significant on the Internet. In a 1998 Bell Labs
Study, packet loss rates of approximately 25% occurred during peak periods. We
believe this will increase if traffic growth exceeds the addition of server
and router capacity, and will increase in any case as the number of users on
the Internet increases. In addition, rapid deployment of "last mile" high-
speed connections, such as DSL and cable modems, which are intended to improve
the viewing and listening experience of the end user, are increasing the
traffic load on the Internet causing further congestion and quality
degradation. These two characteristics, increasing packet loss and more high-
speed Internet connections, are combining to significantly degrade the end
user's streaming media experience.
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Cost and Scale Factors Limiting Streaming Media
To date, Internet broadcasts have been inferior to television and radio
broadcasts due to high Internet transmission costs, the low quality of the
viewing and listening experience, and the inability to serve large audiences
of simultaneous users. This is largely due to the current single point-to-
point land-line network model for Internet content delivery. In a point-to-
point network, each end user establishes a connection between his personal
computer and the computer originating the content delivery. Because of the
need for connectivity to each individual end user, content providers must make
large investments to support the bursts in demand that may sit idle during
non-peak periods. Often the amount of investment required is either difficult
to estimate or uneconomical to make. As a result, insufficient Internet user
connections may prevent access to popular events, such as the well-publicized
Victoria's Secret fashion show or the John Glenn space shuttle launch.
The Internet requires multiple tiers of communication providers, including
multiple backbone and local loop providers, which tends to drive up delivery
costs. As a result, content providers pay for the communication bandwidth to
support each connection to each end user. The end user's ISP also pays for
bandwidth to receive the content. Streaming media, which is inherently data
rich and typically consumes multiple times the bandwidth of static web pages,
increases costs for content providers and ISPs. As an example, we believe the
cost of a transmission to a content provider of streaming media which
approaches the quality of a VCR video (a 300 kilobit stream) would typically
exceed advertising revenue derived by the content provider from such
transmission. In addition, ISPs that are typically bound to fixed monthly
revenues under their contracts with end users may find rising costs from
streaming media difficult to support from current revenue sources. While we
further believe land-line data transmission cost will decline significantly
over time, the land-line networks are unlikely to approach the economies of
scale achieved by alternatives, such as point-to-multipoint broadcasting by
satellite, where there is no direct transmission cost of adding an additional
broadcast viewer.
Limitations of Current Solutions
While various products and delivery services have been developed to address
the challenges of delivering streaming content, we believe they do not
adequately resolve the issues of quality, cost and scalability. Some content
hosting companies store and locate streaming content on servers located at
multiple points on the Internet closer to end users. This typically increases
the speed of connection to a user. However, it does not eliminate the
potential for packet loss as content is delivered from these servers to the
end user through the remaining Internet connections. In addition, both product
companies and hosting companies offer caching software or services that store
content most frequently requested by users closer to the user in order to
reduce the transmission costs across the Internet. This solution usually
requires a large investment in caching software, offers only limited
improvements for live streaming content and lacks other capabilities such as
forward error correction. Furthermore, it does not generate reporting and
network management data for content providers. Many traditional communications
or Internet backbone providers have been trying to increase their network
capacity. However, these fiber networks do not offer a complete managed
service and rely on network connections that are subject to packet loss and
quality degradation. In addition, some of the webcasting companies have
proposed to lower transmission cost by having ISPs agree to retransmit content
in a daisy chain approach. This approach does lower cost, but propagates
packet loss and errors as data is transmitted to the next ISP. Also, while
these approaches offer some benefits for data which can be stored and
retransmitted, neither the traditional web hosting providers, the caching
technologies nor the new fiber-optic based networks provide a complete
solution for large scale, high fidelity Internet broadcasting. Our Internet
broadcast network leverages the best attributes of many of these solutions and
combines them with our proprietary streaming software to deliver a high
quality, low cost and highly scalable solution for streaming media
broadcasting.
The iBEAM Solution
We provide an Internet broadcast network that delivers streaming media with
viewing and listening quality that approaches television and radio, at lower
cost than current Internet solutions. Our network offers the ability to scale
to serve large audiences of simultaneous users. Our breadth of services
enables content providers to
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more easily and cost-effectively distribute content over the Internet. The
network uses point-to-multipoint satellite broadcasting of Internet content to
intelligent iBEAM servers located at the edge of Internet, which is the
Internet access point closest to the end user. Our broadcast approach and
sophisticated streaming management software bypass the congestion of the
Internet backbone. Our investment in intelligent servers at the edge of
Internet enables the delivery of new value-added services, such as
advertisement insertion, to both the content providers and ISPs. We also
provide encoding and event management services to facilitate use of our
services by content providers.
The key benefits of our network to our customers include:
. High-Fidelity Video and Audio Streams--Our software and satellite
architecture enable smooth, continuous content delivery to our servers
before being transmitted to the end user. By delivering to the edge of
the Internet, our network eliminates packet loss and jitter, thereby
delivering a superior broadcast-quality stream.
. Low Cost Distribution--Using satellites to broadcast on a point-to-
multipoint basis at a fixed cost allows us to broadcast to each
additional user at little or no incremental cost. This economy of scale
lets us charge content providers less to distribute streaming media than
traditional Internet bandwidth providers that rely on land-line point-
to-point connectivity and may enable content providers to improve their
profitability.
. Scalability--Our network of servers and our use of satellites to
transmit a single stream to an unlimited number of servers, allow us to
serve large audiences of simultaneous users. As we add streaming
capacity, we will be able to serve increasingly larger audiences with
the quality and reliability that both end users and content providers
demand.
. Transparent to the End User--Since we broadcast to the ISPs, end users
do not need to purchase receiver dishes, special software or change
their procedures to view content. This makes our services transparent to
the end user and we believe facilitates the rapid deployment of our
network.
. Turnkey Solution--We offer a turnkey broadcast solution for Internet
content providers. This solution comprises, among other things, event
planning, encoding and acquisition services. Our customers do not need
to utilize multiple vendors to enable their websites to offer streaming
media.
. Advanced Reporting Capability--We have developed a web-based network
dashboard that allows content providers to determine, by individual
stream, who is watching or listening to their content, how long they
have been watching or listening and where the user is geographically
located. This dashboard gives content providers on our network the
insight they need to make intelligent programming and advertising
decisions, which is a great advantage compared to the traditional rating
services relied on by media companies.
. Flexible Network Design--Our network is designed as an open architecture
to integrate with all streaming media applications. We support the major
streaming media players including Windows Media Player and RealPlayer
and we intend to support new players as they gain widespread market
acceptance. Our servers deployed throughout the Internet are
intelligent, powerful servers that can handle multiple transmission
protocols and execute a variety of value-added applications. Our server
platform is designed to be highly flexible, allowing for new services
and applications such as streaming advertising insertion, pay-per-view
administration and other e-commerce related services. These new
applications will create the potential for new revenue sources for our
customers.
Strategy
Our goal is to become the leading provider of high-fidelity Internet
broadcast services by developing the world's largest, premier quality, and
most cost efficient distributed streaming network. To this end, we are
capitalizing upon our innovative network architecture, proprietary technology
and first mover advantage to position us as the broadcast network of choice
for reliable, high-fidelity Internet broadcasting. Our strategy comprises the
following initiatives:
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Expand Our Customer Base of Leading Media and Entertainment Companies. We
currently have more than 40 media and entertainment companies as customers,
including Warner Bros. Interactive, Launch Media and MSNBC. We intend to
increase our customer base by targeting existing new media, entertainment, and
e-commerce companies, as these companies begin to more fully utilize streaming
technology. We also intend to target traditional media and entertainment
companies (motion picture, television, sports, newspapers and radio companies)
as customers, as they increasingly seek to broadcast video and audio over the
Internet. To accomplish these goals, we intend to expand our sales force and
to further invest in marketing activities and building the iBEAM brand.
Globally Build Out Our High Fidelity Internet Broadcast Network. We plan to
build out our network internationally through partnerships with global leaders
that have the local resources and expertise to rapidly bring our broadcast
network to international customers. This will serve to maximize the worldwide
number of users that are reached by our edge servers, yielding high quality
transmission at low cost. We believe our satellite-based business model will
be particularly successful in markets with less developed, land-line
infrastructure. We believe that the recent North American explosion of
Internet and data related transmission growth will be repeated in numerous
regions across the globe, including Europe, Asia and Latin America. We
recently entered into an agreement with Interpacket, a satellite-based IP
network serving ISPs in 80 countries, to deliver our customers' streaming
content via Interpacket points of presence in Asia, Europe, Latin America,
Africa and the Middle East. By 2002, we believe a significant percentage of
our revenue will be derived from international content providers.
Further Leverage Our Intelligent Network to Drive Economies of Scale. We
have developed a proprietary software platform that allows a number of
standard Internet applications to be run across a global network of
distributed edge servers. The inherent advantage of our network and its
associated broadcast software platform is its ability to scale standard
Internet applications to address large audiences. Because we have deployed a
point-to-multipoint network architecture, we are able to broadcast increasing
amounts of content to our highly distributed network of servers with minimal,
incremental satellite transmission cost.
Moreover, we can add additional points of presence in an ISP's network with
low capital expenditures and minimal increase in bandwidth costs. By
leveraging the existing infrastructure of local and regional Internet service
providers to carry our network traffic, we further reduce the expenditures we
incur in deploying our network infrastructure. The efficiencies gained by
deploying a one-to-many network architecture are substantial and can be
applied to a variety of uses in numerous industries. By partnering with us,
ISPs can avoid incoming bandwidth charges and provide significantly improved
end user experiences through our solution. This quality and cost advantage
creates an economy of scale that will enable us to continue penetrating the
streaming media distribution market.
Introduce New Value Added Features and Services. In addition to offering
high-quality streaming performance at competitive prices, we believe we can
attract new streaming media customers through the introduction of advanced
features such as real-time traffic reporting and advanced data management that
simplify the task of streaming content on the Internet. We intend to
aggressively pursue these new applications and new markets. An example of a
new application we intend to pursue is the introduction of targeted streaming
advertising into our edge-delivered broadcast. Our servers may eventually have
the capability to locally insert directed advertisements into each copy of the
broadcast stream it serves. We believe that this capability will allow content
providers to enhance their revenue by charging advertisers a premium for
advertising targeted directly to the end user. In addition, we intend to serve
enterprise customers with needs for new applications such as Internet enabled
distance learning, virtual roadshows, digital downloads and video
conferencing.
Pursue Additional Strategic Relationships. We currently have strategic
relationships with leading media, entertainment and technology companies and
ISPs, including Microsoft, Covad Communications and Sony. These relationships
provide us with insights as to future customer requirements, Internet access
trends and emerging technologies and facilitate our network expansion. We
intend to pursue additional strategic relationships to accelerate market
acceptance of our services and expand our global network. We believe that
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these benefits, combined with what we believe will be the ISP's unwillingness
to accommodate multiple distributed networks, will further secure our strong
competitive position.
Create Open Platform for New Applications. A network of distributed
computers located at the edge of the Internet can run a wide range of
applications more efficiently than a traditional approach of running these
applications on a cluster of servers located in one or a few data centers
located on the Internet backbone. We are developing a series of application
programming interfaces that allow other applications from other providers to
take advantage of the efficiencies of the iBEAM network. We believe the open
architecture of our network will encourage other application service providers
to partner with us.
iBEAM's Streaming Media Services
Distribution Services
We currently offer three primary services: iBEAM On-Air, iBEAM On-Stage,
and iBEAM On-Demand. All services are priced on a usage basis, with typical
prices ranging from $500-$1,000 per megabit depending on volume commitments.
Content providers are charged for the bandwidth served by us to end users.
Bandwidth is measured either in peak terms and billed monthly (megabits/second
per month), or in average terms and billed on a usage basis (megabits
transferred). The unit of measure used for billing depends on the preference
of the content provider and the nature of the content served.
iBEAM On-Air. iBEAM On-Air is the service offered for delivery of live,
continuous content streaming, such as music video channels, Internet or
traditional radio stations or news shows and sports channels. iBEAM On-Air
service is highly differentiated since it is very difficult to deliver live
content across the Internet using existing Internet delivery or caching
technologies. Video and audio streams are typically delivered by satellite to
our servers, which we call MaxCasters, bypassing the congestion of the
Internet backbone. The satellite link and our private acquisition network
allow us to offer an end-to-end connection from content source to the ISP
ensuring high fidelity video and audio streams.
iBEAM On-Stage. iBEAM On-Stage is the same live delivery of iBEAM On-Air,
packaged to meet the needs of the occasional or event-based customer. Target
customers for iBEAM On-Stage include concerts, trade shows, and other events.
Our network is particularly important for high profile live events, such as
the Metallica 1999 concert, since the large number of simultaneous users
attracted by these events often causes wide-spread congestion in the Internet
backbone. Our satellite broadcast capability allows us to bypass this
congestion and deliver a high-fidelity stream, even during periods of peak
usage.
iBEAM On-Demand. iBEAM On-Demand is our service for on-demand media
hosting, such as music video clips, news highlights, product displays, or any
type of streaming media included on a website. iBEAM On-Demand service is
based upon our intelligent network agent iDirector that manages the
replication of stored on-demand content across the array of iBEAM MaxCaster
servers. iBEAM On-Demand files are typically broadcast to the remote
MaxCasters using our satellite backbone. Our network has been designed with
large-scale storage capabilities to accommodate the very large content
libraries of the media companies we serve.
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Other Turnkey Services
To supplement our core distribution services, we offer a series of other
turnkey services aimed at facilitating a complete Internet broadcasting
solution for content providers. Our turnkey services include event management,
encoding and acquisition services. These services are typically billed on a
consulting or usage basis.
Event Management. We have a team of event managers that will travel on-site
for high profile events. These event managers will supervise the interface with
the content production crew, as well as provide on-site encoding and signal
acquisition.
Encoding Services. Encoding is the process of converting a raw digital audio
or video stream into a format optimized for delivery over the Internet. Proper
encoding is critical to ensure the highest fidelity streaming content.
Optimizing the encoding process requires a combination of quantitative and
subjective assessments of the content being encoded. We provide these services
directly and indirectly through qualified third-party vendors such as Loudeye
and Entertainment Blvd.
Acquisition Services. Our acquisition services collect content from content
providers for distribution through our network. We offer a variety of signal
acquisition methods. In some instances, we will procure the acquisition
circuits on behalf of our customers.
Customers
We commenced commercial operations in October 1999. As of January 25, 2000,
we had over 40 customers. The following is a representative list of our
customers by category:
Internet Media
Adventure TV Indigo New Media
Breaktv.com Inside DVD.com
College Broadcast Mediatrip
Digital Brandcasting Pixelworld
edanz Reporter TV
Exploratorium Value Vision
FasTV Warner Bros. Interactive
iLooks
Music/Music-Video - Radio
CableMusic House of Blues
Elektra Records Ministry of Sound
Entertainment Blvd. RaveWorld
Launch Media Experience Music
On Radio
Film News
Always Independent Films BBC World
atom films MSNBC
Cinema Now ZDTV
iFilm Hollywood Stars TV
Sports
Max Broadcasting Network
ProWebCast.com
Sportscapsule
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The following case studies illustrate how some of our customers are using
our service.
Microsoft
When Microsoft launched its Windows Media Technologies version 4, they
promoted the launch event by hosting a live concert with Buddy Guy, a popular
blues guitarist. We provided iBeam On-Stage service to Microsoft to broadcast
a broadband video feed from the concert at the House of Blues in Los Angeles
to our network of MaxCasters deployed around the country.
Launch Media
We were chosen by Launch Media to provide iBEAM On-Demand hosting services
for the recently introduced Launchcast personalized music service. This
service allows users to specify what genre of music they prefer and identify
individual titles they want included in their personal playlist. Hosting the
Launchcast music service makes extensive use of the intelligent data
management of iBEAM On-Demand. The Launchcast service supports a very large
library of digitized music, intelligently stored across our distributed
network.
MSNBC
MSNBC utilizes the satellite delivery of iBEAM On-Air, as well as the high
quality edge delivery of iBEAM On-Demand. MSNBC's continuous live video news
feed is streamed over our satellite network. We also use the satellite to
deploy and update news highlights that are available on-demand to MSNBC users.
In December 1999, a single 100 kilabit per second (kbps) video stream served
by us generated nearly one terabyte of streaming media data to MSNBC users.
Internet Broadcast Network
We have developed and deployed an Internet broadcast network that combines
the quality, scalability and efficiency of the traditional broadcast networks
with the interactivity and personalization of the Internet. The architecture
of our network is conceptually similar to the architecture of traditional
broadcast television and cable but incorporates several layers of redundancy.
Traditional television is collected over a dedicated acquisition network, then
broadcast by satellite to a network of downlinks at television affiliates or
cable facilities geographically dispersed around the country. We collect
streaming Internet content from providers, then broadcast it via satellite to
our network of MaxCasters, located in the facilities of ISPs. We deliver these
high-fidelity video and audio streams with no special end user hardware or
software required, which makes our network transparent to the end user. In
addition to the efficient distribution of streaming content, our MaxCasters
are intelligent servers that can perform a wide range of value-added
applications which we will seek to introduce in the future.
As we expand our network of MaxCaster edge servers, we will increase the
number of users served thereby reducing transmission costs to ISPs. We have
currently deployed servers in more than 40 ISP networks. These service
providers include ISPs such as Internet America, DSL providers such as Covad
Communications and Northpoint, cable modem service providers such as High
Speed Access and backbone providers such as Apex Global Internet Services.
In addition to our network of MaxCaster edge servers, we have deployed a
series of regional data centers. The regional data centers are deployed at
strategic locations around the Internet backbone. The regional data centers
reach users not served by a MaxCaster edge server. The regional data centers
also provide a second tier of redundancy--if the MaxCaster is unavailable for
any reason, users are automatically routed to our nearest regional data
center. Regional data centers are deployed along the backbone, co-located with
tier 1 providers such as UUNet and Cable and Wireless.
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The third layer of redundancy in our network is achieved by the deployment
of master data centers. The master data centers are located in co-location
facilities of companies such as Abovenet and Exodus Communications. The master
data centers provide a third layer of redundancy, filling in for any regional
data centers that may be unavailable for any reason. In addition, the master
data centers have large scale storage systems to host the complete content
libraries of our media customers.
Our geographically dispersed network of servers is monitored continuously
by our network operations center. We have developed a series of proprietary
network management tools that allow our network operations center personnel to
have complete visibility into any of our remote servers and to remotely manage
the servers. Our network operations center personnel can diagnose problems,
restart servers, and update or re-load software using either terrestrial or
satellite communications with the remote server. Our network operations center
is located in a hardened facility with back-up power supplies and redundant
systems. A diagram of the iBEAM Network is provided below.
[The diagram is geographic map indicating the layers
of our network. The background is a map of the
United States. Depicted on the map are centralized
hosting centers, regional servers and servers widely
dispersed indicating presence at the edge of Internet.
The centralized and regional hosting centers are
redundant backup to our edge servers.]
Our Technology
We have invested nearly 40 man years in the development of a series of
software technologies that constitute the iBEAM broadcast platform. A
conceptual diagram of the scalability of the iBEAM broadcast platform is shown
below. Treating all of our servers as a single virtual machine allows us to
take standard Internet applications such as streaming media servers, file
transfer protocol (FTP) servers, or other applications, and run them on a
scale to serve mass audiences with maximum efficiency and output quality. The
figure below illustrates the principal components of the broadcast platform.
[The diagram depicts how the components of our
broadcast platform transforms a single stream into a high
quality stream that can be broadcast to many. On the left
hand side is a single arrow, representing video and audio
content, entering the iBeam broadcast platform. The iBeam
platform is represented by a box. Inside the box are
descriptions of how our software allows for a high
fidelity output. Exiting the box are multiple arrows
depicting our network platform broadcast to many
locations.]
Some of the key components of our broadcast platform include:
MaxCaster--the intelligent video and audio server at the network edge
The primary technical component of the broadcast platform is the iBEAM
MaxCaster. The MaxCaster is the remote server that sits at the edge of the
Internet. The MaxCaster receives the 1-way satellite broadcast, and performs
functions that integrate the satellite broadcast with the 2-way traffic of the
Internet. The MaxCaster converts the multicast satellite feed to unicast
protocols, to allow the stream to be delivered to virtually any ISP network
without special multicast enabled network gear. The MaxCaster contains
intelligent software that allows it to receive, store and manage data, as well
as report back to our network operations center on the state of the server and
the content being served. Finally, the MaxCaster can intelligently process the
content to perform functions, such as inserting streaming advertising that is
targeted to each individual user.
iRelay--the reliable transport layer
The second element of our broadcast platform is the iRelay transport layer.
The iRelay transport layer allows us to accept an input from several types of
sources, including live audio or video feed and FTP file delivery, and deliver
it to all of our servers without the potential for packet loss or the
atmospheric disturbances of satellite transmission. If a packet should be lost
or scrambled during transmission, the iRelay software will re-transmit
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the missing packet to any downlink that did not receive the original data.
iRelay is a key component in enabling us to harness the full broadcast power
of satellites to deliver uninterrupted Internet streams to large numbers of
our servers located close to the end user.
iDirector--the intelligent network controller
The third element of our broadcast platform is a proprietary technology
called iDirector. The iDirector technology is an intelligent agent that
receives the end user request for content. For example, if a user types
www.msnbc.com to look at an MSNBC news feed, iDirector identifies where the
end user is located, then makes an assessment of network conditions, satellite
link availability, and server availability to connect the end user to the
optimal server. If any component of our network is down, the iDirector system
automatically routes the end user to a different part of the network to ensure
continued service. All of this routing happens transparently to the end user.
The end user is only aware that she typed www.msnbc.com and received a high
quality, uninterrupted video stream.
Strategic Relationships
We have strategic relationships with Covad Communications, InterPacket,
Microsoft Corporation, and Sony Corporation, and intend to enter into
additional strategic relationships with leading media, entertainment and
technology companies to accelerate market acceptance of our services and to
expand and enhance our global network. We believe strategic relationships can
accelerate market acceptance of our technology and services, increase our
brand recognition and improve access to our target customer base.
Covad Communications
In October 1999, we entered into an agreement with Covad Communications, a
leading national broadband services provider utilizing digital subscriber line
(DSL) technology, to provide Covad with high-fidelity streaming video and
audio content at lower cost than landline communication providers. Under the
terms of the agreement, we will deploy our MaxCaster servers in Covad hubs in
North America thereby enlarging the edge of our network. As part of this
deployment initiative, we have collaborated with Covad on technical efforts
aimed at enabling new services including quality of service management,
subscriber management and pay-per-view.
Covad also purchased shares of our Series D Convertible Preferred Stock for
an aggregate purchase price of approximately $2 million in October 1999 which
will convert into 1,006,710 shares of our common stock upon the closing of
this offering.
InterPacket
In January 2000, we entered into an agreement with InterPacket, a
satellite-based IP network serving ISPs in over 80 countries worldwide. Under
the agreement, InterPacket will deliver our customers' streaming content via
their global satellite broadcast network to MaxCasters at InterPacket points
of presence in Asia, Europe, Latin America, Africa and the Middle East. We
believe this relationship will enhance our service offerings and revenue
potential. InterPacket realizes revenue through delivering our streaming
content, and we benefit by accelerating international deployment of our
network to the edge of the Internet.
Microsoft Corporation
We entered into a strategic alliance with Microsoft, effective as of
September 20, 1999, to improve the delivery of streaming media over the
Internet. Under the agreement, Microsoft recommends us as a critical service
provider for the delivery of broadband streaming media and we have engaged in
cooperative sales efforts to promote Windows Media Technology (WMT). In
addition to our direct sales efforts, we are collaborating on feature
development, including technical exchanges regarding the identification and
development of new functions to be included in either our NT based network
platform or WMT. We are provided early adopter access to new WMT products and
agree to incorporate and promote new competitive WMT features.
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Our strategic alliance with Microsoft will extend through September 2002.
Microsoft has agreed to pay us $500,000 through April 15, 2000, all of which
Microsoft may use to purchase our services either for itself or on behalf of
other Internet content providers.
Microsoft purchased shares of our Series D convertible preferred stock for
an aggregate purchase price of approximately $10.0 million in October 1999
which will convert into 5,033,556 shares of our common stock upon the closing
of this offering. In addition, we granted Microsoft a warrant to purchase
218,120 shares of Series D Preferred Stock at an exercise price of $5.96 per
share which will convert into 654,360 shares of common stock.
Sony Corporation
We entered into an investment relationship with Sony Corporation of America
in October 1999. Sony's Vice President of Interactive Services has joined our
advisory board and has assisted in sales introductions and promoting technical
discussion with Sony regarding industry issues such as digital rights
management support, encryption, distribution and hosting methodologies.
Sony purchased shares of our Series D Convertible Preferred Stock for an
aggregate purchase price of approximately $2.0 million in October 1999 which
will convert into 1,006,710 shares of our common stock upon the closing of
this offering.
Sales and Marketing
We primarily sell our services through our direct sales force. We are
currently focusing our sales efforts on the world's leading media and
entertainment companies which have launched or which we believe will launch
broadband multimedia initiatives. As of January 25, 2000, we had 25 employees
in our sales force devoted to developing relationships with content providers
as well as ISPs. We compensate our sales force with salary and commissions
based primarily on increasing traffic from existing customers as well as
adding new customers. Over the next few years we intend to significantly
increase the size of our sales force.
In addition to our direct sales efforts, we are developing a network of
partners which include hosting companies, streaming services companies and
Internet service providers. Our partners will resell our full range of
services beyond our immediate target market.
Our technical consulting group, composed of three systems engineers and
five program managers, supports our sales efforts by providing implementation
services for on-stage streaming events as well as on-air and Internet radio
and media on-demand services.
Our marketing strategy is to build a brand associated with high-fidelity
streaming media delivery. To support this objective, we have been engaged in a
direct marketing campaign that includes a presence at key trade shows,
speaking engagements at industry forums, and iBEAM sponsored events and
seminars. We have also undertaken an advertising campaign aimed at our target
content provider customers. The advertising campaign consists of a mixture of
traditional media as well as Internet based advertising.
Patents and Proprietary Rights
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 filed
eight patent applications and intend to file an additional ten patent
applications in the near future. These patent applications relate to our
streaming platform standard, content management, distribution capabilities and
subscriber management.
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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.
From time to time, third parties might claim infringement by us with
respect to our current or future products. These claims and any resulting
lawsuit, if successful, could subject us to significant liability for damages
and invalidate our proprietary rights. Any litigation or claims, whether or
not valid, could result in substantial costs and diversion of resources. In
January 2000, we received a letter from another company which suggested that
we review patents to which this company claims rights. These patents purport
to cover "a system and method for delivery of video and data over a computer
network." We believe that we do not infringe any claims of these patents.
However, there can be no assurance that this company will agree with our
conclusion or not pursue a claim or litigation against us.
Any potential intellectual property litigation also could force us to do
one or more of the following:
. cease selling, incorporating or using products or services that
incorporate the infringed intellectual property;
. obtain from the holder of the infringed intellectual property right a
license to sell or use the relevant technology, which license may not be
available on acceptable terms, if at all; or
. redesign those products or services that incorporate the disputed
technology.
We may in the future initiate claims or litigation against third parties
for infringement of our proprietary rights or to determine the scope and
validity of our proprietary rights or the proprietary rights of competitors.
These claims could result in costly litigation and the diversion of our
technical and management personnel. As a result, our operating results could
suffer and our financial condition could be harmed.
Competition
The market for Internet broadcasting services is new, highly competitive,
and rapidly evolving. We expect competition to increase both from existing
competitors and new market entrants for various components of our service.
Unlike many of our competitors, we regard ourselves as the only Internet
Broadcast Network, with satellite enabled streaming media as our primary
business mission.
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Our competitors primarily come from four market segments:
. Streaming media hosting companies, such as InterVu;
. Internet content distribution networks, such as Akamai;
. Internet device vendors who utilize caching systems, switches and load
balancers, such as Inktomi; and
. Fiber-based network operators, such as Enron Communications.
We compete on price and quality of delivery, customer service, and network
features. We believe we currently have several primary competitive advantages,
including the quality of our network architecture, our proprietary technology
and our early entrance into the market for Internet broadcast services.
However, 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
competitors may bundle their services with Internet related products or
services from Internet device vendors or Internet service providers. These
bundling relationships may inhibit our ability to sell service to Internet
content providers or to deploy servers at Internet service providers.
Increased competition could result in price reductions, fewer customer
orders, reduced gross margins or loss of market share. Any of these conditions
could materially and adversely affect our business, financial condition, and
operational results.
Facilities
Our headquarters are currently located in approximately 59,000 square feet
of leased office space in Sunnyvale, California. We are currently negotiating
to obtain an additional 15,000 square feet of office space near our
headquarters.
We are building a network operations center in our headquarters which we
believe will be completed by April 2000. We have budgeted $4.0 million for
this purpose, of which $500,000 was spent as of December 31, 1999.
Employees
As of January 25, 2000 we had a total of 189 employees. We have never had a
work stoppage and no personnel are represented under collective bargaining
agreements. We consider our employee relations to be good.
We have rapidly increased our employee base and need to continue to hire
additional personnel. We believe that our future success will depend on our
continued ability to attract, integrate, retain, train and motivate highly
qualified personnel, and upon the continued service of our senior management
and key personnel. Competition for qualified personnel is intense,
particularly in the Silicon Valley area, where our headquarters is located.
There can be no assurance that we will successfully attract, integrate,
retain, train and motivate a sufficient number of qualified personnel to
conduct our business in the future.
Legal Proceedings
We are not a party to any pending legal proceedings. We have been contacted
by an individual who claims to have participated in the founding of our
company. The individual claims that such activities entitle him to common
stock on the same terms as those granted to our founders. Our founders deny
that the individual participated in the creation of the company. We are
unaware of any written agreements granting equity to the individual and, while
our investigation is continuing, we do not believe the individual is entitled
to any equity interest. Litigation is inherently uncertain, and if this
individual initiates a suit against us there can be no assurance that we will
prevail. Should a claim be made and be successful, we could be required to
issue common stock to the claimant on the same terms as those granted to our
founders and recognize an expense in connection with such issuance, which
could have a material adverse effect on our results of operations. In
addition, any such issuance would be dilutive to existing stockholders.
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MANAGEMENT
Directors and Executive Officers
The following table sets forth information regarding our directors and
executive officers as of the date of this prospectus:
<TABLE>
<CAPTION>
Executive Officers: Age Position
------------------- --- --------
<C> <C> <S>
President, Chief Executive Officer and
Peter Desnoes.................... 56 Director
Vice President and Chief Financial
Chris Dier....................... 47 Officer
Nils Lahr........................ 26 Chief Architect
Jeremy Zullo..................... 28 Vice President, Engineering
Dave Brewer...................... 31 Vice President, Operations
Robert Davis..................... 41 Vice President, Sales
David Strehlow................... 44 Vice President, Business Development
Tom Gillis....................... 34 Vice President, Marketing
Andrew Henry..................... 37 Vice President, Product Marketing
Daniel Sroka..................... 37 General Counsel
Directors:
----------
Barry Baker(2)................... 47 Director
Frederic Seegal.................. 52 Director
Richard Shapero(1)(2)............ 52 Director
Peter Wagner(1)(2)............... 34 Director
Robert Wilmot.................... 55 Director
</TABLE>
- --------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
Peter Desnoes joined our board of directors in June 1998. He has served as
our President and Chief Executive Officer since January 1999. Prior to joining
us, Mr. Desnoes was the founder, Managing General Partner and Chief Executive
Officer of Burnham Broadcasting Company, a partnership which owned network
affiliated television stations in several major U.S. markets in addition to
operating a major commercial production and post-production company. Mr.
Desnoes started Burnham Broadcasting Company in 1983 after a 16-year career
with the American Broadcasting Company (ABC). At ABC, Mr. Desnoes served as
President and General Manager of WLS-TV in Chicago from 1979 until 1983. Prior
to that time, he served as Vice President of Sales and Marketing for the ABC
television stations division, and was also elected Chairman of the ABC
Affiliates Board of Governors. Mr. Desnoes holds a B.A. in Philosophy from the
University of Arizona.
Chris Dier has been our Vice President and Chief Financial Officer since
joining us in November 1998. From August 1996 to February 1998, Mr. Dier
served as Vice President Administration and Chief Financial Officer of Aurum
Software Incorporated, a sales force automation software company. From January
1990 to July 1996, he served as Vice President of Administration and Chief
Financial Officer of VERITAS Software Corporation, a publicly traded company
focused on the storage management software market. Previous employment
includes Tolerant Systems and Intel Corporation where he held a variety of
operating finance positions. He holds a B.A. in Humanities and an M.B.A. from
Santa Clara University.
Nils Lahr joined us in April 1998 and has been our Chief Architect since
July 1999. From April 1998 to May 1999, he served as our Director of Server
Engineering and, from May 1999 to July 1999, he served as our Executive
Director of Technology. From May 1997 to June 1998, Mr. Lahr was an
independent contractor serving as a Senior Software Developer for Microsoft
Corporation where he helped clients deploy digital video applications and was
a key developer for Microsoft's digital video services. From April 1996 to May
1997, he served as a Senior Technical Programmer for CNN America where he
designed the technologies and
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infrastructure supporting the CNNfn.com website. From February 1995 to April
1996, Mr. Lahr worked as super-computer programmer for the United States Air
Force.
Jeremy Zullo joined us in May 1998 and has been our Vice President,
Engineering since December 1999. From May 1998 to July 1999, he served as our
Director of Development and, from July 1999 to December 1999, he served as our
Executive Director of Development. Prior to joining us, Mr. Zullo was the
Manager of Internet Products for Bloomberg Television and Internet Divisions
from February 1996 to April 1998. From 1992 to 1996, Mr. Zullo served as Chief
Executive Officer at Dominion Systems Technologies Inc., a company he founded
to create distributed real time engines. From 1993 to 1996, Mr. Zullo was also
a senior consultant for various United States military branches. Prior to this
time, from 1984 to 1993, Mr. Zullo was founder and President of three startup
technology companies. Mr. Zullo holds a B.S. in Physics from Rensselaer
Polytechnic Institute.
Dave Brewer has been our Vice President, Operations since he joined us in
November 1999. From May 1991 to November 1999, Mr. Brewer was Chief Executive
Officer of Brewer Consulting Networks, a company that he founded which focuses
on designing, installing and maintaining local and wide area computer
networking systems for a variety of Fortune 1000 companies and educational
organizations. From 1986 to 1991, Mr. Brewer was a Network Engineer and
Systems Technician with Landis & Gyr Systems, Inc. a supplier of electronic
payment solutions.
Robert Davis joined us as Vice President, Sales in August 1999. From July
1996 to November 1998, Mr. Davis served in several capacities, including as
President, Chief Executive Officer and a member of the board of directors of
Formida Software Corporation, a publicly traded Australian software company.
From September 1993 to July 1996, Mr. Davis was a Senior Vice President of
Worldwide Sales and Support for Premenos Technology Corporation, a software
company. His earlier experiences include senior sales management positions
with Sprint Corporation and Southern Bell. Mr. Davis holds a B.S. Degree from
the University of Akron.
David Strehlow has served as our Vice President, Business Development since
joining us in August 1999. From September 1998 to July 1999, Mr. Strehlow
served as acting Vice President of Business Development for two startup
companies, SoftVideo, Inc. and Live Picture, Inc. From September 1996 to
September 1998, Mr. Strehlow served as Senior Director of Business Development
at RealNetworks, Inc. From October 1995 to June 1996, he served as Senior
Director of Business Development at VDOnet Corporation. Prior to this time,
Mr. Strehlow served in various capacities at Oracle Corporation in both
product management and product marketing roles. Mr. Strehlow holds an M.B.A.
from Carnegie Mellon University, an M.S. in Oceanography from Oregon State
University and a B.S. in Oceanography from University of Washington.
Tom Gillis joined us in July 1998 and has served as our Vice President,
Marketing since December 1999. From July 1998 to May 1999, he served as our
Director of Product Management and, from May 1999 to December 1999, he served
as our Assistant Vice President, Marketing. Prior to joining us, from 1995 to
June 1998 Mr. Gillis served in several capacities at Silicon Graphics,
including Product Line Manager for Desktop Workstations and Product Manager
for Silicon Graphics' digital media streaming and compression hardware
products. From 1987 to 1993, Mr. Gillis was a Senior Hardware Engineer
responsible for wireless communications and radar systems design at Raytheon
Company. Mr. Gillis has an M.B.A. from Harvard University, an M.S. in
Electrical Engineering from Northwestern University and a B.S. in Electrical
Engineering from Tufts University.
Andrew Henry has been our Vice President, Product Marketing since joining
us in January 2000. Prior to joining us, from January 1994 to December 1999,
Mr. Henry held a variety of positions with Silicon Graphics, most recently
serving as Vice President and General Manager of the Visual Solutions Business
Unit. From September 1990 to January 1994, Mr. Henry served as Manager, Visual
Engineering with Failure Analysis Associates. Prior to this time, Mr. Henry
co-founded a graphics technology company called Animated Technologies and was
an engineering manager with TRW Space and Technology Group. He earned a B.S.
degree in Engineering Physics from the University of the Pacific and an
M.S.E.E. in Electro-optics from the University of Southern California.
42
<PAGE>
Daniel Sroka joined us in January 2000 as our General Counsel. Prior to
joining us, Mr. Sroka was a partner at the law firm of Brooks, Pierce,
McLendon, Humphrey & Leonard, L.L.P. Prior to becoming partner in August 1995
and since joining the firm in 1989, Mr. Sroka was an associate with Brooks,
Pierce, McLendon, Humphrey & Leonard. Mr. Sroka's practice has specialized in
mergers and acquisitions, commercial transactions, corporate finance,
formation and capitalization of business entities, commercial real estate and
taxation. He graduated from the University of Wisconsin, Madison with a degree
in Business Administration Accounting and received his law degree from Wake
Forest School of Law.
Barry Baker has served as a member of our board of directors since January
2000. Since March 1999, Mr. Baker has been with USA Networks, Inc., most
recently serving as its President and Chief Operating Officer. Before joining
USA Networks, from June 1996 to February 1999, Mr. Baker served as Chief
Executive Officer/Designate of Sinclair Communications, where he oversaw a
business of 64 television and 54 radio stations in 28 states. From August 1989
to May 1996, Mr. Baker served in various capacities at River City
Broadcasting, a company he founded which was later sold to Sinclair Broadcast
Group. Prior to these experiences, Mr. Baker served in management positions in
cable and radio broadcasting and managed radio startups. Mr. Baker has served
on numerous industry boards. Mr. Baker was recently appointed to the Board of
Directors of the National Association of Television Program Executives, the Ad
Council and The Production Resource Group.
Frederic Seegal has served as a member of our board of directors since
August 1999. Mr. Seegal has served as President of Wasserstein Perella Group,
Inc. and Managing Director of Wasserstein Perella & Co., Inc. since March
1994. Prior to joining the Wasserstein entities, Mr. Seegal was Managing
Director/Co-Head of Domestic Corporate Finance at Salomon Brothers during the
period of 1990 through 1994. From 1982 to 1990, Mr. Seegal was in charge of
Lehman Brothers investment banking activities in the Media & Communications
Industries, where he served as Managing Director of Lehman Brothers. Mr.
Seegal holds a Bachelors Degree from Cornell University and graduated from
Harvard Law School and Harvard Business School in 1974.
Rich Shapero has served as a member of our board of directors since
April 1998. Mr. Shapero has been a general partner of Crosspoint Venture
Partners, L.P., a venture capital investment firm, since April 1993. From
January 1991 to June 1992, he served as Chief Operating Officer of Shiva
Corporation, a computer network company. Previously, he was a Vice President
of Sun Microsystems, Senior Director of Marketing at AST, and held marketing
and sales positions at Informatics General Corporation and UNIVAC's
Communications Division. Mr. Shapero serves as a member of the board of
directors of Covad Communications Group, Inc., Sagent Technology, Inc. and
several privately held companies. Mr. Shapero received a B.A. in English
literature from the University of California at Berkeley.
Peter Wagner has served as a member of the board of directors since
June 1998. Mr. Wagner joined Accel Partners, a San Francisco-based private
equity investing firm, in July 1996, and has been a General Partner since
January 1998, where he specializes in investing in companies in the
communications sector, including networking, telecommunications and wireless
technology. From September 1992 to July 1996, Mr. Wagner was a Product Line
Manager for Silicon Graphics. Mr. Wagner serves on the board of directors of
NorthPoint Communications Group, Inc. and several privately held companies.
Mr. Wagner holds a B.S. in Physics and an M.B.A. from Harvard.
Robert Wilmot is one of our founders and has served as a member of our
board of directors since our inception in March 1998. Dr. Wilmot has been
Chairman at Wilmot Consulting Inc. since May 1995. From April 1994 to May
1995, Dr. Wilmot was an independent consultant and investor. From May 1985
through April 1994, he was Chairman at Wilmot Enterprises Ltd. In these
capacities, Dr. Wilmot has advised several Fortune 100 technology companies on
their Internet transformation. His other prior positions include Vice
President and Managing Director of Texas Instruments and Chief Executive
Officer of International Computers PLC. Dr. Wilmot is an active angel investor
and Chairman of the Supervisory Board of Euro Ventures BV, a venture fund
operating in nine European countries. He is also a Director of COM21, FVC.COM
and @POS.COM and several private companies. Dr. Wilmot received a B.S. in
Electrical Engineering from Nottingham University.
43
<PAGE>
Technical Advisory Board
The technical advisory board members are available to our executive
officers for periodic consultations relating to the development of our
technologies. The following individuals are members of our Technical Advisory
Board:
Navin Chaddha is one of our founders. He is currently Chairman of the Board
and Chief Executive Officer of Biztro, a privately held web-based company
serving small businesses. Prior to becoming Chairman and CEO of Biztro, he
held several management positions at Microsoft, the most recent of which was
Director, Broadband and Infrastructure, Streaming Media Division. While with
Microsoft, Mr. Chaddha also served as Chief Architect and Director, Commercial
Network Solutions, Microsoft's Network Solutions Group. Prior to joining
Microsoft Corporation, Mr. Chaddha founded Vxtreme (acquired by Microsoft
Corporation), an Internet media streaming software company, in December 1995.
Mr. Chaddha is an investor and serves on the advisory board of several
Internet startups. Mr. Chaddha holds a B.S. in electrical engineering from
Indian Institute of Technology, Delhi and an M.S. in electrical engineering
from Stanford University.
Llewellyn Chang is Vice President, Interactive Services for Sony
Corporation of America. In this position, he is involved in developing and
managing a range of technology-enabled products while providing technical
leadership in assessing and exploiting Sony's many digital opportunities.
Prior to joining Sony, Mr. Chang spent eleven years at Salomon Smith Barney
where he served as First Vice President and Area Manager responsible for
Enterprise Applications Engineering. This includes extensive experience in
distributed systems architecture and design, software engineering, large-scale
systems, network integration and applications development as well as the
management of strategic partner and vendor relationships. Previous to Salomon
Smith Barney, Mr. Chang also held Information Technology positions at Goldman
Sachs and Company, AT&T Bell Laboratories, and Exxon Research and Engineering.
Mr. Chang holds a B.S. from the University of the West Indies and and M.S.
from Polytechnic Institute of New York, both in Electrical Engineering.
Robert Hawk is President of Hawk Communications. He previously served as
President and Chief Executive Officer of US WEST Multimedia Communications,
Inc., where he headed the cable, data and telephony communications business
from May 1996 to April 1997. He was president of the Carrier Division of US
West Communications, a regional telecommunications service provider, from
September 1990 to May 1996. Prior to that time, Mr. Hawk was Vice President of
Marketing and Strategic Planning for CXC Corporation. Prior to joining CXC
Corporation, Mr. Hawk was director of Advanced Systems Development for
AT&T/American Bell. He currently serves on the boards of PairGain
Technologies, COM21, Concord Communications, Covad Communications Group,
Radcom, Efficient Networks and several privately held companies. Mr. Hawk
received an M.B.A. from the University of San Francisco and a B.B.A. from the
University of Iowa.
Philip Rosedale is an Entrepreneur-in-Residence at Accel Partners. Prior to
joining Accel in August 1999, Mr. Rosedale spent three and one-half years at
RealNetworks, most recently serving as Vice President and Chief Technology
Officer. His extensive work there included the creation of RealVideo,
development and deployment of the RealSystem 5.0 and G2 products, and
management of audio and video compression research. Before joining
RealNetworks, Mr. Rosedale ran his own software company, Automated Management
Systems, which in 1995 developed FreeVue, a low-bitrate videoconferencing
product for Internet users. Mr. Rosedale holds a B.S. degree in Physics from
the University of California at San Diego.
44
<PAGE>
Board of Directors
Our board of directors currently consists of six members. Upon completion
of this offering, our board of directors will be divided into three classes,
each serving staggered three year terms. The term of office and directors
consisting of each class is as follows:
<TABLE>
<CAPTION>
Class Directors Term of Office
----- --------------------------------- ---------------------------------
<C> <C> <S>
Class I Frederic Seegal and Robert Wilmot . expires at the annual meeting
of stockholders in 2001 and at
each third succeeding annual
meeting thereafter
Class II Richard Shapero and Peter Wagner . expires at the annual meeting
of stockholders in 2002 and at
each third succeeding annual
meeting thereafter
Class III Peter Desnoes and Barry Baker . expires at the annual meeting
of stockholders in 2003 and at
each third succeeding annual
meeting thereafter
</TABLE>
The classification of directors has the effect of making it more difficult
to change the composition of the board of directors. See "Description of
Capital Stock--Delaware Law and Certain Provisions of Our Certificate of
Incorporation and Bylaws."
Our board of directors appoints our executive officers on an annual basis
to serve until their successors have been elected and qualified. There are no
family relationships among any of our directors or officers.
Board Committees
Our Board of Directors has an Audit Committee and a Compensation Committee.
The Audit Committee of the Board of Directors consists of Messrs. Shapero,
Wagner and Baker. The Audit Committee reviews our financial statements and
accounting practices and makes recommendations to our Board of Directors
regarding the selection of independent auditors.
The Compensation Committee of the Board of Directors consists of Messrs.
Shapero and Wagner. The Compensation Committee makes recommendations to the
Board of Directors concerning salaries and incentive compensation for our
officers and employees and administers our employee benefit plans.
Director Compensation
We do not currently compensate our directors in cash for their service as
members of the board of directors, although directors are reimbursed for
reasonable expenses incurred in attending board or committee meetings. Our
officers are appointed by the board of directors and serve at its discretion.
Some of our non-employee directors have received grants of options to purchase
shares of our common stock. See "Principal Stockholders" and "Certain
Transactions--Stock Option Grants to Certain Directors." Our 2000 Director
Option Plan provides for the automatic grant of non-statutory stock options to
non-employee directors who join us after this offering. For further
information regarding the provisions of the 2000 Director Option Plan, see "--
Employee and Director Benefit Plans."
Limitations on Directors' Liability and Indemnification
Our certificate of incorporation limits the liability of directors to the
maximum extent permitted by Delaware law. Delaware law provides that directors
of a corporation will not be personally liable for monetary damages for breach
of their fiduciary duties as directors, except liability for:
. Any breach of their duty of loyalty to the corporation or its
stockholders;
. Acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
. Unlawful payments of dividends or unlawful stock repurchases or
redemptions; or
. Any transaction from which the director derived an improper personal
benefit.
45
<PAGE>
The limitation of liability does not apply to liabilities arising under the
federal securities law and does not affect the availability of equitable
remedies such as injunctive relief or rescission.
Our certificate of incorporation and bylaws provide that we will indemnify
our directors and officers and may indemnify our employees and other agents to
the fullest extent permitted by law. We believe that indemnification under our
bylaws covers at least negligence on the part of indemnified parties. Our
bylaws also permit us to secure insurance on behalf of any officer, director,
employee or other agent for any liability arising out of his or her actions in
their capacity as an officer, director, employee or other agent, regardless of
whether the bylaws would permit indemnification.
We have entered into agreements to indemnify our directors and executive
officers, in addition to the indemnification provided for in our bylaws. These
agreements provide, among other things, for indemnification for judgments,
fines, settlement amounts and expenses, including attorneys' fees incurred by
director, or executive officer in any action or proceeding, including any
action by or in our right, arising out of the person's services as a director
or executive officer, any of our subsidiaries or any other company or
enterprise to which the person provides services at our request. We believe
that these provisions and agreements are necessary to attract and retain
qualified persons as directors and executive officers.
The limitation on liability and indemnification provisions in our
certificate of incorporation and bylaws may discourage stockholders from
bringing a lawsuit against our directors for breach of their fiduciary duty
and may reduce the likelihood of derivative litigation against our directors
and officers, even though a derivative action, if successful, might otherwise
benefit us and our stockholders. A stockholder's investment in us may be
adversely affected to the extent we pay the costs of settlement or damage
awards against our directors and officers under these indemnification
provisions.
Compensation Committee Interlocks and Insider Participation
Our compensation committee currently consists of Messrs. Wagner and
Shapero. In January 1999, Mr. Desnoes, our President and Chief Executive
Officer, resigned from the compensation committee upon being appointed an
executive officer. Other than Mr. Desnoes, none of the members of our
compensation committee is currently or has been, at any time since the time of
our formation, one of our officers or employees. None of our executive
officers currently serves, or in the past has served, as a member of the board
of directors or compensation committee of any entity that has one or more
executive officers serving on our board or compensation committee. Mr. Wagner
is a general partner of Accel Partners, a holder of approximately 17.8% of our
outstanding stock that has purchased shares of our Series B preferred stock,
Series C preferred stock and Series D preferred stock. Mr. Shapero is a
general partner of Crosspoint Venture Partners, a holder of approximately
18.9% of our outstanding stock that has purchased shares of our Series A
preferred stock, Series B preferred stock, Series C preferred stock and
Series D preferred stock. See "Certain Relationships and Related
Transactions."
46
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth all compensation paid by us for services
rendered to us in all capacities during our fiscal year ended December 31,
1999, by (i) our chief executive officer and (ii) the other executive officers
who held office as of December 31, 1999 and met the definition of "highly
compensated" within the definition of the SEC's executive compensation
disclosure rules, collectively, the "named executive officers."
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Number of
1999 Annual Compensation Shares
------------------------------ Underlying
Name and Principal Other Annual Options All Other
Position (1) Salary Bonus Compensation Granted (#) Compensation (4)
- ------------------ -------- -------- ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C>
Peter Desnoes (2)....... $255,769 $157,000 $83,262(3) 1,440,000 $1,103
President and Chief
Executive Officer
Chris Dier.............. 182,500 13,500 -- 109,800 1,434
Vice President and
Chief Financial Officer
Tom Gillis.............. 126,137 -- -- 165,000 1,258
Vice President,
Marketing
Nils Lahr............... 137,311 30,000 -- 222,000 1,244
Chief Architect
Jeremy Zullo............ 142,083 7,500 -- 165,000 1,267
Vice President,
Engineering
</TABLE>
- --------
(1) This table does not include Michael Bowles who served as our Chief
Executive Officer until January 1999 and as Chairman of our Board of
Directors until September 1999. During our fiscal year ended December 31,
1999, Mr. Bowles was paid a salary of $126,769 based on an annualized
salary of $160,000. During fiscal 1999, we paid premiums for life
insurance in the amount of $1,007 on Mr. Bowles' behalf. Mr. Bowles did
not receive a bonus during fiscal 1999.
(2) Mr. Desnoes commenced full-time employment with us in March 1999. Mr.
Desnoes' salary on an annualized basis was $300,000 during fiscal 1999.
(3) Mr. Desnoes was reimbursed this amount for relocation expenses.
(4) Consists of premiums paid by us for term life insurance.
47
<PAGE>
Option Grants During Year Ended December 31, 1999
The following table sets forth certain information for the year ended
December 31, 1999 with respect to grants of stock options to each of the named
executive officers. All options granted by us in 1999 were granted under our
1998 Stock Plan. These options have a term of 10 years. These options are
immediately exercisable in full at the date of grant, but shares purchased on
exercise of unvested options are subject to a repurchase right in our favor
that entitles us to repurchase unvested shares at their original exercise
price on termination of the employee's service with us. Unless otherwise
indicated, the repurchase right lapses as to 25% of the shares on the first
anniversary of the grant date and the balance over the next three years. See
"--Employee and Director Benefit Plans" for a description of the material
terms of these options.
We granted options to purchase common stock and issued shares of common
stock pursuant to restricted stock purchase agreements equal to a total of
10,881,258 shares during 1999. Options were granted at an exercise price equal
to the fair market value of our common stock, as determined in good faith by
the board of directors. The board of directors determined the fair market
value based on our financial results and prospects, the state of our
technology development, the share price derived for arms-length transactions
and the absence of a public trading market for our securities. Potential
realizable values are net of exercise price before taxes, and are based on the
assumption that our common stock appreciates at the annual rate shown,
compounded annually, from the date of grant until the expiration of the ten-
year term. These numbers are calculated based on SEC requirements and do not
reflect our projection or estimate of future stock price growth.
<TABLE>
<CAPTION>
Potential
Realizable Value
Individual Grants at Assumed Annual
------------------------------------------------ Rates of Stock
Number of Percentage of Price
Securities Total Options Appreciation
Underlying Granted to Exercise For Option Term
Options Employees in Price Expiration -----------------
Name(1) Granted 1999 Per Share Date 5% 10%
- ------- ---------- ------------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Peter Desnoes........... 1,410,000 13.2% $0.055 1/11/09 $ 49,808 $126,224
Chris Dier.............. 109,800 1.0 0.114 2/24/09 7,872 19,949
Tom Gillis.............. 45,000 0.4 0.114 4/1/09 3,226 8,176
120,000 1.1 5.000 12/31/09 377,337 956,245
Nils Lahr............... 102,000(2) 0.9 0.114 2/25/09 7,313 18,532
60,000 0.6 0.200 8/12/09 7,547 19,125
60,000 0.6 5.000 12/31/09 188,668 478,123
Jeremy Zullo............ 45,000 0.4 0.114 2/25/09 3,226 8,176
45,000 0.4 0.200 8/12/09 5,660 14,344
75,000 0.7 5.000 12/31/09 235,835 597,653
</TABLE>
- --------
(1) Michael Bowles was not granted any options during fiscal 1999.
(2) The repurchase right lapses as to 48,000 of the shares according to the
following schedule: 34% of the shares on the first anniversary of the
grant date and the balance over the next two years.
48
<PAGE>
Aggregated Option Exercises In 1999 And Year-End Values
The following table sets forth certain information regarding exercised
stock options during the fiscal year ended December 31, 1999 and unexercised
options held as of December 31, 1999 by each of the named executive officers.
The value realized is based on the fair market value of the underlying
securities as of the date of exercise, minus the per share exercise price,
multiplied by the number of shares underlying the option. The value of
unexercised in-the-money options are based on a value of $5.00 per share, the
fair market value of our common stock on December 31, 1999 as determined by
our board of directors. Amounts reflected are based on the value of $5.00 per
share, minus the per share exercise price, multiplied by the number of shares
underlying the option.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options at Year-End at Year-End
Acquired on Value ------------------------- -------------------------
Name(1) Exercise (#) Realized Exercisable Unexercisable Exercisable Unexercisable
- ------- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Peter Desnoes........... 1,521,000 $4,779 -- -- -- --
Chris Dier.............. 375,000 -- 124,800 -- $ 615,083 --
Tom Gillis.............. 159,000 -- 120,000 -- -- --
Nils Lahr............... 69,900 4,644 167,100 -- $ 444,841 --
Jeremy Zullo............ -- -- 303,000 -- $1,118,280 --
</TABLE>
- --------
(1) Michael Bowles did not exercise any options during fiscal 1999.
Employment and Severance Agreements
Peter Desnoes. In January 1999, we entered into a written employment
agreement with Mr. Desnoes. The agreement provides that Mr. Desnoes is
entitled to receive an annual salary of $300,000 and a bonus of $200,000, to
be paid based on the achievement of performance-based milestones. We also
agreed to provide Mr. Desnoes with compensation in the form of a grant of an
option to purchase 1,440,000 shares of common stock at an exercise price of
$0.055 per share, which vests over a four year period. The agreement also
provides that Mr. Desnoes is entitled to purchase up to 80,000 shares of our
Series C preferred stock on the same terms as the other investors. In
addition, we agreed to pay expenses related to his relocation to California.
See "Executive Compensation" and "Certain Relationships and Related
Transactions."
The agreement provides that either we or Mr. Desnoes can terminate the
employment relationship for any reason with 14 days notice. The agreement
further provides that if Mr. Desnoes is terminated other than for cause, he
shall be entitled to receive up to 12 months of annual salary until the
earliest of (i) 12 months from the date of his termination, (ii) the
expiration of his continuation coverage under COBRA and (iii) the date Mr.
Desnoes receives health insurance coverage in connection with new employment.
In the event of a change of control, Mr. Desnoes will agree to continue
service with us or our successor corporation for a period not to exceed six
months if he is requested to do so. Upon the completion of this period, or if
Mr. Desnoes is not requested to remain with us or our successor, Mr. Desnoes
is entitled to receive six months salary and bonus and the options he has been
granted will vest as if he had performed an additional six months of service.
In the event that Mr. Desnoes is requested to remain with us or our successor
upon a change a control and he declines such request then Mr. Desnoes will not
be entitled to receive any additional compensation or vesting, unless his
refusal to continue service is in effect an involuntary termination, in which
case he receive the benefits described in the preceding paragraph.
Chris Dier. In November 1998, Chris Dier accepted our offer of employment.
The offer letter provides that Mr. Dier will receive an annual salary of
$180,000 and up to an additional $20,000 bonus each year based upon the
successful attainment of mutually agreed upon perfomance goals. The offer
letter provides that options granted to Mr. Dier in connection with his
employment will provide for accelerated vesting in the event of a
49
<PAGE>
change of control where Mr. Dier is not designated as Chief Financial Officer
reporting to the Chief Executive Officer equal to an amount of 50% of Mr.
Dier's unvested shares. In addition, Mr. Dier will receive a termination
payment equal to six months full compensation payable on the earlier of six
months after a change of control or termination of employment by the acquiring
company.
Nils Lahr. In July 1999, Nils Lahr accepted our offer of employment. The
offer letter provides that Mr. Lahr is entitled to receive an annual salary of
$150,000 and a bonus of $30,000 based on achievement of performance
milestones. Mr. Lahr has agreed to be employed by us through June 30, 2000, at
which time he will become an at-will employee. We may terminate his employment
with us at any time.
Jeremy Zullo. In July 1999, Jeremy Zullo accepted our offer of employment.
The offer letter provides that Mr. Zullo is entitled to receive an annual
salary of $155,000 and a bonus of $20,000 based on the achievement of
performance milestones. Mr. Zullo has agreed to be employed by us through June
30, 2000, at which time he will become an at-will employee. We may terminate
his employment with us at any time.
On September 24, 1999 we entered into a Settlement Agreement and Mutual
Release with Michael Bowles in connection with his departure from our company.
We paid Mr. Bowles all salary and unused vacation through his employment end
date. In connection with Mr. Bowles' departure, the repurchase right with
respect to his shares of common stock lapsed. In addition, we and Mr. Bowles
agreed to a mutual release.
Employee and Director Benefit Plans
1998 Stock Plan
Our 1998 Stock Plan was adopted by our board of directors in March 1998,
and our stockholders initially approved the plan in April 1998. Our 1998 Stock
Plan provides for the grant of incentive stock options to our employees, and
for the grant of nonstatutory stock options and stock purchase rights to our
employees, directors and consultants.
As of December 31, 1999, we had reserved an aggregate of 16,004,625 shares
of our common stock for issuance under this plan, options to purchase
6,857,817 shares of common stock were outstanding and 2,242,647 shares were
available for future grant. shares were available for future grant. As
of the date of this prospectus, we will not grant any additional stock options
under our 1998 stock plan. Instead we will grant options under our 2000 Stock
Plan.
The 1998 Stock Plan provides that in the event of a change in control, each
outstanding option shall be accelerated and become fully vested and
exercisable if such option is not assumed or substituted for by the successor
corporation.
2000 Stock Plan
Our 2000 Stock Plan was adopted by our board of directors in January 2000,
and the stockholders approved the plan in , 2000. This plan provides for
the grant of incentive stock options to employees and nonstatutory stock
options and stock purchase rights to employees, directors and consultants.
As of January 2000, a total of 7,000,000 shares of common stock were
reserved for issuance pursuant to the 2000 Stock Plan. No options have yet
been issued pursuant to the 2000 Stock Plan. The number of shares reserved for
issuance under 2000 Stock Plan will increase annually on January 1st of each
calendar year, effective beginning in 2001, equal to the lesser of:
. 5% of the outstanding shares of common stock on the first day of the
year,
. 4,000,000 shares, or
. such lesser amount as our board of directors may determine.
50
<PAGE>
Our board of directors or a committee of our board administers the 2000
Stock Plan. The committee may consist of two or more "outside directors" to
satisfy certain tax and securities requirements. The administrator has the
power to determine the terms of the options or stock purchase rights granted,
including the exercise price, the number of shares subject to each option or
stock purchase right, the exercisability of the options and the form of
consideration payable upon exercise. The administrator determines the exercise
price of options granted under our stock option plan, but with respect to
incentive stock options, the exercise price must at least be equal to the fair
market value of our common stock on the date of grant. Additionally, the term
of an incentive stock option may not exceed ten years. The administrator
determines the term of all other options. No optionee may be granted an option
to purchase more than 1,000,000 shares in any fiscal year. In connection with
his or her initial service, an optionee may be granted an additional option to
purchase up to 2,000,000 shares of our common stock.
After termination of one of our employees, directors or consultants, he or
she may exercise his or her option for the period of time stated in the option
agreement. If termination is due to death or disability, the option will
generally remain exercisable for 12 months following such termination. In all
other cases, the option will generally remain exercisable for 3 months.
However, an option may never be exercised later than the expiration of its
term. The administrator determines the exercise price of stock purchase rights
granted under our 2000 Stock Plan. Unless the administrator determines
otherwise, the restricted stock purchase agreement will grant us a repurchase
option that we may exercise upon the voluntary or involuntary termination of
the purchaser's service with us for any reason (including death or
disability). The purchase price for shares we repurchase will generally be the
original price paid by the purchaser. The administrator determines the rate at
which our repurchase option will lapse. Our stock option plan generally does
not allow for the transfer of options or stock purchase rights and only the
optionee may exercise an option and stock purchase right during his or her
lifetime.
Our 2000 Stock Plan provides that in the event of our merger with or into
another corporation or a sale of substantially all of our assets, the
successor corporation will assume or substitute for each option or stock
purchase right. If the outstanding options or stock purchase rights are not
assumed or substituted for, all outstanding options and stock purchase rights
will become fully vested and exercisable prior to the merger or sale of
assets.
Our 2000 Stock Plan will automatically terminate in 2010, unless we
terminate it sooner. In addition, our board of directors has the authority to
amend, suspend or terminate the stock option plan provided it does not
adversely affect any option previously granted under our stock option plan.
2000 Employee Stock Purchase Plan
Concurrently with this offering, we intend to establish an employee stock
purchase plan. A total of 500,000 shares of our common stock will be made
available for sale. In addition, our plan provides for annual increases in the
number of shares available for issuance under the Purchase Plan on January 1st
of each year, beginning in 2001, equal to the lesser of 2% of the outstanding
shares of our common stock on the first day of the calendar year, 1,400,000
shares, or such other lesser amount as may be determined by our board of
directors. Our board of directors or a committee of our board administers the
plan. Our board of directors or its committee has full and exclusive authority
to interpret the terms of the plan and determine eligibility. All of our
employees are eligible to participate if they are customarily employed by us
or any participating subsidiary for at least 20 hours per week and more than
five months in any calendar year. However, an employee may not be granted an
option to purchase stock under the plan if such employee:
. immediately after grant owns stock possessing 5% or more of the total
combined voting power or value of all classes of our capital stock, or
. whose rights to purchase stock under all of our employee stock purchase
plans accrues at a rate that exceeds $25,000 worth of stock for each
calendar year.
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<PAGE>
Our plan is intended to qualify for preferential tax treatment and contains
consecutive, overlapping 24-month offering periods. Each offering period
includes four 6-month purchase periods. The offering periods generally start
on the first trading day on or after November 1 and May 1 of each year, except
for the first such offering period which will commence on the first trading
day on or after the effective date of this offering and will end on the last
trading day on or before October 31, 2000.
The plan permits participants to purchase common stock through payroll
deductions of up to 15% of their eligible compensation which includes a
participant's base straight time gross earnings and commissions but excluding
all other compensation paid to our employees. A participant may purchase no
more than 10,000 shares during any 6-month purchase period.
Amounts deducted and accumulated by the participant are used to purchase
shares of our common stock at the end of each 6-month purchase period. The
price is 85% of the lower of the fair market value of our common stock at the
beginning of an offering period or after a purchase period ends. If the fair
market value at the end of a purchase period is less than the fair market
value at the beginning of the offering period, participants will be withdrawn
from the current offering period following their purchase of shares on the
purchase date and will be automatically re-enrolled in a new offering period.
Participants may end their participation at any time during an offering
period, and will be paid their payroll deductions to date. Participation ends
automatically upon termination of employment with us.
A participant may not transfer rights granted under our employee stock
purchase plan other than by will, the laws of descent and distribution or as
otherwise provided under the plan.
In the event of our merger with or into another corporation or a sale of
all or substantially all of our assets, a successor corporation may assume or
substitute each outstanding option. If the successor corporation refuses to
assume or substitute for the outstanding options, the offering period then in
progress will be shortened, and a new exercise date will be set.
Our plan will terminate in 2010. However, our board of directors has the
authority to amend or terminate our plan, except that, subject to certain
exceptions described in the plan, no such action may adversely affect any
outstanding rights to purchase stock under our plan.
2000 Director Option Plan
Our board of directors adopted the 2000 Director Option Plan in January
2000 and our stockholders initially approved the Director Plan in
2000. The Director Plan provides for the periodic grant of nonstatutory stock
options to non-employee directors. As of January 2000, a total of 500,000
shares were reserved for issuance under the Director Plan, none of which were
subject to outstanding options as of this date. The number of shares reserved
for issuance under our Director Plan will increase annually on January 1st of
each calendar year, effective beginning in 2001, by an increase equal to that
number of shares granted pursuant to options under the Director Plan in the
prior fiscal year or a lesser amount determined by the board of directors.
All grants of options to our non-employee directors under the Director Plan
are automatic. We will grant each non-employee director an option to purchase
60,000 shares upon the date when such person first becomes a non-employee
director (except for those directors who became non-employee directors by
ceasing to be employee directors).
All non-employee directors receive an option to purchase 60,000 shares on
the date that such person first becomes a non-employee director. All options
granted under our Director Plan have a term of ten years and an exercise price
equal to fair market value on the date of grant. Each option becomes
exercisable as to 1/48th of the shares subject to the option on each monthly
anniversary of the date of grant, provided the non-employee director remains a
director on such dates. After termination as a non-employee director with us,
an optionee must exercise an option at the time set forth in his or her option
agreement. If termination is due to death or disability, the option will
remain exercisable for 12 months. In all other cases, the option will remain
exercisable for a
52
<PAGE>
period of 6 months. However, an option may never be exercised later than the
expiration of its term. A non-employee director may not transfer options
granted under our Director Plan other than by will or the laws of descent and
distribution. Only the non-employee director may exercise the option during
his or her lifetime.
In the event of our merger with or into another corporation or a sale of
substantially all of our assets, the successor corporation will assume or
substitute each option. If such assumption or substitution occurs, the options
will continue to be exercisable according to the same terms as before the
merger or sale of assets. Following such assumption or substitution, if a non-
employee director is terminated other than by voluntary resignation, the
option will become fully exercisable and generally will remain exercisable for
a period of 3 months. If the outstanding options are not assumed or
substituted for, our board of directors will notify each non-employee director
that he or she has the right to exercise the option as to all shares subject
to the option for a period of 90 days following the date of the notice. The
option will terminate upon the expiration of the 90-day period.
Unless terminated sooner, our Director Plan will automatically terminate in
2010. Our board of directors has the authority to amend, alter, suspend, or
discontinue the Director Plan, but no such action may adversely affect any
grant made under the Director Plan.
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.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following is a description of transactions since inception in March
1998, to which we have been a party, in which the amount involved in the
transaction exceeds $60,000 and in which any director, executive officer or
holder of more than 5% of our capital stock had or will have a direct or
indirect material interest other than compensation arrangements which are
otherwise required to be described under "Management."
Series A Preferred Stock. On April 16, 1998, we sold 1,333,333 shares of
series A preferred stock at a per share price of $1.20. The sale of the series
A preferred stock included, among others, the sale of 1,250,000 shares of
series A preferred stock to Crosspoint Venture Partners 1997, a holder of more
than 5% of our common stock. Upon the closing of this offering, each share of
series A preferred stock will automatically convert into three shares of
common stock.
Series B Preferred Stock. On June 8, 1998 and July 21, 1998, we sold an
aggregate of 3,248,904 shares of series B preferred stock at a per share price
of $1.65. Upon the closing of this offering, each share of series B preferred
stock will automatically convert into three shares of common stock. The
purchasers of the series B preferred stock, included, among others:
<TABLE>
<CAPTION>
Shares of
Series B As Converted
Preferred Shares of
Purchaser Stock Common Stock
--------- --------- ------------
<S> <C> <C>
Accel Partners...................................... 1,787,943 5,363,829
Crosspoint Venture Partners 1997.................... 696,995 2,090,985
Media Technology Ventures........................... 666,690 2,000,070
</TABLE>
Series C Preferred Stock. On February 3, 1999, we sold 3,591,816 shares of
series C preferred stock at a per share price of $3.42. Upon the closing of
this offering, each share of series C preferred stock will automatically
convert into three shares of common stock. The purchasers of the series C
preferred stock, included, among others:
<TABLE>
<CAPTION>
Shares of
Series C As Converted
Preferred Shares of
Purchaser Stock Common Stock
--------- --------- ------------
<S> <C> <C>
Intel Corporation................................... 877,194 2,631,582
Crosspoint Venture Partners 1997.................... 621,200 1,863,600
Accel Partners...................................... 570,454 1,711,362
Media Technology Ventures........................... 212,712 638,136
Peter Desnoes....................................... 80,000 240,000
Michael Bowles...................................... 29,240 87,720
Chris Dier.......................................... 8,772 26,316
</TABLE>
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<PAGE>
Series D Preferred Stock. On October 14, 1999, we sold 7,072,732 shares of
series D preferred stock at a per share price of $5.96. Upon the closing of
this offering, each share of series D preferred stock will automatically
convert into three shares of common stock. The purchasers of the series D
preferred stock, included, among others:
<TABLE>
<CAPTION>
Shares of
Series C As Converted
Preferred Shares of
Purchaser Stock Common Stock
--------- --------- ------------
<S> <C> <C>
Intel Corporation................................... 1,639,584 4,918,752
Microsoft Corporation............................... 1,677,852 5,033,556
Accel Partners...................................... 1,090,604 3,271,812
Crosspoint Venture Partners 1997.................... 1,090,604 3,271,812
Media Technology Ventures........................... 385,906 1,157,718
Peter Desnoes IRA................................... 10,906 32,718
Leonard Grossi...................................... 8,400 25,200
Frederic Seegal..................................... 8,389 25,167
Chris Dier.......................................... 2,000 6,000
Tom Gillis.......................................... 2,000 6,000
David Strehlow...................................... 2,000 6,000
Robert Davis........................................ 2,000 6,000
</TABLE>
Series D Warrant. On October 14, 1999, we granted a warrant to Microsoft to
purchase 218,120 shares of our series D preferred stock at an exercise price
of $5.96 per share. By virtue of the fact that at the completion of this
offering each share of series D preferred stock will convert into three shares
of common stock, at the completion of this offering, the Microsoft warrant
will be exercisable for 654,360 shares of common stock at $1.99 per share.
Common Stock. On March 23, 1998, we sold 5,545,875 shares of common stock
at a per share price of $.00033 to our three founders. Our founders include
Robert Wilmott, who is currently serving as one of our directors. The Wilmott
Living Trust, for which Mr. Wilmott and his spouse serve as trustees,
purchased 1,992,150 shares of common stock. Of these shares, 75% are subject
to our right of repurchase which lapses as to 1.5625% of the shares after each
month Mr. Wilmott continues to serve as our employee or consultant. In
connection with the formation of our company, Mr. Wilmott entered into a
consulting agreement pursuant to which he agreed to spend at least one day a
week providing certain business development services as requested from time to
time by us.
Michael Bowles, another of our founders and our former Chief Executive
Officer and a director, purchased 2,988,225 shares of common stock. Of these
shares, 75% were subject to our right of repurchase which lapsed as to 1.5625%
of the shares after each month. Mr. Bowles continued to serve as our employee
or consultant. In connection with Mr. Bowles' departure from our company in
September 1999, our repurchase right lapsed with respect to Mr. Bowles' shares
of common stock. See "--Employment Agreements."
Option Grants to Certain Directors. In September 1999, we granted Mr.
Seegal options to purchase 180,000 shares of common stock at an exercise price
of $0.20 per share. These options were granted under our 1998 stock plan. Of
these, 156,000 shares of common stock subject to options vest over a four year
period with 25% of the shares subject to option vesting 12 months from the
date of grant and the remaining shares vesting ratably monthly after that date
so long as Mr. Seegal continues to serve as our director. The remaining 24,000
shares subject to option vest over one year with 25% of the shares vesting
each four month period from the date of grant so long as Mr. Seegal continues
to serve as our director.
In July 1998, we granted Mr. Desnoes an option to purchase 81,000 shares of
common stock at an exercise price of $0.055 per share. This option was granted
under our 1998 Stock Plan. The shares underlying this option were immediately
vested.
55
<PAGE>
Microsoft Relationship. We entered into a strategic alliance with
Microsoft, effective as of September 20, 1999, to improve the delivery of
streaming media over the Internet. Under the Agreement, Microsoft recommends
us as a critical service provider for the delivery of broadband streaming
media and we have engaged in cooperative sales efforts to promote Windows
Media Technology (WMT). Additionally, for the term of the alliance we have
agreed to provide six months of our services to each content provider that is
a participant in Microsoft's broadband streaming initiative, provide that the
value of these services to each participant does not exceed $200,000. Our
strategic alliance with Microsoft will extend through September 2002.
Microsoft has agreed to pay us $500,000 through April 15, 2000, all of which
Microsoft may use to purchase our services either for itself or on behalf of
other Internet content providers. Microsoft's obligations under the strategic
alliance are conditioned upon the performance of our obligations under the
strategic alliance and our meeting certain performance criteria for our
services.
Agreement with Brewer Consulting. In connection with the hiring of David
Brewer, our Vice President of Operations, we agreed to purchase at least $2.0
million of services from Brewer Consulting Networks, a company controlled by
Mr. Brewer, beginning January 1, 2000. Our obligation to purchase these
services from Brewer Consulting Networks is contingent on Mr. Brewer
relinquishing operational or ownership control of Brewer Consulting Networks.
We paid Brewer Consulting Networks an aggregate of $702,395 for services
provided in 1999.
Indemnification
We have entered into indemnification agreements with each of our directors
and officers. These indemnification agreements and our certificate of
incorporation and bylaws require us to indemnify our directors and officers to
the fullest extent permitted by Delaware law. See "Management -- Limitations
on Directors' Liability and Indemnification."
Conflict of Interest Policy
We believe that all transactions with affiliates described above were made
on terms no less favorable to us than could have been obtained from
unaffiliated third parties. Our policy is to require that a majority of the
independent and disinterested outside directors on our board of directors
approve all future transactions between us and our officers, directors,
principal stockholders and their affiliates. These transactions will continue
to be on terms no less favorable to us than we could obtain from unaffiliated
third parties.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of our common stock
as of December 31, 1999 (assuming conversion of all outstanding shares of
preferred stock into common stock upon the closing of this offering and as
adjusted to reflect the sale of the shares offered by this prospectus) by:
. each person who is known by us to beneficially own more than 5% of our
common stock;
. each of the named executives and each of our directors; and
. all of our officers and directors as a group.
Percentage of ownership is based on 58,181,967 shares outstanding as of
December 31, 1999, assuming conversion of the preferred stock, and
shares outstanding after this offering, assuming no exercise of the
underwriters' over-allotment options. Beneficial ownership is calculated based
on SEC requirements. All shares of the common stock subject to options
currently exercisable or exercisable within 60 days after December 31, 1999
are deemed to be outstanding for the purpose of computing the percentage of
ownership of the person holding such options, but are not deemed to be
outstanding for computing the percentage of ownership of any other person.
Unless otherwise indicated below, each stockholder named in the table has sole
voting and investment power with respect to all shares beneficially owned,
subject to applicable community property laws. Unless otherwise indicated in
the table, the address of each individual listed in the table is iBEAM
Broadcasting Corporation, 645 Almanor Avenue, Suite 100, Sunnyvale, CA 94086.
<TABLE>
<CAPTION>
Number of Percentage of Shares
Shares of Beneficially Owned
Beneficially ------------------------------
Name of Beneficial Owner (1) Owned Before Offering After Offering
---------------------------- ------------ --------------- --------------
<S> <C> <C> <C>
5% Stockholders:
Crosspoint Venture Partners 1997.. 10,976,397 18.9%
2925 Woodside Road
Woodside, CA 94062
Accel Partners (2)................ 10,347,003 17.8
One Palmer Square
Princeton, NJ 08542
Intel Corporation................. 7,550,334 13.0
2200 Mission College Blvd.
Santa Clara, CA 95052-8119
Microsoft Corporation (3)......... 5,687,918 9.7
One Microsoft Way
Redmond, WA 98052-6399
Media Technology Ventures, L.P.
(4).............................. 3,795,924 6.5
One First Street
Los Altos, CA 94022
Executive Officers and Directors:
Peter Desnoes (5)................. 1,793,718 3.1
Chris Dier (6).................... 532,116 *
Tom Gillis (7).................... 285,000 *
Nils Lahr (8)..................... 334,500 *
Jeremy Zullo (9).................. 303,000 *
Barry Baker....................... -- --
Frederic Seegal (10).............. 205,167 *
Robert Wilmot (11)................ 1,992,150 3.4
Richard Shapero (12).............. 10,976,397 18.9
Peter Wagner (13)................. 10,347,003 17.8
All executive officers and
directors as a group (15
persons). (14)................... 28,332,351 47.4
</TABLE>
- --------
* Represents less than 1% of our outstanding common stock.
57
<PAGE>
(1) Michael Bowles, one of our founders who served as our Chief Executive
Officer until January 1999 and as Chairman of our Board of Directors
until September 1999, beneficially owns 3,075,945 shares of our common
stock which represents % of our outstanding common stock after this
offering.
(2) Includes 1,076,088 shares held by Accel Internet Fund II L.P., 713,943
shares held by Accel Investors '98 L.P., 134,508 shares held by Accel
Keiretsu VI L.P. and 8,422,464 shares held by Accel VI L.P.
(3) Includes 654,360 shares issuable upon exercise of a warrant, which was
exercisable within 60 days of December 31, 1999.
(4) Includes 228,717 shares held by Media Technology Entrepreneurs Fund,
L.P., 205,365 shares held by Media Technology Ventures Entrepreneurs
Fund, L.P. and 3,361,842 shares held by Media Technology Ventures L.P.
(5) Includes 32,718 shares held by Peter Desnoes, IRA for which the Guarantee
& Trust Company is trustee. Includes 1,440,000 share subject to our right
of repurchase as of December 31, 1999, which lapses over time.
(6) Includes 124,800 shares subject to options, all of which were exercisable
within 60 days of December 31, 1999. Includes 402,300 shares subject to
our right of repurchase as of December 31, 1999, which lapses over time.
(7) Includes 120,000 shares subject to options, all of which were exercisable
within 60 days of December 31, 1999. Includes 241,000 shares subject to
our right of repurchase as of December 31, 1999, which lapses over time.
(8) Includes 167,100 shares subject to options, all of which were exercisable
within 60 days of December 31, 1999. Includes 298,000 shares subject to
our right of repurchase as of December 31, 1999, which lapses over time.
(9) All of these shares are subject to options and immediately exercisable.
Includes 257,000 shares subject to our right of repurchase as of December
31, 1999, which lapses over time.
(10) Includes 48,000 shares subject to options, all of which were exercisable
within 60 days of December 31, 1999. Of these shares, 180,000 are subject
to our right of repurchase as of December 31, 1999, which lapses over
time.
(11) All of these shares are held in the name of the Wilmot Living Trust, of
which Mr. Wilmot and his spouse are trustees. Includes 840,438 shares
subject to our right of repurchase as of December 31, 1999, which lapses
over time.
(12) All of these shares are held by Crosspoint Venture Partners 1997. Mr.
Shapero is a general partner of Crosspoint Venture Partners 1997 and is
one of our directors. Mr. Shapero disclaims beneficial ownership of
shares held by this entity, except to the extent of his proportional
partnership interest in Crosspoint Venture Partners 1997.
(13) All of these shares are held by entities affiliated with Accel Partners
(as described in footnote 2). Mr. Wagner is a general partner of Accel
Partners and is one of our directors. Mr. Wagner disclaims beneficial
ownership of shares held by these entities, except to the extent of his
proportional interest arising from his partnership interest in Accel
Partners.
(14) Includes 1,639,500 shares subject to options, all of which were
exercisable within 60 days of December 31, 1999.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
Upon the closing of this offering, we will be authorized to issue
300,000,000 shares of common stock, $.0001 par value per share, and 10,000,000
shares of undesignated preferred stock, $.0001 par value per share. The
following description of our capital stock does not purport to be complete and
is subject to and qualified by our certificate of incorporation and bylaws,
which are included as exhibits to the Registration Statement of which this
prospectus forms a part, and by the provisions of applicable Delaware law.
Common Stock
As of December 31, 1999, there were 58,181,967 shares of common stock
outstanding, assuming the conversion of all outstanding shares of preferred
stock into common stock, which were held of record by approximately
stockholders.
The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may
be applicable to any outstanding preferred stock, the holders of common stock
are entitled to receive ratably dividends, if any, as may be declared from
time to time by the board of directors out of funds legally available for that
purpose. See "Dividend Policy." In the event of our liquidation, dissolution
or winding up, the holders of common stock are entitled to share ratably in
all assets remaining after payment of liabilities, subject to prior
distribution rights of preferred stock, if any, then outstanding. The common
stock has no preemptive or conversion rights or other subscription rights.
There are no redemption or sinking fund provisions applicable to the common
stock. All outstanding shares of common stock are fully paid and
nonassessable, and the shares of common stock to be issued upon the closing of
this offering will be fully paid and nonassessable.
Preferred Stock
The board of directors has the authority, without action by our
stockholders, to designate and issue preferred stock in one or more series and
to designate the rights, preferences and privileges of each series, any or all
of which may be greater than the rights of the common stock. The effect of the
issuance of any shares of preferred stock upon the rights of holders of the
common stock might include, among other things, restricting dividends on the
common stock, diluting the voting power of the common stock, impairing the
liquidation rights of the common stock and delaying or preventing a change in
control of iBEAM without further action by the stockholders. We have no
present plans to issue any shares of preferred stock.
Warrants
As of December 31, 1999, there were warrants outstanding to purchase a
total of 1,025,676 shares of common stock, as converted. All of these warrants
will remain outstanding after the completion of this offering. Of these,
warrants to purchase 371,316 shares of common stock will expire three years
from the date of this prospectus unless earlier exercised, of which 81,819
shares are exercisable at an exercise price of $0.55 per share, 194,805 shares
are exercisable at an exercise price of $0.77 per share, 19,188 shares are
exercisable at an exercise price of $1.56 per share and 75,504 shares are
exercisable at an exercise price of $1.99 per share. The remaining warrant to
purchase 654,360 shares of common stock expires four years from the completion
of this offering unless earlier exercised and has an exercise price of $5.96
per share.
Registration Rights
After this offering, the holders of approximately 45,740,355 shares of
common stock and the holders of warrants to purchase approximately 654,360
shares of common stock will be entitled to rights with respect to the
registration of these shares under the Securities Act. These holders are
entitled to demand registration rights pursuant to which they may require us
on up to two occasions to file a registration statement under the Securities
Act at our expense. We are required to use all reasonable efforts to effect
this registration. These registration
59
<PAGE>
rights are subject to the right of the underwriters of an offering to limit
the number of shares included in such registration. They are also subject to
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, or if we
believe that a registration at that time would be seriously detrimental to us.
Additionally, if we propose to register any of our securities under the
Securities Act, either for our account or the account of other security
holders exercising registration rights, these holders are entitled to notice
of such registration and are entitled to include some or all of their shares
of common stock in the registration. These registration rights are also
subject to the right of the underwriters of an offering to limit the number of
shares included in the registration. 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 a requested registration if it would be
seriously detrimental to us to file an S-3 registration statement at that
time.
Delaware Law and Certain Provisions of Our Certificate of Incorporation and
Bylaws
Certain provisions of Delaware law and our certificate of incorporation and
bylaws could make it more difficult to acquire us by means of a tender offer,
a proxy contest or otherwise and the removal of incumbent officers and
directors. These provisions, summarized below, are expected to discourage
certain types of coercive takeover practices and inadequate takeover bids and
to encourage persons seeking to acquire control of us to first negotiate with
us. We believe that the benefits of increased protection of our potential
ability to negotiate with the proponent of an unfriendly or unsolicited
proposal to acquire or restructure us outweigh the disadvantages of
discouraging takeover or acquisition proposals because, among other things,
negotiation of these proposals could result in an improvement of their terms.
We are subject to Section 203 of the Delaware General Corporation Law, an
anti-takeover law. In general, Section 203 prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years following the date the person became
an interested stockholder, unless, with exceptions, the business combination
or the transaction in which the person became an interested stockholder is
approved in a prescribed manner. Generally, a business combination includes a
merger, asset or stock sale, or other transaction resulting in a financial
benefit to the interested stockholder. Generally, an interested stockholder is
a person who, together with affiliates and associates, owns, or within three
years prior to the determination of interested stockholder status, did own,
15% or more of a corporation's voting stock. The existence of this provision
would be expected to have an anti-takeover effect with respect to transactions
not approved in advance by the board of directors, including the
discouragement of attempts that might result in a premium over the market
price for the shares of common stock held by stockholders.
Our certificate of incorporation and bylaws require that any action
required or permitted to be taken by our stockholders must be effected at a
duly called annual or special meeting of the stockholders and may not be
effected by a consent in writing. In addition, special meetings of our
stockholders may be called only by the board of directors or certain of our
officers. Our certificate of incorporation and bylaws also provide that,
beginning upon the closing of this offering, our board of directors will be
divided into three classes, with each class serving staggered three-year
terms. These provisions may have the effect of deterring hostile takeovers or
delaying changes in control or management of iBEAM.
Shareholder Agreements
Microsoft, Sony and Covad have each agreed not to acquire more than 15% of
our voting stock at any time before October 2004 without our permission.
Each of Microsoft, Sony, Covad and Liberty Media, which in the aggregate
will own % of our common stock upon the closing of this offering, have
agreed to vote their securities as directed by our Board of Directors, in any
merger in which more than 50% of our voting power is transferred or in a sale
of substantially all of our assets. This obligation lapses for each of these
companies if and when it owns less than 5% of our voting power.
Transfer Agent and Registrar
The transfer agent and registrar for the common stock is .
60
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Immediately prior to this offering, there was no public market for our
common stock. Future sales of substantial amounts of common stock in the
public market could adversely affect the market price of our common stock.
Upon completion of this offering, we will have outstanding shares
of common stock, assuming the issuance of shares of common stock
offered by us and no exercise of options outstanding after December 31, 1999.
Of the shares sold in this offering shares will be freely
tradable without restriction or further registration under the Securities Act,
except for shares purchased by our "affiliates" as that term is defined in
Rule 144 under the Securities Act. Shares purchased by affiliates would be
subject to the limitations and restrictions that are described below.
The remaining shares of common stock held by existing
stockholders were issued and sold by us in reliance on exemptions from the
registration requirements of the Securities Act. All these shares and
approximately shares purchased in this offering, will be subject to
lock-up agreements, described below, on the date of this prospectus. Upon
expiration of the lock-up agreements, shares sold in the offering
will become eligible for sale, shares will become eligible for sale
pursuant to Rule 144(k), shares will become eligible for sale under
Rule 144, and shares will become eligible for sale under Rule 701.
<TABLE>
<CAPTION>
Approximate
Number of
Shares Eligible
Relevant Dates for Future Sale Comment
- -------------- --------------- --------------------------------------
<S> <C> <C>
On the date of this Freely tradable shares sold in
prospectus.............. this offering
180 days after the date All shares subject to lock-up
of this prospectus...... agreements released; shares saleable
under Rules 144, 144(k) and 701
January , 2001......... Shares saleable under Rule 144
</TABLE>
Rule 144
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year would be entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of:
. 1% of the number of shares of common stock then outstanding, which will
equal approximately shares immediately after this offering, or
. the average weekly trading volume of the common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to such sale.
Sales under Rule 144 are also subject to other requirements regarding the
manner of sale, notice filing and the availability of current public
information about us.
Rule 144(k)
Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at any time during the three months preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an affiliate, is
entitled to sell such shares without complying with the manner of sale, notice
filing, volume limitation or notice provisions of Rule 144. Therefore, unless
otherwise restricted, "144(k) shares" may be sold immediately upon the
completion of this offering.
61
<PAGE>
Rule 701
In general, under Rule 701, any of our employees, directors, officers,
consultants, or advisors who purchases shares from us in connection with a
compensatory stock or option plan or other written agreement before the
effective date of this offering is entitled to resell such shares 90 days
after the effective date of this offering in reliance on Rule 144, without
having to comply with the holding period requirements or other restrictions
contained in Rule 701.
The Securities and Exchange Commission has indicated that Rule 701 will
apply to typical stock options granted by an issuer before it becomes subject
to the reporting requirements of the Securities Exchange Act, along with the
shares acquired upon exercise of such options, including exercises after the
date of this prospectus. Securities issued in reliance on Rule 701 are
restricted securities and, subject to the contractual restrictions described
above, beginning 90 days after the date of this prospectus, may be sold by
persons other than "affiliates," as defined in Rule 144, subject only to the
manner of sale provisions of Rule 144 and by "affiliates" under Rule 144
without compliance with its one-year minimum holding period requirement.
Registration Rights
Beginning six months after the date of this offering, the holders of
approximately 45,740,355 shares of common stock and the holders of warrants to
purchase approximately 654,360 shares of common stock will be entitled to
certain rights with respect to the registration of these shares for sale in
the public market. See "Description of Capital Stock--Registration Rights."
Registration of these shares under the Securities Act would result in these
shares becoming freely tradeable in the public market without restriction.
Stock Options
As of December 31, 1999, there were a total of 6,857,817 shares of common
stock subject to outstanding options under our 1998 Stock Plan, all of which
are immediately exercisable, subject to lock-up agreements similar to those
described below. Immediately after the completion of the offering, we intend
to file registration statements on Form S-8 under the Securities Act to
register all of the shares of common stock issued or reserved for future
issuance under our 1998 Stock Plan, 2000 Stock Plan, 2000 Director Stock
Option Plan, and 2000 Employee Stock Purchase Plan. After the effective dates
of these registration statements, shares purchased upon exercise of options
granted under the 1998 Stock Plan, 2000 Stock Plan, 2000 Director Stock Plan
and 2000 Employee Stock Purchase Plan will be available for resale in the
public market.
Lock-up Agreements
All of our officers and directors and substantially all of our
stockholders, have agreed, subject to limited exceptions, not to 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, 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 any shares of
common stock or any securities convertible into or exercisable or exchangeable
for shares of common stock for a period ending 180 days after the date of this
prospectus, without the prior written consent of Morgan Stanley & Co.
Incorporated.
Morgan Stanley & Co. Incorporated may in its sole discretion choose to
release any or all of these shares from these restrictions prior to the
expiration of the lock-up period.
62
<PAGE>
UNDERWRITERS
Under the terms and subject to the conditions contained in an underwriting
agreement dated the date of this prospectus, the underwriters named below, for
whom Morgan Stanley & Co. Incorporated, Bear, Stearns & Co. Inc., Donaldson,
Lufkin & Jenrette Securities Corporation and FleetBoston Robertson Stephens
Inc. are acting as representatives, have severally agreed to purchase, and
iBEAM has agreed to sell to them, severally, the number of shares indicated
below:
<TABLE>
<CAPTION>
Number of
Name Shares
---- ---------
<S> <C>
Morgan Stanley & Co. Incorporated..................................
Bear, Stearns & Co. Inc. ..........................................
Donaldson, Lufkin & Jenrette Securities Corporation................
FleetBoston Robertson Stephens Inc. ...............................
---------
Total..............................................................
=========
</TABLE>
The underwriters are offering the shares of common stock subject to their
acceptance of the shares from iBEAM 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 by this prospectus are subject to the approval of certain legal
matters by their counsel and to certain other conditions. The underwriters are
obligated to take and pay for all of the shares of common stock offered by
this prospectus if any such shares are taken. However, the underwriters are
not required to take or pay for the shares covered by the underwriters' over-
allotment option described below.
The underwriters initially propose to offer part of the shares of common
stock directly to the public at the public offering price listed on the cover
page of this prospectus and part to certain dealers at a price that represents
a concession not in excess of $ a share under the public offering price.
Any underwriter may allow, and such dealers may reallow, a concession not in
excess of $ a share to other underwriters or to certain 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.
iBEAM has 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 public offering price listed on the
cover page of this prospectus, less underwriting discounts and commissions.
The underwriters may exercise this option solely for the purpose of covering
overallotments, if any, made in connection with the offering of the shares of
common stock offered by this prospectus. To the extent the option is
exercised, each underwriter will become obligated, subject to certain
conditions, to purchase about the same percentage of the additional shares of
common stock as the number listed next to the underwriter's name in the
preceding table bears to the total number of shares of common stock listed
next to the names of all underwriters in the preceding table. If the
underwriters' option is exercised in full, the total price to the public would
be $ , the total underwriters' discounts and commissions would be $
and total proceeds to iBEAM would be $ .
The underwriters have informed iBEAM 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.
Application has been made for quotation on the Nasdaq National Market under
the symbol "IBEM".
63
<PAGE>
Each of iBEAM and the directors, executive officers and certain other
stockholders of iBEAM has agreed that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the underwriters, it will not,
during the period ending 180 days after the date of this prospectus:
. 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 the
common stock.
whether any transaction described above is to be settled by delivery of common
stock or such other securities, in cash or otherwise. The restrictions
described in this paragraph do not apply to:
. the sale of shares to the underwriters;
. the issuance by iBEAM of shares of common stock upon the exercise of an
option or a warrant or the conversion of a security outstanding on the
date of this prospectus of which the underwriters have been advised in
writing; or
. transactions by any person other than iBEAM relating to shares of common
stock or other securities acquired in open market transactions after the
completion of the offering of the shares.
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 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.
iBEAM and the underwriters have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act.
At the request of iBEAM, the underwriters have reserved for sale, at the
initial offering price, up to shares offered hereby for directors,
officers, employees, business associates, and related persons of iBEAM. The
shares of common stock available for sale to the general public will be
reduced to the extent such persons 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 offered hereby.
Prior to this offering, there has been no public market for the common
stock. The initial public offering price will be determined by negotiations
between iBEAM and the representatives. Among the factors to be considered in
determining the initial public offering price will be the future prospects of
iBEAM and its industry in general, revenues, operating results and certain
other financial operating information of iBEAM in recent periods, and the
price-earnings ratios, price-revenues ratios, market prices of securities and
certain financial and operating information of companies engaged in activities
similar to those of iBEAM. The estimated initial 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.
64
<PAGE>
LEGAL MATTERS
The validity of the common stock offered by this prospectus will be passed
upon for iBEAM by Wilson Sonsini Goodrich & Rosati, Professional Corporation,
Palo Alto, California. An investment partnership composed of current and
former members of and persons associated with Wilson Sonsini Goodrich &
Rosati, Professional Corporation, beneficially owns 25,167 shares of our
common stock. Davis Polk & Wardwell, Menlo Park, California, is representing
the underwriters in connection with this offering.
EXPERTS
The financial statements as of December 31, 1998 and 1999 and for the
period from March 20, 1998 (inception) to December 31, 1998 and 1999 and for
the year ended December 31, 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 in connection with this
offering. This prospectus does not contain all of the information in the
registration statement and the accompanying exhibits and schedules. For
further information with respect to our company and our common stock, we refer
you to the registration statement and the accompanying exhibits and schedules.
Statements contained in this prospectus as to the contents of any contract or
any other document referred to are not necessarily complete. In each instance,
we refer you to the copy of such contract or document filed as an exhibit to
the registration statement, and each such statement is qualified in all
respects by such reference. The registration statement, including the
accompanying exhibits and schedules, may be inspected without charge at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the regional offices of the Commission
located at Seven World Trade Center, Suite 1300, New York, New York 10048 and
Northwestern Atrium Center, 500 Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of these materials may be obtained from the public
reference section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains a website that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of the
Commission's website is www.sec.gov.
Upon completion of this offering, we will become subject to the information
and periodic reporting requirements of the Securities Exchange Act and will
file periodic reports, proxy statements and other information with the
Commission. Such periodic reports, proxy statements and other information will
be available for inspection and copying at the regional offices, public
reference facilities and website of the Commission referred to above.
65
<PAGE>
iBEAM BROADCASTING CORPORATION
(a development stage company)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants.......................................... F-2
Balance Sheets............................................................. F-3
Statements of Operations................................................... F-4
Statements of Stockholders' Equity......................................... F-5
Statements of Cash Flows................................................... F-6
Notes to Financial Statements.............................................. F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
iBEAM Broadcasting Corporation
In our opinion, the accompanying balance sheets and the related statements
of operations, of stockholders' equity and of cash flows present fairly, in
all material respects, the financial position of iBEAM Broadcasting
Corporation (a development stage company) as of December 31, 1998 and 1999 and
the results of its operations and its cash flows for the period from March 20,
1998 (inception) to December 31, 1998 and 1999 and for the year ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States. 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 auditing standards generally accepted in the
United States 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
San Jose, California
January 28, 2000
F-2
<PAGE>
iBEAM BROADCASTING CORPORATION
(a development stage company)
BALANCE SHEETS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Pro Forma
Stockholders'
December 31, Equity at
----------------- December 31,
1998 1999 1999
------- -------- -------------
(unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................... $ 2,198 $ 24,863
Short-term investments....................... -- 4,977
Accounts receivable.......................... -- 70
Prepaid expenses and other current assets.... 125 796
------- --------
Total current assets........................ 2,323 30,706
Property and equipment, net................... 1,477 12,912
Other assets.................................. 407 1,123
------- --------
$ 4,207 $ 44,741
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................. $ 815 $ 3,055
Accrued liabilities.......................... 437 879
Deferred revenue............................. -- 448
Current portion of capital lease
obligations................................. -- 1,573
------- --------
Total current liabilities................... 1,252 5,955
Capital lease obligations, net of current
portion...................................... -- 3,627
------- --------
Total liabilities........................... 1,252 9,582
------- --------
Commitments and contingencies (Note 6)
Stockholders' equity:
Convertible preferred stock, $0.0001 par
value; 20,000 shares authorized; 4,582,
15,247, and no (unaudited) shares issued and
outstanding (aggregate liquidation value at
December 31, 1999 of $61,398)............... 6,905 61,192 $ --
Common stock, $0.0001 par value; 40,000
shares authorized; 7,137, 12,442 and 58,182
(unaudited) shares issued and outstanding... 1 1 6
Additional paid-in capital................... 853 21,054 82,241
Unearned stock-based compensation............ (577) (12,893) (12,893)
Deficit accumulated during development
stage....................................... (4,227) (34,195) (34,195)
------- -------- --------
Total stockholders' equity.................. 2,955 35,159 $ 35,159
------- -------- ========
$ 4,207 $ 44,741
======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
iBEAM BROADCASTING CORPORATION
(a development stage company)
STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Period from Period from
March 20, 1998 March 20, 1998
(Inception) to Year Ended (Inception) to
December 31, December 31, December 31,
1998 1999 1999
-------------- ------------ --------------
<S> <C> <C> <C>
Revenue............................ $ -- $ 149 $ 149
------- -------- --------
Operating costs and expenses:
Cost of services.................. -- 7,488 7,488
Engineering and development....... 1,449 4,202 5,651
Sales and marketing............... 1,780 9,759 11,539
General and administrative........ 1,084 3,475 4,559
Amortization of stock-based
compensation..................... 39 5,393 5,432
------- -------- --------
Total operating costs and
expenses........................ 4,352 30,317 34,669
------- -------- --------
Loss from operations............... (4,352) (30,168) (34,520)
Interest income.................... 125 579 704
Loss on disposal of assets......... -- (199) (199)
Interest expense................... -- (180) (180)
------- -------- --------
Net loss........................... $(4,227) $(29,968) $(34,195)
======= ======== ========
Net loss per share--basic and
diluted........................... $ (0.78) $ (4.74)
======= ========
Weighted average common shares
outstanding....................... 5,438 6,320
======= ========
Pro forma net loss per share--basic
and diluted (unaudited)........... $ (0.87)
========
Weighted average common shares
outstanding (unaudited)........... 34,431
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
iBEAM BROADCASTING CORPORATION
(a development stage company)
STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Convertible Deficit
Preferred Accumulated
Stock Common Stock Additional Unearned During Total
-------------- ------------- Paid-in Stock-based Development Stockholders'
Shares Amount Shares Amount Capital Compensation Stage Equity
------ ------- ------ ------ ---------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at March 20,
1998 (Inception)
Issuance of common stock
in March 1998........... -- $ -- 5,546 $ 1 $ 1 $ -- $ -- $ 2
Issuance of series A
convertible preferred
stock at $1.20 per
share, less issuance
costs of $33, in April
1998.................... 1,333 1,567 -- -- -- -- -- 1,567
Issuance of series B
convertible preferred
stock at $1.65 per
share, less issuance
costs of $22, in June
and July 1998........... 3,249 5,338 -- -- -- -- -- 5,338
Exercise of employee
stock options........... -- -- 1,591 -- 17 -- -- 17
Issuance of warrants in
connection with capital
leases (Note 7)......... -- -- -- -- 219 -- -- 219
Unearned stock-based
compensation, net....... -- -- -- -- 616 (577) -- 39
Net loss................ -- -- -- -- -- -- (4,227) (4,227)
------ ------- ------ --- ------- -------- -------- -------
Balance at December 31,
1998 4,582 6,905 7,137 1 853 (577) (4,227) 2,955
Issuance of series C
convertible preferred
stock at $3.42 per
share, less issuance
costs of $83, in
February 1999........... 3,592 12,201 -- -- -- -- -- 12,201
Issuance of series D
convertible preferred
stock at $5.96 per
share, less issuance
costs of $67, in October
1999.................... 7,073 42,086 -- -- -- -- -- 42,086
Exercise of employee
stock options, net...... -- -- 5,074 -- 686 -- -- 686
Issuance of common stock
for services rendered... -- -- 231 -- 232 -- -- 232
Issuance of warrants in
connection with capital
leases (Note 7)......... -- -- -- -- 574 -- -- 574
Issuance of warrant to
an investor in October
1999 (Note 7)........... -- -- -- -- 1,000 -- -- 1,000
Unearned stock-based
compensation, net....... -- -- -- -- 17,709 (12,316) -- 5,393
Net loss................ -- -- -- -- -- -- (29,968) (29,968)
------ ------- ------ --- ------- -------- -------- -------
Balance at December 31,
1999 15,247 $61,192 12,442 $ 1 $21,054 $(12,893) $(34,195) $35,159
====== ======= ====== === ======= ======== ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
iBEAM BROADCASTING CORPORATION
(a development stage company)
STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Period from Period from
March 20, 1998 March 20, 1998
(Inception) to Year Ended (Inception) to
December 31, December 31, December 31,
1998 1999 1999
-------------- ------------ --------------
<S> <C> <C> <C>
Cash flows from operating
activities:
Net loss........................... $(4,227) $(29,968) $(34,195)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization.... 65 1,707 1,772
Loss on disposal of assets....... -- 199 199
Amortization of stock-based
compensation.................... 39 5,393 5,432
Issuance of common stock for
services........................ -- 232 232
Issuance of warrant.............. -- 1,000 1,000
Changes in assets and
liabilities:
Accounts receivable............. -- (70) (70)
Prepaid expenses and other
assets......................... (313) (813) (1,126)
Accounts payable................ 815 2,240 3,055
Accrued liabilities............. 437 442 879
Deferred revenue................ -- 448 448
------- -------- --------
Net cash used in operating
activities.................... (3,184) (19,190) (22,374)
------- -------- --------
Cash flows from investing
activities:
Purchase of property and
equipment......................... (1,542) (7,491) (9,033)
Purchase of investments............ -- (4,977) (4,977)
------- -------- --------
Net cash used in investing
activities.................... (1,542) (12,468) (14,010)
------- -------- --------
Cash flows from financing
activities:
Issuance of convertible preferred
stock............................. 6,905 54,287 61,192
Issuance of common stock........... 19 686 705
Payment of capital lease
obligations....................... -- (650) (650)
------- -------- --------
Net cash provided by financing
activities.................... 6,924 54,323 61,247
------- -------- --------
Net increase in cash and cash
equivalents........................ 2,198 22,665 24,863
Cash and cash equivalents at
beginning of period................ -- 2,198 --
------- -------- --------
Cash and cash equivalents at end of
period............................. $ 2,198 $ 24,863 $ 24,863
======= ======== ========
Supplemental non-cash investing and
financing activities:
Property and equipment purchased
under capital lease obligations... $ -- $ 5,850 $ 5,850
======= ======== ========
Issuance of warrants in connection
with equipment lease line......... $ 219 $ 574 $ 793
======= ======== ========
Supplemental cash flows disclosures:
Cash paid for interest............. $ -- $ 140 $ 140
======= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
iBEAM BROADCASTING CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
1. The Company
iBEAM Broadcasting Corporation (the "Company"), formerly Bowles, Inc., was
incorporated on March 20, 1998 in Delaware. iBEAM provides an Internet
broadcast network that enables content providers to broadcast content over the
Internet. The network uses point-to-multipoint satellite broadcasting of
Internet content to intelligent iBEAM servers located at the edge of Internet,
which is the Internet access point closest to the end user.
The Company is in the development stage, devoting substantially all of its
efforts to product development and raising capital financing. The Company has
funded its operating losses since inception through capital lease obligations
and the sale of equity securities. Management's plans for funding operations
includes generating revenue while controlling costs, the sale of equity
securities and the utilization of equipment lease lines (see Note 5). The
Company's failure to sell its services or to raise sufficient capital would
unfavorably impact the Company.
2. Significant Accounting Policies
Use of estimates
The preparation 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 reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Stock split and increase shares authorized
The Company's Board of Directors authorized a 3-for-1 stock split of the
Company's common stock in January 2000. All common share and per share
information in these financial statements have been retroactively adjusted to
reflect this stock split. As a result of the split, the conversion rate of
convertible preferred stock into common stock automatically adjusts from 1:1
to 1:3 (see Note 7) and has been retroactively adjusted in these financial
statements.
Risks and uncertainties
The Company is subject to all of the risks inherent in an early stage
company conducting electronic services over the Internet. These risks include,
but are not limited to, a limited operating history, limited management
resources, dependence upon consumer acceptance of the Internet and the
changing nature of the electronic broadcasting industry. The Company's
operating results may be materially affected by the foregoing factors.
Cash, cash equivalents, restricted cash and investments
The Company considers all highly liquid investments purchased with original
or remaining maturities of three months or less at the date of purchase to be
cash equivalents. Restricted cash of $107,000 consists of a certificate of
deposit held as collateral against the Company's corporate credit cards and is
included in other assets.
The Company classifies all short-term investments as available-for-sale in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." The
Company's short-term investments are invested in high-grade corporate
securities and
F-7
<PAGE>
iBEAM BROADCASTING CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS--(Continued)
government bonds maturing approximately twelve months or less from the date of
purchase. At December 31, 1999, these investments are carried at cost, which
approximates fair value. Material unrealized gains or losses, if any, are
reported in stockholders' equity and included in other comprehensive income.
The cost of securities sold is based on the specific identification method.
For the year ended December 31, 1999, realized gains and losses on available-
for-sale securities were immaterial.
Fair value of financial instruments
The reported amounts of certain of the Company's financial instruments,
including cash and cash equivalents, short-term investments, accounts
receivable, accounts payable and accrued liabilities approximate fair value
due to their short maturities.
Concentration of credit risk
Cash and cash equivalents are deposited in large domestic financial
institutions that management believes are creditworthy. With respect to
accounts receivable, the Company's customer base is dispersed across many
geographic areas primarily within the United States. The Company performs
ongoing credit evaluations of its customers financial condition, generally
requires no collateral from its customers, and establishes allowances for bad
debt as warranted.
Property and equipment
Property and equipment are stated at cost. Depreciation is generally
computed using the straight-line method over the estimated useful lives of the
assets as follows:
<TABLE>
<S> <C>
Network equipment, computers, software and 3 years
other equipment.............................
Furniture and fixtures....................... 5-7 years
Leasehold improvements....................... Shorter of the lease term or
the estimated useful life
</TABLE>
Long-lived assets
The Company evaluates the recoverability of its long-lived assets in
accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of," which requires
recognition of impairment of long-lived assets in the event the net book value
of such assets exceeds the future undiscounted cash flows attributable to such
assets.
Revenue recognition
The Company derives revenue from the sale of its service under contracts
with terms typically ranging from three to twelve months. These contracts may
also provide for minimum monthly fees. The Company recognizes revenue as
services are performed.
Engineering and development expense
Engineering and development costs are expensed as incurred, except for
certain software development costs. In January 1999, the Company adopted
Statement of Position ("SOP") 98-1, which requires software development costs
associated with internal use software to be charged to operations until
certain capitalization criteria are met. For the year ended December 31, 1999,
software development costs of approximately $800,000 were capitalized and
included in property and equipment.
Advertising expense
Expenses related to advertising and promotion of products is charged to
sales and marketing expense as incurred. Advertising expense for the period
from March 20, 1998 (inception) to December 31, 1998 and for the year ended
December 31, 1999 was $23,000 and $2,621,000, respectively.
F-8
<PAGE>
iBEAM BROADCASTING CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS--(Continued)
Stock-based compensation expense
The Company accounts for stock-based employee compensation arrangements in
accordance with provisions of Accounting Principles Board Opinion No. 25 ("APB
No. 25"), "Accounting for Stock Issued to Employees," and complies with the
disclosure provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation." Under APB No. 25, compensation expense is based on the
difference, if any, on the date of grant, between the fair value of the
Company's shares and the exercise price of the option. Equity instruments
issued to nonemployees are accounted for in accordance with the provisions of
SFAS No. 123 and Emerging Issues Task Force ("EITF") 96-18.
Comprehensive income (loss)
The Company adopted the provisions of SFAS No. 130, "Reporting
Comprehensive Income." SFAS No. 130 establishes standards for reporting
comprehensive income and its components in financial statements. Comprehensive
income, as defined, includes all changes in equity (net assets) during a
period from non-owner sources. There is no difference between net loss and
comprehensive loss.
Net loss per share
Basic and diluted net loss per share is computed by dividing the net loss
for the period by the weighted average number of shares of common stock
outstanding during the period. The calculation of diluted net loss per share
excludes potential common shares if the effect is antidilutive. Potential
common shares are comprised of common stock subject to repurchase rights and
incremental shares of common and preferred stock issuable upon the exercise of
stock options or warrants and upon conversion of Series A, Series B, Series C
and Series D convertible preferred stock (collectively, "Preferred Stock").
The following table sets forth the computation of basic and diluted net
loss per share for the periods indicated (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
Period from
March 20, 1998
(Inception) to Year Ended
December 31, December 31,
1998 1999
-------------- ------------
<S> <C> <C>
Net loss........................................... $(4,227) $(29,968)
======= ========
Basic and diluted:
Weighted average common shares outstanding........ 6,979 10,642
Weighted average unvested common shares subject to
repurchase....................................... (1,541) (4,322)
------- --------
Weighted average shares used to compute basic and
diluted net loss per share....................... 5,438 6,320
======= ========
Net loss per share--basic and diluted.............. $ (0.78) $ (4.74)
======= ========
The following table sets forth potential common shares that are not
included in the diluted net loss per share calculation above because to do so
would be antidilutive (in thousands):
<CAPTION>
December 31,
---------------------------
1998 1999
-------------- ------------
<S> <C> <C>
Convertible preferred stock upon conversion to
common stock...................................... 13,747 45,740
Convertible preferred stock warrants upon
conversion to common stock........................ 277 1,026
Unvested common shares subject to repurchase....... 1,591 5,157
Options to purchase common stock................... 3,278 6,858
------- --------
18,893 58,871
======= ========
</TABLE>
F-9
<PAGE>
iBEAM BROADCASTING CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS--(Continued)
Pro forma net loss per share (unaudited)
Pro forma net loss per share for the year ended December 31, 1999 is
computed using the weighted average number of common shares outstanding,
including the pro forma effects of the automatic conversion of the Company's
Preferred Stock into shares of common stock effective upon the closing of the
offering, as if such conversion occurred on January 1, 1999 or at the date of
original issuance, if later. The resulting pro forma adjustment includes an
increase in the weighted average shares used to compute basic and diluted net
loss per share of 28,111,000 shares for the year ended December 31, 1999.
Pro forma stockholders' equity (unaudited)
Immediately prior to the effective date of the offering, the Preferred
Stock outstanding will automatically convert into common stock at a one-to-one
ration. The pro forma effects of this transaction is unaudited and has been
reflected in the accompanying Pro Forma Stockholders' Equity as of December
31, 1999.
Recent accounting pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued 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 balance sheet 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 adopted SFAS No. 133 as
required by SFAS No. 137, "Deferral of the Effective Date of the FASB
Statement No.133," beginning with the third quarter of fiscal 2000.
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in
Financial Statements," which provides guidance on the recognition,
presentation, and disclosure of revenue in financial statements filed with the
SEC. SAB 101 outlines the basic criteria that must be met to recognize revenue
and provides guidance for disclosures related to revenue recognition policies.
Management believes that the impact of SAB 101 will not have a material effect
on the financial position or results of operations of the Company.
3. Balance Sheet Components (in thousands)
<TABLE>
<CAPTION>
December 31,
---------------
1998 1999
------ -------
<S> <C> <C>
Property and equipment, net:
Network software and equipment............................. $ 363 $ 8,224
Computers, software and equipment.......................... 708 5,494
Furniture and fixtures..................................... 456 631
Leasehold improvements..................................... 15 180
------ -------
1,542 14,529
Less: Accumulated depreciation and amortization............ (65) (1,617)
------ -------
$1,477 $12,912
====== =======
Accrued liabilities:
Accrued payroll and related liabilities.................... $ 54 $ 489
Other accrued liabilities.................................. 236 390
Deferred rent.............................................. 147 --
------ -------
$ 437 $ 879
====== =======
</TABLE>
F-10
<PAGE>
iBEAM BROADCASTING CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS--(Continued)
4. Income Taxes
No provision for federal and state income taxes has been recorded as the
Company has incurred net operating losses since inception. The components of
the Company's deferred tax assets are as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
----------------
1998 1999
------- -------
<S> <C> <C>
Net operating loss carryforwards........................... $ 1,343 $10,552
Nondeductible expenses..................................... 333 588
Research and development credit carryovers................. 58 477
Other...................................................... -- 187
------- -------
1,734 11,804
Less: Valuation allowance.................................. (1,734) (11,804)
------- -------
$ -- $ --
======= =======
</TABLE>
Management believes that, based on a number of factors, it is more likely
than not that the deferred tax assets will not be utilized; and accordingly, a
full valuation allowance has been recorded. The change in the valuation
allowance was $1,734,000 and $10,070,000 for the period from March 20, 1998
(inception) to December 31, 1998 and for the year ended December 31, 1999,
respectively.
At December 31, 1999, the Company had approximately $25.8 million of
federal and state net operating loss carryforwards available to offset future
taxable income which expire in varying amounts beginning in 2004. Under the
Tax Reform Act of 1986, the amounts of and benefits from net operating loss
carryforwards may be impaired or limited in certain circumstances. Events
which cause limitations in the amount of net operating losses that the Company
may utilize in any one year include, but are not limited to, a cumulative
ownership change of more than 50%, as defined, over a three year period.
5. Capital Lease Obligations
The Company entered into a master lease agreement with a leasing company in
November 1998 with aggregate lines of credit totaling $4.5 million, which
expire in January 2000. The Company received additional lines totaling $1.0
million in September 1999, which expire in September 2000, and an extension to
existing lines for an additional $3.0 million in December 1999, which expire
in January 2000. Advances under the lines are to be repaid over periods
ranging from 30 months to 48 months, bear interest at rates ranging from 7% to
8%, and are collateralized by the purchased equipment. As of December 31,
1999, the Company had $2.9 million available under its lease lines, of which
$0.9 million could be used for software, tenant improvements and tooling
specifically approved by the leasing company and $2.0 million could be used
for equipment specifically approved by the leasing company. Warrants were
issued to the lender in conjunction with the master lease agreement and each
additional increase in credit (see Note 7).
F-11
<PAGE>
iBEAM BROADCASTING CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS--(Continued)
The advances under the lines have been classified as capital leases. As of
December 31, 1999, the cost of such leased equipment was approximately
$5,850,000 with accumulated amortization of $842,000. As of December 31, 1999,
future minimum lease payments under these agreements are as follows:
<TABLE>
<CAPTION>
Year Ending
December 31,
------------
<S> <C>
2000................................................................. $1,947
2001................................................................. 1,976
2002................................................................. 1,597
2003................................................................. 244
------
Total minimum lease payments......................................... 5,764
Less: Amount representing interest (7% to 8%)........................ (564)
------
Present value of minimum lease payments.............................. 5,200
Less: Current portion of capital lease obligations................... (1,573)
------
Long-term portion of capital lease obligations....................... $3,627
======
</TABLE>
6. Commitments and contingencies
The Company leases office space and equipment under noncancelable operating
leases with various expiration dates through February 2002. Rent expense for
the period from March 31, 1998 (inception) to December 31, 1998 and for the
year ended December 31, 1999 was approximately $107,000 and $803,000,
respectively. The Company also leases bandwidth from a satellite service
provider under a non-cancelable lease agreement, which expires on December
2002.
Future minimum lease payments under noncancelable operating leases are as
follows:
<TABLE>
<CAPTION>
Year Ending
December 31,
------------
<S> <C>
2000.................................................................. $1,634
2001.................................................................. 2,084
2002.................................................................. 1,611
2003.................................................................. --
------
$5,329
======
</TABLE>
In September and October 1999, the Company entered into three-year service
agreements with Northpoint Communications, Inc. ("NorthPoint") and Covad, Inc.
("Covad"), respectively, to provide Internet Service Providers replication,
live broadcast and on-demand data streaming through a high-speed network
provided by NorthPoint and Covad. Under the terms of the agreements, the
Company agreed to pay NorthPoint and Covad twenty percent and fifteen percent,
respectively, of all revenues created from the transport of content through
their networks. No amounts have been incurred under these arrangements as of
December 31, 1999.
In connection with the hiring of David Brewer, Vice President of
Operations, the Company agreed to purchase at least $2.0 million of services
from Brewer Consulting Networks, a company controlled by Mr. Brewer, beginning
January 1, 2000. The obligation to purchase these services from Brewer
Consulting Networks is contingent on Mr. Brewer relinquishing operational or
ownership control of Brewer Consulting Networks.
The Company is subject to legal proceedings, claims and litigation arising
in the ordinary course of business. The Company's management does not expect
that the ultimate costs to resolve these matters will have a material adverse
effect on the Company's financial position, results of operations, or cash
flows.
F-12
<PAGE>
iBEAM BROADCASTING CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS--(Continued)
7. Convertible Preferred Stock
The following table summarizes convertible preferred stock at December 31,
1999 (in thousands):
<TABLE>
<CAPTION>
Shares
---------------------- Liquidation Net
Designated Outstanding Amount Proceeds
---------- ----------- ----------- --------
<S> <C> <C> <C> <C>
Series A......................... 1,350 1,333 $ 1,600 $ 1,567
Series B......................... 3,380 3,249 5,361 5,338
Series C......................... 3,650 3,592 12,284 12,201
Series D......................... 7,500 7,073 42,153 42,086
------ ------ ------- -------
15,880 15,247 $61,398 $61,192
====== ====== ======= =======
</TABLE>
iBEAM's Certificate of Incorporation, as amended, authorizes iBEAM to issue
20 million shares of $0.0001 par value preferred stock in the aggregate.
The rights, privileges and restrictions of holders of Series A, B, C and D
convertible preferred stock ("Series A," "Series B," Series C" and "Series D,"
respectively) are set forth in iBEAM's amended and restated Certificate of
Incorporation, and are summarized as follows:
Voting
Each share of Preferred Stock has voting rights equal to an equivalent
number of shares of common stock into which it is convertible and votes
together as one class with the common stock.
As long as at least any shares of Preferred Stock remain outstanding, the
Company must obtain approval from a majority of the holders of Preferred Stock
in order to alter the Certificate of Incorporation as related to Preferred
Stock, change the authorized number of shares of Preferred Stock, repurchase
any shares of common stock other than shares subject to the right of
repurchase by the Company, change the authorized number of Directors,
authorize a dividend for any class or series other than Preferred Stock,
create a new class of stock or effect a merger, consolidation or sale of
assets where the existing shareholders retain less than 50% of the voting
stock of the surviving entity.
Dividends
Holders of Series A, B, C and D are entitled to receive noncumulative
dividends at the per annum rate of $0.096, $0.132, $0.274 and $0.477 per
share, respectively, when and if declared by the Board of Directors. The
holders of Preferred Stock will also be entitled to participate in dividends
on common stock, when and if declared by the Board of Directors, based on the
number of shares of common stock held on an as-if converted basis. No
dividends on the Preferred Stock or common stock have been declared by the
Board from inception through December 31, 1999.
Liquidation
In the event of any liquidation, dissolution or winding up of the Company,
including a merger, acquisition or sale of assets where the beneficial owners
of the Company's common stock and Preferred Stock own less than 51% of the
resulting voting power of the surviving entity, the holders of Series A, B, C
and D are entitled to receive an amount of $1.20, $1.65, $3.42 and $5.96 per
share, respectively, plus any declared but unpaid dividends prior to and in
preference to any distribution to the holders of common stock. Should the
Company's legally available assets be insufficient to satisfy the liquidation
preferences, the funds will be distributed ratably
F-13
<PAGE>
iBEAM BROADCASTING CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS--(Continued)
among the holders of Series A, B, C and D preferred stock in proportion to the
amount of such stock owed by each holder. The remaining assets, if any, shall
be distributed among the holders of Series A, B, C and D and common stock pro-
rated based on the number of shares of common stock held by each (assuming
full conversion of all such shares Series A, B, C and D) until the value of
the assets distributed to or the consideration received aggregate $180
million.
Conversion
Each share of Preferred Stock is convertible, at the option of the holder,
according to a conversion ratio of three shares of common stock for one share
of Preferred Stock, subject to adjustment for dilution and common stock
splits, and Preferred Stock automatically converts into the number of shares
of common stock into which such shares are convertible at the then effective
conversion ratio upon: (1) the closing of a public offering of common stock at
a per share price of at least $3.97 per share with gross proceeds of at least
$20 million or (2) the consent of the holders of the majority of Preferred
Stock.
Warrants for convertible preferred stock
The Company issued warrants to purchase 27,273 and 64,935 shares of Series
B at $1.65 per share and $2.31 per share, respectively, in October 1998, 6,396
shares of Series C at $4.69 per share in September 1999, and 25,168 shares of
Series D at $5.96 per share in December 1999 to a leasing company upon signing
various equipment lease lines as described in Note 5. These warrants expire
the earlier of five years from the date of grant or three years from the
effective date of the Company's initial public offering. The Company valued
the warrants using the Black-Scholes option pricing model applying expected
lives of five years, a weighted average risk free rate of 6%, a dividend yield
of zero percent and volatility of 80%. The fair value of approximately
$793,000 represents additional interest on the equipment lease lines and is
being expensed over the lease term using the effective interest rate method.
No amounts were amortized in 1998, and $40,000 was amortized during the year
ended December 31, 1999.
In October 1999, the Company also issued a warrant to purchase 218,120
shares of Series D at $5.96 per share to a new investor. In September 1999,
the Company entered into sales and marketing cooperative agreement with this
investor. These warrants expire the earlier of seven years from the date of
grant or four years from the effective date of the Company's initial public
offering and were valued using the Black-Scholes option pricing model applying
an expected life of seven years, a weighted average risk free rate of 6%, a
dividend yield of zero percent and volatility of 80%. The fair value of
approximately $1,000,000 represents a non-cash inducement to enter into future
commercial agreements and was included in sales and marketing expense during
the quarter ended December 31, 1999.
8. Benefit Plans
Stock Option Plan
On March 23, 1998, the Company adopted the 1998 Stock Option Plan (the
"Plan"). The Plan provides for the granting of stock options to employees and
consultants of the Company. Options granted under the Plan may be either
incentive stock options or non-qualified stock options. Incentive stock
options ("ISO") may be granted only to Company employees (including officers
and directors who are also employees). Non-qualified stock options ("NSO") may
be granted to Company employees and consultants. The Company has reserved
approximately 16,005,000 shares of common stock for issuance under the Plan.
Options under the Plan may be granted for periods of up to ten years and at
prices no less than 85% of the estimated fair value of the shares on the date
of grant as determined by the Board of Directors, provided,
F-14
<PAGE>
iBEAM BROADCASTING CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS--(Continued)
however, that (i) the exercise price of an ISO and NSO shall not be less than
100% and 85% of the estimated fair value of the shares on the date of grant,
respectively, and (ii) the exercise price of an ISO and NSO granted to a 10%
shareholder shall not be less than 110% of the estimated fair value of the
shares on the date of grant. Options are exercisable immediately subject to
repurchase options held by the Company which lapse with the options vesting
schedule. Options may have a maximum term of up to 10 years as determined by
the Board of Directors. To date, options granted generally vest over four
years.
The following table summarizes activity under the Plan since inception (in
thousands, except per share data):
<TABLE>
<CAPTION>
Period from March 20, 1998 Year Ended
(Inception) to December 31, 1998 December 31, 1999
--------------------------------------- -------------------------
Weighted Average Weighted Average
Options Exercise Price Options Exercise Price
---------------- -------------------- ------- ----------------
<S> <C> <C> <C> <C>
Outstanding at beginning
of period.............. -- $ -- 3,278 $0.06
Granted................ 4,869 0.04 10,881 0.81
Exercised.............. (1,591) 0.01 (6,464) 0.12
Cancelled.............. -- -- (837) 0.08
---------------- ------
Outstanding at end of
period................. 3,278 0.06 6,858 1.20
================ ======
Options vested at end of
period................. 12 0.06 1,807 0.10
================ ======
</TABLE>
At December 31, 1998 and 1999, shares of common stock subject to a
repurchase option held by the Company totaled approximately 1,591,000 and
5,157,000 shares at a weighted average price of $0.03 and $0.33 per share,
respectively.
The following table summarizes information regarding stock options
outstanding as of December 31, 1999 (in thousands, except per share data):
<TABLE>
<CAPTION>
Options Outstanding and Exercisable
----------------------------------------------------------------
Weighted
Average Weighted
Range of Number Remaining Average
Exercise of Options Contractual Exercise
Prices Outstanding Life Price
---------- ----------- ----------- --------
<S> <C> <C> <C>
$0.06 923 8.7 years $0.06
$0.11 545 8.8 years 0.11
$0.20 655 8.8 years 0.20
$0.40 2,869 9.0 years 0.40
$2.00 839 9.9 years 2.00
$5.00 1,027 10.0 years 5.00
-----
$0.06-$5.00 6,858 9.2 years 1.20
=====
</TABLE>
F-15
<PAGE>
iBEAM BROADCASTING CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS--(Continued)
Fair value disclosures
Had compensation cost for the Company's stock-based compensation plan been
determined based on the fair value at the grant dates for the awards under a
method prescribed by SFAS No. 123, the Company's net loss would have been
increased to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
Period from
March 20, 1998
(Inception) to Year Ended
December 31, December 31,
1998 1999
-------------- ------------
<S> <C> <C>
Net loss:
As reported.................................... $(4,227) $(29,968)
Pro forma...................................... $(4,265) $(30,731)
Net loss per share--basic and diluted:
As reported.................................... $ (0.78) $ (4.72)
Pro forma...................................... $ (0.78) $ (4.86)
</TABLE>
The Company calculated the value of each option grant on the date of grant
using the Black-Scholes option pricing model with the following assumptions
for all periods: dividend yield expected and volatility of 0%; expected lives
of four years and risk free interest rate of 5.75%. These pro forma amounts
may not be representative of the effects on reported net loss for future years
as options vest over several years and additional awards are generally made
each year. The weighted average fair value of options granted was $0.19 and
$1.80 for the period from March 20, 1998 (inception) to December 31, 1998 and
for the year ended December 31, 1999, respectively.
Stock-based compensation
In connection with certain stock option grants to employees and board
members, the Company recognized approximately $608,000 and $17,290,000 of
unearned stock-based compensation for the excess of the deemed fair market
value over the exercise price at the date of grant for the period from March
10, 1998 (inception) to December 31, 1998 and for the year ended December 31,
1999, respectively. The compensation expense is being recognized, using the
multiple option method as prescribed by FASB Interpretation No. 28, over the
option's vesting period of generally four years. As a result, amortization of
stock-based compensation as of December 31, 1999 is expected to be $7,313,000
in 2000, $3,491,000 in 2001, $1,533,000 in 2002 and $556,000 in 2003.
Stock-based compensation expense related to stock options granted to
consultants is recognized as earned. At each reporting date, the Company re-
values the stock-based compensation using the Black-Scholes option pricing
model. As a result, the stock-based compensation expense will fluctuate as the
fair market value of our common stock fluctuates. In connection with the grant
of stock options to consultants, the Company recorded stock-based compensation
expense of $8,000 and $419,000 for the period from March 20, 1998 (inception)
to December 31, 1998 and for the year ended December 31, 1999, respectively.
As of December 31, 1999, the Company expects to amortize stock-based
compensation expense of $720,000 over future periods assuming no change in the
underlying value of the Company's common stock.
401(k) Plan
The Company's employee savings and retirement plan is qualified under
Section 401 of the Internal Revenue Code. 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. The Company
currently does not make matching or additional contributions to the 401(k)
Plan on its employees' behalf.
F-16
<PAGE>
iBEAM BROADCASTING CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS--(Continued)
9. Segment Information
The Company currently operates in a single business segment as there is
only one measurement of profitability for its operations. Through December 31,
1999, foreign operations have not been significant in either revenues or
investments in long-lived assets.
A summary of the Company's revenues by service offering is as follows (in
thousands):
<TABLE>
<CAPTION>
Year Ended
December 31,
1999
------------
<S> <C>
iBEAM On-Air................................................... $ 9
iBEAM On-Stage................................................. 110
iBEAM On-Demand................................................ 5
Other turnkey services......................................... 25
----
$149
====
</TABLE>
For the year ended December 31, 1999, the Company's significant customers
were ProWebCast, MusicNow, Inc. and Pixelworld, which represented 40%, 15% and
13% of total revenue, respectively. At December 31, 1999, Pacific Century and
Pixelworld represented 43% and 28%, respectively, of the accounts receivable
balance.
10. Subsequent Events (unaudited):
Stock option plans
The Company's 2000 Stock Plan (the "2000 Plan") was adopted by the Board of
Directors, subject to stockholder approval, in January 2000. The 2000 Plan
provides for the grant of incentive stock options to employees and non-
statutory stock options and stock purchase rights to employees, directors and
consultants.
A total of 7,000,000 shares of common stock were reserved for issuance
pursuant to the 2000 Plan. No options have yet been issued. The number of
shares reserved for issuance under the 2000 Plan will increase annually on
January 1st of each calendar year, effective beginning in 2001, equal to the
lesser of:
. 5% of the outstanding shares of common stock on the first day of the
year,
. 4,000,000 shares or
. such lesser amount as determined by the Board of Directors.
In January 2000, the Board of Directors adopted, subject to stockholder
approval, the 2000 Director Option Plan (the "Director Plan"). The Director
Plan provides for the periodic grant of nonstatutory stock options to non-
employee directors. A total of 500,000 shares were reserved for issuance under
the Director Plan.
Series E preferred stock
In January 2000, the Company obtained a legally binding, irrevocable
commitment from a new investor to purchase series E preferred stock totaling
$30 million by February 15, 2000.
F-17
<PAGE>
iBEAM
BROADCASTING
CORPORATION
[LOGO]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses Of Issuance And Distribution
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by us in connection with the
sale of Common Stock being registered. All amounts are estimates except the
SEC registration fee and the NASD filing fee.
<TABLE>
<S> <C>
SEC registration fee.................................................. $
NASD filing fee.......................................................
Nasdaq National Market listing fee....................................
Printing and engraving costs..........................................
Legal fees and expenses...............................................
Accounting fees and expenses..........................................
Blue Sky fees and expenses............................................
Transfer Agent and Registrar fees.....................................
Miscellaneous expenses................................................
-----
Total............................................................... $
=====
</TABLE>
Item 14. Indemnification Of Directors And Officers
Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents, and in agreements between the corporation
and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.
Article X of our Amended and Restated Certificate of Incorporation provides
for the indemnification of directors to the fullest extent permissible under
Delaware law.
Article VI of our Amended and Restated Bylaws provides for the
indemnification of officers, directors and third parties acting on behalf of
us if such person acted in good faith and in a manner reasonably believed to
be in and not opposed to our best interest, and, with respect to any criminal
action or proceeding, the indemnified party had no reason to believe his or
her conduct was unlawful.
We have entered into indemnification agreements with our directors and
executive officers, in addition to indemnification provided for in our Amended
and Restated Bylaws, and intend to enter into indemnification agreements with
any new directors and executive officers in the future. The indemnification
agreements may require us, among other things, to indemnify our directors and
officers against certain liability that may arise by reason of their status or
service as directors and officers (other than liabilities arising from willful
misconduct of a culpable nature), to advance their expenses incurred as a
result of any proceeding against them as to which they could be indemnified,
and to obtain directors and officers' insurance, if available on reasonable
terms.
Item 15. Recent Sales Of Unregistered Securities
Since inception, we have issued unregistered securities to a limited number
of persons, as described below. None of these transactions involved any
underwriters, underwriting discounts or commissions, or any public offering,
and we believe that each transaction was exempt from the registration
requirements of the Securities Act by virtue of Section 4(2) thereof,
Regulation D promulgated thereunder or Rule 701 pursuant to compensatory
benefit plans and contracts relating to compensation as provided under such
Rule 701. The recipients of securities in each such transaction represented
their intention to acquire the securities for investment only and not with a
view to or for sale in connection with any distribution thereof, and
appropriate legends were affixed to the share certificates and instruments
issued in such transactions. All recipients had adequate access, through their
relationships with us, to information about us.
II-1
<PAGE>
(1) Since inception through December 31, 1999, (the most recent practicable
date) we granted stock options to purchase common stock and issued shares of
common stock pursuant to restricted stock purchase agreements equal to a total
of 15,750,273 shares of our common stock at prices ranging from $0.00033 to
$5.00 to employees, consultants and directors pursuant to our 1998 Stock Plan,
as amended.
(2) On March 23, 1998, we sold 5,545,875 shares of common stock to our
three founders in exchange for $0.00033 per share for an aggregate purchase
price of $1,848.63.
(3) On April 16, 1998, we sold 1,333,333 shares of Series A Preferred Stock
for $1.20 per share to a group of private investors for an aggregate purchase
price of $1,599,999.60.
(4) On June 8, 1998 and July 21, 1998, we sold 3,248,904 shares of Series B
Preferred Stock for $1.65 per share to a group of private investors for an
aggregate purchase price of $5,360,691.60.
(5) On November 24, 1998, we issued warrants to purchase 92,208 shares of
our Series B Preferred Stock to Comdisco, Inc., of which 27,273 have an
exercise price of $1.65 and 64,935 have an exercise price of $2.31.
(6) On February 3, 1999, we sold 3,591,816 shares of Series C Preferred
Stock for $3.42 per share to a group of private investors for an aggregate
purchase price of $12,284,010.
(7) On September 1, 1999, we issued a warrant to purchase 6,396 shares of
Series C Preferred Stock at an exercise price of $3.42 to Comdisco, Inc.
(8) On October 14, 1999, we sold 7,072,732 shares of Series D Preferred
Stock for $5.96 per share to a group of private investors for an aggregate
purchase price of $42,153,482.72.
(9) On October 14, 1999, we issued a warrant to purchase 218,120 shares of
Series D Preferred Stock at an exercise price of $5.96 to Microsoft
Corporation.
(10) On December 3,1999, we issued a warrant to purchase 25,268 shares of
Series D Preferred Stock at an exercise price of $5.96 to Comdisco, Inc.
For additional information concerning these equity investment transactions,
reference is made to the information contained under the caption "Certain
Relationships and Related Transactions" in the form of prospectus included
herein.
II-2
<PAGE>
Item 16. Exhibits And Financial Statement Schedules
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Amended and Restated Certificate of Incorporation of the Registrant.
3.2 Form of Amended and Restated Certificate of Incorporation of the
Registrant, to be 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* Form of Registrant's Common Stock certificate.
4.2 Amended and Restated Investors' Rights Agreement dated October 14,
1999.
4.3 Series D Stock Purchase Warrant dated October 14, 1999 held by
Microsoft Corporation.
4.4 Voting Agreement dated October 14, 1999.
4.5 Voting Agreement with Liberty IB, Inc. dated February 12, 1999
5.1* Opinion of Wilson Sonsini Goodrich & Rosati Professional
Corporation.
10.1 Form of Indemnification Agreement entered into by the Registrant
with each of its directors and executive officers.
10.2* Employment Agreement dated January 12, 1999 between the Registrant
and Peter Desnoes.
10.3 1998 Stock Plan and forms of agreement thereunder.
10.4 2000 Stock Plan and forms of agreement thereunder.
10.5 2000 Employee Stock Purchase Plan.
10.6 2000 Director Option Plan.
10.7* Sublease Agreement dated July 6, 1998 between Netscape
Communications, Inc. and the Registrant with respect to Registrant's
facilities in Sunnyvale, California.
10.8*+ iBEAM and Microsoft Broadband Streaming Initiative Agreement dated
September 20, 1999.
10.9*+ iBEAM Network Membership Agreement by and between the Registrant and
Covad Communications Group dated October 5, 1999.
10.10*+ Teleport Services Agreement dated December 13, 1999 between Williams
Vyvx Services, a business unit of Williams Communications, Inc., and
the Registrant.
23.1 Consent of PricewaterhouseCoopers, LLP, independent accountants.
23.2* Consent of Counsel. Reference is made to Exhibit 5.1.
24.1 Power of Attorney (see page II-5).
27.1 Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
+Confidential treatment requested.
II-3
<PAGE>
(b) Financial Statement Schedules
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the
financial statements or notes thereto.
Item 17. Undertakings
We hereby undertake to provide to the underwriters at the closing specified
in the underwriting agreement certificates in such denominations and
registered in such names as required by the underwriters to permit prompt
delivery to each purchaser.
Insofar as indemnification by us for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of iBEAM pursuant to the provisions referenced in Item 14 of this Registration
Statement or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by us of expenses incurred or paid by a director, officer, or
controlling person of iBEAM in the successful defense of any action, suit or
proceeding) is asserted by a director, officer or controlling person in
connection with the securities being registered hereunder, we will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
We hereby undertake that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of Prospectus filed by iBEAM pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of
Sunnyvale, State of California, on the 1st day of February, 2000.
iBEAM BROADCASTING CORPORATION
By: /s/ Chris Dier___________________
Chris Dier
Vice President and Chief Financial
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Chris Dier and Peter Desnoes,
and each of them acting individually, as his true and lawful attorneys-in-fact
and agents, each with full power of substitution, for him in any and all
capacities, to sign any and all amendments to this registration statement
(including post-effective amendments or any abbreviated registration statement
and any amendments thereto filed pursuant to Rule 462(b) increasing the number
of securities for which registration is sought), and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, with full power of each to act alone, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully for all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or his or their substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Peter Desnoes President and Chief February 1, 2000
____________________________________ Executive Officer and
Peter Desnoes Chairman of the Board
(Principal Executive
Officer)
/s/ Chris Dier Vice President and Chief February 1, 2000
____________________________________ Financial Officer
Chris Dier (Principal Financial and
Accounting Officer)
/s/ Barry Baker Director February 1, 2000
____________________________________
Barry Baker
/s/ Frederic Seegal Director February 1, 2000
____________________________________
Frederic Seegal
/s/ Richard Shapero Director February 1, 2000
____________________________________
Richard Shapero
/s/ Peter Wagner Director February 1, 2000
____________________________________
Peter Wagner
/s/ Robert Wilmot Director February 1, 2000
____________________________________
Robert Wilmot
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Amended and Restated Certificate of Incorporation of the Registrant.
3.2 Form of Amended and Restated Certificate of Incorporation of the
Registrant, to be 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* Form of Registrant's Common Stock certificate.
4.2 Amended and Restated Investors' Rights Agreement dated October 14,
1999.
4.3 Series D Stock Purchase Warrant dated October 14, 1999 held by
Microsoft Corporation.
4.4 Voting Agreement dated October 14, 1999.
4.5 Voting Agreement with Liberty IB, Inc. dated February 12, 1999
5.1* Opinion of Wilson Sonsini Goodrich & Rosati Professional Corporation.
10.1 Form of Indemnification Agreement entered into by the Registrant with
each of its directors and executive officers.
10.2* Employment Agreement dated January 12, 1999 between the Registrant and
Peter Desnoes.
10.3 1998 Stock Plan and forms of agreement thereunder.
10.4 2000 Stock Plan and forms of agreement thereunder.
10.5 2000 Employee Stock Purchase Plan.
10.6 2000 Director Option Plan.
10.7* Sublease Agreement dated July 6, 1998 between Netscape Communications,
Inc. and the Registrant with respect to Registrant's facilities in
Sunnyvale, California.
10.8*+ iBEAM and Microsoft Broadband Streaming Initiative Agreement dated
September 20, 1999.
10.9*+ iBEAM Network Membership Agreement by and between the Registrant and
Covad Communications Group dated October 5, 1999.
10.10*+ Teleport Services Agreement dated December 13, 1999 between Williams
Vyvx Services, a business unit of Williams Communications, Inc., and
the Registrant.
23.1 Consent of PricewaterhouseCoopers, LLP, independent accountants.
23.2* Consent of Counsel. Reference is made to Exhibit 5.1.
24.1 Power of Attorney (see page II-5).
27.1 Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
+Confidential treatment requested.
<PAGE>
Exhibit 3.1
RESTATED
CERTIFICATE OF INCORPORATION OF
iBEAM BROADCASTING CORPORATION
(Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware)
iBEAM Broadcasting Corporation, a corporation organized and existing
under and by virtue of the provisions of the General Corporation Law of the
State of Delaware (the "General Corporation Law"),
DOES HEREBY CERTIFY:
FIRST: That the name of this corporation is iBEAM Broadcasting
Corporation and that this corporation was originally incorporated pursuant to
the General Corporation Law on March 20, 1998 under the name Bowles, Inc.
SECOND: That the Board of Directors duly adopted resolutions proposing
to amend and restate the Certificate of Incorporation of this corporation,
declaring said amendment and restatement to be advisable and in the best
interests of this corporation and its stockholders, and authorizing the
appropriate officers of this corporation to solicit the consent of the
stockholders therefor, which resolution setting forth the proposed amendment and
restatement is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be
amended and restated in its entirety as follows:
ARTICLE I
The name of this corporation is iBEAM Broadcasting Corporation.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is 15 East North Street in the City of Dover, County of Kent. The name
of the corporation's registered agent at such address is Incorporating Services,
Ltd.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
A. Classes of Stock. This corporation is authorized to issue two
----------------
classes of stock to be designated, respectively, "Common Stock" and "Preferred
Stock." Upon the filing of
<PAGE>
this Amended and Restated Certificate of Incorporation, each outstanding share
of Common Stock shall be divided into three shares of Common Stock. The total
number of shares that this corporation is authorized to issue is One Hundred and
Forty Million (140,000,000) shares. One Hundred and Twenty Million (120,000,000)
shares shall be Common Stock and Twenty Million (20,000,000) shares shall be
Preferred Stock, each with a par value of $0.0001 per share. The first series of
Preferred Stock shall be designated "Series A Preferred Stock," consisting of
One Million Three Hundred and Fifty Thousand (1,350,000) shares. The second
series of Preferred Stock shall be designated "Series B Preferred Stock,"
consisting of Three Million Three Hundred and Eighty Thousand (3,380,000)
shares. The third series of Preferred Stock shall be designated "Series C
Preferred Stock," consisting of Three Million Six Hundred and Fifty Thousand
(3,650,000) shares. The fourth series of Preferred Stock shall be designated
"Series D Preferred Stock, consisting of Seven Million Five Hundred Thousand
(7,500,000) shares.
B. Rights, Preferences and Restrictions of Preferred Stock. The
-------------------------------------------------------
Preferred Stock authorized by this Restated Certificate of Incorporation may be
issued from time to time in one or more series. The rights, preferences,
privileges, and restrictions granted to and imposed on the Series A, Series B,
Series C and Series D Preferred Stock are as set forth below in this Article
IV(B). The Board of Directors is hereby authorized to fix or alter the rights,
preferences, privileges and restrictions granted to or imposed upon additional
series of Preferred Stock, and the number of shares constituting any such series
and the designation thereof, or of any of them. Subject to compliance with
applicable protective voting rights that have been or may be granted to the
Preferred Stock or series thereof in Certificates of Designation or this
corporation's Certificate of Incorporation ("Protective Provisions"), but
notwithstanding any other rights of the Preferred Stock or any series thereof,
the rights, privileges, preferences and restrictions of any such additional
series may be subordinated to, pari passu with (including, without limitation,
---- -----
inclusion in provisions with respect to liquidation and acquisition preferences,
redemption and/or approval of matters by vote or written consent), or senior to
any of those of any present or future class or series of Preferred or Common
Stock. Subject to compliance with applicable Protective Provisions, the Board
of Directors is also authorized to increase or decrease the number of shares of
any series (other than the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock or Series D Preferred Stock), prior or subsequent to
the issue of that series, but not below the number of shares of such series then
outstanding. In case the number of shares of any series shall be so decreased,
the shares constituting such decrease shall resume the status that they had
prior to the adoption of the resolution originally fixing the number of shares
of such series.
1. Dividend Provisions.
-------------------
(a) Subject to the rights of any series of Preferred Stock that may
from time to time come into existence, the holders of shares of Series A, Series
B, Series C and Series D Preferred Stock shall be entitled to receive dividends,
out of any assets legally available therefor, prior and in preference to any
declaration or payment of any dividend (payable other than in Common Stock or
other securities and rights convertible into or entitling the holder thereof to
receive, directly or indirectly, additional shares of Common Stock of this
corporation) on the Common Stock of this corporation, at the rate of (A) $0.096
per share per annum for each share of Series A Preferred Stock then held by them
(as adjusted for any stock splits, stock dividends, recapitalizations or the
like), (B) $0.132 per share per annum for each share of Series B Preferred
2
<PAGE>
Stock then held by them (as adjusted for any stock splits, stock dividends,
recapitalizations or the like), (C) $0.274 per share per annum for each share of
Series C Preferred Stock then held by them (as adjusted for any stock splits,
stock dividends, recapitalizations or the like), (D) $0.477 per share per annum
for each share of Series D Preferred Stock then held by them (as adjusted for
any stock splits, stock dividends, recapitalizations or the like) or such
greater amount as is paid on the Common Stock, payable when, as, and if declared
by the Board of Directors. Such dividends shall not be cumulative. The holders
of the outstanding Series A, Series B, Series C or Series D Preferred Stock can
waive any dividend preference that such holders of each such respective series
shall be entitled to receive under this Section 1 upon the affirmative vote or
written consent of the holders of at least a majority of the Series A, Series B,
Series C or Series D Preferred Stock respectively, then outstanding.
2. Liquidation Preference.
----------------------
(a) In the event of any liquidation, dissolution or winding up of
this corporation, either voluntary or involuntary, subject to the rights of
series of Preferred Stock that may from time to time come into existence, the
holders of Series A, Series B, Series C and Series D Preferred Stock shall be
entitled to receive, prior and in preference to any distribution of any of the
assets of this corporation to the holders of Common Stock by reason of their
ownership thereof, an amount per share equal to the sum of (A) $1.20 for each
outstanding share of Series A Preferred Stock (the "Original Series A Issue
Price"), plus declared but unpaid dividends on such share (subject to adjustment
of such fixed dollar amounts for any stock splits, stock dividends,
combinations, recapitalizations or the like); (B) $1.65 for each outstanding
share of Series B Preferred Stock (the "Original Series B Issue Price"), plus
declared but unpaid dividends on such share (subject to adjustment of such fixed
dollar amounts for any stock splits, stock dividends, combinations,
recapitalizations or the like); (C) $3.42 for each outstanding share of Series C
Preferred Stock (the "Original Series C Issue Price"), plus declared but unpaid
dividends on such share (subject to adjustment of such fixed dollar amounts for
any stock splits, stock dividends, combinations, recapitalizations or the like)
and (D) $5.96 for each outstanding share of Series D Preferred Stock (the
"Original Series D Issue Price"), plus declared but unpaid dividends on such
share (subject to adjustment of such fixed dollar amounts for any stock splits,
stock dividends, combinations, recapitalizations or the like). If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Series A, Series B, Series C and Series D Preferred Stock shall
be insufficient to permit the payment to such holders of the full aforesaid
preferential amounts, then, subject to the rights of series of Preferred Stock
that may from time to time come into existence, the entire assets and funds of
this corporation legally available for distribution shall be distributed ratably
among the holders of the Series A, Series B, Series C and Series D Preferred
Stock in proportion to the foregoing respective liquidation preferences of such
holder.
(b) Upon the completion of the distribution required by subsection
(a) of this Section 2 and any other distribution that may be required with
respect to series of Preferred Stock that may from time to time come into
existence, the remaining assets of this corporation available for distribution
to stockholders shall be distributed among the holders of Series A, Series B,
Series C and Series D Preferred Stock and Common Stock pro rata based on the
number of shares of Common Stock held by each (assuming full conversion of all
such Series A, Series B, Series C and Series D Preferred Stock) until the value
of the assets distributed to or the
3
<PAGE>
consideration received by such holders in the aggregate equals $180,000,000
(including amounts paid pursuant to subsection (a) of this Section 2);
(c) Thereafter, subject to the rights of series of Preferred Stock
that may from time to time come into existence, if assets remain in this
corporation, the holders of the Common Stock of this corporation shall receive
all of the remaining assets of this corporation pro rata based on the number of
shares of Common Stock held by each.
(d) (i) For purposes of this Section 2, a liquidation, dissolution
or winding up of this corporation shall be deemed to be occasioned by, or to
include (unless the holders of at least a majority of the Series A, Series B,
Series C and Series D Preferred Stock then outstanding voting together as a
single class shall determine otherwise), (A) the acquisition of this corporation
by another entity by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger or consolidation)
that results in the transfer of fifty percent (50%) or more of the outstanding
voting power of this corporation to another person or entity or group of related
persons or entities; or (B) a sale of all or substantially all of the assets of
this corporation.
(ii) In any of such events, if the consideration received by
this corporation is other than cash, its value will be deemed its fair market
value. Any securities shall be valued as follows:
(A) Securities not subject to investment letter or other
similar restrictions on free marketability covered by (B) below:
(1) If traded on a securities exchange or through the
Nasdaq National Market, the value shall be deemed to be the average of the
closing prices of the securities on such exchange or system over the thirty (30)
day period ending three (3) days prior to the closing;
(2) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid or sale prices (whichever
is applicable) over the thirty (30) day period ending three (3) days prior to
the closing; and
(3) If there is no active public market, the value
shall be the fair market value thereof, as mutually determined by this
corporation and the holders of at least a majority of the voting power of all
then outstanding shares of Preferred Stock.
(B) The method of valuation of securities subject to
investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a stockholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in (A) (1), (2) or (3) to reflect the approximate fair
market value thereof, as mutually determined by this corporation and the holders
of at least a majority of the voting power of all then outstanding shares of
such Preferred Stock.
(iii) In the event the requirements of this subsection 2(d) are
not complied with, this corporation shall forthwith either:
4
<PAGE>
(A) cause such closing to be postponed until such time as
the requirements of this Section 2 have been complied with; or
(B) cancel such transaction, in which event the rights,
preferences and privileges of the holders of the Series A, Series B, Series C
and Series D Preferred Stock shall revert to and be the same as such rights,
preferences and privileges existing immediately prior to the date of the first
notice referred to in subsection 2(e)(iv) hereof.
(iv) This corporation shall give each holder of record of Series
A, Series B, Series C or Series D Preferred Stock written notice of such
impending transaction not later than twenty (20) days prior to the stockholders'
meeting called to approve such transaction, or twenty (20) days prior to the
closing of such transaction, whichever is earlier, and shall also notify such
holders in writing of the final approval of such transaction. The first of such
notices shall describe the material terms and conditions of the impending
transaction and the provisions of this Section 2, and this corporation shall
thereafter give such holders prompt notice of any material changes. The
transaction shall in no event take place sooner than twenty (20) days after this
corporation has given the first notice provided for herein or sooner than ten
(10) days after this corporation has given notice of any material changes
provided for herein; provided, however, that such periods may be shortened upon
the written consent of the holders of Preferred Stock that are entitled to such
notice rights or similar notice rights and that represent at least a majority of
the voting power of all then outstanding shares of such Preferred Stock.
3. Conversion. The holders of the Series A, Series B, Series C and
----------
Series D Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):
(a) Right to Convert. Subject to Section 3(d), each share of Series
----------------
A, Series B, Series C and Series D Preferred Stock shall be convertible, at the
option of the holder thereof, at any time after the date of issuance of such
share, at the office of this corporation or any transfer agent for such stock,
into such number of fully paid and nonassessable shares of Common Stock as is
determined by (i) in the case of the Series A Preferred Stock, dividing the
Original Series A Issue Price by the Conversion Price applicable to such share,
determined as hereafter provided, in effect on the date the certificate is
surrendered for conversion; (ii) in the case of the Series B Preferred Stock,
dividing the Original Series B Issue Price by the Conversion Price applicable to
such share, determined as hereafter provided, in effect on the date the
certificate is surrendered for conversion; (iii) in the case of the Series C
Preferred Stock, dividing the Original Series C Issue Price by the Conversion
Price applicable to such share, determined as hereafter provided, in effect on
the date the certificate is surrendered for conversion; (iv) in the case of the
Series D Preferred Stock, dividing the Original Series D Issue Price by the
Conversion Price applicable to such share, determined as hereafter provided, in
effect on the date the certificate is surrendered for conversion. The initial
Conversion Price per share for shares of Series A, Series B, Series C and Series
D Preferred Stock shall be the Original Series A Issue Price, Original Series B
Issue Price, Original Series C Issue Price and Original Series D Issue Price
respectively; provided, however, that the Conversion Price for the Series A,
Series B, Series C and Series D Preferred Stock shall be subject to adjustment
as set forth in subsection 3(d).
5
<PAGE>
(b) Automatic Conversion. Each share of Series A, Series B, Series C
--------------------
and Series D Preferred Stock shall automatically be converted into shares of
Common Stock at the Conversion Price at the time in effect for such Series A,
Series B, Series C or Series D Preferred Stock immediately upon the earlier of
(i) this corporation's sale of its Common Stock in a firm commitment
underwritten public offering pursuant to a registration statement on Form S-1 or
Form SB-2 under the Securities Act of 1933, as amended, the public offering
price of which was not less than $11.92 per share (as adjusted for any stock
splits, stock dividends, recapitalizations or the like) and $20,000,000 in the
aggregate or (ii) the date specified by written consent or agreement of the
holders of a majority of the then outstanding shares of Series A, Series B,
Series C and Series D Preferred Stock, voting together as a single class.
(c) Mechanics of Conversion. Except as provided in Section 3(b),
-----------------------
before any holder of Series A, Series B, Series C or Series D Preferred Stock
shall be entitled to convert the same into shares of Common Stock, he or she
shall surrender the certificate or certificates therefor, duly endorsed, at the
office of this corporation or of any transfer agent for the Series A, Series B,
Series C or Series D Preferred Stock , and shall give written notice to this
corporation at its principal corporate office, of the election to convert the
same and shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. This corporation
shall, as soon as practicable thereafter, issue and deliver at such office to
such holder of Series A, Series B, Series C or Series D Preferred Stock, or to
the nominee or nominees of such holder, a certificate or certificates for the
number of shares of Common Stock to which such holder shall be entitled as
aforesaid. Such conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of the shares of Series
A, Series B, Series C or Series D Preferred Stock to be converted, and the
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock as of such date. If the conversion is in
connection with an underwritten offering of securities registered pursuant to
the Securities Act of 1933, the conversion may, at the option of any holder
tendering Series A, Series B, Series C or Series D Preferred Stock for
conversion, be conditioned upon the closing with the underwriters of the sale of
securities pursuant to such offering, in which event the persons entitled to
receive the Common Stock upon conversion of the Series A, Series B, Series C or
Series D Preferred Stock shall not be deemed to have converted such Series A,
Series B, Series C or Series D Preferred Stock until immediately prior to the
closing of such sale of securities.
(d) Conversion Price Adjustments of Preferred Stock for Certain
-----------------------------------------------------------
Dilutive Issuances, Splits and Combinations. The Conversion Price of the Series
- -------------------------------------------
A, Series B, Series C and Series D Preferred Stock shall be subject to
adjustment from time to time as follows:
(i) (A) If this corporation shall issue, after the date upon
which any shares of Series A, Series B, Series C or Series D Preferred Stock
were first issued (the "Purchase Date" with respect to such series), any
Additional Stock (as defined below) without consideration or for a consideration
per share less than the Conversion Price for such series in effect immediately
prior to the issuance of such Additional Stock, the Conversion Price for such
series in effect immediately prior to each such issuance shall forthwith (except
as otherwise provided in this clause (i)) be adjusted to a price determined by
multiplying such Conversion Price by a fraction, the numerator of which shall be
the number of shares of Common Stock
6
<PAGE>
outstanding immediately prior to such issuance (including shares of Common Stock
deemed to be issued pursuant to subsection 3(d)(i)(E)(1) or (2)) plus the number
of shares of Common Stock that the aggregate consideration received by this
corporation for such issuance would purchase at such Conversion Price; and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance (including shares of Common Stock deemed to
be issued pursuant to subsection 3(d)(i)(E)(1) or (2)) plus the number of shares
of such Additional Stock.
(B) No adjustment of the Conversion Price for the Series A,
Series B, Series C or Series D Preferred Stock shall be made in an amount less
than one cent per share, provided that any adjustments that are not required to
be made by reason of this sentence shall be carried forward and shall be either
taken into account in any subsequent adjustment made prior to three (3) years
from the date of the event giving rise to the adjustment being carried forward,
or shall be made at the end of three (3) years from the date of the event giving
rise to the adjustment being carried forward. Except to the limited extent
provided for in subsections (E)(3) and (E)(4), no adjustment of such Conversion
Price pursuant to this subsection 3(d)(i) shall have the effect of increasing
the Conversion Price above the Conversion Price in effect immediately prior to
such adjustment.
(C) In the case of the issuance of Common Stock for cash,
the consideration shall be deemed to be the amount of cash paid therefor before
deducting any reasonable discounts, commissions or other expenses allowed, paid
or incurred by this corporation for any underwriting or otherwise in connection
with the issuance and sale thereof.
(D) In the case of the issuance of the Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined by the Board of
Directors irrespective of any accounting treatment.
(E) In the case of the issuance (whether before, on or
after the applicable Purchase Date) of options to purchase or rights to
subscribe for Common Stock, securities by their terms convertible into or
exchangeable for Common Stock or options to purchase or rights to subscribe for
such convertible or exchangeable securities, the following provisions shall
apply for all purposes of this subsection 3(d)(i) and subsection 3(d)(ii):
(1) The aggregate maximum number of shares of Common
Stock deliverable upon exercise of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at the time such
options or rights were issued and for a consideration equal to the consideration
(determined in the manner provided in subsections 3(d)(i)(C) and (d)(i)(D)), if
any, received by this corporation upon the issuance of such options or rights
plus the minimum exercise price provided in such options or rights (without
taking into account potential antidilution adjustments) for the Common Stock
covered thereby.
(2) The aggregate maximum number of shares of Common
Stock deliverable upon conversion of, or in exchange for, any such convertible
or exchangeable securities or upon the exercise of options to purchase or rights
to subscribe for
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<PAGE>
such convertible or exchangeable securities and subsequent conversion or
exchange thereof shall be deemed to have been issued at the time such securities
were issued or such options or rights were issued and for a consideration equal
to the consideration, if any, received by this corporation for any such
securities and related options or rights (excluding any cash received on account
of accrued interest or accrued dividends), plus the minimum additional
consideration, if any, to be received by this corporation (without taking into
account potential antidilution adjustments) upon the conversion or exchange of
such securities or the exercise of any related options or rights (the
consideration in each case to be determined in the manner provided in
subsections 3(d)(i)(C) and (d)(i)(D)).
(3) In the event of any change in the number of shares
of Common Stock deliverable or in the consideration payable to this corporation
upon exercise of such options or rights or upon conversion of or in exchange for
such convertible or exchangeable securities, including, but not limited to, a
change resulting from the antidilution provisions thereof (unless such options
or rights or convertible or exchangeable securities were merely deemed to be
included in the numerator and denominator for purposes of determining the number
of shares of Common Stock outstanding for purposes of subsection 3(d)(i)(A)),
the Conversion Price of the Series A, Series B, Series C and the Series D
Preferred Stock, to the extent in any way affected by or computed using such
options, rights or securities, shall be recomputed to reflect such change, but
no further adjustment shall be made for the actual issuance of Common Stock or
any payment of such consideration upon the exercise of any such options or
rights or the conversion or exchange of such securities.
(4) Upon the expiration of any such options or rights,
the termination of any such rights to convert or exchange or the expiration of
any options or rights related to such convertible or exchangeable securities,
the Conversion Price of the Series A, Series B, Series C or Series D Preferred
Stock, to the extent in any way affected by or computed using such options,
rights or securities or options or rights related to such securities (unless
such options or rights were merely deemed to be included in the numerator and
denominator for purposes of determining the number of shares of Common Stock
outstanding for purposes of subsection 3(d)(i)(A)), shall be recomputed to
reflect the issuance of only the number of shares of Common Stock (and
convertible or exchangeable securities that remain in effect) actually issued
upon the exercise of such options or rights, upon the conversion or exchange of
such securities or upon the exercise of the options or rights related to such
securities.
(5) The number of shares of Common Stock deemed issued
and the consideration deemed paid therefor pursuant to subsections 3(d)(i)(E)(1)
and (2) shall be appropriately adjusted to reflect any change, termination or
expiration of the type described in either subsection 3(d)(i)(E)(3) or (4).
(ii) "Additional Stock" shall mean any shares of Common Stock
issued (or deemed to have been issued pursuant to subsection 3(d)(i)(E)) by this
corporation after the Series D Purchase Date other than:
(A) Common Stock issued pursuant to a transaction described
in subsection 3(d)(iii) hereof;
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<PAGE>
(B) Common Stock (or options therefor) issuable or issued
to employees, consultants, directors or vendors (if in transactions with
primarily non-financing purposes) of this corporation, with the approval of a
majority of the members of the Board of Directors not holding management
positions with the Company, directly or pursuant to a stock option plan or
restricted stock plan approved by the Board of Directors of this corporation
(and the reissuance of any shares issued or subject to outstanding options
returned to the Company from any unexercised options or restricted stock
repurchased by the Company after such date); or
(C) the issuance of stock, warrants or other securities or
rights, with the approval of a majority of the Board of Directors of the
Company, to persons or entities in connection with a bona fide business
acquisition of or by the Company, whether by merger, consolidation, sale of
assets, sale or exchange of stock or otherwise; or
(D) the issuance of stock warrants or other securities or
rights, with the approval of a majority of the Board of Directors of the
Company, to persons with which the Company is entering or has entered into a
strategic relationship; or
(E) the issuance of stock, warrants or other securities or
rights in connection with bank and other debt financings, commercial lending,
equipment financings, capital lease, or similar transactions approved by a
majority of the Board of Directors of this corporation;
(F) in the event that Intel Corporation and the Company
agree on the terms of a technology development relationship, the issuance of a
warrant to Intel Corporation to purchase up to 146,199 shares of Series C
Preferred Stock for $3.42 per share (subject to adjustment of such fixed dollar
amounts for any stock splits, stock dividends, combinations, recapitalizations
or the like) and the issuance of any Common Stock in connection with the
conversion of such preferred stock.
(G) the issuance of a warrant to Comdisco Inc. to purchase
up to 6,397 shares of Series D Preferred Stock for $4.69 per share (subject to
adjustment of such fixed dollar amounts for any stock splits, stock dividends,
combinations, recapitalizations or the like) and the issuance of any Common
Stock in connection with the conversion of such preferred stock.
(iii) In the event this corporation should at any time or from
time to time after the Purchase Date fix a record date for the effectuation of a
split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock or other securities or
rights convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed), the Conversion
Price of the Series A, Series B, Series C or Series D Preferred Stock shall be
appropriately decreased so that the number of shares of Common Stock issuable on
conversion of each share of such series
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<PAGE>
shall be increased in proportion to such increase of the aggregate of shares of
Common Stock outstanding and those issuable with respect to such Common Stock
Equivalents.
(iv) If the number of shares of Common Stock outstanding at any
time after the Purchase Date is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date of such combination, the
Conversion Price for the Series A, Series B, Series C and Series D Preferred
Stock shall be appropriately increased so that the number of shares of Common
Stock issuable on conversion of each share of such series shall be decreased in
proportion to such decrease in outstanding shares.
(e) Other Distributions. In the event this corporation shall declare
-------------------
a distribution payable in securities of other persons, evidences of indebtedness
issued by this corporation or other persons, assets (excluding cash dividends)
or options or rights not referred to in subsection 3(d)(iii), then, in each such
case for the purpose of this subsection 3(e), the holders of the Series A,
Series B, Series C and Series D Preferred Stock shall be entitled to a
proportionate share of any such distribution as though they were the holders of
the number of shares of Common Stock of this corporation into which their shares
of Series A, Series B, Series C and/or Series D Preferred Stock are convertible
as of the record date fixed for the determination of the holders of Common Stock
of this corporation entitled to receive such distribution.
(f) Recapitalizations. If at any time or from time to time there
-----------------
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 3 or Section 2) provision shall be made so that the holders of the
Series A, Series B, Series C and Series D Preferred Stock shall thereafter be
entitled to receive upon conversion of the Series A, Series B, Series C or
Series D Preferred Stock, the number of shares of stock or other securities or
property of the Corporation or otherwise, to which a holder of Common Stock
deliverable upon conversion would have been entitled on such recapitalization.
In any such case, appropriate adjustment shall be made in the application of the
provisions of this Section 3 with respect to the rights of the holders of the
Series A, Series B, Series C and Series D Preferred Stock after the
recapitalization to the end that the provisions of this Section 3 (including
adjustment of the Conversion Price then in effect and the number of shares
purchasable upon conversion of the Series A, Series B, Series C and Series D
Preferred Stock) shall be applicable after that event as nearly equivalent as
may be practicable.
(g) No Impairment. This corporation will not, by amendment of its
-------------
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by this
corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 3 and in the taking of all such action as may
be necessary or appropriate in order to protect the Conversion Rights of the
holders of the Series A, Series B, Series C and Series D Preferred Stock against
impairment.
(h) No Fractional Shares and Certificate as to Adjustments.
------------------------------------------------------
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(i) No fractional shares shall be issued upon the conversion of
any share or shares of the Series A, Series B, Series C or Series D Preferred
Stock and the number of shares of Common Stock to be issued shall be rounded to
the nearest whole share. Whether or not fractional shares are issuable upon such
conversion shall be determined on the basis of the total number of shares of
Series A, Series B, Series C and/or Series D Preferred Stock the holder is at
the time converting into Common Stock and the number of shares of Common Stock
issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment of
the Conversion Price of Series A, Series B, Series C or Series D Preferred Stock
pursuant to this Section 3, this corporation, at its expense, shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to each holder of Series A, Series B, Series C and Series D
Preferred Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
This corporation shall, upon the written request at any time of any holder of
Series A, Series B, Series C or Series D Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth (A) such adjustment
and readjustment, (B) the Conversion Price for such series of Preferred Stock at
the time in effect, and (C) the number of shares of Common Stock and the amount,
if any, of other property that at the time would be received upon the conversion
of a share of Series A, Series B, Series C or Series D Preferred Stock.
(i) Notices of Record Date. In the event of any taking by this
----------------------
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
corporation shall mail to each holder of Series A, Series B, Series C and Series
D Preferred Stock, at least twenty (20) days prior to the date specified
therein, a notice specifying the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and the amount and
character of such dividend, distribution or right.
(j) Reservation of Stock Issuable Upon Conversion. This corporation
---------------------------------------------
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series A, Series B, Series C and Series D Preferred Stock,
such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of the Series A,
Series B, Series C and Series D Preferred Stock; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of the Series A, Series B,
Series C and Series D Preferred Stock, in addition to such other remedies as
shall be available to the holder of such Preferred Stock, this corporation will
take such corporate action as may, in the opinion of its counsel, be necessary
to increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes, including, without limitation,
engaging in best efforts to obtain the requisite stockholder approval of any
necessary amendment to this certificate.
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<PAGE>
(k) Notices. Any notice required by the provisions of this Section 3
-------
to be given to the holders of shares of Series A, Series B, Series C and/or
Series D Preferred Stock shall be deemed given if deposited in the United States
mail, postage prepaid, and addressed to each holder of record at his address
appearing on the books of this corporation.
4. Voting Rights.
-------------
(a) General Voting Rights. The holder of each share of Series A,
---------------------
Series B, Series C and Series D Preferred Stock shall have the right to one vote
for each share of Common Stock into which such Series A, Series B, Series C or
Series D Preferred Stock could then be converted, and with respect to such vote,
such holder shall have full voting rights and powers equal to the voting rights
and powers of the holders of Common Stock, and shall be entitled,
notwithstanding any provision hereof, to notice of any stockholders' meeting in
accordance with the bylaws of this corporation, and shall be entitled to vote,
together with holders of Common Stock, with respect to any question upon which
holders of Common Stock have the right to vote. Fractional votes shall not,
however, be permitted and any fractional voting rights available on an as-
converted basis (after aggregating all shares into which shares of Series A,
Series B, Series C and/or Series D Preferred Stock held by each holder could be
converted) shall be rounded to the nearest whole number (with one-half being
rounded upward).
(b) Voting for the Election of Directors.
------------------------------------
(i) As long as at least a majority of the shares of Series A
Preferred Stock originally issued remain outstanding, the holders of such shares
of Series A Preferred Stock shall be entitled to elect one (1) director of this
corporation at each annual election of directors.
(ii) As long as at least a majority of the shares of Series B
Preferred Stock originally issued remain outstanding, the holders of such shares
of Series B Preferred Stock shall be entitled to elect one (1) director of this
corporation at each annual election of directors.
(iii) The remaining directors of this corporation shall be
elected as determined in the by-laws by the holders of the Common Stock and the
Series A, Series B, Series C and Series D Preferred Stock voting together as a
single class on an as if converted into Common Stock basis.
In the case of any vacancy (other than a vacancy caused by removal) in
the office of a director occurring among the directors elected by the holders of
a class or series of stock pursuant to this Section 4(b), the remaining
directors so elected by that class or series may by affirmative vote of a
majority thereof (or the remaining director so elected if there be but one, or
if there are no such directors remaining, by the affirmative vote of the holders
of a majority of the shares of that class or series), elect a successor or
successors to hold office for the unexpired term of the director or directors
whose place or places shall be vacant. Any director who shall have been elected
by the holders of a class or series of stock or by any directors so elected as
provided in the immediately preceding sentence hereof may be removed during the
aforesaid term of office, either with or without cause, by, and only by, the
affirmative vote of the holders of the shares of the class or series of stock
entitled to elect such director or directors, given either at a special meeting
of such stockholders duly called for that purpose or pursuant to a written
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<PAGE>
consent of stockholders, and any vacancy thereby created may be filled by the
holders of that class or series of stock represented at the meeting or pursuant
to unanimous written consent.
5. Protective Provisions. So long as any shares of Series A, Series
---------------------
B, Series C and/or Series D Preferred Stock are outstanding (as adjusted for any
stock dividends, combinations or splits with respect to such shares), this
corporation shall not:
(a) without first obtaining the approval (by vote or written consent,
as provided by law) of the holders of at least a majority of the then
outstanding shares of Series A, Series B, Series C and Series D Preferred Stock,
voting together as a single class:
(i) authorize or issue, or obligate itself to issue, any other
equity security, including any other security convertible into or exercisable
for any equity security having a preference over, or being on a parity with, the
Series A, Series B, Series C or Series D Preferred Stock with respect to
dividends, liquidation or voting;
(ii) redeem, purchase or otherwise acquire (or pay into or set
aside for a sinking fund for such purpose) any share or shares of Preferred
Stock or Common Stock; provided, however, that this restriction shall not apply
to (x) the repurchase of shares of Common Stock from employees, officers,
directors, consultants or other persons performing services for this corporation
or any subsidiary pursuant to agreements under which this corporation has the
option to repurchase such shares at cost or at cost upon the occurrence of
certain events, such as the termination of employment or (y) repurchases of
shares of Common Stock not exceeding $25,000 during any twelve (12) month
period;
(iii) declare or pay dividends on or make any distribution on
the account of the Common Stock;
(iv) sell, convey, or otherwise dispose of all or substantially
all of its property or business or merge into or consolidate with any other
corporation (other than a wholly-owned subsidiary corporation) or effect any
transaction or series of related transactions in which more than fifty percent
(50%) or more of the voting power of this corporation shall have passed to
another person or entity or group of related persons or entities;
(v) dissolve, liquidate or wind up the corporation; or
(vi) sell, contract to sell or allow any subsidiary of this
corporation to sell securities of the subsidiary to a third person.
(b) without first obtaining the approval (by vote or written consent,
as provided by law) of the holders of at least a majority of the then
outstanding shares of Series A Preferred Stock, voting as a single class:
(i) increase or decrease (other than by redemption or
conversion) the total number of authorized shares of Series A Preferred Stock;
or
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(ii) amend this corporation's Certificate of Incorporation in a
manner that would alter or change the rights, preferences or privileges of the
shares of Series A Preferred Stock so as to affect adversely the shares.
(c) without first obtaining the approval (by vote or written consent,
as provided by law) of the holders of at least a majority of the then
outstanding shares of Series B Preferred Stock, voting as a single class:
(i) increase or decrease (other than by redemption or
conversion) the total number of authorized shares of Series B Preferred Stock;
or
(ii) amend this corporation's Certificate of Incorporation in a
manner that would alter or change the rights, preferences or privileges of the
shares of Series B Preferred Stock so as to affect adversely the shares.
(d) without first obtaining the approval (by vote or written consent,
as provided by law) of the holders of at least a majority of the then
outstanding shares of Series C Preferred Stock, voting as a single class:
(i) increase or decrease (other than by redemption or
conversion) the total number of authorized shares of Series C Preferred Stock;
or
(ii) amend this corporation's Certificate of Incorporation in a
manner that would alter or change the rights, preferences or privileges of the
shares of Series C Preferred Stock so as to affect adversely the shares.
(e) without first obtaining the approval (by vote or written consent,
as provided by law) of the holders of at least a majority of the then
outstanding shares of Series D Preferred Stock, voting as a single class:
(i) increase or decrease (other than by redemption or
conversion) the total number of authorized shares of Series D Preferred Stock;
or
(ii) amend this corporation's Certificate of Incorporation in a
manner that would alter or change the rights, preferences or privileges of the
shares of Series D Preferred Stock so as to affect adversely the shares.
(f) The authorization or issuance of any equity security, other than
the Series A, Series B, Series C or Series D Preferred Stock, including any
equity security convertible into or exercisable for any equity security having a
preference over, or on a parity with the Series A, Series B, Series C or Series
D Preferred Stock with respect to dividends, liquidation or voting, which has
been approved pursuant to Section 5(a)(i) hereof, shall not require additional
approval under any of Sections 5(b), 5(c), 5(d) or 5(e).
6. Status of Converted Stock. In the event any shares of Series A,
-------------------------
Series B, Series C or Series D Preferred Stock shall be converted pursuant to
Section 3 hereof, the shares so converted shall be canceled and shall not be
issuable by this corporation. The Restated
14
<PAGE>
Certificate of Incorporation of this corporation shall be appropriately amended
to effect the corresponding reduction in this corporation's authorized capital
stock.
C. Common Stock. The rights, preferences, privileges and
------------
restrictions granted to and imposed on the Common Stock are as set forth below
in this Article IV(C).
1. Dividend Rights. Subject to the prior rights of holders of all
---------------
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of this corporation
legally available therefor, such dividends as may be declared from time to time
by the Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or winding
------------------
up of this corporation, the assets of this corporation shall be distributed as
provided in Section 2 of Division (B) of Article IV hereof.
3. Redemption. The Common Stock is not redeemable.
----------
4. Voting Rights. The holder of each share of Common Stock shall
-------------
have the right to one vote for each such share, and shall be entitled to notice
of any stockholders' meeting in accordance with the bylaws of this corporation,
and shall be entitled to vote upon such matters and in such manner as may be
provided by law.
ARTICLE V
Except as otherwise provided in this Certificate of Incorporation, in
furtherance and not in limitation of the powers conferred by statute, the Board
of Directors is expressly authorized to make, repeal, alter, amend and rescind
any or all of the Bylaws of this corporation.
ARTICLE VI
The number of directors of this corporation shall be fixed from time
to time by a bylaw or amendment thereof duly adopted by the Board of Directors
or by the stockholders.
ARTICLE VII
Elections of directors need not be by written ballot unless the Bylaws
of this corporation shall so provide.
ARTICLE VIII
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of this corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of this corporation.
15
<PAGE>
ARTICLE IX
A director of this corporation shall, to the fullest extent permitted
by the General Corporation Law as it now exists or as it may hereafter be
amended, not be personally liable to this corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to this
corporation or its stockholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law, or (iv) for any transaction from
which the director derived any improper personal benefit. If the General
Corporation Law is amended, after approval by the stockholders of this Article,
to authorize corporation action further eliminating or limiting the personal
liability of directors, then the liability of a director of this corporation
shall be eliminated or limited to the fullest extent permitted by the General
Corporation Law, as so amended.
Any amendment, repeal or modification of this Article IX, or the
adoption of any provision of this Restated Certificate of Incorporation
inconsistent with this Article IX, by the stockholders of this corporation shall
not apply to or adversely affect any right or protection of a director of this
corporation existing at the time of such amendment, repeal, modification or
adoption.
ARTICLE X
This corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
ARTICLE XI
To the fullest extent permitted by applicable law, this corporation is
authorized to provide indemnification of (and advancement of expenses to) agents
of this corporation (and any other persons to which General Corporation Law
permits this corporation to provide indemnification) through bylaw provisions,
agreements with such agents or other persons, vote of stockholders or
disinterested directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 145 of the General Corporation Law,
subject only to limits created by applicable General Corporation Law (statutory
or non-statutory), with respect to actions for breach of duty to this
corporation, its stockholders, and others.
Any amendment, repeal or modification of the foregoing provisions of
this Article XI shall not adversely affect any right or protection of a
director, officer, agent, or other person existing at the time of, or increase
the liability of any director of this corporation with respect to any acts or
omissions of such director, officer or agent occurring prior to, such amendment,
repeal or modification.
* * *
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THIRD: The foregoing amendment and restatement was approved by the
holders of the requisite number of shares of said corporation in accordance with
Section 228 of the General Corporation Law.
FOURTH: That said amendment and restatement was duly adopted in
accordance with the provisions of Section 242 and 245 of the General Corporation
Law.
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IN WITNESS WHEREOF, this Restated Certificate of Incorporation has
been executed by the Vice President - Chief Financial Officer of this
corporation on this 20th day of January, 2000.
/s/ Chris Dier
----------------------------------------------------
Chris Dier, Vice President - Chief Financial Officer
<PAGE>
Exhibit 3.2
RESTATED
CERTIFICATE OF INCORPORATION OF
iBEAM BROADCASTING CORPORATION
(Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware)
iBEAM Broadcasting Corporation, a corporation organized and existing
under and by virtue of the provisions of the General Corporation Law of the
State of Delaware (the "General Corporation Law"),
DOES HEREBY CERTIFY:
FIRST: That the name of this corporation is iBEAM Broadcasting
Corporation and that this corporation was originally incorporated pursuant to
the General Corporation Law on March 20, 1998 under the name Bowles, Inc.
SECOND: That the Board of Directors duly adopted resolutions proposing
to amend and restate the Certificate of Incorporation of this corporation,
declaring said amendment and restatement to be advisable and in the best
interests of this corporation and its stockholders, and authorizing the
appropriate officers of this corporation to solicit the consent of the
stockholders therefor, which resolution setting forth the proposed amendment and
restatement is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be
amended and restated in its entirety as follows:
ARTICLE I
The name of this corporation is iBEAM Broadcasting Corporation.
ARTICLE II
The address of this corporation's registered office in the State of
Delaware is 15 East North Street in the City of Dover, County of Kent. The name
of the corporation's registered agent at such address is Incorporating Services,
Ltd.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
This Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares that this Corporation is authorized to issue is Three Hundred
and Ten Million (310,000,000) shares. Three
<PAGE>
Hundred Million (300,000,000) shares shall be Common Stock and Ten Million
(10,000,000) shares shall be Preferred Stock, each with a par value of $0.0001
per share.
The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of this Article IV, to provide for the
issuance of the Preferred Stock in series and, by filing a certificate pursuant
to the applicable law of the State of Delaware, to establish from time to time
the number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof.
The authority of the Board with respect to each series shall include,
but not be limited to, determination of the following: (a) the number of shares
constituting that series and the distinctive designation of that series; (b) the
dividend rate on the shares of that series, whether dividends shall be
cumulative, and, if so, from which date or dates, and the relative rights of
priority, if any, of payment of dividends on shares of that series; (c) whether
that series shall have voting rights in addition to the voting rights provided
by law, and, if so, the terms of such voting rights; (d) whether that series
shall have conversion privileges, and, if so, the terms and conditions of such
conversion, including provision for adjustment of the conversion rate in such
events as the Board of Directors shall determine; (e) whether or not the shares
of that series shall be redeemable and, if so, the terms and conditions of such
redemption, including the date or dates upon or after which they shall be
redeemable, and the amount per share payable in case of redemption, which amount
may vary under different conditions and at different redemption dates; (f)
whether that series shall have a sinking fund for the redemption or purchase of
shares of that series and, if so, the terms and amount of such sinking fund; (g)
the rights of the shares of that series in the event of voluntary or involuntary
liquidation, dissolution or winding up of this Corporation and the relative
rights of priority, if any, of payment of shares of that series; and (h) any
other relative or participating rights, preferences and limitations of that
series.
ARTICLE V
Except as otherwise provided in this Certificate of Incorporation, in
furtherance and not in limitation of the powers conferred by statute, the Board
of Directors is expressly authorized to make, repeal, alter, amend and rescind
any or all of the Bylaws of this Corporation.
ARTICLE VI
The management of the business and the conduct of the affairs of the
Corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be designated in the
Bylaws of the Corporation.
The number of directors which will constitute the whole Board of
Directors of this Corporation shall be as designated in the Bylaws of this
Corporation. Effective upon the filing of this Amended and Restated Certificate
of Incorporation with the Secretary of State of the State of Delaware (the
"Filing Date"), the directors shall be divided into three classes, with the term
of office of the first class, which class shall initially consist of one (1)
director, to expire at the first annual meeting of stockholders held after the
Filing Date; the term of office of the second class, which class shall initially
consist of two (2) directors, to expire at the second annual meeting of
stockholders held after the Filing Date; the term of office of the third class,
which class shall initially consist of
2
<PAGE>
two (2) directors, to expire at the third annual meeting of stockholders held
after the Filing Date; and thereafter for each such term to expire at each third
succeeding annual meeting of stockholders held after such election.
Notwithstanding the foregoing provisions of this Article, each
director shall serve until his or her successor is duly elected and qualified or
until his or her death, resignation, or removal. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
Any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal, or other causes shall be filled by
either (i) the affirmative vote of the holders of a majority of the voting power
of the then-outstanding shares of voting stock of the Corporation entitled to
vote generally in the election of directors voting together as a single class;
or (ii) by the affirmative vote of a majority of the remaining directors then in
office, even though less than a quorum of the Board of Directors. Newly created
directorships resulting from any increase in the number of directors shall,
unless the Board of Directors determines by resolution that any such newly
created directorship shall be filled by the stockholders, be filled only by the
affirmative vote of the directors then in office, even though less than a quorum
of the Board of Directors. Any director elected in accordance with the
preceding sentence shall hold office for the remainder of the full term of the
class of directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been elected and
qualified.
In the event of an increase in the authorized number of directors, the
newly created directorship shall be assigned to one of the above-referenced
classes in accordance with resolutions adopted by the board of directors. No
decrease in the authorized number of directors shall have the effect of
shortening the term of any incumbent director.
ARTICLE VII
Elections of directors need not be by written ballot unless the Bylaws
of this Corporation shall so provide.
ARTICLE VIII
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of this Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of this Corporation.
ARTICLE IX
Stockholders of this Corporation may not take action by written
consent in lieu of a meeting.
ARTICLE X
To the fullest extent permitted by the Delaware General Corporation
Law as the same exists or as may hereafter be amended, a director of the
Corporation or any subsidiary of the Corporation shall not be personally liable
to the Corporation or its stockholders and shall otherwise
3
<PAGE>
be indemnified by the Corporation for monetary damages for breach of fiduciary
duty as a director of the Corporation, any predecessor of the Corporation or any
subsidiary of the Corporation.
The Corporation shall indemnify to the fullest extent permitted by law
any person made or threatened to be made a party to an action or proceeding,
whether criminal, civil, administrative or investigative, by reason of the fact
that he, his testator or intestate is or was a director or officer of the
Corporation, any predecessor of the Corporation or any subsidiary of the
Corporation or serves or served at any other enterprise as a director or officer
at the request of the Corporation, any predecessor to the Corporation or any
subsidiary of the Corporation.
Neither any amendment nor repeal of this Article X, nor the adoption
of any provision of the Corporation's Certificate of Incorporation inconsistent
with this Article X, shall eliminate or reduce the effect of this Article X, in
respect of any matter occurring, or any action or proceeding accruing or arising
or that, but for this Article X, would accrue or arise, prior to such amendment,
repeal, or adoption of an inconsistent provision.
ARTICLE XI
This Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
ARTICLE XII
This Corporation is to have a perpetual existence.
ARTICLE XIII
Stockholders shall not be entitled to cumulative voting rights for
election of directors.
ARTICLE XIV
Advance written notice of new business and stockholder nominations for
the election of directors shall be given in the manner and to the extent
provided in the Bylaws of the Corporation.
* * *
THIRD: The foregoing amendment and restatement was approved by the
holders of the requisite number of shares of said Corporation in accordance with
Section 228 of the General Corporation Law.
FOURTH: That said amendment and restatement was duly adopted in
accordance with the provisions of Section 242 and 245 of the General Corporation
Law.
4
<PAGE>
IN WITNESS WHEREOF, this Restated Certificate of Incorporation has
been executed by the Vice President - Chief Financial Officer of this
corporation on this ____ day of March, 2000.
_______________________________________________________
Chris Dier, Vice President - Chief Financial Officer
<PAGE>
EXHIBIT 3.3
BYLAWS OF
iBEAM Broadcasting Corporation
A DELAWARE CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE I OFFICES................................................ 1
ARTICLE II MEETINGS OF STOCKHOLDERS.............................. 1
ARTICLE III DIRECTORS............................................ 3
ARTICLE IV NOTICES............................................... 5
ARTICLE V OFFICERS............................................... 5
ARTICLE VI CERTIFICATE OF STOCK.................................. 8
ARTICLE VII GENERAL PROVISIONS................................... 9
ARTICLE VIII AMENDMENTS.......................................... 11
ARTICLE IX LOANS TO OFFICERS..................................... 11
</TABLE>
-i-
<PAGE>
BYLAWS
OF
iBEAM Broadcasting Corporation
ARTICLE I
OFFICES
1.1 The registered office shall be in the City of Dover, County of Kent,
State of Delaware.
1.2 The corporation may also have offices at such other places both within
and without the State of Delaware as the Board of Directors may from time to
time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 All meetings of the stockholders for the election of directors shall
be held in the City of Woodside, State of California, at such place as may be
fixed from time to time by the Board of Directors, or at such other place either
within or without the State of Delaware as shall be designated from time to time
by the Board of Directors and stated in the notice of the meeting. Meetings of
stockholders for any other purpose may be held at such time and place, within or
without the State of Delaware, as shall be stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
2.2 Annual meetings of stockholders, commencing with the year 1998, shall
be held at such date and time as shall be designated from time to time by the
Board of Directors and stated in the notice of the meeting, at which they shall
elect by a plurality vote a Board of Directors, and transact such other business
as may properly be brought before the meeting.
2.3 Written notice of the annual meeting stating the place, date and hour
of the meeting shall be given to each stockholder entitled to vote at such
meeting not fewer than ten (10) nor more than sixty (60) days before the date of
the meeting.
2.4 The officer who has charge of the stock ledger of the corporation
shall prepare and make, at least ten (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
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
<PAGE>
2.5 Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute or by the certificate of incorporation,
may be called by the president and shall be called by the president or secretary
at the request in writing of a majority of the Board of Directors, or at the
request in writing of stockholders owning at least fifty percent (50%) in amount
of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
2.6 Written notice of a special meeting stating the place, date and hour
of the meeting and the purpose or purposes for which the meeting is called,
shall be given not fewer than ten (10) nor more than sixty (60) days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
2.7 Business transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice.
2.8 The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted that might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
2.9 When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which by express provision of the statutes or of the certificate of
incorporation, a different vote is required, in which case such express
provision shall govern and control the decision of such question.
2.10 Unless otherwise provided in the certificate of incorporation, each
stockholder shall at every meeting of the stockholders be entitled to one vote
in person or by proxy for each share of the capital stock having voting power
held by such stockholder, but no proxy shall be voted on after three years from
its date, unless the proxy provides for a longer period.
2.11 Unless otherwise provided in the certificate of incorporation, any
action required to be taken at any annual or special meeting of stockholders of
the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, 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. Prompt notice of the taking of the corporate action
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<PAGE>
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
3.1 The number of directors that shall constitute the whole Board of
Directors shall be determined by resolution of the Board of Directors or by the
stockholders at the annual meeting of the stockholders, except as provided in
Section 3.2 of this Article, and each director elected shall hold office until
his successor is elected and qualified. Directors need not be stockholders.
3.2 Vacancies and newly created directorships resulting from any increase
in the authorized number of directors may be filled by a majority of the
directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole Board of Directors (as
constituted immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at least ten percent
(10%) of the total number of the shares at the time outstanding having the right
to vote for such directors, summarily order an election to be held to fill any
such vacancies or newly created directorships, or to replace the directors
chosen by the directors then in office.
3.3 The business of the corporation shall be managed by or under the
direction of its Board of Directors, which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the certificate of incorporation or by these bylaws directed or required to be
exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
----------------------------------
3.4 The Board of Directors of the corporation may hold meetings, both
regular and special, either within or without the State of Delaware.
3.5 The first meeting of each newly elected Board of Directors shall be
held at such time and place as shall be fixed by the vote of the stockholders at
the annual meeting and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present. In the event of the failure of the stockholders to fix the
time or place of such first meeting of the newly elected Board of Directors, or
in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
Board of Directors, or as shall be specified in a written waiver signed by all
of the directors.
3.6 Regular meetings of the Board of Directors may be held without notice
at such time and at such place as shall from time to time be determined by the
Board of Directors.
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<PAGE>
3.7 Special meetings of the Board of Directors may be called by the
president on two (2) days' notice to each director by mail or forty-eight (48)
hours notice to each director either personally or by telegram; special meetings
shall be called by the president or secretary in like manner and on like notice
on the written request of two (2) directors unless the Board of Directors
consists of only one director, in which case special meetings shall be called by
the president or secretary in like manner and on like notice on the written
request of the sole director.
3.8 At all meetings of the Board of Directors a majority of the directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
3.9 Unless otherwise restricted by the certificate of incorporation or
these bylaws, any action required or permitted to be taken at any meeting of the
Board of Directors or of any committee thereof may be taken without a meeting,
if all members of the Board of Directors or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board of Directors or committee.
3.10 Unless otherwise restricted by the certificate of incorporation or
these bylaws, members of the Board of Directors, or any committee designated by
the Board of Directors, may participate in a meeting of the Board of Directors,
or any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
COMMITTEES OF DIRECTORS
-----------------------
3.11 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 of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee.
In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not 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, 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; but no such committee shall have the power or
authority in reference to the following matters: (i) approving or adopting, or
recommending to the stockholders, any action or matter expressly required by the
General
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<PAGE>
Corporation Law of Delaware to be submitted to stockholders for approval or (ii)
adopting, amending or repealing any provision of these bylaws.
3.12 Each committee shall keep regular minutes of its meetings and report
the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
-------------------------
3.13 Unless otherwise restricted by the certificate of incorporation or
these bylaws, the Board of Directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
--------------------
3.14 Unless otherwise restricted by the certificate of incorporation or
these bylaws, any director or the entire Board of Directors may be removed, with
or without cause, by the holders of a majority of shares entitled to vote at an
election of directors.
ARTICLE IV
NOTICES
4.1 Whenever, under the provisions of the statutes or of the certificate
of incorporation or of these bylaws, notice is required to be given to any
director or stockholder, it shall not be construed to mean personal notice, but
such notice may be given in writing, by mail, addressed to such director or
stockholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
4.2 Whenever any notice is required to be given under the provisions of
the statutes or of the certificate of incorporation or of these bylaws, a waiver
thereof in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto.
ARTICLE V
OFFICERS
5.1 The officers of the corporation shall be chosen by the Board of
Directors and shall be a president, treasurer and a secretary. The Board of
Directors may elect from among its members a Chairman of the Board and a Vice
Chairman of the Board. The Board of Directors may also choose one or more vice-
presidents, assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these bylaws otherwise provide.
-5-
<PAGE>
5.2 The Board of Directors at its first meeting after each annual meeting
of stockholders shall choose a president, a treasurer, and a secretary and may
choose vice-presidents.
5.3 The Board of Directors may appoint such other officers and agents as
it shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors.
5.4 The salaries of all officers and agents of the corporation shall be
fixed by the Board of Directors.
5.5 The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the Board
of Directors may be removed at any time by the affirmative vote of a majority of
the Board of Directors. Any vacancy occurring in any office of the corporation
shall be filled by the Board of Directors.
THE CHAIRMAN OF THE BOARD
-------------------------
5.6 The Chairman of the Board, if any, shall preside at all meetings of
the Board of Directors and of the stockholders at which he shall be present. He
shall have and may exercise such powers as are, from time to time, assigned to
him by the Board of Directors and as may be provided by law.
5.7 In the absence of the Chairman of the Board, the Vice Chairman of the
Board, if any, shall preside at all meetings of the Board of Directors and of
the stockholders at which he shall be present. He shall have and may exercise
such powers as are, from time to time, assigned to him by the Board of Directors
and as may be provided by law.
THE PRESIDENT AND VICE-PRESIDENTS
---------------------------------
5.8 The president shall be the chief executive officer of the corporation;
and in the absence of the Chairman and Vice Chairman of the Board he shall
preside at all meetings of the stockholders and the Board of Directors; he shall
have general and active management of the business of the corporation and shall
see that all orders and resolutions of the Board of Directors are carried into
effect.
5.9 He shall execute bonds, mortgages and other contracts requiring a
seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent of the corporation.
5.10 In the absence of the president or in the event of his inability or
refusal to act, the vice-president, if any, (or in the event there be more than
one vice-president, the vice-presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
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<PAGE>
THE SECRETARY AND ASSISTANT SECRETARY
-------------------------------------
5.11 The secretary shall attend all meetings of the Board of Directors and
all meetings of the stockholders and record all the proceedings of the meetings
of the corporation and of the Board of Directors in a book to be kept for that
purpose and shall perform like duties for the standing committees when required.
He shall give, or cause to be given, notice of all meetings of the stockholders
and special meetings of the Board of Directors, and shall perform such other
duties as may be prescribed by the Board of Directors or president, under whose
supervision he shall be. He shall have custody of the corporate seal of the
corporation and he, or an assistant secretary, shall have authority to affix the
same to any instrument requiring it and when so affixed, it may be attested by
his signature or by the signature of such assistant secretary. The Board of
Directors may give general authority to any other officer to affix the seal of
the corporation and to attest the affixing by his signature.
5.12 The assistant secretary, or if there be more than one, the assistant
secretaries in the order determined by the Board of Directors (or if there be no
such determination, then in the order of their election) shall, in the absence
of the secretary or in the event of his inability or refusal to act, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
--------------------------------------
5.13 The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the Board of Directors.
5.14 He shall disburse the funds of the corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and shall
render to the president and the Board of Directors, at its regular meetings, or
when the Board of Directors so requires, an account of all his transactions as
treasurer and of the financial condition of the corporation.
5.15 If required by the Board of Directors, he shall give the corporation
a bond (which shall be renewed every six years) in such sum and with such surety
or sureties as shall be satisfactory to the Board of Directors for the faithful
performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
5.16 The assistant treasurer, or if there shall be more than one, the
assistant treasurers in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the treasurer or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
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<PAGE>
ARTICLE VI
CERTIFICATE OF STOCK
6.1 Every holder of stock in the corporation shall be entitled to have a
certificate, signed by, or in the name of the corporation by, the Chairman or
Vice Chairman of the Board of Directors, or the president or a vice-president
and the treasurer or an assistant treasurer, or the secretary or an assistant
secretary of the corporation, certifying the number of shares owned by him in
the corporation.
Certificates may be issued for partly paid shares and in such case upon the
face or back of the certificates issued to represent any such partly paid
shares, the total amount of the consideration to be paid therefor, and the
amount paid thereon shall be specified.
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 qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, 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.
6.2 Any of or all the signatures on the certificate may be facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
LOST CERTIFICATES
-----------------
6.3 The Board of Directors may direct a new certificate or certificates to
be issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his legal representative, to advertise
the same in such manner as it shall require and/or to give the corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
-8-
<PAGE>
TRANSFER OF STOCK
-----------------
6.4 Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
------------------
6.5 In order that the corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholder or any adjournment
thereof, or to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
-----------------------
6.6 The corporation shall be entitled to recognize the exclusive right of
a person registered on its books as the owner of shares to receive dividends,
and to vote as such owner, and to hold liable for calls and assessments a person
registered on its books as the owner of shares and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
---------
7.1 Dividends upon the capital stock of the corporation, subject to the
provisions of the certificate of incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property, or in shares of the capital stock, subject to
the provisions of the certificate of incorporation.
7.2 Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purposes as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
-9-
<PAGE>
CHECKS
------
7.3 All checks or demands for money and notes of the corporation shall be
signed by such officer or officers or such other person or persons as the Board
of Directors may from time to time designate.
FISCAL YEAR
-----------
7.4 The fiscal year of the corporation shall be fixed by resolution of the
Board of Directors.
SEAL
----
7.5 The Board of Directors may adopt a corporate seal having inscribed
thereon the name of the corporation, the year of its organization and the words
"Corporate Seal, Delaware." The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
---------------
7.6 The corporation shall, to the fullest extent authorized under the laws
of the State of Delaware, as those laws may be amended and supplemented from
time to time, indemnify any director made, or threatened to be made, a party to
an action or proceeding, whether criminal, civil, administrative or
investigative, by reason of being a director of the corporation or a predecessor
corporation or, at the corporation's request, a director or officer of another
corporation; provided, however, that the corporation shall indemnify any such
agent in connection with a proceeding initiated by such agent only if such
proceeding was authorized by the Board of Directors of the corporation. The
indemnification provided for in this Section 7.6 shall: (i) not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any bylaw, agreement or vote of stockholders or disinterested directors or
otherwise, both as to action in their official capacities and as to action in
another capacity while holding such office, (ii) continue as to a person who has
ceased to be a director, and (iii) inure to the benefit of the heirs, executors
and administrators of such a person. The corporation's obligation to provide
indemnification under this Section 7.6 shall be offset to the extent of any
other source of indemnification or any otherwise applicable insurance coverage
under a policy maintained by the corporation or any other person.
Expenses incurred by a director of the corporation in defending a
civil or criminal action, suit or proceeding by reason of the fact that he is or
was a director of the corporation (or was serving at the corporation's request
as a director or officer of another corporation) shall be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the corporation as authorized by relevant sections of the
General Corporation Law of Delaware. Notwithstanding the foregoing, the
corporation shall not be required to advance such expenses to an agent who is a
party to an action, suit or proceeding brought by the corporation and approved
by a majority of the Board of Directors of the corporation that alleges willful
misappropriation of corporate assets by such agent, disclosure
-10-
<PAGE>
of confidential information in violation of such agent's fiduciary or
contractual obligations to the corporation or any other willful and deliberate
breach in bad faith of such agent's duty to the corporation or its stockholders.
The foregoing provisions of this Section 7.6 shall be deemed to be a
contract between the corporation and each director who serves in such capacity
at any time while this bylaw is in effect, and any repeal or modification
thereof shall not affect any rights or obligations then existing with respect to
any state of facts then or theretofore existing or any action, suit or
proceeding theretofore or thereafter brought based in whole or in part upon any
such state of facts.
The Board of Directors in its discretion shall have power on behalf of
the corporation to indemnify any person, other than a director, made a party to
any action, suit or proceeding by reason of the fact that he, his testator or
intestate, is or was an officer or employee of the corporation.
To assure indemnification under this Section 7.6 of all directors,
officers and employees who are determined by the corporation or otherwise to be
or to have been "fiduciaries" of any employee benefit plan of the corporation
that may exist from time to time, Section 145 of the General Corporation Law of
Delaware shall, for the purposes of this Section 7.6, be interpreted as follows:
an "other enterprise" shall be deemed to include such an employee benefit plan,
including without limitation, any plan of the corporation that is governed by
the Act of Congress entitled "Employee Retirement Income Security Act of 1974,"
as amended from time to time; the corporation shall be deemed to have requested
a person to serve an employee benefit plan where the performance by such person
of his duties to the corporation also imposes duties on, or otherwise involves
services by, such person to the plan or participants or beneficiaries of the
plan; excise taxes assessed on a person with respect to an employee benefit plan
pursuant to such Act of Congress shall be deemed "fines."
ARTICLE VIII
AMENDMENTS
8.1 These bylaws may be altered, amended or repealed or new bylaws may be
adopted by the stockholders or by the Board of Directors, when such power is
conferred upon the Board of Directors by the certificate of incorporation at any
regular meeting of the stockholders or of the Board of Directors or at any
special meeting of the stockholders or of the Board of Directors if notice of
such alteration, amendment, repeal or adoption of new bylaws be contained in the
notice of such special meeting. If the power to adopt, amend or repeal bylaws is
conferred upon the Board of Directors by the certificate or incorporation it
shall not divest or limit the power of the stockholders to adopt, amend or
repeal bylaws.
ARTICLE IX
LOANS TO OFFICERS
9.1 The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiaries, including any officer or employee who is a Director of the
corporation or its subsidiaries, whenever, in the judgment of the Board of
Directors, such loan, guarantee or assistance may reasonably be expected to
benefit the
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<PAGE>
corporation. The loan, guarantee or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the Board of
Directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in these bylaws shall be deemed to deny, limit
or restrict the powers of guaranty or warranty of the corporation at common law
or under any statute.
-12-
<PAGE>
CERTIFICATE OF SECRETARY OF
iBEAM Broadcasting Corporation
The undersigned, Jeffrey P. Higgins, hereby certifies that he is the duly
elected and acting Secretary of iBEAM Broadcasting Corporation, a Delaware
corporation (the "Corporation"), and that the Bylaws attached hereto constitute
the Bylaws of said Corporation as duly adopted by Action by Written Consent in
Lieu of Organizational Meeting by the Directors on March ___, 1998.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his name this
___ day of March, 1998.
__________________________________
Jeffrey P. Higgins
Secretary
-13-
<PAGE>
EXHIBIT 3.4
AMENDED AND RESTATED BYLAWS
OF
iBEAM BROADCASTING CORPORATION
a Delaware Corporation
Effective as of __________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I CORPORATE OFFICES....................................................................................... 1
1.1 REGISTERED OFFICE.................................................................................. 1
1.2 OTHER OFFICES...................................................................................... 1
ARTICLE II MEETINGS OF STOCKHOLDERS............................................................................... 1
2.1 PLACE OF MEETINGS.................................................................................. 1
2.2 ANNUAL MEETING..................................................................................... 1
2.3 SPECIAL MEETING.................................................................................... 1
2.4 NOTICE OF STOCKHOLDERS' MEETINGS................................................................... 2
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS.................................... 2
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE....................................................... 3
2.7 QUORUM............................................................................................. 3
2.8 ADJOURNED MEETING; NOTICE.......................................................................... 4
2.9 VOTING............................................................................................. 4
2.10 WAIVER OF NOTICE................................................................................... 4
2.11 NO STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING......................................... 4
2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS........................................ 4
2.13 PROXIES............................................................................................ 5
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE.............................................................. 5
2.15 CONDUCT OF BUSINESS................................................................................ 5
ARTICLE III DIRECTORS............................................................................................. 6
3.1 POWERS............................................................................................. 6
3.2 NUMBER............................................................................................. 6
3.3 CLASSES OF DIRECTORS............................................................................... 6
3.4 RESIGNATION AND VACANCIES.......................................................................... 6
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE........................................................... 7
3.6 REGULAR MEETINGS................................................................................... 8
3.7 SPECIAL MEETINGS; NOTICE........................................................................... 8
3.8 QUORUM............................................................................................. 8
3.9 WAIVER OF NOTICE................................................................................... 8
3.10 ADJOURNED MEETING; NOTICE.......................................................................... 9
3.11 CONDUCT OF BUSINESS................................................................................ 9
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING.................................................. 9
3.13 FEES AND COMPENSATION OF DIRECTORS................................................................. 9
3.14 REMOVAL OF DIRECTORS............................................................................... 9
</TABLE>
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<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IV COMMITTEES........................................................................................... 10
4.1 COMMITTEES OF DIRECTORS.......................................................................... 10
4.2 COMMITTEE MINUTES................................................................................ 10
4.3 MEETINGS AND ACTION OF COMMITTEES................................................................ 10
ARTICLE V OFFICERS.............................................................................................. 11
5.1 OFFICERS......................................................................................... 11
5.2 APPOINTMENT OF OFFICERS.......................................................................... 11
5.3 REMOVAL AND RESIGNATION OF OFFICERS.............................................................. 11
5.4 CHAIRMAN OF THE BOARD............................................................................ 12
5.5 CHIEF EXECUTIVE OFFICER.......................................................................... 12
5.6 PRESIDENT........................................................................................ 12
5.7 VICE PRESIDENT................................................................................... 12
5.8 SECRETARY........................................................................................ 13
5.9 CHIEF FINANCIAL OFFICER.......................................................................... 13
5.10 ASSISTANT SECRETARY.............................................................................. 13
5.11 AUTHORITY AND DUTIES OF OFFICERS................................................................. 14
ARTICLE VI INDEMNITY............................................................................................ 14
6.1 THIRD PARTY ACTIONS.............................................................................. 14
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION.................................................... 14
6.3 SUCCESSFUL DEFENSE............................................................................... 15
6.4 DETERMINATION OF CONDUCT......................................................................... 15
6.5 PAYMENT OF EXPENSES IN ADVANCE................................................................... 15
6.6 INDEMNITY NOT EXCLUSIVE.......................................................................... 15
6.7 INSURANCE INDEMNIFICATION........................................................................ 15
6.8 THE CORPORATION.................................................................................. 16
6.9 EMPLOYEE BENEFIT PLANS........................................................................... 16
6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES...................................... 16
ARTICLE VII RECORDS AND REPORTS................................................................................. 16
7.1 MAINTENANCE AND INSPECTION OF RECORDS............................................................ 16
7.2 INSPECTION BY DIRECTORS.......................................................................... 17
7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS................................................... 17
ARTICLE VIII GENERAL MATTERS.................................................................................... 17
8.1 CHECKS........................................................................................... 17
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS................................................. 17
</TABLE>
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<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES............................................................ 18
8.4 SPECIAL DESIGNATION ON CERTIFICATES............................................................... 18
8.5 LOST CERTIFICATES................................................................................. 19
8.6 CONSTRUCTION; DEFINITIONS......................................................................... 19
8.7 DIVIDENDS......................................................................................... 19
8.8 FISCAL YEAR....................................................................................... 19
8.9 SEAL.............................................................................................. 19
8.10 TRANSFER OF STOCK................................................................................. 19
8.11 STOCK TRANSFER AGREEMENTS......................................................................... 20
8.12 REGISTERED STOCKHOLDERS........................................................................... 20
ARTICLE IX AMENDMENTS............................................................................................ 20
ARTICLE X DISSOLUTION............................................................................................ 20
ARTICLE XI CUSTODIAN............................................................................................. 21
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES....................................................... 21
11.2 DUTIES OF CUSTODIAN............................................................................... 21
ARTICLE XII LOANS TO OFFICERS.................................................................................... 21
</TABLE>
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<PAGE>
AMENDED AND RESTATED BYLAWS OF
iBEAM BROADCASTING CORPORATION
ARTICLE I
CORPORATE OFFICES
-----------------
1.1 REGISTERED OFFICE
-----------------
The registered office of the corporation shall be 15 East North Street in
the City of Dover, County of Kent, State of Delaware.
1.2 OTHER OFFICES
-------------
The board of directors may at any time establish other offices at any place
or places where the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
2.1 PLACE OF MEETINGS
-----------------
Meetings of stockholders shall be held at any place, within or outside the
State of Delaware, designated by the board of directors. In the absence of any
such designation, stockholders' meetings shall be held at the registered office
of the corporation.
2.2 ANNUAL MEETING
--------------
The annual meeting of stockholders shall be held each year on a date and at
a time designated by the board of directors. At the meeting, directors shall be
elected and any other proper business may be transacted.
2.3 SPECIAL MEETING
---------------
A special meeting of the stockholders may be called at any time only by (i)
the board of directors, (ii) the chairman of the board, (iii) the president or
(iv) the chief executive officer.
If a special meeting is called by any person other than the board of
directors, the request shall be in writing, specifying the time of such meeting
and the general nature of the business proposed to be transacted, and shall be
delivered personally or sent by registered mail or by telegraphic or other
facsimile transmission to the chairman of the board, the president, any vice
president, or the
<PAGE>
secretary of the corporation. No business may be transacted at such special
meeting otherwise than specified in such notice. The officer receiving the
request shall cause notice to be promptly given to the stockholders entitled to
vote, in accordance with the provisions of Sections 2.4 and 2.5 of this Article
II, that a meeting will be held at the time requested by the person or persons
who called the meeting, not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after the receipt of the request, the person or persons requesting the
meeting may give the notice. Nothing contained in this paragraph of this Section
2.3 shall be construed as limiting, fixing, or affecting the time when a meeting
of stockholders called by action of the board of directors may be held.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
--------------------------------
All notices of meetings with stockholders shall be in writing and shall be
sent or otherwise given in accordance with Section 2.6 of these Bylaws not less
than 10 nor more than 60 days before the date of the meeting to each stockholder
entitled to vote at such meeting. The notice shall specify the place, date and
hour of the meeting, and, in the case of a special meeting, the purpose or
purposes for which the meeting is called.
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS
---------------------------------------------------------------
To be properly brought before an annual meeting or special meeting,
nominations for the election of director or other business must be (a) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the board of directors, (b) otherwise properly brought before the
meeting by or at the direction of the board of directors, or (c) otherwise
properly brought before the meeting by a stockholder. For such nominations or
other business to be considered properly brought before the meeting by a
stockholder, such stockholder must have given timely notice and in proper form
of his intent to bring such business before such meeting. To be timely, such
stockholder's notice must be delivered to or mailed and received by the
secretary of the corporation not less than 90 days prior to the meeting;
provided, however, that in the event that less than 100 days notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than the
close of business on the tenth day following the day on which such notice of the
date of the meeting was mailed or such public disclosure was made. To be in
proper form, a stockholder's notice to the secretary shall set forth:
(i) the name and address of the stockholder who intends to make the
nominations, propose the business, and, as the case may be, the
name and address of the person or persons to be nominated or the
nature of the business to be proposed;
(ii) a representation that the stockholder is a holder of record of
stock of the corporation entitled to vote at such meeting and, if
applicable, intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice
or introduce the business specified in the notice;
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<PAGE>
(iii) if applicable, a description of all arrangements or
understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant
to which the nomination or nominations are to be made by the
stockholder;
(iv) such other information regarding each nominee or each matter of
business to be proposed by such stockholder as would be required
to be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission had the nominee
been nominated, or intended to be nominated, or the matter been
proposed, or intended to be proposed by the board of directors;
and
(v) if applicable, the consent of each nominee to serve as director
of the corporation if so elected.
The chairman of the meeting may refuse to acknowledge the nomination of any
person or the proposal of any business not made in compliance with the foregoing
procedure.
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
--------------------------------------------
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the secretary or an assistant secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
2.7 QUORUM
------
The holders of a majority of the stock issued and outstanding and entitled
to vote thereat, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders for the transaction of business
except as otherwise provided by statute or by the certificate of incorporation.
If, however, such quorum is not present or represented at any meeting of the
stockholders, then either (i) the chairman of the meeting, or (ii) the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum is present or
represented. At such adjourned meeting at which a quorum is present or
represented, any business may be transacted that might have been transacted at
the meeting as originally noticed.
When a quorum is present or represented at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which, by express provisions of the statutes or
of the certificate of incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of the question.
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<PAGE>
2.8 ADJOURNED MEETING; NOTICE
-------------------------
When a meeting is adjourned to another time or place, unless these Bylaws
otherwise require, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business that
might have been transacted at the original meeting. If the adjournment is for
more than 30 days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
2.9 VOTING
------
The stockholders entitled to vote at any meeting of stockholders shall be
determined in accordance with the provisions of Sections 2.12 and 2.14 of these
Bylaws, subject to the provisions of Sections 217 and 218 of the General
Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgors
and joint owners of stock and to voting trusts and other voting agreements).
Except as may be otherwise provided in the certificate of incorporation,
each stockholder shall be entitled to one vote for each share of capital stock
held by such stockholder.
2.10 WAIVER OF NOTICE
----------------
Whenever notice is required to be given under any provision of the General
Corporation Law of Delaware or of the certificate of incorporation or these
Bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these Bylaws.
2.11 NO STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
----------------------------------------------------------
The stockholders of the corporation may not take action by written consent
without a meeting but must take any such actions at a duly called annual or
special meeting.
2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
-----------------------------------------------------------
In order that the corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or entitled to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors
-4-
<PAGE>
may fix, in advance, a record date, which shall not be more than 60 nor less
than 10 days before the date of such meeting, nor more than 60 days prior to any
other action.
If the board of directors does not so fix a record date, the fixing of such
record date shall be governed by the provisions of Section 213 of the General
Corporation Law of Delaware.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
2.13 PROXIES
-------
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by a written proxy, signed by
the stockholder and filed with the secretary of the corporation, but no such
proxy shall be voted or acted upon after 3 years from its date, unless the proxy
provides for a longer period. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the stockholder or the
stockholder's attorney-in-fact. The revocability of a proxy that states on its
face that it is irrevocable shall be governed by the provisions of Section
212(c) of the General Corporation Law of Delaware.
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE
-------------------------------------
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least 10 days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least 10 days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The stock ledger shall
also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present. The stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, the list of stockholders or the books of the
corporation, or to vote in person or by proxy at any meeting of stockholders and
of the number of shares held by each such stockholder.
2.15 CONDUCT OF BUSINESS
-------------------
Meetings of stockholders shall be presided over by the chairman of the
board, if any, or in his absence by the president, or in his absence by a vice
president, or in the absence of the foregoing persons by a chairman designated
by the board of directors, or in the absence of such designation by a chairman
chosen at the meeting. The secretary shall act as secretary of the meeting, but
in his absence the chairman of the meeting may appoint any person to act as
secretary of the meeting. The
-5-
<PAGE>
chairman of any meeting of stockholders shall determine the order of business
and the procedures at the meeting, including such matters as the regulation of
the manner of voting and conduct of business.
ARTICLE III
DIRECTORS
---------
3.1 POWERS
------
Subject to the provisions of the General Corporation Law of Delaware and
any limitations in the certificate of incorporation or these Bylaws relating to
action required to be approved by the stockholders or by the outstanding shares,
the business and affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the board of directors.
3.2 NUMBER
------
The authorized number of directors of the corporation shall be determined
by resolution of the Board of Directors.
3.3 CLASSES OF DIRECTORS
--------------------
The Directors shall be divided into three classes designated as Class I,
Class II and Class III, respectively. Directors shall be assigned to each class
in accordance with a resolution or resolutions adopted by the Board of
Directors. At the first annual meeting of stockholders following the date
hereof, the term of office of the Class I Directors shall expire and Class I
Directors shall be elected for a full term of three years. At the second annual
meeting of stockholders following the date hereof, the term of office of the
Class II Directors shall expire and Class II Directors shall be elected for a
full term of three years. At the third annual meeting of stockholders following
the date hereof, the term of office of the Class III Directors shall expire and
Class III Directors shall be elected for a full term of three years. At each
succeeding annual meeting of stockholders, directors shall be elected for a full
term of three years to succeed the directors of the class whose terms expire at
such annual meeting.
Notwithstanding the foregoing provisions of this Article, each Director
shall serve until his successor is duly elected and qualified or until his
earlier death, resignation or removal. No decrease in the number of Directors
constituting the Board of Directors shall shorten the term of any incumbent
Director.
3.4 RESIGNATION AND VACANCIES
-------------------------
Any director may resign at any time upon written notice to the corporation.
Subject to the requirements, if any, set forth in the certificate of
incorporation, stockholders may remove directors with or without cause. Unless
otherwise provided in the certificate of incorporation, any vacancy
-6-
<PAGE>
occurring in the board of directors with or without cause may be filled by a
majority of the remaining members of the board of directors, although such
majority is less than a quorum, or by a plurality of the votes cast at a meeting
of stockholders, and each director so elected shall hold office until the
expiration of the term of office of the director whom he has replaced.
Unless otherwise provided in the certificate of incorporation or these
Bylaws:
(i) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of
the stockholders having the right to vote as a single class may
be filled by a majority of the directors then in office, although
less than a quorum, or by a sole remaining director.
(ii) Whenever the holders of any class or classes of stock or series
thereof are entitled to elect one or more directors by the
provisions of the certificate of incorporation, vacancies and
newly created directorships of such class or classes or series
may be filled by a majority of the directors elected by such
class or classes or series thereof then in office, or by a sole
remaining director so elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may apply to the Court of Chancery for a decree summarily
ordering an election as provided in Section 211 of the General Corporation Law
of Delaware.
If, at the time of filling any vacancy or any newly created directorship,
the directors then in office constitute less than a majority of the whole board
(as constituted immediately prior to any such increase), then the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least 10% of the total number of the shares at the time outstanding having the
right to vote for such directors, summarily order an election to be held to fill
any such vacancies or newly created directorships, or to replace the directors
chosen by the directors then in office as aforesaid, which election shall be
governed by the provisions of Section 211 of the General Corporation Law of
Delaware as far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
----------------------------------------
The board of directors of the corporation may hold meetings, both regular
and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or these
Bylaws, members of the board of directors, or any committee designated by the
board of directors, may participate in a meeting of the board of directors, or
any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
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<PAGE>
3.6 REGULAR MEETINGS
----------------
Regular meetings of the board of directors may be held without notice at
such time and at such place as shall from time to time be determined by the
board.
3.7 SPECIAL MEETINGS; NOTICE
------------------------
Special meetings of the board of directors for any purpose or purposes may
be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least 4 days before the time of
the holding of the meeting. If the notice is delivered personally or by
telephone or by telegram, it shall be delivered personally or by telephone or to
the telegraph company at least 48 hours before the time of the holding of the
meeting. Any oral notice given personally or by telephone may be communicated
either to the director or to a person at the office of the director who the
person giving the notice has reason to believe will promptly communicate it to
the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
corporation.
3.8 QUORUM
------
At all meetings of the board of directors, a majority of the authorized
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation.
3.9 WAIVER OF NOTICE
----------------
Whenever notice is required to be given under any provision of the General
Corporation Law of Delaware or of the certificate of incorporation or these
Bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the directors, or members of a committee of directors, need be specified in
any written waiver of notice unless so required by the certificate of
incorporation or these Bylaws.
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<PAGE>
3.10 ADJOURNED MEETING; NOTICE
-------------------------
If a quorum is not present at any meeting of the board of directors, then
the directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present.
3.11 CONDUCT OF BUSINESS
-------------------
Meetings of the board of directors shall be presided over by the chairman
of the board, if any, or in his absence by the chief executive officer, or in
their absence by a chairman chosen at the meeting. The secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting. The chairman of any
meeting shall determine the order of business and the procedures at the meeting.
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
-------------------------------------------------
Unless otherwise restricted by the certificate of incorporation or these
Bylaws, any action required or permitted to be taken at any meeting of the board
of directors, or of any committee thereof, may be taken without a meeting if all
members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee.
3.13 FEES AND COMPENSATION OF DIRECTORS
----------------------------------
Unless otherwise restricted by the certificate of incorporation or these
Bylaws, the board of directors shall have the authority to fix the compensation
of directors. The directors may be paid their expenses, if any, of attendance
at each meeting of the board of directors and may be paid a fixed sum for
attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
3.14 REMOVAL OF DIRECTORS
--------------------
Unless otherwise restricted by statute, any director or the entire board of
directors may only be removed pursuant to the provisions set forth in the
certificate of incorporation. If at any time a class or series of shares is
entitled to elect one or more directors, the provisions of this Article 3.14
shall apply to the vote of that class or series and not to the vote of the
outstanding shares as a whole.
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<PAGE>
ARTICLE IV
COMMITTEES
----------
4.1 COMMITTEES OF DIRECTORS
-----------------------
The board of directors may, by resolution passed by a majority of the whole
board, designate one or more committees, with each committee to consist of one
or more of the directors of the corporation. The board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolutions of the
board of directors or in the Bylaws of the corporation, 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 that may require it; but no
such committee shall have the power or authority to (i) amend the certificate of
incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the board of directors as provided in Section 151(a) of the General
Corporation Law of Delaware, fix any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation), (ii) adopt an agreement of
merger or consolidation under Sections 251 or 252 of the General Corporation Law
of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, (iv)
recommend to the stockholders a dissolution of the corporation or a revocation
of a dissolution, or (v) amend the Bylaws of the corporation; and, unless the
board resolution establishing the committee, the Bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the General
Corporation Law of Delaware.
4.2 COMMITTEE MINUTES
-----------------
Each committee shall keep regular minutes of its meetings and report the
same to the board of directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES
---------------------------------
Meetings and actions of committees shall be governed by, and held and taken
in accordance with, the provisions of Article III of these Bylaws, Section 3.5
(place of meetings and meetings by telephone), Section 3.6 (regular meetings),
Section 3.7 (special meetings and notice), Section 3.8 (quorum), Section 3.9
(waiver of notice), Section 3.10 (adjournment and notice of adjournment),
Section 3.11 (conduct of business) and 3.12 (action without a meeting), with
such changes in the
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<PAGE>
context of those Bylaws as are necessary to substitute the committee and its
members for the board of directors and its members; provided, however, that the
time of regular meetings of committees may also be called by resolution of the
board of directors and that notice of special meetings of committees shall also
be given to all alternate members, who shall have the right to attend all
meetings of the committee. The board of directors may adopt rules for the
government of any committee not inconsistent with the provisions of these
Bylaws.
ARTICLE V
OFFICERS
--------
5.1 OFFICERS
--------
The officers of the corporation shall be a chief executive officer, one or
more vice presidents, a secretary and a chief financial officer. The
corporation may also have, at the discretion of the board of directors, a
chairman of the board, a president, a chief operating officer, one or more
executive, senior or assistant vice presidents, assistant secretaries and any
such other officers as may be appointed in accordance with the provisions of
Section 5.2 of these Bylaws. Any number of offices may be held by the same
person.
5.2 APPOINTMENT OF OFFICERS
-----------------------
Except as otherwise provided in this Section 5.2, the officers of the
corporation shall be appointed by the board of directors, subject to the rights,
if any, of an officer under any contract of employment. The board of directors
may appoint, or empower an officer to appoint, such officers and agents of the
business as the corporation may require (whether or not such officer or agent is
described in this Article V), each of whom shall hold office for such period,
have such authority, and perform such duties as are provided in these Bylaws or
as the board of directors may from time to time determine. Any vacancy
occurring in any office of the corporation shall be filled by the board of
directors or may be filled by the officer, if any, who appointed such officer.
5.3 REMOVAL AND RESIGNATION OF OFFICERS
-----------------------------------
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors or, in the case of an officer appointed by
another officer, by such other officer.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
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<PAGE>
5.4 CHAIRMAN OF THE BOARD
---------------------
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these Bylaws. If there is no
chief executive officer, then the chairman of the board shall also be the chief
executive officer of the corporation and shall have the powers and duties
prescribed in Section 5.5 of these Bylaws.
5.5 CHIEF EXECUTIVE OFFICER
-----------------------
The Chief Executive Officer of the corporation shall, subject to the
control of the Board of Directors, have general supervision, direction and
control of the business and the officers of the corporation. He or she shall
preside at all meetings of the stockholders and, in the absence or nonexistence
of a Chairman of the Board at all meetings of the Board of Directors. He or she
shall have the general powers and duties of management usually vested in the
chief executive officer of a corporation, including general supervision,
direction and control of the business and supervision of other officers of the
corporation, and shall have such other powers and duties as may be prescribed by
the Board of Directors or these Bylaws.
The Chief Executive Officer shall, without limitation, have the authority
to execute bonds, mortgages and other contracts requiring a seal, under the seal
of the corporation, except where required or permitted by law to be otherwise
signed and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the corporation.
5.6 PRESIDENT
---------
Subject to such supervisory powers as may be given by these Bylaws or the
Board of Directors to the Chairman of the Board or the Chief Executive Officer,
if there be such officers, the president shall have general supervision,
direction and control of the business and supervision of other officers of the
corporation, and shall have such other powers and duties as may be prescribed by
the Board of Directors or these Bylaws. In the event a Chief Executive Officer
shall not be appointed, the President shall have the duties of such office.
5.7 VICE PRESIDENT
--------------
In the absence or disability of the chief executive officer, the vice
presidents, if any, in order of their rank as fixed by the board of directors
or, if not ranked, a vice president designated by the board of directors, shall
perform all the duties of the chief executive officer and when so acting shall
have all the powers of, and be subject to all the restrictions upon, the chief
executive officer. The vice presidents shall have such other powers and perform
such other duties as from time to time may be prescribed for them respectively
by the board of directors, these Bylaws, the chief executive officer or the
chairman of the board.
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<PAGE>
5.8 SECRETARY
---------
The secretary shall keep or cause to be kept, at the principal executive
office of the corporation or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of directors, committees
of directors, and stockholders. The minutes shall show the time and place of
each meeting, whether regular or special (and, if special, how authorized and
the notice given), the names of those present at directors' meetings or
committee meetings, the number of shares present or represented at stockholders'
meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal executive
office of the corporation or at the office of the corporation's transfer agent
or registrar, as determined by resolution of the board of directors, a share
register, or a duplicate share register, showing the names of all stockholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates evidencing such shares, and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of
the stockholders and of the board of directors required to be given by law or by
these Bylaws. He shall keep the seal of the corporation, if one be adopted, in
safe custody and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or by these Bylaws.
5.9 CHIEF FINANCIAL OFFICER
-----------------------
The chief financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all money and other valuables in
the name and to the credit of the corporation with such depositaries as may be
designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, shall render to the
chief executive officer and directors, whenever they request it, an account of
all of his transactions as treasurer and of the financial condition of the
corporation, and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or these Bylaws.
5.10 ASSISTANT SECRETARY
-------------------
The assistant secretary, or, if there is more than one, the assistant
secretaries in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as the board of
directors or the stockholders may from time to time prescribe.
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<PAGE>
5.11 AUTHORITY AND DUTIES OF OFFICERS
--------------------------------
In addition to the foregoing authority and duties, all officers of the
corporation shall respectively have such authority and perform such duties in
the management of the business of the corporation as may be designated from time
to time by the board of directors or the stockholders.
ARTICLE VI
INDEMNITY
---------
6.1 THIRD PARTY ACTIONS
-------------------
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation to procure a
judgement in its favor) by reason of the fact that he is or was director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, 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 contendre or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interest of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION
---------------------------------------------
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Delaware Court
of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Delaware Court of Chancery or
such other court shall deem proper.
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<PAGE>
6.3 SUCCESSFUL DEFENSE
------------------
To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 6.1 and 6.2, or in defense of
any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
6.4 DETERMINATION OF CONDUCT
------------------------
Any indemnification under Sections 6.1 and 6.2 (unless ordered by a court)
shall be made by the corporation only as authorized in the specific case upon a
determination that the indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in Sections 6.1 and 6.2. Such determination shall be made
(1) by the Board of Directors or the Executive Committee by a majority vote of a
quorum consisting of directors who were not parties to such action, suit or
proceeding, or (2) or if such quorum is not obtainable or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
6.5 PAYMENT OF EXPENSES IN ADVANCE
------------------------------
Expenses incurred in defending a civil or criminal action, suit or
proceeding shall be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized in this Article VI.
6.6 INDEMNITY NOT EXCLUSIVE
-----------------------
The indemnification and advancement of expenses provided or granted
pursuant to the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another while holding such office.
6.7 INSURANCE INDEMNIFICATION
-------------------------
The corporation shall have the power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation, as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this Article VI.
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<PAGE>
6.8 THE CORPORATION
---------------
For purposes of this Article VI, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
and subject to the provisions of this Article VI (including, without limitation
the provisions of Section 6.4) with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
6.9 EMPLOYEE BENEFIT PLANS
----------------------
For purposes of this Article VI, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably deemed to have acted in a manner "not opposed to the best interests
of the corporation" as referred to in this Article VI.
6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
-----------------------------------------------------------
The indemnification and advanced of expenses provided by, or granted
pursuant to, this Article VI shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE VII
RECORDS AND REPORTS
-------------------
7.1 MAINTENANCE AND INSPECTION OF RECORDS
-------------------------------------
The corporation shall, either at its principal executive office or at such
place or places as designated by the board of directors, keep a record of its
stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these Bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent, shall,
upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to
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inspect for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records and to make copies or extracts
therefrom. A proper purpose shall mean a purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent is the person who seeks the right to inspection, the demand under oath
shall be accompanied by a power of attorney or such other writing that
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the corporation at its registered
office in Delaware or at its principal place of business.
7.2 INSPECTION BY DIRECTORS
-----------------------
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders and its other books and records for a purpose
reasonably related to his position as a director. The Court of Chancery is
hereby vested with the exclusive jurisdiction to determine whether a director is
entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
----------------------------------------------
The chairman of the board, the chief executive officer, any vice president,
the chief financial officer, the secretary or assistant secretary of this
corporation, or any other person authorized by the board of directors or the
chief executive officer or a vice president, is authorized to vote, represent,
and exercise on behalf of this corporation all rights incident to any and all
shares of any other corporation or corporations standing in the name of this
corporation. The authority granted herein may be exercised either by such
person directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having the authority.
ARTICLE VIII
GENERAL MATTERS
---------------
8.1 CHECKS
------
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
------------------------------------------------
The board of directors, except as otherwise provided in these Bylaws, may
authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific
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instances. Unless so authorized or ratified by the board of directors or within
the agency power of an officer, no officer, agent or employee shall have any
power or authority to bind the corporation by any contract or engagement or to
pledge its credit or to render it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES
--------------------------------------
The shares of a corporation shall be represented by certificates, provided
that the board of directors of the corporation may provide by resolution or
resolutions that some or all of any or all classes or series of its stock shall
be uncertificated shares. Any such resolution shall not apply to shares
represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to have a certificate
signed by, or in the name of the corporation by the chairman or vice-chairman of
the board of directors, or the president or vice-president, and by the treasurer
or an assistant treasurer, or the secretary or an assistant secretary of such
corporation representing the number of shares registered in certificate form.
Any or all of the signatures on the certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate has to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the corporation
with the same effect as if he were such officer, transfer agent or registrar at
the date of issue.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
8.4 SPECIAL DESIGNATION ON CERTIFICATES
-----------------------------------
If the corporation is authorized to issue more than one class of stock or
more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
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<PAGE>
8.5 LOST CERTIFICATES
-----------------
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated shares.
8.6 CONSTRUCTION; DEFINITIONS
-------------------------
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these Bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.
8.7 DIVIDENDS
---------
The directors of the corporation, subject to any restrictions contained in
the certificate of incorporation, may declare and pay dividends upon the shares
of its capital stock pursuant to the General Corporation Law of Delaware.
Dividends may be paid in cash, in property, or in shares of the corporation's
capital stock.
The directors of the corporation may set apart out of any of the funds of
the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not
be limited to equalizing dividends, repairing or maintaining any property of the
corporation, and meeting contingencies.
8.8 FISCAL YEAR
-----------
The fiscal year of the corporation shall be fixed by resolution of the
board of directors and may be changed by the board of directors.
8.9 SEAL
----
The corporation may adopt a corporate seal, which may be altered at
pleasure, and may use the same by causing it or a facsimile thereof to be
impressed or affixed or in any other manner reproduced.
8.10 TRANSFER OF STOCK
-----------------
Upon surrender to the corporation or the transfer agent of the corporation
of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignation or authority to
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<PAGE>
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate, and record the
transaction in its books.
8.11 STOCK TRANSFER AGREEMENTS
-------------------------
The corporation shall have power to enter into and perform any agreement
with any number of stockholders of any one or more classes of stock of the
corporation to restrict the transfer of shares of stock of the corporation of
any one or more classes owned by such stockholders in any manner not prohibited
by the General Corporation Law of Delaware.
8.12 REGISTERED STOCKHOLDERS
-----------------------
The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE IX
AMENDMENTS
----------
The original or other Bylaws of the corporation may be adopted, amended or
repealed by the stockholders entitled to vote; provided, however, that the
corporation may, in its certificate of incorporation, confer the power to adopt,
amend or repeal Bylaws upon the directors. The fact that such power has been so
conferred upon the directors shall not divest the stockholders of the power, nor
limit their power to adopt, amend or repeal Bylaws.
ARTICLE X
DISSOLUTION
-----------
If it should be deemed advisable in the judgment of the board of directors
of the corporation that the corporation should be dissolved, the board, after
the adoption of a resolution to that effect by a majority of the whole board at
any meeting called for that purpose, shall cause notice to be mailed to each
stockholder entitled to vote thereon of the adoption of the resolution and of a
meeting of stockholders to take action upon the resolution.
At the meeting a vote shall be taken for and against the proposed
dissolution. If a majority of the outstanding stock of the corporation entitled
to vote thereon votes for the proposed dissolution, then a certificate stating
that the dissolution has been authorized in accordance with the provisions of
Section 275 of the General Corporation Law of Delaware and setting forth the
names and residences of the directors and officers shall be executed,
acknowledged, and filed and shall become effective in accordance with Section
103 of the General Corporation Law of Delaware. Upon such certificate's
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<PAGE>
becoming effective in accordance with Section 103 of the General Corporation Law
of Delaware, the corporation shall be dissolved.
ARTICLE XI
CUSTODIAN
---------
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES
-------------------------------------------
The Court of Chancery, upon application of any stockholder, may appoint one
or more persons to be custodians and, if the corporation is insolvent, to be
receivers, of and for the corporation when:
(i) at any meeting held for the election of directors the
stockholders are so divided that they have failed to elect
successors to directors whose terms have expired or would have
expired upon qualification of their successors; or
(ii) the business of the corporation is suffering or is threatened
with irreparable injury because the directors are so divided
respecting the management of the affairs of the corporation
that the required vote for action by the board of directors
cannot be obtained and the stockholders are unable to terminate
this division; or
(iii) the corporation has abandoned its business and has failed
within a reasonable time to take steps to dissolve, liquidate
or distribute its assets.
11.2 DUTIES OF CUSTODIAN
-------------------
The custodian shall have all the powers and title of a receiver appointed
under Section 291 of the General Corporation Law of Delaware, but the authority
of the custodian shall be to continue the business of the corporation and not to
liquidate its affairs and distribute its assets, except when the Court of
Chancery otherwise orders and except in cases arising under Sections 226(a)(3)
or 352(a)(2) of the General Corporation Law of Delaware.
ARTICLE XII
LOANS TO OFFICERS
-----------------
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiaries, including any officer or employee who is a Director of the
corporation or its subsidiaries, whenever, in the judgment of the Board of
Directors, such loan, guarantee or assistance may reasonably be expected to
benefit the corporation. The loan, guarantee or other assistance may be with or
without interest and may be unsecured, or secured in such manner as the Board of
Directors shall approve, including, without limitation, a
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<PAGE>
pledge of shares of stock of the corporation. Nothing in this Bylaw shall be
deemed to deny, limit or restrict the powers of guaranty or warranty of the
corporation at common law or under any statute.
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<PAGE>
EXHIBIT 4.2
iBEAM BROADCASTING CORPORATION
AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
October 14, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Registration Rights........................................ 1
1.1 Definitions.......................................... 1
1.2 Request for Registration............................. 2
1.3 Company Registration................................. 4
1.4 Form S-3 Registration................................ 5
1.5 Obligations of the Company........................... 6
1.6 Information from Holder.............................. 7
1.7 Expenses of Registration............................. 7
1.8 Delay of Registration................................ 8
1.9 Indemnification...................................... 8
1.10 Reports Under Securities Exchange Act of 1934........ 10
1.11 Assignment of Registration Rights.................... 10
1.12 Limitations on Subsequent Registration Rights........ 11
1.13 "Market Stand-Off" Agreement......................... 11
1.14 Termination of Registration Rights................... 11
2. Covenants of the Company................................... 12
2.1 Delivery of Financial Statements..................... 12
2.2 Inspection........................................... 12
2.3 Termination of Information and Inspection Covenants.. 12
2.4 Right of First Offer................................. 13
2.5 Termination of Right of First Offer.................. 14
2.6 MTV Observer Rights.................................. 15
2.7 Intel Observer Rights................................ 15
2.8 Microsoft Observer Rights............................ 16
2.9 Stand-Still.......................................... 17
2.10 Restrictions on Transfer............................. 17
3. Confidentiality............................................ 18
3.1 Confidentiality...................................... 18
3.2 Amendment............................................ 19
4. Miscellaneous.............................................. 19
4.1 Successors and Assigns............................... 19
4.2 Governing Law........................................ 19
4.3 Counterparts......................................... 19
4.4 Titles and Subtitles................................. 20
4.5 Notices.............................................. 20
4.6 Expenses............................................. 20
4.7 Entire Agreement: Amendments and Waivers............. 20
4.8 Severability......................................... 20
4.9 Aggregation of Stock................................. 20
</TABLE>
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<PAGE>
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
THIS AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT is made as of the
14/th/ day of October, 1999, by and among iBEAM BROADCASTING CORPORATION, a
Delaware corporation (the "Company"), and the investors listed on Schedule A
hereto (each of which is herein referred to as an "Investor").
RECITALS
WHEREAS, certain of the Investors (the "Existing Investors") hold shares of
the Company's Series A Preferred Stock, Series B Preferred Stock, or Series C
Preferred Stock and/or shares of Common Stock issued upon conversion thereof
(the "Series A Preferred Stock," the "Series B Preferred Stock," and the "Series
C Preferred Stock," respectively) and possess registration rights, information
rights, rights of first offer, and other rights pursuant to an Amended and
Restated Investors' Rights Agreement dated as of February 3, 1999, among the
Company, and such Existing Investors (the "Prior Agreement"); and
WHEREAS, the Existing Investors are holders of at least a majority of the
"Registrable Securities" of the Company (as defined in the Prior Agreement), and
desire to amend, restate and supersede the Prior Agreement in its entirety; and
WHEREAS, certain Investors are parties to the Series D Preferred Stock
Purchase Agreement of even date herewith among the Company and certain of the
Investors (the "Series D Agreement"), which provides that as a condition to the
closing of the sale of the Series D Preferred Stock, this Agreement must be
executed and delivered by such Investors and Existing Investors holding at least
a majority of the "Registrable Securities" of the Company (as defined in the
Prior Agreement) and the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the Existing Investors hereby agree that the Prior Agreement shall
be amended, restated and superseded in its entirety by this Agreement, and the
parties hereto further agree as follows:
1. Registration Rights. The Company covenants and agrees as
-------------------
follows:
1.1 Definitions. For purposes of this Section 1:
-----------
(a) The term "Act" means the Securities Act of 1933, as
amended.
(b) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC that permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.
<PAGE>
(c) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 1.11 hereof.
(d) The term "Initial Offering" means the Company's first
firm commitment underwritten public offering of its Common Stock under the Act.
(e) The term "1934 Act" means the Securities Exchange Act
of 1934, as amended.
(f) The term "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement or document.
(g) The term "Registrable Securities" means (i) the Common
Stock issuable or issued upon conversion of the Series A Preferred Stock, (ii)
the Common Stock issuable or issued upon conversion of the Series B Preferred
Stock, (iii) the Common Stock issuable or issued upon conversion of the Series C
Preferred Stock and (iv) the Common Stock issuable or issued upon conversion of
the Series D Preferred Stock and (v) any Common Stock of the Company issued as
(or issuable upon the conversion or exercise of any warrant, right or other
security that is issued as) a dividend or other distribution with respect to, or
in exchange for, or in replacement of, the shares referenced in (i) through (iv)
above, excluding in all cases, however, any Registrable Securities sold by a
person in a transaction in which his rights under this Section 1 are not
assigned.
(h) The number of shares of Registrable Securities
outstanding shall be determined by the number of shares of Common Stock
outstanding that are, and the number of shares of Common Stock issuable pursuant
to then exercisable or convertible securities that are, Registrable Securities.
(i) The term "SEC" shall mean the Securities and Exchange
Commission.
1.2 Request for Registration.
------------------------
(a) Subject to the conditions of this Section 1.2, if the
Company shall receive at any time after the earlier of (i) February 2, 2003 or
(ii) six (6) months after the effective date of the Initial Offering, a written
request from the Holders of thirty percent (30%) or more of the Registrable
Securities then outstanding (the "Initiating Holders") that the Company file a
registration statement under the Act covering the registration of Registrable
Securities with an anticipated aggregate offering price of at least $10,000,000,
then the Company shall, within twenty (20) days of the receipt thereof, give
written notice of such request to all Holders, and subject to the limitations of
this Section 1.2, use all reasonable efforts to effect, as soon as practicable,
the registration under the Act of all Registrable Securities that the Holders
request to be registered in a
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<PAGE>
written request received by the Company within twenty (20) days of the mailing
of the Company's notice pursuant to this Section 1.2(a).
(b) If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 1.2 and the Company shall include such information in the written
notice referred to in Section 1.2(a). In such event the right of any Holder to
include its Registrable Securities in such registration shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company (which underwriter or underwriters shall be
reasonably acceptable to a majority in interest of the Initiating Holders).
Notwithstanding any other provision of this Section 1.2, if the underwriter
advises the Company that marketing factors require a limitation of the number of
securities underwritten (including Registrable Securities), then the Company
shall so advise all Holders of Registrable Securities that would otherwise be
underwritten pursuant hereto, and the number of shares that may be included in
the underwriting shall be allocated to the Holders of such Registrable
Securities on a pro rata basis based on the number of Registrable Securities
held by all such Holders (including the Initiating Holders). Any Registrable
Securities excluded or withdrawn from such underwriting shall be withdrawn from
the registration.
(c) The Company shall not be required to effect a
registration pursuant to this Section 1.2:
(i) in any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, unless the Company is already subject to service in
such jurisdiction and except as may be required under the Act; or
(ii) after the Company has effected two (2)
registrations pursuant to this Section 1.2, and such registrations have been
declared or ordered effective; or
(iii) during the period starting with the date sixty
(60) days prior to the Company's good faith estimate of the date of the filing
of, and ending on a date one hundred eighty (180) days following the effective
date of, a Company-initiated registration subject to Section 1.3 below, provided
that the Company is actively employing in good faith all reasonable efforts to
cause such registration statement to become effective; or
(iv) if the Initiating Holders propose to dispose of
Registrable Securities that may be registered on Form S-3 pursuant to Section
1.4 hereof; or
(v) if the Company shall furnish to Holders
requesting a registration statement pursuant to this Section 1.2, a certificate
signed by the Company's Chief
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<PAGE>
Executive Officer or Chairman of the Board stating that in the good faith
judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for such registration statement
to be effected at such time, in which event the Company shall have the right to
defer such filing for a period of not more than one hundred twenty (120) days
after receipt of the request of the Initiating Holders, provided that such right
to delay a request shall be exercised by the Company not more than once in any
twelve (12)-month period.
1.3 Company Registration.
--------------------
(a) If (but without any obligation to do so) the Company
proposes to register (including for this purpose a registration effected by the
Company for stockholders other than the Holders) any of its stock or other
securities under the Act in connection with the public offering of such
securities (other than a registration relating solely to the sale of securities
to participants in a Company stock plan, a registration relating to a corporate
reorganization or other transaction under Rule 145 of the Act, a registration on
any form that does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities, a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities that are
also being registered, a registration in which the only Common Stock being
registered is Common Stock issuable pursuant to warrants issued in connection
with the issuance of debt securities, or a registration relating solely to
securities not convertible into Common Stock), the Company shall, at such time,
promptly give each Holder written notice of such registration. Upon the written
request of each Holder given within twenty (20) days (or within ten (10) days if
the notice is given after the Company has completed its Initial Offering) after
mailing of such notice by the Company in accordance with Section 4.5, the
Company shall, subject to the provisions of Section 1.3(c), use all reasonable
efforts to cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.
(b) Right to Terminate Registration. The Company shall
-------------------------------
have the right to terminate or withdraw any registration initiated by it under
this Section 1.3 prior to the effectiveness of such registration whether or not
any Holder has elected to include securities in such registration. The expenses
of such withdrawn registration shall be borne by the Company in accordance with
Section 1.7 hereof.
(c) Underwriting Requirements. In connection with any
-------------------------
offering involving an underwriting of shares of the Company's capital stock, the
Company shall not be required under this Section 1.3 to include any of the
Holders' securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it (or by other persons entitled to select the underwriters) and enter into an
underwriting agreement in customary form with an underwriter or underwriters
selected by the Company, and then only in such quantity as the underwriters
determine in their sole discretion will not jeopardize the success of the
offering by the Company. If the total amount of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters determine in their sole discretion is
-4-
<PAGE>
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, that the underwriters determine in their sole discretion
will not jeopardize the success of the offering (the securities so included to
be apportioned pro rata among the selling Holders according to the total amount
of securities entitled to be included therein owned by each selling Holder or in
such other proportions as shall mutually be agreed to by such selling Holders),
but in no event shall (i) the amount of securities of the selling Holders
included in the offering be reduced below twenty percent (20%) of the total
amount of securities included in such offering, unless such offering is the
initial public offering of the Company's securities, in which case the selling
Holders may be excluded if the underwriters make the determination described
above and no other stockholder's securities are included, or (ii)
notwithstanding (i) above, any shares being sold by a stockholder exercising a
demand registration right similar to that granted in Section 1.2 be excluded
from such offering. For purposes of the preceding parenthetical concerning
apportionment, for any selling stockholder that is a Holder of Registrable
Securities and that is a partnership or corporation, the partners, retired
partners and stockholders of such Holder, or the estates and family members of
any such partners and retired partners and any trusts for the benefit of any of
the foregoing persons shall be deemed to be a single "selling Holder," and any
pro rata reduction with respect to such "selling Holder" shall be based upon the
aggregate amount of Registrable Securities owned by all such related entities
and individuals.
1.4 Form S-3 Registration. In case the Company shall receive
---------------------
from the Holders a written request or requests that the Company effect a
registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder or
Holders, the Company shall:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(b) use all reasonable efforts to effect, as soon as
practicable, such registration and all such qualifications and compliances as
may be so requested and as would permit or facilitate the sale and distribution
of all or such portion of such Holders' Registrable Securities as are specified
in such request, together with all or such portion of the Registrable Securities
of any other Holders joining in such request as are specified in a written
request given within fifteen (15) days after receipt of such written notice from
the Company, provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance, pursuant to this
section 1.4:
(i) if Form S-3 is not available for such offering by
the Holders;
(ii) if the Holders, together with the holders of any
other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public (net of any underwriters' discounts or
commissions) of less than $1,000,000;
-5-
<PAGE>
(iii) if the Company shall furnish to the Holders a
certificate signed by the Chief Executive Officer or Chairman of the Board of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
stockholders for such Form S-3 Registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than one hundred twenty (120)
days after receipt of the request of the Holder or Holders under this Section
1.4; provided, however, that the Company shall not utilize this right more than
once in any twelve month period;
(iv) if the Company has, within the twelve (12) month
period preceding the date of such request, already effected one registration on
Form S-3 for the Holders pursuant to this Section 1.4; or
(v) in any particular jurisdiction in which the
Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or
compliance.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. Registrations effected pursuant to this
Section 1.4 shall not be counted as requests for registration effected pursuant
to Sections 1.2.
1.5 Obligations of the Company. Whenever required under this
--------------------------
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use all reasonable efforts to
cause such registration statement to become effective, and, upon the request of
the Holders of a majority of the Registrable Securities registered thereunder,
keep such registration statement effective for a period of up to one hundred
twenty (120) days or, if earlier, until the distribution contemplated in the
Registration Statement has been completed;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement;
(c) furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them;
-6-
<PAGE>
(d) use all reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions;
(e) in the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering;
(f) notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act or the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing;
(g) cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed; and
(h) provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
1.6 Information from Holder. It shall be a condition precedent
-----------------------
to the obligations of the Company to take any action pursuant to this Section 1
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities.
1.7 Expenses of Registration. All expenses other than
------------------------
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Sections 1.2, 1.3 and 1.4,
including (without limitation) all registration, filing and qualification fees,
printers' and accounting fees, fees and disbursements of counsel for the Company
and for one special counsel for the Holders (which shall not exceed $20,000)
shall be borne by the Company. Notwithstanding the foregoing, the Company shall
not be required to pay for any expenses of any registration proceeding begun
pursuant to Section 1.2 if the registration request is subsequently withdrawn at
the request of the Holders of a majority of the Registrable Securities to be
registered (in which case all participating Holders shall bear such expenses pro
rata based upon the number of Registrable Securities that were to be requested
in the withdrawn registration). Unless otherwise stated, all selling expenses
incurred in connection with a registration relating to securities registered on
behalf of the Holders shall be borne pro rata by the Holder or Holders based on
the number of shares so registered.
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<PAGE>
1.8 Delay of Registration. No Holder shall have any right to
---------------------
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.
1.9 Indemnification. In the event any Registrable Securities
---------------
are included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners or officers, directors and
stockholders of each Holder, legal counsel and accountants for each Holder, any
underwriter (as defined in the Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Act or the 1934
Act, against any losses, claims, damages or liabilities (joint or several) to
which they may become subject under the Act, the 1934 Act or any state
securities laws, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Act, the 1934 Act, any
state securities laws or any rule or regulation promulgated under the Act, the
1934 Act or any state securities laws; and the Company will reimburse each such
Holder, underwriter or 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
indemnity agreement contained in this subsection 1.9(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation that occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person;
provided further, however, that the foregoing indemnity agreement with respect
to any preliminary prospectus shall not inure to the benefit of any Holder or
underwriter, or any person controlling such Holder or underwriter, from whom the
person asserting any such losses, claims, damages or liabilities purchased
shares in the offering, if a copy of the prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Holder or underwriter to
such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the shares to such person, and if the
prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage or liability; provided that the failure of such
Holder to deliver any such prospectus or supplement is not a result of the
Company to meet its obligations under Section 1.5 hereof.
(b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the
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<PAGE>
Act, legal counsel and accountants for the Company, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, the 1934 Act or any state securities laws,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will reimburse
any person intended to be indemnified pursuant to this subsection 1.9(b), for
any legal or other expenses reasonably incurred by such person in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
subsection 1.9(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Holder (which consent shall not be unreasonably withheld),
provided that in no event shall any indemnity under this subsection 1.9(b)
exceed the gross proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under
this Section 1.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.9, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.9.
(d) If the indemnification provided for in this Section 1.9
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
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<PAGE>
the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Holders under this
Section 1.9 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.10 Reports Under Securities Exchange Act of 1934. With a view
---------------------------------------------
to making available to the Holders the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time permit
a Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times after ninety (90)
days after the effective date of the Initial Offering;
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC that permits the
selling of any such securities without registration or pursuant to such form.
1.11 Assignment of Registration Rights. The rights to cause the
---------------------------------
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such securities that (i) is a subsidiary, parent, affiliate (as such
term is defined in Rule 405 promulgated under the Act) partner, limited partner,
retired partner or stockholder (collectively, "Related Person") of a Holder,
(ii) is a Holder's family member or trust for the benefit of an individual
Holder, or (iii) after such assignment or transfer, holds at least 100,000
shares of Registrable Securities (subject to appropriate adjustment for stock
splits, stock dividends, combinations and other recapitalizations), provided:
(a) the Company is, within a reasonable time after such transfer, furnished with
written notice of the name and address of
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<PAGE>
such transferee or assignee and the securities with respect to which such
registration rights are being assigned; (b) such transferee or assignee agrees
in writing to be bound by and subject to the terms and conditions of this
Agreement, including without limitation the provisions of Section 1.13 below;
and (c) such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Act.
1.12 Limitations on Subsequent Registration Rights. From and
---------------------------------------------
after the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of a majority of the Registrable Securities,
enter into any agreement with any holder or prospective holder of any securities
of the Company that would allow such holder or prospective holder (a) to include
such securities in any registration filed under Section 1.3 hereof, unless under
the terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of
such securities will not reduce the amount of the Registrable Securities of the
Holders that are included or (b) to demand registration of their securities.
1.13 "Market Stand-Off" Agreement. Each Holder hereby agrees that
---------------------------
it will not, without the prior written consent of the managing underwriter,
during the period commencing on the date of the final prospectus relating to the
Company's initial public offering and ending on the date specified by the
Company and the managing underwriter (such period not to exceed one hundred
eighty (180) days) (i) lend, offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock (whether such shares or any
such securities are then owned by the Holder or are thereafter acquired), or
(ii) 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, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The underwriters in connection with the Company's initial public
offering are intended third party beneficiaries of this Section 1.13 and shall
have the right, power and authority to enforce the provisions hereof as though
they were a party hereto.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period. However, nothing in this
Section 1.13 shall affect, impair or diminish any Holder's right to sell,
transfer or assign any or all of its shares of Registrable Securities to a
Related Person pursuant to the terms set forth in Section 1.11 hereof.
1.14 Termination of Registration Rights. No Holder shall be
----------------------------------
entitled to exercise any right provided for in this Section 1 after five (5)
years following the consummation of the Initial Offering or, as to any Holder,
such earlier time beginning after expiration of the "Market Standoff" set forth
in Section 1.13 at which all Registrable Securities held by such Holder (and any
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<PAGE>
affiliate of the Holder with whom such Holder must aggregate its sales under
Rule 144) can be sold in any three (3)-month period without registration in
compliance with Rule 144 of the Act.
2. Covenants of the Company.
------------------------
2.1 Delivery of Financial Statements. The Company shall deliver
--------------------------------
to each Investor holding shares of the Company:
(a) as soon as practicable, but in any event within ninety
(90) days after the end of each fiscal year of the Company, an income statement
for such fiscal year, a balance sheet of the Company and statement of
stockholder's equity as of the end of such year, and a statement of cash flows
for such year, such year-end financial reports to be in reasonable detail,
prepared in accordance with generally accepted accounting principles ("GAAP"),
and audited and certified by independent public accountants of nationally
recognized standing selected by the Company;
(b) as soon as practicable after the end of each quarter,
and in any event within forty-five (45) days after each quarterly accounting
period, an unaudited quarterly report including a balance sheet, income
statement and cash flow analysis (prepared in accordance with GAAP other than
for accompanying notes and subject to changes resulting from year-end audit
adjustments);
(c) as soon as practicable, but in any event at least
thirty (30) days prior to the end of each fiscal year, a budget and business
plan for the next fiscal year, prepared on a monthly basis, including balance
sheets, income statements and statements of cash flows for such months and, as
soon as prepared, any other budgets or revised budgets prepared by the Company;
and
(d) such other information relating to the financial
condition, business, prospects or corporate affairs of the Company as the
Investor or any assignee of the Investor may from time to time request,
provided, however, that the Company shall not be obligated under this subsection
(d) or any other subsection of Section 2.1 to provide information that it deems
in good faith to be a trade secret or similar confidential information.
2.2 Inspection. The Company shall permit each Investor that
----------
holds at least 600,000 shares of Registrable Securities, at such Investor's
expense, to visit and inspect the Company's properties, to examine its books of
account and records and to discuss the Company's affairs, finances and accounts
with its officers, all at such reasonable times as may be requested by the
Investor; provided, however, that the Company shall not be obligated pursuant to
this Section 2.2 to provide access to any information that it reasonably
considers to be a trade secret or similar confidential information.
2.3 Termination of Information and Inspection Covenants. The
---------------------------------------------------
covenants set forth in Sections 2.1 and 2.2 shall terminate as to Investors and
be of no further force or effect when the sale of securities pursuant to a
registration statement filed by the Company under the Act
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in connection with the firm commitment underwritten offering of its securities
to the general public is consummated or when the Company first becomes subject
to the periodic reporting requirements of Sections 12(g) or 15(d) of the 1934
Act, whichever event shall first occur.
2.4 Right of First Offer. Subject to the terms and conditions
--------------------
specified in this paragraph 2.4 and in paragraph 2.9, the Company hereby grants
to each Major Investor (as hereinafter defined) a right of first offer with
respect to future sales by the Company of its Shares (as hereinafter defined).
For purposes of this Section 2.4, a Major Investor shall mean any Investor or
transferee that holds at least 300,000 shares of Registrable Securities. For
purposes of this Section 2.4, Investor includes any general partners and
affiliates of an Investor. An Investor shall be entitled to apportion the right
of first offer hereby granted it among itself and its partners and affiliates in
such proportions as it deems appropriate.
Except as provided in subparagraph (d), each time the Company proposes
to offer any shares of, or securities convertible into or exchangeable or
exercisable for any shares of, any class of its capital stock ("Shares"), the
Company shall first make an offering of such Shares to each Major Investor in
accordance with the following provisions.
(a) The Company shall deliver a notice in accordance with
Section 4.5 ("Notice") to the Major Investors stating (i) its bona fide
intention to offer such Shares, (ii) the number of such Shares to be offered,
and (iii) the price and terms upon which it proposes to offer such Shares.
(b) By written notification received by the Company, within
twenty (20) calendar days after receipt of the Notice, the Major Investor may
elect to purchase or obtain, at the price and on the terms specified in the
Notice, up to that portion of such Shares that equals the proportion that the
number of shares of Registrable Securities then held by such Major Investor
bears to the total number of shares of Common Stock of the Company then
outstanding (assuming full conversion of all convertible securities). The
Company shall promptly, in writing, inform each Major Investor that elects to
purchase all the shares available to it (a "Fully-Exercising Investor") of any
other Major Investor's failure to do likewise. During the ten (10) day period
commencing after such information is given, each Fully-Exercising Investor may
elect to purchase that portion of the Shares for which Major Investors were
entitled to subscribe but which were not subscribed for by the Major Investors
that is equal to the proportion that the number of shares of Registrable
Securities then held by such Fully-Exercising Investor bears to the total number
of shares of Registrable Securities then held by all Fully-Exercising Investors
who wish to purchase some of the unsubscribed shares.
(c) If all Shares that Investors are entitled to obtain
pursuant to subsection 2.4(b) are not elected to be obtained as provided in
subsection 2.4(b) hereof, the Company may, during the ninety (90) day period
following the expiration of the period provided in subsection 2.4(b) hereof,
offer the remaining unsubscribed portion of such Shares to any person or persons
at a price not less than, and upon terms no more favorable to the offeree than,
those specified in the Notice. If the Company does not enter into an agreement
for the sale of the Shares within such period, or if such agreement is not
consummated within ninety (90) days of the execution
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<PAGE>
thereof, the right provided hereunder shall be deemed to be revived and such
Shares shall not be offered unless first reoffered to the Major Investors in
accordance herewith.
(d) The right of first offer in this paragraph 2.4 shall
not be applicable to (i) the issuance or sale of shares of Common Stock (or
options therefor) granted after the date of this Amended and Restated Investors'
Rights Agreement, with the approval of a majority of the members of the Board of
Directors not holding management positions with the Company (and the reissuance
of any shares issued or subject to outstanding options returned to the Company
from any unexercised options or restricted stock repurchased by the Company
after such date), to employees, directors and consultants for the primary
purpose of soliciting or retaining their services pursuant to stock option plans
approved by the Board of Directors; (ii) the issuance of securities pursuant to
a bona fide, firmly underwritten public offering of shares of Common Stock,
registered under the Act, at an offering price of at least $11.92 per share
(appropriately adjusted for any stock split, dividend, combination or other
recapitalization) and resulting in proceeds to the Company of at least
$20,000,000 in the aggregate, (iii) the issuance of securities pursuant to the
conversion or exercise of convertible or exercisable securities, (iv) the
issuance of securities in connection with a bona fide business acquisition of or
by the Company approved by a majority of the Board of Directors of the Company,
whether by merger, consolidation, sale of assets, sale or exchange of stock or
otherwise, (v) the issuance of stock, warrants or other securities or rights,
with the approval of a majority of the Board of Directors of the Company, to
persons or entities with which the Company is entering or has entered into a
strategic relationship, (vi) the issuance of stock, warrants, or other
securities or rights in connection with and other bank debt financing,
commercial lending, equipment financings, capital lease, or similar
transactions, with the approval of a majority of the Board of Directors of the
Company, (vii) in the event that Intel Corporation and the Company agree on the
terms of a technology development relationship, the issuance of a warrant to
Intel Corporation to purchase up to 146,199 shares of Series C Preferred Stock
at $3.42 per share (subject to adjustment of such fixed dollar amounts for any
stock splits, stock dividends, combinations, recapitalizations or the like) and
the issuance of any Common Stock in connection with the conversion of such
preferred stock; (viii) the issuance of a warrant to Comdisco Inc. to purchase
6,397 shares of Series D Preferred Stock at $4.69 per share (subject to
adjustment of such fixed dollar amounts for any stock splits, stock dividends,
combinations, recapitalizations or the like) and the issuance of any Common
Stock in connection with the conversion of such preferred stock; or (ix) the
issuance of a warrant to Microsoft Corporation to purchase up to 218,120 shares
of Series D Preferred Stock at $5.96 (subject to adjustment of such fixed dollar
amounts for any stock splits, stock dividends, combinations, recapitalizations
or the like) and the issuance of any Common Stock in connection with the
conversion of such preferred stock.
2.5 Termination of Right of First Offer. The covenants set
-----------------------------------
forth in Section 2.4 shall terminate and be of no further force or effect upon
the consummation of, and shall not be applicable to, the sale of securities
pursuant to a bona fide, firmly underwritten public offering of shares of common
stock, registered under the Act, at an offering price of at least $11.92 per
share (appropriately adjusted for any stock split, dividend, combination or
other recapitalization) and resulting in proceeds to the Company of at least
$20,000,000.
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<PAGE>
2.6 MTV Observer Rights. As long as funds affiliated with Media
-------------------
Technology Ventures, L.P. ("MTV") in the aggregate own not less than fifty
percent (50%) of the shares of the Series B Preferred Stock such funds purchased
pursuant to that certain Series B Preferred Stock Purchase Agreement by and
among the Company and certain stockholders of the Company, dated as of June 8,
1998 (or an equivalent amount of Common Stock issued upon conversion thereof),
the Company shall invite a representative of MTV to attend all meetings of its
Board of Directors in a nonvoting observer capacity and, in this respect, shall
give such representative copies of all notices, minutes, consents, and other
materials that it provides to its directors; provided, however, that such
representative shall agree to hold in confidence and trust and to act in a
fiduciary manner with respect to all information so provided; and, provided
further, that the Company reserves the right to withhold any information and to
exclude such representative from any meeting or portion thereof if access to
such information or attendance at such meeting could adversely affect the
attorney-client privilege between the Company and its counsel or would result in
disclosure of trade secrets to such representative or if such Investor or its
representative is a direct competitor of the Company. The covenants set forth in
this Section 2.6 shall terminate and be of no further force or effect upon the
occurrence of either event specified in Section 2.3 hereof.
2.7 Intel Observer Rights. As long as Intel Corporation
---------------------
("Intel"), together with its subsidiaries (defined as entities which Intel
beneficially owns, either directly or indirectly, at least 50% of the voting
securities) in the aggregate own not less than 50% of the shares of the Series C
Preferred Stock Intel purchased pursuant to the Series C Agreement (or an
equivalent amount of Common Stock issued upon conversion thereof), the Company
shall invite a representative of Intel (the "Intel Observer") to attend all
meetings of its Board of Directors in a nonvoting observer capacity and, in this
respect, shall give such representative copies of all notices, minutes,
consents, and other materials that it provides to its directors; provided,
however, that the Company reserves the right to withhold any information and to
exclude the Intel Observer from any meeting or portion thereof if access to such
information or attendance at such meeting could (a) adversely affect the
attorney-client privilege between the Company and its counsel; or (b) result in
disclosure of confidential or proprietary information of third parties. In
addition, a majority of the Company's nonemployee directors shall have the right
to exclude the Intel Observer from portions or entire meetings of the Board of
Directors or omit to provide the Intel Observer with certain information or
analysis which would pose a conflict of interest for Intel. Any disclosures of
confidential information between the Company and the Intel Observer and Intel
will be governed by the terms of the Corporate Non Disclosure Agreement Number
122651 dated August 19, 1998 and any related Confidential Information
Transmittal records executed between the Company and Intel. The Company
acknowledges that Intel will likely have, from time to time, information that
may be of interest to the Company ("Information") regarding a wide variety of
matters including, by way of example only, (1) Intel's technologies, plans and
services, and plans and strategies relating thereto, (2) current and future
investments Intel has made, may make, may consider or may become aware of with
respect to other companies and other technologies, products and services,
including, without limitation, technologies, products and services that may be
competitive with the Company's, and (3) developments with respect to the
technologies, products and services, and plans and strategies relating thereto,
of other companies, including, without limitation, companies that may be
competitive with the Company. The Company recognizes that a portion of such
Information may be
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<PAGE>
of interest to the Company. Such Information may or may not be known by the
Intel Observer. The Company agrees that Intel and the Intel Observer shall have
no duty to disclose any Information to the Company or permit the Company to
participate in any projects or investments based on any Information, or to
otherwise take advantage of any opportunity that may be of interest to the
Company if it were aware of such Information, and hereby waives, to the extent
permitted by law, any claim based on the corporate opportunity doctrine or
otherwise that could limit Intel's ability to pursue opportunities based on such
Information or that would require Intel or the Intel Observer to disclose any
such Information to the Company or offer any opportunity relating thereto to the
Company. The covenants set forth in this Section 2.7 shall terminate and be of
no further force or effect upon the occurrence of either event specified in
Section 2.3 hereof.
2.8 Microsoft Observer Rights. As long as Microsoft, together
-------------------------
with its subsidiaries (defined as entities which the Microsoft Corporation
beneficially owns, either directly or indirectly, at least 50% of the voting
securities) in the aggregate own not less than 50% of the shares of the Series D
Preferred Stock Microsoft Corporation purchased pursuant to the Series D
Agreement (or an equivalent amount of Common Stock issued upon conversion
thereof), the Company shall invite a representative of the "Microsoft Observer"
to attend all meetings of its Board of Directors in a nonvoting observer
capacity and, in this respect, shall give such representative copies of all
notices, minutes, consents, and other materials that it provides to its
directors; provided, however, that the Company reserves the right to withhold
any information and to exclude the Microsoft Observer from any meeting or
portion thereof if access to such information or attendance at such meeting
could (a) adversely affect the attorney-client privilege between the Company and
its counsel; or (b) result in disclosure of confidential or proprietary
information of third parties. In addition, a majority of the Company's
nonemployee directors shall have the right to exclude the Microsoft Observer
from portions or entire meetings of the Board of Directors or omit to provide
the Microsoft Observer with certain information or analysis which would pose a
conflict of interest for Microsoft Corporation. Any disclosures of confidential
information between the Company and the Microsoft Observer and Microsoft
Corporation will be governed by the terms of the Corporate Non Disclosure
Agreement in the form of Schedule B and any related Confidential Information
Transmittal records executed between the Company and Microsoft Corporation. The
Company acknowledges that each Microsoft Corporation will likely have, from time
to time, information that may be of interest to the Company ("Information")
regarding a wide variety of matters including, by way of example only, (1)
Microsoft Corporation's technologies, plans and services, and plans and
strategies relating thereto, (2) current and future investments the Microsoft
Corporation has made, may make, may consider or may become aware of with respect
to other companies and other technologies, products and services, including,
without limitation, technologies, products and services that may be competitive
with the Company's, and (3) developments with respect to the technologies,
products and services, and plans and strategies relating thereto, of other
companies, including, without limitation, companies that may be competitive with
the Company. The Company recognizes that a portion of such Information may be of
interest to the Company. Such Information may or may not be known by the
Microsoft Observer. The Company agrees that Microsoft Corporation and the
Microsoft Observer shall have no duty to disclose any Information to the Company
or permit the Company to participate in any projects or investments based on any
Information, or to otherwise take advantage of any opportunity that may be of
interest to the
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<PAGE>
Company if it were aware of such Information, and hereby waives, to the extent
permitted by law, any claim based on the corporate opportunity doctrine or
otherwise that could limit Microsoft Corporation's ability to pursue
opportunities based on such Information or that would require Microsoft
Corporation or the Microsoft Observer to disclose any such Information to the
Company or offer any opportunity relating thereto to the Company. The covenants
set forth in this Section 2.8 shall terminate and be of no further force or
effect upon the occurrence of either event specified in Section 2.3 hereof.
2.9 Stand-Still. In no event during the period of time
-----------
beginning on the date of this Agreement and extending for five years hereafter,
shall any of Microsoft Corporation, Sony Corporation of America, Covad
Communications Investment Corp. or Covad Communications Group, Inc. (each a
"Strategic Investor") acquire beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Act of 1934, as amended) of 15% or more of
the voting securities (on an as if converted to Common Stock basis) of the
Company then outstanding, without the prior written consent of the Company.
2.10 Restrictions on Transfer.
------------------------
(a) Each Strategic Investor hereby agrees not to (i) lend,
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
shares of Series D Preferred Stock, the Common Stock issuable upon conversion of
the Series D Preferred Stock , or any other securities of the Company or (ii)
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 Series D Preferred
Stock, the Common Stock issuable upon conversion of the Series D Preferred
Stock, or any other securities of the Company, for a period beginning on the
date of the closing of such Strategic Investor's purchase of Series D Preferred
Stock and ending upon the earlier of (A) 180 days following the Initial Offering
or (B) two years from the date of the closing of the purchase of the Series D
Preferred Stock by such Strategic Investor, except (i) pursuant to an
acquisition of the Company by another entity by means of any transaction or
series of related transactions (including, without limitation; any
reorganization, merger or consolidation) that results in the transfer of fifty
percent (50%) or more of the outstanding voting power of the Company to another
person or entity or group of related persons or entities, (ii) pursuant to a
liquidation, dissolution or winding up of the Company, (iii) or to any
subsidiary (at least 80% owned), any parent (which owns at least 80% of such
Strategic Investor) or any affiliate (as such term is defined under Rule 405
promulgated under the Act) of the Strategic Investor which agrees to be bound by
the terms of this Agreement. Notwithstanding the foregoing, each Strategic
Investor agrees that upon the request of the Company or the underwriter of the
Company's Initial Offering, it shall enter into an Agreement with such terms as
set forth in Section 1.13 hereof or as otherwise requested by the managing
underwriter, in connection with the Company's Initial Offering.
(b) Each Strategic Investor hereby agrees not to offer,
sell or otherwise transfer or dispose of, directly or indirectly, any shares of
Series D Preferred Stock, the Common Stock issuable upon conversion of the
Series D Preferred Stock or any other securities of
-17-
<PAGE>
the Company, for a period beginning 180 days following the Initial Offering and
ending upon the earlier of (i) one year following the Initial Offering and (ii)
two years from the date of the closing of the purchase of the Series D Preferred
Stock by such Strategic Investor, except (A) pursuant to an acquisition of the
Company by another entity by means of any transaction or series of related
transactions (including, without limitation, any reorganization, merger or
consolidation) that results in the transfer of fifty percent (50%) of more of
the outstanding voting power of the Company to another person or entity or group
of related persons or entities, (B) pursuant to a liquidation, dissolution or
winding up of the Company or (C) to any subsidiary (at least 80% owned), any
parent (which owns at least 80% of such Strategic Investor) or any affiliate (as
such term is defined under Rule 405 promulgated under the Act) of the Strategic
Investor which agrees to be bound by the terms of this Agreement, provided that
nothing in the foregoing shall restrict any Strategic Investor from entering
into a bona fide hedge transaction during the period set forth in this
subsection, with respect to the Common Stock issuable upon conversion of the
Series D Preferred Stock.
3. Confidentiality.
---------------
3.1 Confidentiality.
---------------
(a) Disclosure of Terms. The terms and conditions (the
-------------------
"Financing Terms") of this Agreement, the Series D Agreement, the Voting
Agreement of even date herewith (collectively, the "Financing Agreements"),
including their existence, shall be considered confidential information and
shall not be disclosed by the Company or by Intel to any third party except in
accordance with the provisions set forth below or as required by law.
(b) Press Releases, Etc. Following the Closing, the Company
-------------------
may issue a press release disclosing that Intel has invested in the Company;
provided that the final form of the press release is approved in advance in
writing by Intel. Intel's name and the fact that Intel is an investor in the
Company can be included in a reusable press release boilerplate statement, so
long as Intel has given the Company its initial approval of such boilerplate
statement and the boilerplate statement is reproduced in exactly the form in
which it was approved. Such boilerplate statement may be posted on the Company's
Web page. No other announcements regarding Intel's investment in the Company in
a press release, conference, advertisement, announcement, professional or trade
publication, mass marketing materials or otherwise to the general public may be
made without such Investor's prior written consent. In addition, the Company
shall notify each Investor that the Company considers the Financing Terms to be
confidential information and that the Financing Terms should not be disclosed by
the Investors other than in accordance with the terms of this Section 3;
provided, further, the Company shall notify each member of the Board of
Directors that the directors are bound by their fiduciary duties to the Company
to maintain the confidentiality of the Financing Terms.
(c) Permitted Disclosures. Notwithstanding the foregoing,
---------------------
(a) Intel and/or the Company may disclose any of the Financing Terms to its
current or bona fide prospective investors, employees, investment bankers,
lenders, accountants and attorneys, in each case (other than to a current or
bona fide prospective investor) only where such person or entities are under
appropriate nondisclosure obligations, either express or implied, and in the
case of a current or
-18-
<PAGE>
bona fide prospective investor only where such person or entity has been
informed by the Company that such information is confidential; and (b) Intel
and/or the Company may disclose (other than in a press release or other public
announcement described in subsection (ii)) solely the fact that Intel is an
investor in the Company to any third parties without the requirement for the
consent of any other party.
(d) Legally Compelled Disclosure. In the event that either
----------------------------
the Company or Intel is requested or becomes legally compelled (including
without limitation, pursuant to securities laws and regulations) to disclose the
existence of the Financing Agreements or any of the Financing Terms hereof in
contravention of the provisions of this Section 3.1, such party (the "Disclosing
Party") shall provide the other party (the "Non-Disclosing Party") with prompt
written notice of that fact so that the appropriate party may seek (with the
cooperation and reasonable efforts of the other party) a protective order,
confidential treatment or other appropriate remedy. In such event, the
Disclosing Party shall furnish only that portion of the information which is
reasonably required and shall use reasonable efforts to assist in obtaining
confidential treatment for such information to the extent reasonably requested
by the Non-Disclosing Party.
(e) Other Information. The provisions of this Section 3.1
-----------------
shall be in addition to, and not in substitution for, the provisions of any
separate nondisclosure agreement executed by any of the parties hereto with
respect to the transactions contemplated hereby.
(f) All notices required under this Section shall be made
pursuant to Section 4.5 of this Agreement.
3.2 Amendment. Any provision of this Section 3 may be amended
---------
and the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of the Company and Intel.
4. Miscellaneous.
-------------
4.1 Successors and Assigns. Except as otherwise provided
----------------------
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties
(including transferees of any shares of Registrable Securities). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
4.2 Governing Law. This Agreement shall be governed by and
-------------
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
4.3 Counterparts. 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.
-19-
<PAGE>
4.4 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
4.5 Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
delivery by confirmed facsimile transmission, nationally recognized overnight
courier service, or upon deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereof,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.
4.6 Expenses. If any action at law or in equity is necessary to
--------
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
4.7 Entire Agreement: Amendments and Waivers. This Agreement
----------------------------------------
(including the Exhibits hereto, if any) constitutes the full and entire
understanding and agreement among the parties with regard to the subjects hereof
and thereof. Except for Sections 2.6, 2.7, 2.8, 2.9, 2.10 and 3, which shall
require the consent of the party benefiting from or subject to such provision,
any term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the holders of a majority of the Registrable Securities. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Registrable Securities, each future holder of all such Registrable
Securities, and the Company.
4.8 Severability. If one or more provisions of this Agreement
------------
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
4.9 Aggregation of Stock. All shares of Registrable Securities
--------------------
held or acquired by affiliated entities or persons shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.
-20-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
iBEAM BROADCASTING CORPORATION
_____________________________________
Peter Desnoes
Chief Executive Officer
Address: 645 Almanor Avenue
Suite 100
Sunnyvale, CA 94086
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>
INVESTORS:
CROSSPOINT VENTURE PARTNERS 1997
_____________________________________
Rich Shapero
General Partner
Address: 2925 Woodside Road
Woodside, CA 94062
ACCEL VI L.P.
By: Accel VI Associates L.L.C.
Its General Partner
_____________________________________
Carter Sednaoui
Managing Member
Address: 428 University Avenue Accel Partners
Palo Alto, CA 94301 One Palmer Square
Attn: J. Peter Wagner Princeton, NJ 08542
Attn: G. Carter
Sednaoui
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>
ACCEL INTERNET FUND II L.P.
By: Accel Internet Fund II Associates L.L.C.
Its General Partner
_____________________________________________
Carter Sednaoui
Managing Member
Address: 428 University Avenue Accel Partners
Palo Alto, CA 94301 One Palmer Square
Attn: J. Peter Wagner Princeton, NJ 08542
Attn: G. Carter
Sednaoui
ACCEL KEIRETSU VI L.P.
By: Accel Keiretsu VI Associates L.L.C.
Its General Partner
_____________________________________________
Carter Sednaoui
Managing Member
Address: 428 University Avenue Accel Partners
Palo Alto, CA 94301 One Palmer Square
Attn: J. Peter Wagner Princeton, NJ 08542
Attn: G. Carter
Sednaoui
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>
ACCEL INVESTORS '98 L.P.
By: ___________________________________
Carter Sednaoui
General Partner
Address: 428 University Avenue Accel Partners
Palo Alto, CA 94301 One Palmer Square
Attn: J. Peter Wagner Princeton, NJ 08542
Attn: G. Carter
Sednaoui
MEDIA TECHNOLOGY VENTURES, L.P.
By: ___________________________________
Title: ________________________________
Address: One First Street
Los Altos, CA 94022
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>
MEDIA TECHNOLOGY VENTURES
ENTREPRENEURS FUND, L.P.
By: ___________________________________
Title: ________________________________
Address: One First Street
Los Altos, CA 94022
ANNABEL J. MONTGOMERY, as Trustee of the
ANNABEL MONTGOMERY REVOCABLE TRUST DATED
FEBRUARY 7, 1991 and JAMES W. MONTGOMERY, as
tenants in common, each as to an undivided
one-half interest
_______________________________________
Annabel J. Montgomery, Trustee
MONTGOMERY & ASSOCIATES, L.P.
By: ___________________________________
Title: ________________________________
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>
CULBARA, INC.
By: __________________________________
Title: _______________________________
Address: 100 Wilshire Blvd. Suite 400
Santa Monica, CA 90401
G&H PARTNERS
By: __________________________________
Title: _______________________________
STANFORD UNIVERSITY
______________________________________
Carol Filmer
Address: Stanford Management Company
2770 Sand Hill Road
Menlo Park, CA 94025
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>
J.P. MORGAN DIRECT VENTURE CAPITAL
INSTITUTIONAL INVESTORS LLC
By: __________________________________
Name: ________________________________
Title: _______________________________
Address: 522 5/TH/ Avenue.
New York, New York 10036
J.P. MORGAN DIRECT VENTURE
CAPITAL PRIVATE INVESTORS LLC
By: __________________________________
Name: ________________________________
Title: _______________________________
Address: 522 5/TH/ Avenue.
New York, New York 10036
INTEL CORPORATION
By: __________________________________
Name: ________________________________
Title: _______________________________
Address: 2200 Mission College Blvd.
Santa Clara, CA 95052-8119
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>
MICROSOFT CORPORATION
By: __________________________________
Name: ________________________________
Title: _______________________________
Address: One Microsoft Way
Redmond, WA 98052-6399
COVAD COMMUNICATIONS INVESTMENT CORP.
By: __________________________________
Name: ________________________________
Title: _______________________________
CRESCENDO WORLD FUND LLC
By: __________________________________
Name: ________________________________
Title: _______________________________
EAGLE VENTURES WF, LLC
By: __________________________________
Name: ________________________________
Title: _______________________________
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>
LUNN-iBEAM, LLC
By: LUNN PARTNERS, LLC
ITS MANAGER
______________________________________
Robert J. Lunn
Managing Member
PETER B. DESNOES, IRA A/C 774-91015
GUARANTEE & TRUST COMPANY, TTEE
______________________________________
ROBERT C. HAWK
______________________________________
Address: 7585 S. Biscay Street
Aurora, CO 80016
LEN GROSSI
______________________________________
Address: 5555 Melrose Avenue
Hollywood, CA 90038
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>
FRED SEEGAL
______________________________________
Address: 31 West 52/nd/ Street
27/th/ Floor
New York, New York 10019
WS INVESTMENT COMPANY 99B
By: __________________________________
Name: ________________________________
Title: _______________________________
Address: 650 Page Mill Road
Palo Alto, CA 94304
CHRIS DIER
______________________________________
BRUCE D. LAWLER
______________________________________
TOM GILLIS
______________________________________
JEREMY ZULLO
______________________________________
NILS LAHR
______________________________________
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>
DAVID STREHLOW
______________________________________
BOB DAVIS
______________________________________
PHILIP ROSEDALE
______________________________________
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>
COMDISCO, INC.
By: __________________________________
Title: _______________________________
Address: 100 Hamilton Ste. 104A 6111 North River Road
Palo Alto, CA 94301 Rosemont, IL 60018
Attn: Christine Ferra Attn: Venture Group
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>
SONY CORPORATION OF AMERICA
By: _________________________________
Title: ______________________________
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>
Schedule A
----------
Schedule of Investors
---------------------
Crosspoint Venture Partners 1997
Accel VI L.P.
Accel Internet Fund II L.P.
Accel Keiretsu VI L.P.
Accel Investors '98 L.P.
Media Technology Ventures, L.P.
Media Technology Ventures
Entrepreneurs Fund, L.P.
Annabel J. Montgomery
As Trustee of the Annabel J.
Montgomery Revocable Trust dated
February 7, 1991 and James W.
Montgomery
Montgomery & Associates LP
J.P. Morgan Direct Venture Capital
Institutional Investors, LLC
J.P. Morgan Direct Venture Capital
Private Investors LLC
Intel Corporation
Microsoft Corporation
Covad Communications
Investment Corp.
S-1
<PAGE>
Crescendo World Fund, LLC
Eagle Ventures WF, LLC
Lunn-iBEAM, LLC
Peter B. Desnoes, IRA A/C
774-91015 Guarantee & Trust
Company, TTEE
Robert C. Hawk
Len Grossi
Fred Seegal
WS Investment Company 99B
Chris L. Dier
Bruce D. Lawler
Tom Gillis
Jeremy Zullo
Nils Lahr
David Strehlow
Bob Davis
Philip Rosendale
Comdisco, Inc.
Sony Corporation of America
S-2
<PAGE>
SCHEDULE B
CORPORATE NON DISCLOSURE AGREEMENT
<PAGE>
EXHIBIT 4.3
NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAW. NO TRANSFER OF THIS WARRANT OR
OF THE SECURITIES ISSUABLE UPON EXERCISE HEREOF SHALL BE VALID OR EFFECTIVE
UNLESS (A) SUCH TRANSFER IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES
LAW, OR (B) THE HOLDER SHALL DELIVER TO THE COMPANY AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND OF ANY
APPLICABLE STATE SECURITIES LAW.
Warrant No. M-1 October 14, 1999
iBEAM BROADCASTING CORPORATION
SERIES D PREFERRED STOCK PURCHASE WARRANT
iBEAM Broadcasting Corporation, a Delaware corporation (the "Company"),
hereby grants to Microsoft Corporation, a Washington corporation ("Microsoft"),
or its permitted assigns or transferees (Microsoft and each such permitted
assignee or transferee being referred to herein as a "holder" and collectively
as the "holders") the right to purchase, at any time after the Exercise Date (as
defined below in Section 1.2) and from time to time on and after the date hereof
until the Expiration Date (as defined below), up to 218,120 fully paid and non-
assessable shares of Series D Preferred Stock of the Company, $.0001 par value
per share (the "Series D Preferred Stock"), on the terms and subject to the
conditions set forth below.
This Series D Preferred Stock Purchase Warrant (hereinafter, this
"Warrant") was originally issued on October 14, 1999 (the "Original Issue
Date"). This Warrant shall expire and be of no further force or effect on the
earlier to occur of (i) the date seven (7) years from the Original Issue Date
and (ii) the date four (4) years from the closing of an initial public offering
of the Company's Common Stock under the Securities Act (the "Expiration Date").
1. Exercise of Warrant.
-------------------
1.1 Exercise and Vesting. Subject to adjustment as hereinafter
--------------------
provided, the rights represented by this Warrant are exercisable on and after
the Exercise Date (as defined below in Section 1.2) until the Expiration Date,
at a price per share (the "Exercise Price") of the Series D Preferred Stock
issuable hereunder equal to $5.96. The Exercise Price shall be payable in cash,
by certified or official bank check as hereinafter provided or in accordance
with Section 1.2 below. This Warrant is fully vested. The shares purchasable
upon exercise of this Warrant, as adjusted from
<PAGE>
time to time pursuant to the provisions of this Warrant, are hereinafter
referred to as the "Warrant Shares."
Upon surrender of this Warrant with a duly executed Notice of Exercise in
the form of Annex A hereto, together with payment, if applicable, of the
Exercise Price for the Warrant Shares purchased, at the Company's principal
executive offices presently located at 645 Almanor Avenue, Suite 100, Sunnyvale,
CA 94086, or at such other address as the Company shall have advised the holder
in writing (the "Designated Office"), the holder shall be entitled to receive a
certificate or certificates for the Warrant Shares so purchased. The Company
agrees that the Warrant Shares shall be deemed to have been issued to the holder
as of the close of business on the date on which this Warrant shall have been
surrendered together with the Notice of Exercise and payment, if applicable, for
such Warrant Shares.
1.2 Right to Convert.
----------------
(a) Subject to the provisions of Section 1.1, at any time or from
time on or prior to the Expiration Date, the holder of this Warrant shall also
have the right to convert this Warrant or any portion thereof (the "Conversion
Right"), without payment by the holder of this Warrant of the Exercise Price in
cash or any other consideration (other than the surrender of rights to receive
Warrant Shares hereunder), into Warrant Shares as provided in this Section 1.2.
Upon exercise of the Conversion Right with respect to a particular number of
Warrant Shares (the "Converted Warrant Shares"), the Company shall deliver to
the holder of this Warrant (without payment by the holder of this Warrant of the
Exercise Price in cash or any other consideration (other than the surrender of
rights to receive Warrant Shares hereunder)) that number of Warrant Shares equal
to the quotient obtained by dividing: (x) the difference between (i) the product
of (A) the Current Market Price of a Warrant Share multiplied by (B) the number
of Converted Warrant Shares and (ii) the product of (A) the Exercise Price
multiplied by (B) the number of the Converted Warrant Shares, in each case as of
the Conversion Date (as defined by Section 1.2(b)), by (y) the Current Market
Price of a Warrant Share on the Conversion Date. No fractional Warrant Shares
shall be issuable upon exercise of the Conversion Right, and if the number of
Warrant Shares to be issued determined in accordance with the following formula
is other than a whole number, the Company shall pay to the holder of this
Warrant an amount in cash equal to the Current Market Price of the resulting
fractional Warrant Share on the Conversion Date.
(b) The Conversion Right may be exercised by the holder of this
Warrant by the surrender of this Warrant as provided in Section 1.1, together
with a written statement specifying that the holder of this Warrant thereby
intends to exercise the Conversion Right and indicating the number of Converted
Warrant Shares which are covered by the exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Corporation of this Warrant,
together with the aforesaid written statement, or on such later date as is
specified therein (the "Conversion Date"). The Corporation shall issue to the
holder of this Warrant as of the Conversion Date a certificate for the Warrant
Shares issuable upon exercise of the Conversion Right and, if applicable, a new
warrant of like tenor evidencing the balance of the Warrant Shares remaining
subject to this Warrant.
-2-
<PAGE>
(c) The term "Current Market Price" for a Warrant Share as of a
specified date shall mean: (i) if the exercise or conversion is in connection
with an initial public offering of the Common Stock, and if the Company's
registration statement relating to such offering has been declared effective by
the Securities and Exchange Commission, then the Current Market Price shall be
the initial "Price to Public" specified in the final prospectus with respect to
the offering, (ii) if the Common Stock is publicly traded on such date, the
average closing price per share over the preceding 10 trading days as reported
on the principal stock exchange or quotation system on which the Common Stock is
listed or quoted, or (iii) if the Common Stock is not publicly traded on such
date, the Current Market Price shall be the greater of the book value
(determined in accordance with GAAP) and the appraised value per Warrant Share
as of such date determined by an investment banking firm of recognized standing
selected by the Company and reasonably satisfactory to the holder hereof. Each
of the Company and Microsoft shall pay one-half of the fees and expenses of such
investment banking firm. In the event that the holder disputes such appraised
value, the holder shall be entitled to select an additional investment banking
firm of recognized standing and paid for by the holder to calculate the
appraised value and the Company and the holder shall use their good faith best
efforts to agree on the appraised value based on the reports of the two
investment banking firms. In the event that the Company and the holder are
still unable to reach agreement as to the appraised value, the Company and the
holder agree to submit such determination to binding arbitration.
2. Transfer; Issuance of Stock Certificates; Restrictive Legends.
-------------------------------------------------------------
2.1 Transfer. Except as expressly permitted in the following
--------
sentence, this Warrant and the rights hereunder are not transferable by the
holder hereof. Notwithstanding the foregoing, this Warrant may be assigned to
any entity controlled by or under common control with (as evidenced by ownership
of 50% or more of the outstanding voting stock or other interests of such
entity) Microsoft. Subject to compliance with the restrictions on transfer set
forth in this Section 2, each transfer of this Warrant and all rights hereunder,
in whole or in part, shall be registered on the books of the Company to be
maintained for such purpose, upon surrender of this Warrant at the Designated
Office, together with a written assignment of this Warrant in the form of Annex
B hereto duly executed by the holder or its agent or attorney. Upon such
surrender and delivery, the Company shall execute and deliver a new Warrant or
Warrants in the name of the assignee or assignees and in the denominations
specified in such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, if any. A
Warrant, if properly assigned in compliance with the provisions hereof, may be
exercised by the new holder for the purchase of Warrant Shares without having a
new Warrant issued. All Warrants issued upon any assignment of Warrants shall
be the valid obligations of the Company, evidencing the same rights, and
entitled to the same benefits as the Warrants surrendered upon such registration
of transfer or exchange.
2.2 Stock Certificates. Certificates for the Warrant Shares shall be
------------------
delivered to the holder within a reasonable time after the rights represented by
this Warrant shall have been exercised pursuant to Section 1, and a new Warrant
representing the share, shares or fraction of a share of Common Stock, if any,
with respect to which this Warrant shall not then have been exercised shall also
be issued to the holder within such time. The issuance of certificates for
Warrant Shares upon the exercise of this Warrant shall be made without charge to
the holder hereof
-3-
<PAGE>
including, without limitation, any tax that may be payable in respect thereof;
provided, however, that the Company shall not be required to pay any income tax
to which the holder hereof may be subject in connection with the issuance of
this Warrant or the Warrant Shares.
2.3 Restrictive Legends. (a) Except as otherwise provided in this
-------------------
Section 2, each certificate for Warrant Shares initially issued upon the
exercise of this Warrant, and each certificate for Warrant Shares issued to any
subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAW. NO TRANSFER OF
THE SHARES REPRESENTED BY THIS CERTIFICATE SHALL BE VALID OR
EFFECTIVE UNLESS (A) SUCH TRANSFER IS MADE PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND IN
COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (B) THE
HOLDER SHALL DELIVER TO THE COMPANY AN OPINION OF COUNSEL IN FORM
AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH
PROPOSED TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS.
(b) Except as otherwise provided in this Section 2, each Warrant
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW. NO
TRANSFER OF THIS WARRANT OR OF THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF SHALL BE VALID OR EFFECTIVE UNLESS (A) SUCH TRANSFER IS MADE
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAW, OR (B)
THE HOLDER SHALL DELIVER TO THE COMPANY AN OPINION OF COUNSEL IN FORM
AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER
IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
OF ANY APPLICABLE STATE SECURITIES LAW.
Notwithstanding the foregoing, the legend requirements of this Section 2.3 shall
terminate as to any particular Warrant or Warrant Share when the Company shall
have received from the holder thereof an opinion of counsel in form and
substance reasonably acceptable to the Company that such legend is not required
in order to ensure compliance with the Securities Act. Whenever the
restrictions imposed by this Section 2.3 shall terminate, the holder hereof or
of Warrant Shares, as the case may be, shall be entitled to receive from the
Company without cost to such holder a new Warrant or certificate for Warrant
Shares of like tenor, as the case may be, without such restrictive legend.
-4-
<PAGE>
3 Adjustment of Number of Shares; Exercise Price; Nature of Securities
--------------------------------------------------------------------
Issuable Upon Exercise of Warrants.
----------------------------------
3.1 Exercise Price; Adjustment of Number of Shares. The Exercise
----------------------------------------------
Price set forth in Section 1 hereof and the number of shares purchasable
hereunder shall be subject to adjustment from time to time as hereinafter
provided.
3.2 Redemption or Conversion of Preferred Stock. If all of the
-------------------------------------------
Series D Preferred Stock is redeemed or converted into shares of Common Stock,
then this Warrant shall automatically become exercisable for that number of
shares of Common Stock equal to the number of shares of Common Stock that would
have been received if this Warrant had been exercised in full and the shares of
Series D Preferred Stock received thereupon had been simultaneously converted
into shares of Common Stock immediately prior to such event, and the Exercise
Price shall be automatically adjusted to equal the number obtained by dividing
(i) the aggregate Purchase Price of the shares of Series D Preferred Stock for
which this Warrant was exercisable immediately prior to such redemption or
conversion, by (ii) the number of shares of Common Stock for which this Warrant
is exercisable immediately after such redemption or conversion.
3.3 Reorganization, Reclassification, Consolidation, Merger or Sale.
---------------------------------------------------------------
If any capital reorganization or reclassification of the capital stock of the
Company, or any consolidation or merger of the Company with another entity, or
the sale of all or substantially all of the Company's assets to another person
or entity (collectively referred to as a "Transaction") shall be effected in
such a way that holders of Series D Preferred Stock shall be entitled to receive
stock, securities, cash or assets with respect to or in exchange for Series D
Preferred Stock, then, as a condition of such Transaction, reasonable, lawful
and adequate provisions shall be made whereby the holder of this Warrant shall
thereafter have the right to purchase and receive upon the basis and upon the
terms and conditions specified in this Warrant, upon exercise of this Warrant
and in lieu of the Warrant Shares immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby, such number,
amount and like kind of shares of stock, securities, cash or assets as may be
issued or payable pursuant to the terms of the Transaction with respect to or in
exchange for the number of shares of Series D Preferred Stock immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby as if such shares were outstanding immediately prior to the
Transaction, and in any such case appropriate provision shall be made with
respect to the rights and interest of the holders to the end that the provisions
hereof (including, without limitation, provisions for adjustments of the
Exercise Price and of the number of Warrant Shares purchasable and receivable
upon the exercise of this Warrant) shall thereafter be applicable, as nearly as
may be practicable, in relation to any shares of stock or securities thereafter
deliverable upon the exercise hereof.
3.4 Stock Splits, Stock Dividends and Reverse Stock Splits. In case
------------------------------------------------------
at any time the Company shall subdivide its outstanding shares of Series D
Preferred Stock into a greater number of shares, or shall declare and pay any
stock dividend with respect to its outstanding stock that has the effect of
increasing the number of outstanding shares of Series D Preferred Stock, the
Exercise Price in effect immediately prior to such subdivision or stock dividend
shall be proportionately reduced and the number of Warrant Shares purchasable
pursuant to this Warrant immediately prior to such subdivision or stock dividend
shall be proportionately increased, and
-5-
<PAGE>
conversely, in case at any time the Company shall combine its outstanding shares
of Series D Preferred Stock into a smaller number of shares, the Exercise Price
in effect immediately prior to such combination shall be proportionately
increased and the number of Warrant Shares purchasable upon the exercise of this
Warrant immediately prior to such combination shall be proportionately reduced.
3.5 Company to Prevent Dilution. In case at any time or from time to
---------------------------
time conditions arise by reason of action taken by the Company which are not
adequately covered by this Section 3, and which might materially and adversely
affect the exercise rights of the holder hereof, unless the adjustment necessary
shall be agreed by the Company and the holder hereof, the Board of Directors of
the Company shall appoint a firm of independent certified public accountants of
national standing, reasonably acceptable to the holder, who at the Company's
expense shall give their opinion upon the adjustment necessary with respect to
the Exercise Price and the number of Warrant Shares purchasable upon exercise of
this Warrant, if any, so as to preserve, without dilution, the exercise rights
of the holder hereof. In the event that the holder disputes such adjustment,
the holder shall be entitled to select an additional firm of independent
certified public accountants of national standing and paid for by the holder to
calculate such adjustment and the Company and the holder shall use their good
faith best efforts to agree on such adjustment based on the reports of the two
accounting firms. In the event that the Company and the holder are still unable
to reach agreement as to such adjustment, the Company and the holder agree to
submit such determination to binding arbitration. Upon determination of such
adjustment, the Board of Directors shall forthwith make the adjustments
described therein.
3.6 Dissolution, Liquidation or Wind-Up. In case the Company shall,
-----------------------------------
at any time prior to the exercise of this Warrant, dissolve, liquidate or wind
up its affairs, the holder hereof shall be entitled, upon the exercise of this
Warrant, to receive, in lieu of the Warrant Shares which the holder would have
been entitled to receive, the same kind and amount of assets as would have been
issued, distributed or paid to such holder upon any such dissolution,
liquidation or winding up with respect to such Warrant Shares, had such holder
hereof been the holder of record of the Warrant Shares receivable upon the
exercise of this Warrant on the record date for the determination of those
persons entitled to receive any such liquidating distribution.
3.7 Accountant's Certificate. In each case of an adjustment in the
------------------------
Exercise Price, number of Warrant Shares or other stock, securities or property
receivable upon the exercise of this Warrant, the Company shall compute, and
upon the holder's request shall at the Company's expense cause independent
public accountants of recognized standing selected by the Company and reasonably
acceptable to the holder to certify such computation, such adjustment in
accordance with the terms of this Warrant and prepare a certificate setting
forth such adjustment and showing in detail the facts upon which such adjustment
is based, including a statement of (i) the number of shares of Common Stock of
each class outstanding or deemed to be outstanding, (ii) the adjusted Exercise
Price and (iii) the number of Warrant Shares issuable upon exercise of this
Warrant. The Company will forthwith mail a copy of each such certificate to the
holder hereof. In the event that the holder disputes such adjustment, the
holder shall be entitled to select an additional firm of independent certified
public accountants of national standing and paid for by the holder to certify
such adjustment and the Company and the holder shall use their good faith best
efforts to agree on such adjustment based on the reports of the two accounting
firms. In the event that the Company
-6-
<PAGE>
and the holder are still unable to reach agreement as to such adjustment, the
Company and the holder agree to submit such determination to binding
arbitration. Upon determination of such adjustment, the Board of Directors shall
forthwith make the adjustments described therein.
3.8 Definition of Common Stock. As used in this Section 3, the term
--------------------------
"Common Stock" shall mean and include the Company's authorized common stock of
any class or classes and any securities convertible into or exchangeable for
such common stock.
4. Registration; Exchange and Replacement of Warrant; Reservation of
-----------------------------------------------------------------
Shares.
- ------
The Company shall keep at the Designated Office a register in which
the Company shall provide for the registration, transfer and exchange of this
Warrant. The Company shall not at any time, except upon the dissolution,
liquidation or winding-up of the Company, close such register so as to result in
preventing or delaying the exercise or transfer of this Warrant.
The Company may deem and treat the person in whose name this Warrant
is registered as the holder and owner hereof for all purposes and shall not be
affected by any notice to the contrary, until presentation of this Warrant for
registration or transfer as provided in this Section 5.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, and upon
surrender and cancellation of this Warrant, if mutilated, the Company will make
and deliver a new Warrant of like tenor, in lieu of this Warrant without
requiring the posting of any bond or the giving of any security.
The Company shall at all times reserve and keep available out of its
authorized shares of Series D Preferred Stock, solely for the purpose of
issuance upon the exercise of this Warrant, such number of shares of Series D
Preferred Stock as shall be issuable upon the exercise hereof and shall at all
times reserve and keep available out of its authorized shares of Common Stock, a
sufficient number of shares to provide for the issuance of Common Stock upon
conversion of the Warrant Shares. The Company covenants and agrees that, upon
exercise of this Warrant and payment of the Exercise Price therefor, if
applicable, all Warrant Shares issuable upon such exercise shall be duly and
validly issued, fully paid and non-assessable.
5. Registration Rights.
-------------------
The holder shall have the registration rights set forth in the Amended
and Restated Investors' Rights Agreement dated as of October 14, 1999 by and
among the Company and the investors listed on Schedule A thereto, as such
agreement may be heretofore amended, with respect to the Common Stock issuable
upon the exchange or conversion of the Warrant Shares.
6. Notices.
-------
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when delivered
personally, or mailed by registered or certified mail, return receipt requested,
or telecopied or telexed and confirmed in writing and delivered personally or
mailed by registered or certified mail, return receipt requested:
-7-
<PAGE>
(a) If to the holder of this Warrant, to the address of such
holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 1 of
this Warrant;
or at such other address as the holder or the Company may hereafter have advised
the other.
7. No Rights as Stockholders.
-------------------------
This Warrant does not entitle the holder to any voting rights or other
rights as a stockholder of the Company prior to the exercise thereof.
8. Successors.
----------
All the covenants, agreements, representations and warranties
contained in this Warrant shall bind the parties hereto and their respective
heirs, executors, administrators, distributees, successors, assigns and
transferees.
9. Law Governing.
-------------
This Warrant shall be construed and enforced in accordance with, and
governed by, the laws of the State of Washington (not including the choice of
law rules thereof) regardless of the jurisdiction of creation or domicile of the
Company or its successors or of the holder at any time hereof.
10. Entire Agreement; Amendments and Waivers.
----------------------------------------
This Warrant sets forth the entire understanding of the parties with
respect to the transactions contemplated hereby. The failure of any party to
seek redress for the violation or to insist upon the strict performance of any
term of this Warrant shall not constitute a waiver of such term and such party
shall be entitled to enforce such term without regard to such forbearance. This
Warrant may be amended, and any breach of or compliance with any covenant,
agreement, warranty or representation may be waived, only if the Company has
obtained the written consent or written waiver of the holder, and then such
consent or waiver shall be effective only in the specific instance and for the
specific purpose for which given.
11. Severability; Headings.
----------------------
If any term of this Warrant as applied to any person or to any
circumstance is prohibited, void, invalid or unenforceable in any jurisdiction,
such term shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or invalidity without in any way affecting any other term of this
Warrant or affecting the validity or enforceability of this Warrant or of such
provision in any other jurisdiction. The Section headings in this Warrant have
been inserted for purposes of convenience only and shall have no substantive
effect.
[remainder of page intentionally blank]
-8-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed as of the date first written above.
iBEAM BROADCASTING CORPORATION
By:________________________________
Name:
Title:
Accepted and agreed:
MICROSOFT CORPORATION
By:_______________________________
Gregory B. Maffei
Senior Vice President, and
Chief Financial Officer
-9-
<PAGE>
ANNEX A
-------
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the within Warrant)
The undersigned hereby irrevocably elects to exercise the right to
purchase ___________ shares of Series D Preferred Stock of iBEAM Broadcasting
Corporation covered by the within Warrant according to the conditions hereof and
herewith makes payment of the Exercise Price of such shares in full in the
amount of $____________________.
By: ___________________________________
(Signature of Registered Holder)
Dated:_______________
<PAGE>
ANNEX B
-------
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the under-signed under this Warrant, with respect to the number of
shares of Series D Preferred Stock set forth below:
No. of Shares of
Name and Address of Assignee Common Stock
- ---------------------------- ------------
and does hereby irrevocably constitute and appoint ________ _____________
attorney-in-fact to register such transfer onto the books of iBEAM Broadcasting
Corporation maintained for the purpose, with full power of substitution in the
premises.
Dated:___________________________ Print Name:______________________
Signature:_______________________
Witness:_________________________
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of this Warrant in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT 4.4
VOTING AGREEMENT
THIS VOTING AGREEMENT (the "Agreement") is made and entered into as of
October 14, 1999, by and among iBEAM BROADCASTING CORPORATION, a Delaware
corporation (the "Company"), the holders of the Company's Series A Preferred
Stock (the "Series A Stock"), Series B Preferred Stock (the "Series B Stock"),
Series C Preferred Stock ("Series C Stock"), and Series D Preferred Stock (the
"Series D Stock" and together with the Series A, B, and C Stock, the "Preferred
Stock") listed on the Schedule of Investors attached as Schedule A hereto (the
----------
"Investors"), and certain holders of Common Stock of the Company (the
"Participating Founders") listed on the Schedule of Participating Founders
attached as Schedule B hereto. The Company, the Participating Founders and the
----------
Investors are individually each referred to herein as a "Party" and are
collectively referred to herein as the "Parties." The Company's Board of
Directors is referred to herein as the "Board."
WITNESSETH:
----------
WHEREAS, certain of the Investors (the "Existing Investors") hold
shares of the Company's Series A Stock, Series B Stock and Series C Stock and/or
shares of Common Stock issued upon conversion thereof;
WHEREAS, certain Investors (the "New Investors") are parties to the
Series D Preferred Stock Purchase Agreement of even date herewith among the
Company and the New Investors (the "Series D Agreement"), which provides that as
a condition to the closing of the sale of the Series D Stock pursuant thereto,
this Agreement must be executed and delivered by such New Investors, Existing
Investors, the Participating Founders and the Company;
WHEREAS, the Participating Founders are the beneficial owners of the
number of shares of Common Stock of the Company set forth opposite his/her name
on Schedule B hereto and the Participating Founders and Existing Investors wish
to provide further inducement to the New Investors to purchase shares of Series
D Stock pursuant to the Series D Agreement; and
WHEREAS, the Company's Restated Certificate of Incorporation provides
that (a) holders of shares of the Company's Series A Stock, voting as a single
class, shall elect one (1) member of the Board (the "Series A Director") and (b)
holders of shares of the Company's Series B Stock, voting together as a single
class, shall elect one (1) member of the Board (the "Series B Director");
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the Company, the Participating Founders and the Investors
hereby agree as follows:
1. Agreement to Vote. Each Investor, as a holder of Preferred Stock,
-----------------
hereby agrees on behalf of itself and any transferee or assignee of any such
shares of the Preferred Stock, to hold all of the shares of Preferred Stock
registered in its name (and any securities of the Company issued with respect
to, upon conversion of, or in exchange or substitution of the Preferred Stock,
and any other voting securities of the Company subsequently acquired by such
<PAGE>
Investor) (hereinafter collectively referred to as the "Investor Shares")
subject to, and to vote the Investor Shares at a regular or special meeting of
stockholders (or by written consent) in accordance with, the provisions of this
Agreement. Each Founder, as a holder of Common Stock of the Company, hereby
agrees on behalf of itself and any transferee or assignee of any such shares of
Common Stock, to hold all of such shares of Common Stock and any other
securities of the Company acquired by such Founder in the future (and any
securities of the Company issued with respect to, upon conversion of, or in
exchange or substitution for such securities) (the "Founder Shares") subject to,
and to vote the Founder Shares at a regular or special meeting of stockholders
(or by written consent) in accordance with, the provisions of this Agreement.
2. Election of Directors.
---------------------
(a) In any election of directors of the Company, the Parties
shall each vote at any regular or special meeting of stockholders (or by written
consent) such number of shares of Common Stock and Preferred Stock then owned by
them (or as to which they then have voting power) as may be necessary to elect
one (1) director who shall be the Company's chief executive officer.
(b) In any election of directors of the Company, the Parties
holding shares of Series A Stock shall each vote at any regular or special
meeting of stockholders (or by written consent) such number of shares of Series
A Stock then owned by them (or as to which they then have voting power) as may
be necessary to elect one (1) director (the "Series A Director"), nominated by
Crosspoint Venture Partners 1997 ("Crosspoint") so long as Crosspoint owns at
least fifty percent (50%) of the Common Stock issued or issuable upon conversion
of the Series A Stock originally purchased by Crosspoint pursuant to that
certain Series A Preferred Stock Purchase Agreement dated April 16, 1998.
(c) In any election of directors of the Company, the Parties
holding shares of Series B Stock shall each vote at any regular or special
meeting of stockholders (or by written consent) such number of shares of Series
B Stock then owned by them (or as to which they then have voting power) as may
be necessary to elect one (1) director (the "Series B Director"), nominated by
Accel Partners and its affiliated funds ("Accel") so long as Accel owns at least
fifty percent (50%) of the Common Stock issued or issuable upon conversion of
the Series B Stock purchased by such Investor pursuant to the Series B Stock
Purchase Agreement dated June 8, 1998.
(d) In any election of directors of the Company, the Parties
shall each vote at any regular or special meeting of stockholders (or by written
consent) such number of voting securities of the Company then owned by them (or
as to which they then have voting power) as may be necessary to elect any
additional directors that are approved by a majority of the Board (the "Industry
Directors").
3. Removal. Any director of the Company may be removed from the
-------
board in the manner allowed by law and the Company's Certificate of
Incorporation and Bylaws, but with respect to a director designated pursuant to
subsections 2(a) through 2(d) above, only upon the vote or written consent of
the majority of the stockholders entitled to designate such director.
2
<PAGE>
4. Vacancy. Any vacancy occurring to a director designated pursuant
-------
to subsections 2(a) through 2(d) above shall only be filled according to the
vote or written consent of the stockholders entitled to designate such director.
5. Voting on Certain Transactions.
------------------------------
(a) Each of Microsoft Corporation, Sony Corporation of America,
Covad Communications Investment Corp. and Covad Communications Group, Inc. ("the
Strategic Investors") shall take such action as may be required so that all
securities of the Company entitled to vote in connection with a Corporate
Transaction (as defined below) beneficially owned by such Investor and/or any of
their controlled affiliates ("Voting Securities") are voted on all Corporate
Transactions in the same manner as voted by a majority of the Board. For
purposes of this Agreement, Corporate Transaction shall mean (i) the acquisition
of the Company by another entity by means of any transaction or series of
related transactions that results in the transfer of fifty percent (50%) or more
of the outstanding voting power of the Company or (ii) the sale of all or
substantially all of the assets of the Company, provided that no transferee of
such voting power or assets is (A) a director, officer or affiliate of the
Company or (B) an associate of such a director, officer or affiliate (with
affiliate and associate having the meaning set forth in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended ("Rule 12b-2"). For purposes of this
Agreement, an entity will be deemed a controlled affiliate of a Strategic
Investor if the Strategic Investor controls such entity within the meaning of
Rule 12b-2.
(b) Each Strategic Investor and its controlled affiliates as
holders of shares of Voting Securities, shall be present, in person or by proxy,
at all meeting of stockholders of the Company so that all shares of Voting
Securities beneficially owned by such Strategic Investor and/or its controlled
affiliates may be counted for the purpose of determining the presence of a
quorum at such meetings.
(c) Each Investor and its controlled affiliates, as holders of
shares of Voting Securities, shall not exercise any dissenters rights under
applicable law at any time for such Corporate Transactions, if applicable;
provided, however, that if any agreement governing the terms of a Corporate
Transaction requires an Investor to provide an indemnity in connection with the
Investor's transfer or exchange of capital stock in the Company, the terms of
such agreement shall provide that such indemnity shall be provided ratably by
all stockholders of the Company, in proportion to their percentage interest in
the outstanding capital stock of the Company, assuming conversion of all
outstanding Preferred Stock into Common Stock; provided further that the maximum
aggregate dollar amount of the indemnity payable by any Investor shall not
exceed the amount of consideration received by such Investor pursuant to the
terms of the Corporate Transaction.
(d) Each Investor and it controlled affiliates, as holders of
shares of Voting Securities, shall refrain from transferring any securities of
the Company, the acquiror, or any other applicable company during any period
prohibited by then applicable pooling of interests accounting treatment rules,
whether before or after the sale of the Company.
(e) No Strategic Investor nor any of its controlled affiliates
shall deposit any Voting Securities in a voting trust or subject any Voting
Securities to any
3
<PAGE>
arrangement or agreement with respect to the voting of such Voting Securities
except for this Agreement.
6. Legend on Share Certificates. Each certificate representing any
----------------------------
Shares shall be endorsed by the Company with a legend reading substantially as
follows:
"The Shares evidenced hereby are subject to a Voting
Agreement (a copy of which may be obtained upon written
request from the issuer), and by accepting any interest in
such shares the person accepting such interest shall be
deemed to agree to and shall become bound by all the
provisions of said Voting Agreement."
7. Covenants of the Company. The Company agrees to use its best
------------------------
efforts to ensure that the rights granted hereunder are effective and that the
Parties hereto enjoy the benefits thereof. Such actions include, without
limitation, the use of the Company's best efforts to cause the nomination and
election of the directors as provided above. The Company will not, by any
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be performed hereunder by the Company, but will at all times in
good faith assist in the carrying out of all of the provisions of this Agreement
and in the taking of all such actions as may be necessary, appropriate or
reasonably requested by the holders of a majority of the outstanding voting
securities held by the Parties hereto assuming conversion of all outstanding
securities in order to protect the rights of the Parties hereunder against
impairment.
8. No Liability for Election of Recommended Directors. Neither the
--------------------------------------------------
Company, the Participating Founders, the Investors, nor any officer, director,
stockholder, partner, employee or agent of such Party, makes any representation
or warranty as to the fitness or competence of the nominee of any Party
hereunder to serve on the Company's Board by virtue of such Party's execution of
this Agreement or by the act of such Party in voting for such nominee pursuant
to this Agreement.
9. Grant of Proxy. Should the provisions of this Agreement be
--------------
construed to constitute the granting of proxies, such proxies shall be deemed
coupled with an interest and are irrevocable for the term of this Agreement.
10. Specific Enforcement. It is agreed and understood that monetary
--------------------
damages would not adequately compensate an injured Party for the breach of this
Agreement by any Party, that this Agreement shall be specifically enforceable,
and that any breach or threatened breach of this Agreement shall be the proper
subject of a temporary or permanent injunction or restraining order. Further,
each Party hereto waives any claim or defense that there is an adequate remedy
at law for such breach or threatened breach.
11. Execution by the Company. The Company, by its execution in the
------------------------
space provided below, agrees that it will cause the certificates evidencing the
shares of Common Stock and Preferred Stock to bear the legend required by
Section 6 herein, and it shall supply, free of charge, a copy of this Agreement
to any holder of a certificate evidencing shares of capital stock of the Company
upon written request from such holder to the Company at its principal office.
The parties hereto do hereby agree that the failure to cause the certificates
evidencing the shares
4
<PAGE>
of Common Stock and Preferred Stock to bear the legend required by Section 6
herein and/or failure of the Company to supply, free of charge, a copy of this
Agreement as provided under this Section 6 shall not affect the validity or
enforcement of this Agreement.
12. Captions. The captions, headings and arrangements used in this
--------
Agreement are for convenience only and do not in any way limit or amplify the
terms and provisions hereof.
13. Notices. Any notice required or permitted by this Agreement
-------
shall be in writing and shall be sent prepaid registered or certified mail,
return receipt requested, addressed to the other Party at the address shown
below or at such other address for which such Party gives notice hereunder.
Such notice shall be deemed to have been given three (3) days after deposit in
the mail.
14. Term.
----
(a) Except for the provisions of Section 5 hereof, this
Agreement shall terminate and be of no further force or effect upon the earliest
to occur of (i) the consummation of the Company's sale of its Common Stock or
other securities pursuant to a registration statement under the Securities Act
of 1933, as amended, (other than a registration statement relating either to
sale of securities to employees of the Company pursuant to its stock option,
stock purchase or similar plan or a SEC Rule 145 transaction), (ii) the
consummation of the acquisition of the Company by another entity by means of any
transaction or series of related transactions (including, without limitation,
any reorganization, merger or consolidation) that results in the transfer of
fifty percent (50%) or more of the outstanding voting power of the Company or a
sale of all or substantially all of the assets of the Company, (iii) the written
consent of the holders of a majority of the shares held by the Parties hereto,
or (iv) October 12, 2009.
(b) The provisions of Section 5 of this Agreement with respect
to each Strategic Investor or Investor shall terminate and be of no further
force or effect upon the later to occur of: (i) the consummation of the sale of
securities pursuant to a bona fide, firmly underwritten public offering of
shares of common stock of the Company registered under the Securities Act of
1933, as amended, or (ii) such Strategic Investor or Investor and its controlled
affiliates in the aggregate own Voting Securities representing less than 5% of
the then outstanding voting power of the Company.
15. Manner of Voting. The voting of shares pursuant to this
----------------
Agreement may be effected in person, by proxy, by written consent, or in any
other manner permitted by applicable law.
16. Amendments and Waivers. Any term hereof may be amended and the
----------------------
observance of any term hereof may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of the holders of a majority of the then outstanding voting securities
held by the Party or Parties for whose benefit such term has been included in
this Agreement. Any amendment or waiver so effected shall be binding upon the
Parties hereto.
5
<PAGE>
17. Stock Splits, Stock Dividends, etc. In the event of any issuance
----------------------------------
of shares of the Company's voting securities hereafter to any of the Parties
hereto (including, without limitation, in connection with any stock split, stock
dividend, recapitalization, reorganization, or the like), such shares shall
become subject to this Agreement and shall be endorsed with the legend set forth
in Section 5.
18. Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
19. Binding Effect. In addition to any restriction on transfer that
--------------
may be imposed by any other agreement by which any Party hereto may be bound,
this Agreement shall be binding upon the Parties, their respective heirs,
successors and assigns and to such additional individuals or entities that may
become stockholders of the Company and that desire to become Parties hereto;
provided that for any such transfer to be deemed effective, the transferee shall
have executed and delivered an Adoption Agreement substantially in the form
attached hereto as Exhibit A. Upon the execution and delivery of an Adoption
---------
Agreement by any transferee reasonably acceptable to the Company, such
transferee shall be deemed to be a Party hereto as if such transferee's
signature appeared on the signature pages hereto. By their execution hereof or
any Adoption Agreement, each of the Parties hereto appoints the Company as its
attorney-in-fact for the purpose of executing any Adoption Agreement which may
be required to be delivered hereunder.
20. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Delaware, without regard to
conflicts of law principles thereof.
21. Entire Agreement. This Agreement is intended to be the sole
----------------
agreement of the Parties as it relates to this subject matter and does hereby
supersede all other agreements of the Parties relating to the subject matter
hereof.
22. Counterparts. 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.
23. Arbitration. Any controversy between the Parties hereto
-----------
involving any claim arising out of or relating to the termination of this
Agreement, will be submitted to and be settled by final and binding arbitration
in Santa Clara, California, in accordance with the then current Commercial
Arbitration Rules of the American Arbitration Association (the "AAA"), and
judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. Such arbitration shall be conducted by three (3)
arbitrators chosen by the Company, the Investors, and the Participating
Founders, or failing such agreement, an arbitrator experienced in the sale of
similarly-sized companies appointed by the AAA. There shall be limited
discovery prior to the arbitration hearing as follows: (a) exchange of witness
lists and copies of documentary evidence and documents relating to or arising
out of the issues to be
6
<PAGE>
arbitrated, (b) depositions of all party witnesses, and (c) such other
depositions as may be allowed by the arbitrators upon a showing of good cause.
Depositions shall be conducted in accordance with the California Code of Civil
Procedure, the arbitrator(s) shall be required to provide in writing to the
Parties the basis for the award or order of such arbitrator(s), and a court
reporter shall record all hearings, with such record constituting the official
transcript of such proceedings.
7
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
iBEAM BROADCASTING CORPORATION
_____________________________________________
Peter Desnoes
President and Chief Executive Officer
Address: 645 Almanor Avenue
Suite 100
Sunnyvale, CA 94086
SIGNATURE PAGE FOR VOTING AGREEMENT
<PAGE>
INVESTORS:
CROSSPOINT VENTURE PARTNERS 1997
_____________________________________________
Richard Shapero
General Partner
Address: 2925 Woodside Road
Woodside, CA 94062
ACCEL VI L.P.
By: Accel VI Associates L.L.C
Its General Partner
_____________________________________________
Managing Member
Address: 428 University Avenue Accel Partners
Palo Alto, CA 94301 One Palmer Square
Attn: J. Peter Wagner Princeton, NJ 08542
Attn: G. Carter
Sednaoui
SIGNATURE PAGE FOR VOTIN AGREEMENT
<PAGE>
ACCEL INTERNET FUND II L.P.
By: Accel Internet Fund II Associates L.L.C.
Its General Partner
Address: 428 University Avenue Accel Partners
Palo Alto, CA 94301 One Palmer Square
Attn: J. Peter Wagner Princeton, NJ 08542
Attn: G. Carter
Sednaoui
ACCEL KEIRETSU VI L.P
By: Accel Keiretsu VI Associates L.L.C.
Its General Partner
_____________________________________________
Managing Member
Address: 428 University Avenue Accel Partners
Palo Alto, CA 94301 One Palmer Square
Attn: J. Peter Wagner Princeton, NJ 08542
Attn: G. Carter
Sednaoui
SIGNATURE PAGE FOR VOTIN AGREEMENT
<PAGE>
ACCEL INVESTORS '98 L.P.
By: Accel Investors '98 Associates L.L.C.
Its General Partner
__________________________________________________
Managing Member
Address: 428 University Avenue Accel Partners
Palo Alto, CA 94301 One Palmer Square
Attn: J. Peter Wagner Princeton, NJ 08542
Attn: G. Carter
Sednaoui
MEDIA TECHNOLOGY VENTURES, L.P.
By:_______________________________________________
Title:____________________________________________
Address: 1 First Street
Los Altos, CA 94022
MEDIA TECHNOLOGY VENTURES
ENTREPRENEURS FUND, L.P.
By:_______________________________________________
Title:____________________________________________
Address: 1 First Street
Los Altos, CA 94022
SIGNATURE PAGE FOR VOTING AGREEMENT
<PAGE>
ANNABEL J. MONTGOMERY, as Trustee of the ANNABEL
MONTGOMERY REVOCABLE TRUST DATED FEBRUARY 7, 1991,
and JAMES W. MONTGOMERY, as tenants in common,
each as to an undivided one-half interest.
__________________________________________________
Annabel J. Montgomery, Trustee
__________________________________________________
James W. Montgomery
Address: 100 Wilshire Blvd., Suite 400
Santa Monica, CA 90401
MONTGOMERY & ASSOCIATES, L.P.
By:_______________________________________________
Title:____________________________________________
Address: 100 Wilshire Blvd., Suite 400
Santa Monica, CA 90401
CULBARA, INC.
By:_______________________________________________
Title:____________________________________________
Address: 100 Wilshire Blvd., Suite 400
Santa Monica, CA 90401
SIGNATURE PAGE FOR VOTING AGREEMENT
<PAGE>
J.P. MORGAN DIRECT VENTURE CAPITAL
INSTITUTIONAL INVESTORS LLC
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
Address: 522 5/TH/ Avenue.
New York, New York 10036
J.P. MORGAN DIRECT VENTURE
CAPITAL PRIVATE INVESTORS LLC
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
Address: 522 5/TH/ Avenue.
New York, New York 10036
INTEL CORPORATION
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
Address: 2200 Mission College Blvd.
Santa Clara, CA 95052-8119
SIGNATURE PAGE FOR VOTING AGREEMENT
<PAGE>
MICROSOFT CORPORATION
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
Address: One Microsoft Way
Redmond, WA 98052-6399
COVAD COMMUNICATIONS
INVESTMENT CORP.
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
CRESCENDO WORLD FUND LLC
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
EAGLE VENTURES WF, LLC
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
LUNN-iBEAM, LLC
By:_______________________________________________
LUNN PARTNERS, LLC
Managing Member
SIGNATURE PAGE FOR VOTING AGREEMENT
<PAGE>
PETER B. DESNOES, IRA A/C
774-91015 GUARANTEE & TRUST
COMPANY, TTEE
__________________________________________________
ROBERT C. HAWK
__________________________________________________
Address: 7585 S. Biscay Street
Aurora, CO 80016
LEN GROSSI
__________________________________________________
Address: 5555 Melrose Avenue
Hollywood, CA 90038
FRED SEEGAL
__________________________________________________
Address: 31 West 52/nd/ Street
27/th/ Floor
New York, New York 10019
SIGNATURE PAGE FOR VOTING AGREEMENT
<PAGE>
WS INVESTMENT COMPANY 99B
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
Address: 650 Page Mill Road
Palo Alto, CA 94304
CHRIS DIER
__________________________________________________
BRUCE D. LAWLER
__________________________________________________
TOM GILLIS
__________________________________________________
JEREMY ZULLO
__________________________________________________
NILS LAHR
__________________________________________________
DAVID STREHLOW
__________________________________________________
BOB DAVIS
__________________________________________________
PHILIP ROSEDALE
__________________________________________________
SIGNATURE PAGE FOR VOTING AGREEMENT
<PAGE>
COMDISCO, INC.
By:_______________________________________________
Title:____________________________________________
Address: 100 Hamilton Ste. 104A 6111 North River Road
Palo Alto, CA 94301 Rosemont, IL 60018
Attn: Christine Ferra Attn: Venture Group
SIGNATURE PAGE FOR VOTING AGREEMENT
<PAGE>
SONY CORPORATION OF AMERICA
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
SIGNATURE PAGE FOR VOTING AGREEMENT
<PAGE>
PARTICIPATING FOUNDERS:
WILMOT LIVING TRUST U/D/T dated April 18, 1995
__________________________________________________
Robert Wilmot, Trustee
__________________________________________________
Mary J. Wilmot, Trustee
Address: 13,333 La Cresta Drive
Los Altos, CA 94022
__________________________________________________
Navin Chaddha
Address: 14600 NE 42/nd/ Place, #N-402
Bellevue, WA 98007
SIGNATURE PAGE FOR VOTING AGREEMENT
<PAGE>
SCHEDULE A
LIST OF INVESTORS
Crosspoint Venture Partners 1997
Accel VI L.P.
Accel Internet Fund II L.P.
Accel Keiretsu VI L.P.
Accel Investors '98 L.P.
Media Technology Ventures, L.P.
Media Technology Ventures Entrepreneurs Fund, L.P.
Annabel J. Montgomery
As Trustee of the Annabel J. Montgomery Revocable Trust
Dated February 7, 1991 and James W. Montgomery
Culbara, Inc.
Montgomery & Associates, L.P.
J.P. Morgan Direct Venture Capital Institutional Investors, LLC
J.P. Morgan Direct Venture Capital Private Investors LLC
Microsoft Corporation
Covad Communications Investment Corp.
Crescendo World Fund, LLC
Eagle Ventures WF, LLC
Intel Corporation
Lunn-iBEAM, LLC
Peter Desnoes, IRA A/C 774-91015 GUARANTEE & TRUST
COMPANY, TTEE
Robert C. Hawk
Len Grossi
SIGNATURE PAGE FOR VOTING AGREEMENT
<PAGE>
Fred Seegal
WS Investment Company 99B
Chris L. Dier
Bruce D. Lawler
Tom Gillis
Jeremy Zullo
Nils Lahr
David Strehlow
Philip Rosendale
Comdisco, Inc.
Sony Corporation of America
SIGNATURE PAGE FOR VOTING AGREEMENT
<PAGE>
SCHEDULE B
LIST OF PARTICIPATING FOUNDERS:
WILMOT LIVING TRUST U/D/T dated April 18, 1995
Navin Chaddha
<PAGE>
EXHIBIT A
ADOPTION AGREEMENT
------------------
This Adoption Agreement ("Adoption Agreement") is executed by the
undersigned (the "Transferee") pursuant to the terms of that certain Voting
Agreement dated as of October 13, 1999 (the "Agreement") by and among the
Company and certain of its Stockholders. Capitalized terms used but not defined
herein shall have the respective meanings ascribed to such terms in the
Agreement. By the execution of this Adoption Agreement, the Transferee agrees
as follows:
(a) Acknowledgment. Transferee acknowledges that Transferee is
--------------
acquiring certain shares of the capital stock of the Company (the "Stock"),
subject to the terms and conditions of the Agreement.
(b) Agreement. Transferee (i) agrees that the Stock acquired by
---------
Transferee shall be bound by and subject to the terms of the Agreement, and (ii)
hereby adopts the Agreement with the same force and effect as if Transferee were
originally a Party thereto.
(c) Notice. Any notice required or permitted by the Agreement shall
------
be given to Transferee at the address listed beside Transferee's signature
below.
EXECUTED AND DATED this ______ day of _________________, ____.
TRANSFEREE:
By:__________________________________________
Name and Title
Address:_____________________________________
Fax:_________________________________________
Accepted and Agreed:
iBEAM BROADCASTING CORPORATION
By:____________________________
Title:_________________________
<PAGE>
Exhibit 4.5
February 12, 1999
Liberty IB, Inc.
8101 East Prentice Avenue
Suite 500
Englewood, Colorado 80111
Re: Voting Agreement
Gentlemen:
This Letter Agreement will confirm our agreement that pursuant to your
purchase of shares of Series C Preferred Stock of iBEAM Broadcasting Corporation
(the Company), Liberty IB, Inc. (Investor) and the Company hereby agree as
follows:
1. Investor shall take such action as may be required so that all
securities of the Company entitled to vote in connection with a Corporate
Transaction (as defined below) beneficially owned by Investor, Liberty Media
Corporation and/or any of its controlled affiliates (Voting Securities) are
voted on all Corporate Transactions in the same manner as voted by a majority of
the Board of Directors of the Company. For purposes of this Letter Agreement,
Corporate Transaction shall mean (i) the acquisition of the Company by another
entity by means of any transaction or series of related transactions that
results in the transfer of fifty percent (50%) or more of the outstanding voting
power of the Company or (ii) the sale of all or substantially all of the assets
of the Company, provided that no transferee of such voting power or assets is
(A) a director, officer or affiliate of the Company or (B) an associate of such
a director, officer or affiliate (with affiliate and associate having the
meanings set forth in Rule 12b-2 under the Securities Exchange Act of 1934, as
amended (Rule 12b-2")). For purposes of this Letter Agreement, an entity will be
deemed a controlled affiliate of Investor or Liberty Media Corporation if
Investor or Liberty Media Corporation controls such entity within the meaning of
Rule 12b-2.
(a) Investor, Liberty Media Corporation and its controlled
affiliates, as holders of shares of Voting Securities, shall be present, in
person or by proxy, at all meetings of stockholders of the Company so that all
shares of Voting Securities beneficially owned by Investor, Liberty Media
Corporation and/or its controlled affiliates may be counted for the purpose of
determining the presence of a quorum at such meetings.
<PAGE>
(b) Investor, Liberty Media Corporation and its controlled
affiliates, as holders of shares of Voting Securities, shall not exercise any
dissenters rights under applicable law at any time for such Corporate
Transactions, if applicable.
(c) Investor, Liberty Media Corporation and its controlled
affiliates, as holders of shares of Voting Securities, shall refrain from
transferring any securities of the Company, the acquirer, or any other
applicable company during any period prohibited by then applicable pooling of
interests accounting treatment rules, whether before or after the sale of the
Company.
(d) None of Investor, Liberty Media Corporation or nor any of its
controlled affiliates shall deposit any Voting Securities in a voting trust or
subject any Voting Securities to any arrangement or agreement with respect to
the voting of such Voting Securities.
2. As long as Liberty Media Corporation or Investor, together with
its subsidiaries (defined as entities in which Investor or Liberty Media
Corporation beneficially owns, either directly or indirectly, at least 50% of
the voting securities), in the aggregate own not less than 50% of the shares of
the Series C Preferred Stock that Investor purchased pursuant to the Series C
Stock Purchase Agreement dated as of February 3, 1999 (or an equivalent amount
of Common Stock issued upon conversion thereof), the Company shall invite a
representative of Investor (the Observer) to attend all meetings of its Board of
Directors in a nonvoting observer capacity and, in this respect, shall give such
representative copies of all notices, minutes, consents, and other materials
that it provides to its directors; provided, however, that Investor shall not
make any use whatsoever at any time of such information except to evaluate its
investment in the Company; provided further, that the Observer shall agree to
hold in confidence and trust and to act in a fiduciary manner with respect to
all information so provided; and, provided further, that the Company reserves
the right to withhold any information and to exclude the Observer from any
meeting or portion thereof if access to such information or attendance at such
meeting could (a) adversely affect the attorney-client privilege between the
Company and its counsel; or (b) result in disclosure of confidential or
proprietary information of third parties. In addition, a majority of the
Company's nonemployee directors shall have the right to exclude the Observer
from portions or entire meetings of the Board of Directors or to omit to provide
the Observer with certain information or analysis Which would pose a conflict of
interest for Investor. The Company acknowledges that Investor will likely have,
from time to time, information that may be of interest to the Company
(Information) regarding a wide variety of matters including, by way of example
only, (1) Investor's technologies, plans and services, and plans and strategies
relating thereto, (2) current and future investments Investor has made, may
make, may consider or may become aware of with respect to other companies and
other technologies, products and services, including, without limitation,
technologies, products and services that may be competitive with the Company's,
and (3) developments with respect to the technologies, products and services,
and plans and strategies relating thereto, of other companies, including,
without limitation, companies that may be competitive with the Company. The
Company recognizes that a portion of such Information may be of interest to the
Company. Such Information may or may not be known by the Observer. The Company
agrees that Investor and the Observer shall have no duty to disclose any
Information to the Company or permit the Company to participate in any projects
or investments based on any Information, or to otherwise take advantage of any
opportunity that may be of interest to the Company if it were aware of
<PAGE>
Liberty IB, Inc.
February 12, 1999
Page 3
such Information, and hereby waives, to the extent permitted by law, any claim
based on the corporate opportunity doctrine or otherwise that could limit
Investor's ability to pursue opportunities based on such Information or that
would require Investor or the Investor Observer to disclose any such Information
to the Company or offer any opportunity relating thereto to the Company
3. This Letter Agreement constitutes the full and entire
understanding and agreement among the parties with regard to subjects hereof.
Any provision of this Letter Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and
the Investor.
4. Except as otherwise provided herein, the terms and conditions of
this Letter Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties (including transferees of any
shares of Voting Securities). Nothing in this Letter Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Letter Agreement, except as expressly
provided in this Letter Agreement.
5. If one or more provisions of this Letter Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Letter Agreement and the balance of the Letter Agreement shall be interpreted as
if such provision were so excluded and shall be enforceable in accordance with
its terms.
6. This Letter 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.
7. This Letter Agreement shall be governed by and construed under
the laws of the State of California.
<PAGE>
8. The agreements set forth in paragraph 1 of this Letter Agreement
shall terminate and be of no further force or effect upon the first to occur of
(a) such time as both of the following conditions shall have been satisfied: (i)
the consummation of the sale of securities pursuant to bona fide, firmly
underwritten public offering of shares of common stock of the Company registered
under the Securities Act of 1933, as amended (the Initial Public Offering); and
(ii) Investor, Liberty Media Corporation and its controlled affiliates in the
aggregate own Voting Securities representing less than 5% of the then
outstanding voting power of the Company and (b) the consummation of a Corporate
Transaction. The agreements set forth in paragraph 2 of this Letter Agreement
shall terminate and be of no further force or effect upon the consummation of
the Initial Public Offering.
Notwithstanding the provisions set forth in the first sentence of
paragraph 4, the agreements set forth in paragraph 1 and paragraph 2 shall not
be binding upon or inure to the benefit of any transferee (other than Liberty
Media Corporation or a controlled affiliate of Liberty Media Corporation) of
Voting Securities unless such transferee acquires beneficial ownership of Voting
Securities representing 5% or more of the then outstanding voting power of the
Company. For the purposes of the immediately preceding sentence, all shares of
Voting Securities held or acquired by a transferee and by entities or persons
affiliated with a transferee shall be aggregated for the purpose of determining
the applicability of paragraphs 1 and 2 to transferees.
Very truly yours,
iBEAM BROADCASTING CORPORATION
By: _________________________________
Its: _________________________________
AGREED AND ACCEPTED THIS
12 th DAY OF February, 1999:
LIBERTY IB, INC.
By: /s/ XXX
----------------------
Its: Senior Vice President
---------------------
<PAGE>
EXHIBIT 10.1
iBEAM BROADCASTING CORPORATION
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of this ___ day of
_________, 2000, by and between iBEAM Broadcasting Corporation, a Delaware
corporation (the "Company"), and ______________________ ("Indemnitee").
WHEREAS, the Company and Indemnitee recognize the increasing difficulty in
obtaining directors' and officers' liability insurance, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and directors
to expensive litigation risks at the same time as the availability and coverage
of liability insurance has been severely limited; and
WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law.
NOW, THEREFORE, in consideration for Indemnitee's services as an officer or
director of the Company, the Company and Indemnitee hereby agree as follows:
1. Indemnification.
(a) Third Party Proceedings. The Company shall indemnify Indemnitee
if Indemnitee is or was a party or is threatened to be made a party to any
threatened, pending or completed action, suit, proceeding or any alternative
dispute resolution mechanism, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Company) by reason
of the fact that Indemnitee is or was a director, officer, employee or agent of
the Company, or any subsidiary of the Company, or by reason of the fact that
Indemnitee is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement (if such settlement is approved
in advance by the Company, which approval shall not be unreasonably withheld)
actually and reasonably incurred by Indemnitee in connection with such action,
suit or proceeding if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe Indemnitee's 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 Indemnitee did not act in good faith and in a manner which
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Company, and, with respect to any
<PAGE>
criminal action or proceeding, had reasonable cause to believe that Indemnitee's
conduct was unlawful.
(b) Proceedings By or in the Right of the Company. The Company shall
indemnify Indemnitee if Indemnitee 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 Company or any subsidiary of the Company to procure a judgment in
its favor by reason of the fact that Indemnitee is or was a director, officer,
employee or agent of the Company, or any subsidiary of the Company, or by reason
of the fact that Indemnitee is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys' fees)
and, to the fullest extent permitted by law, amounts paid in settlement actually
and reasonably incurred by Indemnitee in connection with the defense or
settlement of such action or suit if Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, except that no indemnification shall be made in
respect of any claim, issue or matter as to which Indemnitee shall have been
adjudged to be liable to the Company unless and only to the extent that the
Court of Chancery of the State of Delaware or the court in which such action or
suit was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, Indemnitee is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery of the State of Delaware or such other court shall deem proper.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Subsections (a) and (b) of this Section 1, or in
defense of any claim, issue or matter therein, Indemnitee shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
Indemnitee in connection therewith.
2. Agreement to Serve. In consideration of the protection afforded
by this Agreement, if Indemnitee is a director of the Company he agrees to serve
as a director and not to resign voluntarily during such period without the
written consent of a majority of the Board of Directors until 90 days after the
effective date of this Agreement. If Indemnitee is an officer of the Company
not serving under an employment contract, he agrees to serve in such capacity at
least for the same period of time and not to resign voluntarily during such
period without the written consent of a majority of the Board of Directors.
Following the applicable period set forth above, Indemnitee agrees to continue
to serve in such capacity at the will of the Company (or under separate
agreement, if such agreement exists) so long as he is duly appointed or elected
and qualified in accordance with the applicable provisions of the Bylaws of the
Company or any subsidiary of the Company or until such time as he tenders his
resignation in writing. Nothing contained in this Agreement is intended to
create in Indemnitee any right to continued employment.
-2-
<PAGE>
3. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. The Company shall advance all expenses
incurred by Indemnitee in connection with the investigation, defense, settlement
or appeal of any civil or criminal action, suit or proceeding referenced in
Section 1(a) or (b) hereof (but not amounts actually paid in settlement of any
such action, suit or proceeding). Indemnitee hereby undertakes to repay such
amounts advanced only if, and to the extent that, it shall ultimately be
determined that Indemnitee is not entitled to be indemnified by the Company as
authorized hereby. The advances to be made hereunder shall be paid by the
Company to Indemnitee within thirty (30) days following delivery of a written
request therefor by Indemnitee to the Company.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be directed to the President of the
Company at the address shown on the signature page of this Agreement (or such
other address as the Company shall designate in writing to Indemnitee and given
as provided in Section 14). In addition, Indemnitee shall give the Company such
information and cooperation as it may reasonably require and as shall be within
Indemnitee's power.
(c) Procedure. Any indemnification and advances provided for in
Section 1 and this Section 3 shall be made no later than thirty (30) days after
receipt of the written request of Indemnitee. If a claim under this Agreement,
under any statute, or under any provision of the Company's Certificate of
Incorporation or Bylaws providing for indemnification, is not paid in full by
the Company within thirty (30) days after a written request for payment thereof
has first been received by the Company, Indemnitee may, but need not, at any
time thereafter bring an action against the Company to recover the unpaid amount
of the claim and, subject to Section 13 of this Agreement, Indemnitee shall also
be entitled to be paid for the expenses (including attorneys' fees) of bringing
such action. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in connection with any action,
suit or proceeding in advance of its final disposition) that Indemnitee has not
met the standards of conduct which make it permissible under applicable law for
the Company to indemnify Indemnitee for the amount claimed. However, Indemnitee
shall be entitled to receive interim payments of expenses pursuant to Subsection
3(a) unless and until such defense may be finally adjudicated by court order or
judgment from which no further right of appeal exists. It is the parties'
intention that if the Company contests Indemnitee's right to indemnification,
the question of Indemnitee's right to indemnification shall be for the court to
decide, and neither the failure of the Company (including its Board of
Directors, any committee or subgroup of the Board of Directors, independent
legal counsel, or its stockholders) to have made a determination that
indemnification of Indemnitee is proper in the circumstances because Indemnitee
has met the applicable standard of conduct required by applicable law, nor an
actual determination by the Company (including it Board of Directors, any
committee or subgroup of the Board of Directors, independent legal counsel, or
its stockholders) that Indemnitee has not met such applicable standard of
conduct, shall create a presumption that Indemnitee has or has not met the
applicable standard of conduct.
-3-
<PAGE>
(d) Notice to Insurers. If, at the time of the receipt of a notice of
a claim pursuant to Section 3(b) hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall be obligated
under Section 3(a) hereof to pay the expenses of any proceeding against
Indemnitee, the Company, if appropriate, shall be entitled to assume the defense
of such proceeding, with counsel approved by Indemnitee, upon the delivery to
Indemnitee of written notice of its election to do so. After delivery of such
notice, approval of such counsel by Indemnitee and the retention of such counsel
by the Company, the Company will not be liable to Indemnitee under this
Agreement for any fees of counsel subsequently incurred by Indemnitee with
respect to the same proceeding, provided that (i) Indemnitee shall have the
right to employ his counsel in any such proceeding at Indemnitee's expense; and
(ii) if (A) the employment of counsel by Indemnitee has been previously
authorized by the Company, (B) Indemnitee shall have reasonably concluded that
there may be a conflict of interest between the Company and Indemnitee in the
conduct of any such defense, or (C) the Company shall not, in fact, have
employed counsel to assume the defense of such proceeding, then the fees and
expenses of Indemnitee's counsel shall be at the expense of the Company.
4. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. Notwithstanding any other provision of this Agreement, the
Company hereby agrees to indemnify the Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Company's Certificate
of Incorporation, the Company's Bylaws or by statute. In the event of any
change, after the date of this Agreement, in any applicable law, statute, or
rule which expands the right of a Delaware corporation to indemnify a member of
its board of directors or an officer, such changes shall be, ipso facto, within
the purview of Indemnitee's rights and Company's obligations, under this
Agreement. In the event of any change in any applicable law, statute or rule
which narrows the right of a Delaware corporation to indemnify a member of its
board of directors or an officer, such changes, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement shall have
no effect on this Agreement or the parties' rights and obligations hereunder.
(b) Nonexclusivity. The indemnification provided by this Agreement
shall not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's Certificate of Incorporation, its Bylaws, any agreement, any
vote of stockholders or disinterested Directors, the General Corporation Law of
the State of Delaware, or otherwise, both as to action in Indemnitee's official
capacity and as to action in another capacity while holding such office. The
indemnification provided under this Agreement shall continue as to Indemnitee
for any action taken or not taken while serving in an indemnified capacity even
though he may have ceased to serve in such capacity at the time of any action,
suit or other covered proceeding.
-4-
<PAGE>
5. Partial Indemnification. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for some or a portion of the
expenses, judgments, fines or penalties actually or reasonably incurred by him
in the investigation, defense, appeal or settlement of any civil or criminal
action, suit or proceeding, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion of such
expenses, judgments, fines or penalties to which Indemnitee is entitled.
6. Mutual Acknowledgement. Both the Company and Indemnitee acknowledge
that in certain instances, Federal law or applicable public policy may prohibit
the Company from indemnifying its directors and officers under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification to a court in
certain circumstances for a determination of the Company's right under public
policy to indemnify Indemnitee.
7. Officer and Director Liability Insurance. The Company shall, from time
to time, make the good faith determination whether or not it is practicable for
the Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies providing the officers and directors of the
Company with coverage for losses from wrongful acts, or to ensure the Company's
performance of its indemnification obligations under this Agreement. Among other
considerations, the Company will weigh the costs of obtaining such insurance
coverage against the protection afforded by such coverage. In all policies of
director and officer liability insurance, Indemnitee shall be named as an
insured in such a manner as to provide Indemnitee the same rights and benefits
as are accorded to the most favorably insured of the Company's directors, if
Indemnitee is a director; or of the Company's officers, if Indemnitee is not a
director of the Company but is an officer. Notwithstanding the foregoing, the
Company shall have no obligation to obtain or maintain such insurance if the
Company determines in good faith that such insurance is not reasonably
available, if the premium costs for such insurance are disproportionate to the
amount of coverage provided, if the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit, or if Indemnitee
is covered by similar insurance maintained by a subsidiary or parent of the
Company.
8. Severability. Nothing in this Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability, pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach of
this Agreement. The provisions of this Agreement shall be severable as provided
in this Section 8. If this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated, and the balance
of this Agreement not so invalidated shall be enforceable in accordance with its
terms.
-5-
<PAGE>
9. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) Claims Initiated by Indemnitee. To indemnify or advance expenses
to Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except with respect to
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
Section 145 of the Delaware General Corporation Law, but such indemnification or
advancement of expenses may be provided by the Company in specific cases if the
Board of Directors has approved the initiation or bringing of such suit; or
(b) Lack of Good Faith. To indemnify Indemnitee for any expenses
incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or
(c) Insured Claims. To indemnify Indemnitee for expenses or
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) which
have been paid directly to Indemnitee by an insurance carrier under a policy of
officers' and directors' liability insurance maintained by the Company.
(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.
10. Construction of Certain Phrases.
(a) For purposes of this Agreement, references to the "Company" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
if Indemnitee is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, Indemnitee shall stand in
the same position under the provisions of this Agreement with respect to the
resulting or surviving corporation as Indemnitee would have with respect to such
constituent corporation if its separate existence had continued.
(b) For purposes of this Agreement, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on Indemnitee with respect to an employee benefit plan;
and references to "serving at the request of the Company" shall include any
service as a director, officer, employee or agent of the Company which imposes
duties on, or involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants, or beneficiaries;
and if Indemnitee acted in good faith and in a manner Indemnitee reasonably
believed to be in the interest of the participants and beneficiaries of
-6-
<PAGE>
an employee benefit plan, Indemnitee shall be deemed to have acted in a manner
"not opposed to the best interests of the Company" as referred to in this
Agreement.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
12. Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.
13. Attorneys' Fees. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, the court of competent jurisdiction determines
that each of the material assertions made by Indemnitee as a basis for such
action were not made in good faith or were frivolous. In the event of an action
instituted by or in the name of the Company under this Agreement or to enforce
or interpret any of the terms of this Agreement, Indemnitee shall be entitled to
be paid all court costs and expenses, including attorneys' fees, incurred by
Indemnitee in defense of such action (including with respect to Indemnitee's
counterclaims and cross-claims made in such action), unless as a part of such
action the court determines that each of Indemnitee's material defenses to such
action were made in bad faith or were frivolous.
14. Notice. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee, on the date of such
receipt, or (ii) if mailed by domestic certified or registered mail with postage
prepaid, on the third business day after the date postmarked. Addresses for
notice to either party are as shown on the signature page of this Agreement, or
as subsequently modified by written notice.
15. Consent to Jurisdiction. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be brought only in the state courts of the State of Delaware.
16. Choice of Law. This Agreement shall be governed by and its provisions
construed in accordance with the laws of the State of Delaware, as applied to
contracts between Delaware residents entered into and to be performed entirely
within Delaware without regard to the conflict of law principles thereof.
17. Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such
-7-
<PAGE>
two-year period; provided, however, that if any shorter period of limitations is
-------- -------
otherwise applicable to any such cause of action, such shorter period shall
govern.
18. Subrogation. In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
19. Amendment and Termination. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless it is in writing signed
by both the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
20. Integration and Entire Agreement. This Agreement sets forth the
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations, commitments, understandings and
agreements relating to the subject matter hereof between the parties hereto.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
iBEAM BROADCASTING
CORPORATION
___________________________________
Signature of Authorized Signatory
___________________________________
Print Name and Title
Address: 645 Almanor Avenue
Suite 100
Sunnyvale, CA 94086
AGREED TO AND ACCEPTED:
INDEMNITEE:
______________________________________
Signature
______________________________________
Print Name and Title
Address: ____________________________
____________________________
____________________________
-9-
<PAGE>
iBEAM Broadcasting Corporation
1998 Stock Plan
Adopted on March 23, 1998
Amended and Restated on October 27, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
-------
<S> <C>
SECTION 1. ESTABLISHMENT AND PURPOSE....................... 1
SECTION 2. ADMINISTRATION.................................. 1
(a) Committees of the Board of Directors................... 1
(b) Authority of the Board of Directors.................... 1
SECTION 3. ELIGIBILITY..................................... 1
(a) General Rule........................................... 1
(b) Ten-Percent Stockholders............................... 1
SECTION 4. STOCK SUBJECT TO PLAN........................... 2
(a) Basic Limitation....................................... 2
(b) Additional Shares...................................... 2
SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES......... 2
(a) Stock Purchase Agreement............................... 2
(b) Duration of Offers and Nontransferability of Rights.... 2
(c) Purchase Price......................................... 2
(d) Withholding Taxes...................................... 3
(e) Restrictions on Transfer of Shares and Minimum Vesting. 3
(f) Accelerated Vesting.................................... 3
SECTION 6. TERMS AND CONDITIONS OF OPTIONS................. 3
(a) Stock Option Agreement................................. 3
(b) Number of Shares....................................... 3
(c) Exercise Price......................................... 3
(d) Withholding Taxes...................................... 4
(e) Exercisability......................................... 4
(f) Accelerated Exercisability............................. 4
(g) Basic Term............................................. 4
(h) Nontransferability..................................... 4
(i) Termination of Service (Except by Death)............... 4
(j) Leaves of Absence...................................... 5
(k) Death of Optionee...................................... 5
(l) No Rights as a Stockholder............................. 5
(m) Modification, Extension and Assumption of Options...... 5
(n) Restrictions on Transfer of Shares and Minimum Vesting. 6
(o) Accelerated Vesting.................................... 6
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SECTION 7. PAYMENT FOR SHARES.............................. 6
(a) General Rule........................................... 6
(b) Surrender of Stock..................................... 6
(c) Services Rendered...................................... 6
(d) Promissory Note........................................ 6
(e) Exercise/Sale.......................................... 7
(f) Exercise/Pledge........................................ 7
SECTION 8. ADJUSTMENT OF SHARES............................ 7
(a) General................................................ 7
(b) Mergers and Consolidations............................. 7
(c) Reservation of Rights.................................. 8
SECTION 9. SECURITIES LAWS REQUIREMENTS.................... 8
(a) General................................................. 8
(b) Financial Reports...................................... 8
SECTION 10. NO RETENTION RIGHTS............................ 8
SECTION 11. DURATION AND AMENDMENTS........................ 8
(a) Term of the Plan....................................... 8
(b) Right to Amend or Terminate the Plan................... 9
(c) Effect of Amendment or Termination..................... 9
SECTION 12. DEFINITIONS.................................... 9
</TABLE>
ii
<PAGE>
iBEAM Broadcasting Corporation 1998 Stock Plan
SECTION 1. Establishment And Purpose.
The purpose of the Plan is to offer selected individuals an opportunity to
acquire a proprietary interest in the success of the Company, or to increase
such interest, by purchasing Shares of the Company's Stock. The Plan provides
both for the direct award or sale of Shares and for the grant of Options to
purchase Shares. Options granted under the Plan may include Nonstatutory
Options as well as ISOs intended to qualify under Section 422 of the Code.
Capitalized terms are defined in Section 12.
SECTION 2. Administration.
(a) Committees of the Board of Directors. The Plan may be administered
by one or more Committees. Each Committee shall consist of one or more members
of the Board of Directors who have been appointed by the Board of Directors.
Each Committee shall have such authority and be responsible for such functions
as the Board of Directors has assigned to it. If no Committee has been
appointed, the entire Board of Directors shall administer the Plan. Any
reference to the Board of Directors in the Plan shall be construed as a
reference to the Committee (if any) to whom the Board of Directors has assigned
a particular function.
(b) Authority of the Board of Directors. Subject to the provisions of
the Plan, the Board of Directors shall have full authority and discretion to
take any actions it deems necessary or advisable for the administration of the
Plan. All decisions, interpretations and other actions of the Board of
Directors shall be final and binding on all Purchasers, all Optionees and all
persons deriving their rights from a Purchaser or Optionee.
SECTION 3. Eligibility.
(a) General Rule. Only Employees, Outside Directors and Consultants
shall be eligible for the grant of Options or the direct award or sale of
Shares. Only Employees shall be eligible for the grant of ISOs.
(b) Ten-Percent Stockholders. An individual who owns more than 10% of
the total combined voting power of all classes of outstanding stock of the
Company, its Parent or any of its Subsidiaries shall not be eligible for
designation as an Optionee or Purchaser unless (i) the Exercise Price is at
least 110% of the Fair Market Value of a Share on the date of grant, (ii) the
Purchase Price (if any) is at least 100% of the Fair Market Value of a Share and
(iii) in the case of an ISO, such ISO by its terms is not exercisable after the
expiration of five years from the date of grant. For purposes of this
Subsection (b), in determining stock ownership, the attribution rules of Section
424(d) of the Code shall be applied.
1
<PAGE>
SECTION 4. Stock Subject To Plan.
(a) Basic Limitation. Shares offered under the Plan may be authorized
but unissued Shares or treasury Shares. The aggregate number of Shares that may
be issued under the Plan (upon exercise of Options or other rights to acquire
Shares) shall not exceed 2,334,875/1/ Shares, subject to adjustment pursuant to
Section 8. The number of Shares that are subject to Options or other rights
outstanding at any time under the Plan shall not exceed the number of Shares
that then remain available for issuance under the Plan. The Company, during the
term of the Plan, shall at all times reserve and keep available sufficient
Shares to satisfy the requirements of the Plan.
(b) Additional Shares. In the event that any outstanding Option or
other right for any reason expires or is canceled or otherwise terminated, the
Shares allocable to the unexercised portion of such Option or other right shall
again be available for the purposes of the Plan. In the event that Shares
issued under the Plan are reacquired by the Company pursuant to any forfeiture
provision, right of repurchase or right of first refusal, such Shares shall
again be available for the purposes of the Plan, except that the aggregate
number of Shares which may be issued upon the exercise of ISOs shall in no event
exceed 3,334,875 Shares (subject to adjustment pursuant to Section 8).
SECTION 5. Terms And Conditions Of Awards Or Sales.
(a) Stock Purchase Agreement. Each award or sale of Shares under the
Plan (other than upon exercise of an Option) shall be evidenced by a Stock
Purchase Agreement between the Purchaser and the Company. Such award or sale
shall be subject to all applicable terms and conditions of the Plan and may be
subject to any other terms and conditions which are not inconsistent with the
Plan and which the Board of Directors deems appropriate for inclusion in a Stock
Purchase Agreement. The provisions of the various Stock Purchase Agreements
entered into under the Plan need not be identical.
(b) Duration of Offers and Nontransferability of Rights. Any right to
acquire Shares under the Plan (other than an Option) shall automatically expire
if not exercised by the Purchaser within 30 days after the grant of such right
was communicated to the Purchaser by the Company. Such right shall not be
transferable and shall be exercisable only by the Purchaser to whom such right
was granted.
(c) Purchase Price. The Purchase Price of Shares to be offered under
the Plan shall not be less than 85% of the Fair Market Value of such Shares, and
a higher percentage may be required by Section 3(b). Subject to the preceding
sentence, the Purchase Price shall be determined by the Board of Directors at
its sole discretion. The Purchase Price shall be payable in a form described in
Section 7.
- ---------------
/1/ Reflects 300,000-share increase approved by the Board of December 1, 1998
from 1,484,875 to 1,784,875 shares. Reflects 500,000-share increase approved by
the Board on January 12, 1999 from 1,784,875 to 2,284,875 shares. Reflects
1,050,000-share increase approved by the Board on February 23, 1999 from
2,284,875 to 3,334,875 shares. Reflects 2,000,000 share increase approved by the
Board on October 27, 1999 from 3,334,875 to 5,334,875 shares.
2
<PAGE>
(d) Withholding Taxes. As a condition to the purchase of Shares, the
Purchaser shall make such arrangements as the Board of Directors may require for
the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with such purchase.
(e) Restrictions on Transfer of Shares and Minimum Vesting. Any Shares
awarded or sold under the Plan shall be subject to such special forfeiture
conditions, rights of repurchase, rights of first refusal and other transfer
restrictions as the Board of Directors may determine. Such restrictions shall
be set forth in the applicable Stock Purchase Agreement and shall apply in
addition to any restrictions that may apply to holders of Shares generally. In
the case of a Purchaser who is not an officer of the Company, an Outside
Director or a Consultant, any right to repurchase the Purchaser's Shares at the
original Purchase Price (if any) upon termination of the Purchaser's Service
shall lapse at least as rapidly as 20% per year over the five-year period
commencing on the date of the award or sale of the Shares. Any such right may
be exercised only within 90 days after the termination of the Purchaser's
Service for cash or for cancellation of indebtedness incurred in purchasing the
Shares.
(f) Accelerated Vesting. Unless the applicable Stock Purchase Agreement
provides otherwise, any right to repurchase a Purchaser's Shares at the original
Purchase Price (if any) upon termination of the Purchaser's Service shall lapse
and all of such Shares shall become vested if (i) the Company is subject to a
Change in Control before the Purchaser's Service terminates and (ii) the
repurchase right is not assigned to the entity that employs the Purchaser
immediately after the Change in Control or to its parent or subsidiary.
SECTION 6. Terms And Conditions Of Options.
(a) Stock Option Agreement. Each grant of an Option under the Plan
shall be evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms and conditions of
the Plan and may be subject to any other terms and conditions which are not
inconsistent with the Plan and which the Board of Directors deems appropriate
for inclusion in a Stock Option Agreement. The provisions of the various Stock
Option Agreements entered into under the Plan need not be identical.
(b) Number of Shares. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 8. The Stock Option
Agreement shall also specify whether the Option is an ISO or a Nonstatutory
Option.
(c) Exercise Price. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the
Fair Market Value of a Share on the date of grant, and a higher percentage may
be required by Section 3(b). The Exercise Price of a Nonstatutory Option shall
not be less than 85% of the Fair Market Value of a Share on the date of grant,
and a higher percentage may be required by Section 3(b). Subject to the
preceding two sentences, the Exercise Price under any Option shall be determined
by the Board of Directors at its sole discretion. The Exercise Price shall be
payable in a form described in Section 7.
3
<PAGE>
(d) Withholding Taxes. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Board of Directors may require for
the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with such exercise. The Optionee shall
also make such arrangements as the Board of Directors may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with the disposition of Shares acquired by
exercising an Option.
(e) Exercisability. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to become exercisable. In the case
of an Optionee who is not an officer of the Company, an Outside Director or a
Consultant, an Option shall become exercisable at least as rapidly as 20% per
year over the five-year period commencing on the date of grant. Subject to the
preceding sentence, the exercisability provisions of any Stock Option Agreement
shall be determined by the Board of Directors at its sole discretion.
(f) Accelerated Exercisability. Unless the applicable Stock Option
Agreement provides otherwise, all of an Optionee's Options shall become
exercisable in full if (i) the Company is subject to a Change in Control before
the Optionee's Service terminates, (ii) such Options do not remain outstanding,
(iii) such Options are not assumed by the surviving corporation or its parent
and (iv) the surviving corporation or its parent does not substitute options
with substantially the same terms for such Options.
(g) Basic Term. The Stock Option Agreement shall specify the term of
the Option. The term shall not exceed 10 years from the date of grant, and a
shorter term may be required by Section 3(b). Subject to the preceding
sentence, the Board of Directors at its sole discretion shall determine when an
Option is to expire.
(h) Nontransferability. No Option shall be transferable by the Optionee
other than by beneficiary designation, will or the laws of descent and
distribution. An Option may be exercised during the lifetime of the Optionee
only by the Optionee or by the Optionee's guardian or legal representative. No
Option or interest therein may be transferred, assigned, pledged or hypothecated
by the Optionee during the Optionee's lifetime, whether by operation of law or
otherwise, or be made subject to execution, attachment or similar process.
(i) Termination of Service (Except by Death). If an Optionee's Service
terminates for any reason other than the Optionee's death, then the Optionee's
Options shall expire on the earliest of the following occasions:
(i) The expiration date determined pursuant to Subsection (g) above;
(ii) The date three months after the termination of the Optionee's
Service for any reason other than Disability, or such later date as the
Board of Directors may determine; or
(iii) The date six months after the termination of the Optionee's
Service by reason of Disability, or such later date as the Board of
Directors may determine.
4
<PAGE>
The Optionee may exercise all or part of the Optionee's Options at any time
before the expiration of such Options under the preceding sentence, but only to
the extent that such Options had become exercisable before the Optionee's
Service terminated (or became exercisable as a result of the termination) and
the underlying Shares had vested before the Optionee's Service terminated (or
vested as a result of the termination). The balance of such Options shall lapse
when the Optionee's Service terminates. In the event that the Optionee dies
after the termination of the Optionee's Service but before the expiration of the
Optionee's Options, all or part of such Options may be exercised (prior to
expiration) by the executors or administrators of the Optionee's estate or by
any person who has acquired such Options directly from the Optionee by
beneficiary designation, bequest or inheritance, but only to the extent that
such Options had become exercisable before the Optionee's Service terminated (or
became exercisable as a result of the termination) and the underlying Shares had
vested before the Optionee's Service terminated (or vested as a result of the
termination).
(j) Leaves of Absence. For purposes of Subsection (i) above, Service
shall be deemed to continue while the Optionee is on a bona fide leave of
absence, if such leave was approved by the Company in writing and if continued
crediting of Service for this purpose is expressly required by the terms of such
leave or by applicable law (as determined by the Company).
(k) Death of Optionee. If an Optionee dies while the Optionee is in
Service, then the Optionee's Options shall expire on the earlier of the
following dates:
(i) The expiration date determined pursuant to Subsection (g) above;
or
(ii) The date 12 months after the Optionee's death.
All or part of the Optionee's Options may be exercised at any time before the
expiration of such Options under the preceding sentence by the executors or
administrators of the Optionee's estate or by any person who has acquired such
Options directly from the Optionee by beneficiary designation, bequest or
inheritance, but only to the extent that such Options had become exercisable
before the Optionee's death or became exercisable as a result of the death. The
balance of such Options shall lapse when the Optionee dies.
(l) No Rights as a Stockholder. An Optionee, or a transferee of an
Optionee, shall have no rights as a stockholder with respect to any Shares
covered by the Optionee's Option until such person becomes entitled to receive
such Shares by filing a notice of exercise and paying the Exercise Price
pursuant to the terms of such Option.
(m) Modification, Extension and Assumption of Options. Within the
limitations of the Plan, the Board of Directors may modify, extend or assume
outstanding Options or may accept the cancellation of outstanding Options
(whether granted by the Company or another issuer) in return for the grant of
new Options for the same or a different number of Shares and at the same or a
different Exercise Price. The foregoing notwithstanding, no modification of an
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<PAGE>
Option shall, without the consent of the Optionee, impair the Optionee's rights
or increase the Optionee's obligations under such Option.
(n) Restrictions on Transfer of Shares and Minimum Vesting. Any Shares
issued upon exercise of an Option shall be subject to such special forfeiture
conditions, rights of repurchase, rights of first refusal and other transfer
restrictions as the Board of Directors may determine. Such restrictions shall
be set forth in the applicable Stock Option Agreement and shall apply in
addition to any restrictions that may apply to holders of Shares generally. In
the case of an Optionee who is not an officer of the Company, an Outside
Director or a Consultant, any right to repurchase the Optionee's Shares at the
original Exercise Price upon termination of the Optionee's Service shall lapse
at least as rapidly as 20% per year over the five-year period commencing on the
date of the option grant. Any such repurchase right may be exercised only
within 90 days after the termination of the Optionee's Service for cash or for
cancellation of indebtedness incurred in purchasing the Shares.
(o) Accelerated Vesting. Unless the applicable Stock Option Agreement
provides otherwise, any right to repurchase an Optionee's Shares at the original
Exercise Price upon termination of the Optionee's Service shall lapse and all of
such Shares shall become vested if (i) the Company is subject to a Change in
Control before the Optionee's Service terminates and (ii) the repurchase right
is not assigned to the entity that employs the Optionee immediately after the
Change in Control or to its parent or subsidiary.
SECTION 7. Payment For Shares.
(a) General Rule. The entire Purchase Price or Exercise Price of Shares
issued under the Plan shall be payable in cash or cash equivalents at the time
when such Shares are purchased, except as otherwise provided in this Section 7.
(b) Surrender of Stock. To the extent that a Stock Option Agreement so
provides, all or any part of the Exercise Price may be paid by surrendering, or
attesting to the ownership of, Shares that are already owned by the Optionee.
Such Shares shall be surrendered to the Company in good form for transfer and
shall be valued at their Fair Market Value on the date when the Option is
exercised. The Optionee shall not surrender, or attest to the ownership of,
Shares in payment of the Exercise Price if such action would cause the Company
to recognize compensation expense (or additional compensation expense) with
respect to the Option for financial reporting purposes.
(c) Services Rendered. At the discretion of the Board of Directors,
Shares may be awarded under the Plan in consideration of services rendered to
the Company, a Parent or a Subsidiary prior to the award. At the discretion of
the Board of Directors, Shares may also be awarded under the Plan in
consideration of services to be rendered to the Company, a Parent or a
Subsidiary after the award, except that the par value of such Shares, if newly
issued, shall be paid in cash or cash equivalents.
(d) Promissory Note. To the extent that a Stock Option Agreement or
Stock Purchase Agreement so provides, all or a portion of the Exercise Price or
Purchase Price (as the
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<PAGE>
case may be) of Shares issued under the Plan may be paid with a full-recourse
promissory note. However, the par value of the Shares, if newly issued, shall be
paid in cash or cash equivalents. The Shares shall be pledged as security for
payment of the principal amount of the promissory note and interest thereon. The
interest rate payable under the terms of the promissory note shall not be less
than the minimum rate (if any) required to avoid the imputation of additional
interest under the Code. Subject to the foregoing, the Board of Directors (at
its sole discretion) shall specify the term, interest rate, amortization
requirements (if any) and other provisions of such note.
(e) Exercise/Sale. To the extent that a Stock Option Agreement so
provides, and if Stock is publicly traded, payment may be made all or in part by
the delivery (on a form prescribed by the Company) of an irrevocable direction
to a securities broker approved by the Company to sell Shares and to deliver all
or part of the sales proceeds to the Company in payment of all or part of the
Exercise Price and any withholding taxes.
(f) Exercise/Pledge. To the extent that a Stock Option Agreement so
provides, and if Stock is publicly traded, payment may be made all or in part by
the delivery (on a form prescribed by the Company) of an irrevocable direction
to pledge Shares to a securities broker or lender approved by the Company, as
security for a loan, and to deliver all or part of the loan proceeds to the
Company in payment of all or part of the Exercise Price and any withholding
taxes.
SECTION 8. Adjustment Of Shares.
(a) General. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of an extraordinary
dividend payable in a form other than Shares in an amount that has a material
effect on the Fair Market Value of the Stock, a combination or consolidation of
the outstanding Stock into a lesser number of Shares, a recapitalization, a
spin-off, a reclassification or a similar occurrence, the Board of Directors
shall make appropriate adjustments in one or more of (i) the number of Shares
available for future grants under Section 4, (ii) the number of Shares covered
by each outstanding Option or (iii) the Exercise Price under each outstanding
Option.
(b) Mergers and Consolidations. In the event that the Company is a
party to a merger or consolidation, outstanding Options shall be subject to the
agreement of merger or consolidation. Such agreement, without the Optionees'
consent, may provide for:
(i) The continuation of such outstanding Options by the Company (if
the Company is the surviving corporation);
(ii) The assumption of the Plan and such outstanding Options by the
surviving corporation or its parent;
(iii) The substitution by the surviving corporation or its parent of
options with substantially the same terms for such outstanding Options; or
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<PAGE>
(iv) The cancellation of such outstanding Options without payment of
any consideration.
(c) Reservation of Rights. Except as provided in this Section 8, an
Optionee or Purchaser shall have no rights by reason of (i) any subdivision or
consolidation of shares of stock of any class, (ii) the payment of any dividend
or (iii) any other increase or decrease in the number of shares of stock of any
class. Any issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option. The grant of an Option pursuant
to the Plan shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure, to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.
SECTION 9. Securities Law Requirements.
(a) General. Shares shall not be issued under the Plan unless the issuance
and delivery of such Shares comply with (or are exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange or other
securities market on which the Company's securities may then be traded.
(b) Financial Reports. The Company each year shall furnish to
Optionees, Purchasers and stockholders who have received Stock under the Plan
its balance sheet and income statement, unless such Optionees, Purchasers or
stockholders are key Employees whose duties with the Company assure them access
to equivalent information. Such balance sheet and income statement need not be
audited.
SECTION 10. No Retention Rights.
Nothing in the Plan or in any right or Option granted under the Plan shall
confer upon the Purchaser or Optionee any right to continue in Service for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Company (or any Parent or Subsidiary employing or retaining
the Purchaser or Optionee) or of the Purchaser or Optionee, which rights are
hereby expressly reserved by each, to terminate his or her Service at any time
and for any reason, with or without cause.
SECTION 11. Duration and Amendments.
(a) Term of the Plan. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board of Directors, subject to the
approval of the Company's stockholders. In the event that the stockholders fail
to approve the Plan within 12 months after its adoption by the Board of
Directors, any grants of Options or sales or awards of Shares that have already
occurred shall be rescinded, and no additional grants, sales or awards shall be
made thereafter under the Plan. The Plan shall terminate automatically 10 years
after its adoption by
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<PAGE>
the Board of Directors and may be terminated on any earlier date pursuant to
Subsection (b) below.
(b) Right to Amend or Terminate the Plan. The Board of Directors may
amend, suspend or terminate the Plan at any time and for any reason; provided,
however, that any amendment of the Plan which increases the number of Shares
available for issuance under the Plan (except as provided in Section 8), or
which materially changes the class of persons who are eligible for the grant of
ISOs, shall be subject to the approval of the Company's stockholders.
Stockholder approval shall not be required for any other amendment of the Plan.
(c) Effect of Amendment or Termination. No Shares shall be issued or
sold under the Plan after the termination thereof, except upon exercise of an
Option granted prior to such termination. The termination of the Plan, or any
amendment thereof, shall not affect any Share previously issued or any Option
previously granted under the Plan.
SECTION 12. Definitions.
(a) "Board of Directors" shall mean the Board of Directors of the Company,
as constituted from time to time.
(b) "Change in Control" shall mean:
(i) The consummation of a merger or consolidation of the Company with
or into another entity or any other corporate reorganization, if more than
50% of the combined voting power of the continuing or surviving entity's
securities outstanding immediately after such merger, consolidation or
other reorganization is owned by persons who were not stockholders of the
Company immediately prior to such merger, consolidation or other
reorganization; or
(ii) The sale, transfer or other disposition of all or substantially
all of the Company's assets.
A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean a committee of the Board of Directors, as
described in Section 2(a).
(e) "Company" shall mean iBEAM Broadcasting Corporation, a Delaware
corporation.
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<PAGE>
(f) "Consultant" shall mean a person who performs bona fide services for
the Company, a Parent or a Subsidiary as a consultant or advisor, excluding
Employees and Outside Directors.
(g) "Disability" shall mean that the Optionee is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment.
(h) "Employee" shall mean any individual who is a common-law employee of
the Company, a Parent or a Subsidiary.
(i) "Exercise Price" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Board of Directors in
the applicable Stock Option Agreement.
(j) "Fair Market Value" shall mean the fair market value of a Share, as
determined by the Board of Directors in good faith. Such determination shall be
conclusive and binding on all persons.
(k) "ISO" shall mean an employee incentive stock option described in
Section 422(b) of the Code.
(l) "Nonstatutory Option" shall mean a stock option not described in
Sections 422(b) or 423(b) of the Code.
(m) "Option" shall mean an ISO or Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.
(n) "Optionee" shall mean an individual who holds an Option.
(o) "Outside Director" shall mean a member of the Board of Directors who is
not an Employee.
(p) "Parent" shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain. A corporation that attains the status of a Parent
on a date after the adoption of the Plan shall be considered a Parent commencing
as of such date.
(q) "Plan" shall mean this iBEAM Broadcasting Corporation 1998 Stock Plan.
(r) "Purchase Price" shall mean the consideration for which one Share may
be acquired under the Plan (other than upon exercise of an Option), as specified
by the Board of Directors.
(s) "Purchaser" shall mean an individual to whom the Board of Directors has
offered the right to acquire Shares under the Plan (other than upon exercise of
an Option).
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(t) "Service" shall mean service as an Employee, Outside Director or
Consultant.
(u) "Share" shall mean one share of Stock, as adjusted in accordance with
Section 8 (if applicable).
(v) "Stock" shall mean the Common Stock of the Company, with a par value of
$0.0001 per Share.
(w) "Stock Option Agreement" shall mean the agreement between the Company
and an Optionee which contains the terms, conditions and restrictions pertaining
to the Optionee's Option.
(x) "Stock Purchase Agreement" shall mean the agreement between the Company
and a Purchaser who acquires Shares under the Plan which contains the terms,
conditions and restrictions pertaining to the acquisition of such Shares.
(y) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. A corporation that
attains the status of a Subsidiary on a date after the adoption of the Plan
shall be considered a Subsidiary commencing as of such date.
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iBEAM BROADCASTING CORPORATION 1998 STOCK PLAN:
SUMMARY OF STOCK PURCHASE
By your signature and the signature of the Company's representative below, you
and the Company agree that you are purchasing shares subject to the terms and
conditions of the 1998 Stock Plan and the Stock Purchase Agreement, both of
which are attached to and made a part of this document.
Name of Purchaser: ((Name))
Total Number of Purchased Shares: ((TotalShares))
Purchase Price Per Share: $((PricePerShare))
Date of Purchase: ((DatePurchase))
Vesting Commencement Date: ((VestComDate))
Vesting Schedule: The Right of Repurchase shall
lapse with respect to the
first 25% of the Purchased
Shares when the Purchaser
completes 12 months of
continuous Service after the
Vesting Commencement Date. The
Right of Repurchase shall
lapse with respect to an
additional 1/48th of the
Purchased Shares when the
Purchaser completes each month
of continuous Service
thereafter.
PURCHASER: iBEAM BROADCASTING CORPORATION
By:
- ----------------------------- -----------------------------
Title:
- ----------------------------- -----------------------------
Print Name
<PAGE>
iBEAM BROADCASTING CORPORATION 1998 STOCK PLAN:
STOCK PURCHASE AGREEMENT
SECTION 1. ACQUISITION OF SHARES.
(a) Transfer. On the terms and conditions set forth in the Summary of
Stock Purchase and this Agreement, the Company agrees to transfer to the
Purchaser the number of Shares set forth in the Summary of Stock Purchase. The
transfer shall occur at the offices of the Company on the date of purchase set
forth in the Summary of Stock Purchase or at such other place and time as the
parties may agree.
(b) Consideration. The Purchaser agrees to pay the Purchase Price set
forth in the Summary of Stock Purchase for each Purchased Share. The Purchase
Price is agreed to be at least 100% of the Fair Market Value of the Purchased
Shares. Payment shall be made on the transfer date in cash or cash
equivalents.
(c) Stock Plan and Defined Terms. The transfer of the Purchased
Shares is subject to the Plan, a copy of which the Purchaser acknowledges
having received. The provisions of the Plan are incorporated into this
Agreement by this reference. Capitalized terms are defined in Section 12 of
this Agreement.
SECTION 2. RIGHT OF REPURCHASE.
(a) Scope of Repurchase Right. All Purchased Shares initially shall
be Restricted Shares and shall be subject to a right (but not an obligation)
of repurchase by the Company. The Purchaser shall not transfer, assign,
encumber or otherwise dispose of any Restricted Shares, except as provided in
the following sentence. The Purchaser may transfer Restricted Shares (i) by
beneficiary designation, will or intestate succession or (ii) to the
Purchaser's spouse, children or grandchildren or to a trust established by the
Purchaser for the benefit of the Purchaser or the Purchaser's spouse, children
or grandchildren, provided in either case that the Transferee agrees in
writing on a form prescribed by the Company to be bound by all provisions of
this Agreement. If the Purchaser transfers any Restricted Shares, then this
Section 2 shall apply to the Transferee to the same extent as to the
Purchaser.
(b) Condition Precedent to Exercise. The Right of Repurchase shall be
exercisable only during the 60-day period next following the date when the
Purchaser's Service terminates for any reason, with or without cause,
including (without limitation) death or disability.
(c) Lapse of Repurchase Right. The Right of Repurchase shall lapse
with respect to the Purchased Shares in accordance with the vesting schedule
set forth in the Summary of Stock Purchase. In addition, the Right of
Repurchase shall lapse and all of the remaining
<PAGE>
Restricted Shares shall become vested if (i) the Company is subject to a
Change in Control before the Purchaser's Service terminates and (ii) the Right
of Repurchase is not assigned to the entity that employs the Purchaser
immediately after the Change in Control or to its parent or subsidiary.
(d) Repurchase Cost. If the Company exercises the Right of
Repurchase, it shall pay the Purchaser an amount equal to the Purchase Price
for each of the Restricted Shares being repurchased.
(e) Exercise of Repurchase Right. The Right of Repurchase shall be
exercisable only by written notice delivered to the Purchaser prior to the
expiration of the 60-day period specified in Subsection (b) above. The notice
shall set forth the date on which the repurchase is to be effected. Such date
shall not be more than 30 days after the date of the notice. The
certificate(s) representing the Restricted Shares to be repurchased shall,
prior to the close of business on the date specified for the repurchase, be
delivered to the Company properly endorsed for transfer. The Company shall,
concurrently with the receipt of such certificate(s), pay to the Purchaser the
purchase price determined according to Subsection (d) above. Payment shall be
made in cash or cash equivalents or by canceling indebtedness to the Company
incurred by the Purchaser in the purchase of the Restricted Shares. The Right
of Repurchase shall terminate with respect to any Restricted Shares for which
it has not been timely exercised pursuant to this Subsection (e).
(f) Additional Shares or Substituted Securities. In the event of the
declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, a stock split, an adjustment
in conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities or other property (including money paid
other than as an ordinary cash dividend) which are by reason of such
transaction distributed with respect to any Restricted Shares or into which
such Restricted Shares thereby become convertible shall immediately be subject
to the Right of Repurchase. Appropriate adjustments to reflect the
distribution of such securities or property shall be made to the number and/or
class of the Restricted Shares. Appropriate adjustments shall also, after each
such transaction, be made to the price per share to be paid upon the exercise
of the Right of Repurchase in order to reflect any change in the Company's
outstanding securities effected without receipt of consideration therefor;
provided, however, that the aggregate purchase price payable for the
Restricted Shares shall remain the same.
(g) Termination of Rights as Stockholder. If the Company makes
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Restricted Shares to be repurchased in
accordance with this Section 2, then after such time the person from whom such
Restricted Shares are to be repurchased shall no longer have any rights as a
holder of such Restricted Shares (other than the right to receive payment of
such consideration in accordance with this Agreement). Such Restricted Shares
shall be deemed to have been repurchased in accordance with the applicable
provisions hereof, whether or not the certificate(s) therefor have been
delivered as required by this Agreement.
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<PAGE>
(h) Escrow. Upon issuance, the certificates for Restricted Shares
shall be deposited in escrow with the Company to be held in accordance with
the provisions of this Agreement. Any new, substituted or additional
securities or other property described in Subsection (f) above shall
immediately be delivered to the Company to be held in escrow, but only to the
extent the Purchased Shares are at the time Restricted Shares. All regular
cash dividends on Restricted Shares (or other securities at the time held in
escrow) shall be paid directly to the Purchaser and shall not be held in
escrow. Restricted Shares, together with any other assets or securities held
in escrow hereunder, shall be (i) surrendered to the Company for repurchase
and cancellation upon the Company's exercise of its Right of Repurchase or
Right of First Refusal or (ii) released to the Purchaser upon the Purchaser's
request to the extent the Purchased Shares are no longer Restricted Shares
(but not more frequently than once every six months). In any event, all
Purchased Shares which have vested (and any other vested assets and securities
attributable thereto) shall be released within 60 days after the earlier of
(i) the Purchaser's cessation of Service or (ii) the lapse of the Right of
First Refusal.
SECTION 3. RIGHT OF FIRST REFUSAL.
(a) Right of First Refusal. In the event that the Purchaser proposes
to sell, pledge or otherwise transfer to a third party any Purchased Shares,
or any interest in such Purchased Shares, the Company shall have the Right of
First Refusal with respect to all (and not less than all) of such Purchased
Shares. If the Purchaser desires to transfer Purchased Shares, the Purchaser
shall give a written Transfer Notice to the Company describing fully the
proposed transfer, including the number of Purchased Shares proposed to be
transferred, the proposed transfer price, the name and address of the proposed
Transferee and proof satisfactory to the Company that the proposed sale or
transfer will not violate any applicable federal or state securities laws. The
Transfer Notice shall be signed both by the Purchaser and by the proposed
Transferee and must constitute a binding commitment of both parties to the
transfer of the Purchased Shares. The Company shall have the right to purchase
all, and not less than all, of the Purchased Shares on the terms of the
proposal described in the Transfer Notice (subject, however, to any change in
such terms permitted under Subsection (b) below) by delivery of a notice of
exercise of the Right of First Refusal within 30 days after the date when the
Transfer Notice was received by the Company. The Company's rights under this
Subsection (a) shall be freely assignable, in whole or in part.
(b) Transfer of Shares. If the Company fails to exercise its Right of
First Refusal within 30 days after the date when it received the Transfer
Notice, the Purchaser may, not later than 90 days following receipt of the
Transfer Notice by the Company, conclude a transfer of the Purchased Shares
subject to the Transfer Notice on the terms and conditions described in the
Transfer Notice, provided that any such sale is made in compliance with
applicable federal and state securities laws and not in violation of any other
contractual restrictions to which the Purchaser is bound. Any proposed
transfer on terms and conditions different from those described in the
Transfer Notice, as well as any subsequent proposed transfer by the Purchaser,
shall again be subject to the Right of First Refusal and shall require
compliance with the procedure described in Subsection (a) above. If the
Company exercises its Right of First Refusal, the parties shall consummate the
sale of the Purchased Shares on the terms set forth in the Transfer Notice
within 60 days after the date when the Company received
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<PAGE>
the Transfer Notice (or within such longer period as may have been specified
in the Transfer Notice); provided, however, that in the event the Transfer
Notice provided that payment for the Purchased Shares was to be made in a form
other than cash or cash equivalents paid at the time of transfer, the Company
shall have the option of paying for the Purchased Shares with cash or cash
equivalents equal to the present value of the consideration described in the
Transfer Notice.
(c) Additional Shares or Substituted Securities. In the event of the
declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, a stock split, an adjustment
in conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities or other property (including money paid
other than as an ordinary cash dividend) which are by reason of such
transaction distributed with respect to any Purchased Shares subject to this
Section 3 or into which such Purchased Shares thereby become convertible shall
immediately be subject to this Section 3. Appropriate adjustments to reflect
the distribution of such securities or property shall be made to the number
and/or class of Purchased Shares subject to this Section 3.
(d) Termination of Right of First Refusal. Any other provision of this
Section 3 notwithstanding, in the event that the Stock is readily tradable on
an established securities market when the Purchaser desires to transfer
Purchased Shares, the Company shall have no Right of First Refusal, and the
Purchaser shall have no obligation to comply with the procedures prescribed by
Subsections (a) and (b) above.
(e) Permitted Transfers. This Section 3 shall not apply to (i) a
transfer by beneficiary designation, will or intestate succession or (ii) a
transfer to the Purchaser's spouse, children or grandchildren or to a trust
established by the Purchaser for the benefit of the Purchaser or the
Purchaser's spouse, children or grandchildren, provided in either case that
the Transferee agrees in writing on a form prescribed by the Company to be
bound by all provisions of this Agreement. If the Purchaser transfers any
Purchased Shares, either under this Subsection (e) or after the Company has
failed to exercise the Right of First Refusal, then this Section 3 shall apply
to the Transferee to the same extent as to the Purchaser.
(f) Termination of Rights as Stockholder. If the Company makes
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Purchased Shares to be purchased in
accordance with this Section 3, then after such time the person from whom such
Purchased Shares are to be purchased shall no longer have any rights as a
holder of such Purchased Shares (other than the right to receive payment of
such consideration in accordance with this Agreement). Such Purchased Shares
shall be deemed to have been purchased in accordance with the applicable
provisions hereof, whether or not the certificate(s) therefor have been
delivered as required by this Agreement.
SECTION 4. OTHER RESTRICTIONS ON TRANSFER.
(a) Purchaser Representations. In connection with the issuance and
acquisition of Shares under this Agreement, the Purchaser hereby represents
and warrants to the Company as follows:
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<PAGE>
(i) The Purchaser is acquiring and will hold the Purchased Shares
for investment for his or her account only and not with a view to, or for
resale in connection with, any "distribution" thereof within the meaning of
the Securities Act.
(ii) The Purchaser understands that the Purchased Shares have not
been registered under the Securities Act by reason of a specific exemption
therefrom and that the Purchased Shares must be held indefinitely, unless they
are subsequently registered under the Securities Act or the Purchaser obtains
an opinion of counsel, in form and substance satisfactory to the Company and
its counsel, that such registration is not required. The Purchaser further
acknowledges and understands that the Company is under no obligation to
register the Purchased Shares.
(iii) The Purchaser is aware of the adoption of Rule 144 by the
Securities and Exchange Commission under the Securities Act, which permits
limited public resales of securities acquired in a non-public offering,
subject to the satisfaction of certain conditions, including (without
limitation) the availability of certain current public information about the
issuer, the resale occurring only after the holding period required by Rule
144 has been satisfied, the sale occurring through an unsolicited "broker's
transaction," and the amount of securities being sold during any three-month
period not exceeding specified limitations. The Purchaser acknowledges and
understands that the conditions for resale set forth in Rule 144 have not been
satisfied and that the Company has no plans to satisfy these conditions in the
foreseeable future.
(iv) The Purchaser will not sell, transfer or otherwise dispose of
the Purchased Shares in violation of the Securities Act, the Securities
Exchange Act of 1934, or the rules promulgated thereunder, including Rule 144
under the Securities Act. The Purchaser agrees that he or she will not dispose
of the Purchased Shares unless and until he or she has complied with all
requirements of this Agreement applicable to the disposition of Purchased
Shares and he or she has provided the Company with written assurances, in
substance and form satisfactory to the Company, that (A) the proposed
disposition does not require registration of the Purchased Shares under the
Securities Act or all appropriate action necessary for compliance with the
registration requirements of the Securities Act or with any exemption from
registration available under the Securities Act (including Rule 144) has been
taken and (B) the proposed disposition will not result in the contravention of
any transfer restrictions applicable to the Purchased Shares under the Rules
of the California Corporations Commissioner.
(v) The Purchaser has been furnished with, and has had access to,
such information as he or she considers necessary or appropriate for deciding
whether to invest in the Purchased Shares, and the Purchaser has had an
opportunity to ask questions and receive answers from the Company regarding
the terms and conditions of the issuance of the Purchased Shares.
(vi) The Purchaser is aware that his or her investment in the
Company is a speculative investment which has limited liquidity and is subject
to the risk of complete loss. The Purchaser is able, without impairing his or
her financial condition, to hold the
5
<PAGE>
Purchased Shares for an indefinite period and to suffer a complete loss of his
or her investment in the Purchased Shares.
(b) Securities Law Restrictions. Regardless of whether the offering
and sale of Shares under the Plan have been registered under the Securities
Act or have been registered or qualified under the securities laws of any
state, the Company at its discretion may impose restrictions upon the sale,
pledge or other transfer of the Purchased Shares (including the placement of
appropriate legends on stock certificates or the imposition of stop-transfer
instructions) if, in the judgment of the Company, such restrictions are
necessary or desirable in order to achieve compliance with the Securities Act,
the securities laws of any state or any other law.
(c) Market Stand-Off. In connection with any underwritten public
offering by the Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act, including the Company's
initial public offering, the Purchaser shall not directly or indirectly sell,
make any short sale of, loan, hypothecate, pledge, offer, grant or sell any
option or other contract for the purchase of, purchase any option or other
contract for the sale of, or otherwise dispose of or transfer, or agree to
engage in any of the foregoing transactions with respect to, any Purchased
Shares without the prior written consent of the Company or its underwriters.
Such restriction (the "Market Stand-Off") shall be in effect for such period
of time following the date of the final prospectus for the offering as may be
requested by the Company or such underwriters. In no event, however, shall
such period exceed 180 days. The Market Stand-Off shall in any event terminate
two years after the date of the Company's initial public offering. In the
event of the declaration of a stock dividend, a spin-off, a stock split, an
adjustment in conversion ratio, a recapitalization or a similar transaction
affecting the Company's outstanding securities without receipt of
consideration, any new, substituted or additional securities which are by
reason of such transaction distributed with respect to any Shares subject to
the Market Stand-Off, or into which such Shares thereby become convertible,
shall immediately be subject to the Market Stand-Off. In order to enforce the
Market Stand-Off, the Company may impose stop-transfer instructions with
respect to the Purchased Shares until the end of the applicable stand-off
period. The Company's underwriters shall be beneficiaries of the agreement set
forth in this Subsection (c). This Subsection (c) shall not apply to Shares
registered in the public offering under the Securities Act, and the Purchaser
shall be subject to this Subsection (c) only if the directors and officers of
the Company are subject to similar arrangements.
(d) Rights of the Company. The Company shall not be required to (i)
transfer on its books any Purchased Shares that have been sold or transferred
in contravention of this Agreement or (ii) treat as the owner of Purchased
Shares, or otherwise to accord voting, dividend or liquidation rights to, any
transferee to whom Purchased Shares have been transferred in contravention of
this Agreement.
SECTION 5. SUCCESSORS AND ASSIGNS.
Except as otherwise expressly provided to the contrary, the provisions
of this Agreement shall inure to the benefit of, and be binding upon, the
Company and its successors and assigns and be binding upon the Purchaser and the
Purchaser's legal representatives, heirs,
6
<PAGE>
legatees, distributees, assigns and transferees by operation of law, whether
or not any such person has become a party to this Agreement or has agreed in
writing to join herein and to be bound by the terms, conditions and
restrictions hereof.
SECTION 6. NO RETENTION RIGHTS.
Nothing in this Agreement or in the Plan shall confer upon the
Purchaser any right to continue in Service for any period of specific duration
or interfere with or otherwise restrict in any way the rights of the Company (or
any Parent or Subsidiary employing or retaining the Purchaser) or of the
Purchaser, which rights are hereby expressly reserved by each, to terminate his
or her Service at any time and for any reason, with or without cause.
SECTION 7. TAX ELECTION.
The acquisition of the Purchased Shares may result in adverse tax
consequences that may be avoided or mitigated by filing an election under Code
Section 83(b). Such election may be filed only within 30 days after the date of
purchase set forth in the Summary of Stock Purchase. The form for making the
Code Section 83(b) election is attached to this Agreement as an Exhibit. The
Purchaser should consult with his or her tax advisor to determine the tax
consequences of acquiring the Purchased Shares and the advantages and
disadvantages of filing the Code Section 83(b) election. The Purchaser
acknowledges that it is his or her sole responsibility, and not the Company's,
to file a timely election under Code Section 83(b), even if the Purchaser
requests the Company or its representatives to make this filing on his or her
behalf.
SECTION 8. LEGENDS.
All certificates evidencing Purchased Shares shall bear the following
legends:
"THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED,
ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE
TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER
OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES). SUCH
AGREEMENT GRANTS TO THE COMPANY CERTAIN RIGHTS OF FIRST REFUSAL UPON AN
ATTEMPTED TRANSFER OF THE SHARES AND CERTAIN REPURCHASE RIGHTS UPON
TERMINATION OF SERVICE WITH THE COMPANY. THE SECRETARY OF THE COMPANY WILL
UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF
WITHOUT CHARGE."
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN
7
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EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS
NOT REQUIRED."
If required by the authorities of any state in connection with the issuance of
the Purchased Shares, the legend or legends required by such state authorities
shall also be endorsed on all such certificates.
SECTION 9. NOTICE.
Any notice required by the terms of this Agreement shall be given in
writing and shall be deemed effective upon personal delivery or upon deposit
with the United States Postal Service, by registered or certified mail, with
postage and fees prepaid. Notice shall be addressed to the Company at its
principal executive office and to the Purchaser at the address that he or she
most recently provided to the Company.
SECTION 10. ENTIRE AGREEMENT.
The Summary of Stock Purchase, this Agreement and the Plan constitute
the entire contract between the parties hereto with regard to the subject matter
hereof. They supersede any other agreements, representations or understandings
(whether oral or written and whether express or implied) which relate to the
subject matter hereof.
SECTION 11. CHOICE OF LAW.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of California, as such laws are applied to contracts
entered into and performed in such State.
SECTION 12. DEFINITIONS.
(a) "Agreement" shall mean this Stock Purchase Agreement.
(b) "Board of Directors" shall mean the Board of Directors of the
Company, as constituted from time to time or, if a Committee has been
appointed, such Committee.
(c) "Change in Control" shall mean:
(i) The consummation of a merger or consolidation of the
Company with or into another entity or any other corporate
reorganization, if more than 50% of the combined voting power of the
continuing or surviving entity's securities outstanding immediately after
such merger, consolidation or other reorganization is owned by persons
who were not stockholders of the Company immediately prior to such
merger, consolidation or other reorganization; or
8
<PAGE>
(ii) The sale, transfer or other disposition of all or
substantially all of the Company's assets.
A transaction shall not constitute a Change in Control if its sole
purpose is to change the state of the Company's incorporation or to create a
holding company that will be owned in substantially the same proportions by the
persons who held the Company's securities immediately before such transaction.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Committee" shall mean a committee of the Board of Directors, as
described in Section 2 of the Plan.
(f) "Company" shall mean iBeam Broadcasting Corporation, a Delaware
corporation.
(g) "Consultant" shall mean a person who performs bona fide services
for the Company, a Parent or a Subsidiary as a consultant or advisor,
excluding Employees and Outside Directors.
(h) "Employee" shall mean any individual who is a common-law employee
of the Company, a Parent or a Subsidiary.
(i) "Fair Market Value" shall mean the fair market value of a Share,
as determined by the Board of Directors in good faith. Such determination
shall be conclusive and binding on all persons.
(j) "Outside Director" shall mean a member of the Board of Directors
who is not an Employee.
(k) "Parent" shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
(l) "Plan" shall mean the iBeam Broadcasting Corporation 1998 Stock
Plan, as amended.
(m) "Purchased Shares" shall mean the Shares purchased by the
Purchaser pursuant to this Agreement.
(n) "Purchase Price" shall mean the amount for which one Share may be
purchased pursuant to this Agreement, as specified in the Summary of Stock
Purchase.
(o) "Purchaser" shall mean the individual named in the Summary of Stock
Purchase.
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(p) "Restricted Share" shall mean a Purchased Share that is subject to
the Right of Repurchase.
(q) "Right of First Refusal" shall mean the Company's right of first
refusal described in Section 3.
(r) "Right of Repurchase" shall mean the Company's right of repurchase
described in Section 2.
(s) "Securities Act" shall mean the Securities Act of 1933, as amended.
(t) "Service" shall mean service as an Employee, Outside Director or
Consultant.
(u) "Share" shall mean one share of Stock, as adjusted in accordance
with Section 8 of the Plan (if applicable).
(v) "Stock" shall mean the Common Stock of the Company, with a par
value of $0.0001 per Share.
(w) "Subsidiary" shall mean any corporation (other than the Company)
in an unbroken chain or corporations beginning with the Company, if each of
the corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
(x) "Summary of Stock Purchase" shall mean the document so entitled to
which this Agreement is attached.
(y) "Transferee" shall mean any person to whom the Purchaser has
directly or indirectly transferred any Purchased Share.
(z) "Transfer Notice" shall mean the notice of a proposed transfer of
Purchased Shares described in Section 3.
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EXHIBIT I
SECTION 83(b) ELECTION
This statement is made under Section 83(b) of the Internal Revenue Code of 1986,
as amended, pursuant to Treasury Regulations Section 1.83-2.
(1) The taxpayer who performed the services is:
Name:
Address:
Social Security No.:
(2) The property with respect to which the election is made is ______ shares of
the common stock of iBeam Broadcasting Corporation
(3) The property was transferred on ________ __, 199__.
(4) The taxable year for which the election is made is the calendar year 199__.
(5) The property is subject to a repurchase right pursuant to which the issuer
has the right to acquire the property at the original purchase price if for
any reason taxpayer's service with the issuer is terminated. The issuer's
repurchase right lapses in a series of installments over a ______-year
period ending on ___________ ____, _____.
(6) The fair market value of such property at the time of transfer (determined
without regard to any restriction other than a restriction which by its
terms will never lapse) is $___ per share.
(7) The amount paid for such property is $____ per share.
(8) A copy of this statement was furnished to iBeam Broadcasting Corporation,
for whom taxpayer rendered the services underlying the transfer of such
property.
(9) This statement is executed on _______ __, 199___.
- ------------------------------------ ----------------------------------------
Spouse (if any) Taxpayer
This election must be filed with the Internal Revenue Service Center with which
the Purchaser files his or her Federal income tax returns and must be filed
within 30 days after the date of purchase. This filing should be made by
registered or certified mail, return receipt requested. The Purchaser must
retain two copies of the completed form for filing with his or her Federal and
state tax returns for the current tax year and an additional copy for his or her
records.
<PAGE>
EXHIBIT 10.4
iBEAM
BROADCASTING CORPORATION
2000 STOCK PLAN
1. Purposes of the Plan. The purposes of this 2000 Stock Plan are:
--------------------
. to attract and retain the best available personnel for positions
of substantial responsibility,
. to provide additional incentive to Employees, Directors and
Consultants, and
. to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
-----------
(a) "Administrator" means the Board or any of its Committees as shall
-------------
be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
---------------
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
-----
(d) "Code" means the Internal Revenue Code of 1986, as amended.
----
(e) "Committee" means a committee of Directors appointed by the Board
---------
in accordance with Section 4 of the Plan.
(f) "Common Stock" means the common stock of the Company.
------------
(g) "Company" means iBEAM Broadcasting Corporation, Inc., a Delaware
-------
corporation.
(h) "Consultant" means any person, including an advisor, engaged by
----------
the Company or a Parent or Subsidiary to render services to such entity.
(i) "Director" means a member of the Board.
--------
<PAGE>
(j) "Disability" means total and permanent disability as defined in
----------
Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers and Directors,
--------
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the day three (3) months following the 91/st/
day of such leave, any Incentive Stock Option held by the Optionee shall cease
to be treated as an Incentive Stock Option and shall be treated for tax purposes
as a Nonstatutory Stock Option. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to constitute "employment" by
the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
(m) "Fair Market Value" means, as of any date, the value of Common
-----------------
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the day of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the day of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "Incentive Stock Option" means an Option intended to qualify as
----------------------
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(o) "Nonstatutory Stock Option" means an Option not intended to
-------------------------
qualify as an Incentive Stock Option.
(p) " Notice of Grant" means a written or electronic notice evidencing
---------------
certain terms and conditions of an individual Option or Stock Purchase Right
grant. The Notice of Grant is part of the Option Agreement.
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<PAGE>
(q) "Officer" means a person who is an officer of the Company within
-------
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(r) "Option" means a stock option granted pursuant to the Plan.
------
(s) "Option Agreement" means an agreement between the Company and an
----------------
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.
(t) "Option Exchange Program" means a program whereby outstanding
-----------------------
Options are surrendered in exchange for Options with a lower exercise price.
(u) "Optioned Stock" means the Common Stock subject to an Option or
--------------
Stock Purchase Right.
(v) "Optionee" means the holder of an outstanding Option or Stock
--------
Purchase Right granted under the Plan.
(w) "Parent" means a "parent corporation," whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.
(x) "Plan" means this 2000 Stock Plan.
----
(y) "Restricted Stock" means shares of Common Stock acquired pursuant
----------------
to a grant of Stock Purchase Rights under Section 11 of the Plan.
(z) "Restricted Stock Purchase Agreement" means a written agreement
-----------------------------------
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.
(aa) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
----------
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(bb) "Section 16(b) " means Section 16(b) of the Exchange Act.
-------------
(cc) "Service Provider" means an Employee, Director or Consultant.
----------------
(dd) "Share" means a share of the Common Stock, as adjusted in
-----
accordance with Section 13 of the Plan.
(ee) "Stock Purchase Right" means the right to purchase Common Stock
--------------------
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ff) "Subsidiary" means a "subsidiary corporation", whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
-------------------------
the Plan, the maximum aggregate number of Shares that may be optioned and sold
under the Plan is 7,000,000
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<PAGE>
Shares, plus an annual increase to be added on the first day of the Company's
fiscal year beginning in 2001, equal to the lesser of (i) 4,000,000 shares, (ii)
5% of the outstanding shares on such date or (iii) an amount determined by the
Board. The Shares may be authorized, but unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under
--------
the Plan, whether upon exercise of an Option or Right, shall not be returned to
the Plan and shall not become available for future distribution under the Plan,
except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan.
4. Administration of the Plan.
--------------------------
(a) Procedure.
---------
(i) Multiple Administrative Bodies. Different Committees with
------------------------------
respect to different groups of Service Providers may administer the Plan.
(ii) Section 162(m). To the extent that the Administrator
--------------
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify
----------
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.
(iv) Other Administration. Other than as provided above, the
--------------------
Plan shall be administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
---------------------------
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock
Purchase Rights may be granted hereunder;
(iii) to determine the number of shares of Common Stock to be
covered by each Option and Stock Purchase Right granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
-4-
<PAGE>
(v) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Option or Stock Purchase Right granted
hereunder. Such terms and conditions include, but are not limited to, the
exercise price, the time or times when Options or Stock Purchase Rights may be
exercised (which may be based on performance criteria), any vesting acceleration
or waiver of forfeiture restrictions, and any restriction or limitation
regarding any Option or Stock Purchase Right or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;
(vi) to reduce the exercise price of any Option or Stock
Purchase Right to the then current Fair Market Value if the Fair Market Value of
the Common Stock covered by such Option or Stock Purchase Right shall have
declined since the date the Option or Stock Purchase Right was granted;
(vii) to institute an Option Exchange Program;
(viii) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;
(x) to modify or amend each Option or Stock Purchase Right
(subject to Section 15(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Options longer than is
otherwise provided for in the Plan;
(xi) to allow Optionees to satisfy withholding tax obligations
by electing to have the Company withhold from the Shares to be issued upon
exercise of an Option or Stock Purchase Right that number of Shares having a
Fair Market Value equal to the minimum amount required to be withheld. The Fair
Market Value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined. All elections by an
Optionee to have Shares withheld for this purpose shall be made in such form and
under such conditions as the Administrator may deem necessary or advisable;
(xii) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator;
(xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
----------------------------------
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.
5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may
-----------
be granted to Service Providers. Incentive Stock Options may be granted only to
Employees.
-5-
<PAGE>
6. Limitations.
-----------
(a) Each Option shall be designated in the Option Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they interfere in
any way with the Optionee's right or the Company's right to terminate such
relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of Options:
(i) No Service Provider shall be granted, in any fiscal year of
the Company, Options to purchase more than 1,000,000 Shares.
(ii) In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 2,000,000
Shares, which shall not count against the limit set forth in subsection (i)
above.
(iii) The foregoing limitations shall be adjusted proportionately
in connection with any change in the Company's capitalization as described in
Section 13.
(iv) If an Option is cancelled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 13), the cancelled Option will be counted against the
limits set forth in subsections (i) and (ii) above. For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.
7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall
------------
become effective upon its adoption by the Board. It shall continue in effect
for a term of ten (10) years unless terminated earlier under Section 15 of the
Plan.
8. Term of Option. The term of each Option shall be stated in the Option
--------------
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.
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9. Option Exercise Price and Consideration.
---------------------------------------
(a) Exercise Price. The per share exercise price for the Shares to
--------------
be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted with
a per Share exercise price of less than 100% of the Fair Market Value per Share
on the date of grant pursuant to a merger or other corporate transaction.
(b) Waiting Period and Exercise Dates. At the time an Option is
---------------------------------
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions that must be satisfied before the
Option may be exercised.
(c) Form of Consideration. The Administrator shall determine the
---------------------
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares, provided Shares acquired directly from the
Company, (A) have been owned by the Optionee for more than six (6) months on the
date of surrender, and (B) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which said Option
shall be exercised;
(v) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;
-7-
<PAGE>
(vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;
(vii) any combination of the foregoing methods of payment; or
(viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
------------------
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
-----------------------------------------------
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 13 of the Plan.
Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
(b) Termination of Relationship as a Service Provider. If an
-------------------------------------------------
Optionee ceases to be a Service Provider, other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
-8-
<PAGE>
(c) Disability of Optionee. If an Optionee ceases to be a Service
----------------------
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service Provider,
-----------------
the Option may be exercised within such period of time as is specified in the
Option Agreement (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquires the right to exercise the Option by bequest or inheritance,
but only to the extent that the Option is vested on the date of death. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination. If, at
the time of death, the Optionee is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall immediately
revert to the Plan. The Option may be exercised by the executor or
administrator of the Optionee's estate or, if none, by the person(s) entitled to
exercise the Option under the Optionee's will or the laws of descent or
distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to
-----------------
buy out for a payment in cash or Shares an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
11. Stock Purchase Rights.
---------------------
(a) Rights to Purchase. Stock Purchase Rights may be issued either
------------------
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing or electronically, by means of a Notice of Grant, of the
terms, conditions and restrictions related to the offer, including the number of
Shares that the offeree shall be entitled to purchase, the price to be paid, and
the time within which the offeree must accept such offer. The offer shall be
accepted by execution of a Restricted Stock Purchase Agreement in the form
determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines otherwise,
-----------------
the Restricted Stock Purchase Agreement shall grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the
purchaser's service with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Purchase Agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator.
-9-
<PAGE>
(c) Other Provisions. The Restricted Stock Purchase Agreement shall
----------------
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.
(d) Rights as a Shareholder. Once the Stock Purchase Right is
-----------------------
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 13
of the Plan.
12. Non-Transferability of Options and Stock Purchase Rights. Unless
--------------------------------------------------------
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.
13. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
------------------------------------------------------------------
Asset Sale.
- ----------
(a) Changes in Capitalization. Subject to any required action by the
-------------------------
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, the number of shares that may be added annually to the shares
reserved under the Plan (pursuant to Section 3(a)(i)), as well as the price per
share of Common Stock covered by each such outstanding Option or Stock Purchase
Right, shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option or Stock Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse
as to all such Shares, provided the proposed dissolution or liquidation
-10-
<PAGE>
takes place at the time and in the manner contemplated. To the extent it has not
been previously exercised, an Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company
--------------------
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option and Stock Purchase Right shall be
assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the
event that the successor corporation refuses to assume or substitute for the
Option or Stock Purchase Right, the Optionee shall fully vest in and have the
right to exercise the Option or Stock Purchase Right as to all of the Optioned
Stock, including Shares as to which it would not otherwise be vested or
exercisable. If an Option or Stock Purchase Right becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee in writing or
electronically that the Option or Stock Purchase Right shall be fully vested and
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option or Stock Purchase Right shall terminate upon the expiration of such
period. For the purposes of this paragraph, the Option or Stock Purchase Right
shall be considered assumed if, following the merger or sale of assets, the
option or right confers the right to purchase or receive, for each Share of
Optioned Stock subject to the Option or Stock Purchase Right immediately prior
to the merger or sale of assets, the consideration (whether stock, cash, or
other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right, to be solely common stock of the successor corporation or its
Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
14. Date of Grant. The date of grant of an Option or Stock Purchase Right
-------------
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall
be provided to each Optionee within a reasonable time after the date of such
grant.
15. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may at any time amend,
-------------------------
alter, suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder
--------------------
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
----------------------------------
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the
-11-
<PAGE>
Optionee and the Company. Termination of the Plan shall not affect the
Administrator's ability to exercise the powers granted to it hereunder with
respect to Options granted under the Plan prior to the date of such termination.
16. Conditions Upon Issuance of Shares.
----------------------------------
(a) Legal Compliance. Shares shall not be issued pursuant to the
----------------
exercise of an Option or Stock Purchase Right unless the exercise of such Option
or Stock Purchase Right and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of an
--------------------------
Option or Stock Purchase Right, the Company may require the person exercising
such Option or Stock Purchase Right to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.
17. Inability to Obtain Authority. The inability of the Company to obtain
-----------------------------
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
18. Reservation of Shares. The Company, during the term of this Plan,
---------------------
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
19. Shareholder Approval. The Plan shall be subject to approval by the
--------------------
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.
-12-
<PAGE>
iBEAM BROADCASTING CORPORATION
2000 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
----------------------------
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Grant Number ___________________________
Date of Grant ___________________________
Vesting Commencement Date ___________________________
Exercise Price per Share $__________________________
Total Number of Shares Granted ___________________________
Total Exercise Price $__________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: ___________________________
Vesting Schedule:
----------------
Subject to accelerated vesting as set forth below, this Option may be
exercised, in whole or in part, in accordance with the following schedule:
[25% of the Shares subject to the Option shall vest twelve months after the
Vesting Commencement Date, and 1/48 of the Shares subject to the Option shall
vest each month thereafter, subject to the Optionee continuing to be a Service
Provider on such dates].
<PAGE>
Termination Period:
------------------
This Option may be exercised for [three months] after Optionee ceases to be
a Service Provider. Upon the death or Disability of the Optionee, this Option
may be exercised for [twelve months] after Optionee ceases to be a Service
Provider. In no event shall this Option be exercised later than the
Term/Expiration Date as provided above.
II. AGREEMENT
---------
A. Grant of Option.
---------------
The Plan Administrator of the Company hereby grants to the Optionee
named in the Notice of Grant attached as Part I of this Agreement (the
"Optionee") an option (the "Option") to purchase the number of Shares, as set
forth in the Notice of Grant, at the exercise price per share set forth in the
Notice of Grant (the "Exercise Price"), subject to the terms and conditions of
the Plan, which is incorporated herein by reference. Subject to Section 15(c) of
the Plan, in the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Option Agreement, the terms and
conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
B. Exercise of Option.
------------------
(a) Right to Exercise. This Option is exercisable during its term in
-----------------
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of
------------------
an exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
---------
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be completed
by the Optionee and delivered to the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares. This Option shall be deemed to be exercised upon receipt by the Company
of such fully executed Exercise Notice accompanied by such aggregate Exercise
Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.
-2-
<PAGE>
C. Method of Payment.
-----------------
Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:
1. cash;
2. check;
3. consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan; or
4. surrender of other Shares, provided Shares acquired directly from
the Company (i) have been owned by the Optionee for more than six (6) months on
the date of surrender, and (ii) have a Fair Market Value on the date of
surrender equal to the aggregate Exercise Price of the Exercised Shares.
D. Non-Transferability of Option.
-----------------------------
This Option may not be transferred in any manner otherwise than by will
or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by the Optionee. The terms of the Plan and this Option
Agreement shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.
E. Term of Option.
--------------
This Option may be exercised only within the term set out in the Notice
of Grant, and may be exercised during such term only in accordance with the Plan
and the terms of this Option Agreement.
F. Tax Consequences.
----------------
Some of the federal tax consequences relating to this Option, as of the
date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE
OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING
OF THE SHARES.
G. Tax Obligations.
---------------
1. Withholding Taxes. Optionee agrees to make appropriate
-----------------
arrangements with the Company (or the Parent or Subsidiary employing or
retaining Optionee) for the satisfaction of all Federal, state, and local income
and employment tax withholding requirements applicable to the Option exercise.
Optionee acknowledges and agrees that the Company may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.
2. Notice of Disqualifying Disposition of ISO Shares. If the Option
-------------------------------------------------
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired
-3-
<PAGE>
pursuant to the ISO on or before the later of (1) the date two years after the
Date of Grant, or (2) the date one year after the date of exercise, the Optionee
shall immediately notify the Company in writing of such disposition. Optionee
agrees that Optionee may be subject to income tax withholding by the Company on
the compensation income recognized by the Optionee.
H. Entire Agreement; Governing Law.
-------------------------------
The Plan is incorporated herein by reference. The Plan and this
Option Agreement constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing signed by the Company and Optionee. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.
I. NO GUARANTEE OF CONTINUED SERVICE.
---------------------------------
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER
AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING
GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES
AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE
VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED
PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD,
FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE
COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT
ANY TIME, WITH OR WITHOUT CAUSE.
By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
OPTIONEE: iBEAM BROADCASTING CORPORATION
________________________________ _________________________________
Signature By
________________________________ _________________________________
Print Name Title
________________________________
Residence Address
-4-
<PAGE>
EXHIBIT A
---------
iBEAM BROADCASTING CORPORATION
2000 STOCK PLAN
EXERCISE NOTICE
iBEAM Broadcasting Corporation
645 Almanor Avenue, Suite 100
Sunnyvale, CA 94086
Attention: [Title]
1. Exercise of Option. Effective as of today, ________________, _____,
------------------
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of iBEAM Broadcasting Corporation (the
"Company") under and pursuant to the 2000 Stock Plan (the "Plan") and the Stock
Option Agreement dated, _____ (the "Option Agreement"). The purchase price for
the Shares shall be $_____, as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
-------------------
full purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
----------------------------
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance (as evidenced by the
---------------------
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 13 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
----------------
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
<PAGE>
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
-------------------------------
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.
Submitted by: Accepted by:
PURCHASER: iBEAM BROADCASTING CORPORATION
_______________________________ _____________________________________
Signature By
_______________________________ _____________________________________
Print Name Its
Address: Address:
- ------- -------
_______________________________ iBEAM Broadcasting Corporation
645 Almanor Avenue, Suite 100
_______________________________ Sunnyvale, CA 94086
____________________________________
Date Received
-2-
<PAGE>
EXHIBIT 10.5
iBEAM BROADCASTING CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 2000 Employee Stock
Purchase Plan of iBEAM Broadcasting Corporation.
1. Purpose. The purpose of the Plan is to provide employees of the
-------
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the
intention of the Company to have the Plan qualify as an "Employee Stock Purchase
Plan" under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
-----------
(a) "Board" shall mean the Board of Directors of the Company or
-----
any committee thereof designated by the Board of Directors of the Company in
accordance with Section 14 of the Plan.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
----
amended.
(c) "Common Stock" shall mean the common stock of the Company.
------------
(d) "Company" shall mean iBEAM Broadcasting Corporation and any
-------
Designated Subsidiary of the Company.
(e) "Compensation" shall mean all base straight time gross
------------
earnings and commissions, but exclusive of payments for overtime, shift premium,
incentive compensation, incentive payments, bonuses and other compensation.
(f) "Designated Subsidiary" shall mean any Subsidiary that has
---------------------
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(g) "Employee" shall mean any individual who is an Employee of the
--------
Company for tax purposes whose customary employment with the Company is at least
twenty (20) hours per week and more than five (5) months in any calendar year.
For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship shall be deemed to have terminated on the
91st day of such leave.
(h) "Enrollment Date" shall mean the first Trading Day of each
---------------
Offering Period.
(i) "Exercise Date" shall mean the last Trading Day of each
-------------
Purchase Period.
<PAGE>
(j) "Fair Market Value" shall mean, as of any date, the value of
-----------------
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the day of determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Common Stock on
the date of determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board; or
(iv) For purposes of the Enrollment Date of the first
Offering Period under the Plan, the Fair Market Value shall be the initial price
to the public as set forth in the final prospectus included within the
registration statement in Form S-1 filed with the Securities and Exchange
Commission for the initial public offering of the Company's Common Stock (the
"Registration Statement").
(k) "Offering Periods" shall mean the periods of approximately
----------------
twenty-four (24) months during which an option granted pursuant to the Plan may
be exercised, commencing on the first Trading Day on or after May 1 and November
1 of each year and terminating on the last Trading Day in the periods ending
twenty-four months later; provided, however, that the first Offering Period
under the Plan shall commence with the first Trading Day on or after the date on
which the Securities and Exchange Commission declares the Company's Registration
Statement effective and ending on the last Trading Day on or before April 31,
2002. The duration and timing of Offering Periods may be changed pursuant to
Section 4 of this Plan.
(l) "Plan" shall mean this 2000 Employee Stock Purchase Plan.
----
(m) "Purchase Period" shall mean the approximately six month
---------------
period commencing after one Exercise Date and ending with the next Exercise
Date, except that the first Purchase Period of any Offering Period shall
commence on the Enrollment Date and end with the next Exercise Date; provided,
however, that the first Purchase Period under the Plan shall commence with the
first Trading Day on or after the Securities and Exchange Commission declares
the Company's Registration Statement effective and shall end on the last Trading
Day on or before October 31, 2000.
(n) "Purchase Price" shall mean 85% of the Fair Market Value of a
--------------
share of Common Stock on the Enrollment Date or on the Exercise Date, whichever
is lower; provided however, that the Purchase Price may be adjusted by the Board
pursuant to Section 20.
-2-
<PAGE>
(o) "Reserves" shall mean the number of shares of Common Stock
--------
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
(p) "Subsidiary" shall mean a corporation, domestic or foreign,
----------
of which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.
(q) "Trading Day" shall mean a day on which national stock
-----------
exchanges and the Nasdaq System are open for trading.
3. Eligibility.
-----------
(a) Any Employee who shall be employed by the Company on a given
Enrollment Date shall be eligible to participate in the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Subsidiary, or (ii) to the extent that his or her rights to purchase stock
under all employee stock purchase plans of the Company and its subsidiaries
accrues at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of
stock (determined at the fair market value of the shares at the time such option
is granted) for each calendar year in which such option is outstanding at any
time.
4. Offering Periods. The Plan shall be implemented by consecutive,
----------------
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after May 1 and November 1 each year, or on such other date as
the Board shall determine, and continuing thereafter until terminated in
accordance with Section 20 hereof; provided, however, that the first Offering
Period under the Plan shall commence with the first Trading Day on or after the
date on which the Securities and Exchange Commission declares the Company's
Registration Statement effective and ending on the last Trading Day on or before
April 31, 2002. The Board shall have the power to change the duration of
Offering Periods (including the commencement dates thereof) with respect to
future offerings without shareholder approval if such change is announced at
least five (5) days prior to the scheduled beginning of the first Offering
Period to be affected thereafter.
5. Participation.
-------------
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the Company's payroll office prior
---------
to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the
first payroll following the Enrollment Date and shall end on the last payroll in
the Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
-3-
<PAGE>
6. Payroll Deductions.
------------------
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding 15% of the Compensation
which he or she receives on each pay day during the Offering Period.
(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan and shall be withheld in whole
percentages only. A participant may not make any additional payments into such
account.
(c) A participant may discontinue his or her participation in the
Plan as provided in Section 10 hereof, or may increase or decrease the rate of
his or her payroll deductions during the Offering Period by completing or filing
with the Company a new subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in rate shall
be effective with the first full payroll period following five (5) business days
after the Company's receipt of the new subscription agreement unless the Company
elects to process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a
participant's payroll deductions may be decreased to zero percent (0%) at any
time during a Purchase Period. Payroll deductions shall recommence at the rate
provided in such participant's subscription agreement at the beginning of the
first Purchase Period which is scheduled to end in the following calendar year,
unless terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part, or
at the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period,
---------------
each eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Purchase Period more than
10,000 shares of the Company's Common Stock (subject to any adjustment pursuant
to Section 19), and provided further that such purchase shall be subject to the
limitations set forth in Sections 3(b) and 12 hereof. The Board may, for future
Offering Periods, increase or decrease, in its absolute discretion, the maximum
number of shares of
-4-
<PAGE>
the Company's Common Stock an Employee may purchase during each Purchase Period
of such Offering Period. Exercise of the option shall occur as provided in
Section 8 hereof, unless the participant has withdrawn pursuant to Section 10
hereof. The option shall expire on the last day of the Offering Period.
8. Exercise of Option.
------------------
(a) Unless a participant withdraws from the Plan as provided in
Section 10 hereof, his or her option for the purchase of shares shall be
exercised automatically on the Exercise Date, and the maximum number of full
shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
participant as provided in Section 10 hereof. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to
purchase shares hereunder is exercisable only by him or her.
(b) If the Board determines that, on a given Exercise Date, the
number of shares with respect to which options are to be exercised may exceed
(i) the number of shares of Common Stock that were available for sale under the
Plan on the Enrollment Date of the applicable Offering Period, or (ii) the
number of shares available for sale under the Plan on such Exercise Date, the
Board may in its sole discretion (x) provide that the Company shall make a pro
rata allocation of the shares of Common Stock available for purchase on such
Enrollment Date or Exercise Date, as applicable, in as uniform a manner as shall
be practicable and as it shall determine in its sole discretion to be equitable
among all participants exercising options to purchase Common Stock on such
Exercise Date, and continue all Offering Periods then in effect, or (y) provide
that the Company shall make a pro rata allocation of the shares available for
purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform
a manner as shall be practicable and as it shall determine in its sole
discretion to be equitable among all participants exercising options to purchase
Common Stock on such Exercise Date, and terminate any or all Offering Periods
then in effect pursuant to Section 20 hereof. The Company may make pro rata
allocation of the shares available on the Enrollment Date of any applicable
Offering Period pursuant to the preceding sentence, notwithstanding any
authorization of additional shares for issuance under the Plan by the Company's
shareholders subsequent to such Enrollment Date.
9. Delivery. As promptly as practicable after each Exercise Date on
--------
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.
10. Withdrawal.
----------
(a) A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to exercise
his or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit B to this Plan. All of the participant's payroll
---------
deductions credited to his or her account shall be paid to such participant
-5-
<PAGE>
promptly after receipt of notice of withdrawal and such participant's option for
the Offering Period shall be automatically terminated, and no further payroll
deductions for the purchase of shares shall be made for such Offering Period. If
a participant withdraws from an Offering Period, payroll deductions shall not
resume at the beginning of the succeeding Offering Period unless the participant
delivers to the Company a new subscription agreement.
(b) A participant's withdrawal from an Offering Period shall not
have any effect upon his or her eligibility to participate in any similar plan
which may hereafter be adopted by the Company or in succeeding Offering Periods
which commence after the termination of the Offering Period from which the
participant withdraws.
11. Termination of Employment.
-------------------------
Upon a participant's ceasing to be an Employee, for any reason,
he or she shall be deemed to have elected to withdraw from the Plan and the
payroll deductions credited to such participant's account during the Offering
Period but not yet used to exercise the option shall be returned to such
participant or, in the case of his or her death, to the person or persons
entitled thereto under Section 15 hereof, and such participant's option shall be
automatically terminated. The preceding sentence notwithstanding, a participant
who receives payment in lieu of notice of termination of employment shall be
treated as continuing to be an Employee for the participant's customary number
of hours per week of employment during the period in which the participant is
subject to such payment in lieu of notice.
12. Interest. No interest shall accrue on the payroll deductions of
--------
a participant in the Plan.
13. Stock.
-----
(a) Subject to adjustment upon changes in capitalization of the
Company as provided in Section 19 hereof, the maximum number of shares of the
Company's Common Stock which shall be made available for sale under the Plan
shall be 500,000 shares plus an annual increase to be added on the first day of
the Company's fiscal year beginning in 2001, equal to the lesser of (i)
1,400,000 shares, (ii) 2% of the outstanding shares on such date or (iii) a
lesser amount determined by the Board.
(b) The participant shall have no interest or voting right in
shares covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan shall
be registered in the name of the participant or in the name of the participant
and his or her spouse.
14. Administration. The Plan shall be administered by the Board or a
--------------
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision
and determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.
-6-
<PAGE>
15. Designation of Beneficiary.
--------------------------
(a) A participant may file a written designation of a beneficiary
who is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death subsequent to an
Exercise Date on which the option is exercised but prior to delivery to such
participant of such shares and cash. In addition, a participant may file a
written designation of a beneficiary who is to receive any cash from the
participant's account under the Plan in the event of such participant's death
prior to exercise of the option. If a participant is married and the designated
beneficiary is not the spouse, spousal consent shall be required for such
designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.
16. Transferability. Neither payroll deductions credited to a
---------------
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 15 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
17. Use of Funds. All payroll deductions received or held by the
------------
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.
18. Reports. Individual accounts shall be maintained for each
-------
participant in the Plan. Statements of account shall be given to participating
Employees at least annually, which statements shall set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
19. Adjustments Upon Changes in Capitalization, Dissolution,
--------------------------------------------------------
Liquidation, Merger or Asset Sale.
- ---------------------------------
(a) Changes in Capitalization. Subject to any required action
-------------------------
by the shareholders of the Company, the Reserves, the maximum number of shares
each participant may purchase each Purchase Period (pursuant to Section 7), the
number of shares that may be added annually to the shares reserved under the
Plan (pursuant to Section 13(a)(i)), as well as the price per share and the
number of shares of Common Stock covered by each option under the Plan which has
not yet been exercised shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the
-7-
<PAGE>
number of shares of Common Stock effected without receipt of consideration by
the Company; provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an option.
(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date"), and
shall terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Board. The New
Exercise Date shall be before the date of the Company's proposed dissolution or
liquidation. The Board shall notify each participant in writing, at least ten
(10) business days prior to the New Exercise Date, that the Exercise Date for
the participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.
(c) Merger or Asset Sale. In the event of a proposed sale of
--------------------
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, each outstanding option shall be
assumed or an equivalent option substituted by the successor corporation or a
Parent or Subsidiary of the successor corporation. In the event that the
successor corporation refuses to assume or substitute for the option, any
Purchase Periods then in progress shall be shortened by setting a new Exercise
Date (the "New Exercise Date") and any Offering Periods then in progress shall
end on the New Exercise Date. The New Exercise Date shall be before the date of
the Company's proposed sale or merger. The Board shall notify each participant
in writing, at least ten (10) business days prior to the New Exercise Date, that
the Exercise Date for the participant's option has been changed to the New
Exercise Date and that the participant's option shall be exercised automatically
on the New Exercise Date, unless prior to such date the participant has
withdrawn from the Offering Period as provided in Section 10 hereof.
20. Amendment or Termination.
------------------------
(a) The Board of Directors of the Company may at any time and for
any reason terminate or amend the Plan. Except as provided in Section 19 hereof,
no such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board of Directors on any Exercise Date
if the Board determines that the termination of the Offering Period or the Plan
is in the best interests of the Company and its shareholders. Except as provided
in Section 19 and this Section 20 hereof, no amendment may make any change in
any option theretofore granted which adversely affects the rights of any
participant. To the extent necessary to comply with Section 423 of the Code (or
any successor rule or provision or any other applicable law, regulation or stock
exchange rule), the Company shall obtain shareholder approval in such a manner
and to such a degree as required.
(b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be
-8-
<PAGE>
entitled to change the Offering Periods, limit the frequency and/or number of
changes in the amount withheld during an Offering Period, establish the exchange
ratio applicable to amounts withheld in a currency other than U.S. dollars,
permit payroll withholding in excess of the amount designated by a participant
in order to adjust for delays or mistakes in the Company's processing of
properly completed withholding elections, establish reasonable waiting and
adjustment periods and/or accounting and crediting procedures to ensure that
amounts applied toward the purchase of Common Stock for each participant
properly correspond with amounts withheld from the participant's Compensation,
and establish such other limitations or procedures as the Board (or its
committee) determines in its sole discretion advisable which are consistent with
the Plan.
(c) In the event the Board determines that the ongoing operation
of the Plan may result in unfavorable financial accounting consequences, the
Board may, in its discretion and, to the extent necessary or desirable, modify
or amend the Plan to reduce or eliminate such accounting consequence including,
but not limited to:
(i) altering the Purchase Price for any Offering Period
including an Offering Period underway at the time of the change in Purchase
Price;
(ii) shortening any Offering Period so that Offering Period
ends on a new Exercise Date, including an Offering Period underway at the time
of the Board action; and
(iii) allocating shares.
Such modifications or amendments shall not require stockholder
approval or the consent of any Plan participants.
21. Notices. All notices or other communications by a participant to
-------
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
22. Conditions Upon Issuance of Shares. Shares shall not be issued
----------------------------------
with respect to an option unless the exercise of such option and the issuance
and delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
23. Term of Plan. The Plan shall become effective upon the earlier
------------
to occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 20 hereof.
-9-
<PAGE>
24. Automatic Transfer to Low Price Offering Period. To the extent
-----------------------------------------------
permitted by any applicable laws, regulations, or stock exchange rules if the
Fair Market Value of the Common Stock on any Exercise Date in an Offering Period
is lower than the Fair Market Value of the Common Stock on the Enrollment Date
of such Offering Period, then all participants in such Offering Period shall be
automatically withdrawn from such Offering Period immediately after the exercise
of their option on such Exercise Date and automatically re-enrolled in the
immediately following Offering Period as of the first day thereof.
-10-
<PAGE>
EXHIBIT A
---------
iBEAM BROADCASTING CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date:___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. ____________________ hereby elects to participate in the iBEAM Broadcasting
Corporation Employee Stock Purchase Plan (the "Employee Stock Purchase
Plan") and subscribes to purchase shares of the Company's Common Stock in
accordance with this Subscription Agreement and the Employee Stock Purchase
Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount of
____% of my Compensation on each payday (from 0 to 15%) during the Offering
Period in accordance with the Employee Stock Purchase Plan. (Please note
that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise my
option.
4. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is in
all respects subject to the terms of the Plan. I understand that my
ability to exercise the option under this Subscription Agreement is subject
to shareholder approval of the Employee Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should be
issued in the name(s) of (Employee or Employee and Spouse only).
6. I understand that if I dispose of any shares received by me pursuant to the
Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares) or one year after the
Exercise Date, I will be treated for federal income tax purposes as having
received ordinary income at the time of such disposition in an amount equal
to the excess of the fair market value of the shares at the time such
shares were purchased by me over the price which I paid for the shares. I
-
hereby agree to notify the Company in writing within 30 days after the date
---------------------------------------------------------------------------
of any disposition of my shares and I will make adequate provision for
----------------------------------------------------------------------
Federal, state or other tax withholding obligations, if any, which arise
------------------------------------------------------------------------
upon the
--------
<PAGE>
disposition of the Common Stock. The Company may, but will not be
-------------------------------
obligated to, withhold from my compensation the amount necessary to meet
any applicable withholding obligation including any withholding necessary
to make available to the Company any tax deductions or benefits
attributable to sale or early disposition of Common Stock by me. If I
dispose of such shares at any time after the expiration of the 2-year and
1-year holding periods, I understand that I will be treated for federal
income tax purposes as having received income only at the time of such
disposition, and that such income will be taxed as ordinary income only to
the extent of an amount equal to the lesser of (1) the excess of the fair
market value of the shares at the time of such disposition over the
purchase price which I paid for the shares, or (2) 15% of the fair market
value of the shares on the first day of the Offering Period. The remainder
of the gain, if any, recognized on such disposition will be taxed as
capital gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent upon
my eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print)_____________________________________________________
(First) (Middle) (Last)
_________________________ ___________________________________
Relationship
___________________________________
(Address)
-2-
<PAGE>
Employee's Social
Security Number: _____________________________________________________
Employee's Address: _____________________________________________________
_____________________________________________________
_____________________________________________________
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:___________________ _____________________________________________________
Signature of Employee
_____________________________________________________
Spouse's Signature (If beneficiary other than spouse)
-3-
<PAGE>
EXHIBIT B
---------
iBEAM BROADCASTING CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the iBEAM
Broadcasting Corporation Employee Stock Purchase Plan which began on
____________, ______ (the "Enrollment Date") hereby notifies the Company that he
or she hereby withdraws from the Offering Period. He or she hereby directs the
Company to pay to the undersigned as promptly as practicable all the payroll
deductions credited to his or her account with respect to such Offering Period.
The undersigned understands and agrees that his or her option for such Offering
Period will be automatically terminated. The undersigned understands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.
Name and Address of Participant:
________________________________
________________________________
________________________________
Signature:
________________________________
Date:____________________________
<PAGE>
EXHIBIT 10.6
iBEAM BROADCASTING CORPORATION
2000 DIRECTOR OPTION PLAN
1. Purposes of the Plan. The purposes of this 2000 Director Option
--------------------
Plan are to attract and retain the best available personnel for service as
Outside Directors (as defined herein) of the Company, to provide additional
incentive to the Outside Directors of the Company to serve as Directors, and to
encourage their continued service on the Board.
All options granted hereunder shall be nonstatutory stock
options.
2. Definitions. As used herein, the following definitions shall
-----------
apply:
(a) "Board" means the Board of Directors of the Company.
-----
(b) "Code" means the Internal Revenue Code of 1986, as amended.
----
(c) "Common Stock" means the common stock of the Company.
------------
(d) "Company" means iBEAM Broadcasting Corporation, a Delaware
-------
corporation.
(e) "Director" means a member of the Board.
--------
(f) "Disability" means total and permanent disability as defined
----------
in section 22(e)(3) of the Code.
(g) "Employee" means any person, including officers and
--------
Directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a Director's fee by the Company shall not be sufficient in and of
itself to constitute "employment" by the Company.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
(i) "Fair Market Value" means, as of any date, the value of
-----------------
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the day of determination as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;
<PAGE>
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the day of determination, as
reported in The Wall Street Journal or such other source as the Board deems
reliable; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.
(j) "Inside Director" means a Director who is an Employee.
---------------
(k) "Option" means a stock option granted pursuant to the Plan.
------
(l) "Optioned Stock" means the Common Stock subject to an
--------------
Option.
(m) "Optionee" means a Director who holds an Option.
--------
(n) "Outside Director" means a Director who is not an Employee.
----------------
(o) "Parent" means a "parent corporation," whether now or
------
hereafter existing, as defined in Section 424(e) of the Code.
(p) "Plan" means this 2000 Director Option Plan.
----
(q) "Share" means a share of the Common Stock, as adjusted in
-----
accordance with Section 10 of the Plan.
(r) "Subsidiary" means a "subsidiary corporation," whether now
----------
or hereafter existing, as defined in Section 424(f) of the Internal Revenue Code
of 1986.
3. Stock Subject to the Plan. Subject to the provisions of Section
-------------------------
10 of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 500,000 Shares, plus an annual increase to be added on
the first day of the Company's fiscal year beginning in 2001, equal to (i) the
Optioned Stock underlying Options granted in the immediately preceding year, or
(ii) a lesser amount determined by the Board (the "Pool"). The Shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.
-2-
<PAGE>
4. Administration and Grants of Options under the Plan.
---------------------------------------------------
(a) Procedure for Grants. All grants of Options to Outside
--------------------
Directors under this Plan shall be automatic and nondiscretionary and shall be
made strictly in accordance with the following provisions:
(i) No person shall have any discretion to select which
Outside Directors shall be granted Options or to determine the number of Shares
to be covered by Options.
(ii) Each Outside Director shall be automatically granted
an Option to purchase 60,000 Shares (the "First Option") on the date on which
such person first becomes an Outside Director, whether through election by the
shareholders of the Company or appointment by the Board to fill a vacancy;
provided, however, that an Inside Director who ceases to be an Inside Director
but who remains a Director shall not receive a First Option.
(iii) Notwithstanding the provisions of subsections (ii)
hereof, any exercise of an Option granted before the Company has obtained
shareholder approval of the Plan in accordance with Section 16 hereof shall be
conditioned upon obtaining such shareholder approval of the Plan in accordance
with Section 16 hereof.
(iv) The terms of a First Option granted hereunder shall be
as follows:
(A) the term of the First Option shall be ten (10)
years.
(B) the First Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.
(C) the exercise price per Share shall be 100% of the
Fair Market Value per Share on the date of grant of the First Option.
(D) subject to Section 10 hereof, the First Option
shall become exercisable as to 1/48th Shares subject to the First Option on each
monthly anniversary of its date of grant, provided that the Optionee continues
to serve as a Director on such dates.
(v) In the event that any Option granted under the Plan
would cause the number of Shares subject to outstanding Options plus the number
of Shares previously purchased under Options to exceed the Pool, then the
remaining Shares available for Option grant shall be granted under Options to
the Outside Directors on a pro rata basis. No further grants shall be made until
such time, if any, as additional Shares become available for grant under the
Plan through action of the Board or the shareholders to increase the number of
Shares which may be issued under the Plan or through cancellation or expiration
of Options previously granted hereunder.
5. Eligibility. Options may be granted only to Outside Directors.
-----------
All Options shall be automatically granted in accordance with the terms set
forth in Section 4 hereof.
-3-
<PAGE>
The Plan shall not confer upon any Optionee any right with
respect to continuation of service as a Director or nomination to serve as a
Director, nor shall it interfere in any way with any rights which the Director
or the Company may have to terminate the Director's relationship with the
Company at any time.
6. Term of Plan. The Plan shall become effective upon the earlier
------------
to occur of its adoption by the Board or its approval by the shareholders of the
Company as described in Section 16 of the Plan. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 11 of the Plan.
7. Form of Consideration. The consideration to be paid for the
---------------------
Shares to be issued upon exercise of an Option, including the method of payment,
shall consist of (i) cash, (ii) check, (iii) other shares, provided shares
acquired directly from the Company (x) have been owned by the Optionee for more
than six (6) months on the date of surrender, and (y) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised, (iv) consideration received by the
Company under a cashless exercise program implemented by the Company in
connection with the Plan, or (v) any combination of the foregoing methods of
payment.
8. Exercise of Option.
------------------
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
-----------------------------------------------
granted hereunder shall be exercisable at such times as are set forth in Section
4 hereof; provided, however, that no Options shall be exercisable until
shareholder approval of the Plan in accordance with Section 16 hereof has been
obtained. An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may consist of any consideration and
method of payment allowable under Section 7 of the Plan. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. A share certificate for the number of Shares so acquired
shall be issued to the Optionee as soon as practicable after exercise of the
Option. No adjustment shall be made for a dividend or other right for which the
record date is prior to the date the stock certificate is issued, except as
provided in Section 10 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
(b) Termination of Continuous Status as a Director. Subject to
----------------------------------------------
Section 10 hereof, in the event an Optionee's status as a Director terminates
(other than upon the Optionee's death or
-4-
<PAGE>
Disability), the Optionee may exercise his or her Option, but only within six
(6) months following the date of such termination, and only to the extent that
the Optionee was entitled to exercise it on the date of such termination (but in
no event later than the expiration of its ten (10) year term). To the extent
that the Optionee was not entitled to exercise an Option on the date of such
termination, and to the extent that the Optionee does not exercise such Option
(to the extent otherwise so entitled) within the time specified herein, the
Option shall terminate.
(c) Disability of Optionee. In the event Optionee's status as a
----------------------
Director terminates as a result of Disability, the Optionee may exercise his or
her Option, but only within twelve (12) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option on the date of termination, or if he or she does not exercise
such Option (to the extent otherwise so entitled) within the time specified
herein, the Option shall terminate.
(d) Death of Optionee. In the event of an Optionee's death, the
-----------------
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of death, and only to the extent that the Optionee was
entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.
9. Non-Transferability of Options. The Option may not be sold,
------------------------------
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
10. Adjustments Upon Changes in Capitalization, Dissolution, Merger
---------------------------------------------------------------
or Asset Sale.
- -------------
(a) Changes in Capitalization. Subject to any required action
-------------------------
by the shareholders of the Company, the number of Shares covered by each
outstanding Option, the number of Shares which have been authorized for issuance
under the Plan but as to which no Options have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option, the
number of shares that may be added annually to the shares reserved under the
Plan (pursuant to Section 3(a)(i)), as well as the price per Share covered by
each such outstanding Option, and the number of Shares issuable pursuant to the
automatic grant provisions of Section 4 hereof shall be proportionately adjusted
for any increase or decrease in the number of issued Shares resulting from a
stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued Shares effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration." Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or
-5-
<PAGE>
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the
--------------------
Company with or into another corporation or the sale of substantially all of the
assets of the Company, outstanding Options may be assumed or equivalent options
may be substituted by the successor corporation or a Parent or Subsidiary
thereof (the "Successor Corporation"). If an Option is assumed or substituted
for, the Option or equivalent option shall continue to be exercisable as
provided in Section 4 hereof for so long as the Optionee serves as a Director or
a director of the Successor Corporation. Following such assumption or
substitution, if the Optionee's status as a Director or director of the
Successor Corporation, as applicable, is terminated other than upon a voluntary
resignation by the Optionee, the Option or option shall become fully
exercisable, including as to Shares for which it would not otherwise be
exercisable. Thereafter, the Option or option shall remain exercisable in
accordance with Sections 8(b) through (d) above.
If the Successor Corporation does not assume an outstanding Option or
substitute for it an equivalent option, the Option shall become fully vested and
exercisable, including as to Shares for which it would not otherwise be
exercisable. In such event the Board shall notify the Optionee that the Option
shall be fully exercisable for a period of ninety (90) days from the date of
such notice, and upon the expiration of such period the Option shall terminate.
For the purposes of this Section 10(c), an Option shall be considered
assumed if, following the merger or sale of assets, the Option confers the right
to purchase or receive, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares).
If such consideration received in the merger or sale of assets is not solely
common stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation, provide for the consideration to
be received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
11. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may at any time amend,
-------------------------
alter, suspend, or discontinue the Plan, but no amendment, alteration,
suspension, or discontinuation shall be made which would impair the rights of
any Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with any applicable
-6-
<PAGE>
law, regulation or stock exchange rule, the Company shall obtain shareholder
approval of any Plan amendment in such a manner and to such a degree as
required.
(b) Effect of Amendment or Termination. Any such amendment or
----------------------------------
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
12. Time of Granting Options. The date of grant of an Option shall,
------------------------
for all purposes, be the date determined in accordance with Section 4 hereof.
13. Conditions Upon Issuance of Shares. Shares shall not be issued
----------------------------------
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares, if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
14. Reservation of Shares. The Company, during the term of this
---------------------
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
15. Option Agreement. Options shall be evidenced by written option
----------------
agreements in such form as the Board shall approve.
16. Shareholder Approval. The Plan shall be subject to approval by
--------------------
the shareholders of the Company within twelve (12) months after the date the
Plan is adopted. Such shareholder approval shall be obtained in the degree and
manner required under applicable state and federal law and any stock exchange
rules.
-7-
<PAGE>
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 January 28, 2000 relating to the financial statements of
iBEAM Broadcasting Corporation (a development stage company), which appears in
such Registration Statement. We also consent to the reference to us under the
heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
San Jose, California
January 28, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM iBEAM
BROADCASTING CORPS 1999 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR OTHER
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 MAR-20-1998
<PERIOD-END> DEC-31-1999 DEC-31-1998
<CASH> 24,863 2,198
<SECURITIES> 4,977 0
<RECEIVABLES> 70 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 30,706 2,323
<PP&E> 14,529 1,542
<DEPRECIATION> 1,617 65
<TOTAL-ASSETS> 44,741 4,207
<CURRENT-LIABILITIES> 5,955 1,252
<BONDS> 0 0
0 0
61,192 6,905
<COMMON> 1 1
<OTHER-SE> 21,054 853
<TOTAL-LIABILITY-AND-EQUITY> 44,741 4,207
<SALES> 149 0
<TOTAL-REVENUES> 149 0
<CGS> 7,488 0
<TOTAL-COSTS> 30,317 4,352
<OTHER-EXPENSES> 579 125
<LOSS-PROVISION> (199) 0
<INTEREST-EXPENSE> (180) 0
<INCOME-PRETAX> (29,968) (4,227)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (29,968) (4,227)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (29,968) (4,227)
<EPS-BASIC> (4.74) (0.78)
<EPS-DILUTED> (4.74) (0.78)
</TABLE>
