<PAGE>
As filed with the Securities and Exchange Commission on March 16, 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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Cidera, Inc.
(Exact name of registrant as specified in its charter)
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Delaware 7389 52-2048092
(State or jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or Industrial Identification Number)
organization) Classification Code
Number)
8037 Laurel Lakes Ct.
Laurel, Maryland 20707
(301) 598-0500
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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Douglas E. Humphrey
President and Chief Executive Officer
Cidera, Inc.
8037 Laurel Lakes Ct.
Laurel, Maryland 20707
(301) 598-0500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
MICHAEL R. LINCOLN, ESQ. BRENT B. SILER, ESQ.
SIDNEY R. SMITH, ESQ. Hale and Dorr LLP
DARREN K. DeSTEFANO, ESQ. 1455 Pennsylvania Ave., N.W.
Cooley Godward LLP Washington, DC 20004
One Freedom Square (202) 942-8400
Reston Town Center (202) 942-8484 (facsimile)
11951 Freedom Drive
Reston, VA 20190
(703) 262-8000
(703) 262-8100 (facsimile)
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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 of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration 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. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Proposed
Title of Each Class Maximum Amount of
of Securities to be Aggregate Offering Registration
Registered Price(1) Fee
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<S> <C> <C>
Common Stock, $.01 par value................ $86,250,000 $22,770
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</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(o) under the Securities Act of
1933. Includes shares subject to sale pursuant to the underwriter's over-
allotment option.
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 that specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended, 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 is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MARCH 16, 2000
Shares
[CIDERA LOGO]
Common Stock
--------
Prior to this offering, there has been no public market for our common stock.
The initial public offering price of our common stock is expected to be between
$ and $ per share. We have applied to list the common stock on The Nasdaq
Stock Market's National Market under the symbol "CIDR."
The underwriters have an option to purchase a maximum of additional
shares to cover over-allotments of shares.
Investing in our common stock involves risks. See "Risk Factors" on page 7.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions Cidera
------------ ------------- ------------
<S> <C> <C> <C>
Per Share.................................. $ $ $
Total...................................... $ $ $
</TABLE>
Delivery of the shares of common stock will be made on or about , 2000.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
Credit Suisse First Boston
Deutsche Banc Alex. Brown
Donaldson, Lufkin & Jenrette
Robertson Stephens
The date of this prospectus is , 2000.
<PAGE>
[Front cover foldout]
<PAGE>
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary......................................................... 3
Risk Factors............................................................... 7
Special Note Regarding Forward-Looking Statements.......................... 15
Use of Proceeds............................................................ 16
Dividend Policy............................................................ 16
Capitalization............................................................. 17
Dilution................................................................... 18
Selected Consolidated Financial Data....................................... 19
Management's Discussion and
Analysis of Financial Condition
and Results of Operations................................................. 20
Business................................................................... 24
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Management................................................................. 34
Related Party Transactions................................................. 42
Principal Stockholders..................................................... 45
Description of Capital Stock............................................... 47
Shares Eligible for Future Sale............................................ 49
Underwriting............................................................... 51
Notice to Canadian Residents............................................... 53
Legal Matters.............................................................. 54
Experts.................................................................... 54
Where You Can Find More Information........................................ 54
Index to Consolidated Financial Statements................................. F-1
</TABLE>
------------
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
Dealer Prospectus Delivery Obligation
Until , 2000 (25 days after the date of this prospectus), all dealers
that effect transactions in these securities, whether or not participating in
this offering, may be required to deliver a prospectus. This is in addition to
the dealers' obligation to deliver a prospectus when acting as underwriters and
with respect to unsold allotments or subscriptions.
<PAGE>
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information about us and the common stock being sold in this offering and our
financial statements and accompanying notes appearing elsewhere in this
prospectus.
Cidera, Inc.
We are an international leader in satellite-based delivery of Internet
content. Our satellite delivery network and proprietary software enable the
transmission of broadcast data to the edge of the Internet, with significantly
reduced error rates and substantial bandwidth savings. Our satellite delivery
network can broadcast over 3.5 trillion bits of data per day at speeds of up to
45 megabits per second to each location equipped with one of our satellite
dishes. Our customers include Internet service providers, or ISPs, content
distributors and corporations. We currently deliver our customers' broadcast
data to over 247 points-of-presence, or POPs, in North America and Europe. POPs
are the access points where end users connect to the shared Internet
infrastructure, and we refer to these points collectively as the edge of the
Internet. Because the number of locations to which a satellite can broadcast
data within its service area is unlimited, we have the ability to cost-
effectively add customers within each of our service areas.
Internet use has grown rapidly in recent years. International Data
Corporation estimates that the amount of data transmitted over the Internet
will increase from 56 trillion bits per day in 1998 to 2,507 trillion bits per
day in 2002, a compounded annual growth rate of 158%. Broadcast traffic,
characterized by multiple transmissions of identical data from one source to
many end users, represents a significant portion of the demand for Internet
transmission capacity, or bandwidth. Because of its point-to-point design, the
terrestrial Internet does not handle broadcast data efficiently.
Both ISPs and content distributors are increasingly experiencing
difficulties providing high quality delivery of broadcast data to their end
users. Content distributors are an emerging group of companies that store,
serve and manage third party content. In order to overcome their service
difficulties, both ISPs and content distributors are increasingly moving data
to the edge of the Internet for distribution. These companies currently depend
on the terrestrial network to implement this strategy. However, the terrestrial
network was designed for point-to-point traffic, not broadcast traffic, and as
a result it suffers from transmission delays and lost data. The cost to ISPs
and content distributors, both in bandwidth consumed and customer
dissatisfaction, is significant.
Our solution, consisting of a satellite-based network and proprietary
software, bypasses the point-to-point terrestrial Internet infrastructure and
broadcasts content directly to multiple locations at the edge of the Internet.
Our satellite-based network complements the Internet by freeing terrestrial
bandwidth for point-to-point applications. Our customers receive data through
our satellite dishes located at POPs. Once the data is received at the POPs,
our service adapters and proprietary software located at the POPs enable our
customers to deliver the data to their end users. Our solution provides the
following benefits:
. enables customers to offer a higher quality of service;
. reduces customer bandwidth costs;
. delivers a solution compatible with existing Internet technologies; and
. provides strong customer service and support.
We currently provide ISPs with Cidera Cache Turbocharging and Cidera Usenet
News Service. We recently launched Cidera Streaming Media Service which we are
marketing to content distributors and corporations. We plan to release Cidera
Big File Mover and Cidera Virtual Application Server Technology, or Cidera
VAST, later this year. These services are summarized below.
. Cidera Cache Turbocharging--identifies frequently accessed Web pages and
delivers them directly to the caches of our ISP customers.
. Cidera Usenet News Service--continuously feeds Usenet News to our ISP
customers.
3
<PAGE>
. Cidera Streaming Media Service--delivers popular streaming media content
directly to the edge of the Internet.
. Cidera Big File Mover--will deliver large data files by broadcasting the
data to many locations simultaneously.
. Cidera VAST--will provide ISPs and content distributors with the ability
to lease capacity on our servers located at the edge of the Internet to
serve as their primary edge server or to meet event-based, peak or other
demands.
Our goal is to become the leading global satellite-based Internet data
delivery service. To accomplish this goal, we are pursuing a strategy built on
the following initiatives:
. globally expand our network to provide our content provider customers
with the widest possible distribution area;
. expand and strengthen our customer relationships to promote the expansion
of our network;
. expand our service offerings to leverage our existing and planned
infrastructure;
. build strategic and marketing alliances to strengthen our market
position;
. provide services that complement those of content distributors; and
. maintain technological compatibility.
Recent Developments
In March 2000, we completed a private placement of preferred stock. The
investors included MCI WorldCom, PSINet, Dell Computer, Investor AB, and an
affiliate of GE Americom. MCI WorldCom and PSINet are prominent developers of
Internet infrastructure. Dell Computer is a leading manufacturer of computer
hardware. Investor AB is a major investment firm in Europe. GE Americom is a
leading U.S. satellite provider and the provider of our North American and
European satellite capacity. The private placement yielded us net proceeds of
$33.7 million, which we intend to use together with the proceeds of this
offering to further our strategy of becoming the leader in the satellite-based
delivery of Internet content. This investment represents 58% of the capital
raised to date. All outstanding preferred stock will convert into common stock
upon the effectiveness of this offering.
------------
We were incorporated under the name SkyCache, Incorporated in Delaware in
July 1997. We changed our name to Cidera, Inc. in January 2000. Our principal
executive offices are located at 8037 Laurel Lakes Court, Laurel, Maryland
20707 and our telephone number is (301) 598-0500. Our World Wide Web site
address is www.cidera.com. The information on our Web site is not a part of
this prospectus.
Our logo is a federally registered trademark. Cidera Cache Turbocharging,
Cidera Big File Mover and Cidera Virtual Application Server Technology are
trademarks and service marks for which we have filed federal applications.
4
<PAGE>
The Offering
<TABLE>
<S> <C>
Common stock offered............ shares
Common stock to be outstanding
after this offering............ shares
Use of proceeds................. For the continued expansion of our satellite-
based network, and for working capital and
general corporate purposes.
Proposed Nasdaq National Market
symbol......................... CIDR
</TABLE>
The number of shares of common stock to be outstanding after this offering
is based on shares of common stock outstanding as of March 15, 2000. This
number excludes:
. 10,374,384 shares authorized for issuance under our stock benefit plans,
of which 3,201,707 shares were subject to outstanding options at a
weighted average exercise price of $2.07; and
. 801,200 shares of common stock issuable upon exercise of outstanding
warrants at an exercise price of $0.50 per share.
Unless otherwise indicated, all of the information in this prospectus:
. reflects the exercise of warrants prior to the closing of this offering,
resulting in the issuance of 333,834 shares of series A mandatorily
redeemable convertible preferred stock and our receipt of $300,451 in
aggregate exercise proceeds;
. reflects the automatic conversion of all outstanding shares of our
preferred stock into 21,401,905 shares of common stock upon completion of
this offering; and
. assumes no exercise of the underwriters' over-allotment option.
5
<PAGE>
Summary Financial Data
The following financial information should be read together with our
financial statements and related notes and "Management's Discussion and
Analysis of Financial Condition and Operating Results" included elsewhere in
this prospectus.
<TABLE>
<CAPTION>
Period from
Inception
(July 7, 1997)
through Year Ended December 31,
December 31, -------------------------
1997 1998 1999
-------------- ----------- ------------
(in thousands, except per share data)
<S> <C> <C> <C>
Statement of Operations Data:
Net revenue......................... $ 5 $ 5 $ 358
Gross profit (loss)................. -- (799) (3,765)
Operating loss...................... (270) (3,585) (11,395)
Interest income (expense), net...... -- (15) 193
Net loss............................ (270) (3,599) (11,202)
Net loss applicable to common
stockholders....................... (270) (3,663) (12,496)
Basic and diluted net loss
applicable to common stockholders
per share ......................... $(0.05) $ (0.64) $ (2.16)
Weighted average number of shares
used in basic and diluted net loss
applicable to common stockholders
per share.......................... 5,769 5,769 5,793
Pro forma basic and diluted net loss
applicable to common stockholders
per share.......................... $ (0.67)
Weighted average number of shares
used in pro forma basic and diluted
net loss applicable to common
stockholders per share............. 18,627
</TABLE>
<TABLE>
<CAPTION>
December 31, 1999
-------------------------------
Pro Forma
Actual Pro Forma As Adjusted
-------- --------- -----------
(in thousands)
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents..................... $ 4,622 $40,422 $
Working capital............................... 6,790 38,067
Total assets.................................. 16,306 52,106
Long-term obligations, net of current
portion...................................... 2,368 2,368 2,368
Mandatorily redeemable convertible preferred
stock........................................ 27,122 --
Total stockholders' (deficit) equity.......... (15,538) 46,006
</TABLE>
See note 2 to our financial statements included elsewhere in this
prospectus for information regarding the calculation of basic and diluted net
loss and pro forma net loss applicable to common stockholders per share.
In the pro forma balance sheet column, we have adjusted the actual numbers
to reflect the following events:
. the issuance of preferred stock in a private placement financing in the
first quarter of 2000 and our receipt of the proceeds therefrom;
. the exercise prior to the closing of this offering of warrants resulting
in the issuance of 333,834 shares of convertible preferred stock and our
receipt of the proceeds therefrom; and
. the automatic conversion of all of the outstanding shares of our
convertible preferred stock, including the shares issued in the first
quarter of 2000 and the preferred shares issued upon exercise of the
warrants, into 21,401,905 shares of common stock upon the closing of this
offering.
In the pro forma as adjusted column, we have further adjusted the pro forma
numbers to give effect to our sale of the shares of common stock in this
offering at an assumed initial public offering price of $ per share and to
our receipt of the estimated proceeds of this offering. See "Use of Proceeds."
6
<PAGE>
RISK FACTORS
You should consider carefully the following risk factors and all other
information contained in this prospectus before purchasing our common stock.
Investing in our common stock involves a high degree of risk. Risks and
uncertainties, in addition to those we describe below, that are not presently
known to us or that we currently believe are immaterial may also impair our
business operations. If any of these risks occur, our business could be harmed,
the price of our common stock could decline and you might lose all or part of
your investment.
Our business is difficult to evaluate because we have a limited operating
history.
We were founded in July 1997 and began selling Cidera Cache Turbocharging
and Cidera Usenet News Service in late 1998. We recently introduced Cidera
Streaming Media Service and plan to introduce additional services in 2000.
Accordingly, we have limited meaningful historical financial data upon which
you can evaluate us and our prospects. Our ability to sell our services and the
level of success we achieve will depend, among other things, on the level of
demand for satellite-based data delivery services. This is a new and rapidly
evolving market. In addition, as a young company, we face risks and
uncertainties relating to our ability to successfully implement our strategy.
You must consider the risks and uncertainties that an early stage company like
ours faces. If we are unsuccessful in addressing these risks and uncertainties
or we are unable to execute our strategy, our business would be harmed.
We have a history of losses, expect to incur future losses and may never
achieve profitability, which could result in the decline of the market price of
our common stock.
We have never been profitable. We have incurred significant losses since
inception and expect to continue to incur losses in the future. In 1997, 1998
and 1999, we incurred net losses of $270,000, $3.6 million and $11.2 million,
respectively. As of December 31, 1999, we had an accumulated deficit of $15.1
million. We cannot be certain that our revenue will grow or that we will
achieve sufficient revenue to achieve profitability. We have large fixed
expenses, particularly related to the procurement of satellite data
transmission capacity. Moreover, we expect to continue to incur significantly
increased expenses related to sales and marketing, product development and
administration and management. As a result, we will need to generate
significantly higher revenue 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 financial results will suffer.
We have high fixed costs relating to satellite capacity and we may be unable to
generate sufficient revenues to cover these expenses.
Our business model depends upon the constant availability of satellite
transponder capacity. Our contracts with our satellite capacity providers have
terms from three to seven years, and commit us to make fixed periodic payments
over the terms of the contracts regardless of how much of this capacity we use.
We anticipate that this will continue to be the case in the future. As a
result, we have historically been required to make payments to our satellite
providers in excess of the revenue we received from our customers. Unless we
are able to increase our revenue to cover these fixed costs, our financial
results will suffer. Additionally, the fees required to obtain satellite
capacity may increase significantly and unpredictably.
Our revenue and operating results may vary significantly from quarter to
quarter, which could adversely affect our stock price.
Our quarter-to-quarter revenue and operating results may vary significantly
due to a number of factors beyond our control. These fluctuations may cause our
operating results to be below the expectations of public market analysts and
investors and, as a result, the price of our common stock may fall. Factors
that could cause quarterly fluctuations include:
. variations in demand for our services;
7
<PAGE>
. our ability to develop and attain market acceptance of new services; and
. changes in our pricing policies.
As a result of these factors, we believe that period-to-period comparisons
of our revenue and operating results are not necessarily meaningful.
The long sales cycle for some of our services may cause our revenue and
operating results to vary significantly, which could adversely affect our stock
price.
In many cases, a potential cutomer's decision to purchase our services
involves an elaborate evaluation and testing process. As a result, our sales
cycle for these services is likely to be lengthy. Throughout the sales cycle,
we spend considerable time and expense educating and providing information to
prospective customers about the use and benefits of our services. These long
sales cycles may contribute to the variability of our revenue and results of
operations from quarter to quarter.
We have limited sales and marketing experience; our business will suffer if we
do not expand our direct and indirect sales organizations.
We currently have limited sales and marketing experience. This limited
experience may restrict our success in commercializing our services. In
addition, although we have historically marketed to ISPs, our new services are
targeted primarily at content distributors and corporations, with whom we have
more limited marketing experience. Our services require a sophisticated sales
effort targeted at a limited number of key people within our prospective
customers' organizations. This sales effort requires trained sales personnel.
We need to expand our marketing and sales organization in order to increase
market awareness of our services, accelerate deployment of our network and
generate increased revenue.
We are in the process of developing our direct sales force and plan to hire
additional qualified sales personnel. Competition for these individuals is
intense, and we might not be able to hire the kind and number of sales
personnel we need. In international markets, where we rely largely on the
services of independent agents, it can be difficult to locate qualified agents.
In addition, we believe that our future success is dependent upon our ability
to establish successful relationships with a variety of distribution partners.
If we are unable to expand our direct and indirect sales operations, we may not
be able to increase market awareness or sales of our services, which may
prevent us from achieving and maintaining profitability.
Our business will suffer if we fail to manage our growth properly.
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 have expanded our operations rapidly since our inception. This
growth has placed, and our anticipated growth in future operations will
continue to place, a significant strain on our management systems and
resources. 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 both domestically and
internationally.
We are integrating new members of our senior management team and this could
disrupt our operations.
We have recently hired and plan to hire in the near future a number of key
employees and executives. On March 6, 2000, Edward D. Postal joined Cidera as
our chief financial officer, and we are currently in negotiations with a new
chief executive officer candidate. To be integrated into Cidera, these
individuals will need to spend a significant amount of time learning our
business model and management system, in addition to performing their regular
duties. Accordingly, the integration of these new personnel may 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.
8
<PAGE>
The skilled employees that we need may be difficult and expensive to hire and
retain in the current tight labor market.
Our success depends in large part on our ability to attract, train, motivate
and retain highly skilled technical and marketing professionals. Our total
number of employees grew from 10 on January 1, 1999 to 82 on March 1, 2000. In
addition, we plan to continue to hire a significant number of employees.
Qualified technical and marketing professionals are in great demand and are
likely to remain a scarce resource. We may be unable to attract or continue to
retain the skilled employees we require. We may also experience an increase in
expenses because of our need to attract and retain qualified personnel, which
may reduce our operating margins.
Our future success depends on market acceptance of satellite-based data
delivery services generally, and our services in particular.
Our future growth depends on the commercial success of our satellite-based
data delivery services. The market for these services is new and unproven and
these services may not achieve widespread market acceptance. Furthermore, we
have only recently begun to commercially market Cidera Streaming Media Service
and we intend to release Cidera Big File Mover Service in the near future. Our
future revenue growth will depend, in large part, on customer acceptance of
these services. If our target customers do not adopt or purchase our current
and planned services, our revenue will not grow significantly and our financial
results will be seriously harmed.
Our success will depend upon the continued deployment of our satellite dishes
at ISP POPs and the continued expansion of our network.
A key element of our business plan is to expand our network by installing
more satellite dishes at ISP POPs, both domestically and internationally. If we
experience difficulties or delays in this deployment, our ability to expand our
business would be compromised.
In order to accelerate deployment of our dishes at ISP POPs, we have pursued
a strategy of offering services that are attractive to ISPs, such as Cidera
Usenet News Service and Cidera Cache Turbocharging. Some of our existing and
planned services are targeted to customers other than ISPs. The value of our
services to those customers will depend upon increased deployment of dishes at
ISP POPs. For this reason, the successful introduction and growth of our
services for non-ISP customers may depend upon continued demand for our ISP
services.
We could face a variety of other obstacles as we attempt to deploy our
dishes at additional ISP POPs, including:
. the reluctance or inability of ISPs to install dishes on the roof of
their POPs because, for example, they lack roof rights or their
installation violates zoning laws;
. potential shortages of servers, dishes or other equipment that we install
at the POPs;
. the need for us to make potentially significant capital investment
relating to this equipment; and
. in countries other than the United States, governmental or cultural
resistance to placement of dishes or other equipment.
Our future success depends upon the continuation of several industry trends,
including the increasing popularity of data distribution at the edge of the
Internet and increasing demand for rich media content and services.
We have developed our satellite-based data delivery services in response to
a number of recent Internet industry trends. If any of these trends do not
continue, demand for our services might not grow or could even decline. These
trends include:
9
<PAGE>
. the development of data caching, in which copies of frequently accessed
Web pages and other content are moved to and stored on servers located at
local POPs maintained by ISPs;
. the emergence and continued success of content distributors, who
distribute content of third parties to servers located closer to end
users;
. the increasing popularity of rich content, such as streaming video and
audio, that is often of a broadcast nature, and is therefore conducive to
satellite-based delivery; and
. the increasing deployment of broadband access to the Internet, such as
DSL and cable modem access, which provides end users with a faster
Internet connection, thereby increasing demand for data rich content.
The Internet industry is subject to rapid and continuous evolution and is
highly unpredictable. It is possible that new standards may emerge that would
reverse some or all of these trends. This could have a negative impact on our
business and financial performance.
Our business will suffer if we do not maintain compatibility with third-party
technologies employed in streaming media and caching.
A key element of our business strategy is to maintain the compatibility of
our services with the most popular third-party technologies that our customers
will use. Our target markets are likely to be 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 new industry standards emerge for caching
or streaming media that our services do not promote or support, and we are
unable to create compatible services, our services may not achieve commercial
acceptance. In this event, our business and financial results would be
seriously harmed.
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 offerings do not have. To achieve market acceptance
for our services, we must effectively and promptly anticipate and adapt to
customer requirements and offer services that meet customer demands. Our
failure to offer services that satisfy customer requirements would seriously
harm our business and financial results.
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 prevent enhancements to our existing
services.
Any disruption in our network could lead to significant costs, lost revenue and
harm to our reputation, particularly until we have a backup satellite network
in place.
In order to provide our customers with fast, efficient and reliable Internet
data delivery, we must protect our satellite-based network, particularly our
uplink and downlink sites, against damage from:
. human error;
. physical or electronic security breaches;
. fire, earthquake, flood and other natural disasters;
. power loss;
. sabotage and vandalism; and
. similar events.
10
<PAGE>
Despite precautions we have taken, the occurrence of any of these events or
other unanticipated problems at one or more of our uplink or downlink sites
could result in service interruptions or significant damage to our equipment.
Additionally, our operations are dependent upon the transmission capacity of
our third-party satellite providers. If we lose access to satellite
transmission capacity for an extended period of time, we could lose customers
or revenues, our reputation could be harmed and our business and financial
results could suffer. In order to provide complete back-up service, we would
require capacity on a second satellite over each continent and a second dish at
each POP. Although we have capacity on a back-up satellite in North America, we
do not yet have back-up capacity in Europe. Until we have both back-up
satellites and installed back-up dishes in our service areas, any interruption
in satellite transmission by our third-party satellite providers may adversely
affect the operation of our network and our business generally.
The markets in which we operate are highly competitive and we may be unable to
compete successfully against new entrants with greater resources.
We compete in markets that are new, intensely competitive, highly fragmented
and rapidly changing. Many of our potential competitors have longer operating
histories, greater name recognition and substantially greater financial,
technical and marketing resources than we do. These potential competitors may
be able to respond more quickly than we can to new or emerging technologies and
changes in customer requirements. Some of our potential competitors may bundle
their services with other software or hardware in a manner that may discourage
content distributors from purchasing any service we offer or ISPs from
installing our systems.
As competition in the Internet content delivery market continues to
intensify, new solutions will emerge. We are aware of other companies that are
focusing, or may in the future focus, significant resources on developing and
marketing services that will compete with ours. We also believe that, in the
future, we may face competition from commercial satellite service providers,
who 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. In addition, if our current satellite providers become
competitors in the content delivery market, they might restrict our satellite
access.
Increased competition could result in:
. price and revenue reductions and lower profit margins;
. loss of customers; and
. loss of market share.
Any one of these could cause our business and financial results to suffer.
We do not have exclusive contracts with our customers and our customers may
shift from using our services to those of our competitors at any time without
penalty.
Our business will be adversely affected if we are unable to protect our
intellectual property rights from third-party challenges.
We rely on a combination of patent, copyright, trademark and trade secret
laws and restrictions on disclosure to protect our intellectual property
rights. These legal rights afford only limited protection. Despite our efforts
to protect these rights, unauthorized parties may attempt to copy or otherwise
use our technology. Policing unauthorized use of our products is difficult, and
we cannot be certain that the steps we have taken will prevent their
unauthorized use or misappropriation, particularly in foreign countries where
the laws may not protect our proprietary rights as fully as laws in the United
States.
11
<PAGE>
Although we have received a patent that provides limited protection for our
cache management technology, none of the other technology we use is covered by
patents that would preclude or inhibit competitors from entering our market.
Our current patent, any future patents and patents licensed by us may be
successfully challenged or may not provide us with any competitive advantages.
Moreover, at present, none of our technology is patented abroad. We cannot be
certain that any future patent applications will be granted, that any future
patent will not be challenged, invalidated or circumvented, or that rights
granted under any patent that may be issued will provide competitive advantages
to us. Finally, patent and copyright protection may be unavailable for much of
our technology.
Our services use technology that may infringe upon the proprietary rights of
others, and we may be liable for significant damages as a result.
Other companies, including our competitors, may have or obtain patents or
other proprietary rights that would prevent, limit or interfere with our
ability to sell our services. As a result, we may be found to infringe on the
proprietary rights of others. In the event of a successful claim of
infringement against us and our failure or inability to license the infringed
technology, our business and operating results would be significantly harmed.
Companies in the Internet market are increasingly bringing suits alleging
infringement of their proprietary rights, particularly patent rights. Any
litigation or claims, whether or not valid, could result in substantial costs
and diversion of resources. Intellectual property litigation or claims could
force us to do one or more of the following:
. cease selling services that rely upon, are derived from or incorporate
the challenged intellectual property;
. obtain a license from the holder of the infringed intellectual property
right, which license may not be available on reasonable terms; and
. redesign our services.
If we are forced to take any of these actions, our business may be seriously
harmed.
If we are unable to retain our key employees, our ability to compete could be
harmed.
Our future success depends upon the continued services of our executive
officers and other key technology, sales, marketing and support personnel, who
have critical industry experience and relationships that we rely on in
implementing our business plan. None of our officers or key employees is bound
by an employment agreement for any specific term. The loss of the services of
any of our key employees could delay the development and introduction of and
negatively impact our ability to sell our service.
We face risks associated with international operations that could harm our
business.
In 1999, we derived 29% of our net revenue from customers located outside
the United States. Of the more than 230 satellite dishes that we have
installed, 48 were located outside of the United States. To be successful, we
believe we must continue to expand our international operations. We expect to
commit significant resources to our international expansion, including the
installation of satellite dishes and sales and marketing activities. As a
result, we will be increasingly subject to a number of risks associated with
international business activities which may increase our costs, lengthen our
sales cycle and require significant management attention. These risks include:
. increased expenses associated with marketing services in foreign
countries;
. general economic conditions in international markets;
. currency exchange rate fluctuations;
. unexpected changes in regulatory requirements resulting in unanticipated
costs and delays;
. tariffs, export controls and other trade barriers;
12
<PAGE>
. longer accounts receivable payment cycles and difficulties in collecting
accounts receivable;
. potentially adverse tax consequences, including restrictions on the
repatriation of earnings;
. burdens of complying with a wide variety of foreign laws, particularly
with respect to intellectual property and license requirements;
. political instability; and
. limited ability to enforce agreements, intellectual property rights and
other rights in some foreign countries.
We depend upon the granting and renewal of government licenses.
In the United States, we require a license granted by the Federal
Communications Commission to operate our satellite uplink facilities. Similar
licenses will be required in other countries as we expand our international
operations. If we are not granted or fail to renew a license, then we would be
unable to continue to operate our business in the affected areas unless we
could make alternative arrangements. This could significantly harm our business
and financial results.
Internet laws could adversely affect our business.
Laws and regulations which apply to communications and commerce over the
Internet are becoming more prevalent, including laws regarding children's
privacy, copyrights, taxation and the transmission of sexually explicit
material. The law of the Internet remains largely unsettled, even in areas
where there has been some legislative action. It may take years to determine
whether and how existing laws such as those governing intellectual property,
privacy, libel and taxation apply to the Internet. In addition, the growth and
development of the market for online commerce may prompt calls for more
stringent consumer protection laws, both in the United States and abroad, that
may impose additional burdens on companies conducting business online. The
adoption or modification of laws or regulations relating to the Internet, or
interpretations of existing law, could restrict the type and amount of data we
may deliver over our network. This could have the effect of reducing the number
of potential customers for our services which would adversely affect our
business and results of operations.
We could be liable for the content broadcast over our network by our customers.
We have no control over the nature of the content broadcast over our network
on behalf of our customers, and the data may be encrypted in a way that makes
it impossible for us to review. The transmission of this data may violate laws
of the United States or other countries in which we operate or plan to do
business, such as laws prohibiting the distribution of child pornography. For
this reason, we could incur legal or criminal liability for the content we
transmit on behalf of our customers, which could hurt our business and
reputation.
We may be subject to regulation, taxation, enforcement or other liabilities in
unexpected jurisdictions.
We provide our services to customers located throughout the United States
and in several foreign countries. Because of the nature of satellite
transmissions, we may broadcast data into additional foreign countries where we
do not have customers. 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, employees or property
in these jurisdictions. The application of these multiple sets of laws and
regulations is uncertain, but we could find we are subject to regulation,
taxation, enforcement or other liability in unexpected ways, which could harm
our business and financial results.
Our business could be affected by Year 2000 problems, which could disrupt or
delay our scheduled product deliveries to customers or affect customer demand
for our products and result in the loss of sales and customers.
Prior to January 1, 2000, there was a great deal of concern regarding the
ability of computers to adequately recognize 21st century dates from 20th
century dates due to the two-digit date fields used by many
13
<PAGE>
systems. Reports to date are that computer systems are functioning normally.
However, computer experts have warned that there may still be residual
consequences of the change in centuries.
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.
The market for technology stocks has been extremely volatile. Factors that
could cause the price of our common stock in the public market to fluctuate
significantly from the price paid by investors in this offering include:
. the addition or departure of key personnel;
. variations in our quarterly operating results;
. announcements by us or our competitors of significant contracts, new
products or services offerings or enhancements, acquisitions,
distribution partnerships, joint ventures or capital commitments;
. changes in financial estimates by securities analysts;
. our sales of common stock or other securities in the future;
. changes in market valuations of networking, Internet and
telecommunications companies; and
. fluctuations in stock market prices and volumes, generally.
In the past, class action litigation has often been brought against
companies following periods of volatility in the market price of their common
stock. We may become involved in this type of litigation in the future.
Litigation is often expensive and consumes management's attention and
resources, which could materially harm our business and results of operations.
Insiders will continue to have substantial control over our company after this
offering and you will be unable to influence the outcome of key transactions,
including changes of control.
The executive officers and 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 control 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 and Delaware law may make it difficult for
a third party to acquire our company and could depress the price of our common
stock.
Delaware corporate law, our certificate of incorporation and our bylaws
contain provisions that could delay, defer or prevent a change in control of
our company or our management. These provisions could also discourage proxy
contests and make it more difficult for you and other stockholders to elect
directors and take other corporate actions. As a result, these provisions could
limit the price that investors are willing to pay in the future for shares of
our common stock. These provisions include:
. classifying the board of directors into three groups serving staggered
terms;
. authorizing the board of directors to issue additional preferred stock;
. prohibiting cumulative voting in the election of directors;
. limiting the persons who may call special meetings of stockholders;
. prohibiting stockholder action by written consent; and
. establishing advance notice requirements for nominations for election to
the board of directors or for proposing matters that can be acted on by
stockholders at stockholder meetings.
14
<PAGE>
Future sales of our common stock may depress our stock price.
Sales of a substantial number of shares of common stock in the public market
following this offering could cause the market price of our common stock to
decline. After this offering, we will have shares of common stock
outstanding. All the shares sold in this offering will be freely tradable. The
remaining 28,317,327 shares of common stock will be eligible for sale in the
public market beginning 180 days after the date of this prospectus subject to
the restrictions of Rule 144. Additionally, holders of 27,170,559 shares have
rights that would require us to register their shares for sale beginning as
soon as 180 days after the date of this prospectus. After this offering we also
intend to register up to approximately 5,200,000 additional shares of our
common stock for sale upon exercise of outstanding options and warrants issued
pursuant to compensatory benefit plans or reserved for future issuance pursuant
to our stock plans.
We do not intend to pay dividends.
We have never declared or paid any cash dividends on our capital stock and
we do not anticipate paying any cash dividends in the foreseeable future.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and
uncertainties. In some cases, you can identify forward-looking statements by
terms such as "anticipate," "believe," "could," "estimate," "expect," "intend,"
"may," "should," "will," "predict," "potential," "continue" or "would," the
negative of such terms or other comparable terminology. These statements are
only predictions. Actual events or results may differ materially. In evaluating
these statements, you should specifically consider various factors, including
the risks described above and in other parts of this prospectus. These factors
may cause our actual results to differ materially from any forward-looking
statement. Although we believe that the expectations reflected in the forward-
looking statements are reasonable, we cannot guarantee future results, levels
of activity performance or achievements.
15
<PAGE>
USE OF PROCEEDS
We estimate that our net proceeds from the offering will be approximately
$ million, after deducting the estimated underwriting discount and
commissions and estimated offering expenses. Our net proceeds from the offering
will be approximately $ million if the underwriters exercise their over-
allotment option in full.
We currently expect to use the net proceeds primarily for the continued
expansion of our satellite-based network, and for working capital and general
corporate purposes. The amount of net proceeds that we actually expend will
vary significantly depending on a number of factors, including future revenue
growth, if any, and the amount of cash we generate from operations. Thus, we
will have significant discretion in applying the net proceeds of this offering.
Pending our use of the net proceeds, we plan to invest the net proceeds in
investment grade, interest-bearing securities.
DIVIDEND POLICY
We have never paid or declared any cash dividends on our common stock or
other securities and do not anticipate paying cash dividends in the foreseeable
future. We currently intend to retain all future earnings, if any, for use in
the operation of our business.
16
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of December 31, 1999:
. on an actual basis;
. on a pro forma basis to give effect to the issuance of mandatorily
redeemable convertible preferred stock in a private placement financing
in the first quarter of 2000 and our receipt of the proceeds therefrom;
the exercise of warrants prior to the closing of this offering, resulting
in the issuance of 333,834 shares of series A mandatorily redeemable
convertible preferred stock and our receipt of $300,451 in aggregrate
exercise proceeds; and the automatic conversion of all shares of
mandatorily redeemable convertible preferred stock, including the shares
issued in the first quarter of 2000 and the shares issued upon exercise
of the warrants, into 21,401,905 shares of common stock upon the closing
of this offering; and
. on a pro forma as adjusted basis to give effect to the sale of shares
of common stock in this offering, at an assumed initial public offering
price of $ per share, after deducting estimated underwriting discounts
and commissions and estimated offering expenses payable by us.
<TABLE>
<CAPTION>
As of December 31, 1999
------------------------------
Pro Pro Forma
Actual Forma As Adjusted
-------- ------- -----------
(in thousands)
<S> <C> <C> <C>
Long-term portion of capital lease obligations.. $ 2,368 $ 2,368 $ 2,368
Mandatorily redeemable convertible preferred
stock:
Series A, $.01 par value; 7,500,000 shares
authorized, 7,066,147 shares issued and
outstanding, actual; no shares authorized,
issued or outstanding, pro forma and pro
forma as adjusted............................ 6,260 -- --
Series B, $.01 par value; 9,887,403 shares
authorized, issued, and outstanding, actual;
no shares authorized, issued or outstanding,
pro forma and pro forma as adjusted.......... 20,862 -- --
Series C, $.01 par value; no shares
authorized, issued or outstanding, actual,
pro forma and pro forma as adjusted.......... -- -- --
Stockholder's equity (deficit):
Common stock, $0.01 par value, 29,031,620
shares authorized; 5,916,296 shares issued
and outstanding, actual; 27,318,201 shares
issued and outstanding, pro forma; shares
issued and outstanding, pro forma as
adjusted..................................... 59 273
Additional paid-in capital.................... 1,847 62,795
Deferred compensation......................... (2,409) (2,409) (2,409)
Accumulated other comprehensive income........ 36 36 36
Accumulated deficit........................... (15,071) (15,071) (15,071)
-------- ------- -------
Total stockholders' equity (deficit)........ (15,538) 45,624
-------- ------- -------
Total capitalization...................... $ 13,952 $47,992 $
======== ======= =======
</TABLE>
This table excludes the following shares:
. 3,214,416 shares of common stock issuable upon the exercise of stock
options outstanding under our stock option plans and stock option
agreements as of December 31, 1999 at a weighted average exercise price
of $0.48 per share.
. 801,200 shares of common stock issuable upon the exercise of outstanding
warrants as of December 31, 1999, at an exercise price of $0.50 per
share; and
. 1,868,572 common shares available for future grant or issuance under our
stock option plans as of December 31, 1999.
After December 31, 1999, we have issued additional options to purchase an
aggregate of 354,750 shares of common stock at an exercise price of $13.00 per
share. Since December 31, 1999 we have also sold 620,000 shares of common
stock pursuant to a grant of restricted stock and have issued 379,126 shares
upon the exercise of stock options.
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<PAGE>
DILUTION
Our pro forma net tangible book value as of December 31, 1999 was $45.6
million, or approximately $1.67 per share. Pro forma net tangible book value
per share represents the amount of our total tangible assets less total
liabilities, divided by the 27,318,201 shares of common stock outstanding,
after giving effect to:
. the issuance of mandatorily redeemable convertible preferred stock in a
private placement financing in the first quarter of 2000 and our receipt
of the proceeds therefrom;
. the exercise of warrants prior to the closing of this offering,
resulting in the issuance of shares of preferred stock and our receipt
of $300,451 in aggregate exercise proceeds; and
. the automatic conversion of all of the outstanding shares of our
mandatorily redeemable convertible preferred stock, including the shares
issued in the first quarter of 2000 and the shares issued upon exercise
of the warrants, into shares of common stock upon the closing of this
offering.
After giving effect to the sale of shares of common stock in this
offering at an assumed initial public offering price of $ per share and the
receipt of the estimated net proceeds therefrom, the pro forma net tangible
book value as of December 31, 1999 would have been $ million, or $ per
share. This represents an immediate increase in pro forma net tangible book
value of $ per share to existing stockholders and an immediate dilution of
$ per share to purchasers of common stock in the offering. The following
table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Initial public offering price per share............................. $
Pro forma net tangible book value per share as of December 31,
1999............................................................. $1.67
Pro forma increase in net tangible book value per share
attributable to this offering....................................
-----
Pro forma net tangible book value per share after this offering.....
----
Dilution per share to new investors................................. $
====
</TABLE>
The following table summarizes, on the pro forma basis discussed above, as
of December 31, 1999, the difference between the number of shares of common
stock purchased, the total consideration paid and the average price per share
paid by existing stockholders and by the new investors, before deducting the
estimated underwriting discounts and commissions and estimated offering
expenses payable by us, at an assumed initial public offering price of $
share.
<TABLE>
<CAPTION>
Shares Purchased Total Consideration
------------------ ------------------- Average Price
Number Percent Amount Percent Per Share
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders...... 27,318,201 % $62,537,168 % $2.29
New investors.............. $
---------- ----- ----------- -----
Total.................... 100.0% $ 100.0%
========== ===== =========== =====
</TABLE>
If the underwriters exercise their over-allotment option in full, the number
of shares held by new investors will increase to shares, or % of the
total shares of common stock outstanding, and the number of shares held by
existing stockholders will be % of the total shares of common stock
outstanding after this offering.
The table above assumes no exercise of stock option or warrants outstanding
at December 31, 1999, except for the warrants whose exercise is assumed in the
pro forma calculation. As of December 31, 1999, there were options and
additional warrants outstanding to purchase 4,015,616 shares of common stock at
a weighted average exercise price of $0.48 per share. To the extent that all of
these outstanding options or warrants had been exercised as of December 31,
1999, net tangible book value per share would have been $ and total dilution
per share to new investors would have been $ .
18
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated statement of operations data set forth below and
the consolidated balance sheet data at December 31, 1998 and 1999 are derived
from our consolidated financial statements which have been audited by
PricewaterhouseCoopers LLP, independent accountants, and are included elsewhere
in this Prospectus. The consolidated balance sheet data at December 31, 1997
are derived from our audited consolidated financial statements not included in
this prospectus. Our historical results are not necessarily indicative of
results to be expected for any future period. The data set forth below should
be read in conjunction with our financial statements and related notes thereto
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus. See note 2 to our financial
statements appearing elsewhere in this prospectus for information regarding
shares used in computing net loss and pro forma net loss applicable to common
stockholders per share--basic and diluted.
<TABLE>
<CAPTION>
Period form
Inception
(July 7, 1997)
through Year Ended December 31,
December 31, -------------------------
1997 1998 1999
-------------- ----------- ------------
(in thousands, except per share data)
<S> <C> <C> <C>
Statement of Operations Data:
Net revenue......................... $ 5 $ 5 $ 358
Cost of services.................... 5 804 4,123
------ ----------- ------------
Gross profit (loss)................. -- (799) (3,765)
------ ----------- ------------
Research and development............ 83 731 1,245
Sales and marketing................. 106 1,259 3,784
General and administrative.......... 81 795 2,601
------ ----------- ------------
Operating loss...................... (270) (3,584) (11,395)
Interest income (expense), net...... -- (15) 193
------ ----------- ------------
Net loss............................ (270) (3,599) (11,202)
Dividends and accretion on series A
and B mandatorily redeemable
convertible preferred stock........ -- (64) (1,294)
------ ----------- ------------
Net loss applicable to common
stockholders....................... $ (270) $ (3,663) $ (12,496)
====== =========== ============
Basic and diluted net loss
applicable to common stockholders
per share......................... $(0.05) $ (0.64) $ (2.16)
====== =========== ============
Weighted average number of shares
used in basic and diluted net loss
applicable to common stockholders
per share.......................... 5,769 5,769 5,793
====== =========== ============
Pro forma basic and diluted net loss
applicable to common stockholders
applicable to common stockholders
per share.......................... (0.67)
============
Weighted average number of shares
used in pro forma basic and diluted
net loss applicable to common
stockholders per share ............ 18,627
============
<CAPTION>
December 31,
----------------------------------------
1997 1998 1999
-------------- ----------- ------------
(in thousands)
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents........... $ 47 $ 2,369 $ 4,622
Working capital..................... 30 1,814 6,790
Total assets........................ 112 3,786 16,306
Long-term obligations, net of
current portion.................... -- 589 2,368
Mandatorily redeemable convertible
preferred stock.................... -- 5,865 27,122
Total stockholders equity
(deficit).......................... 80 (3,349) (15,538)
</TABLE>
19
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read together with our financial
statements and related notes appearing elsewhere in this prospectus. This
prospectus contains forward-looking statements that involve risks and
uncertainties. Actual results may differ from those indicated in forward-
looking statements.
Overview
We are an international leader in the satellite-based delivery of Internet
content. ISPs, content distributors and corporations engage us to deliver
Internet data such as streaming media, Usenet News and other popular Web
content directly to the edge of the Internet. We currently deliver Internet
content to more than 247 POPs in North America and Europe.
We commenced operations in July 1997. Since our inception, we have incurred
significant losses, and as of December 31, 1999, we had an accumulated deficit
of $15.1 million. From July 1997 to August 1998, we focused our efforts
exclusively on the development of our distribution network, as well as our
first two offerings, Cidera Cache Turbocharging and Cidera Usenet News Service.
We began commercially providing Cidera Cache Turbocharging and Cidera Usenet
News Service in September 1998 in conjunction with the physical deployment of
our satellite dish network.
We derive our revenue from the sale of Cidera Cache Turbocharging and Cidera
Usenet News Service under contracts with terms typically ranging from six to
twelve months. We earn revenue based on fees for these services. We bill these
subscription fees one month in advance, but recognize revenue in the month in
which we provide the services. In the future, we may also derive revenue from
Cidera Streaming Media Service, Cidera Big File Mover and Cidera VAST
offerings.
During 1999, 71% of our net revenue was derived from customers based in the
United States. We expect that customers based outside the United States will
account for a larger proportion of our net revenue in future periods. To date,
substantially all of our net revenue has been derived from direct sales. We
expect that net revenue through indirect distribution channels will represent
an increasing proportion of our net revenue in future periods.
Cost of services consists of fees paid to satellite providers for use of
satellite bandwidth, fees paid to ISPs for terrestrial bandwidth, depreciation
of network hardware and personnel costs associated with the installation,
management and maintenance of the network. We enter into contracts for
satellite capacity with third-party providers with terms typically ranging from
three years to seven years. These contracts commit us to monthly service fees
for use of a fixed amount of satellite capacity, regardless of usage. We expect
that our cost of services per customer will decrease in the future as we spread
these fixed costs over an expanding customer base.
Research and development expenses consist primarily of salaries and related
personnel costs and costs related to the design, development, testing,
deployment and enhancement of our services, and depreciation of hardware
associated with these efforts. To date, we have expensed our research and
development costs as incurred. We believe that research and development is
critical to our strategic product development objectives and intend to enhance
our technology to meet the changing requirements of the market demand. As a
result, we expect our research and development expenses to increase in the
future.
Sales and marketing expenses consist primarily of salaries and related costs
of sales and marketing personnel, recruiting expenses and professional fees. We
expect that sales and marketing expenses will increase in the future as we hire
additional personnel, initiate additional marketing programs, establish sales
offices in new locations and incur costs related to the expansion of our
product lines and territories.
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<PAGE>
General and administrative expenses consist primarily of salaries and
related costs of executive, administrative and finance personnel and 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 and incur additional costs related
to the growth of our business and our operations as a public company.
Interest income (expense), net consists of interest earned on our cash
equivalent balances and short-term investments, net of interest expense on
equipment leases and short-term borrowings.
Equity-related compensation charges, while not specifically displayed on our
operating statement, are a significant component of our net loss. At December
31, 1999, deferred stock compensation, which is a component of stockholders'
equity (deficit), was $2.4 million. This amount is being amortized ratably over
the vesting periods of the applicable stock options and restricted shares,
typically four years. These charges will be applied to the appropriate
operating statement line item on a case-by-case basis. We expect to incur
equity-related compensation expense relating to options outstanding on December
31, 1999 of at least $500,000 annually from 2000 to 2003.
Results of Operations
Comparison of the year ended December 31, 1999 to the year ended December 31,
1998
Net Revenue. Net revenue increased from $5,000 for the year ended December
31, 1998 to $358,000 for the year ended December 31, 1999. The increase in
revenue was attributable to growth in our customer base from 20 billed
customers at the close of 1998 to 150 billed customers at the close of 1999. We
do not expect that we will be able to sustain this revenue growth rate in
future periods.
Cost of Services. Cost of services increased from $805,000 for the year
ended December 31, 1998 to $4.1 million for the year ended December 31, 1999.
The increase in cost of services was attributable to the implementation of our
service offering in Europe, the establishment of a continuously staffed network
operating center, the acquisition of additional terrestrial bandwidth to
support operations. The increase in cost of services was primarily attributable
to a significant increase in personnel, payroll and related expenses, as well
as depreciation of additional equipment. In addition, the depreciation of newly
acquired network hardware contributed to the increase.
Research and Development. Research and development expenses increased from
$731,000 for the year ended December 31, 1998 to $1.2 million for the year
ended December 31, 1999. The increase in research and development expenses was
primarily attributable to a significant increase in personnel, payroll and
related expenses, as well as depreciation of additional equipment.
Sales and Marketing. Sales and marketing expenses increased from $1.3
million for the year ended December 31, 1998 to $3.8 million for the year ended
December 31, 1999. The increase in sales and marketing expenses was
attributable to an increase in sales and marketing personnel as well as
increased marketing expenses to support the deployment of our services.
General and Administrative. General and administrative expenses increased
from $795,000 for the year ended December 31, 1998 to $2.6 million for the year
ended December 31, 1999. The increase in general and administrative expenses
was attributable to increases in personnel and related expenses.
Interest Income (Expense), Net. Interest income (expense), net increased
from $(15,000) for the year ended December 31, 1998 to $193,000 for the year
ended December 31, 1999. Interest income (expense), net increased due to the
increase in interest income earned on the proceeds from the issuance of our
series B mandatorily redeemable convertible preferred stock.
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Comparison of the period from the date of inception (July 7, 1997) to
December 31, 1997 to the year ended December 31, 1998
Net Revenue. Net revenue remained relatively stable at $5,000 both for the
period from July 7, 1997 to December 31, 1997 and for the year ended December
31, 1998. Revenue for the 1997 period was attributable to consulting income
related to various efforts undertaken on behalf of other start-up companies.
These efforts ended on December 31, 1997. Revenue for the year ended December
31, 1998 resulted from the initiation our Cache Turbocharging and Usenet News
Service offerings.
Cost of Services. Cost of services increased from $5,000 for the period
from July 7, 1997 to December 31, 1997 to $805,000 for the year ended December
31, 1998. Cost of services for the 1997 period were related to the consulting
engagements discussed above. Cost of services for the year ended December 31,
1998 were attributable to our initial acquisition of terrestrial bandwidth and
satellite capacity, as well as increased personnel and related expenses.
Research and Development. Research and development expenses increased from
$83,000 for the period from July 7, 1997 to December 31, 1997 to $731,000 for
the year ended December 31, 1998. The increase in research and development
expenses was due to increased payroll and associated expenses due to increased
staffing and payments for satellite bandwidth to conduct our research and
development.
Sales and Marketing. Sales and marketing expenses increased from $106,000
for the period from July 7, 1997 to December 31, 1997 to $1.3 million for the
year ended December 31, 1998. The increase in sales and marketing expenses was
attributable to the increase in sales and marketing personnel as well as
increased marketing expenses to develop marketplace recognition and conduct
basic market research.
General and Administrative. General and administrative expenses increased
from $81,000 for the period from July 7, 1997 to December 31, 1997 to $795,000
for the year ended December 31, 1998. The increase in general and
administrative expenses was attributable to increases in personnel and related
expenses.
Interest Income (Expense), Net. Interest income (expense), net decreased
from $250 for the period from July 7, 1997 through December 31, 1997 to
$(15,000) for the year ended December 31, 1998. The decrease in interest
income (expense), net was attributable to increased interest expense
associated with equipment leases for long term purchase of hardware at our
network operations center and uplink facilities.
Liquidity and Capital Resources
Since inception, we have financed our operations primarily through private
sales of our capital stock. We have also financed our purchase of capital
equipment through borrowings on long-term debt agreements totalling
approximately $4.7 million. At December 31, 1999, cash, cash equivalents and
short-term investments totaled $8.6 million.
We have had significant negative cash flows from our operating activities
since our inception. Cash used in operating activities was $267,000 for the
period from July 7, 1997 to December 31, 1997, $3.4 million for the year ended
December 31, 1998 and $9.9 million for the year ended December 31, 1999. Net
cash flows from operating activities in each period reflect increasing net
losses and, to a lesser extent, receivables and prepaid expenses, offset in
part by increased accounts payable and accrued expenses.
Cash used in investing activities was $36,000 for the period from July 7,
1997 to December 31, 1997, $126,000 for the year ended December 31, 1998 and
$8.3 million for the year ended December 31, 1999. Cash used for investing
activities reflects purchases of short-term investments in 1999 and purchases
of property and equipment in all years, primarily computers, receivers and
other hardware associated with the deployment of our network.
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Cash provided by financing activities was $350,000 for the period from July
7, 1997 to December 31, 1997, $5.9 million for the year ended December 31, 1998
and $20.5 million for the year ended December 31, 1999. Cash provided by
financing activities for these periods was derived primarily from private sales
of convertible preferred stock. We have equipment lines of credit aggregating
approximately $7.5 million collateralized by the property and equipment. At
December 31, 1999, approximately $2.2 million was outstanding under these lines
of credit.
On February 28, 2000, we issued an aggregate of 3,445,916 shares of series C
mandatorily redeemable convertible preferred stock for aggregate proceeds of
$30.1 million. On March 15, 2000, we issued an additional 668,605 shares of
series C mandatorily redeemable convertible preferred stock for aggregate
proceeds of $5.9 million. The series C stock has cumulative preferred dividends
of 8% per year. Each share of series C stock will automatically convert into
one share of common stock upon the closing of this offering.
We believe that the net proceeds from this offering, together with our
current cash, cash equivalents and marketable securities, will be sufficient to
meet our anticipated cash needs for working capital and capital expenditures
for at least the next 12 months. If cash generated from operations is
insufficient to satisfy our liquidity requirements, we may seek to sell
additional equity or debt securities. If additional funds are raised through
the issuance of debt securities, these securities could have rights,
preferences and privileges senior to those accruing to holders of common stock,
and the term of this debt could impose restrictions on our operations. The sale
of additional equity or convertible debt securities could result in additional
dilution to our stockholders, and we cannot be certain that additional
financing will be available in amounts or on terms acceptable to us, if at all.
If we are unable to obtain this additional financing, we may be required to
reduce the scope of our planned technology, services or product development and
sales and marketing efforts, which could harm our business, financial condition
and operating results.
Year 2000 Compliance
Prior to January 1, 2000, there was a great deal of concern regarding the
ability of computers to adequately recognize 21st century dates from 20th
century dates due to the two-digit date fields used by many systems. Reports to
date are that computer systems are functioning normally. However, computer
experts have warned that there may still be residual consequences of the change
in centuries. As of March 1, 2000, we have experienced no difficulties in
connection with the Year 2000 problem.
Market Risk
We do not use derivative financial instruments. We generally place our
marketable security investments in high credit quality instruments, primarily
U.S. Government obligations and corporate obligations with contractual
maturities of less than one year. We do not expect any material loss from our
marketable security investments and therefore believe that our potential
interest rate exposure is not material.
Impact of Recently Issued Accounting Standards
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as amended by
SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities--
Deferral of the Effective Date of FASB Statement No. 133." We are required to
adopt SFAS 133 for all fiscal quarters of all fiscal years beginning after June
15, 2000. SFAS 133 establishes methods of accounting for derivative financial
instruments and hedging activities. Because we currently hold no derivative
financial instruments as defined by SFAS 133 and do not currently engage in
hedging activities, we do not expect that adoption of SFAS 133 will have a
material effect on our financial condition and results of operations.
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BUSINESS
Overview
We are an international leader in satellite-based delivery of Internet
content. We deliver Internet data such as streaming media, Usenet News and
other popular Web content through our satellite-based distribution network
directly to the edge of the Internet. Our customers include ISPs, content
distributors and corporations. We currently deliver Internet content to more
than 247 POPs in North America and Europe. Because the number of locations to
which a satellite can broadcast data within its service area is unlimited, we
have the ability to cost-effectively add customers within each of our service
areas.
Industry Background
Growth in Broadcast Data
Internet use has grown rapidly in recent years as a result of increases in
the number of Internet users, the proliferation of PCs and other Internet-
enabled devices and the availability of faster and cheaper Internet access.
International Data Corporation, or IDC, estimates that the number of Internet
users worldwide will grow from approximately 196 million in 1999 to
approximately 502 million by 2003 and that 65% of these users will be located
outside of the United States by 2003. Growth in the amount and variety of
content and service offerings available on the Web has further increased
Internet use. IDC estimates that the amount of data transmitted over the
Internet will increase from 56 trillion bits per day in 1998 to 2,507 trillion
bits per day in 2002, a compounded annual growth rate of 158%.
The Internet is a point-to-point network. It was originally used for email,
file transfer and other point-to-point traffic. However, an increasing amount
of Internet traffic is of a broadcast nature, characterized by multiple
transmissions of identical data from one source to many end users. Examples of
broadcast data include live streaming media and highly popular Web pages that
are accessed by many users over a short period of time. According to Jupiter
Communications, page views on the top 10 content sites will increase from 12.2
million page views per day to 27.9 million over the next four years.
Because the volume of broadcast data being transmitted through their POPs
has grown, ISPs are increasingly experiencing difficulties in providing high
quality service. These difficulties result in longer response times, poor
quality audio and video streaming and less-satisfied end users. According to a
survey conducted by Jupiter Communications, 75% of high traffic Web sites were
criticized by their end users for slow page delivery, and 42% were criticized
for pages failing to load.
In an attempt to improve the end user's experience, many ISPs are providing
their customers with broadband connections to the Internet, such as DSL and
cable modem connections. Forrester Research estimates that 47% of end users
will access the Internet through broadband connections by 2004. While faster
local Internet connections improve performance between the end-user and the
POP, they do little to alleviate the congestion on the Internet backbone. In
fact, this deployment of broadband access has resulted in further congestion on
the backbone by increasing the demand by end users for high-bandwidth, rich
media content, which tends to be of a broadcast nature.
Content Distribution from the Edge of the Internet
To meet end user demand, high-bandwidth data is increasingly being moved
from central Web site servers to multiple servers located at the edge of the
Internet. ISPs are deploying caching servers within their networks to store and
deliver popular Web content to their end users without incurring bandwidth
costs for retrieval of this data. Content distributors are developing
technologies that facilitate end users' access to data at the edge of the
Internet, rather than from servers located at distant points on the Internet.
Content distribution from the edge of the Internet addresses the need to store
content closer to the end user and manage the end user's interaction with it.
However, this solution does not address the problem of transporting content
from its source site to the edge of the Internet.
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Transporting Content to the Edge of the Internet
In order to move content to servers at the edge of the Internet, both
content distributors and ISPs must use significant amounts of bandwidth.
Content distributors' difficulties are complicated by the need to send multiple
copies of the same data over the terrestrial Internet infrastructure to their
distributed servers.
When this data is transmitted over the terrestrial Internet, it is divided
into many packets. Each packet typically crosses multiple networks that are
connected to each other at a limited number of public and private peering
points. These peering points are frequently congested, which often results in
transmission delays and lost data. According to a study by Dataquest, streaming
media travels through an average of 20 routers and experiences average packet
loss of 25%. When data is lost, either the data transmission process is
repeated until all of the data is transmitted successfully, or the data arrives
corrupted. Packet loss and transmission delays are particularly problematic
with live streaming media because lost data cannot be resent and packets
arriving out of sequence due to transmission delays may not be accessed in
their original sequence. This data loss and the resulting degradation in
quality are among the fundamental causes of unsatisfactory performance of many
Internet-based applications.
Currently available solutions still depend on the terrestrial network to
deliver content to the edge of the Internet. Because of the point-to-point
architecture of the Internet, this distribution requires the broadcast of
identical copies of data to each POP, resulting in inefficient consumption of
bandwidth. Furthermore, using the terrestrial Internet to transport content to
the edge does not solve the problem of packet loss. There has been no cost-
effective solution to provide high quality delivery of broadcast content to the
edge.
The Cidera Solution
We provide an international satellite-based distribution network that
delivers high-bandwidth Internet content to the edge of the Internet. We
currently deliver data to more than 247 POPs in North America and Europe. The
efficiencies of satellite broadcasting eliminate the need to send separate
copies of data to each requesting end user over the terrestrial Internet. Our
network complements the existing terrestrial Internet infrastructure and
optimizes the delivery of data from one point of origin to multiple locations.
Using our satellite-based distribution network and our proprietary software, we
also improve the quality of data delivery by significantly reducing packet
loss.
We receive the data to be transmitted at our uplink sites through either a
dedicated leased line or a high-speed Internet connection. We then transmit
this data from our uplink sites to geostationary satellites. Our customers
receive this data from the satellites using our satellite dishes. Once the data
is received at the POPs, our service adapters and proprietary software located
at the POPs enable our customers to deliver high quality data to their end
users.
Our solution provides benefits to both ISPs and content distributors that
subscribe to our satellite-based delivery service. These benefits include:
. Enabling our Customers to Offer a Higher Quality of Service. Both ISPs
and content distributors can reduce network overloads by using our
satellite-based network to transmit data to the edge. By avoiding the
congestion problems and packet loss associated with the existing
terrestrial network, our customers can increase the speed of access to
the data and quality of the data provided to the end user. Our solution
permits content distributors to deliver graphics, video, audio,
animation, software downloads and other high-bandwidth content that
cannot be effectively delivered through the existing terrestrial
networks. This enhances the quality of the end user's experience.
. Reducing Customer Bandwidth Costs. Our satellite-based delivery service
allows content distributors and ISPs to reduce their bandwidth costs by
eliminating the need to transmit separate copies of the same data to each
POP via the terrestrial Internet. Content distributors who use our
service need to broadcast only one copy of their data over our network to
reach POPs at the edge of the Internet. Additionally,
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ISPs who use our network avoid having to consume terrestrial bandwidth to
repeatedly retrieve broadcast content, since we deliver this content
directly to the POP via satellite. In bypassing the existing terrestrial
networks, our services free up the bandwidth that was previously devoted
to delivering and receiving this data.
. Delivering a Solution Compatible with Existing Internet Technologies. We
have designed our network and technology to be compatible with leading
Internet hardware, software, protocols, formats and standards. For
example, our network is compatible with cache servers from leading
hardware providers, including Cisco, Entera, Inktomi, Network Appliance
and Novell. In addition, we support all major streaming formats,
including RealNetworks G2, Microsoft Windows Media Technology and Apple
QuickTime. This technical neutrality makes our data delivery solution
easy and efficient for ISPs and content distributors to implement.
. Providing Strong Customer Service and Support. To assist our clients with
installation, integration and maintenance issues, we maintain a staff of
consulting engineers and customer support personnel. In addition, we have
an advanced network operations center which enables us to continuously
monitor the performance of our network.
The Cidera Strategy
Our goal is to become the leading global satellite-based Internet data
delivery service. To accomplish this goal, we are pursuing a strategy built on
the following initiatives:
. Globally Expand our Network. We have deployed more than 247 satellite
dishes throughout North America and Europe. We intend to expand our
network in both North America and Europe by deploying additional
satellite dishes. Further expansion of our network will make our services
more valuable to content distributors by enabling them to reach more end
users at the edge of the Internet. In addition, we intend to expand our
data delivery network in emerging high-growth Internet markets in Latin
America, Asia and the Pacific Region by establishing a direct sales
force, retaining independent sales agents, and leasing satellite capacity
for each region. We believe that our satellite-based services will be
attractive to international customers given the limited availability and
high costs of bandwidth in these regions.
. Expand and Strengthen our Customer Relationships. Our target customers
are currently ISPs, content distributors and corporations. We intend to
aggressively pursue additional customers through the use of an expanded
sales force and targeted advertising. We believe that by quickly securing
additional customers, deploying our physical network, and securing
placement of our satellite dishes in the facilities of ISPs and business
enterprises, we will be able to establish ourselves as the leader in
satellite-based data delivery. In addition, we intend to provide
extensive customer support services to create customer loyalty and to
market new services as they become available.
. Expand our Service Offerings. We believe that our network can be easily
expanded to provide a variety of value-added services for the delivery of
additional classes of broadcast data. By extending our service offerings
to include Cidera Big File Mover and by developing Cidera VAST, we
believe we can address additional broadcast delivery needs of ISPs,
content distributors and corporations. We also believe our satellite-
based network will be attractive to corporations seeking to host and
deliver applications from a distributed network of servers at the edge of
the Internet. We intend to continue to focus on identifying new
applications for our satellite broadcast data delivery network and
aggressively market those applications.
. Build Strategic and Marketing Alliances to Strengthen Market Position. We
have entered into strategic and marketing alliances with leading Internet
companies, including Akamai, Exodus and bCandid. We intend to continue to
pursue relationships with other technology leaders, including Internet
software and hardware companies, application service providers and
network providers. We believe these relationships will accelerate the
deployment of our technology and services, increase our brand recognition
and improve our access to our target customer base.
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. Provide Services that Complement those of Content Distributors. We
provide content distributors with a cost-effective means to deliver
content to the edge of the Internet. We plan to continue to serve as an
integral delivery vehicle for content distributors, thereby enhancing
their service offerings. By maintaining our focus on content delivery, we
believe that our services will continue to complement, rather than
compete with, those of content distributors.
. Maintain Technological Compatibility. We have designed our network and
technology to be compatible with the prevailing Internet hardware,
software, protocols, formats and standards. As new technologies and
standards are developed, we intend to ensure that our network
architectures are designed to support major emerging technologies. By
maintaining technological compatability, we believe that our service will
be attractive to a wide variety of potential customers.
Cidera Services
We currently provide ISPs with Cidera Cache Turbocharging and Cidera Usenet
News Service. We recently launched Cidera Streaming Media Service, which we
market to content distributors and corporations. We plan to release Cidera Big
File Mover and Cidera VAST later this year.
Services Currently Available
Cidera Cache Turbocharging
Cidera Cache Turbocharging delivers frequently accessed Web pages and Web
objects directly to ISP caches by using our satellite-based data delivery
network, rather than using two-way terrestrial bandwidth. Cidera Cache
Turbocharging dynamically identifies popular web content, based on requests
from ISPs' end users. This content is then broadcast in real time over our
satellite-based network directly into customer Web caches at the edge of the
Internet. Our customers can then deliver this content to end users from within
their networks, thereby improving performance and saving bandwidth.
We work with major Web cache vendors to insure compatibility between Cidera
Cache Turbocharging and the vendors' product offerings. As of March 1, 2000, we
have certified ten Web cache vendors, including Cisco, Entera, Inktomi, Network
Appliance and Novell, as Cidera compatible.
Cidera Cache Turbocharging is currently available to ISPs on a yearly
subscription basis for $350 to $400 per month.
Cidera Usenet News Service
Usenet News is an Internet-based bulletin board in the public domain that
allows individuals to post messages to forums grouped loosely by topic of
interest. Usenet News operates in a broadcast fashion. When an end user posts a
message to a forum, that posting is then transmitted over the Internet until
all Usenet News servers receive the message. These Usenet News servers are
typically located at ISP POPs. Because every Usenet News message is eventually
delivered to every Usenet News server, it is a more efficient use of bandwidth
to broadcast this data over a satellite-based network than over the
terrestrial-based Internet.
We deliver a continuous satellite-based Usenet News feed that our ISP
customers can use to stock their news servers. Bypassing the terrestrial
Internet frees up existing bandwidth that the ISPs previously devoted to Usenet
News. Delivery of Usenet News through our satellite-based network provides an
ISP with bandwidth savings. As of March 1, 2000, the Cidera Usenet News Service
feed consisted of 9 million bits per second, or Mbps, the equivalent of six T1
lines.
Cidera Usenet News Service is currently available to ISPs on a yearly
subscription basis for $350 to $800 per month.
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Cidera Streaming Media Service
Cidera Streaming Media Service is currently operational and is targeted for
use by content distributors and corporations. The service efficiently delivers
popular live streaming media content directly to the edge of the Internet.
Cidera Streaming Media Service supports the most popular streaming media
formats, including RealNetworks' RealSystem G2, Microsoft's Windows Media
Technology and Apple QuickTime 4, as well as native IP multicast. We have
licensed technologies from Real Networks and Microsoft, as well as developed
our proprietary software and methods to enable the effective use of one-way
satellite broadcasting to deliver live streaming media.
Content distributors and corporations use Cidera Streaming Media Service by
delivering a live audio or video stream to our uplink facility, either through
an existing high-speed Internet connection or a dedicated leased line. Next,
the stream is encoded with our proprietary software for satellite delivery and
broadcast over our satellite-based network. When the transmission is received
at the POP, it is decoded into the appropriate format and fed into a media
server. The media server, typically supplied by a content distributor, provides
the live stream for viewing by end users.
We price Cidera Streaming Media Service based upon usage frequency and the
amount of bandwidth consumed.
Services Currently Under Development
Cidera Big File Mover
Cidera Big File Mover will be a file delivery service using our satellite-
based broadcast network designed for customers who repetitively deliver data
files to many geographically diverse locations. We began beta testing the
service in January 2000 and we plan to release the service for general
availability in April 2000.
Cidera Big File Mover customers will transfer information to our uplink
facility using either a dedicated leased line or the Internet. The file will
then be encoded and broadcast over our satellite-based network. Our service
adapters at the remote locations receive and decode the file, then pass it
directly into a file server.
Information that can be delivered using Cidera Big File Mover includes
software updates and upgrades, video on demand files and corporate applications
requiring the delivery of large data files. We expect that users of Cidera Big
File Mover will include content distributors and corporations that want to
distribute large data files ranging from tens of megabytes to several gigabytes
per day.
We will price Cidera Big File Mover service based upon a number of factors,
including the size of the file, the number of downlink sites and other
customer-specified delivery requirements.
Cidera VAST
Cidera Virtual Application Server Technology, or Cidera VAST, is a flexible
solution to the problems associated with locating servers at the edge of the
Internet. Cidera VAST is currently in development, with beta trials expected in
Spring 2000 and general availability expected in the second half of 2000.
Cidera VAST will allow customers to lease space on servers owned by us and
located at the edge of the Internet. Currently, each content distributor must
procure, install and manage its servers and arrange for back-up server capacity
in the event of primary server failure.
Cidera VAST consists of an expandable chassis containing up to 12 available
processors, each of which can function as a server for a content distributor or
ISP customer. The VAST chassis will be located within the data centers of our
customers, with direct connections to their local networks and a Cidera
satellite dish installed on the premises. The inherent flexibility of Cidera
VAST will permit a customer to use a processor in Cidera VAST server as its
primary server, as well as lease additional processors as needed to meet event-
based
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and peak demands. Customers leasing space on Cidera VAST will also have the
ability to relocate a function to a spare Cidera VAST processor in the event
that its primary processor fails. Cidera VAST is designed to allow our
customers to outsource the ownership and maintenance of a large number of
distributed servers while providing for the security of data and applications
required by our customers.
Network Architecture
Our network architecture is illustrated below. The shaded area indicates the
equipment owned by us. The three principal components of the network are the
master uplink, capacity on the satellite and the satellite receiving dish, or
downlink.
[GRAPHIC DEPICTION OF CIDERA NETWORK ARCHITECTURE]
Data Receipt and Uplinking
We receive data to be distributed through our network at our uplink
facility. This facility provides the ability to transmit data to satellites
covering our service area for broadcast to our dishes located at the edge of
the Internet. We use our proprietary software to assemble and package the data
for satellite transmission. The uplink transmitter is currently capable of
transmitting 45 Mbps of data to the satellite, and can be upgraded to transmit
additional data.
Satellite Transmission
We lease satellite capacity on the GE-4 Satellite for broadcasting data to
North America and the GE-1E Satellite for broadcasting data to Europe. The
satellites receive and continuously broadcast data at up to 45 Mbps throughout
North America and Europe. Later this year, we expect to establish similar
capabilities using satellites that cover Asia and Latin America. The number of
downlink locations to which the satellite can broadcast the data is effectively
unlimited within the area covered by the satellite.
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Data Delivery
Each downlink facility is configured to receive data from a satellite and
deliver that data to servers located at the POP. The service adapter contains
our proprietary software that separates the data according to its content type
and delivers it to the appropriate servers. End users can then access the data
through their connections to the POP. At the current 45 Mbps rate, each
downlink is capable of receiving 3.9 trillion bits of data per day. This would
otherwise be delivered using the terrestrial Internet backbone.
Proprietary Software
Our proprietary software is a key element of our solution. The software:
.manages the flow of data through
our network;
.converts data between Internet and broadcast protocols; and
.manages the delivery of Internet
services.
Customers
Our primary customers are ISPs and content distributors. Additionally, we
intend to target large corporations with widely distributed facilities.
Internet Service Providers
We provide ISPs with the capability to leverage their existing bandwidth,
thereby increasing their revenues and operating margins. In 1999, ISPs
accounted for all of our revenue. As of March 1, 2000, 198 ISPs were
subscribing for at least one of our services. Of this number, 159 were located
in North America and 39 were located in Europe. Our ISP customers include:
North America Europe
Bell Atlantic Telecom Italia (Italy)
ComNet Comunitel Global SA (Spain)
CTS Network Services LF Net (Germany)
DBS Technologies
Internet Ventures Inc.
MGC Communications
Micron
NetRail
Road Runner
TCA Communications (Subsidiary of
Fox)
Telocity
Content Distributors
Our satellite-based network gives content distributors a means to cost-
effectively distribute content to their servers located at the edge of the
Internet. The services we provide to content distributors became commercially
available on January 1, 2000. Akamai Technologies is the only content
distributor currently subscribing to our services. Several other content
distributors are currently evaluating our services. We expect that content
distributors will account for an increasing proportion of our net revenue in
the future.
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Sales and Marketing
We focused our initial sales and marketing efforts on ISPs in the United
States. In January 1999, we expanded those efforts into Europe. Our initial
sales effort was aimed at creating an installed base of satellite dishes.
Securing that base was necessary to permit us to market our services to content
distributors because this provides them with access to POPs through our
satellite-based network. In August 1999, we started marketing efforts targeted
at content distributors.
We sell our services in the United States through our direct sales force. We
have separate dedicated sales forces for national ISPs, regional/local ISPs,
and content distributors in the United States. We currently have two national
account managers responsible for sales to content distributors and
corporations. As of March 1, 2000, we had 12 employees in our domestic sales
department, eight of whom were in direct sales.
Internationally, we sell our services through independent agents with
regional expertise. Each independent agent is responsible for marketing and
sales of our services in its respective country or region. The activities of
the agents are closely monitored by channel managers who are our employees. To
date, our international sales are limited to Europe and Canada. We expect to
enter Latin America, Asia and the Pacific Region in the future. As of March 1,
2000, we had three channel managers and used eight independent agents.
We believe that a high level of customer service and support is critical to
the successful marketing and sale of our services. Accordingly, we are building
a comprehensive service and support organization to meet the needs of our
customers. As of March 1, 2000, we had 29 employees in our customer service and
support organization. We are seeking to hire additional customer service and
support personnel as our customer base grows and as we introduce new services.
We maintain a staff of consulting engineers who directly support our sales and
distribution efforts by providing technical consulting and integration
assistance to our prospective customers. As of March 1, 2000, we employed three
consulting engineers.
We conduct a comprehensive marketing program to support our sales efforts
and actively promote the Cidera brand name. Our marketing strategies include an
active public relations campaign, print advertisements, direct mail, online
advertisements, trade shows, and customer communications programs. We have
informal arrangements with leading Internet companies, such as Cisco, Inktomi,
Network Appliance, Novell, CacheFlow and Enterra, to co-market services. As of
March 1, 2000, we had 13 employees in our marketing organization.
Strategic and Marketing Alliances
We have entered into a number of strategic and marketing alliances with
leading technology companies to accelerate both the deployment of our network
and the use of the network to deliver content to the edge of the Internet. We
believe strategic and marketing alliances can accelerate market acceptance of
our technology and services, increase our brand recognition and improve access
to our target customer base.
bCandid. bCandid provides Usenet News server management and discussion group
software to organizations that operate and manage their own Usenet News
servers. bCandid reports that this software is being used by leading ISPs such
as @Home, Bell Atlantic, Sprint, MCI WorldCom, British Telecom and Bell South.
We entered into an agreement with bCandid under which each company uses the
other's technology in providing a comprehensive solution for Usenet News
management. To this end, we have developed a directed sales and joint marketing
effort which leverages our respective technologies. This agreement expires on
July 21, 2000, but is renewable on an annual basis.
Akamai Technologies. Akamai is a content distributor that provides a service
facilitating the hosting and distribution of third party-generated content to
the edge of the Internet. We entered into an agreement with Akamai to use our
satellite-based network to deliver this content to Akamai's widely dispersed
servers. The agreement also provides that, following the completion of the
initial test and integration phase of the project, both parties will cooperate
in the deployment of each other's facilities for the distribution and hosting
of content. The initial test phase has been completed and the integration phase
is currently underway.
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Exodus. Exodus is one of the largest Web hosting and co-location companies
in the United States. We have entered into a marketing agreement with Exodus,
under which each company has trained the other's sales team on their respective
services. We have placed our equipment at seven of Exodus's eight locations and
we make Cidera Usenet News Service and Cidera Cache Turbocharging available to
ISPs who locate their POPs at these Exodus facilities.
RealNetworks. We have entered into a software distribution agreement with
RealNetworks under which we developed a software package to allow Real-encoded
streaming media to be broadcast over our satellite-based network. This
agreement allows us to deploy this software we developed using data from
RealNetworks' software development kit. We pay a license fee to RealNetworks
for each instance of RealNetworks' software installed by us as part of a
streaming media enabled uplink site. This agreement expires on February 3,
2002.
Microsoft. We are a participant in Microsoft's broadband initiative. We will
cooperate with Microsoft in development of programs to support the expansion,
development, implementation and sale of broadband capabilities for streaming
media. Microsoft granted us a license to use one of its proprietary protocols
to develop a software package that allows Microsoft-encoded streaming content
to be delivered over our network. This agreement expires on March 31, 2001.
Research and Development
We believe that our future success will depend in large part on our ability
to enhance our services, expand our service offerings, maintain technological
leadership, maintain the compatibility of our services with industry-prevailing
caches and streaming media protocols, and satisfy an evolving range of customer
requirements for Internet content distribution. Our development team is
responsible for product architecture, core technology, testing, quality
assurance, documentation and expanding the ability of our hardware and software
to meet our customers needs. As of March 1, 2000, we had 16 employees on our
development team.
Competition
The market for satellite-based Internet content delivery is new and rapidly
evolving. We expect that competition will increase and that our primary
competitors may not yet have entered the market. Many of our potential
competitors may have much greater name recognition, longer operating histories,
larger customer bases and significantly greater financial resources. Increased
competition could result in price reductions, fewer customer orders, reduced
gross margin and loss of market share, any of which could cause our operating
results to suffer. We believe that the primary competitive factors in our
market are:
. reliability of performance;
. installed base of satellite dishes;
. scalability of service;
. compatibility with prevailing major industry caching systems;
. cost effectiveness;
. technological expertise; and
. dedication to customer service.
Our competition to date has come from the providers of traditional
terrestrial networks for the distribution of Internet content. These entities
do not provide satellite-based networks and none have publicly announced any
intention to enter this segment of the market. We also believe that, in the
future, we may experience competition from traditional satellite companies,
which could choose to provide Internet content distribution services. While
these entities have historically not directly engaged in the distribution of
Internet content, they generally have the resources to provide services similar
to ours.
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Intellectual Property
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 recently received a
patent from the United States Patent and Trademark Office, titled
"Comprehensive Global Information Broadcast System and Implementation Thereof"
which covers elements of our process for Cidera Cache Turbocharging. Otherwise,
we hold no other patents and we have not filed any patent applications with the
United States Patent and Trademark Office. 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 technology 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 litigation could result in substantial costs and diversion of
resources and could cause our business and financial results to suffer. 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 to meaningfully protect our property could cause our
business and financial results to suffer.
Employees
As of March 1, 2000, we had a total of 99 employees. Of these employees, 16
were in software development, 38 were in sales, marketing and business
development, 29 were in customer support and 16 were in finance and
administration. Our future success will depend in part on our ability to
attract, retain and motivate highly qualified technical and management
personnel, for whom competition is intense. We believe our relations with our
employees is good. None of our employees are represented by a collective
bargaining unit.
Facilities
Our headquarters are currently located in approximately 26,000 square feet
of leased office space located in Laurel, Maryland. The lease for this space
terminates on December 31, 2006.
Legal Proceedings
We are not a party to any material legal proceedings.
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MANAGEMENT
Executive Officers and Directors
Our executive officers and directors, and their ages as of March 7, 2000,
are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Douglas E. Humphrey............ 40 chairman of the board, president and chief
executive officer
Robert Marggraf................ 57 executive vice president and chief operating
officer
Edward D. Postal............... 44 executive vice president and chief financial
officer
Robert M. Dunham............... 40 executive vice president, operations and
development, and secretary
Thom F. Degnan................. 47 senior vice president, business development
Brian W. Hayhurst.............. 35 director
John Landry.................... 51 director
Peter Barris................... 48 director
Suzanne H. King................ 35 director
J. Mitchell Reese.............. 40 director
Robert M. Stewart.............. 45 director
</TABLE>
Douglas E. Humphrey. Mr. Humphrey founded Cidera and has served as our
chairman, president and chief executive officer since our inception in July
1997. Prior to founding Cidera, Mr. Humphrey founded DIGEX, a national ISP that
was acquired by Intermedia Communications in July 1997. During his tenure at
DIGEX, Mr. Humphrey served as chief executive officer and chief technology
officer from 1991 to 1997.
Robert Marggraf. Mr. Marggraf has served as our executive vice president and
chief operating officer since July 1998. From June 1994 to February 1998, he
served as executive vice president and chief operating officer for Novadyne
Computer Systems, a network integration and support organization focused on the
Internet and enterprise markets.
Edward D. Postal. Mr. Postal has served as our executive vice president,
chief financial officer and assistant secretary since March 2000. From October
1996 to March 2000, Mr. Postal served in various capacities with PSINet, Inc.,
a global ISP, most recently as executive vice president and chief financial
officer. Prior to joining PSINet, Mr. Postal served as senior vice president
and chief financial officer of The Hunter Group, Inc., a systems integration
consulting firm, from March 1995 to October 1996. Mr. Postal is a certified
public accountant.
Robert M. Dunham. Mr. Dunham has served as our executive vice president of
operations and development since March 2000 and our secretary since our
inception in July 1997. From inception to March 2000, Mr. Dunham also served as
our chief financial officer and treasurer. From July 1988 to June 1997, Mr.
Dunham served as a controller and director of operations with HHL Financial
Services, a healthcare receivables management company.
Thom F. Degnan. Mr. Degnan has served as our senior vice president of
business development since November 1999. Prior to joining us, Mr. Degnan
served from August 1994 until November 1999 in a variety of positions with
QUALCOMM, a provider of wireless technology, most recently as vice president,
wireless carrier investments.
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<PAGE>
Brian W. Hayhurst. Mr. Hayhurst has served as a director since June 1998.
Since September 1997, Mr. Hayhurst has served as a vice president at Carlyle
Venture Partners, L. P., a private investment firm. From June 1995 to September
1997, Mr. Hayhurst was vice president of Morgan Keegan, Inc.'s venture capital
division. From June 1987 to June 1995, Mr. Hayhurst served in various
capacities with Deloitte & Touche, LLP. Mr. Hayhurst is a certified public
accountant.
John Landry. Mr. Landry has served as a director since July 1998. Since
1995, Mr. Landry has served as vice president of technology strategy for IBM.
From December 1990 to June 1995, he was senior vice president of development
and chief technology officer at Lotus Development Corporation until Lotus'
acquisition by IBM. Mr. Landry also serves as a director of Lante Corporation,
GIGA Information Group, MCK Communications, Inc. and Interliant, Inc.
Peter Barris. Mr. Barris has served as a director since June 1999. Mr.
Barris is the managing general partner of New Enterprise Associates L.P., a
private investment firm, which he joined in 1992. Mr. Barris serves as a
director of CareerBuilder, Inc., Mobius Management Systems, Inc. and
pcOrder.com, Inc.
Suzanne H. King. Ms. King has served as a director since June 1999. Ms. King
has been with New Enterprise Associates L.P., a private investment firm, since
July 1995, serving as a partner since April 1999. Prior to joining NEA, Ms.
King was a student at Northwestern University's Kellogg School of Business.
Prior to that, she worked as controller of XcelleNet, Inc. (now Sterling
Commerce), a developer of system management software for remote access from
October 1988 to June 1994. Prior to joining XcelleNet, she worked as a senior
auditor for Arthur Andersen & Co. from September 1986 to September 1988.
Ms. King is a certified public accountant.
J. Mitchell Reese. Mr. Reese has served as a director since June 1998. Mr.
Reese is a managing director for The Carlyle Group, where he has been since
September 1997. Prior to joining Carlyle, Mr. Reese was employed by Morgan
Keegan, Inc., an investment banking firm, from October 1990 until August 1997,
where he was president of its venture capital division and co-head of its
investment banking group.
Robert M. Stewart. Mr. Stewart has served as a director since February 1998.
Since January 1999, Mr. Stewart has served as a co-founder and general partner
of Spring Capital Partners L.P., a mezzanine capital fund. Prior to forming
Spring Capital, he was a managing director of CrossHill Financial Group LLC, a
private investment banking firm, from November 1995 to December 1998. Prior to
joining CrossHill Financial Group, Mr. Stewart was a principal with Armata
Partners L.P., a private investment banking firm, from April 1993 to October
1995.
Each executive officer serves at the discretion of the board of directors
and holds office until his successor is elected and qualified or until his
earlier resignation or removal. There are no family relationships among any of
the directors or executive officers. Mr. Hayhurst, Mr. Barris, Mr. Reese and
Ms. King serve on the board of directors pursuant to arrangements that will
terminate upon the closing of this offering.
Our Advisory Board
In March 2000, we established an advisory board to assist our management
team in addressing strategic issues as we position ourselves as an
international leader in satellite-based delivery of Internet content. To date,
the advisory board has not convened a meeting. Our advisory board currently
consists of the following members:
. Wayne Correia, chief executive officer of Capulus, a digital media
distribution company focused on the business-to-business market, and
founder and former chief technology officer of Critical Path;
. Peter Lothberg, network architecture consultant for Sprint and founder
of Stupi, Inc.;
. Mike McCurry, former White House press secretary;
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<PAGE>
. Arno Penzias, vice president and chief scientist of Bell Laboratories
and 1978 Nobel Prize winner in physics; and
. John Sidgmore, vice chairman of MCI WorldCom.
Each advisor is expected to attend three annual strategy sessions and to be
available to meet regularly, but no more than quarterly, with other advisory
board members to provide strategic, marketing and technical support and advice
for our management team. Each advisor serves for an initial one year term. We
have granted each advisor an option to purchase 30,000 shares of our common
stock at an exercise price of $8.75 under our 2000 Equity Incentive Plan on the
date they joined the advisory board. These options fully vest on the first
anniversary of the grant.
Election of Directors
Following this offering, the board of directors will be divided into three
classes, each of whose members will serve for a staggered three-year term. Mr.
Reese and Mr. Landry will serve in the class whose term expires in 2000; Ms.
King and Mr. Stewart will serve in the class whose term expires in 2001; and
Mr. Humphrey, Mr. Hayhurst and Mr. Barris will serve in the class whose term
expires in 2002. Upon the expiration of the term of a class of directors,
directors in such class will be elected for three-year terms at the annual
meeting of stockholders in the year in which such term expires.
Board Committees
Audit Committee. Our audit committee consists of Mr. Hayhurst, Mr. Landry
and Mr. Stewart. The audit committee makes recommendations to the board of
directors regarding the selection of independent auditors, reviews the results
and scope of the audit and other services provided by our independent auditors
and evaluates our internal accounting procedures.
Compensation Committee. Our compensation committee consists of Mr. Humphrey,
Mr. Reese and Mr. Barris. The compensation committee reviews and approves
compensation and benefits for our executive officers. The compensation
committee also administers our compensation and stock plans and makes
recommendations to the board of directors regarding such matters.
Compensation of Directors
We reimburse directors for reasonable out-of-pocket expenses incurred in
attending meetings of the board of directors. We will make non-discretionary
grants of stock options to our non-employee directors from time to time
pursuant to our 2000 non-employee directors plan. The number of options, and
the timing of these grants are more fully described under "2000 Non-Employee
Directors' Stock Option Plan."
Compensation Committee Interlocks and Insider Participation
Mr. Humphrey, our chief executive officer, serves as a member of our
compensation committee. 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 who serve as a
member of our board or compensation committee.
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Executive Compensation
The following table sets forth the compensation we paid to our chief
executive officer and our three other most highly compensated executive
officers whose salary and bonus exceeded $100,000 during 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Securities
-------------------- Underlying
Name and Principal Position Salary Bonus Options
- --------------------------- ---------- --------- ----------
<S> <C> <C> <C>
Douglas E. Humphrey,
President, chief executive officer and chairman
of the board of directors..................... $114,615 $20,000 --
Robert Marggraf,
Executive vice president and chief operating
officer....................................... 165,000 33,000 --
Robert M. Dunham,
Executive vice president, secretary and former
chief financial officer and treasurer......... 108,462 18,000 30,000
Steven W. Sweeney,
Former vice president--international
operations.................................... 150,000 -- --
</TABLE>
Option Grants in 1999
The following table sets forth information regarding options granted to the
named executive officers during 1999.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Percent of Annual Rates of Stock
Total Options Price Appreciation
Number of Granted to Exercise for Option Term (1)
Options Employees in Price ---------------------
Name Granted 1999 ($/Share) Expiration Date 5% 10%
- ---- --------- ------------- --------- --------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Douglas E. Humphrey..... -- -- % $ -- -- $ -- $ --
Robert Marggraf......... -- -- -- -- -- --
Robert M. Dunham........ 30,000 2.58 1.25 08/05/09
Steven W. Sweeney....... -- -- -- -- -- --
</TABLE>
- ---------------------
(1) Potential realizable values are computed by (a) multiplying the number of
shares of common stock subject to a given option by the initial public
offering price of $ per share, (b) assuming that the aggregate stock
value derived from that calculation compounds at the annual 5% or 10% rate
shown in the table for the term of the option and (c) subtracting from
that result the aggregate option exercise price. The 5% and 10% assumed
annual rates of stock price appreciation are mandated by the rules of the
SEC and do not represent our prediction of our stock price.
The percent of total options granted to employees in the above table is
based on 1,200,750 total options granted in 1999. Our board of directors may
reprice options under the terms of our stock option plans.
Options were granted at an exercise price equal to the fair market value of
our common stock, as determined by our board of directors on the date of grant.
In making this determination, the board of directors considered a number of
factors, including:
. our historical and prospective future revenue and profitability;
. our cash balance and rate of cash consumption;
. the development and size of the market for our services;
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<PAGE>
. the status of our financing activities;
. the stability of our management team; and
. the breadth of our service offerings.
1999 Option Exercises and Year-End Option Values
The following table sets forth information concerning the value realized
upon exercise of options during 1999 and the number and value of unexercised
options held by each of the named executive officers at December 31, 1999.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options at In-the-Money Options at
Shares December 31, 1999 December 31, 1999 (1)
Acquired on Value ------------------------- -------------------------
Name Exercise (#) Realized (1) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Douglas E. Humphrey..... -- $-- -- -- $-- $--
Robert Marggraf......... -- -- 242,500 242,500
Robert M. Dunham........ -- -- 216,324 66,054
Steven W. Sweeney....... 33,333 -- 66,667 --
</TABLE>
- ---------------------
(1) Based on the assumed initial public offering price of $ per share, minus
the per share exercise price, multiplied by the number of shares issued or
issuable upon exercise of the option.
Benefit Plans
1998 Founders Stock Incentive Plan. We adopted the 1998 Founders Stock
Incentive Plan on January 1, 1998, which we amended and restated on August 14,
1998. Our board of directors terminated this plan on February 24, 2000;
however, the plan remains effective with respect to options granted prior to
the termination date.
The plan provided for the grant of incentive stock options within the
meaning of Section 422 of the Internal Revenue Code to our employees, including
officers and employee directors, and nonstatutory stock options to employees,
including officers and employee directors, directors and consultants. In
addition, the plan permitted the granting of stock bonuses and rights to
purchase restricted stock.
An aggregate of 1,370,052 shares of common stock were authorized for
issuance under the plan. An aggregate of 1,370,052 shares are subject to
outstanding option grants under the plan to date. No further awards have been
granted under the plan since the date of termination. We have issued 105,000
shares of common stock upon exercise of options granted under the plan. As of
March 1, 2000, options to purchase an aggregate of 1,265,052 shares of common
stock were outstanding under the plan at an exercise price of $0.06 per share.
We are not authorized to issue any more options under the plan. The plan is
administered by an administrator designated by our board of directors.
1998 Employee Stock Incentive Plan. We adopted the 1998 Employee Stock
Incentive Plan on May 29, 1998. Our board of directors terminated the plan on
February 24, 2000; however, the plan remains effective with respect to options
or other stock awards granted prior to the termination date.
The plan provided for the grant of incentive stock options within the
meaning of Section 422 of the Internal Revenue Code to our employees, including
officers and employee directors, and nonstatutory stock options to employees,
including officers and employee directors, directors and consultants. In
addition, the plan permitted the granting of stock bonuses and rights to
purchase restricted stock.
An aggregate of 3,804,332 shares of common stock were authorized for
issuance under the plan. We have granted an aggregate of 3,010,511 options or
other awards under the plan to date. At the time we terminated the
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<PAGE>
plan, the remaining shares that were not subject to outstanding option grants
or other awards were removed from the plan's share reserve and were committed
to our 2000 Equity Incentive Plan.
No further awards have been granted under the plan since the date of
termination. As of March 1, 2000, we had issued 365,524 shares of common stock
upon exercise of options granted under the plan. As of March 1, 2000, options
to purchase an aggregate of 1,905,655 shares of common stock were outstanding
under the plan at exercise prices ranging from $0.20 to $13.00 per share. On
February 24, 2000, we sold 620,000 shares to Edward Postal at a purchase price
of $13.00 per share pursuant to an award of restricted stock under this plan.
These shares are subject to time-based vesting over a four year period. The
plan is administered by an administrator designated by our board of directors.
We are not authorized to issue any more options under the plan.
2000 Equity Incentive Plan. Our board of directors adopted the 2000 Equity
Incentive Plan on February 24, 2000 and it became effective on that date. The
plan was approved by our stockholders on February 24, 2000. Under the plan, the
board may award incentive stock options within the meaning of Section 422 of
the Internal Revenue Code to employees, including officers and employee
directors and nonstatutory stock options to employees, including officers and
employee directors, directors and consultants, including non-employee
directors. In addition, the plan permits the granting of stock bonuses and
rights to purchase restricted stock. There are 4,909,821 shares of common stock
reserved for issuance under the plan. No person is eligible to be granted
options covering more than 2,000,000 shares of common stock in any calendar
year. The maximum term of options granted under the plan is ten years. As of
March 1, 2000, options to purchase 30,000 shares have been granted and are
outstanding under the plan at an exercise price of $13.00 per share.
The plan is administered by the board or a committee appointed by the board.
Subject to the limitations set forth in the plan, the board has the authority
to select the persons to whom grants are to be made, to designate the number of
shares to be covered by each stock award, to determine whether an option is to
be an incentive stock option or a nonstatutory stock option, to establish
vesting schedules, to specify the option exercise price and the type of
consideration to be paid upon exercise and, subject to certain restrictions, to
specify other terms of stock awards.
The exercise price of options granted under the plan is determined by the
board of directors in accordance with the guidelines set forth in the plan. The
exercise price of an incentive stock option cannot be less than 100% of the
fair market value of the common stock on the date of grant. The exercise price
of a nonstatutory stock option cannot be less than 85% of the fair market value
of the common stock on the date of grant. Options granted under the plan vest
at the rate specified in the option agreement and the grant notice. The
exercise price of incentive stock options granted to any person who at the time
of grant owns stock representing more than 10% of the total combined voting
power of all classes of our capital stock must be at least 110% of the fair
market value of such stock on the grant date and the term of such incentive
stock option cannot exceed five years.
Stock options granted under the plan generally are non-transferable. Options
expire three months after the termination of an optionee's service. However, if
the optionee's service ends as a result of his or her disability, or because of
death, then the period for exercising his or her options is extended to twelve
and eighteen months, respectively. The board may deviate from those time
periods and may provide for shorter or longer periods to exercise options.
These periods may also be extended if the optionee is unable to exercise his or
her stock options because of securities law restrictions.
Any stock bonuses or restricted stock purchase awards granted under the plan
will be in the form and will contain the terms and conditions that the board
deems appropriate. The purchase price under any restricted stock purchase
agreement will not be less than 85% of the fair market value of our common
stock on the date of grant. Stock bonuses and restricted stock purchase
agreements awarded under the plan are transferable if the grant allows the
transfer, which will be determined by our board of directors on a case-by-case
basis.
Upon specified changes in control, all outstanding stock awards under the
plan must either be assumed or substituted for by the surviving entity. If the
surviving entity does not assume or substitute for the stock
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<PAGE>
awards, the stock awards will be accelerated in full and then terminated to the
extent not exercised prior to the change in control.
2000 Non-Employee Directors' Stock Option Plan. Our board of directors
adopted the 2000 non-employee directors' stock option plan on February 24,
2000. Our stockholders approved the directors' plan on February 24, 2000. The
plan will become effective immediately following this offering. We have
reserved a total of 400,000 shares of common stock for issuance under the
directors' plan.
The eligible participants in the directors' plan are the members of our
board of directors who are not employed by us or affiliates of us. The
directors' plan provides for the issuance of non-statutory stock options.
The directors' plan provides for the non-discretionary award of stock
options at various times. Each member of the board at the time of this offering
will be issued an option for 40,000 shares of our common stock. Individuals who
become directors after this offering, will also receive an option for 40,000
shares. At the time of each annual meeting of our stockholders, each director
will receive an option to purchase 10,000 shares of our common stock. In the
case of a director who has not served on the board for the full year preceding
this annual grant, the amount of shares subject to his or her option will be
reduced on a pro rata basis for each full quarter during that year in which the
director did not serve on the board.
Options granted under the directors' plan will have a term that is no longer
than ten years from the date of grant. The exercise price for an option will be
at least 100% of the fair market value of our common stock on the date of
grant. Options granted under the directors' plan are not transferable, and may
only be exercised by a director during his or her lifetime. The option may be
transferred, at the time of a director's death, by will or by the laws of
descent and distribution. Under the directors' plan, a director may designate
the recipient of the option on the director's death.
Options vest and become exercisable in accordance with an established
schedule. For the initial grant, 50% of the options vest one year after the
date of grant, and the remaining 50% of the shares vest two years after the
date of grant. In the case of the annual grants, 100% of the options vest and
become exercisable on the first anniversary of the date of grant.
Upon specified changes in control, all outstanding stock options under the
directors' plan must either be assumed or substituted for by the surviving
entity. If the surviving entity does not assume or substitute for the stock
awards, the stock awards will be accelerated in full and then terminated to the
extent not exercised prior to the change in control.
The directors' plan expires on the day before the tenth anniversary of its
adoption by the board or approval by stockholders, whichever is earlier. The
board may amend or terminate the directors' plan at any time in its sole
discretion. No amendment or termination may adversely affect the rights of any
director.
2000 Employee Stock Purchase Plan. On February 24, 2000, we adopted the 2000
Employee Stock Purchase Plan. A total of 800,000 shares of common stock have
been reserved for issuance under the purchase plan. The purchase plan is
intended to qualify as an employee stock purchase plan within the meaning of
Section 423 of the Internal Revenue Code. Under the purchase plan, the board
may authorize participation by eligible employees, including officers, in
periodic offerings following the commencement of the purchase plan.
Unless otherwise determined by the board, employees are eligible to
participate in the purchase plan only if they are customarily employed by us,
or an affiliate designated by our board, for over 20 hours per week and more
than five months per calendar year. Employees who participate in an offering
may have up to 15% of their earnings withheld pursuant to the purchase plan.
The amount withheld is then used to purchase shares of the common stock on
specified dates determined by the board. The price of common stock purchased
under the purchase plan will be equal to 85% of the lower of the fair market
value of the common stock at the
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commencement date of each offering period or the relevant purchase date.
Employees may end their participation in the offering at any time during the
offering period, and participation ends automatically on termination of
employment.
In the event of a merger, reorganization, consolidation or liquidation, the
board has discretion to provide that each right to purchase common stock will
be assumed or an equivalent right substituted by the successor corporation or
the board may provide for all sums collected by payroll deductions to be
applied to purchase stock immediately prior to such merger or other
transaction. The board has the authority to amend or terminate the purchase
plan, but may not adversely affect any outstanding rights to purchase common
stock.
401(k) Plan. On January 1, 1998, we established a tax-qualified employee
savings and retirement plan. Our 401(k) plan provides that each participant may
contribute up to the statutorily prescribed annual limit, which is $10,500 in
2000. All amounts contributed by employee participants and earnings on these
contributions are fully vested at all times. Employee participants may elect to
invest their contributions in various established funds.
Agreements with Executive Officers
In June 1998, we entered into two year employment agreements with Douglas
Humphrey and Robert Dunham. Under the terms of the agreements, we agreed to pay
Mr. Humphrey an annual salary of $100,000 and Mr. Dunham an annual salary of
$90,000. The board of directors subsequently approved annual salaries for both
Mr. Humphrey and Mr. Dunham of $138,000 effective August 5, 1999. Our agreement
with Mr. Humphrey provides that his salary will never be less than 60% of the
base salary of any member of our senior management team and Mr. Humphrey's
salary will automatically adjust accordingly. Also, in June 1998, we entered
into a three year employment agreement with Robert Marggraf. Under the terms of
the agreement, we agreed to pay Mr. Marggraf an annual salary of $165,000.
These agreements allow for annual bonuses targeted at 20% of base compensation.
The employment agreements prohibit Mr. Humphrey, Mr. Dunham and Mr. Marggraf,
respectively, from competing with us and soliciting our customers or employment
during the term of their respective employment agreements and the 12-month
period after the date of termination.
The employment agreements provide that Mr. Humphrey, Mr. Dunham and Mr.
Marggraf are employed at will, and their employment relationship may be
terminated for any reason at any time. However, if we terminate employment
under any of these agreements without cause, as defined in the agreement, then
the terminated employee will receive a severance payment equal to six months of
his base salary as of the date of termination. In addition, 50% of any unvested
options granted under the 1998 Founders Equity Incentive Plan then held by
Mr. Dunham will accelerate and vest. Notwithstanding the foregoing, if Mr.
Dunham's employment is terminated 90 days prior to or within 180 days following
a change of control, 100% of any unvested options held by him under to the 1998
Founders Equity Incentive Plan will accelerate and vest. If any of
Mr. Humphrey, Mr. Dunham or Mr. Marggraf voluntarily terminates his employment
with cause, then we must pay him a severance payment equal to six months of his
base salary as of the date of termination.
In February 2000, we entered into a two year employment agreement with
Edward D. Postal. Under the terms of the agreement, we agreed to pay Mr. Postal
an annual salary of $250,000. The agreement provides for an annual bonus of
$100,000. In addition, the board of directors agreed to sell and Mr. Postal
agreed to purchase 620,000 shares of our common stock on March 6, 2000 at
$13.00 per share, which is subject to time-based vesting over a four-year
period. Mr. Postal paid for these shares with a combination of cash and a
promissory note. The employment agreement prohibits Mr. Postal from competing
with us and soliciting our customers or employees during the term of the
employment agreement and the 12-month period after the date of termination. In
the event Mr. Postal is terminated without cause or upon a change of control,
100% of any unvested shares or unvested options then held by Mr. Postal will
accelerate and vest. If we terminate Mr. Postal's employment without cause or
if Mr. Postal voluntarily terminates his employment with cause, we must pay Mr.
Postal a severance payment equal to up to 100% of his annual salary.
41
<PAGE>
RELATED PARTY TRANSACTIONS
Series C Financing
On February 28, 2000, we issued 3,445,916 shares of series C mandatorily
redeemable convertible preferred stock for aggregate proceeds of $30.2 million.
On March 15, 2000, we issued an additional 668,605 shares of series C stock for
$5.8 million. We sold these shares to the following entities, which include two
officers, director and three members of our advisory board:
<TABLE>
<CAPTION>
Number of Aggregate
Purchaser Shares Purchase Price
- --------- --------- --------------
<S> <C> <C>
GE Capital Equity Investments, Inc..................... 1,142,923 $10,000,005
Investor (Guernsey) Ltd................................ 1,371,507 12,000,000
Dell USA, L.P.......................................... 571,462 5,000,007
MCI Worldcom Venture Fund, Inc......................... 571,462 5,000,007
PSINet Strategic Investments, Inc...................... 228,585 2,000,004
Edward Postal.......................................... 57,147 500,008
John B. Landry......................................... 40,003 350,006
Adam J. Landry......................................... 17,144 150,001
Wayne Correia.......................................... 51,425 448,943
Arno Penzias........................................... 34,288 300,003
Thom Degnan............................................ 12,573 110,007
Diane Degnan........................................... 4,572 40,003
John Sidgmore.......................................... 11,430 100,007
</TABLE>
John B. Landry is a director. Adam J. Landry is the son of John B. Landry.
Messrs. Postal and Degnan are officers of Cidera. Mrs. Degnan is Mr. Degnan's
wife. Messrs. Correia, Penzias and Sidgmore are members of our advisory board.
Each share of series C stock will convert automatically into one share of
common stock upon the closing of this offering.
Series B Financing
On June 9, 1999, we issued 9,887,403 shares of series B mandatorily
redeemable convertible preferred stock for aggregate proceeds of $20.0 million.
We sold 9,754,783 of these shares to the following entities, who are 5%
stockholders and a director, for an aggregate purchase price of approximately
$19.7 million:
<TABLE>
<CAPTION>
Number of Aggregate
Purchaser Shares Purchase Price
- --------- --------- --------------
<S> <C> <C>
New Enterprise Associates VIII, L.P.................... 4,847,299 $9,806,000
NEA Presidents' Fund, L.P. ............................ 44,493 90,000
NEA Ventures 1999, L.P. ............................... 2,472 5,000
Carlyle Venture Partners, L.P.......................... 1,391,268 2,814,223
C/S Venture Investors, L.P............................. 184,518 373,239
Carlyle U.S. Venture Partners, L.P. ................... 112,165 226,884
Carlyle Venture Coinvestment, L.L.C.................... 289,530 585,654
Institutional Venture Partners VIII, L.P............... 1,244,600 2,517,547
IVP Broadband Fund, L.P. .............................. 140,896 285,001
IVM Investment Fund VIII, L.L.C........................ 23,459 47,452
Intel Corporation...................................... 1,408,955 2,850,000
John Landry............................................ 65,128 131,739
</TABLE>
New Enterprise Associates VIII, L.P., Carlyle Venture Partners, L.P.,
Institutional Venture Partners VIII, L.L.C. and Intel Corporation are each 5%
stockholders. Mr. Landry is a director. The remaining entities are affiliates
of New Enterprise Associates, Carlyle Ventures and Institutional Venture
Partners.
Each share of series B preferred stock will automatically convert into one
share of common stock upon the closing of this offering.
42
<PAGE>
Series A Financing
On June 4, 1998, we issued 7,066,147 shares of series A mandatorily
redeemable convertible preferred stock for aggregate proceeds of $6.4 million.
We sold 6,760,133 of these shares to the following entities, who are 5%
stockholders, an officer and a director, for an aggregate purchase price of
approximately $6.1 million:
<TABLE>
<CAPTION>
Number of Aggregate
Purchaser Shares Purchase Price
- --------- --------- --------------
<S> <C> <C>
Carlyle Venture Partners, L.P.......................... 4,710,822 $4,233,385
C/S Venture Investors, L.P............................. 962,056 864,553
Carlyle U.S. Ventures Partners, L.P.................... 624,778 561,457
Carlyle Venture Coinvestment, L.L.C.................... 379,018 340,605
Robert M. Stewart...................................... 55,640 50,000
Robert M. Dunham....................................... 27,819 25,000
</TABLE>
Carlyle Venture Partners, L.P. is a 5% stockholder. Mr. Dunham is our
executive vice president and secretary. Mr. Stewart is a director. The
remaining entities are affiliates of Carlyle Ventures.
Each share of series A preferred stock will automatically convert into one
share of common stock upon the closing of this offering.
In addition, we issued warrants to purchase 333,834 shares of series A
preferred stock for $0.90 per share to affiliates of Anchor Financial Group,
Inc., then an affiliate of Mr. Stewart, in consideration for their services in
connection with the closing of the series A preferred stock financing. These
warrants expire upon the closing of this offering. Mr. Stewart received 100,150
of these warrants.
Bridge Financing
In February 1998, we issued promissory notes in the aggregate principal
amount of $400,000 bearing simple interest at a rate of 8% per annum to Mr.
Dunham, Mr. Stewart and other non-affiliated investors. We also issued, to the
purchasers of the notes, warrants to purchase an aggregate of 801,200 shares of
common stock at an exercise price of $.50 per share exercisable on or prior to
February 16, 2005. Messrs. Dunham and Stewart received 50,075 and 100,150
warrants, respectively. Immediately upon the closing of the series A preferred
stock financing, purchasers of the notes, including Messrs. Dunham and Stewart,
converted them into shares of series A preferred stock at $0.90 per share.
Arrangements with Phase1 Incubator, Inc.
On June 1, 1998, we entered into a sublease for office space with Phase1
Incubator, Inc., an affiliate of Mr. Humphrey. This agreement was amended on
March 7, 2000. The sublease expires on August 31, 2004, although we may
terminate it on 30 days notice. Monthly rent due under the sublease is $2,244.
We have the option to extend the sublease for an additional two years upon
expiration of the initial term, with monthly rent equal to the fair market
rental rate at that time.
Concurrently with the sublease, we also entered into a license agreement
with Phase1 Incubator to install, operate, maintain, repair, replace and remove
up to three satellite dishes on the rooftop of the building. The license is for
a five year term, although we may terminate it on 30 days notice. The monthly
fee due under the license is $2,000. In 1999, Cidera paid $111,720 to Phasel
for rent and associated services.
Agreement with The Colocation Corporation
On March 7, 2000, we entered into a colocation agreement to lease machine
space in the facilities of The Colocation Corporation, an affiliate of Mr.
Humphrey. The agreement expires on August 31, 2004. In 1999, Cidera paid
$123,942 to the Colocation Corporation for rent and associated services.
Loan from officer
In February 1998, Mr. Humphrey loaned Cidera $300,000 pursuant to an
unsecured promissory note. This amount was repaid with 8% interest in June 1998
from the proceeds of the Series A financing.
43
<PAGE>
Loan from officer
In February 1998, Mr. Humphrey loaned Cidera $300,000 pursuant to an
unsecured promissory note. This amount was repaid with 8% interest, in June
1998 from the proceeds of the Series A financing.
Loan to officer
On March 6, 2000, in connection with his employment agreement to serve as
our chief financial officer, Mr. Postal acquired 620,000 shares of our common
stock at $13.00 per share. He purchased this stock by paying $80,000 in cash
and executing a promissory note for the balance of $7,920,000. The note has a
nine- year term and accrues interest at 6.2% per year. The note is a full
recourse obligation of Mr. Postal and is secured by the shares.
We agreed to the material terms of each of the preferred stock issuances,
the bridge financing and the loan to Mr. Postal described above after arm's-
length negotiations with previously unaffiliated persons. We believe that the
loan from Mr. Humphrey was, and that the agreements with Phase1 Incubator and
The Colocation Corporation are, on terms no less favorable than we could obtain
from unaffiliated third parties. All future transactions, including loans
between us and our officers, directors, principal stockholders and their
affiliates, will be approved by a majority of our board of directors, including
a majority of our independent and disinterested directors, and will continue to
be on terms no less favorable to us than we could obtain from unaffiliated
third parties.
44
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding beneficial ownership of
our common stock as of March 15, 2000, and as adjusted to reflect the sale of
the shares of common stock in this offering, by:
. each person or group who beneficially owns more than 5% of our common
stock;
. each of our directors;
. each executive officer named in the summary compensation table on page
37; and
. all of our directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, and includes voting and investment power
with respect to shares. Unless otherwise indicated below, to our knowledge, all
persons named in the table have sole voting and investment power with respect
to their shares of common stock, except to the extent authority is shared by
spouses under applicable law. Unless otherwise indicated, the address of each
person listed below is c/o Cidera, Inc., 8037 Laurel Lakes Court, Laurel,
Maryland 20707.
<TABLE>
<CAPTION>
Percentage
Ownership
Shares -----------------
Beneficially Before After
Name and Address Owned Offering Offering
---------------- ------------ -------- --------
<S> <C> <C> <C>
Entities affiliated with The Carlyle Group(1).. 8,654,155 30.9%
Brian W. Hayhurst(2)........................... 8,654,155 30.9
J. Mitchell Reese(3)........................... 8,654,155 30.9
Douglas E. Humphrey and Lisa M. Losito(4)...... 5,768,649 20.6
Entities affiliated with New Enterprise
Associates(5)................................. 4,894,264 17.5
Peter Barris(6)................................ 4,894,264 17.5
Suzanne H. King(7)............................. 4,894,264 17.5
Entities affiliated with Institutional Venture
Partners(8)................................... 1,408,955 5.0
Intel Corporation(9)........................... 1,408,955 5.0
Edward D. Postal(10)........................... 677,147 2.4
Robert M. Dunham(11)........................... 294,218 1.0
Robert M. Stewart(12).......................... 255,940 *
Robert Marggraf................................ 242,500 *
John Landry(13)................................ 145,890 *
Steven W. Sweeney(14).......................... 50,000 *
Thom F. Degnan(15)............................. 17,145 *
All executive officers and directors as a group
(12 persons)(16).............................. 21,002,649 74.1
</TABLE>
- ---------------------
* Less than 1%
(1) Consists of 6,102,090 shares held by Carlyle Venture Partners, L.P.,
1,146,574 shares held by C/S Venture Investors, L.P., 736,943 shares held
by Carlyle U.S. Ventures Partners, L.P. and 668,548 shares held by Carlyle
Venture Coinvestment, L.L.C. The Carlyle Group is located at 1001
Pennsylvania Avenue, N.W., Suite 220 South, Washington, DC 20004.
(2) Consists of the shares described in footnote 1 above. Mr. Hayhurst is a
Vice President of Carlyle Venture Partners, L.P. Mr. Hayhurst disclaims
beneficial ownership of shares held by these entities.
(3) Consists of the shares described in footnote 1 above. Mr. Reese is a
managing director of The Carlyle Group. Mr. Reese disclaims beneficial
ownership of shares held by these entities.
(4) Douglas E. Humphrey and Lisa M. Losito are husband and wife. Consists of
2,884,325 shares held by Mr. Humphrey and 2,884,324 held by Ms. Losito.
Mr. Humphrey holds a proxy to vote Ms. Losito's shares. This proxy
terminates by its terms on the closing of this offering.
(5) Consists of 4,847,299 shares held by New Enterprise Associates VIII, L.P.,
44,493 shares held by NEA Presidents' Fund, L.P. and 2,472 shares held by
NEA Ventures 1999, L.P. New Enterprise Associates is located at One
Freedom Square, 11951 Freedom Drive, Suite 1240, Reston, VA 20190.
45
<PAGE>
(6) Consists of the shares described in footnote 5 above. Mr. Barris is a
partner of New Enterprise Associates. Mr. Barris disclaims beneficial
ownership of shares held by these entities.
(7) Consists of the shares described in footnote 5 above. Ms. King is a
partner of New Enterprise Associates. Ms. King disclaims beneficial
ownership of shares held by these entities.
(8) Consists of 1,244,600 shares held by Institutional Venture Partners VIII,
L.P., 140,896 shares held by IVP Broadband Fund, L.P. and 23,459 shares
held by IVM Investment Fund VIII, L.L.C. Institutional Venture Partners is
located at 3000 Sand Hill Rd., Bldg. 2, Suite 290, Menlo Park, CA 94025.
(9) Intel Corporation's address is 2625 Walsh Avenue, M-SSC4-20010, Santa
Clara, CA 95052.
(10) Includes 620,000 shares of restricted stock subject to a repurchase right
in favor of Cidera.
(11) Includes 216,324 shares subject to options held by Mr. Dunham that are
exercisable within 60 days and 50,075 shares underlying currently
exercisable warrants.
(12) Includes 200,300 shares underlying currently exercisable warrants. Also
includes 19,775 shares held in an irrevocable trust for the benefit of Mr.
Stewart's children, of which Mr. Stewart disclaims beneficial ownership.
(13) Includes 17,144 shares registered in Mr. Landry's name that he holds as
custodian for his minor child. Mr. Landry disclaims beneficial ownership
of these shares. Also includes 2,264 shares subject to options held by Mr.
Landry that are exercisable within 60 days.
(14) Includes 16,667 shares that are subject to options exercisable within 60
days.
(15) Includes 4,572 shares registered in the name of Mr. Degnan's wife as
custodian for his minor children. Mr. Degnan disclaims beneficial
ownership of these shares.
(16) Includes 385,630 shares that are subject to options exercisable within 60
days.
46
<PAGE>
DESCRIPTION OF CAPITAL STOCK
After this offering, our authorized capital stock will consist of
100,000,000 shares of common stock, and 30,000,000 shares of preferred stock.
As of March 15, 2000, there were outstanding:
. 6,915,422 shares of common stock held by 17 stockholders of record;
. 21,401,905 shares of preferred stock held by 51 stockholders of record,
all of which will automatically convert into 21,401,905 shares of common
stock upon the closing of this offering. This number includes 333,834
shares of series A preferred stock issuable upon exercise of warrants
that will expire if not exercised prior to the closing of this offering;
and
. options and other warrants to purchase an aggregate of 4,002,907 shares
of our common stock.
Upon completion of this offering and the conversion of all outstanding
shares of preferred stock into common stock, there will be shares of
common stock outstanding and no shares of preferred stock outstanding.
Common Stock
Holders of our common stock are entitled to one vote for each share held on
matters submitted to a vote of stockholders. Holders of our common stock do not
have cumulative voting rights. Accordingly, holders of a majority of the shares
of common stock entitled to vote in any election of directors may elect all of
the directors standing for election. Holders of common stock are entitled to
receive their proportionate share of any dividends declared by the board of
directors, subject to any preferential dividend rights of outstanding preferred
stock. Upon our liquidation, dissolution or winding up, the holders of common
stock are entitled to receive their proportionate share of our net assets
available after the payment of all debts and other liabilities and subject to
the preferential rights of any outstanding preferred stock. The common stock
has no preemptive, subscription, redemption or conversion rights. All
outstanding shares of common stock are, and the shares of common stock to be
issued by us in this offering will be, fully paid and nonassessable. The
rights, preferences and privileges of the common stock are subject to the
rights of the holders of shares of any series of preferred stock that we may
designate and issue in the future.
Preferred Stock
Following the offering, our board of directors will be authorized, without
further stockholder approval, to issue up to an aggregate of 30,000,000 shares
of preferred stock in one or more series. The board of directors may fix or
alter the designations, preferences, rights and any qualifications, limitations
or restrictions of the shares of each such series, including the dividend
rights, dividend rates, conversion rights, voting rights, terms of redemption,
redemption price or prices, pre-emptive rights and liquidation preferences. The
issuance of preferred stock could:
. adversely affect the voting power of holders of common stock;
. adversely affect the likelihood that the holders of common stock will
receive dividend payments and payments upon liquidation; and
. delay, defer or prevent a change in control.
We have no present plans to issue any shares of preferred stock.
Warrants
In connection with our bridge financing in February 1998, we issued 801,200
warrants to acquire our common stock at an exercise price of $0.50 per share,
all of which are currently outstanding. The warrants expire on February 16,
2005. The warrants contain customary provisions for the adjustment of the
exercise price and the number of shares issuable upon the exercise of the
warrants in the event of stock dividends, stock splits, reorganizations and
other similar corporate actions.
47
<PAGE>
Anti-takeover Effects Delaware Law and Our Certificate of Incorporation and
Bylaws
Following the closing of this offering, we will be subject to the
provisions of Section 203 of the Delaware corporate statute. Section 203
generally prohibits a publicly held Delaware corporation from engaging in a
business combination with an interested stockholder for a period of three
years after the date of the transaction in which the person became an
interested stockholder, unless the interested stockholder attained that status
with the approval of the corporation's board of directors or unless the
business combination is approved in a prescribed manner. Business combinations
include mergers, asset sales and other transactions resulting in a financial
benefit to the interested stockholder. With certain exceptions, an interested
stockholder is a person who, together with affiliates and associates, owns, or
within three years did own, 15% or more of the corporation's voting stock.
This statue could prohibit or delay the accomplishment of mergers or other
takeover or change-in-control attempts and, accordingly, may discourage
attempts to acquire us.
The following provisions of our amended and restated certificate of
incorporation and amended and restated bylaws that will become effective upon
the closing of this offering may have an anti-takeover effect. They may delay
or prevent a tender offer or takeover attempt that a stockholder might
consider to be in its best interest, including attempts that might result in a
premium over the market price for our common stock:
. our board of directors will be divided into three classes with staggered
three-year terms and may be removed only for cause;
. a majority of our directors will be entitled to fill any vacancy on the
board of directors, however occurring, including a vacancy resulting from
an enlargement of the board;
. special meetings of the stockholders may only be called by the chief
executive officer, the chairman, or the board of directors pursuant to a
resolution adopted by a majority of the total number of authorized
directors;
. any action required or permitted to be taken by the stockholders at an
annual meeting or a special meeting of stockholders may only be taken if
it is properly brought before such meeting and may not be taken by
written action in lieu of a meeting; and
. in order for any matter to be considered properly brought before a
meeting, a stockholder must provide us with advance notice of the matter
as required in our bylaws.
Delaware law provides that the vote of a majority of the shares entitled to
vote on any matter is required to amend a corporation's certificate of
incorporation or bylaws, unless a corporation's certificate of incorporation
or bylaws requires a greater percentage. Our amended and restated certificate
of incorporation requires the vote of the holders of at least 66 2/3% of the
shares of our capital stock entitled to vote to amend or repeal any of the
foregoing provisions of our certificate of incorporation. Generally, our
bylaws may be amended or repealed by a majority vote of the board of directors
or the holders of 66 2/3% of the shares of our capital stock issued and
outstanding and entitled to vote. This stockholder vote would be in addition
to any separate class vote that might in the future be required pursuant to
the terms of any series of preferred stock that might be then outstanding.
Limitation of Liability and Indemnification
Our certificate of incorporation provides that our directors and officers
shall be indemnified by us except to the extent prohibited by Delaware law.
This indemnification covers all expenses and liabilities reasonably incurred
in connection with their services for or on behalf of us. In addition, our
certificate of incorporation provides that our directors will not be
personally liable for monetary damages to us or to our stockholders for
breaches of their fiduciary duty as directors, unless they violated their duty
of loyalty to us or our stockholders, acted in bad faith, knowingly or
intentionally violated the law, authorized illegal dividends or redemptions or
derived an improper personal benefit from their action as directors.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is American Stock
Transfer and Trust Company.
48
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have shares of common stock
outstanding, assuming no exercise of outstanding options. Of these shares, the
shares to be sold in this offering will be freely tradable without
restriction or further registration under the Securities Act, except that any
shares purchased by our affiliates, as that term is defined in Rule 144 under
the Securities Act, may generally only be sold in compliance with the
limitations of Rule 144 described below. The remaining 28,317,327 shares of
common stock are restricted securities under Rule 144. Generally, restricted
securities that have been owned for at least two years may be sold immediately
after the completion of this offering and restricted securities that have been
owned for at least one year may be sold 90 days after the completion of this
offering.
Lock-Up Agreements
Our executive officers, directors and other stockholders, who will hold
approximately 26,500,000 shares of common stock following this offering, have
entered into lock-up agreements with the underwriters under which they have
agreed not to sell, dispose of, loan, pledge or grant any rights to any shares
of common stock or any securities convertible into or exercisable or
exchangeable for shares of common stock without the prior written consent of
Credit Suisse First Boston Corporation for a period of 180 days after the date
of this prospectus. Transfers or dispositions can be made sooner with the prior
written consent of Credit Suisse First Boston Corporation.
Rule 144
In general, under Rule 144, stockholders, including our affiliates, who have
beneficially owned shares for at least one year are entitled to sell, within
any three-month period, a number of these shares that does not exceed the
greater of one percent of the then outstanding shares of common stock and the
average weekly trading volume in the common stock in the over-the-counter
market during the four calendar weeks preceding the date on which notice of
such sale is filed. These sales must also comply with requirements concerning
availability of public information, manner of sale and notice of sale. In
addition, our affiliates must comply with the restrictions and requirements of
Rule 144, except for the one-year holding period requirement, in order to sell
nonrestricted shares.
Rule 144(k)
Under Rule 144(k), a stockholder who is not an affiliate and has not been an
affiliate for at least three months prior to the sale and who has beneficially
owned shares for at least two years may sell these shares without compliance
with the requirements of Rule 144. In meeting these holding periods, a
stockholder can include the holding periods of a prior owner who was not an
affiliate. The holding periods do not begin until the stockholder pays the full
purchase price or other consideration for the shares.
Rule 701
Rule 701 provides that currently outstanding shares of common stock acquired
under our employee compensation plans, or shares issuable upon the exercise of
currently outstanding stock options, may be sold beginning 90 days after the
date of this prospectus by non-affiliates, subject only to the manner-of-sale
provisions of Rule 144 and by affiliates under Rule 144 without compliance with
its one-year holding period requirement.
Stock Options
At March 1, 2000, 1,070,865 shares of common stock were issuable pursuant to
vested options granted under our 1998 founders stock incentive plan and our
1998 stock incentive plan. The holders of substantially all of these are
subject to 180-day lock-up agreements with the underwriters as described above.
49
<PAGE>
We intend to file a registration statement on Form S-8 under the Securities
Act within 180 days after the date of this prospectus, to register up to
5,200,000 shares of common stock issuable under our stock incentive plan,
including the 3,206,304 shares of common stock subject to outstanding options
as of March 1, 2000. We expect this registration statement to become effective
upon filing.
Registration Rights
After this offering, the holders of 27,170,554 shares of common stock and
the holders of warrants to acquire 801,200 shares of common stock will be
entitled to rights with respect to the registration of those shares under the
Securities Act.
Piggyback Rights. Under the terms of the agreement between us and the
holders of these registrable securities, if we propose to register any of our
securities under the Securities Act, either for our own account or for the
account of other security holders exercising registration rights, these holders
are entitled to notice of registration and are entitled to include shares of
their common stock in the registration.
Demand Rights and Form S-3 Rights. After this offering, holders of
approximately 21,401,905 shares of common stock will also be entitled to demand
registration rights under which they may require us, on up to four occasions,
to file a registration statement under the Securities Act at our expense with
respect to their shares of common stock. We are required to use our best
efforts to effect these registrations.
These holders may also require us to file additional registration statements
on Form S-3 at our expense. All of these registration rights are subject to
conditions and limitations, including the right of the underwriters of an
offering to limit the number of shares included in a registration and our right
not to effect a requested registration within six months following a firm
commitment underwritten public offering of our securities.
50
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated 2000, we have agreed to sell to the underwriters named
below, for whom Credit Suisse First Boston Corporation, Deutsche Bank
Securities Inc., Donaldson, Lufkin & Jenrette Securities Corporation and
FleetBoston Robertson Stephens Inc. are acting as representatives the following
respective numbers of shares of common stock:
<TABLE>
<CAPTION>
Number
Underwriter of Shares
----------- ---------
<S> <C>
Credit Suisse First Boston Corporation.............................
Deutsche Bank Securities Inc. .....................................
Donaldson, Lufkin & Jenrette Securities Corporation................
FleetBoston Robertson Stephens Inc. ...............................
---
Total............................................................
===
</TABLE>
The underwriting agreement provides that the underwriters are obligated to
purchase all the shares of common stock in the offering if any are purchased,
other than those shares covered by the over-allotment option described below.
The underwriting agreement also provides that if an underwriter defaults, the
purchase commitments of non-defaulting underwriters may be increased or the
offering of common stock may be terminated.
We have granted to the underwriters a 30-day option to purchase on a pro
rata basis up to additional shares at the initial public offering price
less the underwriting discounts and commissions. The option may be exercised
only to cover any over-allotments of common stock.
The underwriters propose to offer the shares of common stock initially at
the public offering price on the cover page of this prospectus and to selling
group members at that price less a concession of $ per share. The
underwriters and selling group members may allow a discount of $ per share on
sales to other broker/dealers. After the initial public offering, the public
offering price and concession and discount to broker/dealers may be changed by
the representatives.
The following table summarizes the compensation and estimated expenses we
will pay.
<TABLE>
<CAPTION>
Per Share Total
----------------------------- -----------------------------
Without With Without With
Over-allotment Over-allotment Over-allotment Over-allotment
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Underwriting discounts
and commissions paid by
us..................... $ $ $ $
Expenses payable by us.. $ $ $ $
</TABLE>
The underwriters have informed us that they do not expect discretionary
sales to exceed 5% of the shares of common stock being offered.
We have an agreement with Credit Suisse First Boston under which they
provide financial advisory and investment banking services to us. In connection
with the closing of our offering of series C preferred stock, Credit Suisse
First Boston received a cash fee equal to 6% of the proceeds of the offering,
or $2.2 million. Credit Suisse First Boston does not have any other material
relationship with us or any of our officers, directors or
51
<PAGE>
controlling persons, except with respect to its contractual relationship with
us under the underwriting agreement entered into in connection with this
offering.
We have agreed that we will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Securities and
Exchange Commission its registration statement under the Securities Act
relating to, any shares of our common stock or securities convertible into or
exchangeable or exercisable for any shares of our common stock, or publicly
disclose the intention to make any such offer, sale, pledge, disposition of
filing, without the prior written consent of Credit Suisse First Boston
Corporation for a period of 180 days after the date of this prospectus, except
issuances pursuant to the exercise of employee stock options outstanding on the
date hereof or grants of options or issuances of shares pursuant to our 2000
Equity Incentive Plan, and issuances pursuant to our 2000 Employee Stock
Purchase Plan.
Our officers, directors and other stockholders, who will hold an an
aggregate of shares of common stock after the offering, have agreed that
they will not offer, sell, contract to sell, pledge or otherwise dispose of,
directly or indirectly, any shares of our common stock or securities
convertible into or exchangeable or exercisable for any shares of our common
stock, enter into a transaction which would have the same effect, or enter into
any swap, hedge or other arrangement that transfers, in whole or in part, any
of the economic consequences of ownership of our common stock, whether any such
aforementioned transaction is to be settled by delivery of our common stock or
such other securities, in cash or otherwise, or publicly disclose the intention
to make any such offer, sale, pledge or disposition, or to enter into any such
transaction, swap, hedge or other arrangement, without, in each case, the prior
written consent of Credit Suisse First Boston Corporation for a period of 180
days after the date of this prospectus.
The underwriters have reserved for sale, at the initial public offering
price, up to shares of common stock for employees, directors and certain
other persons associated with us who have expressed an interest in purchasing
common stock in the offering. The number of shares available for sale to the
general public in the offering will be reduced to the extent these persons
purchase the reserved shares. Any reserved shares not so purchased will be
offered by the underwriters to the general public on the same terms as the
other shares.
We have agreed to indemnify the underwriters against liabilities under the
Securities Act, or contribute to payments which the underwriters may be
required to make in that respect.
We have applied to list the shares of common stock on The Nasdaq Stock
Market's National Market, subject to official notice of issuance, under the
symbol "CIDR."
Before this offering, there has been no public market for our common stock.
Consequently, the public offering price for the common stock offered by this
prospectus will be determined through negotiations among the representatives
and us. Among the factors to be considered in these negotiations will be
prevailing market conditions, our financial status, market valuations of
companies that we and the representatives believe to be comparable to us,
estimates of our business potential and our present state of development.
The representatives may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation
M under the Securities Exchange Act of 1934.
. Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position.
. Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
. Syndicate covering transactions involve purchases of the common stock in
the open market after the distribution has been completed in order to
cover syndicate short positions.
. Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the common stock originally sold by the
syndicate member is purchased in a stabilizing or syndicate covering
transaction to cover syndicate short positions.
52
<PAGE>
These stabilizing transactions, syndicate covering transactions and penalty
bids may cause the price of the common stock to be higher than it would
otherwise be in the absence of these transactions. These transactions may be
effected on The Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of the common stock in Canada is being made only on a
private placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of common stock are effected. Accordingly, any resale of the common
stock in Canada must be made in accordance with applicable securities laws
which will vary depending on the relevant jurisdiction, and which may require
resales to be made in accordance with available statutory exemptions or
pursuant to a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice
prior to any resale of the common stock.
Representations of Purchasers
Each purchaser of common stock in Canada who receives a purchase
confirmation will be deemed to represent to us and the dealer from whom such
purchase confirmation is received that: (i) such purchaser is entitled under
applicable provincial securities laws to purchase such common stock without the
benefit of a prospectus qualified under such securities laws; (ii) where
required by law, that such purchaser is purchasing as principal and not as
agent; and (iii) such purchaser has reviewed the text above under "Resale
Restrictions."
Rights of Action (Ontario Purchasers)
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.
Enforcement of Legal Rights
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Canadian purchasers to effect service of process within Canada
upon the issuer or such persons. All or a substantial portion of the assets of
the issuer and such persons may be located outside of Canada and, as a result,
it may not be possible to satisfy a judgment against the issuer or such persons
in Canada or to enforce a judgment obtained in Canadian courts against such
issuer or persons outside of Canada.
Notice to British Columbia Residents
A purchaser of common stock to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
common stock acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from us. Only one such report
must be filed in respect of common stock acquired on the same date and under
the same prospectus exemption.
Taxation and Eligibility for Investment
Canadian purchasers of common stock should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the common
stock in their particular circumstances and with respect to the eligibility of
the common stock for investment by the purchaser under relevant Canadian
legislation.
53
<PAGE>
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for us
by Cooley Godward LLP, Reston, Virginia. Hale and Dorr LLP, Washington, D.C.,
is serving as counsel to the underwriters.
EXPERTS
PricewaterhouseCoopers LLP, independent accountants, have audited our
consolidated financial statements at December 31, 1998 and December 31, 1999
and for the period from July 7, 1997 (date of inception) to December 31, 1997
and the years ended December 31, 1998 and 1999, as described in their report.
We have included our financial statements in the prospectus and elsewhere in
the registration statement in reliance on PricewaterhouseCoopers LLP's report,
given on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1, including exhibits, schedules and amendments, under the
Securities Act relating to the common stock we are proposing to sell in this
offering. This prospectus constitutes a part of the registration statement but
does not contain all of the information included in the registration statement.
For further information about us and the common stock we propose to sell in
this offering, please refer to the registration statement.
You may read and copy all or any portion of the registration statement or
any other information we file at the SEC's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. You can request copies of these
documents, upon payment of a duplicating fee, by writing the SEC. Please call
the SEC at 1-800-SEC-0330 for further information on the operation of the
public reference rooms. Our SEC filing, including the registration statement,
are also available to you on the SEC's Web site (http://www.sec.gov).
As of this offering, we will become subject to the information and reporting
requirements of the Securities and Exchange Act. In accordance with those
requirements, we will file periodic reports, proxy statements and other
information with the SEC.
54
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants................................... F-2
Consolidated Statements of Operations............................... F-3
Consolidated Balance Sheets......................................... F-4
Consolidated Statements of Stockholders' Equity (Deficit) and
Mandatorily Redeemable Convertible Preferred Stock................. F-5
Consolidated Statements of Cash Flows............................... F-6
Notes to Consolidated Financial Statements.......................... F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Stockholders
Cidera, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, stockholders' deficit, mandatorily
redeemable convertible preferred stock and cash flows present fairly, in all
material respects, the consolidated financial position of Cidera, Inc.
(formerly SkyCache Incorporated) (the Company) at December 31, 1998 and 1999,
and the consolidated results of its operations and its cash flows for the
period from July 7, 1997 (date of inception) to December 31, 1997 and for the
years ended December 31, 1998 and 1999, in conformity with accounting
principles generally accepted in the United States. These consolidated
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 financial 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.
PricewaterhouseCoopers LLP
McLean, Virginia
March 7, 2000
F-2
<PAGE>
CIDERA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period from
July 7, 1997
(date of Year Ended
inception) to December 31,
December 31, -------------------------
1997 1998 1999
------------- ----------- ------------
<S> <C> <C> <C>
Net revenue............... $ 5,407 $ 5,471 $ 358,210
Cost of services.......... 5,114 804,680 4,122,969
--------- ----------- ------------
Gross profit (loss)....... 293 (799,209) (3,764,759)
--------- ----------- ------------
Research and development.. 82,965 730,837 1,244,618
Sales and marketing....... 106,204 1,259,365 3,783,794
General and
administrative........... 81,434 795,219 2,601,396
--------- ----------- ------------
Operating loss............ (270,310) (3,584,630) (11,394,567)
Interest income (expense),
net...................... 253 (14,659) 192,553
--------- ----------- ------------
Net loss.................. (270,057) (3,599,289) (11,202,014)
Dividends and accretion on
Series A and Series B
Mandatorily Redeemable
Convertible Preferred
Stock.................... -- (64,129) (1,293,862)
--------- ----------- ------------
Net loss applicable to
common stockholders...... $(270,057) $(3,663,418) $(12,495,876)
========= =========== ============
Basic and diluted net loss
applicable to common
stockholders per share... $ (0.05) $ (0.64) $ (2.16)
========= =========== ============
Weighted average number of
shares used in basic and
diluted net loss
applicable to common
stockholders per share... 5,768,649 5,768,649 5,793,347
========= =========== ============
Pro forma basic and
diluted net loss
applicable to common
stockholders per share
(unaudited).............. $ (0.67)
============
Weighted average number of
shares used in pro forma
basic and diluted net
loss applicable to common
stockholders per share
(unaudited).............. 18,627,146
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
CIDERA, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Pro Forma
Stockholders'
December 31, Equity at
------------------------ December 31,
1998 1999 1999
----------- ----------- -------------
(Note 2)
(Unaudited)
ASSETS
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents............ $ 2,368,651 $ 4,622,284
Short-term investments............... -- 3,958,779
Accounts receivable.................. 15,589 58,204
Due from related parties............. 13,143 24,140
Other current assets................. 97,575 481,870
----------- -----------
Total current assets............... 2,494,958 9,145,277
Property and equipment, net............ 1,037,603 6,647,503
Other assets........................... 253,451 513,623
----------- -----------
Total assets....................... $ 3,786,012 $16,306,403
=========== ===========
LIABILITIES, MANDATORILY REDEEMABLE PREFERRED
STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable..................... $ 206,026 $ 540,539
Accrued expenses..................... 129,102 414,446
Unearned service fees................ 4,504 3,100
Current portion of capital lease
obligations......................... 341,031 1,397,015
----------- -----------
Total current liabilities.......... 680,663 2,355,100
Long-term portion of capital lease
obligations........................... 589,357 2,368,208
----------- -----------
Total liabilities.................. 1,270,020 4,723,308
----------- -----------
Commitments (Note 4)
Mandatorily Redeemable Convertible
Preferred Stock:
Series A, $.01 par value, 7,500,000
shares authorized, 7,066,147 shares
issued and outstanding at December
31, 1998 and 1999 (liquidation
preference $6,635,315), none
outstanding pro forma............... 5,864,548 6,259,778 $ --
Series B, $.01 par value, 9,887,403
shares authorized, issued, and
outstanding at December 31, 1999
(liquidation preference
$20,898,635), none outstanding pro
forma............................... -- 20,861,650 --
Stockholder's (deficit) equity:
Common stock, $.01 par value,
29,031,620 shares authorized,
5,768,649 and 5,916,296 shares
issued and outstanding in 1998 and
1999, respectively; 27,318,201
shares issued and outstanding pro
forma .............................. 57,686 59,162 228,698
Additional paid-in capital........... 463,104 1,846,709 26,892,730
Deferred compensation................ -- (2,408,987) (2,408,987)
Accumulated other comprehensive
income.............................. -- 36,143 36,143
Accumulated deficit.................. (3,869,346) (15,071,360) (15,071,360)
----------- ----------- ------------
Total stockholders' (deficit)
equity............................ (3,348,556) (15,538,333) $ 9,677,224
----------- ----------- ============
Total liabilities, mandatorily
redeemable preferred stock and
stockholders' (deficit) equity.. $ 3,786,012 $16,306,403
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
CIDERA, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT),
AND MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK
<TABLE>
<CAPTION>
Mandatorily Redeemable Mandatorily Redeemable
Convertible Convertible
Series A Preferred Stock Series B Preferred Stock
------------------------ -------------------------
Shares Amount Shares Amount
------------------------ -------------------------
<S> <C> <C> <C> <C>
Initial issuance of
common stock to
Company founders
for cash........... -- $ -- -- $ --
Net loss........... -- -- -- --
----------- ------------ ----------- -------------
Balance, December
31, 1997........... -- -- -- --
----------- ------------ ----------- -------------
Issuance of Series
A Convertible
Preferred Stock.... 6,676,674 6,000,000 -- --
Conversion of notes
payable to Series A
Convertible
Preferred Stock.... 389,473 350,000 -- --
Offering costs
related to the
issuance of Series
A Convertible
Preferred Stock.... -- (362,734) -- --
Issuance of
warrants in
connection with the
issuance of notes
payable............ -- -- -- --
Issuance of
warrants in
connection with
Series A
Convertible
Preferred Stock... -- (186,847) -- --
Accretion related
to Series A
Convertible
Preferred Stock
liquidation
preference......... -- 64,129 -- --
Net loss........... -- -- -- --
----------- ------------ ----------- -------------
Balance, December
31, 1998........... 7,066,147 5,864,548 -- --
----------- ------------ ----------- -------------
Issuance of Series
B Convertible
Preferred Stock.... -- -- 9,887,403 20,000,000
Offering costs
related to the
issuance of Series
B
Convertible
Preferred Stock... -- -- -- (36,981)
Accretion related
to Series A
Convertible
Preferred
Stock liquidation
preference........ -- 109,916 -- --
Dividends related
to the issuance of
Series A and B
Convertible
Preferred Stock.... -- 285,314 -- 898,631
Option exercises... -- -- -- --
Common stock and
common stock
options issued for
consulting
services........... -- -- -- --
Deferred
compensation
related to option
grants............. -- -- -- --
Amortization of
deferred
compensation....... -- -- -- --
Comprehensive loss:
Net loss.......... -- -- -- --
Other
comprehensive
income:
Unrealized gain
on available-for
sale
investments...... -- -- -- --
Total
comprehensive
loss............ -- -- -- --
----------- ------------ ----------- -------------
Balance, December
31, 1999........... 7,066,147 $ 6,259,778 9,887,403 $ 20,861,650
=========== ============ =========== =============
<CAPTION>
Stockholders' Deficit
--------------------------------------------------------------------------------------
Accumulated
Common Stock Additional Other
----------------- Paid-in Deferred Accumulated Comprehensive
Shares Amount Capital Compensation Deficit Income Total
--------- ------- ----------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Initial issuance of
common stock to
Company founders
for cash........... 5,768,649 $57,686 $ 292,314 $ -- $ -- $ -- $ 350,000
Net loss........... -- -- -- -- (270,057) -- (270,057)
--------- ------- ----------- ------------- ------------- ------------- --------------
Balance, December
31, 1997........... 5,768,649 57,686 292,314 -- (270,057) -- 79,943
--------- ------- ----------- ------------- ------------- ------------- --------------
Issuance of Series
A Convertible
Preferred Stock.... -- -- -- -- -- -- --
Conversion of notes
payable to Series A
Convertible
Preferred Stock.... -- -- -- -- -- -- --
Offering costs
related to the
issuance of Series
A Convertible
Preferred Stock.... -- -- -- -- -- -- --
Issuance of
warrants in
connection with the
issuance of notes
payable............ -- -- 48,072 -- -- -- 48,072
Issuance of
warrants in
connection with
Series A
Convertible
Preferred Stock... -- -- 186,847 -- -- -- 186,847
Accretion related
to Series A
Convertible
Preferred Stock
liquidation
preference......... -- -- (64,129) -- -- -- (64,129)
Net loss........... -- -- -- -- (3,599,289) -- (3,599,289)
--------- ------- ----------- ------------- ------------- ------------- --------------
Balance, December
31, 1998........... 5,768,649 57,686 463,104 -- (3,869,346) -- (3,348,556)
--------- ------- ----------- ------------- ------------- ------------- --------------
Issuance of Series
B Convertible
Preferred Stock.... -- -- -- -- -- -- --
Offering costs
related to the
issuance of Series
B
Convertible
Preferred Stock... -- -- -- -- -- -- --
Accretion related
to Series A
Convertible
Preferred
Stock liquidation
preference........ -- -- (109,916) -- -- -- (109,916)
Dividends related
to the issuance of
Series A and B
Convertible
Preferred Stock.... -- -- (1,183,946) -- -- -- (1,183,946)
Option exercises... 91,398 914 17,504 -- -- -- 18,418
Common stock and
common stock
options issued for
consulting
services........... 56,249 562 196,838 -- -- -- 197,400
Deferred
compensation
related to option
grants............. -- -- 2,463,125 (2,463,125) -- -- --
Amortization of
deferred
compensation....... -- -- -- 54,138 -- -- 54,138
Comprehensive loss:
Net loss.......... -- -- -- -- (11,202,014) -- --
Other
comprehensive
income:
Unrealized gain
on available-for
sale
investments...... -- -- -- -- -- 36,143 --
Total
comprehensive
loss............ -- -- -- -- -- -- (11,165,871)
--------- ------- ----------- ------------- ------------- ------------- --------------
Balance, December
31, 1999........... 5,916,296 $59,162 $1,846,709 $(2,408,987) $(15,071,360) $36,143 $(15,538,333)
========= ======= =========== ============= ============= ============= ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
CIDERA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period from
July 7, 1997
(date of
inception) to Year Ended December 31,
December 31, -------------------------
1997 1998 1999
------------- ----------- ------------
<S> <C> <C> <C>
Cash flows from operating
activities:
Net loss........................ $(270,057) $(3,599,289) $(11,202,014)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation................... 2,441 170,015 994,279
Non-cash interest expense
related to notes payable...... -- 48,072 --
Writedown of property and
equipment..................... -- -- 192,163
Gain on the sale of
securities.................... -- -- (48,585)
Loss (gain) on sale of property
and equipment................. (4,400) 9,978 (1,110)
Stock based compensation
expense....................... -- -- 251,538
Change in operating assets and
liabilities:
Accounts receivable........... (5,357) (10,232) (42,615)
Due from related parties...... (5,532) 5,532 (10,997)
Other current assets.......... (3,616) (107,102) (384,295)
Accounts payable.............. 7,803 198,223 334,513
Accrued expenses.............. 23,772 105,330 285,344
Unearned service fee.......... -- 4,504 (1,404)
Other assets ................. (12,113) (241,338) (260,172)
--------- ----------- ------------
Net cash used in operating
activities................. (267,059) (3,416,307) (9,893,355)
--------- ----------- ------------
Cash flows from investing
activities:
Purchase of available-for-sale
securities..................... -- -- (7,068,052)
Maturity of available-for-sale
securities..................... -- -- 3,194,000
Expenditures for property and
equipment...................... (45,254) (126,259) (4,461,656)
Proceeds from sale of property,
plant and equipment............ 9,400 -- 14,145
--------- ----------- ------------
Net cash used in investing
activities................. (35,854) (126,259) (8,321,563)
--------- ----------- ------------
Cash flows from financing
activities:
Proceeds from sale of common
stock.......................... 350,000 -- --
Proceeds from sale of
convertible preferred stock,
net of offering costs.......... -- 5,637,266 19,963,019
Principal payments on capital
lease obligations.............. (123,136) (849,078)
Proceeds from notes payable..... -- 738,900 --
Repayment of notes payable...... -- (388,900) --
Proceeds from sale-leaseback.... -- -- 1,336,192
Proceeds from exercise of
options........................ -- -- 18,418
--------- ----------- ------------
Net cash provided by
financing activities....... 350,000 5,864,130 20,468,551
--------- ----------- ------------
Net increase in cash.............. 47,087 2,321,564 2,253,633
Cash at the beginning of period... -- 47,087 2,368,651
--------- ----------- ------------
Cash at the end of period......... $ 47,087 $ 2,368,651 $ 4,622,284
========= =========== ============
Cash paid for:
Interest........................ $ -- $ 60,476 $ 163,488
========= =========== ============
Non-cash investing and financing
activities:
Capital lease obligations to
acquire property and
equipment...................... $ -- $ 1,053,524 $ 3,683,913
========= =========== ============
Conversion of notes payable to
Mandatorily Redeemable
Convertible Preferred Stock.... $ -- $ 350,000 $ --
========= =========== ============
Issuance of common stock for
services rendered.............. $ -- $ -- $ 168,750
========= =========== ============
Accretion and dividends on
Series A and Series B
Convertible Preferred Stock.... $ -- $ 64,129 $ 1,293,861
========= =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
CIDERA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of business and financing of operations
Cidera Inc., formerly SkyCache Incorporated, (the "Company") a Delaware
corporation, was formed on July 7, 1997. The consolidated financial statements
include the accounts of the Company and its wholly owned subsidiary, SkyCache
Europe Ltd. All intercompany accounts and transactions have been eliminated in
the consolidated financial statements. Cidera is engaged in satellite-based
delivery of Internet content. The Company delivers Internet data such as
streaming media, Usenet News and other popular Web content through its
satellite-based distribution network directly to the edge of the Internet. The
Company currently operates in one business segment.
The Company has experienced substantial net losses since its inception and,
as of December 31, 1999, had an accumulated deficit of $15,071,360. Such losses
and accumulated deficit resulted from the Company's lack of substantial revenue
and the costs incurred in the development of the Company's service and in the
establishment of the Company's network. For the foreseeable future, the Company
expects to continue to experience significant growth in its operating expenses
in order to execute its current business plan, particularly research and
development, sales and marketing, and general and administrative expenses.
Through 1999, the Company raised total proceeds of $26 million through
private placement offerings of Series A Mandatorily Redeemable Convertible
Preferred Stock at $0.898651 per share and Series B Mandatorily Redeemable
Convertible Preferred Stock at $2.022776 per share.
2. Summary of significant accounting policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary. Intercompany transactions and accounts are
eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and investments with maturities of
three months or less from the date of acquisition.
Marketable Securities
The Company determines the appropriate classification of marketable
securities at the time of purchase and reevaluates such designation at each
balance sheet date. The Company's marketable securities are categorized as
available-for-sale.
Available-for-sale securities consist of bonds and certificates of deposit
with contractual maturities of one year or less not classified as trading
securities or as held-to-maturity securities. Unrealized holding gains and
losses on available-for-sale securities are reported as a net amount as a
component of accumulated other comprehensive loss in stockholders' (deficit)
equity until realized. Gains and losses on the sale of available-for-sale
securities are determined using the specific-identification method.
F-7
<PAGE>
CIDERA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The historical cost, gross unrealized gains, gross unrealized losses, and
fair value of available-for-sale securities are as follows as of December 31:
<TABLE>
<CAPTION>
1998 1999
------ ----------
<S> <C> <C>
Historical cost......................................... $ -- $3,922,636
Gross unrealized gains.................................. -- 36,928
Gross unrealized losses................................. -- (785)
------ ----------
Fair value.............................................. $ -- $3,958,779
====== ==========
</TABLE>
Proceeds from sales of securities available-for-sale were approximately
$3,194,000 for 1999 and during 1998 no sales of such securities occurred. In
1999, gross realized gains on the sale of securities available-for-sale
amounted to $48,585. There were no gross realized losses.
Revenue Recognition
Services fee revenue is recognized monthly as the services are performed.
During 1999 the Company substantially discounted its installation revenue in
order to gain market share and acceptance of its services. Installation revenue
discounts for 1999 were $63,000. Revenue is shown net of discounts granted.
Basic and Diluted Per Share and Unaudited Pro Forma Per Share Information
Basic net loss applicable to common stockholders per share has been computed
using the weighted-average number of common shares outstanding during the
period. Diluted net loss applicable to common stockholders per share is
computed based on the weighted average number of common shares outstanding
during each year, plus the weighted average number of dilutive potential common
shares considered outstanding during the period. Unaudited pro forma basic and
diluted net loss applicable to common stockholders per share have been computed
assuming the conversion of all outstanding shares of mandatorily redeemable
convertible preferred stock, as if the shares had converted immediately as of
the beginning of year or upon their issuance.
All convertible preferred shares, outstanding stock options and warrants
have been excluded from the calculation of the diluted loss per share because
all such securities are antidilutive for all periods presented. The total
number of shares related to convertible preferred shares, outstanding options
and warrants excluded from the calculations of diluted net loss per share were
0, 7,455,551, and 17,060,194 for the periods ended December 31, 1997, 1998, and
1999, respectively.
Unaudited Pro Forma Stockholders' Equity
The Board of Directors has authorized the filing of a registration statement
with the Securities and Exchange Commission ("SEC") that would permit the
Company to sell shares of the Company's common stock in connection with a
proposed initial public offering ("IPO"). If the IPO is consummated under the
terms presently anticipated, upon the closing of the proposed IPO all of the
then outstanding shares of the Company's Mandatorily Reedemable Convertible
Preferred stock will automatically convert into shares of common stock on a
one-for-one basis. The conversion of the Mandatorily Redeemable Convertible
Preferred Stock has been reflected in the accompanying unaudited pro forma
balance sheet as if it had occurred on December 31, 1999.
Internally Developed Software
Effective for fiscal years beginning after December 15, 1998, the American
Institute of Certified Public Accountants ("AICPA") issued Statement of
Position 98-1 ("SOP 98-1"), "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use." SOP 98-1 requires all costs related to
the development of internal use software other than those incurred during the
application development stage to be expensed as incurred. Costs incurred during
the application development stage are required to be capitalized
F-8
<PAGE>
CIDERA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
and amortized over the estimated useful life of the software. The Company
adopted SOP 98-1 on January 1, 1999 and capitalized $139,239 in internally
developed software costs during the year ended December 31, 1999. Capitalized
software costs are amortized on a straight-line basis over a useful life
ranging from one to three years. Amortization related to the capitalized
software was $70,211 for the year ended December 31, 1999.
Property and Equipment
Property and equipment are stated at cost and depreciated on a straight-line
basis over the estimated useful lives of the various assets, which range from 3
to 20 years. Upon retirement or disposition of property and equipment, the cost
and related accumulated depreciation are removed from the accounts and any
resulting gain or loss is reflected in operations.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash and cash equivalents,
short-term investments and accounts receivable. The Company's cash and cash
equivalents are held with several U.S. commercial banks. The Company has not
experienced any losses related to its cash and cash equivalents. The Company
performs periodic evaluations of the relative credit standing of these
institutions. From time to time, the Company's cash balances with any one
financial institution may exceed Federal Deposit Insurance Corporation
insurance limits.
The Company's customers are concentrated in the United States. The Company
performs ongoing credit evaluations, generally does not require collateral and,
if necessary, establishes an allowance for doubtful accounts based upon factors
surrounding the credit risk of customers, historical trends and other
information; to date, such losses have been within management's expectations.
Advertising Expense
The cost of advertising is generally expensed as incurred. Such costs are
included in sales and marketing expense and totaled approximately $13,643,
$348,225, and $832,226, during the period from July 7, 1997 (inception) to
December 31, 1997, and for the years ended December 31, 1998 and 1999,
respectively.
Income Taxes
Prior to January 1998, the Company was taxed as an S Corporation and taxable
income (loss) was included in the individual tax returns of the stockholders.
Effective January 1998, the Company terminated its S corporation election and
became subject to federal and state income taxes. The Company recognizes
deferred taxes using the asset and liability approach under which deferred
income taxes are provided for differences between the financial reporting and
tax bases of assets and liabilities based upon enacted tax laws and rates
applicable to the periods in which the taxes become payable. The Company
provides a valuation allowance, if necessary, to reduce deferred tax assets to
their estimated realizable value.
Stock Based Compensation
The Company accounts for its stock option plan in accordance with the
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123"), which permits entities to recognize as expense over the vesting period
the fair market value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 allows entities to continue to apply the provisions
of APB Opinion No. 25 and provide pro forma net loss
F-9
<PAGE>
CIDERA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
and pro forma net loss per share disclosures for employee stock options grants
made in 1997 and subsequent years as if the fair-value-based method defined in
SFAS No. 123 had been applied. The Company has elected to apply the provisions
of APB Opinion No. 25 and provide the pro forma disclosures of SFAS No. 123.
Foreign Currency Transactions
The functional currency of the Company's European subsidiary is the U.S.
dollar. Resulting foreign exchange gains and losses are included in operating
results and have not been material to the Company's consolidated operating
results, financial position, or cash flows in any period.
Fair Value of Financial Instruments
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
Cash and cash equivalents and short term investments--The carrying amounts
of these items approximate their fair value due to the short-term maturity of
such instruments.
Short-term bank credit, long-term bank loans and capital leases--The
carrying amounts of the Company's borrowing arrangements approximate their fair
value. Fair values are estimated using discounted cash flow analyses, based on
the Company's incremental borrowing rates for similar types of borrowing
arrangements.
Impact of Recently Issued Accounting Standards
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"), as amended by SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities--Deferral of the
Effective Date of FASB Statement No. 133." The Company is required to adopt
SFAS 133 for all fiscal quarters of all fiscal years beginning after June 15,
2000. SFAS 133 establishes methods of accounting for derivative financial
instruments and hedging activities. Because the Company currently holds no
derivative financial instruments as defined by SFAS 133 and does not currently
engage in hedging activities, adoption of SFAS 133 is expected to have no
material effect on the Company's financial condition and results of operations.
Impairment of Long-Lived Assets
The Company has adopted Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of" ("SFAS 121"). SFAS No. 121 prescribes that an impairment
loss is recognized in the event that facts and circumstances indicate that the
carrying amount of an asset may not be recoverable, and an estimate of future
undiscounted cash flows is less than the carrying amount of the asset.
Impairment is recorded based on an estimate of future discounted cash flows.
Comprehensive Loss
The Company recognizes the unrealized gain and loss in available-for-sale
securities in comprehensive loss.
Reclassifications
Certain prior period amounts have been reclassified to conform with current
year presentation.
F-10
<PAGE>
CIDERA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
3. Property and equipment
Property and equipment consist of the following at December 31:
<TABLE>
<CAPTION>
1998 1999
----------- -----------
<S> <C> <C>
Computer equipment................................ $ 1,187,096 $ 5,436,387
Telecommunications bandwidth...................... -- 2,025,604
Furniture and fixtures............................ 6,913 123,566
Leasehold improvements............................ 10,860 223,485
----------- -----------
1,204,869 7,809,042
Less: accumulated depreciation and amortization... (167,266) (1,161,539)
----------- -----------
$ 1,037,603 $ 6,647,503
=========== ===========
</TABLE>
As of December 31, 1998 and 1999, property and equipment under capital lease
totaled $1,053,524 and $4,737,437, respectively, including an indefeasible
right of use in 1999 of $2,025,604. Accumulated depreciation under capital
leases was $147,786 and $571,405 for 1998 and 1999, respectively. Included in
computer equipment is $30,368 and $167,558 at December 31, 1998 and 1999,
respectively, of dish installation costs, which have been deferred and
amortized over three years.
4. Commitments
Operating Leases
The Company is obligated under operating lease agreements for equipment,
satellite communication services and office space. Future minimum lease
payments under these non-cancelable operating leases as of December 31, 1999
are as follows:
<TABLE>
<S> <C>
2000.................................. $ 3,064,588
2001.................................. 4,846,088
2002.................................. 4,936,088
2003.................................. 4,951,088
2004.................................. 4,848,616
Thereafter............................ 9,380,329
-----------
Total............................... $32,026,797
===========
</TABLE>
Rental expense under these leases was $490,703 and $1,416,734 for the years
ended December 31, 1998 and 1999, respectively.
During 1998 and 1999, the Company leased office space from a related party.
Total rent expense in connection with the non-cancelable operating leases was
$15,408 and $48,024 for the years ended December 31, 1998 and 1999,
respectively.
Capital Leases
The Company is obligated under capital lease agreements for the purchase of
computer equipment and an indefeasible right of use agreement. The computer
equipment capital lease agreements include purchase options for the computer
equipment at lease termination for the fair market value of the equipment.
Future
F-11
<PAGE>
CIDERA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
minimum lease payments under these non-cancelable capital leases as of December
31, 1999 are as follows:
<TABLE>
<S> <C>
2000.............................................................. $1,708,370
2001.............................................................. 1,594,009
2002.............................................................. 1,082,780
2003.............................................................. 62,882
----------
4,448,041
Less: interest portion............................................ 682,818
----------
3,765,223
Less: current portion of capital lease obligation................. 1,397,015
----------
Long-term portion................................................. $2,368,208
==========
</TABLE>
During 1999, the Company negotiated lease facilities for $3,489,255 million
of equipment, under which future minimum lease payments are determined based on
the amount of equipment leased. As of December 31, 1999, the Company has drawn
approximately $1,336,192 million on these lease facilities in connection with
the sale and leaseback of equipment. As of December 31, 1999 the Company was
not in compliance with one of the covenants under one of the capital lease
facilities, which was waived by the lender through March 2001.
Line of Credit
During 1998, the Company signed a line of credit with a financial
institution for up to $750,000. The interest rate is prime plus 1.5% and the
financial institution has a lien on all corporate assets. As of December 31,
1998 and 1999, nothing was outstanding on this line.
5. Accruals
Accruals consist of the following:
<TABLE>
<CAPTION>
December 31,
-----------------
1998 1999
-------- --------
<S> <C> <C>
Wages and taxes payable...................................... $ 93,102 $204,835
Vacation payable............................................. -- 95,551
Other........................................................ 36,000 114,060
-------- --------
$129,102 $414,446
======== ========
</TABLE>
6. Related party transactions
During 1997, the Company earned revenues of $5,258 for consulting services
performed for another company in which the Company's stockholders owned 18%.
During 1998, the Company had a line of credit agreement with a stockholder
and officer of the Company for $300,000. Subsequent to the Series A Preferred
Stock offering, the line of credit was terminated.
As of December 31, 1998 and 1999, the Company had $13,143 and $24,140,
respectively, in loans due from employees.
On June 1, 1998, we entered into a sublease for office space with an
affiliate of the chief executive officer. This agreement was amended on March
7, 2000. The sublease expires on August 31, 2004, although we may terminate it
on 30 days notice. The Company has the option to extend the sublease for an
additional two years upon expiration of the initial term, with monthly rent
equal to the fair market rental rate at that time.
F-12
<PAGE>
CIDERA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Concurrently with the sublease, the Company also entered into a license
agreement with this affiliate to install, operate, maintain, repair, replace
and remove up to three satellite dishes on the rooftop of the building. The
license is for a five year term, although we may terminate it on 30 days
notice. In 1999, the Company paid $111,720 to this affiliate for rent and
associated services.
On March 7, 2000, we entered into a colocation agreement to lease machine
space in the facilities of another affiliate of our chief executive officer.
The agreement expires on August 31, 2004. In 1999, The Company paid $78,279 to
this affiliate for rent and associated services.
On March 6, 2000, in connection with his employment agreement, the chief
financial officer acquired 620,000 shares of our common stock at $13.00 per
share. He purchased this stock by paying $80,000 in cash and executing a
promissory note for the balance of $7,920,000. The note has a nine-year term
and accrues interest at 6.2% per year.
7. Stockholders' (deficit) equity and mandatorily redeemable convertible
preferred stock
Common Stock
On July 7, 1997, the founders of the Company purchased 100 shares of the
Company's common stock for $350,000 in connection with the Company's formation.
On January 1, 1998, the Company issued 5,768,549 shares of common stock in
connection with a 57,686.49-to-1 stock split. All share and per share data have
been adjusted to reflect this split as of the earliest period presented.
Series A Mandatorily Redeemable Convertible Preferred Stock
The Series A Mandatorily Redeemable Convertible preferred stock has a par
value of $0.01 per share. The Company issued 7,066,147 Series A Mandatorily
Redeemable Convertible Preferred shares on June 4, 1998 for $0.898651 per share
including the conversion of certain notes payable. At issuance, the Series A
Mandatorily Redeemable Convertible Preferred shares had non-cumulative
preferred dividends of 7.2% per share annually. Effective with the issuance of
the Series B Mandatorily Redeemable Convertible Preferred on June 9, 1999, the
Series A have dividends at 8% which are cumulative.
Series B Mandatorily Redeemable Convertible Preferred Stock
The Series B Mandatorily Redeemable Convertible Preferred stock has a par
value of $0.01 per share. The Company issued 9,887,403 Series B Mandatorily
Redeemable Convertible Preferred shares on June 9, 1999 for $2.022776 per
share. The Series B Mandatorily Redeemable Convertible Preferred shares have
cumulative preferred dividends of 8% per year.
Conversion
Each share of Series A Mandatorily Redeemable Convertible Preferred Stock
and Series B Mandatorily Redeemable Convertible Preferred Stock is convertible
into common stock at the option of the holder at any time at the initial
conversion ratio of 1-to-1. The conversion ratio is subject to adjustment for
events such as a stock split, stock dividend, or a specified issuance of stock.
At December 31, 1998 and 1999 the conversion ratio was 1-to-1.
Automatic conversion is required if at any time the Company effects an
initial public offering in which the price paid by the public is at least $15
million and at least $5.00 per share.
Mandatory Redemption
On June 5, 2003, the Company is required to redeem any and all Series A and
Series B shares at cost, plus any unpaid and accrued dividends, at the request
of each stockholder. The Series A Mandatorily Redeemable Convertible Preferred
Stock will be redeemed for $.898651 per share plus accrued dividends and the
Series B Mandatorily Redeemable Convertible Preferred Stock will be redeemed
for $2.022776 per share plus accrued dividends.
F-13
<PAGE>
CIDERA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Liquidation Preferences
In the event of any liquidation, dissolution or winding up of the Company,
the holders of Series A Mandatorily Redeemable Convertible Preferred Stock and
Series B Mandatorily Redeemable Convertible Preferred Stock will be entitled to
a liquidation preference over the Company's common stock. The liquidation
preference equals the original face amount plus any unpaid dividends which have
been declared or accrued. After the liquidation preference is satisfied, the
preferred stockholders and common stockholders shall share in the net assets of
the Company until the preferred stockholders have received a per share amount
equal to three times the original purchase price of each preferred share.
Thereafter, the remaining net assets are distributed ratably among the common
stockholders. The Company has accrued dividends of $0 and $1,183,946 through
December 31, 1998 and 1999, respectively.
The consolidation or merger of the Company with any other entity which
results in the exchange of outstanding shares of the Company for securities or
other consideration paid by such entity, and the sale, lease, abandonment,
transfer to other disposition of substantially all its assets, shall be deemed
to be a liquidation.
Dividends, Voting and Other Rights
The Company shall not declare or pay any distributions by dividend or
otherwise, payable other than in common stock, until a dividend in an amount at
least equal to the accrued and unpaid dividends due for each outstanding share
of Series A Mandatorily Redeemable Convertible Preferred Stock and Series B
Mandatorily Redeemable Convertible Preferred Stock has been paid or declared
and set apart.
Each share of Series A Mandatorily Redeemable Convertible Preferred Stock is
entitled to the number of votes equal to the number of whole shares of common
stock into which each share of Series A Mandatorily Redeemable Convertible
Preferred Stock could be converted.
Holders of Series A Mandatorily Redeemable Convertible Preferred Stock have
the right to elect two directors to the Board of Directors of the Company, as
long as 500,000 shares of the Series A Mandatorily Redeemable Convertible
Preferred Stock remain issued and outstanding.
Warrants
In connection with the Series A Mandatorily Redeemable Convertible Preferred
Stock financing, the Company issued warrants to purchase 333,834 shares of the
Company's Series A Mandatorily Redeemable Convertible Preferred Stock at
$0.898651 per share. The warrants are exercisable beginning June 4, 1998 and
expire at the earlier of the automatic conversion of all of the outstanding
shares of Series A Mandatorily Redeemable Convertible Preferred Stock or 7
years. The fair value of the Series A Mandatorily Redeemable Convertible
Preferred Stock warrants on the date of grant was $186,847 and is reflected as
a reduction of the carrying value of the Series A Mandatorily Redeemable
Convertible Preferred Stock in the Company's statement of stockholders'
(deficit) equity. The fair value of the warrants was determined using the
Black-Scholes option pricing model.
8. Notes payable
In February 1998, the Company entered into a financing agreement for
$400,000 consisting of notes payable. In connection with the issuance of the
notes payable, the Company issued warrants to purchase 801,200 shares of the
Company's common stock at $0.49925 per share to the holders of the notes
payable. The fair value of the common stock warrants on the date of grant was
$48,072, calculated using the Black-Scholes option pricing model which is
reflected as additional paid-in capital in the Company's statement of
stockholders' (deficit) equity. The Company also recognized $48,072 of interest
expense related to the common stock warrants during the period the notes
payable were outstanding. The warrants expire 7 years from the date of
issuance.
F-14
<PAGE>
CIDERA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The notes payable were retired in June 1998 in connection with the
Company's Series A Mandatorily Redeemable Convertible Preferred Stock
issuance. $350,000 of the notes payable were converted into Series A
Mandatorily Redeemable Convertible Preferred Stock and $50,000 was repaid in
cash to the holders of the notes.
9. Income taxes
The components of the net deferred tax asset (liability) and the related
valuation allowance are as follows:
<TABLE>
<CAPTION>
December 31,
------------------------
1998 1999
----------- -----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards............... $ 1,437,969 $ 5,720,789
Other.......................................... -- 188,386
----------- -----------
Total deferred tax assets...................... 1,437,969 5,909,175
Valuation allowance............................ (1,367,730) (5,692,432)
----------- -----------
Total........................................ 70,239 216,743
----------- -----------
Deferred tax liability:
Property and equipment......................... (70,239) (211,743)
Other.......................................... -- (5,000)
----------- -----------
Total deferred tax liability................. (70,239) (216,743)
----------- -----------
Net deferred tax assets.......................... $ -- $ --
=========== ===========
</TABLE>
Based on the Company's limited operating history and management's
expectation of future losses, management believes that the Company's deferred
tax assets do not meet the "more likely than not" criteria under SFAS No. 109.
Accordingly, a valuation allowance for the entire deferred tax asset amount
has been recorded.
Ownership changes resulting from the Company's issuance of capital stock
may limit the amount of net operating losses that can be utilized annually to
offset future taxable income. The amount of annual limitation is determined
based upon the Company's value immediately prior to the ownership change.
Subsequent significant changes in the ownership could further affect the
limitation in future years. As of December 31, 1999, the Company had
approximately $14.8 million of net operating losses. The net operating losses
will begin to expire in 2018.
A reconciliation between the statutory federal income tax rate and the
effective rate of income tax expense follows:
<TABLE>
<CAPTION>
December 31,
---------------
1998 1999
------ ------
<S> <C> <C>
U.S. federal income tax rate............................. 34.00 % 34.00 %
State taxes.............................................. 4.62 4.62
Other.................................................... (0.62) (0.12)
Valuation allowance...................................... (38.00) (38.50)
------ ------
Provision (benefit) for income taxes..................... -- % -- %
====== ======
</TABLE>
F-15
<PAGE>
CIDERA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
10. Stock Options
Employee Stock Incentive Plan
Effective January 1, 1998, the Company adopted the 1998 Employee Stock
Incentive Plan (the "Plan"), under which incentive stock options and non-
statutory stock options may be granted to employees, directors and consultants
of the Company. Incentive stock options may only be granted to, and held by,
employees of the Company.
The Plan is administered by the Board of Directors. The options are not
transferable and are subject to various restrictions outlined in the Plan. The
Board determines the number of options granted to employees, directors or
consultants, the vesting period and the exercise price. Options vest over a
four year period which includes a one year cliff with monthly vesting
thereafter. The option agreement includes a twelve month forward vesting
provision in the event of a change in control. The exercise price for stock
options granted shall not be less than the estimated fair value per share of
common stock on the date of such grant for incentive stock options and not less
than 110% of the estimated fair value per share of common stock on the date of
such grant for stock options granted to an individual owning more than ten
percent of the total combined voting power of all classes of stock of the
Company.
The Board of Directors has reserved 962,332 and 3,804,332 shares of common
stock for option grants under the Plan as of December 31, 1998 and 1999,
respectively. Options granted under the plan expire ten years after the grant
date. As of December 31, 1998 and 1999, the Board of Directors had granted
options to purchase 885,011 and 1,935,762 shares, respectively under the Plan.
Founders Stock Plan
Effective January 1, 1998, the Company adopted the 1998 Founders Stock
Incentive Plan (the "Founders Plan"), under which incentive stock options and
non-statutory stock options may be granted to employees, directors and
consultants of the Company. Incentive stock options may only be granted to, and
held by, employees of the Company.
The Plan is administered by the Board of Directors. The options are not
transferable and are subject to various restrictions outlined in the Founders
Plan. The Board determines the number of options granted to employees,
directors or consultants, the vesting period and the exercise price. The
exercise price for stock options granted shall not be less than the estimated
fair value per share of common stock on the date of such grant for incentive
stock options and not less than 110% of the estimated fair value per share of
common stock on the date of such grant for stock options granted to an
individual owning more than ten percent of the total combined voting power of
all classes of stock of the Company.
As of both December 31, 1998 and 1999, the Board of Directors has reserved
1,370,052 shares of common stock for option grants under the Founders Plan.
Options granted under the Founders Plan vest over three years and expire ten
years after the grant date for all individuals other than those who own more
than ten percent of the Company's total combined voting power on the date of
grant. More than ten percent owner's options expire five years after the date
of grant.
As of both December 31, 1998 and 1999, the Board of Directors had granted
options to purchase 1,370,052 shares under the Founders Plan.
F-16
<PAGE>
CIDERA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The following table summarizes information about stock options outstanding
at December 31:
<TABLE>
<CAPTION>
1998 1999
------------------ -------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Outstanding at beginning of year.... -- $ -- 2,250,063 $0.11
Granted............................. 2,250,063 0.11 1,155,750 1.16
Exercised........................... -- -- (91,398) 0.19
Cancelled........................... -- -- (99,999) 0.30
--------- ---------
Outstanding at end of year.......... 2,250,063 0.11 3,214,416 0.48
========= =========
Exercisable at end of year.......... 288,432 0.06 1,222,313 0.10
========= =========
</TABLE>
<TABLE>
<CAPTION>
1998 1999
--------------------- ---------------------
Weighted Weighted
Average Average
Years Years
Remaining Remaining
Contractual Contractual
Exercise Price Per Share Shares Life Shares Life
------------------------ --------- ----------- --------- -----------
<S> <C> <C> <C> <C>
$3.00.......................... -- -- 15,000 10.0
$1.25.......................... -- -- 945,700 9.8
$0.50.......................... -- -- 180,000 9.3
$0.20.......................... 880,011 9.7 708,614 8.5
$0.06.......................... 1,370,052 9.0 1,365,052 7.7
</TABLE>
The Company calculates the fair value of stock options at the date of grant
using an option pricing model. The Company has elected the "pro forma,
disclosure only" option permitted under SFAS 123 "Accounting For Stock Based
Compensation" instead of recording a charge to operations. The following table
reflects pro forma net income (loss) had the Company elected to adopt the fair
value approach of valuing stock options of FAS 123:
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------
1998 1999
----------- ------------
<S> <C> <C>
Net loss applicable to common stockholders:
As reported................................... $(3,663,418) $(12,495,876)
Pro forma..................................... (3,783,600) (12,549,914)
Earnings per share applicable to common
stockholders:
As reported................................... $ (0.64) $ (2.16)
Pro forma..................................... (0.66) (2.17)
</TABLE>
The weighted-average exercise price and the weighted-average grant date fair
value of options granted whose exercise price equals, exceeds or is less than
the market price of the stock at the date of grant is as follows at December
31:
<TABLE>
<CAPTION>
1998 1999
----------------- -----------------
Weighted Weighted Weighted Weighted
Average Average Average Average
Exercise Fair Exercise Fair
Exercise Price Price Value Price Value
-------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Equals market price..................... $0.12 $0.05 $0.35 $0.35
Exceeds market price.................... -- -- -- --
Less than market price.................. -- -- 1.31 7.13
</TABLE>
F-17
<PAGE>
CIDERA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The estimated fair value of each option is calculated using the Black-
Scholes option-pricing model. The following table summarizes the weighted-
average of the assumptions used for stock options granted during 1998 and 1999:
<TABLE>
<CAPTION>
1998 1999
---- ----
<S> <C> <C>
Risk-free interest rate.......................................... 6.5% 6.1%
Expected years until exercise.................................... 9.3 10.0
Expected volatility.............................................. -- --
Dividend yield................................................... -- --
</TABLE>
The weighted-average per share fair value of options granted in 1998 and
1999 was $0.12 and $1.19, respectively.
11. 401 (k) Plan
On January 1, 1998, the Company adopted the Cidera, Inc. 401(k) Plan. All
employees of the Company are eligible to participate in the 401(k) Plan.
Participants may contribute up to 15% of their eligible earnings. The Company
may make additional contributions to the plan, although it is not required to
do so. Participants are fully vested in contributions made directly to the plan
and vest over a five-year period for contributions made by the Company. Total
costs recognized by the Company related to the plan were $1,725 and $3,138
during 1998 and 1999, respectively.
12. Geographic and Segment Information
The Company markets its services primarily from its operations in the United
States, and operates in a single industry segment. Information regarding
operations in different geographic regions is as follows:
<TABLE>
<CAPTION>
Period from
July 7, 1997 Year Ended
(date of inception) December 31,
to December 31, -------------------------
1997 1998 1999
------------------- ----------- ------------
<S> <C> <C> <C>
Net revenue:
United States.................. $ 5,407 $ 5,471 $ 252,725
Europe......................... $ -- $ -- $ 105,485
--------- ----------- ------------
Total........................ $ 5,407 $ 5,471 $ 358,210
========= =========== ============
Operating loss:
United States.................. $(270,310) (3,584,630) (10,629,458)
Europe......................... -- -- (765,109)
--------- ----------- ------------
Total........................ $(270,310) $(3,584,630) $(11,394,567)
========= =========== ============
<CAPTION>
December 31,
---------------------------------------------
1997 1998 1999
------------------- ----------- ------------
<S> <C> <C> <C>
Identifiable assets:
United States.................. $ 111,518 $ 3,786,012 $ 16,167,564
Europe......................... -- -- 138,839
--------- ----------- ------------
Total........................ $ 111,518 $ 3,786,012 $ 16,306,403
========= =========== ============
</TABLE>
F-18
<PAGE>
CIDERA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
13. Subsequent Events
Series C Mandatorily Redeemable Convertible Preferred Stock
In February and March, 2000, the Company issued 4,114,521 shares of Series C
Mandatorily Redeemable Convertible Preferred Stock for $8.7495 per share. The
Series C preferred stock has a par value of $0.01 per share and has generally
the same rights and preferences as the Series A and B mandatorily redeemable
Convertible Preferred Stock. The Series C preferred stock has cumulative
preferred dividends of 8% per year. Each share of the Series C preferred is
convertible into common stock at the option of the holder at any time at the
initial conversion ratio of 1-to-1. The conversion ratio is subject to
adjustment for events such as a stock split, stock dividend, or a specified
issuance of stock. Automatic conversion is required if at any time the Company
shall effect an initial public offering in which the price paid by the public
is at least $30 million. The Company expects to recognize a charge for the
beneficial conversion feature in the first quarter of fiscal 2000 with respect
to this issuance.
2000 Equity Incentive Plan
The board of directors adopted the 2000 Equity Incentive Plan on February
24, 2000 and it became effective on that date. The plan was approved by our
stockholders on February 24, 2000. Under the plan, the board may award
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code to employees, including officers and employee directors and
nonstatutory stock options to employees, including officers and employee
directors, directors and consultants, including non-employee directors. There
are 4,913,153 shares of common stock reserved for issuance under the plan. No
person is eligible to be granted options covering more than 2,000,000 shares of
common stock in any calendar year. The maximum term of options granted under
the plan is ten years.
The exercise price of options granted under the plan is determined by the
board of directors in accordance with the guidelines set forth in the plan. The
exercise price of an incentive stock option cannot be less than 100% of the
fair market value of the common stock on the date of grant. The exercise price
of a nonstatutory stock option cannot be less than 85% of the fair market value
of the common stock on the date of grant. Options granted under the plan vest
at the rate specified in the option agreement and the grant notice. The
exercise price of incentive stock options granted to any person who at the time
of grant owns stock representing more than 10% of the total combined voting
power of all classes of our capital stock must be at least 110% of the fair
market value of such stock on the grant date and the term of such incentive
stock option cannot exceed five years.
2000 Non-Employee Directors' Stock Option Plan
The board of directors adopted the 2000 non-employee directors' stock option
plan on February 24, 2000. Our stockholders approved the directors' plan on
February 24, 2000. The plan will become effective immediately following this
offering. We have reserved a total of 400,000 shares of common stock for
issuance under the directors' plan. The eligible participants in the directors'
plan are the members of our board of directors who are not employed by us or
affiliates of us. The directors' plan provides for the issuance of non-
statutory stock options. Options granted under the directors' plan will have a
term that is no longer than ten years from the date of grant. The exercise
price for an option will be at least 100% of the fair market value of our
common stock on the date of grant. Options granted under the directors' plan
are not transferable, and may only be exercised by a director during his or her
lifetime. The option may be transferred, at the time of a director's death, by
will or by the laws of descent and distribution. Under the directors' plan, a
director may designate the recipient of the option on the director's death.
F-19
<PAGE>
CIDERA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
2000 Employee Stock Purchase Plan
On February 24, 2000, the board of directors adopted the 2000 Employee Stock
Purchase Plan. A total of 800,000 shares of common stock have been reserved for
issuance under the purchase plan. The purchase plan is intended to qualify as
an employee stock purchase plan within the meaning of Section 423 of the
Internal Revenue Code. Under the purchase plan, the board may authorize
participation by eligible employees, including officers, in periodic offerings
following the commencement of the purchase plan. Unless otherwise determined by
the board, employees are eligible to participate in the purchase plan only if
they are customarily employed by us, or an affiliate designated by our board,
for over 20 hours per week and more than five months per calendar year.
Employees who participate in an offering may have up to 15% of their earnings
withheld pursuant to the purchase plan. The amount withheld is then used to
purchase shares of the common stock on specified dates determined by the board.
The price of common stock purchased under the purchase plan will be equal to
85% of the lower of the fair market value of the common stock at the
commencement date of each offering period or the relevant purchase date.
Employees may end their participation in the offering at any time during the
offering period, and participation ends automatically on termination of
employment.
Charter Amendment
On February 28, 2000, the Company amended and restated its Certificate of
Incorporation to provide for an increase in the number of authorized shares of
common stock to 100,000,000 and to increase the number of authorized shares of
mandatorily redeemable convertible preferred stock to 30,000,000. In addition,
on February 28, 2000, the Company amended its Certificate of Designation to
create 4,114,521 shares of Series C Mandatorily Redeemable Convertible
Preferred Stock.
F-20
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth all expenses payable by the Registrant in
connection with the sale of the Common Stock being registered. All the amounts
shown are estimates except for the SEC registration fee and the NASD filing
fee.
<TABLE>
<S> <C>
Registration fee.................................................... $22,770
NASD filing fee..................................................... 9,125
Nasdaq Stock Market Listing Application fee......................... *
Blue sky qualification fees and expenses............................ *
Printing and engraving expenses..................................... *
Legal fees and expenses............................................. *
Accounting fees and expenses........................................ *
Transfer agent and registrar fees................................... *
Miscellaneous....................................................... *
-------
Total............................................................. $ *
=======
</TABLE>
- ---------------------
* to be filed by amendment
Item 14. Indemnification of Directors and Officers.
Under Section 145 of the Delaware General Corporation Law, the Registrant
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933, as amended (the "Securities Act").
The Registrant's Amended and Restated Certificate of Incorporation and
Bylaws include provisions to (i) eliminate the personal liability of its
Directors for monetary damages resulting from breaches of their fiduciary duty
to the extent permitted by Section 102(b)(7) of the General Corporation Law of
Delaware (the "Delaware Law") and (ii) require the Registrant to indemnify its
Directors and officers to the fullest extent permitted by Section 145 of the
Delaware Law, including circumstances in which indemnification is otherwise
discretionary. Pursuant to Section 145 of the Delaware Law, a corporation
generally has the power to indemnify its present and former directors,
officers, employees and agents against expenses incurred by them in connection
with any suit to which they are, or are threatened to be made, a party by
reason of their serving in such positions so long as they acted in good faith
and in a manner they reasonably believed to be in, or not opposed to, the best
interests of the corporation and, with respect to any criminal action, they had
no reasonable cause to believe their conduct was unlawful. The Registrant
believes that these provisions are necessary to attract and retain qualified
persons as Directors and officers. These provisions do not eliminate the
Directors' duty of care and, in appropriate circumstances, equitable remedies
such as injunctive or other forms of non-monetary relief will remain available
under the Delaware Law. In addition, each Director will continue to be subject
to liability for breach of the Director's duty of loyalty to the Registrant,
for acts or omissions not in good faith or involving intentional misconduct,
for knowing violations of law, for acts or omissions that the Director believes
to be contrary to the best interests of the Registrant or its stockholders, for
any transaction from which the Director derived an improper personal benefit,
for acts or omissions involving a reckless disregard for the Director's duty to
the Registrant or its stockholders when the Director was aware or should have
been aware of a risk of serious injury to the Registrant or its stockholders,
for acts or omissions that constitute an unexcused pattern of inattention that
amounts to an abdication of the Director's duty to the Registrant or its
stockholders, for improper transactions between the Director and the Registrant
and for improper distributions to stockholders and loans to Directors and
officers. The provision also does not affect a Director's responsibilities
under any other law, such as the federal securities law or state or federal
environmental laws.
II-1
<PAGE>
The Registrant has agreed to indemnify each of its Directors and executive
officers against expenses, judgments, fines, settlements and other amounts
incurred (including expenses of a derivative action) in connection with any
proceeding, whether actual or threatened, to which any such person may be made
a party by reason of the fact that such person is or was a Director or an
executive officer of the Registrant or any of its affiliated enterprises,
provided that such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Registrant and, with respect to any criminal proceeding, had no reasonable
cause to believe his conduct was unlawful. The indemnification agreements also
set forth certain procedures that will apply in the event of a claim for
indemnification thereunder.
At present, there is no pending litigation or proceeding involving a
Director or officer of the Registrant as to which indemnification is being
sought, nor is the Registrant aware of any threatened litigation that may
result in claims for indemnification by any officer or Director.
The Registrant has an insurance policy covering the officers and Directors
of the Registrant with respect to certain liabilities, including liabilities
arising under the Securities Act or otherwise.
Item 15. Recent Sales of Unregistered Securities.
Since July 10, 1997, the Registrant has sold and issued the following
unregistered securities:
(a) On March 15, 2000, Cidera issued and sold 668,605 shares of its
Series C Convertible Preferred Stock to certain accredited investors for an
aggregate purchase price of $5,848,960, or $8.75 per share. Upon the
closing of this offering the shares of Series C Preferred Stock will
automatically convert into 668,605 shares of common stock. Cidera relied on
the exemption provided by Section 4(2) under the Act and Rule 506 of
Regulation C promulgated thereunder for the sale of its Series C
Convertible Preferred Stock.
(b) On February 28, 2000, Cidera issued and sold 3,445,916 shares of its
Series C Convertible Preferred Stock to certain accredited investors for an
aggregate purchase price of $30,150,042, or $8.75 per share. Upon the
closing of this offering the shares of Series C Preferred Stock will
automatically convert into 3,445,916 shares of common stock. Cidera relied
on the exemption provided by Section 4(2) under the Act and Rule 506 of
Regulation D promulgated thereunder for the sale of its Series C
Convertible Preferred Stock.
(c) On November 10, 1999, Cidera issued 56,249 shares of common stock to
Howard Fisher Associates International, an executive search firm, in
consideration for its services in recruiting a new chief financial officer
and chief executive officer. Cidera relied on the exemption provided by
Section 4(2) under the Securities Act for the issuance of the shares of
common stock.
(d) On June 9, 1999, Cidera issued and sold 9,887,403 shares of its
Series B Convertible Preferred Stock to certain accredited investors for an
aggregate purchase price of $20,000,002, or $2.02 per share. Upon the
closing of this offering, the shares of Series B Preferred Stock will
automatically convert into 9,887,403 shares of common stock. Cidera relied
on the exemption provided by Section 4(2) under the Act and Rule 506 of
Regulation D promulgated thereunder for the sale of its Series B
Convertible Preferred Stock.
(e) On June 4, 1998, Cidera issued and sold 7,066,147 shares of its
Series A Convertible Preferred Stock to certain accredited investors for an
aggregate purchase price of $6,350,000, or $.90 per share. Upon the closing
of this offering, the shares of Series A Preferred Stock will automatically
convert into 7,066,147 shares of common stock. Cidera relied on the
exemption provided by Section 4(2) of the Act and Rule 506 of Regulation D
promulgated thereunder for the sale of its Series A Convertible Preferred
Stock.
(f) On June 4, 1998, in consideration for services provided in the
Series A financing, Cidera issued 333,834 warrants to purchase Series A
Convertible Preferred Stock to nine accredited investors and sophisticated
purchasers. The exercise price of these warrants is $0.90 per share. The
warrants may be exercised by applying the value of a portion of the
warrants (equal to the number of shares issuable under the warrant being
exercised multiplied by the fair market value of the Series A Convertible
Preferred Stock less the aggregate per share exercise price) in lieu of
payment of the exercise price per share. The
II-2
<PAGE>
warrants will expire on the earlier of February 16, 2005 or Cidera's
initial public offering. Cidera relied on the exemption provided by Section
4(2) under the Act for the issuance of these warrants.
(g) On February 16, 1998, in a bridge financing, Cidera issued
promissory notes in the aggregate amount of $400,000 and 801,200 warrants
to purchase common stock to eleven accredited investors. All promissory
notes were retired on June 4, 1998 in connection with issuance of the
Series A Convertible Preferred Stock. The exercise price of the warrants is
$0.50 per share. The warrants may be exercised by applying the value of a
portion of the warrants (equal to the number of shares issuable under the
warrant being exercised multiplied by the fair market value of the common
stock, less the aggregate per share exercise price) in lieu of payment of
the exercise price per share. The warrants will expire on February 16,
2005. Cidera relied on the exemption provided by Section 4(2) under the Act
for the bridge financing.
(h) On September 5, 1997, Cidera issued 5,768,649 shares of common stock
to its founders, Douglas E. Humphrey and Lisa M. Losito, for $.06 per
share. Cidera relied on the exemption provided by Section 4(2) under the
Act for the issuance of stock to the founders.
(i) Since January 1, 1998, Cidera has issued options to purchase a total
of 3,674,563 options for shares of its common stock at exercise prices
ranging from $0.06 to $13.00 per share to employees, consultants, directors
and other service providers pursuant to Cidera's Founders Stock Option
Plan, the 1998 Equity Incentive Plan, and the 2000 Equity Incentive Plan.
As of March 1, 2000, optionees have exercised 468,259 options at a
weighted-average exercise price of $0.16 and 3,206,304 options are
outstanding, 1,070,865 of which are vested. Cidera relied on the exemption
provided by Rule 701 under the Act for the issuance of these options.
The recipients of the above-described securities represented their intention
to acquire the securities for investment only and not with a view to
distribution thereof. Appropriate legends were affixed to the stock
certificates issued in such transactions. All recipients had adequate access,
through employment or other relationships, to information about Cidera.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
1.1 Form of Underwriting Agreement.(1)
3.1 Second Amended and Restated Certificate of Incorporation.
3.2 Second Amended and Restated Bylaws.
4.1 Specimen Stock Certificate.(1)
4.2 Registration Rights Agreement.
4.3 Amendment No. 1 to Registration Rights Agreement.
4.4 Amendment No. 2 to Registration Rights Agreement.
5.1 Opinion of Cooley Godward LLP.(1)
10.1 1998 Founders Stock Incentive Plan.
10.2 1998 Equity Incentive Plan.
10.3 Form of Incentive Stock Option Agreement pursuant to the 1998 Equity
Incentive Plan.
10.4 Form of Non-Qualified Stock Option Agreement pursuant to the 1998 Equity
Incentive Plan.
10.5 2000 Equity Incentive Plan.
10.6 Form of Stock Option Agreement for Incentive and Nonstatutory Stock Options
pursuant to the 2000 Equity Incentive Plan.
10.7 2000 Non-Employee Directors Stock Option Plan.
10.8 2000 Employee Stock Purchase Plan.
10.9 Employment Agreement dated June 1, 1998 with Douglas E. Humphrey.
10.10 Employment Agreement dated July 1, 1998 with Robert Marggraf.
10.11 Employment Agreement dated June 1, 1998 with Robert M. Dunham.
10.12 Employment Agreement dated February 17, 2000 with Edward D. Postal.
10.13 [Reserved]
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
10.14 Strategic Partnership Agreement with bCandid, dated July 16, 1999. +
10.15 Service Implementation Agreement with Akamai Technologies, Inc. +
10.16 Software Distribution Agreement with RealNetworks, Inc., dated January 25,
2000. +
10.17 License Agreement with Microsoft, dated February 17, 2000. +
10.18 Exodus Alliance Partnership Agreement, dated March 30, 1999. +
10.19 Satellite Transponder Service Agreement with GE American Communications,
Inc., dated November 2, 1999. +
10.20 Satellite Transponder Agreement with GE Capital Europe Limited, dated
November 1, 1999. +
10.21 Office Sublease with Phase 1 Incubator, Inc., dated June 1, 1998.
10.22 Rooftop Space License with Phase 1 Incubator, Inc., dated June 1, 1998.
10.23 Colocation Agreement with The Colocation Corporation, dated March 7, 2000.
10.24 Digital Satellite Uplink Service Agreement with Kingston Satellite Services,
Ltd., dated November 10, 1998.+
10.25 Amendment to Office Sublease and Rooftop Space license with Phase1
Incubator, Inc., dated March 7, 2000.
21.1 List of Subsidiaries.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2 Consent of Cooley Godward LLP (included in Exhibit 5.1).
24.1 Power of Attorney (contained on page II-5).
27.1 Financial Data Schedule.
</TABLE>
- ---------------------
+ Confidential treatment has been requested with respect to certain
portions of this exhibit. Omitted portions have been filed separately
with the Securities and Exchange Commission.
(1) To be filed by amendment.
Item 17. Undertakings.
The undersigned registrant hereby undertakes 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 for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes:
(1) That, for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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 Laurel,
State of Maryland, on March 15, 2000.
/s/ Douglas E. Humphrey
By: _________________________________
Douglas E. Humphrey
Chairman and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Douglas E. Humphrey and Edward D. Postal, and
each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place, and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments, exhibits thereto and other documents in connection
therewith) to this registration statement and any subsequent registration
statement filed by the registrant pursuant to Rule 462(b) of the Securities Act
of 1933, as amended, which relates to this registration statement, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to 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 any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Douglas E. Humphrey President, Chief Executive March 15, 2000
______________________________________ Officer and Director
Douglas E. Humphrey (principal executive
officer)
/s/ Edward D. Postal Executive Vice President March 15, 2000
______________________________________ and Chief Financial
Edward D. Postal Officer (principal
financial and accounting
officer)
/s/ Brian W. Hayhurst Director March 15, 2000
______________________________________
Brian W. Hayhurst
/s/ John Landry Director March 15, 2000
______________________________________
John Landry
/s/ Peter Barris Director March 15, 2000
______________________________________
Peter Barris
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Suzanne H. King Director March 15, 2000
______________________________________
Suzanne H. King
/s/ J. Mitchell Reese Director March 15, 2000
______________________________________
J. Mitchell Reese
/s/ Robert M. Stewart Director March 15, 2000
______________________________________
Robert M. Stewart
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
1.1 Form of Underwriting Agreement.(1)
3.1 Second Amended and Restated Certificate of Incorporation.
3.2 Second Amended and Restated Bylaws.
4.1 Specimen Stock Certificate.(1)
4.2 Registration Rights Agreement.
4.3 Amendment No. 1 to Registration Rights Agreement.
4.4 Amendment No. 2 to Registration Rights Agreement.
5.1 Opinion of Cooley Godward LLP.(1)
10.1 1998 Founders Stock Incentive Plan.
10.2 1998 Equity Incentive Plan.
10.3 Form of Incentive Stock Option Agreement pursuant to the 1998 Equity
Incentive Plan.
10.4 Form of Non-Qualified Stock Option Agreement pursuant to the 1998 Equity
Incentive Plan.
10.5 2000 Equity Incentive Plan.
10.6 Form of Stock Option Agreement for Incentive and Nonstatutory Stock Options
pursuant to the 2000 Equity Incentive Plan.
10.7 2000 Non-Employee Directors Stock Option Plan.
10.8 2000 Employee Stock Purchase Plan.
10.9 Employment Agreement dated June 1, 1998, with Douglas E. Humphrey.
10.10 Employment Agreement dated July 1, 1998, with Robert Marggraf.
10.11 Employment Agreement dated June 1, 1998 with Robert M. Dunham.
10.12 Employment Agreement dated February 17, 2000 with Edward D. Postal.
10.13 [Reserved]
10.14 Strategic Partnership Agreement with bCandid, dated July 16, 1999.+
10.15 Service Implementation Agreement with Akamai Technologies, Inc.+
10.16 Software Distribution Agreement with RealNetworks, Inc., dated January 25,
2000.+
10.17 License Agreement with Microsoft, Inc., dated February 17, 2000.+
10.18 Exodus Alliance Partnership Agreement, dated March 30, 1999.+
10.19 Satellite Transponder Service Agreement with GE American Communications,
Inc., dated November 2, 1999.+
10.20 Satellite Transponder Agreement with GE Capital Europe Limited, dated
November 1, 1999.+
10.21 Office Sublease with Phase 1 Incubator, Inc., dated June 1, 1998.
10.22 Rooftop Space License with Phase 1 Incubator, Inc., dated June 1, 1998.
10.23 Colocation Agreement with The Colocation Corporation, dated March 7, 2000.
10.24 Digital Satellite Uplink Service Agreement with Kingston Satellite Services,
Ltd., dated November 10, 1998.+
10.25 Amendment to Office Sublease and Rooftop Space license with Phase1
Incubator, Inc., dated March 7, 2000.
21.1 List of Subsidiaries.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2 Consent of Cooley Godward LLP (included in Exhibit 5.1).
24.1 Power of Attorney (contained on page II-5).
27.1 Financial Data Schedule.
</TABLE>
- ---------------------
+ Confidential treatment has been requested with respect to certain
portions of this exhibit. Omitted portions have been filed separately
with the Securities and Exchange Commission.
(1) To be filed by amendment.
II-7
<PAGE>
EXHIBIT 3.1
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CIDERA, INC.
(Originally Incorporated On July 7, 1997 Under The Name Skycache, Incorporated)
This amended and restated Certificate of Incorporation was duly adopted by
the Corporation's Board of Directors at a meeting of the Board of Directors
where proper notice was given and where a quorum was present pursuant to Section
141 of the Delaware General Corporation Law and by the Stockholders of the
Corporation by written consent in lieu of a meeting pursuant to Section 228 of
the Delaware General Corporation Law, in accordance with Sections 242 and 245 of
the Delaware General Corporation Law.
Cidera, Inc., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
I.
The name of this corporation is Cidera, Inc.
II.
The address of the registered office of the corporation in the State of
Delaware is 3511 Silverside Road, Suite 105, City of Wilmington, County of New
Castle, and the name of the registered agent of the corporation in the State of
Delaware at such address is Delaware Registry, Ltd.
III.
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware.
IV.
A. This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares which the corporation is authorized to issue is One Hundred
Thirty Million (130,000,000) shares. One Hundred Million (100,000,000) shares
of Common Stock, $.01 par value per share and Thirty Million (30,000,000) shares
of Preferred Stock, $.01 par value per share.
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate (a
"Preferred Stock Designation") pursuant to the Delaware General Corporation Law
("DGCL"), to fix or alter from time to time the designation, powers, preferences
and rights of the shares of each such series and the qualifications, limitations
or restrictions of any wholly unissued series of Preferred Stock, and to
establish from time to time the number of shares constituting any such series or
any of them; and to increase or decrease the number of shares of any series
subsequent to the issuance of shares 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 decreased in accordance with the foregoing sentence, the
<PAGE>
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.
V.
For the management of the business and for the conduct of the affairs of
the corporation, and in further definition, limitation and regulation of the
powers of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
1. 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 fixed
exclusively by one or more resolutions adopted by the Board of Directors.
2. Subject to the rights of the holders of any series of Preferred
Stock to elect additional directors under specified circumstances, following the
closing of the initial public offering pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "1933 Act"),
covering the offer and sale of Common Stock to the public (the "Initial Public
Offering"), 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 closing
of the Initial Public Offering, 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 closing of the
Initial Public Offering, 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 closing of the Initial
Public Offering, 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 section, each director
shall serve until his successor is duly elected and qualified or until his
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.
a. Subject to the rights of the holders of any series of
Preferred Stock, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors, shall,
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by the stockholders, except as
otherwise provided by law, be filled only by the affirmative vote of a majority
of the directors then in office, even though less than a quorum of the Board of
Directors, and not by the stockholders. Any director elected in accordance with
the preceding sentence shall hold office for the remainder of the full term of
the director for which the vacancy was created or occurred and until such
director's successor shall have been elected and qualified.
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b. 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 (as constituted immediately prior to any such increase), the
Delaware 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 offices as aforesaid, which election shall be governed by Section 211 of the
DGCL.
4. Subject to paragraph (h) of Section 42 of the Bylaws, the Bylaws
may be altered or amended or new Bylaws adopted by the affirmative vote of at
least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of
the then-outstanding shares of the voting stock of the corporation entitled to
vote. The Board of Directors shall also have the power to adopt, amend, or
repeal Bylaws.
5. The directors of the corporation need not be elected by written
ballot unless the Bylaws so provide.
6. No action shall be taken by the stockholders of the corporation
except at an annual or special meeting of stockholders called in accordance with
the Bylaws or by written consent of stockholders in accordance with the Bylaws
prior to the closing of the Initial Public Offering and following the closing of
the Initial Public Offering no action shall be taken by the stockholders by
written consent.
7. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the corporation shall be given in the manner provided in the
Bylaws of the corporation.
VI.
A. The liability of the directors for monetary damages shall be eliminated
to the fullest extent under applicable law.
B. Any repeal or modification of this Article VI shall be prospective and
shall not affect the rights under this Article VI in effect at the time of the
alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
VII.
A. The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, except as provided in paragraph B. of this
Article VII, and all rights conferred upon the stockholders herein are granted
subject to this reservation.
B. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then-outstanding shares of the voting stock, voting together
as a single class, shall be required to alter, amend or repeal Articles V, VI,
and VII.
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VIII.
In Witness Whereof, this Certificate has been subscribed this 28/th/ day of
February, 2000 by the undersigned who affirms that the statements made herein
are true and correct.
/s/ Douglas E. Humphrey
------------------------
Douglas E. Humphrey
Chief Executive Officer
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EXHIBIT 3.2
SECOND AMENDED AND RESTATED BYLAWS
OF
CIDERA, INC.
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE I Offices.............................................. 1
Section 1. Registered Office.................................... 1
Section 2. Other Offices........................................ 1
ARTICLE II Corporate Seal....................................... 1
Section 3. Corporate Seal....................................... 1
ARTICLE III Stockholders' Meetings............................... 1
Section 4. Place Of Meetings.................................... 1
Section 5. Annual Meetings...................................... 1
Section 6. Special Meetings..................................... 3
Section 7. Notice Of Meetings................................... 4
Section 8. Quorum............................................... 5
Section 9. Adjournment And Notice Of Adjourned Meetings......... 5
Section 10. Voting Rights........................................ 5
Section 11. Joint Owners Of Stock................................ 6
Section 12. List Of Stockholders................................. 6
Section 13. Action Without Meeting............................... 6
Section 14. Organization......................................... 7
ARTICLE IV Directors............................................ 7
Section 15. Number And Term Of Office............................ 7
Section 16. Powers............................................... 8
Section 17. Classes of Directors................................. 8
Section 18. Vacancies............................................ 8
Section 19. Resignation.......................................... 9
Section 20. Meetings............................................. 9
Section 21. Quorum And Voting.................................... 10
Section 22. Action Without Meeting............................... 10
Section 23. Fees And Compensation................................ 10
Section 24. Committees........................................... 10
Section 25. Organization......................................... 12
ARTICLE V Officers............................................. 12
Section 26. Officers Designated.................................. 12
Section 27. Tenure And Duties Of Officers........................ 12
Section 28. Delegation Of Authority.............................. 13
</TABLE>
1
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<TABLE>
<S> <C> <C>
Section 29. Resignations......................................... 13
Section 30. Removal.............................................. 14
ARTICLE VI Execution Of Corporate Instruments And Voting
Of Securities Owned By The Corporation............. 14
Section 31. Execution Of Corporate Instruments................... 14
Section 32. Voting Of Securities Owned By The Corporation........ 14
ARTICLE VII Shares Of Stock...................................... 14
Section 33. Form And Execution Of Certificates................... 14
Section 34. Lost Certificates.................................... 15
Section 35. Transfers............................................ 15
Section 36. Fixing Record Dates.................................. 15
Section 37. Registered Stockholders.............................. 16
ARTICLE VIII Other Securities Of The Corporation.................. 17
Section 38. Execution Of Other Securities........................ 17
ARTICLE IX Dividends............................................ 17
Section 39. Declaration Of Dividends............................. 17
Section 40. Dividend Reserve..................................... 17
ARTICLE X Fiscal Year.......................................... 18
Section 41. Fiscal Year.......................................... 18
ARTICLE XI Indemnification...................................... 18
Section 42. Indemnification Of Directors, Executive Officers,
Other Officers, Employees And Other Agents........... 18
ARTICLE XII Notices.............................................. 21
Section 43. Notices.............................................. 21
ARTICLE XIII Amendments........................................... 23
Section 44. Amendments........................................... 23
ARTICLE XIV Loans To Officers.................................... 23
Section 45. Loans To Officers.................................... 23
</TABLE>
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<PAGE>
SECOND AMENDED AND RESTATED BYLAWS
OF
CIDERA, INC.
(A DELAWARE CORPORATION)
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation in
the State of Delaware shall be in the City of Wilmington, County of New Castle.
(Del. Code Ann., tit. 8, (S) 131)
Section 2. Other Offices. The corporation shall also have and maintain an
office or principal place of business at such place as may be fixed by the Board
of Directors, and 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. (Del. Code Ann., tit.
8, (S) 122(8))
ARTICLE II
CORPORATE SEAL
Section 3. Corporate Seal. The corporate seal shall consist of a die
bearing the name of the corporation and the inscription, "Corporate Seal-
Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise. (Del. Code Ann., tit. 8, (S)
122(3))
ARTICLE III
STOCKHOLDERS' MEETINGS
Section 4. Place Of Meetings. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof. (Del. Code Ann., tit. 8, (S) 211(a))
Section 5. Annual Meetings.
(a) The annual meeting of the stockholders of the corporation, for
the purpose of election of directors and for such other business as may lawfully
come before it, shall be held on such date and at such time as may be designated
from time to time by the Board of Directors. Nominations of persons for election
to the Board of Directors of the corporation and the proposal of business to be
considered by the stockholders may be made at an annual meeting of
<PAGE>
stockholders: (i) pursuant to the corporation's notice of meeting of
stockholders; (ii) by or at the direction of the Board of Directors; or (iii) by
any stockholder of the corporation who was a stockholder of record at the time
of giving of notice provided for in the following paragraph, who is entitled to
vote at the meeting and who complied with the notice procedures set forth in
Section 5. (Del. Code Ann., tit. 8, (S) 211(b)).
(b) At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. For
nominations or other business to be properly brought before an annual meeting by
a stockholder pursuant to clause (c) of Section 5(a) of these Bylaws, (i) the
stockholder must have given timely notice thereof in writing to the Secretary of
the corporation, (ii) such other business must be a proper matter for
stockholder action under the Delaware General Corporation Law ("DGCL"), (iii) if
the stockholder, or the beneficial owner on whose behalf any such proposal or
nomination is made, has provided the corporation with a Solicitation Notice (as
defined in this Section 5(b)), such stockholder or beneficial owner must, in the
case of a proposal, have delivered a proxy statement and form of proxy to
holders of at least the percentage of the corporation's voting shares required
under applicable law to carry any such proposal, or, in the case of a nomination
or nominations, have delivered a proxy statement and form of proxy to holders of
a percentage of the corporation's voting shares reasonably believed by such
stockholder or beneficial owner to be sufficient to elect the nominee or
nominees proposed to be nominated by such stockholder, and must, in either case,
have included in such materials the Solicitation Notice, and (iv) if no
Solicitation Notice relating thereto has been timely provided pursuant to this
section, the stockholder or beneficial owner proposing such business or
nomination must not have solicited a number of proxies sufficient to have
required the delivery of such a Solicitation Notice under this Section 5. To be
timely, a stockholder's notice shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the ninetieth (90th) day nor earlier than the close of business on
the one hundred twentieth (120th) day prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is advanced more than thirty (30) days prior to or
delayed by more than thirty (30) days after the anniversary of the preceding
year's annual meeting, notice by the stockholder to be timely must be so
delivered not earlier than the close of business on the one hundred twentieth
(120th) day prior to such annual meeting and not later than the close of
business on the later of the ninetieth (90th) day prior to such annual meeting
or the tenth (10th) day following the day on which public announcement of the
date of such meeting is first made. In no event shall the public announcement of
an adjournment of an annual meeting commence a new time period for the giving of
a stockholder's notice as described above. Such stockholder's notice shall set
forth: (A) as to each person whom the stockholder proposed to nominate for
election or reelection as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "1934 Act") and Rule 14a-11 thereunder (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (B) as to any other business that the stockholder proposes
to bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (C) as to
the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and address of such
stockholder, as they appear on the corporation's books,
2
<PAGE>
and of such beneficial owner, (ii) the class and number of shares of the
corporation which are owned beneficially and of record by such stockholder and
such beneficial owner, and (iii) whether either such stockholder or beneficial
owner intends to deliver a proxy statement and form of proxy to holders of, in
the case of the proposal, at least the percentage of the corporation's voting
shares required under applicable law to carry the proposal or, in the case of a
nomination or nominations, a sufficient number of holders of the corporation's
voting shares to elect such nominee or nominees (an affirmative statement of
such intent, a "Solicitation Notice").
(c) Notwithstanding anything in the second sentence of Section 5(b)
of these Bylaws to the contrary, in the event that the number of directors to be
elected to the Board of Directors of the Corporation is increased and there is
no public announcement naming all of the nominees for director or specifying the
size of the increased Board of Directors made by the corporation at least one
hundred (100) days prior to the first anniversary of the preceding year's annual
meeting, a stockholder's notice required by this Section 5 shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the corporation not later than the close of
business on the tenth (10th) day following the day on which such public
announcement is first made by the corporation.
(d) Only such persons who are nominated in accordance with the
procedures set forth in this Section 5 shall be eligible to serve as directors
and only such business shall be conducted at a meeting of stockholders as shall
have been brought before the meeting in accordance with the procedures set forth
in this Section 5. Except as otherwise provided by law, the Chairman of the
meeting shall have the power and duty to determine whether a nomination or any
business proposed to be brought before the meeting was made, or proposed, as the
case may be, in accordance with the procedures set forth in these Bylaws and, if
any proposed nomination or business is not in compliance with these Bylaws, to
declare that such defective proposal or nomination shall not be presented for
stockholder action at the meeting and shall be disregarded.
(e) Notwithstanding the foregoing provisions of this Section 5, in
order to include information with respect to a stockholder proposal in the proxy
statement and form of proxy for a stockholders' meeting, stockholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Nothing in these Bylaws shall be deemed to affect any rights of stockholders to
request inclusion of proposals in the corporation proxy statement pursuant to
Rule 14a-8 under the 1934 Act.
(f) For purposes of this Section 5, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the 1934 Act.
Section 6. Special Meetings.
(a) Special meetings of the stockholders of the corporation may be
called, for any purposes, by (i) the Chairman of the Board of Directors, (ii)
the Chief Executive Officer, or (iii) the Board of Directors pursuant to a
resolution adopted by a majority of the total
3
<PAGE>
number of authorized directors (whether or not there exist any vacancies in
previously authorized directorships at the time any such resolution is presented
to the Board of Directors for adoption).
(b) If a special meeting is properly called by any person or
persons other than the Board of Directors, the request shall be in writing,
specifying 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 of Directors, the
Chief Executive Officer, or the Secretary of the corporation. No business may be
transacted at such special meeting otherwise than specified in such notice. The
Board of Directors shall determine the time and place of such special meeting,
which shall be held not less than thirty-five (35) nor more than one hundred
twenty (120) days after the date of the receipt of the request. Upon
determination of the time and place of the meeting, the officer receiving the
request shall cause notice to be given to the stockholders entitled to vote, in
accordance with the provisions of Section 7 of these Bylaws. If the notice is
not given within one hundred (100) days after the receipt of the request, the
person or persons properly requesting the meeting may set the time and place of
the meeting and give the notice. Nothing contained in this paragraph (b) 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.
(c) Nominations of persons for election to the Board of Directors
may be made at a special meeting of stockholders at which directors are to be
elected pursuant to the corporation's notice of meeting (i) by or at the
direction of the Board of Directors or (ii) by any stockholder of the
corporation who is a stockholder of record at the time of giving notice provided
for in these Bylaws who shall be entitled to vote at the meeting and who
complies with the notice procedures set forth in this Section 6(c). In the event
the corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the Board of Directors, any such stockholder
may nominate a person or persons (as the case may be), for election to such
position(s) as specified in the corporation's notice of meeting, if the
stockholder's notice required by Section 5(b) of these Bylaws shall be delivered
to the Secretary at the principal executive offices of the corporation not
earlier than the close of business on the one hundred twentieth (120th) day
prior to such special meeting and not later than the close of business on the
later of the ninetieth (90th) day prior to such meeting or the tenth (10th) day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting. In no event shall the public announcement of an
adjournment of a special meeting commence a new time period for the giving of a
stockholder's notice as described above.
Section 7. Notice Of Meetings. Except as otherwise provided by law or the
Certificate of Incorporation, written notice of each meeting of stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting, such
notice to specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, signed by the person entitled to notice thereof,
either before or after such meeting, and will be waived by any stockholder by
his attendance thereat in person or by proxy, except when the stockholder
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. Any stockholder so waiving notice of such meeting shall be
4
<PAGE>
bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given. (Del. Code Ann., tit. 8, (S)(S) 222, 229)
Section 8. Quorum. At all meetings of stockholders, except where otherwise
provided by statute or by the Certificate of Incorporation, or by these Bylaws,
the presence, in person or by proxy duly authorized, of the holders of a
majority of the outstanding shares of stock entitled to vote shall constitute a
quorum for the transaction of business. In the absence of a quorum, any meeting
of stockholders may be adjourned, from time to time, either by the chairman of
the meeting or by vote of the holders of a majority of the shares represented
thereat, but no other business shall be transacted at such meeting. The
stockholders present at a duly called or convened meeting, at which a quorum is
present, may continue to transact business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum. Except as
otherwise provided by statute, the Certificate of Incorporation or these Bylaws,
in all matters other than the election of directors, the affirmative vote of the
majority of shares present in person or represented by proxy at the meeting and
entitled to vote on the subject matter shall be the act of the stockholders.
Except as otherwise provided by statute, the Certificate of Incorporation or
these Bylaws, directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of directors. Where a separate vote by a class or classes
or series is required, except where otherwise provided by the statute or by the
Certificate of Incorporation or these Bylaws, a majority of the outstanding
shares of such class or classes or series, present in person or represented by
proxy, shall constitute a quorum entitled to take action with respect to that
vote on that matter and, except where otherwise provided by the statute or by
the Certificate of Incorporation or these Bylaws, the affirmative vote of the
majority (plurality, in the case of the election of directors) of the votes cast
by the holders of shares of such class or classes or series shall be the act of
such class or classes or series. (Del. Code Ann., tit. 8, (S) 216)
Section 9. Adjournment And Notice Of Adjourned Meetings. Any meeting of
stockholders, whether annual or special, may be adjourned from time to time
either by the chairman of the meeting or by the vote of a majority of the shares
casting votes. When a meeting is adjourned to another time or place, 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 which might have been
transacted at the original meeting. 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. (Del. Code Ann., tit. 8,
(S) 222(c))
Section 10. Voting Rights. For the purpose of determining those
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the stock
records of the corporation on the record date, as provided in Section 12 of
these Bylaws, shall be entitled to vote at any meeting of stockholders. Every
person entitled to vote shall have the right to do so either in person or by an
agent or agents authorized by a proxy granted in accordance with Delaware law.
An agent so appointed need not be a stockholder. No proxy shall be voted after
three (3) years from its date of creation unless the proxy provides for a longer
period. (Del. Code Ann., tit. 8, (S)(S) 211(e), 212(b))
5
<PAGE>
Section 11. Joint Owners Of Stock. If shares or other securities having
voting power stand of record in the names of two (2) or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety, or otherwise, or if two (2) or more persons have the same
fiduciary relationship respecting the same shares, unless the Secretary is given
written notice to the contrary and is furnished with a copy of the instrument or
order appointing them or creating the relationship wherein it is so provided,
their acts with respect to voting shall have the following effect: (a) if only
one (1) votes, his act binds all; (b) if more than one (1) votes, the act of the
majority so voting binds all; (c) if more than one (1) votes, but the vote is
evenly split on any particular matter, each faction may vote the securities in
question proportionally, or may apply to the Delaware Court of Chancery for
relief as provided in the DGCL, Section 217(b). If the instrument filed with the
Secretary shows that any such tenancy is held in unequal interests, a majority
or even-split for the purpose of subsection (c) shall be a majority or even-
split in interest. (Del. Code Ann., tit. 8, (S) 217(b))
Section 12. List Of Stockholders. The Secretary shall prepare and make, at
least ten (10) days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at said meeting, arranged in alphabetical order,
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 specified, at the place where
the meeting is to be held. The list shall be produced and kept at the time and
place of meeting during the whole time thereof and may be inspected by any
stockholder who is present. (Del. Code Ann., tit. 8, (S) 219(a))
Section 13. Action Without Meeting.
(a) Unless otherwise provided in the Certificate of Incorporation,
any action required by statute to be taken at any annual or special meeting of
the stockholders, or any action which may be taken at any annual or special
meeting of the 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.
(b) Every written consent shall bear the date of signature of each
stockholder who signs the consent, and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty (60) days of
the earliest dated consent delivered to the corporation in the manner herein
required, written consents signed by a sufficient number of stockholders to take
action are delivered to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business or an officer or agent of
the corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to a corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
(Del. Code Ann., tit. 8, (S) 228)
(c) Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing and who, if the action had been
taken at a meeting, would have been entitled to notice
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of the meeting if the record date for such meeting had been the date that
written consents signed by a sufficient number of stockholders to take action
were delivered to the corporation as provided in Section 228 (c) of the DGCL. If
the action which is consented to is such as would have required the filing of a
certificate under any section of the DGCL if such action had been voted on by
stockholders at a meeting thereof, then the certificate filed under such section
shall state, in lieu of any statement required by such section concerning any
vote of stockholders, that written consent has been given in accordance with
Section 228 of the DGCL.
(d) Notwithstanding the foregoing, no such action by written
consent may be taken following the closing of the initial public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), covering the offer and sale of Common Stock
of the corporation (the "Initial Public Offering").
Section 14. Organization.
(a) At every meeting of stockholders, the Chairman of the Board of
Directors, or, if a Chairman has not been appointed or is absent, the President,
or, if the President is absent, a chairman of the meeting chosen by a majority
in interest of the stockholders entitled to vote, present in person or by proxy,
shall act as chairman. The Secretary, or, in his absence, an Assistant Secretary
directed to do so by the President, shall act as secretary of the meeting.
(b) The Board of Directors of the corporation shall be entitled to
make such rules or regulations for the conduct of meetings of stockholders as it
shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Directors, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing an agenda or order of business for the meeting,
rules and procedures for maintaining order at the meeting and the safety of
those present, limitations on participation in such meeting to stockholders of
record of the corporation and their duly authorized and constituted proxies and
such other persons as the chairman shall permit, restrictions on entry to the
meeting after the time fixed for the commencement thereof, limitations on the
time allotted to questions or comments by participants and regulation of the
opening and closing of the polls for balloting on matters which are to be voted
on by ballot. Unless and to the extent determined by the Board of Directors or
the chairman of the meeting, meetings of stockholders shall not be required to
be held in accordance with rules of parliamentary procedure.
ARTICLE IV
DIRECTORS
Section 15. Number And Term Of Office . The authorized number of directors
of the corporation shall be fixed in accordance with the Certificate of
Incorporation. Directors need not be stockholders unless so required by the
Certificate of Incorporation. If for any cause, the directors shall not have
been elected at an annual meeting, they may be elected as soon thereafter as
convenient at a special meeting of the stockholders called for that purpose in
the manner provided in these Bylaws. (Del. Code Ann., tit. 8, (S)(S) 141(b),
211(b), (c))
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Section 16. Powers. The powers of the corporation shall be exercised, its
business conducted and its property controlled by the Board of Directors, except
as may be otherwise provided by statute or by the Certificate of Incorporation.
(Del. Code Ann., tit. 8, (S) 141(a))
Section 17. Classes of Directors. Subject to the rights of the holders of
any series of Preferred Stock to elect additional directors under specified
circumstances, following the closing of the Initial Public Offering, 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 closing of the Initial
Public Offering, 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 closing of the Initial Public
Offering, 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 closing of the Initial Public Offering,
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 section, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
Section 18. Vacancies.
(a) Unless otherwise provided in the Certificate of Incorporation,
any vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal or other causes and any newly created directorships
resulting from any increase in the number of directors shall, unless the Board
of Directors determines by resolution that any such vacancies or newly created
directorships shall be filled by stockholders, be filled only by the affirmative
vote of a majority 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
director for which the vacancy was created or occurred and until such director's
successor shall have been elected and qualified. A vacancy in the Board of
Directors shall be deemed to exist under this Section 18 in the case of the
death, removal or resignation of any director. (Del. Code Ann., tit. 8, (S)
223(a), (b))
(b) 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 (as constituted immediately prior to any such increase), the
Delaware 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 offices as aforesaid, which election shall be governed by Section 211 of the
DGCL. (Del. Code Ann., tit. 8, (S) 223(c)).
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Section 19. Resignation. Any director may resign at any time by delivering
his written resignation to the Secretary, such resignation to specify whether it
will be effective at a particular time, upon receipt by the Secretary or at the
pleasure of the Board of Directors. If no such specification is made, it shall
be deemed effective at the pleasure of the Board of Directors. When one or more
directors shall resign from the Board of Directors, effective at a future date,
a majority of the directors then in office, including those who have so
resigned, shall have power to fill such vacancy or vacancies, the vote thereon
to take effect when such resignation or resignations shall become effective, and
each Director so chosen shall hold office for the unexpired portion of the term
of the Director whose place shall be vacated and until his successor shall have
been duly elected and qualified. (Del. Code Ann., tit. 8, (S)(S) 141(b), 223(d))
Section 20. Meetings.
(a) Annual Meetings. The annual meeting of the Board of Directors
shall be held immediately before or after the annual meeting of stockholders and
at the place where such meeting is held. No notice of an annual meeting of the
Board of Directors shall be necessary and such meeting shall be held for the
purpose of electing officers and transacting such other business as may lawfully
come before it.
(b) Regular Meetings. Unless otherwise restricted by the
Certificate of Incorporation, regular meetings of the Board of Directors may be
held at any time or date and at any place within or without the State of
Delaware which has been designated by the Board of Directors and publicized
among all directors. No formal notice shall be required for regular meetings of
the Board of Directors. (Del. Code Ann., tit. 8, (S) 141(g))
(c) Special Meetings. Unless otherwise restricted by the
Certificate of Incorporation, special meetings of the Board of Directors may be
held at any time and place within or without the State of Delaware whenever
called by the Chairman of the Board, the President or any two of the directors
(Del. Code Ann., tit. 8, (S) 141(g))
(d) Telephone Meetings. Any member of the Board of Directors, or
of any committee thereof, may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting. (Del. Code
Ann., tit. 8, (S) 141(I))
(e) Notice of Meetings. Notice of the time and place of all
meetings of the Board of Directors shall be orally or in writing, by telephone,
including a voice messaging system or other system or technology designed to
record and communicate messages, facsimile, telegraph or telex, or by electronic
mail or other electronic means, during normal business hours, at least twenty-
four (24) hours before the date and time of the meeting, or sent in writing to
each director by first class mail, charges prepaid, at least three (3) days
before the date of the meeting. Notice of any meeting may be waived in writing
at any time before or after the meeting and will be waived by any director by
attendance thereat, except when the director attends the 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. (Del. Code
Ann., tit. 8, (S) 229)
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(f) Waiver of Notice. The transaction of all business at any meeting
of the Board of Directors, or any committee thereof, however called or noticed,
or wherever held, shall be as valid as though had at a meeting duly held after
regular call and notice, if a quorum be present and if, either before or after
the meeting, each of the directors not present shall sign a written waiver of
notice. All such waivers shall be filed with the corporate records or made a
part of the minutes of the meeting. (Del. Code Ann., tit. 8, (S) 229)
Section 21. Quorum And Voting.
(a) Unless the Certificate of Incorporation requires a greater
number and except with respect to indemnification questions arising under
Section 42 hereof, for which a quorum shall be one-third of the exact number of
directors fixed from time to time in accordance with the Certificate of
Incorporation, a quorum of the Board of Directors shall consist of a majority of
the exact number of directors fixed from time to time by the Board of Directors
in accordance with the Certificate of Incorporation; provided, however, at any
meeting whether a quorum be present or otherwise, a majority of the directors
present may adjourn from time to time until the time fixed for the next regular
meeting of the Board of Directors, without notice other than by announcement at
the meeting. (Del. Code Ann., tit. 8, (S) 141(b))
(b) At each meeting of the Board of Directors at which a quorum is
present, all questions and business shall be determined by the affirmative vote
of a majority of the directors present, unless a different vote be required by
law, the Certificate of Incorporation or these Bylaws. (Del. Code Ann., tit. 8,
(S) 141(b))
Section 22. Action Without 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 of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee. (Del. Code Ann., tit. 8, (S) 141(f))
Section 23. Fees And Compensation. Directors shall be entitled to such
compensation for their services as may be approved by the Board of Directors,
including, if so approved, by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, for attendance at each regular or special
meeting of the Board of Directors and at any meeting of a committee of the Board
of Directors. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise and receiving compensation therefor. (Del. Code
Ann., tit. 8, (S) 141(h))
Section 24. Committees.
(a) Executive Committee. The Board of Directors may appoint an
Executive Committee to consist of one (1) or more members of the Board of
Directors. The Executive Committee, to the extent permitted by law and 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 (i) approving or adopting, or
recommending to the
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stockholders, any action or matter expressly required by the DGCL to be
submitted to stockholders for approval, or (ii) adopting, amending or repealing
any bylaw of the corporation. (Del. Code Ann., tit. 8, (S) 141(c))
(b) Other Committees. The Board of Directors may, from time to
time, appoint such other committees as may be permitted by law. Such other
committees appointed by the Board of Directors shall consist of one (1) or more
members of the Board of Directors and shall have such powers and perform such
duties as may be prescribed by the resolution or resolutions creating such
committees, but in no event shall any such committee have the powers denied to
the Executive Committee in these Bylaws. (Del. Code Ann., tit. 8, (S) 141(c))
(c) Term. Each member of a committee of the Board of Directors
shall serve a term on the committee coexistent with such member's term on the
Board of Directors. The Board of Directors, subject to any requirements of any
outstanding series of preferred Stock and the provisions of subsections (a) or
(b) of this Bylaw, may at any time increase or decrease the number of members of
a committee or terminate the existence of a committee. The membership of a
committee member shall terminate on the date of his death or voluntary
resignation from the committee or from the Board of Directors. The Board of
Directors may at any time for any reason remove any individual committee member
and the Board of Directors may fill any committee vacancy created by death,
resignation, removal or increase in the number of members of the committee. 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, and, in addition, in the absence or disqualification of any
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. (Del. Code Ann.,
tit. 8, (S)141(c))
(d) Meetings. Unless the Board of Directors shall otherwise
provide, regular meetings of the Executive Committee or any other committee
appointed pursuant to this Section 24 shall be held at such times and places as
are determined by the Board of Directors, or by any such committee, and when
notice thereof has been given to each member of such committee, no further
notice of such regular meetings need be given thereafter. Special meetings of
any such committee may be held at any place which has been determined from time
to time by such committee, and may be called by any director who is a member of
such committee, upon written notice to the members of such committee of the time
and place of such special meeting given in the manner provided for the giving of
written notice to members of the Board of Directors of the time and place of
special meetings of the Board of Directors. Notice of any special meeting of any
committee may be waived in writing at any time before or after the meeting and
will be waived by any director by attendance thereat, except when the director
attends such special 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. A majority of the authorized number of
members of any such committee shall constitute a quorum for the transaction of
business, and the act of a majority of those present at any meeting at which a
quorum is present shall be the act of such committee. (Del. Code Ann., tit. 8,
(S)(S) 141(c), 229)
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Section 25. Organization. At every meeting of the directors, the Chairman
of the Board of Directors, or, if a Chairman has not been appointed or is
absent, the President (if a director), or if the President is absent, the most
senior Vice President (if a director), or, in the absence of any such person, a
chairman of the meeting chosen by a majority of the directors present, shall
preside over the meeting. The Secretary, or in his absence, any Assistant
Secretary directed to do so by the President, shall act as secretary of the
meeting.
ARTICLE V
OFFICERS
Section 26. Officers Designated. The officers of the corporation shall
include, if and when designated by the Board of Directors, the Chairman of the
Board of Directors, the Chief Executive Officer, the President, one or more Vice
Presidents, the Secretary, the Chief Financial Officer, the Treasurer and the
Controller, all of whom shall be elected at the annual organizational meeting of
the Board of Directors. The Board of Directors may also appoint one or more
Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such
other officers and agents with such powers and duties as it shall deem
necessary. The Board of Directors may assign such additional titles to one or
more of the officers as it shall deem appropriate. Any one person may hold any
number of offices of the corporation at any one time unless specifically
prohibited therefrom by law. The salaries and other compensation of the
officers of the corporation shall be fixed by or in the manner designated by the
Board of Directors. (Del. Code Ann., tit. 8, (S)(S) 122(5), 142(a), (b))
Section 27. Tenure And Duties Of Officers.
(a) General. All officers shall hold office at the pleasure of the
Board of Directors and until their successors shall have been duly elected and
qualified, unless sooner removed. Any officer elected or appointed by the Board
of Directors may be removed at any time by the Board of Directors. If the office
of any officer becomes vacant for any reason, the vacancy may be filled by the
Board of Directors. (Del. Code Ann., tit. 8, (S) 141(b), (e))
(b) Duties of Chairman of the Board of Directors. The Chairman of
the Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of Directors
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers, as the Board of Directors
shall designate from time to time. If there is no President, then the Chairman
of the Board of Directors shall also serve as the Chief Executive Officer of the
corporation and shall have the powers and duties prescribed in paragraph (c) of
this Section 27. (Del. Code Ann., tit. 8, (S) 142(a))
(c) Duties of President. The President shall preside at all
meetings of the stockholders and at all meetings of the Board of Directors,
unless the Chairman of the Board of Directors has been appointed and is present.
Unless some other officer has been elected Chief Executive Officer of the
corporation, the President shall be the chief executive officer of the
corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and officers of the
corporation. The President shall perform other duties commonly incident to his
office and shall also perform such other duties and have
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such other powers, as the Board of Directors shall designate from time to time.
(Del. Code Ann., tit. 8, (S) 142(a))
(d) Duties of Vice Presidents. The Vice Presidents may assume and
perform the duties of the President in the absence or disability of the
President or whenever the office of President is vacant. The Vice Presidents
shall perform other duties commonly incident to their office and shall also
perform such other duties and have such other powers as the Board of Directors
or the President shall designate from time to time. (Del. Code Ann., tit. 8, (S)
142(a))
(e) Duties of Secretary. The Secretary shall attend all meetings
of the stockholders and of the Board of Directors and shall record all acts and
proceedings thereof in the minute book of the corporation. The Secretary shall
give notice in conformity with these Bylaws of all meetings of the stockholders
and of all meetings of the Board of Directors and any committee thereof
requiring notice. The Secretary shall perform all other duties given him in
these Bylaws and other duties commonly incident to his office and shall also
perform such other duties and have such other powers, as the Board of Directors
shall designate from time to time. The President may direct any Assistant
Secretary to assume and perform the duties of the Secretary in the absence or
disability of the Secretary, and each Assistant Secretary shall perform other
duties commonly incident to his office and shall also perform such other duties
and have such other powers as the Board of Directors or the President shall
designate from time to time. (Del. Code Ann., tit. 8, (S) 142(a))
(f) Duties of Chief Financial Officer. The Chief Financial
Officer shall keep or cause to be kept the books of account of the corporation
in a thorough and proper manner and shall render statements of the financial
affairs of the corporation in such form and as often as required by the Board of
Directors or the President. The Chief Financial Officer, subject to the order of
the Board of Directors, shall have the custody of all funds and securities of
the corporation. The Chief Financial Officer shall perform other duties commonly
incident to his office and shall also perform such other duties and have such
other powers as the Board of Directors or the President shall designate from
time to time. The President may direct the Treasurer or any Assistant Treasurer,
or the Controller or any Assistant Controller to assume and perform the duties
of the Chief Financial Officer in the absence or disability of the Chief
Financial Officer, and each Treasurer and Assistant Treasurer and each
Controller and Assistant Controller shall perform other duties commonly incident
to his office and shall also perform such other duties and have such other
powers as the Board of Directors or the President shall designate from time to
time. (Del. Code Ann., tit. 8, (S) 142(a))
Section 28. Delegation Of Authority. The Board of Directors may
from time to time delegate the powers or duties of any officer to any other
officer or agent, notwithstanding any provision hereof.
Section 29. Resignations. Any officer may resign at any time by
giving written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the person
or persons to whom such notice is given, unless a later time is specified
therein, in which event the resignation shall become effective at such later
time. Unless otherwise specified in such notice, the acceptance of any such
resignation shall not be necessary to make it effective. Any resignation shall
be without prejudice to the rights, if any,
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of the corporation under any contract with the resigning officer. (Del. Code
Ann., tit. 8, (S) 142(b))
Section 30. Removal. Any officer may be removed from office at
any time, either with or without cause, by the affirmative vote of a majority of
the directors in office at the time, or by the unanimous written consent of the
directors in office at the time, or by any committee or superior officers upon
whom such power of removal may have been conferred by the Board of Directors.
ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES
OWNED BY THE CORPORATION
Section 31. Execution Of Corporate Instruments. The Board of Directors may,
in its discretion, determine the method and designate the signatory officer or
officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation. (Del. Code
Ann., tit. 8, (S)(S) 103(a), 142(a), 158)
All checks and drafts drawn on banks or other depositaries on funds to the
credit of the corporation or in special accounts of the corporation shall be
signed by such person or persons as the Board of Directors shall authorize so to
do.
Unless 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. (Del. Code
Ann., tit. 8, (S)(S) 103(a), 142(a), 158).
Section 32. Voting Of Securities Owned By The Corporation. All stock and
other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized so to do by
resolution of the Board of Directors, or, in the absence of such authorization,
by the Chairman of the Board of Directors, the Chief Executive Officer, the
President, or any Vice President. (Del. Code Ann., tit. 8, (S) 123)
ARTICLE VII
SHARES OF STOCK
Section 33. Form And Execution Of Certificates. Certificates for the
shares of stock of the corporation shall be in such form as is consistent with
the Certificate of Incorporation and applicable law. 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 of the Board of Directors, or the President
or any Vice President and by the Treasurer or Assistant Treasurer or the
Secretary or Assistant Secretary, certifying the number of shares owned by him
in the corporation. Any or all of the signatures on the certificate may be
facsimiles. In case any officer, transfer agent, or
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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 with the same effect as if
he were such officer, transfer agent, or registrar at the date of issue. Each
certificate shall state upon the face or back thereof, in full or in summary,
all of the powers, designations, preferences, and rights, and the limitations or
restrictions of the shares authorized to be issued or shall, except as otherwise
required by law, set forth on the face or back 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. Within a
reasonable time after the issuance or transfer of uncertificated stock, the
corporation shall send to the registered owner thereof a written notice
containing the information required to be set forth or stated on certificates
pursuant to this section or otherwise required by law or with respect to this
section 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. Except as otherwise expressly provided by law, the rights and
obligations of the holders of certificates representing stock of the same class
and series shall be identical. (Del. Code Ann., tit. 8, (S) 158)
Section 34. Lost Certificates. A new certificate or certificates shall 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. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to agree to indemnify the corporation in such manner as it shall
require or to give the corporation a surety bond in such form and amount 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. (Del. Code Ann., tit. 8, (S) 167)
Section 35. Transfers.
(a) Transfers of record of shares of stock of the corporation shall
be made only upon its books by the holders thereof, in person or by attorney
duly authorized, and upon the surrender of a properly endorsed certificate or
certificates for a like number of shares. (Del. Code Ann., tit. 8, (S) 201, tit.
6, (S) 8- 401(1))
(b) 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 DGCL. (Del. Code Ann., tit. 8, (S) 160 (a))
Section 36. Fixing Record Dates.
(a) 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, the Board of Directors may fix, in advance, a record date,
which record date shall not precede the date upon
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which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall, subject to applicable law, not be more
than sixty (60) nor less than ten (10) days before the date of such meeting. If
no record date is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. 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.
(b) Prior to the Initial Public Offering, in order that the
corporation may determine the stockholders entitled to consent to corporate
action in writing without a meeting, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which date
shall not be more than ten (10) days after the date upon which the resolution
fixing the record date is adopted by the Board of Directors. Any stockholder of
record seeking to have the stockholders authorize or take corporate action by
written consent shall, by written notice to the Secretary, request the Board of
Directors to fix a record date. The Board of Directors shall promptly, but in
all events within ten (10) days after the date on which such a request is
received, adopt a resolution fixing the record date. If no record date has been
fixed by the Board of Directors within ten (10) days of the date on which such a
request is received, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting, when no prior action
by the Board of Directors is required by applicable law, shall be the first date
on which a signed written consent setting forth the action taken or proposed to
be taken is delivered to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business or an officer or agent of
the corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the Board of Directors and prior action by
the Board of Directors is required by law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
(c) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders 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
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than sixty (60)
days prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto. (Del. Code Ann., tit. 8, (S) 213)
Section 37. Registered Stockholders. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and 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
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have express or other notice thereof, except as otherwise provided by the laws
of Delaware. (Del. Code Ann., tit. 8, (S)(S) 213(a), 219)
ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
Section 38. Execution Of Other Securities. All bonds, debentures and
other corporate securities of the corporation, other than stock certificates
(covered in Section 33), may be signed by the Chairman of the Board of
Directors, the President or any Vice President, or such other person as may be
authorized by the Board of Directors, and the corporate seal impressed thereon
or a facsimile of such seal imprinted thereon and attested by the signature of
the Secretary or an Assistant Secretary, or the Chief Financial Officer or
Treasurer or an Assistant Treasurer; provided, however, that where any such
bond, debenture or other corporate security shall be authenticated by the manual
signature, or where permissible facsimile signature, of a trustee under an
indenture pursuant to which such bond, debenture or other corporate security
shall be issued, the signatures of the persons signing and attesting the
corporate seal on such bond, debenture or other corporate security may be the
imprinted facsimile of the signatures of such persons. Interest coupons
appertaining to any such bond, debenture or other corporate security,
authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an
Assistant Treasurer of the corporation or such other person as may be authorized
by the Board of Directors, or bear imprinted thereon the facsimile signature of
such person. In case any officer who shall have signed or attested any bond,
debenture or other corporate security, or whose facsimile signature shall appear
thereon or on any such interest coupon, shall have ceased to be such officer
before the bond, debenture or other corporate security so signed or attested
shall have been delivered, such bond, debenture or other corporate security
nevertheless may be adopted by the corporation and issued and delivered as
though the person who signed the same or whose facsimile signature shall have
been used thereon had not ceased to be such officer of the corporation.
ARTICLE IX
DIVIDENDS
Section 39. Declaration Of Dividends. Dividends upon the capital stock of
the corporation, subject to the provisions of the Certificate of Incorporation
and applicable law, if any, may be declared by the Board of Directors pursuant
to law at any regular or special meeting. Dividends may be paid in cash, in
property, or in shares of the capital stock, subject to the provisions of the
Certificate of Incorporation and applicable law. (Del. Code Ann., tit. 8,
(S)(S) 170, 173)
Section 40. Dividend Reserve. 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 Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors shall think
conducive to the interests of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created. (Del.
Code Ann., tit. 8, (S) 171)
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ARTICLE X
FISCAL YEAR
Section 41. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the Board of Directors.
ARTICLE XI
INDEMNIFICATION
Section 42. Indemnification Of Directors, Executive Officers, Other
Officers, Employees And Other Agents.
(a) Directors And Executive Officers. The corporation shall
indemnify its directors and executive officers (for the purposes of this Article
XI, "executive officers" shall have the meaning defined in Rule 3b-7 promulgated
under the 1934 Act) to the fullest extent not prohibited by the DGCL or any
other applicable law; provided, however, that the corporation may modify the
extent of such indemnification by individual contracts with its directors and
executive officers; and, provided, further, that the corporation shall not be
required to indemnify any director or executive officer in connection with any
proceeding (or part thereof) initiated by such person unless (i) such
indemnification is expressly required to be made by law, (ii) the proceeding was
authorized by the Board of Directors of the corporation, (iii) such
indemnification is provided by the corporation, in its sole discretion, pursuant
to the powers vested in the corporation under the DGCL or any other applicable
law or (iv) such indemnification is required to be made under subsection (d).
(b) Other Officers, Employees and Other Agents. The corporation
shall have power to indemnify its other officers, employees and other agents as
set forth in the DGCL or any other applicable law. The Board of Directors shall
have the power to delegate the determination of whether indemnification shall be
given to any such person to such officers or other persons as the Board of
Directors shall determine.
(c) Expenses. The corporation shall advance to 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, by reason of the fact that he is or was a director or executive
officer, of the corporation, or is or was serving at the request of the
corporation as a director or executive officer of another corporation,
partnership, joint venture, trust or other enterprise, prior to the final
disposition of the proceeding, promptly following request therefor, all expenses
incurred by any director or executive officer in connection with such proceeding
upon receipt of an undertaking by or on behalf of such person to repay said
amounts if it should be determined ultimately that such person is not entitled
to be indemnified under this Section 42 or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to
paragraph (e) of this Section 42, no advance shall be made by the corporation to
an executive officer of the corporation (except by reason of the fact that such
executive officer is or was a director of the corporation in which event this
paragraph shall not apply) in any action, suit or proceeding,
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whether civil, criminal, administrative or investigative, if a determination is
reasonably and promptly made (i) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to the proceeding, or (ii)
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, that the facts known to the decision-making party at the time such
determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the corporation.
(d) Enforcement. Without the necessity of entering into an
express contract, all rights to indemnification and advances to directors and
executive officers under this Bylaw shall be deemed to be contractual rights and
be effective to the same extent and as if provided for in a contract between the
corporation and the director or executive officer. Any right to indemnification
or advances granted by this Section 42 to a director or executive officer shall
be enforceable by or on behalf of the person holding such right in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) no disposition of such claim is made within
ninety (90) days of request therefor. The claimant in such enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting his claim. In connection with any claim for indemnification, the
corporation shall be entitled to raise as a defense to any such action that the
claimant has not met the standards of conduct that make it permissible under the
DGCL or any other applicable law for the corporation to indemnify the claimant
for the amount claimed. In connection with any claim by an executive officer of
the corporation (except in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
executive officer is or was a director of the corporation) for advances, the
corporation shall be entitled to raise a defense as to any such action clear and
convincing evidence that such person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
corporation, or with respect to any criminal action or proceeding that such
person acted without reasonable cause to believe that his conduct was lawful.
Neither the failure of the corporation (including its Board of Directors,
independent legal counsel or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in the DGCL or any other applicable law, nor an actual
determination by the corporation (including its Board of Directors, independent
legal counsel or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that claimant has not met the applicable standard of conduct. In any suit
brought by a director or executive officer to enforce a right to indemnification
or to an advancement of expenses hereunder, the burden of proving that the
director or executive officer is not entitled to be indemnified, or to such
advancement of expenses, under this Section 42 or otherwise shall be on the
corporation.
(e) Non-Exclusivity of Rights. The rights conferred on any person
by this Bylaw shall not be exclusive of any other right which such person may
have or hereafter acquire under any applicable statute, provision of the
Certificate of Incorporation, Bylaws, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding office. The corporation is
specifically authorized to enter into individual contracts with any or all of
its directors, officers, employees or agents respecting indemnification and
advances, to the fullest extent not prohibited by the Delaware General
Corporation Law, or by any other applicable law.
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(f) Survival of Rights. The rights conferred on any person by
this Bylaw shall continue as to a person who has ceased to be a director,
officer, employee or other agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(g) Insurance. To the fullest extent permitted by the DGCL or
any other applicable law, the corporation, upon approval by the Board of
Directors, may purchase insurance on behalf of any person required or permitted
to be indemnified pursuant to this Section 42.
(h) Amendments. Any repeal or modification of this Section 42
shall only be prospective and shall not affect the rights under this Bylaw in
effect at the time of the alleged occurrence of any action or omission to act
that is the cause of any proceeding against any agent of the corporation.
(i) Saving Clause. If this Bylaw or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director and executive officer to
the full extent not prohibited by any applicable portion of this Section 42 that
shall not have been invalidated, or by any other applicable law. If this Section
42 shall be invalid due to the application of the indemnification provisions of
another jurisdiction, then the corporation shall indemnify each director and
executive officer to the full extent under any other applicable law.
(j) Certain Definitions. For the purposes of this Bylaw, the
following definitions shall apply:
(1) The term "proceeding" shall be broadly construed and
shall include, without limitation, the investigation, preparation, prosecution,
defense, settlement, arbitration and appeal of, and the giving of testimony in,
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative.
(2) The term "expenses" shall be broadly construed and shall
include, without limitation, court costs, attorneys' fees, witness fees, fines,
amounts paid in settlement or judgment and any other costs and expenses of any
nature or kind incurred in connection with any proceeding.
(3) The term 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 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, shall stand in the same position under
the provisions of this Section 42 with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(4) References to a "director," "executive officer,"
"officer," "employee," or "agent" of the corporation shall include, without
limitation, situations where such person is serving at the request of the
corporation as, respectively, a director, executive officer,
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officer, employee, trustee or agent of another corporation, partnership, joint
venture, trust or other enterprise.
(5) 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 believed to be in the interest
of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this Section 42.
ARTICLE XII
Notices
Section 43. Notices.
(a) Notice To Stockholders. Whenever, under any provisions of these
Bylaws, notice is required to be given to any stockholder, it shall be given in
writing, timely and duly deposited in the United States mail, postage prepaid,
and addressed to his last known post office address as shown by the stock record
of the corporation or its transfer agent. (Del. Code Ann., tit. 8, (S) 222)
(b) Notice To Directors. Any notice required to be given to any
director may be given by the method stated in subsection (a), or by overnight
delivery service, facsimile, telex or telegram, except that such notice other
than one which is delivered personally shall be sent to such address as such
director shall have filed in writing with the Secretary, or, in the absence of
such filing, to the last known post office address of such director.
(c) Affidavit Of Mailing. An affidavit of mailing, executed by a
duly authorized and competent employee of the corporation or its transfer agent
appointed with respect to the class of stock affected, specifying the name and
address or the names and addresses of the stockholder or stockholders, or
director or directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall in the absence of fraud, be prima
facie evidence of the facts therein contained. (Del. Code Ann., tit. 8, (S) 222)
(d) Time Notices Deemed Given. All notices given by mail or by
overnight delivery service, as above provided, shall be deemed to have been
given as at the time of mailing, and all notices given by facsimile, telex or
telegram shall be deemed to have been given as of the sending time recorded at
time of transmission.
(e) Methods of Notice. It shall not be necessary that the same
method of giving notice be employed in respect of all directors, but one
permissible method may be employed in respect of any one or more, and any other
permissible method or methods may be employed in respect of any other or others.
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(f) Failure To Receive Notice. The period or limitation of time
within which any stockholder may exercise any option or right, or enjoy any
privilege or benefit, or be required to act, or within which any director may
exercise any power or right, or enjoy any privilege, pursuant to any notice sent
him in the manner above provided, shall not be affected or extended in any
manner by the failure of such stockholder or such director to receive such
notice.
(g) Notice To Person With Whom Communication Is Unlawful. Whenever
notice is required to be given, under any provision of law or of the Certificate
of Incorporation or Bylaws of the corporation, to any person with whom
communication is unlawful, the giving of such notice to such person shall not be
required and there shall be no duty to apply to any governmental authority or
agency for a license or permit to give such notice to such person. Any action or
meeting which shall be taken or held without notice to any such person with whom
communication is unlawful shall have the same force and effect as if such notice
had been duly given. In the event that the action taken by the corporation is
such as to require the filing of a certificate under any provision of the DGCL,
the certificate shall state, if such is the fact and if notice is required, that
notice was given to all persons entitled to receive notice except such persons
with whom communication is unlawful.
(h) Notice To Person With Undeliverable Address. Whenever notice is
required to be given, under any provision of law or the Certificate of
Incorporation or Bylaws of the corporation, to any stockholder to whom (i)
notice of two consecutive annual meetings, and all notices of meetings or of the
taking of action by written consent without a meeting to such person during the
period between such two consecutive annual meetings, or (ii) all, and at least
two, payments (if sent by first class mail) of dividends or interest on
securities during a twelve-month period, have been mailed addressed to such
person at his address as shown on the records of the corporation and have been
returned undeliverable, the giving of such notice to such person shall not be
required. Any action or meeting which shall be taken or held without notice to
such person shall have the same force and effect as if such notice had been duly
given. If any such person shall deliver to the corporation a written notice
setting forth his then current address, the requirement that notice be given to
such person shall be reinstated. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the DGCL, the certificate need not state that notice was not given
to persons to whom notice was not required to be given pursuant to this
paragraph. (Del. Code Ann, tit. 8, (S) 230)
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ARTICLE XIII
AMENDMENTS
Section 44. Amendments. Subject to paragraph (h) of Section 42 of the
Bylaws, the Bylaws may be altered or amended or new Bylaws adopted by the
affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the
voting power of all of the then-outstanding shares of the voting stock of the
corporation entitled to vote. The Board of Directors shall also have the power
to adopt, amend, or repeal Bylaws.
ARTICLE XIV
LOANS TO OFFICERS
Section 45. 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 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. (Del. Code Ann., tit. 8, (S)143)
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Exhibit 4.2
REGISTRATION RIGHTS AGREEMENT
June 4, 1998
To each of the several Purchasers named in Schedule I to the Series A
Convertible Preferred Stock Purchase Agreement of even date herewith (the
"Purchasers"), Anchor Financial Group LLC ("Anchor"), the holders of the
- -----------
Warrants to Purchase Common Stock (the "Bridge Warrants") issued pursuant to the
---------------
Bridge Financing Agreement dated February 16, 1998 (the "Bridge Warrant
-------
Holders"), Douglas E. Humphrey and Lisa Losito (the "Founders").
- ------- --------
Ladies and Gentlemen:
This will confirm that in consideration of the Purchasers' agreement on the
date hereof to purchase an aggregate of 7,066,147 shares of Series A Convertible
Preferred Stock, $.01 par value ("Preferred Stock"), of SkyCache, Inc., a
---------------
Delaware corporation (the "Company"), pursuant to the Series A Convertible
-------
Preferred Stock Purchase Agreement of even date herewith (the "Purchase
--------
Agreement") between the Company and the Purchasers and as an inducement to the
- ---------
Purchasers to consummate the transactions contemplated by the Purchase Agreement
and in consideration of the waiver by the Bridge Warrant Holders of their
registration rights, their anti-dilution rights and their rights of first
refusal contained in sections 8 and 10, respectively, of the Bridge Warrants and
in consideration for the prior dedication and effort of the Founders, the
Company covenants and agrees with each of you as follows:
1. Certain Definitions. As used in this Agreement, the following terms
-------------------
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission, or any
----------
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Common Stock, $.01 par value, of the Company,
------------
as constituted as of the date of this Agreement.
"Conversion Shares" shall mean shares of Common Stock issued upon
-----------------
conversion of the Preferred Shares and shares of Common Stock issued or
issuable upon conversion of any shares of preferred stock of any series
hereafter acquired by Purchasers.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
------------
or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Founders' Stock" shall mean the shares of Common Stock held by the
---------------
Founders.
<PAGE>
Registration Rights Agreement -- Page 2
"Preferred Shares" shall mean the shares of Preferred Stock purchased by
----------------
the Purchasers on the date hereof and the shares of Preferred Stock issued
upon the exercise of warrants issued to Anchor or its designees, pursuant to
that certain letter agreement dated as of February 10, 1998 by and among the
Company and Anchor.
"Registration Expenses" shall mean the expenses so described in Section 8.
---------------------
"Restricted Stock" shall mean the Conversion Shares and any other shares of
----------------
Common Stock hereafter acquired by Purchasers, excluding any such Conversion
Shares or shares of Common Stock which have been (a) registered under the
Securities Act pursuant to an effective registration statement filed
thereunder and disposed of in accordance with the registration statement
covering them or (b) publicly sold pursuant to Rule 144 under the Securities
Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
--------------
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean the expenses so described in Section 8.
----------------
"Warrant Shares" shall mean the shares of Common Stock issued upon exercise
--------------
of the Bridge Warrants.
2. Restrictive Legend. Each certificate representing Preferred
------------------
Shares, Warrant Shares or Conversion Shares shall, except as otherwise provided
in this Section 2 or in Section 3, be stamped or otherwise imprinted with a
legend substantially in the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND ALL SUCH
APPLICABLE LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE."
A certificate shall not bear such legend if in the opinion of counsel
satisfactory to the Company (it being agreed that Testa, Hurwitz & Thibeault,
LLP shall be satisfactory) the securities represented thereby may be publicly
sold without registration under the Securities Act and any applicable state
securities laws.
3. Notice of Proposed Transfer. Prior to any proposed transfer of any
---------------------------
Preferred Shares, Warrant Shares or Conversion Shares (other than under the
circumstances described in Sections 4, 5 or 6), the holder thereof shall give
written notice to the Company of its intention to effect such transfer. Each
such notice shall describe the manner of the proposed transfer and, if requested
by the Company, shall be accompanied by an opinion of counsel satisfactory to
<PAGE>
Registration Rights Agreement -- Page 3
the Company (it being agreed that Testa, Hurwitz & Thibeault, LLP shall be
satisfactory) to the effect that the proposed transfer may be effected without
registration under the Securities Act and any applicable state securities laws,
whereupon the holder of such stock shall be entitled to transfer such stock in
accordance with the terms of its notice; provided, however, that no such opinion
-------- -------
of counsel shall be required for a transfer to one or more partners or members
of the transferor (in the case of a transferor that is a partnership or a
limited liability company, respectively) or to an affiliated corporation (in the
case of a transferor that is a corporation). Each certificate for Preferred
Shares, Warrant Shares or Conversion Shares transferred as above provided shall
bear the legend set forth in Section 2, except that such certificate shall not
bear such legend if (i) such transfer is in accordance with the provisions of
Rule 144 (or any other rule permitting public sale without registration under
the Securities Act) or (ii) the opinion of counsel referred to above is to the
further effect that the transferee and any subsequent transferee (other than an
affiliate of the Company) would be entitled to transfer such securities in a
public sale without registration under the Securities Act. The restrictions
provided for in this Section 3 shall not apply to securities which are not
required to bear the legend prescribed by Section 2 in accordance with the
provisions of that Section.
4. Required Registration. (a) At any time after the earlier of (i)
---------------------
the effective date of any registration statement covering a public offering of
securities of the Company under the Securities Act and (ii) the third
anniversary of the date of this Agreement, the holders of Restricted Stock
constituting at least 50% of the total shares of Restricted Stock then
outstanding may request the Company to register under the Securities Act all or
any portion of the shares of Restricted Stock held by such requesting holder or
holders for sale in the manner specified in such notice, provided that the
--------
shares of Restricted Stock for which registration has been requested shall (i)
constitute at least 20% of the total shares of Restricted Stock originally
issued if such holder or holders shall request the registration of less than all
shares of Restricted Stock then held by such holder or holders; and (ii) have an
anticipated aggregate public offering price of not less than $5 million. For
purposes of this Section 4 and Sections 5, 6, 13(a) and 13(d), the term
"Restricted Stock" shall be deemed to include the number of shares of Restricted
Stock which would be issuable to a holder of Preferred Shares upon conversion of
all Preferred Shares and any other shares of preferred stock of any series
hereafter acquired held by such holder at such time, provided, however, that the
-------- -------
only securities which the Company shall be required to register pursuant hereto
shall be shares of Common Stock, and provided, further, however, that, in any
-------- ------- -------
underwritten public offering contemplated by this Section 4 or Sections 5 and 6,
the holders of Preferred Shares shall be entitled to sell such Preferred Shares
and any other shares of preferred stock of any series hereafter acquired to the
underwriters for conversion and sale of the shares of Common Stock issued upon
conversion thereof. Notwithstanding anything to the contrary contained herein,
no request may be made under this Section 4 within 180 days after the effective
date of a registration statement filed by the Company covering a firm commitment
underwritten public offering in which the holders of Restricted Stock shall have
been entitled to join pursuant to Sections 5 or 6 and in which there shall have
been effectively registered all shares of Restricted Stock as to which
registration shall have been requested.
(b) Following receipt of any notice under this Section 4, the Company
shall immediately notify all holders of Restricted Stock from whom notice has
not been received and shall use its best efforts to register under the
<PAGE>
Registration Rights Agreement -- Page 4
Securities Act, for public sale in accordance with the method of disposition
specified in such notice from requesting holders, the number of shares of
Restricted Stock specified in such notice (and in all notices received by the
Company from other holders within 30 days after the giving of such notice by the
Company). If such method of disposition shall be an underwritten public
offering, the Company may designate the managing underwriter of such offering,
subject to the approval of the holders of a majority of the shares of Restricted
Stock to be sold in such offering, which approval shall not be unreasonably
withheld or delayed. The Company shall be obligated to register Restricted Stock
pursuant to this Section 4 on two occasions only, provided, however, that such
-------- -------
obligation shall be deemed satisfied only when a registration statement covering
all shares of Restricted Stock specified in notices received as aforesaid, for
sale in accordance with the method of disposition specified by the requesting
holders, shall have become effective and, if such method of disposition is a
firm commitment underwritten public offering, all such shares shall have been
sold pursuant thereto.
(c) The Company shall be entitled to include in any registration
statement referred to in this Section 4, for sale in accordance with the method
of disposition specified by the requesting holders, shares of Common Stock to be
sold by the Company for its own account, except as and to the extent that, in
the opinion of the managing underwriter (if such method of disposition shall be
an underwritten public offering), such inclusion would adversely affect the
marketing of the Restricted Stock to be sold. Except for registration statements
on Form S-4, S-8 or any successor thereto, the Company will not file with the
Commission any other registration statement with respect to its Common Stock,
whether for its own account or that of other stockholders, from the date of
receipt of a notice from requesting holders pursuant to this Section 4 until the
completion of the period of distribution of the registration contemplated
thereby.
(d) Notwithstanding any other provision of this Section 4, if the
---------
underwriter(s) advise(s) the Company in writing that marketing factors require a
limitation of the number of securities to be underwritten then the Company shall
so advise all holders of Restricted Stock which would otherwise be registered
and underwritten pursuant hereto, and the number of shares of Restricted Stock
that may be included in the underwriting shall be reduced as required by the
underwriter(s) and allocated among the holders of Restricted Stock on a pro rata
basis according to the number of shares of Restricted Stock then outstanding
held by each holder requesting registration; provided, however, that the number
-------- -------
of shares of Restricted Stock to be included in such underwriting and
registration shall not be reduced unless all other securities of the Company are
first entirely excluded from the underwriting and registration. Any shares of
Restricted Stock excluded and withdrawn from such underwriting shall be
withdrawn from the registration.
(e) Notwithstanding the foregoing, if the Company shall furnish to
holders requesting the filing of a registration statement pursuant to this
Section 4, a certificate signed by the President or Chief Executive Officer
- ---------
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 registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, then the Company
shall have the right to defer such filing for a period of not more than 120 days
after receipt of the request of the holders; provided, however, that the Company
-------- -------
<PAGE>
Registration Rights Agreement -- Page 5
may notutilize this right more than once in any twelve (12) month period.
5. Incidental Registration. If the Company at any time (other than
-----------------------
pursuant to Section 4 or Section 6) proposes to register any of its securities
under the Securities Act for sale to the public, whether for its own account or
for the account of other security holders or both (except with respect to
registration statements on Forms S-4, S-8 or another form not available for
registering the Restricted Stock, the Warrant Shares or the Founders' Stock for
sale to the public), each such time it will give written notice to all holders
of outstanding Restricted Stock, Warrant Shares or Founders' Stock of its
intention so to do. Upon the written request of any such holder, received by
the Company within 30 days after the giving of any such notice by the Company,
to register any of its Restricted Stock, Warrant Shares or Founders' Stock, the
Company will use its best efforts to cause the Restricted Stock, Warrant Shares
or Founders' Stock as to which registration shall have been so requested to be
included in the securities to be covered by the registration statement proposed
to be filed by the Company, all to the extent requisite to permit the sale or
other disposition by the holder of such Restricted Stock, Warrant Shares or
Founders' Stock so registered. In the event that any registration pursuant to
this Section 5 shall be, in whole or in part, an underwritten public offering of
Common Stock, the number of shares of Restricted Stock, Warrant Shares or
Founders' Stock to be included in such an underwriting may be reduced (pro rata
among the requesting holders based upon the number of shares of Restricted
Stock, Warrant Shares or Founders' Stock owned by such holders) if and to the
extent that the managing underwriter shall be of the opinion that such inclusion
would adversely affect the marketing of the securities to be sold by the Company
therein, provided, however, that such number of shares of Restricted Stock,
-------- -------
Warrant Shares or Founders' Stock shall not be reduced if any shares are to be
included in such underwriting for the account of any person other than the
Company or requesting holders of Restricted Stock, Warrant Shares or Founders'
Stock, and provided, further, however, that in no event may less than one-third
-------- ------- -------
of the total number of shares of Common Stock to be included in such
underwriting be made available for shares of Restricted Stock or Founders' Stock
except in the event that the underwritten offering is the initial public
offering of the Company in which case all of the Restricted Stock, Warrant
Shares and Founders' Stock may be excluded. Notwithstanding the foregoing
provisions, the Company may withdraw any registration statement referred to in
this Section 5 without thereby incurring any liability to the holders of
Restricted Stock, Warrant Shares or Founders' Stock.
6. Registration on Form S-3. If at any time (i) a holder or holders of
------------------------
at least 50% of the Preferred Shares or Restricted Stock request that the
Company file a registration statement on Form S-3 or any successor thereto for a
public offering of all or any portion of the shares of Restricted Stock held by
such requesting holder or holders, the reasonably anticipated aggregate price to
the public of which would exceed $1,000,000, and (ii) the Company is a
registrant entitled to use Form S-3 or any successor thereto to register such
shares, then the Company shall use its best efforts to register under the
Securities Act on Form S-3 or any successor thereto, for public sale in
accordance with the method of disposition specified in such notice, the number
of shares of Restricted Stock specified in such notice. Whenever the Company is
required by this Section 6 to use its best efforts to effect the registration of
<PAGE>
Registration Rights Agreement -- Page 6
Restricted Stock, each of the procedures and requirements of Section 4
(including but not limited to the requirement that the Company notify all
holders of Restricted Stock from whom notice has not been received and provide
them with the opportunity to participate in the offering) shall apply to such
registration, provided, however, that the Company shall not be obligated to
-------- -------
effect more than one such registration in any twelve month period on Form S-3
under this Section 6, and provided, further, however, that the requirements
-------- ------- -------
contained in the first sentence of Section 4(a) shall not apply to any
registration on Form S-3 which may be requested and obtained under this Section
6.
7. Registration Procedures. If and whenever the Company is required
-----------------------
by the provisions of Sections 4, 5 or 6 to use its best efforts to effect the
registration of any shares of Restricted Stock, Warrant Shares or Founders'
Stock under the Securities Act, the Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
(which, in the case of an underwritten public offering pursuant to Section 4,
shall be on Form S-1 or other form of general applicability satisfactory to the
managing underwriter selected as therein provided) with respect to such
securities and use its best efforts to cause such registration statement to
become and remain effective for the period of the distribution contemplated
thereby (determined as hereinafter provided);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period specified in paragraph (a) above and comply with the provisions of
the Securities Act with respect to the disposition of all Restricted Stock,
Warrant Shares or Founders' Stock covered by such registration statement in
accordance with the sellers' intended method of disposition set forth in such
registration statement for such period;
(c) furnish to each seller of Restricted Stock, Warrant Shares or
Founders' Stock and to each underwriter such number of copies of the
registration statement and the prospectus included therein (including each
preliminary prospectus) as such persons reasonably may request in order to
facilitate the public sale or other disposition of the Restricted Stock, Warrant
Shares or Founders' Stock covered by such registration statement;
(d) use its best efforts to register or qualify the Restricted Stock,
Warrant Shares or Founders' Stock covered by such registration statement under
the securities or "blue sky" laws of such jurisdictions as the sellers of
Restricted Stock, Warrant Shares or Founders' Stock or, in the case of an
underwritten public offering, the managing underwriter reasonably shall request,
provided, however, that the Company shall not for any such purpose be required
- -------- -------
to qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;
<PAGE>
Registration Rights Agreement -- Page 7
(e) use its best efforts to list the Restricted Stock, Warrant Shares
or Founders' Stock covered by such registration statement with any securities
exchange on which the Common Stock of the Company is then listed;
(f) immediately notify each seller of Restricted Stock, Warrant Shares
or Founders' Stock and each underwriter under such registration statement, at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, of the happening of any event of which the Company has
knowledge as a result of which the prospectus contained in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing;
(g) if the offering is underwritten and at the request of any seller
of Restricted Stock, Warrant Shares or Founders' Stock, use its best efforts to
furnish on the date that Restricted Stock or Founders' Stock is delivered to the
underwriters for sale pursuant to such registration: (i) an opinion dated such
date of counsel representing the Company for the purposes of such registration,
addressed to the underwriters and to such seller, stating that such registration
statement has become effective under the Securities Act and that (A) to the best
knowledge of such counsel, no stop order suspending the effectiveness thereof
has been issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act, (B) the registration
statement, the related prospectus and each amendment or supplement thereof
comply as to form in all material respects with the requirements of the
Securities Act (except that such counsel need not express any opinion as to
financial statements contained therein) and (C) to such other effects as
reasonably may be requested by counsel for the underwriters or by such seller or
its counsel and (ii) a letter dated such date from the independent public
accountants retained by the Company, addressed to the underwriters and to such
seller, stating that they are independent public accountants within the meaning
of the Securities Act and that, in the opinion of such accountants, the
financial statements of the Company included in the registration statement or
the prospectus, or any amendment or supplement thereof, comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act, and such letter shall additionally cover such other financial matters
(including information as to the period ending no more than five business days
prior to the date of such letter) with respect to such registration as such
underwriters reasonably may request; and
(h) make available for inspection by each seller of Restricted Stock,
Warrant Shares or Founders' Stock, any underwriter participating in any
distribution pursuant to such registration statement, and any attorney,
accountant or other agent retained by such seller or underwriter, all financial
and other records, pertinent corporate documents and properties of the Company,
and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement.
For purposes of Section 7(a) and 7(b) and of Section 4(c), the period
of distribution of Restricted Stock in a firm commitment underwritten public
offering shall be deemed to extend until each underwriter has completed the
<PAGE>
Registration Rights Agreement -- Page 8
distribution of all securities purchased by it, and the period of distribution
of Restricted Stock in any other registration shall be deemed to extend until
the earlier of the sale of all Restricted Stock covered thereby and 120 days
after the effective date thereof.
In connection with each registration hereunder, the sellers of
Restricted Stock, Warrant Shares or Founders' Stock will furnish to the Company
in writing such information with respect to themselves and the proposed
distribution by them as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws.
In connection with each registration pursuant to Sections 4, 5 or 6
covering an underwritten public offering, the Company and each seller agree to
enter into a written agreement with the managing underwriter selected in the
manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment stature.
8. Expenses. All expenses incurred by the Company in complying with
--------
Sections 4, 5 and 6, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel and independent
public accountants for the Company, fees and expenses (including counsel fees)
incurred in connection with complying with state securities or "blue sky" laws,
fees of the National Association of Securities Dealers, Inc., transfer taxes,
fees of transfer agents and registrars, costs of insurance and fees and
disbursements of one counsel for the sellers of Restricted Stock, Warrant Shares
and Founders' Stock, but excluding any Selling Expenses, are called
"Registration Expenses". All underwriting discounts and selling commissions
applicable to the sale of Restricted Stock, Warrant Shares and Founders' Stock
are called "Selling Expenses".
The Company will pay all Registration Expenses in connection with each
registration statement under Sections 4, 5 or 6. All Selling Expenses in
connection with each registration statement under Sections 4, 5 or 6 shall be
borne by the participating sellers in proportion to the number of shares sold by
each, or by such participating sellers other than the Company (except to the
extent the Company shall be a seller) as they may agree.
9. Indemnification and Contribution. (a) In the event of a
--------------------------------
registration of any of the Restricted Stock, Warrant Shares or Founders' Stock
under the Securities Act pursuant to Sections 4, 5 or 6, the Company will
indemnify and hold harmless each seller of such Restricted Stock, Warrant Shares
or Founders' Stock thereunder, each underwriter of such Restricted Stock,
Warrant Shares or Founders' Stock thereunder and each other person, if any, who
controls such seller or underwriter within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
such seller, underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such Restricted Stock, Warrant Shares or
Founders' Stock was registered under the Securities Act pursuant to Sections 4,
5 or 6, any preliminary prospectus or final prospectus contained therein, or any
<PAGE>
Registration Rights Agreement -- Page 9
amendment or supplement thereof, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each such seller, each such underwriter and each such controlling
person for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action, provided, however, that the Company will not be liable in any such case
-------- -------
if and to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission so made in conformity with information furnished by any such
seller, any such underwriter or any such controlling person in writing
specifically for use in such registration statement or prospectus.
(b) In the event of a registration of any of the Restricted Stock,
Warrant Shares or Founders' Stock under the Securities Act pursuant to Sections
4, 5 or 6, each seller of such Restricted Stock, Warrant Shares or Founders'
Stock thereunder, severally and not jointly, will indemnify and hold harmless
the Company, each person, if any, who controls the Company within the meaning of
the Securities Act, each officer of the Company who signs the registration
statement, each director of the Company, each underwriter and each person who
controls any underwriter within the meaning of the Securities Act, against all
losses, claims, damages or liabilities, joint or several, to which the Company
or such officer, director, underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in the registration statement under which such Restricted Stock, Warrant Shares
or Founders' Stock was registered under the Securities Act pursuant to Sections
4, 5 or 6, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that such seller will be liable
-------- -------
hereunder in any such case if and only to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with information pertaining to such seller, as such, furnished
in writing to the Company by such seller specifically for use in such
registration statement or prospectus, and provided, further, however, that the
-------- ------- -------
liability of each seller hereunder shall be limited to the proportion of any
such loss, claim, damage, liability or expense which is equal to the proportion
that the public offering price of the shares sold by such seller under such
registration statement bears to the total public offering price of all
securities sold thereunder, but not in any event to exceed the net proceeds
received by such seller from the sale of Restricted Stock, Warrant Shares or
Founders' Stock covered by such registration statement.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
<PAGE>
Registration Rights Agreement -- Page 10
the indemnifying party shall not relieve it from any liability which it may have
to such indemnified party other than under this Section 9 and shall only relieve
it from any liability which it may have to such indemnified party under this
Section 9 if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 9 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected, provided,
--------
however, that, if the defendants in any such action include both the
- -------
indemnifiedparty and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be reasonable defenses available to it which
are different from or additional to those available to the indemnifying party or
if the interests of the indemnified party reasonably may be deemed to conflict
with the interests of the indemnifying party, the indemnified party shall have
the right to select a separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any holder of
Restricted Stock, Warrant Shares or Founders' Stock exercising rights under this
Agreement, or any controlling person of any such holder, makes a claim for
indemnification pursuant to this Section 9 but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 9 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of any such
selling holder or any such controlling person in circumstances for which
indemnification is provided under this Section 9; then, and in each such case,
the Company and such holder will contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after contribution from
others) in such proportion so that such holder is responsible for the portion
represented by the percentage that the public offering price of its Restricted
Stock, Warrant Shares or Founders' Stock offered by the registration statement
bears to the public offering price of all securities offered by such
registration statement, and the Company is responsible for the remaining
portion; provided, however, that, in any such case, (A) no such holder will be
-------- -------
required to contribute any amount in excess of the public offering price of all
such Restricted Stock, Warrant Shares or Founders' Stock offered by it pursuant
to such registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
10. Changes in Common Stock or Preferred Stock. If, and as often as,
------------------------------------------
there is any change in the Common Stock or the Preferred Stock by way of a stock
<PAGE>
Registration Rights Agreement -- Page 11
split, stock dividend, combination or reclassification, or through a merger,
consolidation, reorganization or recapitalization, or by any other means,
appropriate adjustment shall be made in the provisions hereof so that the rights
and privileges granted hereby shall continue with respect to the Common Stock or
the Preferred Stock as so changed.
11. Rule 144 Reporting. With a view to making available the benefits
------------------
of certain rules and regulations of the Commission which may at any time permit
the sale of the Restricted Stock, Warrant Shares or Founders' Stock to the
public without registration, at all times after 90 days after any registration
statement covering a public offering of securities of the Company under the
Securities Act shall have become effective, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) furnish to each holder of Restricted Stock, Warrant Shares or
Founders' Stock forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of such Rule 144 and of the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed
by the Company as such holder may reasonably request in availing itself of any
rule or regulation of the Commission allowing such holder to sell any Restricted
Stock, Warrant Shares or Founders' Stock without registration.
12. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to you as follows:
(a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other agency of
government, the Charter or By-laws of the Company or any provision of any
indenture, agreement or other instrument to which it or any or its properties or
assets is bound, conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any such indenture, agreement
or other instrument or result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any of the properties or assets of
the Company.
(b) This Agreement has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
13. Miscellaneous.
-------------
<PAGE>
Registration Rights Agreement -- Page 12
(a) All covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto (including without
limitation transferees of any Preferred Shares, Bridge Warrants, Warrant Shares
or Restricted Stock), whether so expressed or not, provided, however, that
-------- -------
registration rights conferred herein on the holders of Preferred Shares, Bridge
Warrants, Warrant Shares or Restricted Stock shall only inure to the benefit of
a transferee of Preferred Shares, Bridge Warrants, Warrant Shares or Restricted
Stock if (i) there is transferred to such transferee at least 20% of the total
shares of Restricted Stock or Warrant Shares originally issued pursuant to the
Purchase Agreement or the Bridge Financing Agreement, respectively, to the
direct or indirect transferor of such transferee or (ii) such transferee is a
partner, shareholder or affiliate of a party hereto, and provided, further,
-------- -------
however, that no registration rights conferred herein to the Founders shall be
- -------
transferable.
(b) All notices, requests, consents and other communications hereunder
shall be in writing and shall be delivered in person, mailed by certified or
registered mail, return receipt requested, or sent by telecopier or telex,
addressed as follows:
if to the Company or any Purchaser, at the address of such party set forth
in the Purchase Agreement;
if to any subsequent holder of Preferred Shares, Bridge Warrants, Warrant
Shares or Restricted Stock, to it at such address as may have been furnished
to the Company in writing by such holder;
if to a Founder, at the address of the Company;
if to a Bridge Warrant Holder, at the address of such party set forth in
the Bridge Financing Agreement;
if to Anchor, at 2445 M Street, Suite 490, Washington, DC 20037, attn:
Robert McE. Stewart;
or, in any case, at such other address or addresses as shall have been furnished
in writing to the Company (in the case of a holder of Preferred Shares, Bridge
Warrants, Warrant Shares, Restricted Stock or Founders' Stock) or to the holders
of Preferred Shares, Bridge Warrants, Warrant Shares, Restricted Stock or
Founders' Stock (in the case of the Company) in accordance with the provisions
of this paragraph.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of Maryland, without giving effect to the principles
---------------------------------------
of conflicts of laws thereof.
- ----------------------------
(d) This Agreement may not be amended or modified, and no provision
hereof may be waived, without the written consent of the Company and the holders
of at least two-thirds of the outstanding shares of Restricted Stock.
<PAGE>
Registration Rights Agreement -- Page 13
(e) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(f) The obligations of the Company to register shares of Restricted
Stock, Warrant Shares or Founders' Stock under Sections 4, 5 or 6 shall
terminate on the fifteenth anniversary of the date of this Agreement.
(g) If requested in writing by the underwriters for the initial
underwritten public offering of securities of the Company, each holder of
Restricted Stock, Warrant Shares or Founders' Stock who is a party to this
Agreement shall agree not to sell publicly any shares of Restricted Stock,
Warrant Shares or Founders' Stock or any other shares of Common Stock
(other than shares of Restricted Stock or other shares of Common Stock being
registered in such offering), without the consent of such underwriters, for a
period of not more than 180 days following the effective date of the
registration statement relating to such offering; provided, however, that all
-------- -------
persons entitled toregistration rights with respect to shares of Common Stock
who are not parties to this Agreement, all other persons selling shares of
Common Stock in such offering, all persons holding in excess of 1% of the
capital stock of the Company on a fully diluted basis and all executive officers
and directors of the Company shall also have agreed not to sell publicly their
Common Stock under the circumstances and pursuant to the terms set forth in this
Section 13(g).
(h) Notwithstanding the provisions of Section 7(a), the Company's
obligation to file a registration statement, or cause such registration
statement to become and remain effective, shall be suspended for a period not to
exceed 90 days in any 24-month period if there exists at the time material non-
public information relating to the Company which, in the reasonable opinion of
the Company, should not be disclosed.
(i) The Company shall not grant to any third party any registration
rights more favorable than or inconsistent with any of those contained herein,
so long as any of the registration rights under this Agreement remains in
effect.
(j) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
<PAGE>
Registration Rights Agreement -- Page 14
Please indicate your acceptance of the foregoing by signing and returning
the enclosed counterpart of this letter, whereupon this Agreement shall be a
binding agreement between the Company and you.
Very truly yours,
SKYCACHE, INC.
By:/s/ Douglas E. Humphrey
-----------------------
Douglas E. Humphrey
President and Chief Executive Officer
AGREED TO AND ACCEPTED as of the date first above written.
Purchasers named in Schedule I to the Purchase
Agreement:
CARLYLE VENTURE PARTNERS, L.P.
By: Its General Partner, TCG Ventures, Ltd.
By: /s/ J. Mitchell Reese
---------------------
J. Mitchell Reese
Attorney in Fact
C/S VENTURE INVESTORS, L.P.
By: Its General Partner, TCG Ventures, Ltd.
By: /s/ J. Mitchell Reese
---------------------
J. Mitchell Reese
Attorney in Fact
CARLYLE U.S. VENTURE PARTNERS, L.P.
By: Its General Partner, TCG Ventures, L.L.C.
By: /s/ J. Mitchell Reese
---------------------
J. Mitchell Reese
Managing Director
<PAGE>
Registration Rights Agreement -- Page 15
CARLYLE VENTURE COINVESTMENT, L.L.C.
By: Its Manager, TCG Ventures, L.L.C.
By: /s/ J. Mitchell Reese
----------------------
J. Mitchell Reese
Managing Director
BRIDGE WARRANT HOLDERS:
/s/ William R. Daniels
- ----------------------
William R. Daniels
/s/ Robert M. Dunham
- --------------------
Robert M. Dunham
/s/ Clyde A. Heintzelman
- ------------------------
Clyde A. Heintzelman
/s/ Benjamin Maldonado
- ----------------------
Benjamin Maldonado
/s/ Robert M. Stewart
- ---------------------
Robert M. Stewart
<PAGE>
Registration Rights Agreement -- Page 16
/s/ William G. Stewart
- ----------------------
William G. Stewart
/s/ Thomas D. Washburne, Jr.
- ----------------------------
Thomas D. Washburne, Jr.
/s/ Lloyd W. Taylor
- -------------------
Lloyd W. Taylor
BMW Partners
By: /s/ William C. Trimble, III
---------------------------
William C. Trimble, III
General Partner
Rave Financial Services Inc.
- ----------------------------
By: /s/ William Barrone
-------------------
William Barrone
Title: Director of Finance
-------------------
/s/ R. Douglas Rivers
- ---------------------
R. Douglas Rivers
<PAGE>
Registration Rights Agreement -- Page 17
FOUNDERS:
/s/ Douglas E. Humphrey
- -----------------------
Douglas E. Humphrey
/s/ Lisa Losito
- ---------------
Lisa Losito
<PAGE>
Registration Rights Agreement -- Page 18
ANCHOR DESIGNEES:
/s/ Robert M. Stewart
- ---------------------
Robert M. Stewart
/s/ Stuart J. Yarbrough
- -----------------------
Stuart J. Yarbrough
/s/ Edward J. Mathias
- ---------------------
Edward J. Mathias
Robert C. McCormack Trust 10/6/67
By:/s/ Robert C. McCormack
-----------------------
Name:
Title:
SBR, Inc.
By:/s/ Sam Ross
------------
Name:
Title:
/s/ Harold W. Purcell
- ---------------------
Harold W. Purcell
/s/ Edward M. Rogers
- --------------------
Edward M. Rogers
/s/ James M. Sutton
- -------------------
James M. Sutton
/s/ Charles L. Dunlap
- ---------------------
Charles L. Dunlap
/s/ Pascal Luck
- ---------------
Pascal Luck
<PAGE>
Exhibit 4.3
AMENDMENT NO. 1 TO
REGISTRATION RIGHTS AGREEMENT
June 9, 1999
To each of the Purchasers named in
Schedule I to the Series B Convertible
- ----------
Preferred Stock Purchase Agreement
dated June 9, 1999 (the "Purchasers")
Ladies and Gentlemen:
On June 4, 1998 SkyCache, Inc., a Delaware corporation (the "Company"),
Douglas E. Humphrey, Lisa Losito, each of the several purchasers listed on
Schedule I to that certain Series A Convertible Preferred Stock Purchase
- ----------
Agreement of even date therewith, Anchor Financial Group LLC, and the holders of
the Warrants to Purchase shares of the Common Stock, $.01 par value, of the
Company issued pursuant to that certain Bridge Financing Agreement dated
February 16, 1998, entered into a Registration Rights Agreement (the
"Agreement") of even date therewith. The parties to the Agreement now wish to
amend the Agreement to extend the rights and benefits thereof to holders of
Series B Convertible Preferred Stock, $.01 par value, of the Company (the
"Series B Preferred Stock") issued pursuant to that certain Series B Convertible
Preferred Stock Purchase Agreement of even date herewith (the "Series B Stock
Purchase Agreement") by and among the Company and the Purchasers and to make
certain other changes as hereinafter set forth. In consideration of and
pursuant to the foregoing, the Company covenants and agrees with each of you
that the Agreement is hereby amended as follows:
1. All of the shares of Series B Preferred Stock purchased pursuant to
the Series B Stock Purchase Agreement shall be "Preferred Shares"
for all purposes and to the same extent as if they were originally
included as "Preferred Shares" under the Agreement and all
references in the Agreement to the "Preferred Stock" and the
"Purchase Agreement" shall include all of the shares of such Series
B Preferred Stock and the Series B Stock Purchase Agreement,
respectively.
<PAGE>
2. The last sentence of Section 6 of the Agreement shall be deleted in
its entirety and replaced with following:
"Whenever the Company is required by this Section 6 to use its best
efforts to effect the registration of Restricted Stock, each of the
procedures and requirements of Section 4 (including but not limited to
the requirement that the Company notify all holders of Restricted
Stock from whom notice has not been received and provide them with the
opportunity to participate in the offering) shall apply to such
registration, provided, however, that the Company shall not be
-------- -------
obligated to effect more than two such registrations in any twelve
month period on Form S-3 under this Section 6, and provided, further,
-------- -------
however, that the requirements contained in the first sentence of
-------
Section 4(a) shall not apply to any registration on Form S-3 which may
be requested and obtained under this Section 6."
This Amendment 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Please indicate your acceptance of the foregoing by signing and returning
the enclosed counterpart of this letter, whereupon this Agreement shall be a
binding agreement between the Company and you.
Very truly yours,
SKYCACHE, INC.
By: /s/ Douglas E. Humphrey
-----------------------
Douglas E. Humphrey
President and Chief Executive
Officer
AGREED TO AND ACCEPTED as of the
date first above written.
CARLYLE VENTURE PARTNERS, L.P.
By: Its General Partner, TCG Ventures, Ltd.
By:/s/ J. Mitchell Reese
------------------------
J. Mitchell Reese
Attorney in Fact
C/S VENTURE INVESTORS, L.P.
By: Its General Partner, TCG Ventures, Ltd.
By: /s/ J. Mitchell Reese
-------------------------
J. Mitchell Reese
Attorney in Fact
CARLYLE U.S. VENTURE PARTNERS, L.P.
By: Its General Partner, TCG Ventures, L.L.C.
By: /s/ J. Mitchell Reese
-------------------------
J. Mitchell Reese
Managing Director
<PAGE>
CARLYLE VENTURE COINVESTMENT, L.L.C.
By: Its Manager, TCG Ventures, L.L.C.
By: /s/ J. Mitchell Reese
-------------------------
J. Mitchell Reese
Managing Director
<PAGE>
PURCHASERS NOT PREVIOUSLY
PARTY TO THE AGREEMENT
NEW ENTERPRISE ASSOCIATES VIII,
LIMITED PARTNERSHIP
By: NEA Partners VIII, Limited Partnership
General Partner
By: /s/ Nancy Dorman
-----------------
General Partner
NEA PRESIDENTS' FUND, L.P.
By: NEA General Partners, L.P.
General Partner
By:/s/ Nancy Dorman
----------------
General Partner
NEA VENTURES 1999, L.P.
By:/s/ Nancy Dorman
----------------
Vice President
--------------
/s/ Frank A. Bonsal
- -------------------
Frank A. Bonsal
/s/ John Landry
- ---------------
John Landry
/s/ Avram Miller, Trustee
- -------------------------
The Avram Miller Trust
Intel Corporation
/s/ Arvind Sodhani
- ------------------
Arvid Sohani, Vice President and Treasurer
<PAGE>
Institutional Venture Partners, VIII, L.P.
By: its General Partner, Institutional Venture Management VIII, LLC
By: /s/ R. Thomas Dyal
------------------
R. Thomas, Dyal, Managing Director
IVM Investment Management Fund VIII, LLC,
By: its Manager Institutional Venture Management VIII, LLC
By: /s/ R. Thomas Dyal
------------------
R. Thomas, Dyal, Managing Director
IVP Broadband Fund, L.P.,
By: its General Partner IVP Broadband Management, LLC,
By: its Managing Director, Institutional Venture management VIII, LLC
By: /s/ R. Thomas Dyal
------------------
R. Thomas, Dyal, Managing Director
<PAGE>
Series B Purchaser
/s/ Thomas Washburne
- --------------------
Thomas Washburne
<PAGE>
Exhibit 4.4
AMENDMENT NO. 2 TO
REGISTRATION RIGHTS AGREEMENT
February 28, 2000
To each of the Purchasers named in
Schedule I to the Series C Convertible
Preferred Stock Purchase Agreement
dated February 28, 2000 (the "Purchasers")
Ladies and Gentlemen:
On June 4, 1998, Cidera, Inc. (formerly SkyCache, Inc.), a Delaware
corporation (the "Company"), Douglas E. Humphrey, Lisa Losito, each of the
several purchasers listed on Schedule I to that certain Series A Convertible
Preferred Stock Purchase Agreement of even date therewith, Anchor Financial
Group LLC, and the holders of the Warrants to Purchase shares of the Common
Stock, $.01 par value, of the Company issued pursuant to that certain Bridge
Financing Agreement dated February 16, 1998, entered into a Registration Rights
Agreement (as amended, the "Agreement") of even date therewith. On June 9, 1999,
the parties to the Agreement entered into Amendment No. 1 to the Agreement along
with the several purchasers listed on Schedule I to that certain Series B
Convertible Preferred Stock Purchase Agreement of even date with such Amendment
No. 1.
The parties to the Agreement now wish to further amend the Agreement to
extend the rights and benefits thereof to holders of Series C Convertible
Preferred Stock, $.01 par value, of the Company (the "Series C Preferred Stock")
issued pursuant to that certain Series C Convertible Preferred Stock Purchase
Agreement of even date herewith (the "Series C Stock Purchase Agreement") by and
among the Company and the Purchasers and to make certain other changes as
hereinafter set forth.
Section 13(d) of the Agreement provides for such Agreement to be amended
both with the written consent of the Company and the holders of at least
two-thirds of the outstanding shares of Restricted Stock (as defined therein).
In consideration of and pursuant to the foregoing, the Company covenants
and agrees with each of you that the Agreement is hereby amended as follows:
1. All of the shares of Series C Preferred Stock purchased pursuant to
the Series C Stock Purchase Agreement shall be "Preferred Shares" for
all purposes and to the same extent as if they were originally
included as "Preferred Shares"
<PAGE>
under the Agreement, all references in the Agreement to the "Preferred
Stock" and the "Purchase Agreement" shall include all of the shares of
such Series C Preferred Stock and the Series C Stock Purchase
Agreement, respectively and all references in the Agreement to
"Purchasers" shall include each Purchaser named in Schedule I to the
Series C Stock Purchase Agreement.
2. Section 4(b) of the Agreement is hereby amended by adding the
following sentence:
"Notwithstanding anything to the contrary contained herein, in the
event that the holders of 33% or more of the then outstanding shares
of Series C Preferred Stock (or Conversion Shares relating thereto)
elect not to include their shares of Restricted Stock in at least one
registration pursuant to this Section 4, such holders will be entitled
to require the Company to effect two additional registrations pursuant
to this Section 4, which registrations may be requested by a holder or
holders of at least 30% of the total shares of Series C Convertible
Preferred Stock of the Company then outstanding."
3. Section 4 of the Agreement is hereby amended by replacing "50%" in the
fourth line thereof with "30%."
4. With respect to registrations on Form S-3, Section 6 of the Agreement
is hereby amended by replacing "50%" in the second line thereof and
replacing it with "20%."
5. Section 9(d) of the Agreement is hereby amended by replacing:
"provided, however, that, in any such case, (A) no such holder will be
-------- -------
required to contribute any amount in excess of the public offering
price of all such Restricted Stock, Warrant Shares or Founders' Stock
offered by it pursuant to such registration statement;" beginning in
the sixteenth line, with: "provided, however, that, in any such case,
-------- -------
(A) no such holder will be required to contribute any amount in excess
of the net proceeds received by such holder for all such Restricted
Stock, Warrant Shares or Founders' Stock offered by it pursuant to
such registration statement;".
6. Section 13(c) of the Agreement is hereby amended to replace the word
"Maryland" with the word "Delaware." The following additional language
is hereby added to such Section 13(c): "Each of the parties hereby
submits to
<PAGE>
personal jurisdiction and waives any objection as to venue in the
State of Delaware. Service of process on the parties in any action
arising out of or relating to this Agreement shall be effective if
provided in accordance with Section 13(b). The parties hereby waive
all right to trial by jury in any action or proceeding to enforce or
defend any rights under this Agreement."
7. Section 13(d) of the Agreement is hereby amended by adding the
following sentence:
"Notwithstanding anything to the contrary in this Agreement, the
provisions of Section 4(b) hereof shall not be amended without the
consent of holders of at least two-thirds of the outstanding shares of
the Series C Preferred Stock."
This Amendment 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. This Amendment shall be effective upon execution by the
Company and the holders of at least two-thirds of the outstanding shares of
Restricted Stock (as defined in the Agreement).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Please indicate your acceptance of the foregoing by signing and returning
the enclosed counterpart of this letter, whereupon this Agreement shall be a
binding agreement between the Company and you.
Very truly yours,
CIDERA, INC.
By: /s/ Douglas E. Humphrey
---------------------------------
Douglas E. Humphrey
President and Chief Executive
Officer
AGREED TO AND ACCEPTED as of the
date first above written.
CARLYLE VENTURE PARTNERS, L.P.
By: Its General Partner, TCG Ventures, Ltd.
By: /s/ J. Mitchell Reese
-----------------------------
J. Mitchell Reese
Attorney in Fact
C/S Venture INVESTORS, L.P.
By: Its General Partner, TCG Ventures, Ltd.
By: /s/ J. Mitchell Reese
-----------------------------
J. Mitchell Reese
Attorney in Fact
Carlyle U.S. Venture Partners, L.P.
By: Its General Partner, TCG Ventures, L.L.C.
By: /s/ J. Mitchell Reese
-----------------------------
J. Mitchell Reese
Managing Director
[SIGNATURE PAGE TO AMENDMENT NO. 2
TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
Carlyle Venture Coinvestment, L.L.C.
By: Its Manager, TCG Ventures, L.L.C.
By: /s/ J. Mitchell Reese
-----------------------------
J. Mitchell Reese
Managing Director
/s/ Douglas E. Humphrey
- -----------------------
Douglas E. Humphrey
/s/ Lisa Losito
- ---------------
Lisa Losito
NEW ENTERPRISE ASSOCIATES VIII,
LIMITED PARTNERSHIP
By: NEA Partners VIII, Limited Partnership
General Partner
By: /s/ Peter Barris
-----------------
General Partner
NEA PRESIDENTS' FUND, L.P.
By: NEA General Partners, L.P.
General Partner
By: /s/ Peter Barris
-----------------
General Partner
NEA VENTURES 1999, L.P.
By: /s/ Peter Barris
-----------------
General Partner
[SIGNATURE PAGE TO AMENDMENT NO. 2
TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
INSTITUTIONAL VENTURE PARTNERS VIII, L.P.
By: its General Partner, Institutional Venture Management VIII, LLC
By: /s/ R. Thomas Dyal
-----------------------------------
R. Thomas Dyal, Managing Director
IVM INVESTMENT FUND VIII, LLC
By: its Manager Institutional Venture Management VIII, LLC
By: /s/ R. Thomas Dyal
-----------------------------------
R. Thomas Dyal, Managing Director
IVP BROADBAND FUND, L.P.
By: its General Partner IVP Broadband Management, LLC
By: its Managing Director, Institutional Venture Management VIII, LLC
By: /s/ R. Thomas Dyal
-----------------------------------
R. Thomas Dyal, Managing Director
INTEL CORPORATION
By: Noel Lazo
---------
Its: Assistant Treasurer
-------------------
PURCHASERS NOT PREVIOUSLY PARTY TO THE
AGREEMENT
GE CAPITAL EQUITY INVESTMENTS, INC.
By:/s/ Steven D. Smith
-------------------
Name: Steven D. Smith
---------------
Title: Managing Director
-----------------
[SIGNATURE PAGE TO AMENDMENT NO. 2
TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
INVESTOR (GUERNSEY) LTD.
By: /s/ David Jeffreys Marc Hollander
----------------------------------
Name: David Jeffreys Marc Hollander
--------------------------------
Title:
--------------------------------
DELL USA, L.P.
By: Dell Gen. P. Corp., its general partner
By: /s/ Alex C. Smith
-----------------
Name: Alex C. Smith
---------------
Title: Vice President
--------------
PSINET STRATEGIC INVESTMENTS, INC.
By: /s/ Harold S. Wills
-------------------
Name: Harold S. Wills
-----------------
Title: V.P. PSINet Strategic Investments, Inc.
---------------------------------------
/s/ Edward Postal
- -----------------
Edward Postal
/s/ Thom F. Degnan Diane H. Degnan
- ------------------------------------
Thom F. and Diane H. Degnan, JTWROS
/s/ Diane H. Degnan
- -------------------
Diane H. Degnan,
as custodian for Jamie Degnan
/s/ Diane H. Degnan
- -------------------
Diane H. Degnan,
as custodian for Todd Degnan
/s/ John Landry
- -------------------------------------
John Landry
[SIGNATURE PAGE TO AMENDMENT NO. 2
TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
/s/ John Landry, as custodian for Jillian K. Landry
- ---------------------------------------------------
John Landry,
as custodian for Jillian K. Landry
/s/ Adam Landry
- ---------------
Adam J. Landry
MCI WORLDCOM VENTURE FUND, INC.
By: /s/ Susan Mayer
-----------------------
Name: Susan Mayer
---------------------
Title: President
--------------------
/s/ John Sidmore
- --------------------------
John Sidgmore
/s/ Arno Penzias
- --------------------------
Arno Penzias
/s/ Wayne Correia
- --------------------------
Wayne Correia
[SIGNATURE PAGE TO AMENDMENT NO. 2
TO REGISTRATION RIGHTS AGREEMENT]
<PAGE>
Exhibit 10.1
CIDERA,INC.
1998 FOUNDERS STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED)
<PAGE>
Table Of Contents
(CONTENTS)
Page
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 1 DEFINITIONS.................................................. 1
ARTICLE 2 PURPOSES..................................................... 3
ARTICLE 3 ADMINISTRATION............................................... 3
ARTICLE 4 RIGHT OF FIRST REFUSAL....................................... 4
4.1 Right of First Refusal....................................... 4
4.2 Notice of Proposed Transfer.................................. 4
4.3 Exercise of Right of First Refusal........................... 4
4.4 Purchase Price............................................... 4
4.5 Payment...................................................... 4
4.6 Holder's Right to Transfer................................... 4
4.7 Exempt Transfers............................................. 5
ARTICLE 5 STOCK SUBJECT TO PLAN........................................ 5
5.1 Shared Issues................................................ 5
5.2 Aggregate Limit.............................................. 5
5.3 Reallocation of Shares....................................... 6
ARTICLE 6 OPTIONS...................................................... 6
6.1 Award........................................................ 6
6.2 Option Price................................................. 6
6.3 Maximum Option Period........................................ 6
6.4 Nontransferability........................................... 6
6.5 Employee Status.............................................. 6
6.6 Exercise..................................................... 7
6.7 Payment...................................................... 7
6.8 Installment Payment.......................................... 7
6.9 Stockholder Rights........................................... 8
6.10 Disposition of Stock......................................... 8
ARTICLE 7 SARS......................................................... 8
7.1 Award........................................................ 8
7.2 Maximum SAR Period........................................... 8
7.3 Nontransferability........................................... 8
</TABLE>
<PAGE>
Table Of Contents
(CONTINUED)
<TABLE>
<CAPTION>
Page
<S> <C>
7.4 Exercise............................................................... 8
7.5 Employee Status........................................................ 9
7.6 Settlement............................................................. 9
7.7 Stockholder Rights..................................................... 9
ARTICLE 8 STOCK AWARDS........................................................... 9
8.1 Award.................................................................. 9
8.2 Vesting................................................................ 9
8.3 Employee Status........................................................ 9
8.4 Stockholder Rights; Eligibility Limits, Termination for Cause.......... 10
ARTICLE 9 ADJUSTMENT UPON CHANGE IN COMMON STOCK................................. 10
ARTICLE 10 COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES.................. 11
ARTICLE 11 GENERAL PROVISIONS..................................................... 11
11.1 Effect on Employment and Service....................................... 11
11.2 Unfunded Plan.......................................................... 11
11.3 Rules of Construction.................................................. 12
ARTICLE 12 AMENDMENT.............................................................. 12
ARTICLE 13 DURATION OF PLAN....................................................... 12
ARTICLE 14 EFFECTIVE DATE OF PLAN................................................. 12
</TABLE>
ii.
<PAGE>
CIDERA, INC.
1998 FOUNDERS STOCK INCENTIVE PLAN
(Amended and Restated)
INTRODUCTION
This Plan is an amendment and restatement of the Company's existing
"SkyCache, Inc. 1998 Founders Stock Incentive Plan," as permitted by Article 12
of the Plan, and shall become effective on the date of approval of the amended
and restated version of the Plan by the Company's board of directors.
ARTICLE 1
DEFINITIONS
1.1 "Administrator" means the Board and any delegate of the Board that is
appointed in accordance with Article 3.
1.2 "Affiliate" means any "subsidiary" or "parent" corporation (within the
meaning of Section 424 of the Code) of the Company.
1.3 "Agreement" means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the terms
and conditions of a Stock Award, an Option or SAR granted to such Participant.
1.4 "Board" means the Board of Directors of the Company.
1.5 "Code" means the Internal Revenue Code of 1986, and any amendments
thereto.
1.6 "Common Stock" means the common stock of the Company.
1.7 "Company" means Cidera, Inc., a Delaware corporation. The Company was
formerly known as SkyCache, Inc. prior to a name change approved by the Board on
January 11, 2000.
1.8 "Corresponding SAR" means an SAR that is granted in relation to a
particular Option and that can be exercised only upon the surrender to the
Company, unexercised, of that portion of the Option to which the SAR relates.
1.9 "Fair Market Value" means, on any given date, the value of one share
of the Common Stock determined as follows:
<PAGE>
(i) if the Common Stock is listed on an established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Common Stock) on the last market trading day prior to the day
of determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable.
(ii) in the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Administrator using
any reasonable method.
1.10 "Initial Value" means, with respect to an SAR, the Fair Market Value
on the date of grant.
1.11 "Option" means a stock option that entitles the holder to purchase
from the Company a stated number of shares of Common Stock at the price set
forth in an Agreement.
1.12 "Participant" means an employee, consultant or director of the Company
or an Affiliate, including an employee who is a member of the Board or an
individual who provides services to the Company or an Affiliate, who satisfies
the requirements of Company policy and applicable statutes/regulations, and is
selected by the Administrator to receive a Stock Award, an Option (ISO or Non-
Qualified), an SAR, or a combination thereof
1.13 "Plan" means the Cidera, Inc. 1998 Founders Stock Incentive Plan.
1.14 "SAR" means a stock appreciation right that in accordance with the
terms of an Agreement entitles the holder to receive, with respect to each share
of Common Stock encompassed by the exercise of such SAR, the amount determined
by the Administrator and specified in an Agreement. In the absence of such a
determination, the holder shall be entitled to receive, with respect to each
share of Common Stock encompassed by the exercise of such SAR, the excess of the
Fair Market Value on the date of exercise over the Initial Value. References to
"SARs" include both Corresponding SARs and SARs granted independently of
Options, unless the context requires otherwise.
1.15 "Stock Award" means Common Stock awarded to a Participant under
Article 8.
1.16 "Ten Percent Stockholder" means any individual owning more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of an Affiliate. An individual shall be considered to own any voting
stock owned (directly or indirectly) by or for his brothers, sisters, spouse,
ancestors or lineal descendants and shall be considered to own proportionately
any voting stock owned (directly or indirectly) by or for a corporation,
partnership, estate or trust of which such individual is a stockholder, partner
or beneficiary.
2.
<PAGE>
ARTICLE 2
PURPOSES
The Plan is intended to assist the Company and its Affiliates in recruiting
and retaining individuals with ability and initiative by enabling such persons
to participate in the future success of the Company and its Affiliates and to
associate their interests with those of the Company and its stockholders. The
Plan is intended to permit the grant of both Options qualifying under Section
422 of the Code ("incentive stock options") and Options not so qualifying, and
the grant of SARs and Stock Awards. No Option that is intended to be an
incentive stock option shall be invalid for failure to qualify as an incentive
stock option. The proceeds received by the Company from the sale of Common Stock
pursuant to this Plan shall be used for general corporate purposes.
ARTICLE 3
ADMINISTRATION
The Plan shall be administered by the Administrator. The Administrator
shall have authority to grant Stock Awards, Options and SARs upon such terms
(not inconsistent with the provisions of this Plan) as the Administrator may
consider appropriate. Such terms may include conditions (in addition to those
contained in this Plan) on the exercisability of all or any part of an Option or
SAR or on the transferability or forfeitability of a Stock Award.
Notwithstanding any such conditions, the Administrator may, in its discretion,
accelerate the time at which any Option or SAR may be exercised, or the time at
which a Stock Award may become transferable or nonforfeitable. In addition, the
Administrator shall have complete authority to interpret all provisions of this
Plan; to prescribe the form of Agreements; to adopt, amend, and rescind rules
and regulations pertaining to the administration of the Plan; and to make all
other determinations necessary or advisable for the administration of this Plan,
except as limited in Article 12 herein. The express grant in the Plan of any
specific power to the Administrator shall not be construed as limiting any power
or authority of the Administrator. Any decision made, or action taken, by the
Administrator in connection with the administration of this Plan shall be final
and conclusive. Neither the Administrator nor any member of the Board shall be
liable for any act done in good faith with respect to this Plan or any
Agreement, Option, SAR or Stock Award. All expenses of administering this Plan
shall be borne by the Company.
The Board, in its discretion, may delegate to one or more officers of the
Company all or part of the Board's authority and duties with respect to grants
and awards, in which case references to the Administrator in this Article 3
shall include the Board's delegate or delegates. The Board may revoke or amend
the terms of a delegation at any time but such action shall not invalidate any
prior actions of the Board's delegate or delegates that were consistent with the
terms of the Plan and the prior delegation.
3.
<PAGE>
ARTICLE 4
RIGHT OF FIRST REFUSAL
4.1 Right of First Refusal. Before any Common Stock held by any
Participant ("Purchase Shares") upon exercise of an Option or any transferee of
such shares (either being sometimes referred to herein as the "Holder") may be
sold or otherwise transferred (including without limitation a transfer by gift
or operation of law), the Company and/or its assignee(s) shall have an
assignable right of first refusal to purchase the Purchase Shares to be sold or
transferred (the "Offered Shares") on the terms and conditions set forth in this
Article 4 (the "Right of First Refusal").
4.2 Notice of Proposed Transfer. The Holder of the Purchase Shares shall
deliver to the Company a written notice (the "Notice") stating: (i) the Holder's
bona fide intention to sell or otherwise transfer the Offered Shares; (ii) the
name of each proposed bona fide purchaser or other transferee ("Proposed
Transferee"); (iii) the number of Offered Shares to be transferred to each
Proposed Transferee; (iv) the bona fide cash price or other consideration for
which the Holder proposes to transfer the Offered Shares (the "Offered Price");
and (v) that the Holder will offer to sell the Offered Shares to the Company
and/or its assignee(s) at the Offered Price as provided in this Article 4.
4.3 Exercise of Right of First Refusal. At any time within thirty (30)
days after the date of the Notice, the Company and/or its assignee(s) may, by
giving written notice to the Holder, elect to purchase all of the Offered Shares
proposed to be transferred to any one or more of the Proposed Transferees named
in the Notice, at the purchase price determined as specified below.
4.4 Purchase Price. The purchase price for the Offered Shares purchased
under this Article 4 will be the Offered Price. If the Offered Price includes
consideration other than cash, then the cash equivalent value of the non-cash
consideration shall conclusively be deemed to be the value of such non-cash
consideration as determined in good faith by the Administrator.
4.5 Payment. Payment of the purchase price for Offered Shares will be
payable, at the option of the Company and/or its assignee(s) (as applicable), by
check or by cancellation of all or a portion of any outstanding indebtedness of
the Holder to the Company (or to such assignee, in the case of a purchase of
Offered Shares by such assignee) or by any combination thereof. The purchase
price will be paid without interest within sixty (60) days after the Company's
receipt of the Notice, or, at the option of the Company and/or its assignee(s),
in the manner and at the time(s) set forth in the Notice.
4.6 Holder's Right to Transfer. If all of the Offered Shares proposed in
the Notice to be transferred to a given Proposed Transferee are not purchased by
the Company and/or its assignee(s) as provided in this Article 4, then the
Holder may sell or otherwise transfer such Offered Shares to that Proposed
Transferee at the Offered Price or at a higher price, provided that such sale or
other transfer is consummated within 120 days after the date of the Notice, and
provided further, that (i) any such sale or other transfer is effected in
compliance with all applicable securities laws and (ii) the Proposed Transferee
agrees in writing that the provisions
4.
<PAGE>
of this Article 4 will continue to apply to the Offered Shares in the hands of
such Proposed Transferee. If the Offered Shares described in the Notice are not
transferred to the Proposed Transferee within such 120 day period, then a new
Notice must be given to the Company, and the Company will again be offered the
Right of First Refusal before any Purchase Shares held by the Holder may be sold
or otherwise transferred.
4.7 Exempt Transfers. Notwithstanding anything to the contrary in this
Article 4, the following transfers of Purchase Shares will be exempt from the
Right of First Refusal: (1) the transfer of any or all of the Purchase Shares
during Participant's lifetime by gift or on Participant's death by will or
intestacy to Participant's "immediate family" (as defined below) or to a trust
for the benefit of Participant or Participant's immediate family, provided that
each transferee or other recipient agrees in a writing satisfactory to the
Company that the provisions of this Section will continue to apply to the
transferred Purchase Shares in the hands of such transferee or other recipient;
(ii) any transfer of Purchase Shares made pursuant to a statutory merger or
statutory consolidation of the Company with or into another corporation or
corporations (except that the Right of First Refusal will continue to apply
thereafter to such Purchase Shares, in which case the surviving corporation of
such merger or consolidation shall succeed to the rights or the Company under
this Section unless the agreement of merger or consolidation expressly otherwise
provides); or (iii) any transfer of Purchase Shares pursuant to the winding up
and dissolution of the Company. As used herein, the term "immediate family"
will mean Participant's spouse, the lineal descendant or antecedent, father,
mother, brother or sister, adopted child or grandchild of Participant or
Participant's spouse, or the spouse of any child, adopted child, grandchild or
adopted grandchild of Participant or Participant's spouse, and a person
domiciled with the Participant and whom by affidavit is the domestic partner of
the Participant in a committed relationship with one another.
ARTICLE 5
STOCK SUBJECT TO PLAN
5.1 Shared Issues. Upon the award of shares of Common Stock pursuant to a
Stock Award the Company may issue shares of Common Stock from its authorized but
unissued Common Stock. Upon the exercise of any Option or SAR the Company may
deliver to the Participant (or the Participant's broker if the Participant so
directs), shares of Common Stock from its authorized but unissued Common Stock.
5.2 Aggregate Limit. The maximum aggregate number of shares of Common
Stock that may be issued under this Plan pursuant to the exercise of SARs and
Options and the grant of Stock Awards is 1,370,054 shares. The maximum aggregate
number of shares that may be issued under this Plan shall be subject to
adjustment as provided in Article 9. The exercise of an SAR will reduce the
maximum aggregate number of shares of Common Stock that may be issued under this
Plan only to the extent that the SAR is settled by the issuance of shares of
Common Stock.
5.3 Reallocation of Shares. If an Option is terminated, in whole or in
part, for any reason other than its exercise or the exercise of a Corresponding
SAR that is settled with Common Stock, the number of shares of Common Stock
allocated to the Option or portion
5.
<PAGE>
thereof may be reallocated to other Options, SARs and Stock Awards to be granted
under this Plan. If an SAR is terminated, in whole or in part, for any reason
other than its exercise and settlement with Common Stock or the exercise of a
related Option, the number of shares of Common Stock allocated to the SAR or
portion thereof may be reallocated to other Options, SARs and Stock Awards to be
granted under this Plan. If a Stock Award is forfeited, in whole or in part, the
number of shares forfeited may be reallocated to other Options, SARs and Stock
Awards to be granted under this Plan.
ARTICLE 6
OPTIONS
6.1 Award. In accordance with the provisions of Article 4, the
Administrator will designate each individual to whom an Option is to be granted
and will specify the number of shares of Common Stock covered by such awards.
6.2 Option Price. The price per share or the formula for determining the
price per share for Common Stock purchased on the exercise of an Option shall be
determined by the Administrator on the date of grant. Notwithstanding the
preceding sentence, the price per share for Common Stock purchased on the
exercise of any Option that is an incentive stock option shall not be less than
the Fair Market Value on the date the Option is granted or, in the case of an
incentive stock option granted to an individual who is a Ten Percent Stockholder
on the date such option is granted, shall not be less than one hundred ten
percent (110%) of the Fair Market Value on the date the Option is granted.
6.3 Maximum Option Period. The maximum period in which an Option may be
exercised shall be determined by the Administrator on the date of grant, except
that no Option that is an incentive stock option shall be exercisable after the
expiration of ten years from the date such Option was granted. In the case of an
incentive stock option that is granted to a Participant who is a Ten Percent
Stockholder on the date of grant, such Option shall not be exercisable after the
expiration of five years from the date of grant. The terms of any Option that is
an incentive stock option may provide that it is exercisable for a period less
than such maximum period.
6.4 Nontransferability. Each Option granted under this Plan shall be
nontransferable except by will or by the laws of descent and distribution. In
the event of any such transfer, the Option and any Corresponding SAR that
relates to such Option must be transferred to the same person or persons or
entity or entities. During the lifetime of the Participant to whom the Option is
granted, the Option may be exercised only by the Participant. No right or
interest of a Participant in any Option or Stock obtained under this Plan shall
be liable for, or subject to, any lien, obligation, assignment, or liability of
such Participant.
6.5 Employee Status. For purposes of determining the applicability of
Section 422 of the Code (relating to incentive stock options), or in the event
that the terms of any Option provide that it may be exercised only during
employment or within a specified period of time after termination of employment,
the Administrator may decide to what extent leaves of absence for governmental
or military service shall not be deemed interruptions of continuous
6.
<PAGE>
employment. Employment shall not be considered interrupted for plan
participation or continuous vesting, for leaves of absence or any other extended
absence outside the current control of the employee.
6.6 Exercise. Subject to the provisions of this Plan and the applicable
Agreement, an Option may be exercised in whole at any time or in part from time
to time at such times and in compliance with such requirements as the
Administrator shall determine; provided, however, that incentive stock options
(granted under the Plan and all plans of the Company and its Affiliates) may not
be first exercisable in a calendar year for stock having a Fair Market Value
(determined as of the date an Option is granted) exceeding $100,000. An Option
granted under this Plan may be exercised with respect to any number of whole
shares, less than the full number for which the Option could be exercised. A
partial exercise of an Option shall not affect the right to exercise the Option
from time to time in accordance with this Plan and the applicable Agreement with
respect to the remaining shares subject to the Option. The exercise of an Option
shall result in the termination of any Corresponding SAR to the extent of the
number of shares with respect to which the Option is exercised.
6.7 Payment. Unless otherwise provided by the Agreement, payment of the
Option price shall be made in cash or a cash equivalent acceptable to the
Administrator. If the Agreement provides, payment of all or part of the Option
price may be made on a cashless basis by surrendering shares of Common Stock to
the Company. If Common Stock is used to pay all or part of the Option price, the
sum of the cash and cash equivalent and the Fair Market Value (determined as of
the day preceding the date of exercise) of the shares surrendered must not be
less than the Option price of the shares for which the Option is being
exercised.
6.8 Installment Payment. If the Participant is employed by the Company or
an Affiliate on the date the Option is exercised, payment of all or part of the
Option price may be made in installments. In that event the Company shall lend
the Participant an amount equal to not more than ninety percent (90%) of the
Option price of the shares acquired by the exercise of the Option. This amount
shall be evidenced by the Participant's promissory note and shall be payable in
not more than sixty equal monthly installments, unless the amount of the loan
exceeds the maximum loan value for the shares purchased, which value shall be
established from time to time by regulations of the Board of Governors of the
Federal Reserve System. In that event, the note shall be payable in equal
quarterly installments over a period of time not to exceed five years. The
Administrator, however, may vary such terms and make such other provisions
concerning the unpaid balance of such purchase price in the case of hardship,
subsequent termination of employment, leave of absence or other absence beyond
the current control of the employee, absence on military or government service,
or subsequent death of the Participant as in its discretion are necessary or
advisable in order to protect the Company, promote the purposes of the Plan and
comply with regulations of the Board of Governors of the Federal Reserve System
relating to securities credit transactions.
The Participant shall pay interest on the unpaid balance at the minimum
rate necessary to avoid imputed interest or original issue discount under the
Code. All shares acquired with cash borrowed from the Company shall be pledged
to the Company as security for the repayment thereof. In the discretion of the
Administrator, shares of stock may be released from such pledge proportionately
as payments on the note (together with interest) are made, provided the release
of
7.
<PAGE>
such shares complies with the regulations of the Federal Reserve System relating
to securities credit transactions then applicable. While shares are so pledged,
and so long as there has been no default in the installment payments, such
shares shall remain registered in the name of the Participant, and he shall have
the right to vote such shares and to receive all dividends thereon.
6.9 Stockholder Rights. No Participant shall have any rights as a
stockholder with respect to shares subject to his Option until the date of
exercise of such Option.
6.10 Disposition of Stock. A Participant shall notify the Company of any
sale or other disposition of Common Stock acquired pursuant to an option that
was an incentive stock option if such sale or disposition occurs (i) within two
years of the grant of an Option or (ii) within one year of the issuance of the
Common Stock to the Participant. Such notice shall be in writing and directed to
the Secretary of the Company.
ARTICLE 7
SARS
7.1 Award. The Administrator will designate each individual to whom SARs
are to be granted and will specify the number of shares covered by such awards.
No Participant may be granted Corresponding SARs (under all incentive stock
option plans of the Company and its Affiliates) that are related to incentive
stock options which are first exercisable in any calendar year for stock having
an aggregate Fair Market Value (determined as of the date the related Option is
granted) that exceeds $100,000.
7.2 Maximum SAR Period. The maximum period in which an SAR may be
exercised shall be determined by the Administrator on the date of grant, except
that no Corresponding SAR that is related to an incentive stock option shall be
exercisable after the expiration of ten years from the date such related Option
was granted. In the case of a Corresponding SAR that is related to an incentive
stock option granted to a Participant who is a Ten Percent Stockholder, such
Corresponding SAR shall not be exercisable after the expiration of five years
from the date such related Option was granted. The terms of any Corresponding
SAR that is related to an incentive stock option may provide that it is
exercisable for a period less than such maximum period.
7.3 Nontransferability. Each SAR granted under this Plan shall be
nontransferable except by will or by the laws of descent and distribution. In
the event of any such transfer, a Corresponding SAR and the related Option must
be transferred to the same person or persons or entity or entities. During the
lifetime of the Participant to whom the SAR is granted, the SAR may be exercised
only by the Participant. No right or interest of a Participant in any SAR shall
be liable for, or subject to, any lien, obligation, or, liability of such
Participant.
7.4 Exercise. Subject to the provisions of this Plan and the applicable
Agreement, an SAR may be exercised in whole at any time or in part from time to
time at such times and in compliance with such requirements as the Administrator
shall determine; provided, however, that a Corresponding SAR that is related to
an incentive stock option may be exercised only to the extent that the related
Option is exercisable and only when the Fair Market Value exceeds the
8.
<PAGE>
option price of the related Option. An SAR granted under this Plan may be
exercised with respect to any number of whole shares less than the full number
for which the SAR could be exercised. A partial exercise of an SAR shall not
affect the right to exercise the SAR from time to time in accordance with this
Plan and the applicable Agreement with respect to the remaining shares subject
to the SAR. The exercise of a Corresponding SAR shall result in the termination
of the related Option to the extent of the number of shares with respect to
which the SAR is exercised.
7.5 Employee Status. If the terms of any SAR provide that it may be
exercised only during employment or within a specified period of time after
termination of employment, the Administrator may decide to what extent leaves of
absence for governmental or military service shall not be deemed interruptions
of continuous employment. Employment shall not be considered interrupted for
plan participation or continuous vesting, for leaves of absence or any other
extended absence outside the current control of the employee.
7.6 Settlement. At the Administrator's discretion, the amount payable as a
result of the exercise of an SAR may be settled in cash, Common Stock, or a
combination of cash and Common Stock. No fractional share will be deliverable
upon the exercise of an SAR but a cash payment will be made in lieu thereof.
7.7 Stockholder Rights. No Participant shall, as a result of receiving an
SAR award, have any rights as a stockholder of the Company or any Affiliate
until the date that the SAR is exercised and then only to the extent that the
SAR is settled by the issuance of Common Stock.
ARTICLE 8
STOCK AWARDS
8.1 Award. The Administrator will designate each individual to whom a
Stock Award is to be made and will specify the number of shares of Common Stock
covered by such awards.
8.2 Vesting. The Administrator, on the date of the award, may prescribe
that a Participant's rights in the Stock Award shall be forfeitable or otherwise
restricted for a period of time or subject to such conditions as may be set
forth in the Agreement and or an incorporated Confidentiality and Engagement
Agreement or similar instrument as set out in 8.4.
8.3 Employee Status. In the event that the terms of any Stock Award
provide that shares may become transferable and nonforfeitable thereunder only
after completion of a specified period of employment, the Administrator may
decide in each case to what extent leaves of absence for governmental or
military service shall not be deemed interruptions of continuous employment.
Employment shall not be considered interrupted for plan participation or
continuous vesting, for leaves of absence or any other extended absence outside
the current control of the employee.
8.4 Stockholder Rights; Eligibility Limits, Termination for Cause. Prior
any forfeiture (in accordance with the applicable Agreement and/or
Confidentiality and Engagement Agreement, and while the shares of Common Stock
granted pursuant to the Stock Award may be
9.
<PAGE>
forfeited or are nontransferable), a Participant will have all rights of a
stockholder with respect to a Stock Award, including the right to receive
dividends and vote the shares; provided, however, that during such period (i) a
Participant may not sell, transfer, pledge, exchange, hypothecate, or otherwise
dispose of shares of Common Stock granted pursuant to a Stock Award, nor are
such shares subject to any form of levy; (ii) the Company shall retain custody
of the certificates evidencing shares of Common Stock granted pursuant to a
Stock Award, and (iii) the Participant will deliver to the Company a stock
power, endorsed in blank, with respect to each Stock Award. The limitations set
forth in the preceding sentence shall not apply after the shares of Common Stock
granted under the Stock Award are transferable and are no longer forfeitable.
Notwithstanding any other provision herein, at the Company's request, each
Participant shall execute with the Agreement hereunder, any contract which is
referenced in the Agreement where that contract is intended to protect Company
trade secrets, the dissemination of Company information, and/or limitations on
competition by a Participant. Any grant made in contravention of this provision
shall be void or voidable and be entirely without effect. Furthermore, the
Agreement and/or any contract as described above may delineate penalties for
breach thereof, including but not limited to forfeiture of all rights of
participation in this Plan, with full forfeiture of all benefits received or
anticipated to be received under this Plan.
Termination for cause shall, at the sole discretion of the Administrator,
cause total forfeiture under this Plan, both of benefits already received and
those which are anticipated. Termination for cause is defined as any act of
dishonesty where the Company is the victim; or where there is any breach of any
Agreement; or where a Participant deliberately has materially and in some
measurable way endangered the operations of the Company or any client or any
affiliate of the Company; or where there has been gross dereliction or
abdication of duty or refusal to perform assigned duties consistent with
required responsibilities; or where the Participant has violated in connection
with Company work any employment law barring discrimination or implicating
issues of safety of other persons, firms or property.
ARTICLE 9
ADJUSTMENT UPON CHANGE IN COMMON STOCK
The maximum number of shares as to which Options, SARs and Stock Awards may
be granted under this Plan and the terms of outstanding Stock Awards, Options,
and SARs shall be adjusted as the Board shall determine to be equitably required
in the event that (a) the Company (i) effects one or more stock dividends, stock
split-ups, subdivisions or consolidations of shares or (ii) engages in a
transaction to which Section 424 of the Code applies or (b) there occurs any
other event which, in the judgment of the Board necessitates such action. Any
determination made under this Article 9 by the Board shall be final and
conclusive.
The issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for
labor or services, either upon direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or obligations of
the Company convertible into such shares or other securities, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the maximum
number of
10.
<PAGE>
shares as to which Options, SARs and Stock Awards may be granted or the terms of
outstanding Stock Awards, Options or SARs.
The Administrator may make Stock Awards and may grant Options and SARs in
substitution for performance shares, phantom shares, stock awards, stock
options, stock appreciation rights, or similar awards held by an individual who
becomes an employee of the Company or an Affiliate in connection with a
transaction described in the first paragraph of this Article 9. Notwithstanding
any provision of the Plan (other than the limitation of Section 5.2), the terms
of such substituted Stock Awards or Option or SAR grants shall be as the
Administrator, in its discretion, determines is appropriate.
ARTICLE 10
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Option or SAR shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment shall
be made under this Plan except in compliance with all applicable federal and
state laws and regulations (including, without limitation, withholding tax
requirements), any listing agreement to which the Company is a party, and the
rules of all domestic stock exchanges on which the Company's shares may be
listed. The Company shall have the right to rely on an opinion of its counsel as
to such compliance. Any share certificate issued to evidence Common Stock when a
Stock Award is granted or for which an Option or SAR is exercised may bear such
legends and statements as the Administrator may deem advisable to assure
compliance with federal and state laws and regulations. No Option or SAR shall
be exercisable, no Stock Award shall be granted, no Common Stock shall be
issued, no certificate for shares shall be delivered, and no payment shall be
made under this Plan until the Company has obtained such consent or approval as
the Administrator may deem advisable from regulatory bodies having jurisdiction
over such matters.
ARTICLE 11
GENERAL PROVISIONS
11.1 Effect on Employment and Service. Neither the adoption of this Plan,
its operation, nor any documents describing or referring to this Plan (or any
part thereof) shall confer upon any individual any right to continue in the
employ or service of the Company or an Affiliate or in any way affect any right
and power of the Company or an Affiliate to terminate the employment or service
of any individual at any time with or without assigning a reason therefor.
11.2 Unfunded Plan. The Plan, insofar as it provides for grants, shall be
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon any contractual obligations that may be created pursuant to this
Plan. No such obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company.
11.
<PAGE>
11.3 Rules of Construction. Headings are given to the articles and sections
of this Plan solely as a convenience to facilitate reference. The reference to
any statute, regulation, or other provision of law shall be construed to refer
to any amendment to or successor of such provision of law.
ARTICLE 12
AMENDMENT
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until stockholder approval is
obtained if (i) the amendment increases the aggregate number of shares of Common
Stock that may be issued under the Plan or (ii) the amendment changes the class
of individuals eligible to become Participants. No amendment shall, without a
Participant's consent, adversely affect any rights of such Participant under any
outstanding Stock Award, Option or SAR outstanding at the time such amendment is
made. No amendment (other than (i) and (ii) above) may be undertaken to this
Plan or Agreements hereunder without the express written permission of the
Participant; no Participant refusal to agree to such an amendment may be taken
into account in any aspect of employment with the Company or participation in
this or any subsequent Plan.
ARTICLE 13
DURATION OF PLAN
No Stock Award, Option or SAR may be granted under this Plan more than ten
years after the earlier of the date this Plan is adopted by the Board or the
date this Plan is approved by stockholders in accordance with Article 14. Stock
Awards, Options and SARs granted before that date shall remain valid in
accordance with their terms.
ARTICLE 14
EFFECTIVE DATE OF PLAN
Options and SARs may be granted under this Plan upon its adoption by the
Board, provided that no Option or SAR shall be effective or exercisable unless
this Plan is approved by a majority of the votes entitled to be cast by the
Company's stockholders, voting either in person or by proxy, at a duly held
stockholders' meeting within twelve months of such adoption. Stock Awards may be
granted under this Plan upon the later of its adoption by the Board or its
approval by stockholders in accordance with the preceding sentence.
12.
<PAGE>
Exhibit 10.2
CIDERA, INC.
1998 EMPLOYEE STOCK INCENTIVE PLAN
(AMENDED AND RESTATED)
INTRODUCTION
This Plan is an amendment and restatement of the Company's existing
"SkyCache, Inc. 1998 Employee Stock Incentive Plan," as permitted by Article 12
of the Plan, and shall become effective on the date of approval of the amended
and restated version of the Plan by the Company's Board of Directors.
ARTICLE 1
DEFINITIONS
1.1 "Administrator" means the Board and any delegate of the Board that is
appointed in accordance with Article 3.
1.2 "Affiliate" means any "subsidiary" or "parent" corporation (within the
meaning of Section 424 of the Code) of the Company.
1.3 "Agreement" means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the terms
and conditions of a Stock Award, an Option or SAR granted to such Participant.
1.4 "Board" means the Board of Directors of the Company.
1.5 "Code" means the Internal Revenue Code of 1986, and any amendments
thereto.
1.6 "Common Stock" means the common stock of the Company.
1.7 "Company" means Cidera, Inc., a Delaware corporation. The Company was
formerly known as SkyCache, Inc. prior to a name change approved by the Board on
January 11, 2000.
1.8 "Corresponding SAR" means an SAR that is granted in relation to a
particular Option and that can be exercised only upon the surrender to the
Company, unexercised, of that portion of the Option to which the SAR relates.
1.9 "Fair Market Value" means, on any given date, the value of one share
of the Common Stock determined as follows:
(i) if the Common Stock is listed on an established stock exchange
or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair
Market Value of a share of Common Stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the
1.
<PAGE>
greatest volume of trading in the Common Stock) on the last market trading day
prior to the day of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable.
(ii) in the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Administrator using any
reasonable method.
1.10 "Initial Value" means, with respect to an SAR, the Fair Market Value
on the date of grant.
1.11 "Option" means a stock option that entitles the holder to purchase
from the Company a stated number of shares of Common Stock at the price set
forth in an Agreement.
1.12 "Participant" means an employee, consultant or director of the Company
or an Affiliate, including an employee who is a member of the Board or an
individual who provides services to the Company or an Affiliate, who satisfies
the requirements of Article 4 and is selected by the Administrator to receive a
Stock Award, an Option, an SAR, or a combination thereof.
1.13 "Plan" means the Cidera, Inc. 1998 Employee Stock Incentive Plan.
1.14 "SAR" means a stock appreciation right that in accordance with the
terms of an Agreement entitles the holder to receive, with respect to each share
of Common Stock encompassed by the exercise of such SAR, the amount determined
by the Administrator and specified in an Agreement. In the absence of such a
determination, the holder shall be entitled to receive, with respect to each
share of Common Stock encompassed by the exercise of such SAR, the excess of the
Fair Market Value on the date of exercise over the Initial Value. References to
"SARs" include both Corresponding SARs and SARs granted independently of
Options, unless the context requires otherwise.
1.15 "Stock Award" means Common Stock awarded to a Participant under
Article 8.
1.16 "Ten Percent Stockholder" means any individual owning more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of an Affiliate. An individual shall be considered to own any voting
stock owned (directly or indirectly) by or for his brothers, sisters, spouse,
ancestors or lineal descendants and shall be considered to own proportionately
any voting stock owned (directly or indirectly) by or for a corporation,
partnership, estate or trust of which such individual is a stockholder, partner
or beneficiary.
ARTICLE 2
PURPOSES
The Plan is intended to assist the Company and its Affiliates in recruiting
and retaining individuals with ability and initiative by enabling such persons
to participate in the future success of the Company and its Affiliates and to
associate their interests with those of the Company and its stockholders. The
Plan is intended to permit the grant of both Options qualifying under
2.
<PAGE>
Section 422 of the Code ("incentive stock options") and Options not so
qualifying, and the grant of SARs and Stock Awards. No Option that is intended
to be an incentive stock option shall be invalid for failure to qualify as an
incentive stock option. The proceeds received by the Company from the sale of
Common Stock pursuant to this Plan shall be used for general corporate purposes.
ARTICLE 3
ADMINISTRATION
Plan shall be administered by the Administrator. The Administrator shall
have authority to grant Stock Awards, Options and SARs upon such terms (not
inconsistent with the provisions of this Plan) as the Administrator may consider
appropriate. Such terms may include conditions (in addition to those contained
in this Plan) on the exercisability of all or any part of an Option or SAR or on
the transferability or forfeitability of a Stock Award. Notwithstanding any
such conditions, the Administrator may, in its discretion, accelerate the time
at which any Option or SAR may be exercised, or the time at which a Stock Award
may become transferable or nonforfeitable. In addition, the Administrator shall
have complete authority to interpret all provisions of this Plan; to prescribe
the form of Agreements; to adopt, amend, and rescind rules and regulations
pertaining to the administration of the Plan; and to make all other
determinations necessary or advisable for the administration of this Plan. The
express grant in the Plan of any specific power to the Administrator shall not
be construed as limiting any power or authority of the Administrator. Any
decision made, or action taken, by the Administrator in connection with the
administration of this Plan shall be final and conclusive. Neither the
Administrator nor any member of the Board shall be liable for any act done in
good faith with respect to this Plan or any Agreement, Option, SAR or Stock
Award. All expenses of administering this Plan shall be borne by the Company.
The Board, in its discretion, may delegate to one or more officers of the
Company all or part of the Board's authority and duties with respect to grants
and awards to individuals who satisfy the requirements of Article 4, in which
case references to the Administrator in this Article 3 shall include the Board's
delegate or delegates. The Board may revoke or amend the terms of a delegation
at any time but such action shall not invalidate any prior actions of the
Board's delegate or delegates that were consistent with the terms of the Plan
and the prior delegation.
ARTICLE 4
RIGHT OF FIRST REFUSAL
4.1 Right of First Refusal. Before any Common Stock held by any
Participant ("Purchase Shares") upon exercise of an Option or any transferee of
such shares (either being sometimes referred to herein as the "Holder") may be
sold or otherwise transferred (including without limitation a transfer by gift
or operation of law), the Company and/or its assignee(s) shall have an
assignable right of first refusal to purchase the Purchase Shares to be sold or
transferred (the "Offered Shares") on the terms and conditions set forth in this
Article 4 (the "Right of First Refusal").
3.
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4.2 Notice of Proposed Transfer. The Holder of the Purchase Shares shall
deliver to the Company a written notice (the "Notice") stating: (i) the
Holder's bona fide intention to sell or otherwise transfer the Offered Shares;
(ii) the name of each proposed bona fide purchaser or other transferee
("Proposed Transferee"); (iii) the number of Offered Shares to be transferred to
each Proposed Transferee; (iv) the bona fide cash price or other consideration
for which the Holder proposes to transfer the Offered Shares (the "Offered
Price"); and (v) that the Holder will offer to sell the Offered Shares to the
Company and/or its assignee(s) at the Offered Price as provided in this Article
4.
4.3 Exercise of Right of First Refusal. At any time within thirty (30)
days after the date of the Notice, the Company and/or its assignee(s) may, by
giving written notice to the Holder, elect to purchase all of the Offered Shares
proposed to be transferred to any one or more of the Proposed Transferees named
in the Notice, at the purchase price determined as specified below.
4.4 Purchase Price. The purchase price for the Offered Shares purchased
under this Article 4 will be the Offered Price. If the Offered Price includes
consideration other than cash, then the cash equivalent value of the non-cash
consideration shall conclusively be deemed to be the value of such non-cash
consideration as determined in good faith by the Administrator.
4.5 Payment. Payment of the purchase price for Offered Shares will be
payable, at the option of the Company and/or its assignee(s) (as applicable), by
check or by cancellation of all or a portion of any outstanding indebtedness of
the Holder to the Company (or to such assignee, in the case of a purchase of
Offered Shares by such assignee) or by any combination thereof. The purchase
price will be paid without interest within sixty (60) days after the Company's
receipt of the Notice, or, at the option of the Company and/or its assignee(s),
in the manner and at the time(s) set forth in the Notice.
4.6 Holder's Right to Transfer. If all of the Offered Shares proposed in
the Notice to be transferred to a given Proposed Transferee are not purchased by
the Company and/or its assignee(s) as provided in this Article 4, then the
Holder may sell or otherwise transfer such Offered Shares to that Proposed
Transferee at the Offered Price or at a higher price, provided that such sale or
other transfer is consummated within 120 days after the date of the Notice, and
provided further, that (i) any such sale or other transfer is effected in
compliance with all applicable securities laws and (ii) the Proposed Transferee
agrees in writing that the provisions of this Article 4 will continue to apply
to the Offered Shares in the hands of such Proposed Transferee. If the Offered
Shares described in the Notice are not transferred to the Proposed Transferee
within such 120 day period, then a new Notice must be given to the Company, and
the Company will again be offered the Right of First Refusal before any Purchase
Shares held by the Holder may be sold or otherwise transferred.
4.7 Exempt Transfers. Notwithstanding anything to the contrary in this
Article 4, the following transfers of Purchase Shares will be exempt from the
Right of First Refusal: (i) the transfer of any or all of the Purchase Shares
during Participant's lifetime by gift or on Participant's death by will or
intestacy to Participant's "immediate family" (as defined below) or to a trust
for the benefit of Participant or Participant's immediate family, provided that
each transferee or other recipient agrees in a writing satisfactory to the
Company that the provisions of
4.
<PAGE>
this Section will continue to apply to the transferred Purchase Shares in the
hands of such transferee or other recipient; (ii) any transfer of Purchase
Shares made pursuant to a statutory merger or statutory consolidation of the
Company with or into another corporation or corporations (except that the Right
of First Refusal will continue to apply thereafter to such Purchase Shares, in
which case the surviving corporation of such merger or consolidation shall
succeed to the rights or the Company under this Section unless the agreement of
merger or consolidation expressly otherwise provides); or (iii) any transfer of
Purchase Shares pursuant to the winding up and dissolution of the Company. As
used herein, the term "immediate family" will mean Participant's spouse, the
lineal descendant or antecedent, father, mother, brother or sister, adopted
child or grandchild of Participant or Participant's spouse, or the spouse of any
child, adopted child, grandchild or adopted grandchild of Participant or
Participant's spouse.
ARTICLE 5
STOCK SUBJECT TO PLAN
5.1 Shares Issued. Upon the award of shares of Common Stock pursuant to a
Stock Award the Company may issue shares of Common Stock from its authorized but
unissued Common Stock. Upon the exercise of any Option or SAR the Company may
deliver to the Participant (or the Participant's broker if the Participant so
directs), shares of Common Stock from its authorized but unissued Common Stock.
5.2 Aggregate Limit. The maximum aggregate number of shares of Common
Stock that may be issued under this Plan pursuant to the exercise of SARs and
Options and the grant of Stock Awards is 2,939,438 shares. The maximum
aggregate number of shares that may be issued under this Plan shall be subject
to adjustment as provided in Article 9. The exercise of an SAR will reduce the
maximum aggregate number of shares of Common Stock that may be issued under this
Plan only to the extent that the SAR is settled by the issuance of shares of
Common Stock.
5.3 Reallocation of Shares. If an Option is terminated, in whole or in
part, for any reason other than its exercise or the exercise of a Corresponding
SAR that is settled with Common Stock, the number of shares of Common Stock
allocated to the Option or portion thereof may be reallocated to other Options,
SARs and Stock Awards to be granted under this Plan. If an SAR is terminated,
in whole or in part, for any reason other than its exercise and settlement with
Common Stock or the exercise of a related Option, the number of shares of Common
Stock allocated to the SAR or portion thereof may be reallocated to other
Options, SARs and Stock Awards to be granted under this Plan. If a Stock Award
is forfeited, in whole or in part, the number of shares forfeited may be
reallocated to other Options, SARs and Stock Awards to be granted under this
Plan.
5.
<PAGE>
ARTICLE 6
OPTIONS
6.1 Award. In accordance with the provisions of Article 4, the
Administrator will designate each individual to whom an Option is to be granted
and will specify the number of shares of Common Stock covered by such awards.
6.2 Option Price. The price per share or the formula for determining the
price per share for Common Stock purchased on the exercise of an Option shall be
determined by the Administrator on the date of grant. Notwithstanding the
preceding sentence, the price per share for Common Stock purchased on the
exercise of any Option that is an incentive stock option shall not be less than
the Fair Market Value on the date the Option is granted or, in the case of an
incentive stock option granted to an individual who is a Ten Percent Stockholder
on the date such option is granted, shall not be less than one hundred ten
percent (110%) of the Fair Market Value on the date the Option is granted.
6.3 Maximum Option Period. The maximum period in which an Option may be
exercised shall be determined by the Administrator on the date of grant, except
that no Option that is an incentive stock option shall be exercisable after the
expiration of ten years from the date such Option was granted. In the case of
an incentive stock option that is granted to a Participant who is a Ten Percent
Stockholder on the date of grant, such Option shall not be exercisable after the
expiration of five years from the date of grant. The terms of any Option that
is an incentive stock option may provide that it is exercisable for a period
less than such maximum period.
6.4 Nontransferability. Each Option granted under this Plan shall be
nontransferable except by will or by the laws of descent and distribution. In
the event of any such transfer, the Option and any Corresponding SAR that
relates to such Option must be transferred to the same person or persons or
entity or entities. During the lifetime of the Participant to whom the Option
is granted, the Option may be exercised only by the Participant. No right or
interest of a Participant in any Option shall be liable for, or subject to, any
lien, obligation, or liability of such Participant.
6.5 Employee Status. For purposes of determining the applicability of
Section 422 of the Code (relating to incentive stock options), or in the event
that the terms of any Option provide that it may be exercised only during
employment or within a specified period of time after termination of employment,
the Administrator may decide to what extent leaves of absence for governmental
or military service, illness, temporary disability, or other reasons shall not
be deemed interruptions of continuous employment.
6.6 Exercise. Subject to the provisions of this Plan and the applicable
Agreement, an Option may be exercised in whole at any time or in part from time
to time at such times and in compliance with such requirements as the
Administrator shall determine; provided, however, that incentive stock options
(granted under the Plan and all plans of the Company and its Affiliates) may not
be first exercisable in a calendar year for stock having a Fair Market Value
(determined as of the date an Option is granted) exceeding $100,000. An Option
granted under
6.
<PAGE>
this Plan may be exercised with respect to any number of whole shares less than
the full number for which the Option could be exercised. A partial exercise of
an Option shall not affect the right to exercise the Option from time to time in
accordance with this Plan and the applicable Agreement with respect to the
remaining shares subject to the Option. The exercise of an Option shall result
in the termination of any Corresponding SAR to the extent of the number of
shares with respect to which the Option is exercised.
6.7 Payment. Unless otherwise provided by the Agreement, payment of the
Option price shall be made in cash or a cash equivalent acceptable to the
Administrator. If the Agreement provides, payment of all or part of the Option
price may be made on a cashless basis by surrendering shares of Common Stock to
the Company. If Common Stock is used to pay all or part of the Option price,
the sum of the cash and cash equivalent and the Fair Market Value (determined as
of the day preceding the date of exercise) of the shares surrendered must not be
less than the Option price of the shares for which the Option is being
exercised.
6.8 Stockholder Rights. No Participant shall have any rights as a
stockholder with respect to shares subject to his Option until the date of
exercise of such Option.
6.9 Disposition of Stock. A Participant shall notify the Company of any
sale or other disposition of Common Stock acquired pursuant to an Option that
was an incentive stock option if such sale or disposition occurs (i) within two
years of the grant of an Option or (ii) within one year of the issuance of the
Common Stock to the Participant. Such notice shall be in writing and directed
to the Secretary of the Company.
ARTICLE 7
SARS
7.1 Award. In accordance with the provisions of Article 4, the
Administrator will designate each individual to whom SARs are to be granted and
will specify the number of shares covered by such awards. No Participant may be
granted Corresponding SARs (under all incentive stock option plans of the
Company and its Affiliates) that are related to incentive stock options which
are first exercisable in any calendar year for stock having an aggregate Fair
Market Value (determined as of the date the related Option is granted) that
exceeds $100,000.
7.2 Maximum SAR Period. The maximum period in which an SAR may be
exercised shall be determined by the Administrator on the date of grant, except
that no Corresponding SAR that is related to an incentive stock option shall be
exercisable after the expiration of ten years from the date such related Option
was granted. In the case of a Corresponding SAR that is related to an incentive
stock option granted to a Participant who is a Ten Percent Stockholder, such
Corresponding SAR shall not be exercisable after the expiration of five years
from the date such related Option was granted. The terms of any Corresponding
SAR that is related to an incentive stock option may provide that it is
exercisable for a period less than such maximum period.
7.3 Nontransferability. Each SAR granted under this Plan shall be
nontransferable except by will or by the laws of descent and distribution. In
the event of any such transfer, a
7.
<PAGE>
Corresponding SAR and the related Option must be transferred to the same person
or persons or entity or entities. During the lifetime of the Participant to whom
the SAR is granted, the SAR may be exercised only by the Participant. No right
or interest of a Participant in any SAR shall be liable for, or subject to, any
lien, obligation, or liability of such Participant.
7.4 Exercise. Subject to the provisions of this Plan and the applicable
Agreement, an SAR may be exercised in whole at any time or in part from time to
time at such times and in compliance with such requirements as the Administrator
shall determine; provided, however, that a Corresponding SAR that is related to
an incentive stock option may be exercised only to the extent that the related
Option is exercisable and only when the Fair Market Value exceeds the option
price of the related Option. An SAR granted under this Plan may be exercised
with respect to any number of whole shares less than the full number for which
the SAR could be exercised. A partial exercise of an SAR shall not affect the
right to exercise the SAR from time to time in accordance with this Plan and the
applicable Agreement with respect to the remaining shares subject to the SAR.
The exercise of a Corresponding SAR shall result in the termination of the
related Option to the extent of the number of shares with respect to which the
SAR is exercised.
7.5 Employee Status. If the terms of any SAR provide that it may be
exercised only during employment or within a specified period of time after
termination of employment, the Administrator may decide to what extent leaves of
absence for governmental or military service, illness, temporary disability or
other reasons shall not be deemed interruptions of continuous employment.
7.6 Settlement. At the Administrator's discretion, the amount payable as
a result of the exercise of an SAR may be settled in cash, Common Stock, or a
combination of cash and Common Stock. No fractional share will be deliverable
upon the exercise of an SAR but a cash payment will be made in lieu thereof.
7.7 Stockholder Rights. No Participant shall, as a result of receiving an
SAR award, have any rights as a stockholder of the Company or any Affiliate
until the date that the SAR is exercised and then only to the extent that the
SAR is settled by the issuance of Common Stock.
ARTICLE 8
STOCK AWARDS
8.1 Award. In accordance with the provisions of Article 4, the
Administrator will designate each individual to whom a Stock Award is to be made
and will specify the number of shares of Common Stock covered by such awards.
8.2 Vesting. The Administrator, on the date of the award, may prescribe
that a Participant's rights in the Stock Award shall be forfeitable or otherwise
restricted for a period of time or subject to such conditions as may be set
forth in the Agreement.
8.3 Employee Status. In the event that the terms of any Stock Award
provide that shares may become transferable and nonforfeitable thereunder only
after completion of a specified period of employment, the Administrator may
decide in each case to what extent leaves
8.
<PAGE>
of absence for governmental or military service, illness, temporary disability,
or other reasons shall not be deemed interruptions of continuous employment.
8.4 Stockholder Rights. Prior to their forfeiture (in accordance with the
applicable Agreement and while the shares of Common Stock granted pursuant to
the Stock Award may be forfeited or are nontransferable), a Participant will
have all rights of a stockholder with respect to a Stock Award, including the
right to receive dividends and vote the shares; provided, however, that during
such period (i) a Participant may not sell, transfer, pledge, exchange,
hypothecate, or otherwise dispose of shares of Common Stock granted pursuant to
a Stock Award, (ii) the Company shall retain custody of the certificates
evidencing shares of Common Stock granted pursuant to a Stock Award, and (iii)
the Participant will deliver to the Company a stock power, endorsed in blank,
with respect to each Stock Award. The limitations set forth in the preceding
sentence shall not apply after the shares of Common Stock granted under the
Stock Award are transferable and are no longer forfeitable.
ARTICLE 9
ADJUSTMENT UPON CHANGE IN COMMON STOCK
The maximum number of shares as to which Options, SARs and Stock Awards may
be granted under this Plan and the terms of outstanding Stock Awards, Options,
and SARs shall be adjusted as the Board shall determine to be equitably required
in the event that (a) the Company (i) effects one or more stock dividends, stock
split-ups, subdivisions or consolidations of shares or (ii) engages in a
transaction to which Section 424 of the Code applies or (b) there occurs any
other event which, in the judgment of the Board necessitates such action. Any
determination made under this Article 9 by the Board shall be final and
conclusive.
The issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for
labor or services, either upon direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or obligations of
the Company convertible into such shares or other securities, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the maximum
number of shares as to which Options, SARs and Stock Awards may be granted or
the terms of outstanding Stock Awards, Options or SARs.
The Administrator may make Stock Awards and may grant Options and SARs in
substitution for performance shares, phantom shares, stock awards, stock
options, stock appreciation rights, or similar awards held by an individual who
becomes an employee of the Company or an Affiliate in connection with a
transaction described in the first paragraph of this Article 9. Notwithstanding
any provision of the Plan (other than the limitation of Section 5.2), the terms
of such substituted Stock Awards or Option or SAR grants shall be as the
Administrator, in its discretion, determines is appropriate.
9.
<PAGE>
ARTICLE 10
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Option or SAR shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment shall
be made under this Plan except in compliance with all applicable federal and
state laws and regulations (including, without limitation, withholding tax
requirements), any listing agreement to which the Company is a party, and the
rules of all domestic stock exchanges on which the Company's shares may be
listed. The Company shall have the right to rely on an opinion of its counsel
as to such compliance. Any share certificate issued to evidence Common Stock
when a Stock Award is granted or for which an Option or SAR is exercised may
bear such legends and statements as the Administrator may deem advisable to
assure compliance with federal and state laws and regulations. No Option or SAR
shall be exercisable, no Stock Award shall be granted, no Common Stock shall be
issued, no certificate for shares shall be delivered, and no payment shall be
made under this Plan until the Company has obtained such consent or approval as
the Administrator may deem advisable from regulatory bodies having jurisdiction
over such matters.
ARTICLE 11
GENERAL PROVISIONS
11.1 Effect on Employment and Service. Neither the adoption of this Plan,
its operation, nor any documents describing or referring to this Plan (or any
part thereof) shall confer upon any individual any right to continue in the
employ or service of the Company or an Affiliate or in any way affect any right
and power of the Company or an Affiliate to terminate the employment or service
of any individual at any time with or without assigning a reason therefor.
11.2 Unfunded Plan. The Plan, insofar as it provides for grants, shall be
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon any contractual obligations that may be created pursuant to this
Plan. No such obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company.
11.3 Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
ARTICLE 12
AMENDMENT
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until stockholder approval is
obtained if (i) the amendment
10.
<PAGE>
increases the aggregate number of shares of Common Stock that may be issued
under the Plan or (ii) the amendment changes the class of individuals eligible
to become Participants. No amendment shall, without a Participant's consent,
adversely affect any rights of such Participant under any outstanding Stock
Award, Option or SAR outstanding at the time such amendment is made.
ARTICLE 13
DURATION OF PLAN
No Stock Award, Option or SAR may be granted under this Plan more than ten
years after the earlier of the date this Plan is adopted by the Board or the
date this Plan is approved by stockholders in accordance with Article 14. Stock
Awards, Options and SARs granted before that date shall remain valid in
accordance with their terms.
ARTICLE 14
EFFECTIVE DATE OF PLAN
Options and SARs may be granted under this Plan upon its adoption by the
Board, provided that no Option or SAR shall be effective or exercisable unless
this Plan is approved by a majority of the votes entitled to be cast by the
Company's stockholders, voting either in person or by proxy, at a duly held
stockholders' meeting within twelve months of such adoption. Stock Awards may
be granted under this Plan upon the later of its adoption by the Board or its
approval by stockholders in accordance with the preceding sentence.
11.
<PAGE>
Exhibit 10.3
STANDARD FORM OF
SKYCACHE, INCORPORATED
INCENTIVE STOCK OPTION AGREEMENT
--------------------------------
No. of Shares Subject to this Agreement: ___________________
Expiration Date: ___________________
THIS INCENTIVE STOCK OPTION AGREEMENT dated the _____ day of ____________,
______, by and between SkyCache, Incorporated, a Delaware corporation
("Company"), and ________ ("Participant") is made pursuant and subject to the
------- -----------
provisions of the Company's 1998 Employee Stock Incentive Plan ("Plan"), a copy
----
of which has been given to Participant. All terms used herein that are defined
in the Plan have the same meaning given them in the Plan.
1. Grant of Option. Pursuant to the Plan, and subject to the terms and
---------------
conditions set forth herein, the Company, on __________________, _____ ("Date of
-------
Grant"), granted to the Participant an Option to purchase all or any part of an
- -----
aggregate of ______ shares of Common Stock of the Company (which together with
any securities issued with respect to those shares by way of stock dividend,
stock split, share transfer, merger, consolidation, or other change in
capitalization, whether before or after the date of exercise of the Option, are
referred to as ("Purchase Shares"), with a par value of $.01 per share, at the
---------------
purchase price of ______ per share ("Exercise Price"), such shares having a Fair
--------------
Market Value on the Date of Grant of $__________ per share. This Option is
intended to be an incentive stock option under Section 422 of the Code.
2. Terms and Conditions. This Option is subject to the following terms
---------------------
and conditions:
(a) Expiration Date. This Option shall expire on ______________
----------------
("Expiration Date"). No part of this Option may be exercised after that date.
---------------
(b) Exercise of Option by Participant. This Option shall be
----------------------------------
exercisable as of the date one year from the Date of Grant with respect to _____
shares [1/4 of option shares]. The Option shall become exercisable with respect
to an additional ______ shares [1/8 of option shares] on ___________, _____
[date 18 months from Date of Grant]. The Option shall become exercisable with
respect to an additional ____ shares [1/8 of option shares] on _________, _____
[date 24 months from Date of Grant]. The Option shall become exercisable with
respect to an additional ___ shares [1/8 of option shares] on ___________, ____
[date 30 months from Date of Grant]. The Option shall become exercisable with
respect to an additional _____ shares [1/8 of option shares] on ___________,
_____ [date 36 months from Date of Grant]. The Option shall be exercisable with
respect to an additional ____ shares [1/8 of option shares] on ____________,
_____ [date 42 months from Date of Grant]. The Option shall be exercisable with
respect to the remaining _____ shares [1/8 of option shares] on
_________________________,_____ [date four years from Date of Grant]. Once any
installment of the Option has become exercisable, it will remain so until the
<PAGE>
Expiration Date or until the Option terminates pursuant to Paragraph 3 below. A
partial exercise of this Option shall not affect the Participant's right to
exercise this Option with respect to the remaining shares, subject to the
conditions of this Agreement.
(c) Exercise of Option Upon Participant's Death. If the Participant
--------------------------------------------
dies before the Expiration Date and prior to any termination of the Option
pursuant to Paragraph 3 below, this Option may be exercised for the number of
shares Participant was entitled to purchase on the date of his death by the
Participant's estate, personal representative, person(s) or entity to whom his
rights under this Option shall pass by will or the laws of descent and
distribution. The estate, personal representative, or other such person or
entity must exercise the Option in accordance with the procedures set forth in
this Agreement no later than the earlier of (i) six (6) months after the date of
the Participant's death, or (ii) the Expiration Date.
(d) Method of Exercising Option and Payment for Shares. This Option,
or any portion thereof, shall be exercised by written notice delivered to the
attention of the Company's Secretary at the Company's principal office. The
exercise date shall be (i) the date of postmark, in the case of notice by mail,
or (ii) the date of delivery, if delivered in person. The exercise notice shall
be accompanied by payment of the Exercise Price in full and any required Tax
---
Withholding (as defined in Paragraph 6 below). As a condition to exercise of
- -----------
this Option, Option shall deliver an executed copy of any Stockholder Agreement
among the Company's stockholders then in effect. Payment shall be made in cash,
in the form of currency or check or other cash equivalent acceptable to the
Company. Notwithstanding the foregoing, by mutual agreement of the Company and
Participant, Participant may exercise this Option on a cashless basis through
the cancellation of issued and outstanding shares of Common Stock of the
Company, or the cancellation of Purchase Shares otherwise exercisable pursuant
to this Option, having a Fair Market Value equal to the Exercise Price.
(e) Nontransferability. This option may not be transferred except by
-------------------
will or by the laws of descent and distribution. During the Participant's
lifetime, this Option may be exercised only by the Participant.
3. Termination of Employment with the Company or an Affiliate. In the
-----------------------------------------------------------
event the Participant ceases to be employed by the Company or an Affiliate prior
to the Expiration Date, Participant may exercise this Option with respect to all
or part of the shares for which Participant could have exercised the Option on
the date of his termination of employment with the Company and its Affiliates.
Such Option may be exercised no later than three (3) months following the date
his employment terminates, but in no event later than the Expiration Date. No
additional portion of this Option shall become exercisable after the date the
Participant terminates employment.
4. Redemption of Purchase Shares. Upon the Participant's separation
------------------------------
from service with the Company or an Affiliate, the Company shall have the option
(but not the obligation) to purchase any Purchase Shares, and the Participant,
his estate, personal representative, or other person or entity who acquires the
shares by will or by the laws of descent and distribution shall be required to
sell such shares to the Company. The redemption price for the Purchase Shares
will be the Fair Market Value of the shares on the date of redemption. The
Company's acquisition of the Purchase Shares, and payment of the redemption
2
<PAGE>
price, to the Participant, his representative or other person(s) or entity will
occur on a date determined by the Company (which, in the event of the
Participant's death, will be no earlier than three (3) months after the date of
death) and will be completed no later than six (6) months after the date of
separation from service.
5. Transfer of Shares. Participants shall not transfer, or permit the
-------------------
transfer of, any of his Purchase Shares, except in accordance with Paragraph 4
of this Agreement. Any non-authorized transfer of shares will be void and of no
legal force.
6. Withholding Taxes. If the Company shall be required to withhold any
-----------------
federal, state, local or foreign tax ("Tax Withholding") in connection with any
---------------
exercise of the Option, Participant shall pay the tax or make provisions that
are satisfactory to the Company for the payment thereof concurrent with the
payment of the Exercise Price.
7. No Rights as a Shareholder. The Participant shall have no rights as
---------------------------
a shareholder with respect to the Common Stock until the Participant has
exercised the Option, paid the Exercise Price, and paid any Tax Withholding in
accordance with the requirements of this Agreement.
8. Representations and Warranties of Participant. Participant
----------------------------------------------
represents and warrants to the Company that:
(a) Agrees to Terms of the Plan and this Agreement. Participant has
received a copy of the Plan and this Agreement, has read and understands the
terms of the Plan and this Agreement, and agrees to be bound by their terms and
conditions. Participant acknowledges that there may be adverse tax consequences
upon acquisition of the Purchase Shares, and that Participant should consult a
tax adviser prior to such acquisition or disposition.
(b) Unregistered Stock. Participant acknowledges and understands
-------------------
that any shares of Common Stock acquired upon the exercise of this Option will
not be registered under the Securities Act of 1933, as amended ("1933 Act"), or
--------
any applicable state securities laws by reason of claimed exemptions from
registration thereunder which depend in part on Participant's investment
intentions and is aware that no federal or state agency has made any review,
finding or determination regarding the Common Stock nor any recommendation or
endorsement of the Common Stock as an investment, and Participant must forego
the security, if any, that such a review would provide.
(c) Access to Information. Participant has had access to all
----------------------
information regarding the Company and its present and prospective business,
assets, liabilities and financial condition that Participant reasonably
considers important in making the decision to acquire the Purchase Shares, and
Participant has had ample opportunity to ask questions of the Company's
representatives concerning such matters and this investment.
(d) Party to Interest; Knowledge and Experience. Participant is the
--------------------------------------------
sole party in interest with respect to the Common Stock subject to the Option
and has sufficient knowledge and experience in financial and business matters to
enable Participant to evaluate the merits and risks of this investment.
3
<PAGE>
Participant fully understands the substantial risks associated with the
Company's business.
(e) Speculative Nature of Purchase. Participant recognizes the
------------------------------
speculative nature and the high risk of loss associated with the acquisition of
Common Stock upon the exercise of this Option and the operation of the Company
and affirms that Participant is willing and able to bear the high risk of this
investment for an indefinite period of time.
(f) Restricted Securities. Participant acknowledges that the shares
----------------------
of Common Stock acquired upon the exercise of this Option will be "restricted"
securities under the 1933 Act, and that Participant will therefore not be able
to transfer, sell, assign or otherwise dispose of the shares unless the shares
are registered under the 1933 Act and applicable state securities laws or unless
an exemption is available. In addition to any legend required by any
Shareholders' Agreement, Participant acknowledges that the certificate(s)
representing any shares of Common Stock acquired upon the exercise of this
Option may bear a restrictive legend as follows:
The shares represented by this certificate have not been registered
under the Securities Act of 1933 or any state securities laws. These
shares may not be sold, exchanged, made subject to a security
interest, pledged, hypothecated or otherwise transferred without an
effective registration statement for such shares under the Securities
Act of 1933 and applicable state securities laws, or an opinion of
counsel acceptable to the corporation that such registration is not
required.
The securities represented by this certificate are subject to the
terms and conditions of a Stock Option Agreement and/or a Shareholders
Agreement, by and among Company and the shareholders of Company, which
Agreement includes certain restrictions on transfer. A copy of such
Stock Option Agreement is on file and available for inspection at the
principal office of Company, and no transfer of the interests
represented by this certificate shall be valid or effective unless or
until the terms and conditions of such Agreement shall have been
complied with.
9. Representations and Warranties of Company. The Company represents
and warrants to the Participant that:
(a) Authority. This Agreement has been duly authorized and is a
----------
valid and binding instrument against the Company, enforceable in accordance with
its terms.
(b) Compliance with Law. The Company shall make reasonable efforts
--------------------
to comply with all applicable federal and state securities laws; provided,
---------
however, notwithstanding any other provision of this Agreement, the Option shall
- --------
not be exercisable if the exercise thereof would result in a violation of any
such laws.
4
<PAGE>
(c) Purchase Shares. Upon the Participant's payment for the Purchase
----------------
Shares and any Tax Withholding, the Purchase Shares shall be duly authorized and
issued, fully paid and nonassessable, and the Purchase Shares shall have good
marketable title, free and clear of all liens, security interests and other
encumbrances. Once payment has been made for the Purchase Shares and any Tax
Withholding, the Company will release the applicable certificate to the
Participant. The Participant shall have the right to vote the Purchase Shares
and receive dividends thereon after the Exercise Price and any Tax Withholding
has been paid to the Company and prior to their forfeiture.
10. Survival of Representations and Warranties. All representations,
------------------------------------------
warranties, covenants, and agreements contained herein or made in writing by the
Participant or the Company in connection with the transaction contemplated
hereby, except any representation, warranty or agreement as to which compliance
may have been appropriately waived, shall survive the execution and delivery of
this Agreement.
11. Right to Terminate Employment and Adjust Compensation. This Option
------------------------------------------------------
does not confer upon the Participant any right to continued employment with the
Company or an Affiliate, nor does any provision of this Agreement limit in any
way any right that the Company or an Affiliate may otherwise have to terminate
the employment or adjust the compensation of the Participant at any time.
12. Change in Capital Structure. The terms of this Option shall be
----------------------------
adjusted if the Company determines, in its sole discretion, that such adjustment
is required in the event the Company effects one or more stock dividends, stock
split-ups, subdivisions or consolidations of shares or other similar changes in
capitalization. The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
terms of this Option.
13. Merger, Consolidations, Acquisitions or Dissolution of the Company.
-------------------------------------------------------------------
In the event of the merger or consolidation of the Company with or into another
unaffiliated entity, or the acquisition by another unaffiliated entity or person
of all or substantially all of the Company's assets or more than fifty percent
(50%) of the Company's then outstanding voting stock, or the liquidation,
dissolution, or winding up of the Company (other than in a restructuring
transaction which results in the continuation of the Company's business by an
affiliated entity), then, at the election of the Company, either (i) the Option
shall be assumed or an equivalent option substituted by any successor
corporation to the Company, or (ii) the Company shall make provision for this
Option to become exercisable for a minimum of thirty (30) days prior to such
event, as to all vested Option shares covered hereby through such date, it being
understood, that for purposes of this Section 13, "vested Option shares" shall
be deemed to include the number of shares scheduled to vest on the next two
scheduled vesting dates set forth in Section 2(b) of this Agreement.
14. Fractional Shares. Fractional shares shall not be issued hereunder,
------------------
and when any provision hereof may entitle Participant to a fractional share,
such fraction shall be disregarded.
5
<PAGE>
15. Relation to Other Benefits. Any economic or other benefit to the
--------------------------
Participant under this Agreement shall not be taken into account in determining
any benefits to which the Participant may be entitled under any profit-sharing,
retirement or other benefit or compensation plan maintained by the Company or
any subsidiary and shall not affect the amount of any life insurance coverage
available to any beneficiary under any life insurance plan covering employees of
the Company or any subsidiary.
16. Lockup Agreement. Notwithstanding the above, in the event of any
----------------
registration of securities of the Company under the Securities Act of 1933, as
amended, or under Section 12 of the Securities Exchange Act of 1934, as amended,
the Participant agrees, if requested by the Company's underwriters, to execute a
lockup agreement pursuant to which the Participant agrees, for a period of 180
days following such registration, not to sell, transfer or otherwise dispose of
any Shares held by the Participant.
17. Notice. Any notice or other communication given pursuant to this
------
Agreement shall be in writing and shall be personally delivered or mailed by
United States registered or certified mail, postage prepaid, return receipt
requested, if to the Participant, at the address on the signature page hereto,
and to the following addresses:
If to the Company: SkyCache, Incorporated
312 Laurel Avenue
Laurel, Maryland 20707
Attention: President
Any such notice shall be deemed to have been given (a) on the date of postmark,
in the case of notice by mail, or (b) on the date of delivery, if delivered in
person.
18. Conflicts. In the event of any conflict between the provisions of
----------
the Plan as in effect on the date hereof and the provisions of this Agreement,
the provisions of the Plan shall govern. All references herein to the Plan shall
mean the Plan in effect on the date of this Agreement.
19. Binding Effect. Subject to the limitations stated above and in the
---------------
Plan, this Agreement shall be binding upon and inure to the benefit of legatees,
distributees, and personal representatives of the Participants and the
successors of the Company.
20. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each signed by different persons and all of said counterparts
together shall constitute one and the same instrument, and such instrument shall
be deemed to have been made, executed and delivered on the date first
hereinabove written, irrespective of the time or times when the same or any
counterparts hereof actually may have been executed and delivered. This
Agreement shall become effective when the Company shall have executed and
delivered a counterpart hereof to the Participant and the Participant shall have
executed and delivered a counterpart hereof to the Company.
21. Severability. In the event that one or more of the provisions of
-------------
this Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
6
<PAGE>
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
22. Entire Agreement. This Agreement and the Plan, shall constitute the
-----------------
entire agreement with respect to the subject matter hereof.
23. Heading. The section, subsection and paragraph headings utilized
-------
throughout this Agreement are for convenience and reference only, and the words
contained herein shall not be held to expand, modify, amplify or aid in the
interpretation, construction, or meaning of this Agreement.
24. Governing Law. This Agreement shall be governed by the laws of the
--------------
State of Maryland.
25. Confidentiality Agreement. In consideration for the grant of this
--------------------------
Option, Participant hereby agrees to execute and be bound by the terms of the
Company's standard Confidentiality and Non-Disclosure Agreement.
[Signature Page Follows.]
7
<PAGE>
This Agreement is executed by the Company as of the _______ day of
______________, _____.
SKYCACHE, INCORPORATED
By: __________________________
Name: __________________________
Title: __________________________
The undersigned Participant hereby acknowledges receipt of an executed
original of this Agreement and accepts the Option granted hereunder, subject to
the terms and conditions above.
_________________________________________
[Participant]
DATE: __________________________
Address: __________________________
__________________________
__________________________
Tax Identification Number: ___________________
[SIGNATURE PAGE FOLLOWS]
8
<PAGE>
Exhibit 10.4
STANDARD FORM OF
SKYCACHE, INCORPORATED
NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------
No. of Shares Subject to this Agreement: ___________________
Expiration Date: ___________________
THIS NON-QUALIFIED STOCK OPTION AGREEMENT dated the _____ day of
____________, ______, by and between SkyCache, Incorporated, a Delaware
corporation ("Company"), and ________ ("Participant") is made pursuant and
------- -----------
subject to the provisions of the Company's 1998 Employee Stock Incentive Plan
("Plan"), a copy of which has been given to Participant. All terms used herein
- ------
that are defined in the Plan have the same meaning given them in the Plan.
1. Grant of Option. Pursuant to the Plan, and subject to the terms and
---------------
conditions set forth herein, the Company, on __________________, _____ ("Date of
-------
Grant"), granted to the Participant an Option to purchase all or any part of an
- -----
aggregate of ______ shares of Common Stock of the Company (which together with
any securities issued with respect to those shares by way of stock dividend,
stock split, share transfer, merger, consolidation, or other change in
capitalization, whether before or after the date of exercise of the Option, are
referred to as ("Purchase Shares"), with a par value of $.01 per share, at the
---------------
purchase price of ______ per share ("Exercise Price"), such shares having a Fair
--------------
Market Value on the Date of Grant of $__________ per share. This Option is not
intended to be an incentive stock option under Section 422 of the Code.
2. Terms and Conditions. This Option is subject to the following terms
--------------------
and conditions:
(a) Expiration Date. This Option shall expire on ______________
----------------
("Expiration Date"). No part of this Option may be exercised after that date.
---------------
(b) Exercise of Option by Participant. This Option shall be
----------------------------------
exercisable as of the Date of Grant with respect to _____ shares. The Option
shall become exercisable with respect to an additional ______ shares on
___________, _____. The Option shall be exercisable with respect to the
remaining _____ shares on _________________________,_____. Once any installment
of the Option has become exercisable, it will remain so until the Expiration
Date or until the Option terminates pursuant to Paragraph 3 below. A partial
exercise of this Option shall not affect the Participant's right to exercise
this Option with respect to the remaining shares, subject to the conditions of
this Agreement.
(c) Exercise of Option Upon Participant's Death. If the Participant
--------------------------------------------
dies before the Expiration Date and prior to any termination of the Option
pursuant to Paragraph 3 below, this Option may be exercised for the number of
shares Participant was entitled to purchase on the date of his death by the
<PAGE>
Participant's estate, personal representative, person(s) or entity to whom his
rights under this Option shall pass by will or the laws of descent and
distribution. The estate, personal representative, or other such person or
entity must exercise the Option in accordance with the procedures set forth in
this Agreement no later than the earlier of (i) six (6) months after the date of
the Participant's death, or (ii) the Expiration Date.
(d) Method of Exercising Option and Payment for Shares. This Option,
---------------------------------------------------
or any portion thereof, shall be exercised by written notice delivered to the
attention of the Company's Secretary at the Company's principal office. The
exercise date shall be (i) the date of postmark, in the case of notice by mail,
or (ii) the date of delivery, if delivered in person. The exercise notice shall
be accompanied by payment of the Exercise Price in full and any required Tax
---
Withholding (as defined in Paragraph 6 below). As a condition to exercise of
- -----------
this Option, the Participant shall deliver an executed copy of any Stockholder
Agreement among the Company's stockholders then in effect. Payment shall be made
in cash, in the form of currency or check or other cash equivalent acceptable to
the Company. Notwithstanding the foregoing, by mutual agreement of the Company
and Participant, Participant may exercise this Option on a cashless basis
through the cancellation of issued and outstanding shares of Common Stock of the
Company, or the cancellation of Purchase Shares otherwise exercisable pursuant
to this Option, having a Fair Market Value equal to the Exercise Price.
(e) Nontransferability. This option may not be transferred except by
-------------------
will or by the laws of descent and distribution. During the Participant's
lifetime, this Option may be exercised only by the Participant.
3. Termination of Employment with the Company or an Affiliate. In the
-----------------------------------------------------------
event the Participant ceases to be employed by the Company or an Affiliate prior
to the Expiration Date, Participant may exercise this Option with respect to all
or part of the shares for which Participant could have exercised the Option on
the date of his termination of employment with the Company and its Affiliates.
Such Option may be exercised no later than three (3) months following the date
his employment terminates, but in no event later than the Expiration Date. No
additional portion of this Option shall become exercisable after the date the
Participant terminates employment.
4. Redemption of Purchase Shares. Upon the Participant's separation
------------------------------
from service with the Company or an Affiliate, the Company shall have the option
(but not the obligation) to purchase any Purchase Shares, and the Participant,
his estate, personal representative, or other person or entity who acquires the
shares by will or by the laws of descent and distribution shall be required to
sell such shares to the Company. The redemption price for the Purchase Shares
will be the Fair Market Value of the shares on the date of redemption. The
Company's acquisition of the Purchase Shares, and payment of the redemption
price, to the Participant, his representative or other person(s) or entity will
occur on a date determined by the Company (which, in the event of the
Participant's death, will be no earlier than three (3) months after the date of
death) and will be completed no later than six (6) months after the date of
separation from service.
2
<PAGE>
5. Transfer of Shares. Participants shall not transfer, or permit the
-------------------
transfer of, any of his Purchase Shares, except in accordance with Paragraph 4
of this Agreement. Any non-authorized transfer of shares will be void and of no
legal force.
6. Withholding Taxes. If the Company shall be required to withhold any
------------------
federal, state, local or foreign tax ("Tax Withholding") in connection with any
---------------
exercise of the Option, Participant shall pay the tax or make provisions that
are satisfactory to the Company for the payment thereof concurrent with the
payment of the Exercise Price.
7. No Rights as a Shareholder. The Participant shall have no rights as a
---------------------------
shareholder with respect to the Common Stock until the Participant has exercised
the Option, paid the Exercise Price, and paid any Tax Withholding in accordance
with the requirements of this Agreement.
8. Representations and Warranties of Participant. Participant represents
----------------------------------------------
and warrants to the Company that:
(a) Agrees to Terms of the Plan and this Agreement. Participant has
-----------------------------------------------
received a copy of the Plan and this Agreement, has read and understands the
terms of the Plan and this Agreement, and agrees to be bound by their terms and
conditions. Participant acknowledges that there may be adverse tax consequences
upon acquisition of the Purchase Shares, and that Participant should consult a
tax adviser prior to such acquisition or disposition.
(b) Unregistered Stock. Participant acknowledges and understands that
-------------------
any shares of Common Stock acquired upon the exercise of this Option will not be
registered under the Securities Act of 1933, as amended ("1933 Act"), or any
--------
applicable state securities laws by reason of claimed exemptions from
registration thereunder which depend in part on Participant's investment
intentions and is aware that no federal or state agency has made any review,
finding or determination regarding the Common Stock nor any recommendation or
endorsement of the Common Stock as an investment, and Participant must forego
the security, if any, that such a review would provide.
(c) Access to Information. Participant has had access to all
----------------------
information regarding the Company and its present and prospective business,
assets, liabilities and financial condition that Participant reasonably
considers important in making the decision to acquire the Purchase Shares, and
Participant has had ample opportunity to ask questions of the Company's
representatives concerning such matters and this investment.
(d) Party to Interest; Knowledge and Experience. Participant is the
--------------------------------------------
sole party in interest with respect to the Common Stock subject to the Option
and has sufficient knowledge and experience in financial and business matters to
enable Participant to evaluate the merits and risks of this investment.
Participant fully understands the substantial risks associated with the
Company's business.
(e) Speculative Nature of Purchase. Participant recognizes the
-------------------------------
speculative nature and the high risk of loss associated with the acquisition of
Common Stock upon the exercise of this Option and the operation of the Company
3
<PAGE>
and affirms that Participant is willing and able to bear the high risk of this
investment for an indefinite period of time.
(f) Restricted Securities. Participant acknowledges that the shares
----------------------
of Common Stock acquired upon the exercise of this Option will be "restricted"
securities under the 1933 Act, and that Participant will therefore not be able
to transfer, sell, assign or otherwise dispose of the shares unless the shares
are registered under the 1933 Act and applicable state securities laws or unless
an exemption is available. In addition to any legend required by any
Shareholders' Agreement, Participant acknowledges that the certificate(s)
representing any shares of Common Stock acquired upon the exercise of this
Option may bear a restrictive legend as follows:
The shares represented by this certificate have not been registered
under the Securities Act of 1933 or any state securities laws. These
shares may not be sold, exchanged, made subject to a security
interest, pledged, hypothecated or otherwise transferred without an
effective registration statement for such shares under the Securities
Act of 1933 and applicable state securities laws, or an opinion of
counsel acceptable to the corporation that such registration is not
required.
The securities represented by this certificate are subject to the
terms and conditions of a Stock Option Agreement, by and among
Company and the shareholders of Company, which Agreement includes
certain restrictions on transfer. A copy of such Stock Option
Agreement is on file and available for inspection at the principal
office of Company, and no transfer of the interests represented by
this certificate shall be valid or effective unless or until the
terms and conditions of such Agreement shall have been complied with.
9. Representations and Warranties of Company. The Company represents and
------------------------------------------
warrants to the Participant that:
(a) Authority. This Agreement has been duly authorized and is a
----------
valid and binding instrument against the Company, enforceable in accordance with
its terms.
(b) Compliance with Law. The Company shall make reasonable efforts
--------------------
to comply with all applicable federal and state securities laws; provided,
---------
however, notwithstanding any other provision of this Agreement, the Option shall
- -------
not be exercisable if the exercise thereof would result in a violation of any
such laws.
(c) Purchase Shares. Upon the Participant's payment for the Purchase
----------------
Shares and any Tax Withholding, the Purchase Shares shall be duly authorized and
issued, fully paid and nonassessable, and the Purchase Shares shall have good
marketable title, free and clear of all liens, security interests and other
encumbrances. Once payment has been made for the Purchase Shares and any Tax
Withholding, the Company will release the applicable certificate to the
Participant. The Participant shall have the right to vote the Purchase Shares
4
<PAGE>
and receive dividends thereon after the Exercise Price and any Tax Withholding
has been paid to the Company and prior to their forfeiture.
10. Survival of Representations and Warranties. All representations,
-------------------------------------------
warranties, covenants, and agreements contained herein or made in writing by the
Participant or the Company in connection with the transaction contemplated
hereby, except any representation, warranty or agreement as to which compliance
may have been appropriately waived, shall survive the execution and delivery of
this Agreement.
11. Right to Terminate Employment and Adjust Compensation. This Option
------------------------------------------------------
does not confer upon the Participant any right to continued employment with the
Company or an Affiliate, nor does any provision of this Agreement limit in any
way any right that the Company or an Affiliate may otherwise have to terminate
the employment or adjust the compensation of the Participant at any time.
12. Change in Capital Structure. The terms of this Option shall be
----------------------------
adjusted if the Company determines, in its sole discretion, that such adjustment
is required in the event the Company effects one or more stock dividends, stock
split-ups, subdivisions or consolidations of shares or other similar changes in
capitalization. The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
terms of this Option.
13. Merger, Consolidations, Acquisitions or Dissolution of the Company.
-------------------------------------------------------------------
In the event of the merger or consolidation of the Company with or into another
unaffiliated entity, or the acquisition by another unaffiliated entity or person
of all or substantially all of the Company's assets or more than fifty percent
(50%) of the Company's then outstanding voting stock, or the liquidation,
dissolution, or winding up of the Company (other than in a restructuring
transaction which results in the continuation of the Company's business by an
affiliated entity), then, at the election of the Company, either (i) the Option
shall be assumed or an equivalent option substituted by any successor
corporation to the Company, or (ii) the Company shall make provision for this
Option to become exercisable, for a minimum of thirty (30) days prior to such
event, as to all vested Option shares covered hereby through such date.
14. Fractional Shares. Fractional shares shall not be issued hereunder,
------------------
and when any provision hereof may entitle Participant to a fractional share,
such fraction shall be disregarded.
15. Relation to Other Benefits. Any economic or other benefit to the
--------------------------
Participant under this Agreement shall not be taken into account in determining
any benefits to which the Participant may be entitled under any profit-sharing,
retirement or other benefit or compensation plan maintained by the Company or
any subsidiary and shall not affect the amount of any life insurance coverage
available to any beneficiary under any life insurance plan covering employees of
the Company or any subsidiary.
5
<PAGE>
16. Lockup Agreement. Notwithstanding the above, in the event of any
----------------
registration of securities of the Company under the Securities Act of 1933, as
amended, or under Section 12 of the Securities Exchange Act of 1934, as amended,
the Participant agrees, if requested by the Company's underwriters, to execute a
lockup agreement pursuant to which the Participant agrees, for a period of 180
days following such registration, not to sell, transfer or otherwise dispose of
any Shares held by the Participant.
17. Notice. Any notice or other communication given pursuant to this
-------
Agreement shall be in writing and shall be personally delivered or mailed by
United States registered or certified mail, postage prepaid, return receipt
requested, if to the Participant, at the address on the signature page hereto,
and to the following addresses:
If to the Company: SkyCache, Incorporated
312 Laurel Avenue
Laurel, Maryland 20707
Attention: President
Any such notice shall be deemed to have been given (a) on the date of postmark,
in the case of notice by mail, or (b) on the date of delivery, if delivered in
person.
18. Conflicts. In the event of any conflict between the provisions of
----------
the Plan as in effect on the date hereof and the provisions of this Agreement,
the provisions of the Plan shall govern. All references herein to the Plan shall
mean the Plan in effect on the date of this Agreement.
19. Binding Effect. Subject to the limitations stated above and in the
---------------
Plan, this Agreement shall be binding upon and inure to the benefit of legatees,
distributees, and personal representatives of the Participants and the
successors of the Company.
20. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each signed by different persons and all of said counterparts
together shall constitute one and the same instrument, and such instrument shall
be deemed to have been made, executed and delivered on the date first
hereinabove written, irrespective of the time or times when the same or any
counterparts hereof actually may have been executed and delivered. This
Agreement shall become effective when the Company shall have executed and
delivered a counterpart hereof to the Participant and the Participant shall have
executed and delivered a counterpart hereof to the Company.
21. Severability. In the event that one or more of the provisions of
-------------
this Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
22. Entire Agreement. This Agreement and the Plan, shall constitute the
-----------------
entire agreement with respect to the subject matter hereof.
23. Heading. The section, subsection and paragraph headings utilized
-------
6
<PAGE>
throughout this Agreement are for convenience and reference only, and the words
contained herein shall not be held to expand, modify, amplify or aid in the
interpretation, construction, or meaning of this Agreement.
24. Governing Law. This Agreement shall be governed by the laws of the
--------------
State of Maryland.
25. Confidentiality Agreement. In consideration for the grant of this
--------------------------
Option, Participant hereby agrees to execute and be bound by the terms of the
Company's standard Confidentiality and Non-Disclosure Agreement.
[Signature Page Follows.]
7
<PAGE>
This Agreement is executed by the Company as of the _______ day of
______________, _____.
SKYCACHE, INCORPORATED
By: __________________________
Name: __________________________
Title: __________________________
The undersigned Participant hereby acknowledges receipt of an executed
original of this Agreement and accepts the Option granted hereunder, subject to
the terms and conditions above.
_________________________________________
[Participant]
DATE: __________________________
Address: __________________________
__________________________
__________________________
Tax Identification Number: ___________________
8
<PAGE>
Exhibit 10.5
CIDERA, INC.
2000 EQUITY INCENTIVE PLAN
Adopted By Board of Directors: February 24, 2000
Approved By Stockholders: February 24, 2000
Termination Date: February 23, 2010
1. Purposes.
(a) Eligible Stock Award Recipients. The persons eligible to receive Stock
Awards are the Employees, Directors and Consultants of the Company and its
Affiliates.
(b) Available Stock Awards. The purpose of the Plan is to provide a means
by which eligible recipients of Stock Awards may be given an opportunity to
benefit from increases in value of the Common Stock through the granting of the
following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) stock bonuses and (iv) rights to acquire restricted stock.
(c) General Purpose. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards, to secure
and retain the services of new members of this group and to provide incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.
2. Definitions.
(a) "Affiliate" means any parent corporation or subsidiary corporation of
the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means if Participant is subject to a written employment
agreement with the Company in which the term "Cause" is specifically defined,
the term shall have the same meaning for purposes of this Plan. In all other
instances, "Cause" shall mean (i) Participant's negligent or willful failure to
perform duties consistent with his or her position which is not corrected within
fifteen (15) days after written notice of such failure and an opportunity to
cure; (ii) indictment or conviction of a felony or any other crime involving
moral turpitude or dishonesty; (iii) failure or refusal to comply with Company
policies, standards or regulations that have been communicated to the
Participant and which is not corrected within fifteen (15) days after notice of
the deficiency and an opportunity to cure; (iv) conduct by the Participant that
demonstrates gross unfitness to serve in the capacity in which the Participant
is serving at the time of such conduct; (v) material violation of any agreement
with the Company (including, but not limited to, any proprietary information,
inventions, non-solicitation and/or non-competition agreements with the Company)
or of any statutory duty to the Company; or (vi) the Participant's willful
dishonesty, fraud, or misconduct with respect to the business or affairs of the
Company.
1.
<PAGE>
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a committee of one or more members of the Board
appointed by the Board in accordance with subsection 3(c).
(f) "Common Stock" means the common stock of the Company.
(g) "Company" means Cidera, Inc., a Delaware corporation.
(h) "Consultant" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (ii) who is a member of the Board of Directors
of an Affiliate. However, the term "Consultant" shall not include either
Directors who are not compensated by the Company for their services as Directors
or Directors who are merely paid a director's fee by the Company for their
services as Directors.
(i) "Continuous Service" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant's Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or a Director will not
constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party's sole discretion, may determine
whether Continuous Service shall be considered interrupted in the case of any
leave of absence approved by that party, including sick leave, military leave or
any other personal leave.
(j) "Covered Employee" means the chief executive officer and the four (4)
other highest compensated officers of the Company for whom total compensation is
required to be reported to stockholders under the Exchange Act, as determined
for purposes of Section 162(m) of the Code.
(k) "Director" means a member of the Board of Directors of the Company.
(l) "Disability" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.
(m) "Employee" means any person employed by the Company or an Affiliate.
Mere service as a Director or payment of a director's fee by the Company or an
Affiliate shall not be sufficient to constitute "employment" by the Company or
an Affiliate.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(o) "Fair Market Value" means, as of any date, the value of the Common
Stock determined as follows:
2.
<PAGE>
(i) If the Common Stock is listed on any established stock exchange
or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair
Market Value of a share of Common Stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest volume of
trading in the Common Stock) on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.
(ii) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
(p) "Good Reason" shall mean (i) reduction of a Participant's rate of
Compensation as in effect immediately prior to a Change in Control by greater
than ten percent (10%) without the Participant's prior written consent, except
to the extent such reduction is part of a general reduction of Compensation
affecting all or substantially all employees of the Company or affecting all or
substantially all employees at the same level as the Participant; (ii) a
material reduction of a Participant's job duties, powers or responsibilities to
a level below that which would ordinarily be assigned to an employee at the
Participant's level without his or her prior written consent (but not merely a
change in title or reporting relationships), provided that an assignment of
specific duties and functions of a Participant to someone else as a result of
Company growth and/or reorganization of the business shall not, by itself,
constitute "Good Reason" unless in the aggregate there has been a material
reduction of the Participant's job functions; (iii) a relocation of the
Participant's principal work site on other than a temporary basis to a location
that is more than fifty (50) miles away from his or her principal work site at
the time of the Change in Control, unless the new location is the same distance
or closer to the Participant's personal residence; or (iv) a failure or refusal
of any successor company to assume the obligations of the Company under an
agreement with a Participant, or a material breach by the successor company of
any of the material provisions of an agreement with such Participant. The term
"Compensation" as used herein refers to a Participant's base salary, as well as
any bonus or commission that the Participant is eligible to receive upon the
attainment of performance goals or otherwise.
(q) "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.
(r) "Listing Date" means the first date upon which any security of the
Company is listed (or approved for listing) upon notice of issuance on any
securities exchange or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system.
(s) "Non-Employee Director" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or a subsidiary, does
not receive compensation (directly or indirectly) from the Company or its parent
or a subsidiary for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act ("Regulation S-K")), does not possess an interest in any other
transaction as to
3.
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which disclosure would be required under Item 404(a) of Regulation S-K and is
not engaged in a business relationship as to which disclosure would be required
under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a "non-
employee director" for purposes of Rule 16b-3.
(t) "Nonstatutory Stock Option" means an Option not intended to qualify as
an Incentive Stock Option.
(u) "Officer" means (i) before the Listing Date, any person designated by
the Company as an officer and (ii) on and after the Listing Date, 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.
(v) "Option" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.
(w) "Option Agreement" means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.
(x) "Optionholder" means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Option.
(y) "Outside Director" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury Regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
(z) "Participant" means a person to whom a Stock Award is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding Stock
Award.
(aa) "Plan" means this Cidera, Inc. 2000 Equity Incentive Plan.
(bb) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.
(cc) "Securities Act" means the Securities Act of 1933, as amended.
(dd) "Stock Award" means any right granted under the Plan, including an
Option, a stock bonus and a right to acquire restricted stock.
(ee) "Stock Award Agreement" means a written agreement between the Company
and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.
4.
<PAGE>
(ff) "Ten Percent Stockholder" means a person who owns (or is deemed to own
pursuant to Section 424(d) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of any of its Affiliates.
3. ADMINISTRATION.
(a) Administration by Board. The Board shall administer the Plan unless and
until the Board delegates administration to a Committee, as provided in
subsection 3(c).
(b) Powers of Board. The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which a Stock Award shall be granted to each such
person.
(ii) To construe and interpret the Plan and Stock Awards granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
(iii) To amend the Plan or a Stock Award as provided in Section 12.
(iv) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.
(c) Delegation to Committee.
(i) General. The Board may delegate administration of the Plan to a
Committee or Committees of one (1) or more members of the Board, and the term
"Committee" shall apply to any person or persons to whom such authority has been
delegated. If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee any of
the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
(ii) Committee Composition when Common Stock is Publicly Traded. At
such time as the Common Stock is publicly traded, in the discretion of the
Board, a Committee may consist solely of two or more Outside Directors, in
accordance with Section 162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3.
5.
<PAGE>
Within the scope of such authority, the Board or the Committee may (1) delegate
to a committee of one or more members of the Board who are not Outside Directors
the authority to grant Stock Awards to eligible persons who are either (a) not
then Covered Employees and are not expected to be Covered Employees at the time
of recognition of income resulting from such Stock Award or (b) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the Code
and/or) (2) delegate to a committee of one or more members of the Board who are
not Non-Employee Directors the authority to grant Stock Awards to eligible
persons who are not then subject to Section 16 of the Exchange Act.
(d) Effect of Board's Decision. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.
4. Shares Subject to the Plan.
(a) Share Reserve. Subject to the provisions of Section 11 relating to
adjustments upon changes in Common Stock, the Common Stock that may be issued
pursuant to Stock Awards shall not exceed in the aggregate four million nine
hundred nine thousand eight hundred twenty-one (4,909,821) shares of Common
Stock.
(b) Reversion of Shares to the Share Reserve. If any Stock Award shall for
any reason expire or otherwise terminate, in whole or in part, without having
been exercised in full, the shares of Common Stock not acquired under such Stock
Award shall revert to and again become available for issuance under the Plan.
(c) Source of Shares. The shares of Common Stock subject to the Plan may
be unissued shares or reacquired shares, bought on the market or otherwise.
5. Eligibility.
(a) Eligibility for Specific Stock Awards. Incentive Stock Options may be
granted only to Employees. Stock Awards other than Incentive Stock Options may
be granted to Employees, Directors and Consultants.
(b) Ten Percent Stockholders. A Ten Percent Stockholder shall not be
granted an Incentive Stock Option unless the exercise price of such Option is at
least one hundred ten percent (110%) of the Fair Market Value of the Common
Stock at the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.
(c) Section 162(m) Limitation. Subject to the provisions of Section 11
relating to adjustments upon changes in the shares of Common Stock, no Employee
shall be eligible to be granted Options covering more than two million
(2,000,000) shares of Common Stock during any calendar year. This subsection
5(c) shall not apply prior to the Listing Date and, following the Listing Date,
this subsection 5(c) shall not apply until (i) the earliest of: (1) the first
material modification of the Plan (including any increase in the number of
shares of Common Stock reserved for issuance under the Plan in accordance with
Section 4); (2) the issuance of all of the shares of Common Stock reserved for
issuance under the Plan; (3) the expiration of the Plan; or (4) the first
meeting of stockholders at which Directors are to be
6.
<PAGE>
elected that occurs after the close of the third calendar year following the
calendar year in which occurred the first registration of an equity security
under Section 12 of the Exchange Act; or (ii) such other date required by
Section 162(m) of the Code and the rules and regulations promulgated thereunder.
(d) Consultants.
(i) Prior to the Listing Date, a Consultant shall not be eligible
for the grant of a Stock Award if, at the time of grant, either the offer or the
sale of the Company's securities to such Consultant is not exempt under Rule 701
of the Securities Act ("Rule 701") because of the nature of the services the
Consultant is providing to the Company, or because the Consultant is not a
natural person, or as otherwise provided by Rule 701, unless the Company
determines that such grant need not comply with the requirements of Rule 701 and
will satisfy another exemption under the Securities Act as well as comply with
the securities laws of all other jurisdictions.
(ii) From and after the Listing Date, a Consultant shall not be
eligible for the grant of a Stock Award if, at the time of grant, a Form S-8
Registration Statement under the Securities Act ("Form S-8") is not available to
register either the offer or the sale of the Company's securities to such
Consultant because of the nature of the services that the Consultant is
providing to the Company, or because the Consultant is not a natural person, or
as otherwise provided by the rules governing the use of Form S-8, unless the
Company determines both (i) that such grant (A) shall be registered in another
manner under the Securities Act (e.g., on a Form S-3 Registration Statement) or
(B) does not require registration under the Securities Act in order to comply
with the requirements of the Securities Act, if applicable, and (ii) that such
grant complies with the securities laws of all other relevant jurisdictions.
(iii) Rule 701 and Form S-8 generally are available to consultants
and advisors only if (i) they are natural persons; (ii) they provide bona fide
services to the issuer, its parents, its majority-owned subsidiaries or
majority-owned subsidiaries of the issuer's parent; and (iii) the services are
not in connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for
the issuer's securities.
7.
<PAGE>
6. Option Provisions.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and, if certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise of each type of
Option. The provisions of separate Options need not be identical, but each
Option shall include (through incorporation of provisions hereof by reference in
the Option or otherwise) the substance of each of the following provisions:
(a) Term. Subject to the provisions of subsection 5(b) regarding Ten
Percent Stockholders, no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the date it was granted.
(b) Exercise Price of an Incentive Stock Option. Subject to the provisions
of subsection 5(b) regarding Ten Percent Stockholders, the exercise price of
each Incentive Stock Option shall be not less than one hundred percent (100%) of
the Fair Market Value of the Common Stock subject to the Option on the date the
Option is granted. Notwithstanding the foregoing, an Incentive Stock Option may
be granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.
(c) Exercise Price of a Nonstatutory Stock Option. The exercise price of
each Nonstatutory Stock Option shall be not less than eighty-five percent (85%)
of the Fair Market Value of the Common Stock subject to the Option on the date
the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.
(d) Consideration. The purchase price of Common Stock acquired pursuant to
an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the
Company of other Common Stock, (2) according to a deferred payment or other
similar arrangement with the Optionholder or (3) in any other form of legal
consideration that may be acceptable to the Board. Unless otherwise specifically
provided in the Option, the purchase price of Common Stock acquired pursuant to
an Option that is paid by delivery to the Company of other Common Stock
acquired, directly or indirectly from the Company, shall be paid only by shares
of the Common Stock of the Company that have been held for more than six (6)
months (or such longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes). At any time that the Company is
incorporated in Delaware, payment of the Common Stock's "par value," as defined
in the Delaware General Corporation Law, shall not be made by deferred payment.
8.
<PAGE>
In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.
(e) Transferability of an Incentive Stock Option. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.
(f) Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock
Option shall be transferable to the extent provided in the Option Agreement. If
the Nonstatutory Stock Option does not provide for transferability, then the
Nonstatutory Stock Option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during the lifetime of
the Optionholder only by the Optionholder. Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the Option.
(g) Vesting Generally. The total number of shares of Common Stock subject
to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(g) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may
be exercised.
(h) Termination of Continuous Service. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the date of
termination) but only within such period of time ending on the earlier of (i)
the date three (3) months following the termination of the Optionholder's
Continuous Service (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, after termination, the Optionholder does not exercise his
or her Option within the time specified in the Option Agreement, the Option
shall terminate.
(i) Extension of Termination Date. An Optionholder's Option Agreement may
also provide that if the exercise of the Option following the termination of the
Optionholder's Continuous Service (other than upon the Optionholder's death or
Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in subsection 6(a) or (ii) the
expiration of a period of three (3) months after the termination of the
Optionholder's Continuous Service
9.
<PAGE>
during which the exercise of the Option would not be in violation of such
registration requirements.
(j) Disability of Optionholder. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement) or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, after termination, the Optionholder does not
exercise his or her Option within the time specified herein, the Option shall
terminate.
(k) Death of Optionholder. In the event (i) an Optionholder's Continuous
Service terminates as a result of the Optionholder's death or (ii) the
Optionholder dies within the period (if any) specified in the Option Agreement
after the termination of the Optionholder's Continuous Service for a reason
other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder's estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
Option upon the Optionholder's death pursuant to subsection 6(e) or 6(f), but
only within the period ending on the earlier of (1) the date eighteen (18)
months following the date of death (or such longer or shorter period specified
in the Option Agreement) or (2) the expiration of the term of such Option as set
forth in the Option Agreement. If, after death, the Option is not exercised
within the time specified herein, the Option shall terminate.
(l) Early Exercise. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. Any unvested shares of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the Board
determines to be appropriate. The Company will not exercise its repurchase
option until at least six (6) months (or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting purposes) have
elapsed following exercise of the Option unless the Board otherwise specifically
provides in the Option.
(m) Right of Repurchase. The Option may, but need not, include a provision
whereby the Company may elect, prior to the Listing Date (or after the Listing
Date if so specified) to repurchase all or any part of the vested shares of
Common Stock acquired by the Optionholder pursuant to the exercise of the
Option. The Company will not exercise its repurchase option until at least six
(6) months (or such longer or shorter period of time required to avoid a charge
to earnings for financial accounting purposes) have elapsed following exercise
of the Option unless the Board otherwise specifically provides in the Option.
(n) Right of First Refusal. The Option may, but need not, include a
provision whereby the Company may elect, prior to the Listing Date, to exercise
a right of first refusal following receipt of notice from the Optionholder of
the intent to transfer all or any part of the shares of Common Stock received
upon the exercise of the Option.
10.
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(O) Re-Load Options.
(i) Without in any way limiting the authority of the Board to make
or not to make grants of Options hereunder, the Board shall have the authority
(but not an obligation) to include as part of any Option Agreement a provision
entitling the Optionholder to a further Option (a "Re-Load Option") in the event
the Optionholder exercises the Option evidenced by the Option Agreement, in
whole or in part, by surrendering other shares of Common Stock in accordance
with this Plan and the terms and conditions of the Option Agreement. Unless
otherwise specifically provided in the Option, the Optionholder shall not
surrender shares of Common Stock acquired, directly or indirectly from the
Company, unless such shares have been held for more than six (6) months (or such
longer or shorter period of time required to avoid a charge to earnings for
financial accounting purposes).
(ii) Any such Re-Load Option shall (1) provide for a number of
shares of Common Stock equal to the number of shares of Common Stock surrendered
as part or all of the exercise price of such Option; (2) have an expiration date
which is the same as the expiration date of the Option the exercise of which
gave rise to such Re-Load Option; and (3) have an exercise price which is equal
to one hundred percent (100%) of the Fair Market Value of the Common Stock
subject to the Re-Load Option on the date of exercise of the original Option.
Notwithstanding the foregoing, a Re-Load Option shall be subject to the same
exercise price and term provisions heretofore described for Options under the
Plan.
(iii) Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board may designate at the time of the grant
of the original Option; provided, however, that the designation of any Re-Load
Option as an Incentive Stock Option shall be subject to the one hundred thousand
dollar ($100,000) annual limitation on the exercisability of Incentive Stock
Options described in subsection 9(d) and in Section 422(d) of the Code. There
shall be no Re-Load Options on a Re-Load Option. Any such Re-Load Option shall
be subject to the availability of sufficient shares of Common Stock under
subsection 4(a) and the "Section 162(m) Limitation" on the grants of Options
under subsection 5(c) and shall be subject to such other terms and conditions as
the Board may determine which are not inconsistent with the express provisions
of the Plan regarding the terms of Options.
(p) Forfeiture of Profits. The Option may, but need not, include a
provision whereby the Company may require an Optionholder to pay to the Company
the amount of any profits from the sale of the shares subject to the Option in
the event the Optionholder violates any proprietary information, inventions,
non-solicitation and/or non-competition agreements with the Company.
7. Provisions of Stock Awards other than Options.
(a) Stock Bonus Awards. Each stock bonus agreement shall be in such form
and shall contain such terms and conditions as the Board shall deem appropriate.
The terms and conditions of stock bonus agreements may change from time to time,
and the terms and conditions of separate stock bonus agreements need not be
identical, but each stock bonus agreement shall include (through incorporation
of provisions hereof by reference in the agreement or otherwise) the substance
of each of the following provisions:
11.
<PAGE>
(i) Consideration. A stock bonus may be awarded in consideration
for past services actually rendered to the Company or an Affiliate for its
benefit.
(ii) Vesting. Shares of Common Stock awarded under the stock bonus
agreement may, but need not, be subject to a share repurchase option in favor of
the Company in accordance with a vesting schedule to be determined by the Board.
(iii) Termination of Participant's Continuous Service. In the event a
Participant's Continuous Service terminates, the Company may reacquire any or
all of the shares of Common Stock held by the Participant which have not vested
as of the date of termination under the terms of the stock bonus agreement.
(iv) Transferability. Rights to acquire shares of Common Stock under
the stock bonus agreement shall be transferable by the Participant only upon
such terms and conditions as are set forth in the stock bonus agreement, as the
Board shall determine in its discretion, so long as Common Stock awarded under
the stock bonus agreement remains subject to the terms of the stock bonus
agreement.
(v) Forfeiture of Profits. A stock bonus agreement may, but need
not, include a provision whereby the Company may require a Participant to pay to
the Company the amount of any profits from the sale of the shares subject to a
stock bonus award in the event the Participant violates any proprietary
information, inventions, non-solicitation and/or non-competition agreements with
the Company.
(b) Restricted Stock Awards. Each restricted stock purchase agreement
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. The terms and conditions of the restricted stock
purchase agreements may change from time to time, and the terms and conditions
of separate restricted stock purchase agreements need not be identical, but each
restricted stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:
(i) Purchase Price. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board shall determine and
designate in such restricted stock purchase agreement. The purchase price shall
not be less than eighty-five percent (85%) of the Common Stock's Fair Market
Value on the date such award is made or at the time the purchase is consummated.
(ii) Consideration. The purchase price of Common Stock acquired
pursuant to the restricted stock purchase agreement shall be paid either: (i) in
cash at the time of purchase; (ii) at the discretion of the Board, according to
a deferred payment or other similar arrangement with the Participant; or (iii)
in any other form of legal consideration that may be acceptable to the Board in
its discretion; provided, however, that at any time that the Company is
incorporated in Delaware, then payment of the Common Stock's "par value," as
defined in the Delaware General Corporation Law, shall not be made by deferred
payment.
12.
<PAGE>
(iii) Vesting. Shares of Common Stock acquired under the restricted
stock purchase agreement may, but need not, be subject to a share repurchase
option in favor of the Company in accordance with a vesting schedule to be
determined by the Board.
(iv) Termination of Participant's Continuous Service. In the event a
Participant's Continuous Service terminates, the Company may repurchase or
otherwise reacquire any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination under the terms
of the restricted stock purchase agreement.
(v) Transferability. Rights to acquire shares of Common Stock under
the restricted stock purchase agreement shall be transferable by the Participant
only upon such terms and conditions as are set forth in the restricted stock
purchase agreement, as the Board shall determine in its discretion, so long as
Common Stock awarded under the restricted stock purchase agreement remains
subject to the terms of the restricted stock purchase agreement.
(vi) Forfeiture of Profits. A stock purchase agreement may, but need
not, include a provision whereby the Company may require a Participant to pay to
the Company the amount of any profits from the sale of the shares subject to a
restricted stock award in the event the Participant violates any proprietary
information, inventions, non-solicitation and/or non-competition agreements with
the Company.
8. Covenants of the Company.
(a) Availability of Shares. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.
(b) Securities Law Compliance. The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to grant Stock Awards and to issue and sell shares of Common
Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained.
9. Use of Proceeds from Stock.
Proceeds from the sale of Common Stock pursuant to Stock Awards shall
constitute general funds of the Company.
10. Miscellaneous.
(a) Acceleration of Exercisability and Vesting. The Board shall have the
power to accelerate the time at which a Stock Award may first be exercised or
the time during which a Stock Award or any part thereof will vest in accordance
with the Plan, notwithstanding the
13.
<PAGE>
provisions in the Stock Award stating the time at which it may first be
exercised or the time during which it will vest.
(b) Stockholder Rights. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of
Common Stock subject to such Stock Award unless and until such Participant has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.
(c) No Employment or other Service Rights. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant any right to continue to serve the Company or an Affiliate in
the capacity in effect at the time the Stock Award was granted or shall affect
the right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.
(d) Incentive Stock Option $100,000 Limitation. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.
(e) Investment Assurances. The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Participant's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant's own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (1) the issuance of the shares of
Common Stock upon the exercise or acquisition of Common Stock under the Stock
Award has been registered under a then currently effective registration
statement under the Securities Act or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the Common Stock.
(f) Withholding Obligations. To the extent provided by the terms of a
Stock Award Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation
14.
<PAGE>
relating to the exercise or acquisition of Common Stock under a Stock Award by
any of the following means (in addition to the Company's right to withhold from
any compensation paid to the Participant by the Company) or by a combination of
such means: (i) tendering a cash payment; (ii) authorizing the Company to
withhold shares of Common Stock from the shares of Common Stock otherwise
issuable to the Participant as a result of the exercise or acquisition of Common
Stock under the Stock Award, provided, however, that no shares of Common Stock
are withheld with a value exceeding the minimum amount of tax required to be
withheld by law; or (iii) delivering to the Company owned and unencumbered
shares of Common Stock.
(g) Cancellation and Re-Grant of Options.
(i) Authority to Reprice. The Board shall have the authority to
effect, at any time and from time to time, (1) the repricing of any outstanding
Options under the Plan and/or (2) with the consent of any adversely affected
holders of Options, the cancellation of any outstanding Options under the Plan
and the grant in substitution therefor of new Options under the Plan covering
the same or different numbers of shares of Common Stock. The exercise price per
share of Common Stock shall be not less than that specified under the Plan for
newly granted Stock Awards. Notwithstanding the foregoing, the Board may grant
an Option with an exercise price lower than that set forth above if such Option
is granted as part of a transaction to which Section 424(a) of the Code applies.
(ii) Effect of Repricing under Section 162(m) of the Code. Shares of
Common Stock subject to an Option which is amended or canceled in order to set a
lower exercise price per share of Common Stock shall continue to be counted
against the maximum award of Options permitted to be granted pursuant to
subsection 5(c). The repricing of an Option under this subsection 10(g)(i)
resulting in a reduction of the exercise price shall be deemed to be a
cancellation of the original Option and the grant of a substitute Option; in the
event of such repricing, both the original and the substituted Options shall be
counted against the maximum awards of Options permitted to be granted pursuant
to subsection 5(c). The provisions of this subsection 10(g)(ii) shall be
applicable only to the extent required by Section 162(m) of the Code.
11. Adjustments upon Changes in Stock.
(a) Capitalization Adjustments. If any change is made in the Common Stock
subject to the Plan, or subject to any Stock Award, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the maximum number of securities subject to
award to any person pursuant to subsection 5(c), and the outstanding Stock
Awards will be appropriately adjusted in the class(es) and number of securities
and price per share of Common Stock subject to such outstanding Stock Awards.
The Board shall make such adjustments, and its determination shall be final,
binding and conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a transaction "without receipt of consideration"
by the Company).
15.
<PAGE>
(b) Change in Control--Dissolution or Liquidation. In the event of a
dissolution or liquidation of the Company, then all outstanding Stock Awards
shall terminate immediately prior to such event.
(c) Change in Control--Asset Sale, Merger, Consolidation or Reverse
Merger. In the event of (i) a sale, lease or other disposition of all or
substantially all of the assets of the Company, (ii) a merger or consolidation
in which the Company is not the surviving corporation or (iii) a reverse merger
in which the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise, then any surviving corporation or acquiring corporation shall assume
any Stock Awards outstanding under the Plan or shall substitute similar stock
awards (including an award to acquire the same consideration paid to the
stockholders in the transaction described in this subsection 11(c) for those
outstanding under the Plan). In the event any surviving corporation or acquiring
corporation refuses to assume such Stock Awards or to substitute similar stock
awards for those outstanding under the Plan, then with respect to Stock Awards
held by Participants whose Continuous Service has not terminated, the vesting of
such Stock Awards (and, if applicable, the time during which such Stock Awards
may be exercised) shall be accelerated in full, and the Stock Awards shall
terminate if not exercised (if applicable) at or prior to such event. With
respect to any other Stock Awards outstanding under the Plan, such Stock Awards
shall terminate if not exercised (if applicable) prior to such event.
(d) Change in Control--Termination of Continuous Service.
(i) If the Continuous Service of a Participant is either
involuntarily without Cause or is voluntarily terminated for a Good Reason on
within eighteen (18) months after the date of a Change in Control under Section
11(c) of the Plan, then the vesting of such Participant's Stock Award at the
time of the Change in Control (and, if applicable, the time during which such
Stock Award may be exercised) shall be accelerated in full and the Participant's
Options, if any, subject to this Plan shall immediately become exercisable in
full.
(ii) Any purported voluntarily termination of the Continuous
Service of a Participant for Good Reason shall be communicated by a notice of
termination to the Company, and shall state the specific termination provisions
relied upon and set forth in reasonable detail the facts and circumstances
claimed to provide a basis for such termination.
(iii) If any payment or benefit that the Participant would
receive under this Plan when combined with any other payment or benefit he or
she receives pursuant to the termination of his employment with the Company
(collectively, the "Payment") would (i) constitute a "parachute payment" within
the meaning of Section 280G of the Code, and (ii) but for this sentence, be
subject to the excise tax imposed by Section 4999 of the Code (the "Excise
Tax"), then such Payment shall be either (x) the full amount of such Payment or
(y) such lesser amount (with cash payments being reduced before stock
compensation) as would result in no portion of the Payment being subject to the
Excise Tax, whichever of the foregoing amounts, taking into account the
applicable federal, state and local employment taxes, income taxes, and the
Excise Tax, results in the Participant's receipt, on an after-tax basis, of the
greater amount notwithstanding that all or some portion of the Payment may be
subject to the Excise Tax.
16.
<PAGE>
Participant shall be solely responsible for the payment of all personal tax
liability that is incurred as a result of the payments and benefits received
under this Plan or other applicable agreements, and Participant will not be
reimbursed by the Company for any such payment.
(iv) All determinations required to be made under Section
11(d)(iii) shall be made by the Company's independent public accountants (the
"Accountants"). The Accountants shall provide detailed supporting calculations
both to the Company and the Participant within thirty (30) business days of the
date that the Participant's employment with the Company terminates or such
earlier time as is requested by the Company. For purposes of making the
calculations required by Section 11(d)(iii), the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith determinations concerning the application of the Code.
The Company and the Participant shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under Section 11(d)(iii). The Company shall bear all costs
the Accountants may reasonably incur in connection with any calculations
contemplated by this Section. Any such determination by the Accountants shall be
binding upon the Company and Participant. Within five (5) days after receipt of
the calculations, the Company shall pay to or distribute to or for the benefit
of the Participant such amounts as are then due to him or her under this
Agreement.
(v) As a result of the uncertainty in the application of
Section 280G of the Code at the time of the initial determination by the
Accountants hereunder, it is possible that a Payment or Payments, as the case
may be, will have been made by the Company that should not have been made
("Overpayment") or that an additional Payment or Payments, as the case may be,
which will not have been made by the Company could have been made
("Underpayment"), in each case, consistent with the calculations required to be
made hereunder. In the event that the Accountants, based upon the assertion of
the deficiency by the Internal Revenue Service against Participant or the
Company that the Accountant believe has a high probability of success, determine
that an Overpayment has been made, any such overpayment paid or distributed by
the Company to or for the benefit of Participant shall be treated for all
purposes as a loan ab initio to Participant that he shall repay to the Company
together with interest at the applicable federal rate provided for in Section
7872(f)(2) of the Code; provided, however, that no such loan shall be deemed to
have been made and no amount shall be payable by the Participant to the Company
if and to the extent such deemed loan and payment would not either reduce the
amount on which the Participant is subject to tax under Section 1 and Section
4999 of the Code or generate a refund of such taxes. In the event that the
Accountants, based upon controlling precedent or other substantial authority,
determine that an Underpayment has occurred, any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Participant together
with interest at the applicable federal rate provided for in Section 7872(f)(2)
of the Code.
(e) Change in Control--Securities Acquisition. After the Listing Date,
in the event of an acquisition by any person, entity or group within the meaning
of Section 13(d) or 14(d) of the Exchange Act, or any comparable successor
provisions (excluding any employee benefit plan, or related trust, sponsored or
maintained by the Company or an Affiliate) of the beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable
successor rule) of securities of the Company representing at least fifty percent
(50%)
17.
<PAGE>
of the combined voting power entitled to vote in the election of Directors and
provided that such acquisition is not a result of, and does not constitute a
transaction described in subsection 11(c) hereof, then with respect to Stock
Awards held by Participants whose Continuous Service has not terminated, the
vesting of such Stock Awards (and, if applicable, the time during which such
Stock Awards may be exercised) shall be accelerated in full.
(f) Change in Control--Change in Incumbent Board. In the event that
the individuals who, as of the date of the adoption of this Plan, are members of
the Board (the "Incumbent Board"), cease for any reason to constitute at least
fifty percent (50%) of the Board and provided that such change in the Incumbent
Board does not occur solely as a result of and/or following a transaction
described in subsection 11(c) hereof, then with respect to Stock Awards held by
persons whose Continuous Service has not terminated, the vesting of such Stock
Awards (and, if applicable, the time during which such Stock Awards may be
exercised) shall be accelerated in full. If the election, or nomination for
election, by the Company's stockholders of any new Director was approved by a
vote of at least fifty percent (50%) of the Incumbent Board, such new Director
shall be considered as a member of the Incumbent Board.
12. Amendment of the Plan and Stock Awards.
(a) Amendment of Plan. The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3
or any Nasdaq or securities exchange listing requirements.
(b) Stockholder Approval. The Board may, in its sole discretion, submit
any other amendment to the Plan for stockholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.
(c) Contemplated Amendments. It is expressly contemplated that the Board
may amend the Plan in any respect the Board deems necessary or advisable to
provide eligible Employees with the maximum benefits provided or to be provided
under the provisions of the Code and the regulations promulgated thereunder
relating to Incentive Stock Options and/or to bring the Plan and/or Incentive
Stock Options granted under it into compliance therewith.
(d) No Impairment of Rights. Rights under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Participant and (ii) the Participant
consents in writing.
(e) Amendment of Stock Awards. The Board at any time, and from time to
time, may amend the terms of any one or more Stock Awards; provided, however,
that the rights under any Stock Award shall not be impaired by any such
amendment unless (i) the Company requests the consent of the Participant and
(ii) the Participant consents in writing.
13. Termination or Suspension of the Plan.
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(a) Plan Term. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board or approved by
the stockholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.
(b) No Impairment of Rights. Suspension or termination of the Plan shall
not impair rights and obligations under any Stock Award granted while the Plan
is in effect except with the written consent of the Participant.
14. Effective Date of Plan.
The Plan shall become effective as determined by the Board, but no Stock
Award shall be exercised (or, in the case of a stock bonus, shall be granted)
unless and until the Plan has been approved by the stockholders of the Company,
which approval shall be within twelve (12) months before or after the date the
Plan is adopted by the Board.
15. Choice of Law.
The law of the State of Delaware shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to such
state's conflict of laws rules.
***
19.
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Exhibit 10.6
CIDERA, INC.
2000 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
(INCENTIVE AND NONSTATUTORY STOCK OPTIONS)
Pursuant to your Stock Option Grant Notice ("Grant Notice") and this Stock
Option Agreement, Cidera, Inc. (the "Company") has granted you an option under
its 2000 Equity Incentive Plan (the "Plan") to purchase the number of shares of
the Company's Common Stock indicated in your Grant Notice at the exercise price
indicated in your Grant Notice. Defined terms not explicitly defined in this
Stock Option Agreement but defined in the Plan shall have the same definitions
as in the Plan.
The details of your option are as follows:
1. Vesting. Subject to the limitations contained herein, your option
will vest as provided in your Grant Notice, provided that vesting will cease
upon the earlier of (i) the date of a violation on your part of any proprietary
information, inventions, non-solicitation and/or non-competition agreements that
exist between you and the Company, or (ii) termination of your Continuous
Service.
2. Number of Shares and Exercise Price. The number of shares of Common
Stock subject to your option and your exercise price per share referenced in
your Grant Notice may be adjusted from time to time for Capitalization
Adjustments, as provided in the Plan.
3. Exercise prior to Vesting ("Early Exercise"). If permitted in your
Grant Notice (i.e., the "Exercise Schedule" indicates that "Early Exercise" of
your option is permitted) and subject to the provisions of your option, you may
elect at any time that is both (i) during the period of your Continuous Service
and (ii) during the term of your option, to exercise all or part of your option,
including the nonvested portion of your option; provided, however, that:
(a) a partial exercise of your option shall be deemed to cover first
vested shares of Common Stock and then the earliest vesting installment of
unvested shares of Common Stock;
(b) any shares of Common Stock so purchased from installments that
have not vested as of the date of exercise shall be subject to the purchase
option in favor of the Company as described in the Company's form of Early
Exercise Stock Purchase Agreement; and
(c) you shall enter into the Company's form of Early Exercise Stock
Purchase Agreement with a vesting schedule that will result in the same vesting
as if no early exercise had occurred.
<PAGE>
4. ISO Exercise Limitation.
(a) The aggregate Fair Market Value of the shares of Common Stock
with respect to which you may exercise your option for the first time during any
calendar year, when added to the aggregate Fair Market Value of the shares of
Common Stock subject to any other options designated as Incentive Stock Options
and granted to you under any stock option plan of the Company or an Affiliate
prior to the Date of Grant with respect to which such options are exercisable
for the first time during the same calendar year, shall not exceed $100,000 (the
"ISO Exercise Limitation") unless applicable law requires that your option be
exercisable sooner./1/
(b) Notwithstanding the provisions of paragraph 4(a), if the ISO
Exercise Limitation would prevent you from exercising your option as to vested
shares, then the ISO Exercise Limitation shall terminate as to such vested
shares as such shares vest, and you may exercise your option as to such vested
shares. Upon such termination of the ISO Exercise Limitation, your option shall
be deemed a Nonstatutory Stock Option to the extent of the number of vested
shares of Common Stock subject to your option that would otherwise exceed the
ISO Exercise Limitation.
(c) The ISO Exercise Limitation shall terminate, and you may fully
exercise your option, as to all shares of Common Stock subject to your option
for which your option would have been exercisable in the absence of the ISO
Exercise Limitation upon the earlier of the following events:
(i) the date of termination of your Continuous Service,
(ii) the day immediately prior to the effective date of a Change
in Control (as defined in the Plan) in which your option is not assumed or
substituted for as provided in the Plan, or
(iii) the day that is ten (10) days prior to the Expiration Date
of your option.
Upon such termination of the ISO Exercise Limitation, your option shall be
deemed a Nonstatutory Stock Option to the extent of the number of shares of
Common Stock subject to your option that would otherwise then exceed the ISO
Exercise Limitation.
5. Method of Payment. Payment of the exercise price is due in full upon
exercise of all or any part of your option. You may elect to make payment of the
exercise price in cash or by check or in any other manner permitted by your
Grant Notice, which may include one or more of the following:
__________________________
/1/ For purposes of this provision, your options designated as Incentive Stock
Options shall be taken into account in the order in which they were granted to
you, and the Fair Market Value of shares of Common Stock shall be determined as
of the time the option with respect to such shares of Common Stock is granted.
If Section 422 of the Code is amended to provide for a different limitation from
that set forth in this provision, the ISO Exercise Limitation shall be deemed
amended effective as of the date required or permitted by such amendment to the
Code.
2.
<PAGE>
(a) In the Company's sole discretion at the time your option is
exercised and provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall Street Journal, pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board that,
prior to the issuance of Common Stock, results in either the receipt of cash (or
check) by the Company or the receipt of irrevocable instructions to pay the
aggregate exercise price to the Company from the sales proceeds.
(b) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in The Wall Street Journal, by delivery of
already-owned shares of Common Stock either that you have held for the period
required to avoid a charge to the Company's reported earnings (generally six
months) or that you did not acquire, directly or indirectly from the Company,
that are owned free and clear of any liens, claims, encumbrances or security
interests, and that are valued at Fair Market Value on the date of exercise.
"Delivery" for these purposes, in the sole discretion of the Company at the time
you exercise your option, shall include delivery to the Company of your
attestation of ownership of such shares of Common Stock in a form approved by
the Company. Notwithstanding the foregoing, you may not exercise your option by
tender to the Company of Common Stock to the extent such tender would violate
the provisions of any law, regulation or agreement restricting the redemption of
the Company's stock.
(c) Pursuant to the following deferred payment alternative:
(i) Not less than one hundred percent (100%) of the aggregate
exercise price, plus accrued interest, shall be due four (4) years from date of
exercise or, at the Company's election, upon termination of your Continuous
Service.
(ii) Interest shall be compounded at least annually and shall be
charged at the minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Code, of any portion of any
amounts other than amounts stated to be interest under the deferred payment
arrangement.
(iii) At any time that the Company is incorporated in Delaware,
payment of the Common Stock's "par value," as defined in the Delaware General
Corporation Law, shall be made in cash and not by deferred payment.
(iv) In order to elect the deferred payment alternative, you
must, as a part of your written notice of exercise, give notice of the election
of this payment alternative and, in order to secure the payment of the deferred
exercise price to the Company hereunder, if the Company so requests, you must
tender to the Company a promissory note and a security agreement covering the
purchased shares of Common Stock, both in form and substance satisfactory to the
Company, or such other or additional documentation as the Company may request.
6. Whole Shares. You may exercise your option only for whole shares of
Common Stock.
3.
<PAGE>
7. Securities Law Compliance. Notwithstanding anything to the contrary
contained herein, you may not exercise your option unless the shares of Common
Stock issuable upon such exercise are then registered under the Securities Act
or, if such shares of Common Stock are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the registration
requirements of the Securities Act. The exercise of your option must also
comply with other applicable laws and regulations governing your option, and you
may not exercise your option if the Company determines that such exercise would
not be in material compliance with such laws and regulations.
8. Term. You may not exercise your option before the commencement of its
term or after its term expires. The term of your option commences on the Date
of Grant and expires upon the earliest of the following:
(a) three (3) months after the termination of your Continuous Service
for any reason other than your Disability or death, provided that if during any
part of such three- (3-) month period your option is not exercisable solely
because of the condition set forth in the preceding paragraph relating to
"Securities Law Compliance," your option shall not expire until the earlier of
the Expiration Date or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of your Continuous Service;
(b) twelve (12) months after the termination of your Continuous
Service due to your Disability;
(c) eighteen (18) months after your death if you die either during
your Continuous Service or within three (3) months after your Continuous Service
terminates;
(d) the date of a violation on your part of the terms of any
proprietary information, inventions, non-solicitation and/or non-competition
agreements that exist between you and the Company;
(e) the Expiration Date indicated in your Grant Notice; or
(f) the day before the tenth (10th) anniversary of the Date of Grant.
If your option is an incentive stock option, note that, to obtain the
federal income tax advantages associated with an "incentive stock option," the
Code requires that at all times beginning on the date of grant of your option
and ending on the day three (3) months before the date of your option's
exercise, you must be an employee of the Company or an Affiliate, except in the
event of your death or Disability. The Company has provided for extended
exercisability of your option under certain circumstances for your benefit but
cannot guarantee that your option will necessarily be treated as an "incentive
stock option" if you continue to provide services to the Company or an Affiliate
as a Consultant or Director after your employment terminates or if you otherwise
exercise your option more than three (3) months after the date your employment
terminates.
4.
<PAGE>
9. Exercise.
(a) You may exercise the vested portion of your option (and the
unvested portion of your option if your Grant Notice so permits) during its term
by delivering a Notice of Exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require.
(b) By exercising your option you agree that, as a condition to any
exercise of your option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise of
your option, (2) the lapse of any substantial risk of forfeiture to which the
shares of Common Stock are subject at the time of exercise, or (3) the
disposition of shares of Common Stock acquired upon such exercise.
(c) If your option is an incentive stock option, by exercising your
option you agree that you will notify the Company in writing within fifteen (15)
days after the date of any disposition of any of the shares of the Common Stock
issued upon exercise of your option that occurs within two (2) years after the
date of your option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of your option.
(d) By exercising your option you agree that the Company (or a
representative of the underwriter(s)) may, in connection with the first
underwritten registration of the offering of any securities of the Company under
the Securities Act, require that you not sell, dispose of, transfer, make any
short sale of, grant any option for the purchase of, or enter into any hedging
or similar transaction with the same economic effect as a sale, any shares of
Common Stock or other securities of the Company held by you, for a period of
time specified by the underwriter(s) (not to exceed one hundred eighty (180)
days) following the effective date of the registration statement of the Company
filed under the Securities Act. You further agree to execute and deliver such
other agreements as may be reasonably requested by the Company and/or the
underwriter(s) that are consistent with the foregoing or that are necessary to
give further effect thereto. In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to your shares of
Common Stock until the end of such period.
10. Transferability. Your option is not transferable, except by will or by
the laws of descent and distribution, and is exercisable during your life only
by you. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise your
option.
11. Right of First Refusal. Shares of Common Stock that you acquire upon
exercise of your option are subject to the right of first refusal described
below. The Company's right of first refusal shall expire on the Listing Date as
defined in the Plan.
(a) Prior to the Listing Date, you may not validly transfer (as
hereinafter defined) any shares of stock purchased on exercise of the option, or
any interest in such shares,
5.
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unless such transfer is solely for cash consideration and is made in compliance
with the following provisions:
(i) Before there can be a valid transfer of any shares or any
interest therein, the record holder of the shares to be transferred (the
"Offered Shares") shall give written notice (by registered or certified mail) to
the Company. Such notice shall specify the identity of the proposed transferee,
the cash price offered for the Offered Shares by the proposed transferee and the
other terms and conditions of the proposed transfer. The date such notice is
mailed shall be hereinafter referred to as the "notice date" and the record
holder of the Offered Shares shall be hereinafter referred to as the "Offeror."
If, from time to time, there is any stock dividend, stock split or other change
in the character or amount of any of the outstanding stock of the corporation
the stock of which is subject to the provisions of this option, then in such
event any and all new, substituted or additional securities to which you are
entitled by reason of your ownership of the shares acquired upon exercise of
this option shall be immediately subject to the Company's Right of First Refusal
with the same force and effect as the shares subject to the Right of First
Refusal immediately before such event.
(ii) For a period of thirty (30) calendar days after the notice
date, the Company shall have the option to purchase all (but not less than all)
of the Offered Shares at the purchase price and on the terms set forth in
subsection 11(a)(iii) ("Right of First Refusal"). The Company may exercise its
Right of First Refusal by mailing (by registered or certified mail) written
notice of exercise of its Right of First Refusal to the Offeror prior to the end
of said thirty (30) days.
(iii) The price at which the Company may purchase the Offered
Shares pursuant to the exercise of its Right of First Refusal shall be the cash
price offered for the Offered Shares by the proposed transferee (as set forth in
the notice required under subsection 11(a)(i)). The Company's notice of
exercise of its Right of First Refusal shall be accompanied by full payment for
the Offered Shares and, upon such payment by the Company, the Company shall
acquire full right, title and interest to all of the Offered Shares.
(iv) If, and only if, the option given pursuant to subsection
11(a)(ii) is not exercised, the transfer proposed in the notice given pursuant
to subsection 11(a)(i) may take place; provided, however, that such transfer
must, in all respects, be exactly as proposed in said notice except that such
transfer may not take place either before the tenth (10th) calendar day after
the expiration of said 30-day option exercise period or after the ninetieth
(90th) calendar day after the expiration of said 30-day option exercise period,
and if such transfer has not taken place prior to said ninetieth (90th) day,
such transfer may not take place without once again complying with subsection
11(a).
(b) As used in this Section 11, the term "transfer" means any sale,
encumbrance, pledge, gift or other form of disposition or transfer of shares of
the Company's stock or any legal or equitable interest therein; provided,
however, that the term "transfer" does not include a transfer of such shares or
interests by will or by the applicable laws of descent and distribution.
6.
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(c) None of the shares of the Company's stock purchased on exercise
of this option shall be transferred on the Company's books nor shall the Company
recognize any such transfer of any such shares or any interest therein unless
and until all applicable provisions of this Section 11 have been complied with
in all respects. The certificates of stock evidencing shares of stock purchased
on exercise of this option shall bear an appropriate legend referring to the
transfer restrictions imposed by this Section 11.
(d) To ensure that shares subject to the Company's Right of First
Refusal will be available for repurchase by the Company, the Company may require
you to deposit the certificate(s) evidencing the shares that you purchase upon
exercise of this option with an escrow agent designated by the Company under the
terms and conditions of an escrow agreement approved by the Company. If the
Company does not require such deposit as a condition of exercise of your option,
the Company reserves the right at any time to require you to so deposit the
certificate(s) in escrow. As soon as practicable after the expiration of the
Company's Right of First Refusal, the agent shall deliver to you the shares and
any other property no longer subject to such restriction. In the event the
shares and any other property held in escrow are subject to the Company's
exercise of its Right of First Refusal, the notices required to be given to you
shall be given to the escrow agent, and any payment required to be given to you
shall be given to the escrow agent. Within thirty (30) days after payment by the
Company for the Offered Shares, the escrow agent shall deliver the Offered
Shares that the Company has repurchased to the Company and shall deliver the
payment received from the Company to you.
12. Right of Repurchase.
(a) The Company shall have the right to repurchase all or any part of
the shares received pursuant to the exercise of your option (a "Repurchase
Right") on the terms and conditions below.
(b) The Company may elect (but is not obligated) to repurchase all or
any part of the vested and unvested shares you received pursuant to this option
(the Company's "Repurchase Right"). If, from time to time, there is any stock
dividend, stock split or other change in the character or amount of any of the
outstanding stock of the corporation the stock of which is subject to the
provisions of this option, then in such event any and all new, substituted or
additional securities to which you are entitled by reason of your ownership or
the shares acquired upon exercise of this option shall be immediately subject to
this Repurchase Right with the same force and effect as the shares subject to
this Repurchase Right immediately before such event.
(c) The Company's Repurchase Right shall be exercisable only within
the ninety (90) day period following a Repurchase Event, or such longer period
as may be required to avoid a charge to earnings for financial accounting
purposes or as otherwise agreed to by the Company and you (the "Repurchase
Period"). Each of the following events shall constitute a "Repurchase Event":
(i) Termination of your Continuous Service for any reason or no
reason, with or without cause, including death or Disability, in which event the
Repurchase
7.
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Period shall commence on the date of termination of your Continuous Service (or
in the case of a post-termination exercise of this option, the date of such
exercise).
(ii) You, your legal representative, or other holder of shares
acquired upon exercise of this option attempts to sell, exchange, transfer,
pledge, or otherwise dispose of any of the shares without prior written approval
of the Company, in which event the Repurchase Period shall commence on the date
the Company receives actual notice of such attempted sale, exchange, transfer,
pledge or other disposition.
(iii) The receivership, bankruptcy, or other creditor's
proceeding regarding you or the taking of any of the shares by legal process,
such as a levy of execution, in which event the Repurchase Period shall commence
on the date the Company receives actual notice of the commencement of pendency
of the receivership, bankruptcy or other creditor's proceeding or the date of
such taking, as the case may be, and the Fair Market Value of the shares shall
be determined as of the last day of the month preceding the month in which the
proceeding involved commenced or the taking occurred.
(iv) A violation by you of any proprietary information,
inventions, non-solicitation and/or non-competition agreements that exist
between you and the Company.
(d) The Company shall not exercise its Repurchase Right after the
Listing Date as defined in the Plan, except it may do so after the Listing Date
if there is a Repurchase Event described in Section 12(c)(iv) above. The Company
shall not exercise its Repurchase Right for less than all of the shares without
your consent, shall exercise its Repurchase Right only for cash or cancellation
of purchase money indebtedness for the shares and shall give you written notice
(accompanied by payment for the shares) within ninety (90) calendar days after
the later of the Repurchase Event or a proper purchase of shares following such
Repurchase Event.
(e) The repurchase price for vested shares shall be equal to the
shares' Fair Market Value at the time of the Repurchase Event, except for a
Repurchase Event described in Section 12(c)(iv) above in which case the Company
shall repurchase vested shares at a price equal to your exercise price for such
shares as indicated in your Stock Option Grant Notice. In all events, the
Company shall repurchase unvested shares at a price equal to your exercise price
for those shares as indicated in your Stock Option Grant Notice.
(f) To ensure that the shares subject to the Company's Repurchase
Right will be available for repurchase, the Company may require you to deposit
the certificate evidencing the shares that you purchase upon exercise of this
option with an agent designated by the Company under the terms and conditions of
an escrow agreement approved by the Company. If the Company does not require
such deposit as a condition of exercise of this option, the Company reserves the
right at any time to require you to so deposit the certificate in escrow. As
soon as practicable after the expiration of this Repurchase Right, the agent
shall deliver to you the shares and any other property no longer subject to such
restriction. In the event the shares and any other property held in escrow are
subject to the Company's exercise of its Repurchase Right, the notices required
to be given to you shall be given to the escrow agent, and any
8.
<PAGE>
payment required to be given to you shall be given to the escrow agent. Within
thirty (30) days after payment by the Company for the shares, the escrow agent
shall deliver the shares that the Company has purchased to the Company and shall
deliver the payment received from the Company to you.
13. Forfeiture Of Profits From Sale Of Option Shares. If you engage in any
activity or conduct in violation of any proprietary information, inventions,
non-solicitation and/or non-competition agreements that exist between you and
the Company, you agree to pay to the Company in cash or a cash equivalent
acceptable to the Company an amount equal to any profits you receive from the
sale of the shares subject to this option, whether any such sale occurs during
or after the period of your Continuous Service for the Company or before or
after the conduct occurs that violates the terms of your agreements with the
Company. The amount of your profits for these purposes will be calculated as the
difference between the sale price for the shares and the price you paid to
exercise the option. There shall be no offset from the amount you owe the
Company for any tax liability you may have incurred as a result of the exercise
of the option or the sale of the shares. You agree to make this payment to the
Company no later than thirty (30) days after the date the Company requests
payment. You also consent to a deduction from any amounts the Company owes you
from time to time (including amounts owed to you as wages or other compensation,
fringe benefits, or vacation pay, as well as any other amounts owed to you by
the Company) to the extent of the amount you are obligated to pay the Company
under this Section. Whether or not the Company elects to make any set-off in
whole or part, if the Company does not recover by means of set-off the full
amount you owe it, you agree to pay the unpaid balance within the time period
specified above.
14. Option not a Service Contract. Your option is not an employment or
service contract, and nothing in your option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your option shall obligate the Company or an
Affiliate, their respective shareholders, Boards of Directors, Officers or
Employees to continue any relationship that you might have as a Director or
Consultant for the Company or an Affiliate.
15. Withholding Obligations.
(a) At the time you exercise your option, in whole or in part, or at
any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise
agree to make adequate provision for (including by means of a "cashless
exercise" pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board to the extent permitted by the Company), any sums
required to satisfy the federal, state, local and foreign tax withholding
obligations of the Company or an Affiliate, if any, which arise in connection
with your option.
(b) Upon your request and subject to approval by the Company, in its
sole discretion, and compliance with any applicable conditions or restrictions
of law, the Company may withhold from fully vested shares of Common Stock
otherwise issuable to you upon the exercise of your option a number of whole
shares of Common Stock having a Fair Market Value,
9.
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determined by the Company as of the date of exercise, not in excess of the
minimum amount of tax required to be withheld by law. If the date of
determination of any tax withholding obligation is deferred to a date later than
the date of exercise of your option, share withholding pursuant to the preceding
sentence shall not be permitted unless you make a proper and timely election
under Section 83(b) of the Code, covering the aggregate number of shares of
Common Stock acquired upon such exercise with respect to which such
determination is otherwise deferred, to accelerate the determination of such tax
withholding obligation to the date of exercise of your option. Notwithstanding
the filing of such election, shares of Common Stock shall be withheld solely
from fully vested shares of Common Stock determined as of the date of exercise
of your option that are otherwise issuable to you upon such exercise. Any
adverse consequences to you arising in connection with such share withholding
procedure shall be your sole responsibility.
(c) You may not exercise your option unless the tax withholding
obligations of the Company and/or any Affiliate are satisfied. Accordingly, you
may not be able to exercise your option when desired even though your option is
vested, and the Company shall have no obligation to issue a certificate for such
shares of Common Stock or release such shares of Common Stock from any escrow
provided for herein.
16. Notices. Any notices provided for in your option or the Plan shall be
given in writing and shall be deemed effectively given upon receipt or, in the
case of notices delivered by mail by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you at the last
address you provided to the Company.
17. Governing Plan Document. Your option is subject to all the provisions
of the Plan, the provisions of which are hereby made a part of your option, and
is further subject to all interpretations, amendments, rules and regulations
which may from time to time be promulgated and adopted pursuant to the Plan. In
the event of any conflict between the provisions of your option and those of the
Plan, the provisions of the Plan shall control.
* * * *
10.
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Exhibit 10.7
Cidera, Inc.
2000 Non-Employee Directors' Stock Option Plan
Adopted: February 24, 2000
Approved By Stockholders: February 24, 2000
Effective Date: February 24, 2000
Termination Date: February 23, 2010
1. Purposes.
(a) Eligible Option Recipients. The persons eligible to receive Options
are the Non-Employee Directors of the Company.
(b) Available Options. The purpose of the Plan is to provide a means by
which Non-Employee Directors may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of Nonstatutory
Stock Options.
(c) General Purpose. The Company, by means of the Plan, seeks to retain
the services of its Non-Employee Directors, to secure and retain the services of
new Non-Employee Directors and to provide incentives for such persons to exert
maximum efforts for the success of the Company and its Affiliates.
2. Definitions.
(a) "Affiliate" means any parent corporation or subsidiary corporation of
the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.
(b) "Annual Grant" means an Option granted annually to all Non-Employee
Directors who meet the criteria specified in subsection 6(b) of the Plan.
(c) "Annual Meeting" means the annual meeting of the stockholders of the
Company.
(d) "Board" means the Board of Directors of the Company.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Common Stock" means the common stock of the Company.
(g) "Company" means Cidera, Inc., a Delaware corporation.
(h) "Consultant" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (ii) who is a member of the Board of Directors
of an Affiliate. However, the
1.
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term "Consultant" shall not include either Directors of the Company who are not
compensated by the Company for their services as Directors or Directors of the
Company who are merely paid a director's fee by the Company for their services
as Directors.
(i) "Continuous Service" means that the Optionholder's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Optionholder's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Optionholder renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Optionholder
renders such service, provided that there is no interruption or termination of
the Optionholder's Continuous Service. For example, a change in status from a
Non-Employee Director of the Company to a Consultant of an Affiliate or an
Employee of the Company will not constitute an interruption of Continuous
Service. The Board or the chief executive officer of the Company, in that
party's sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal leave.
(j) "Director" means a member of the Board of Directors of the Company.
(k) "Disability" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.
(l) "Employee" means any person employed by the Company or an Affiliate.
Mere service as a Director or payment of a director's fee by the Company or an
Affiliate shall not be sufficient to constitute "employment" by the Company or
an Affiliate.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(n) "Fair Market Value" means, as of any date, the value of the Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair
Market Value of a share of Common Stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest volume of
trading in the Common Stock) on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.
(ii) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
(iii) Notwithstanding the foregoing, with respect to the Initial
Grants that are made on the IPO Date as set forth in Section 6(a) below, the
Fair Market Value shall be the price per share at which shares of the Company's
Common Stock are first sold to the public in the
2.
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Company's initial public offering as specified in the final prospectus with
respect to that offering.
(o) "Initial Grant" means an Option granted to a Non-Employee Director who
meets the criteria specified in subsection 6(a) of the Plan.
(p) "IPO Date" means the effective date of the initial public offering of
the Common Stock.
(q) "Non-Employee Director" means a Director who is not an Employee.
(r) "Nonstatutory Stock Option" means an Option not intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(s) "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.
(t) "Option" means a Nonstatutory Stock Option granted pursuant to the
Plan.
(u) "Option Agreement" means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.
(v) "Optionholder" means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Option.
(w) "Plan" means this Cidera, Inc. 2000 Non-Employee Directors' Stock
Option Plan.
(x) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.
(y) "Securities Act" means the Securities Act of 1933, as amended.
3. Administration.
(a) Administration by Board. The Board shall administer the Plan. The
Board may not delegate administration of the Plan to a committee.
(b) Powers of Board. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(i) To determine the provisions of each Option to the extent not
specified in the Plan.
(ii) To construe and interpret the Plan and Options granted under it,
and to establish, amend and revoke rules and regulations for its administration.
The Board, in the
3.
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exercise of this power, may correct any defect, omission or inconsistency in the
Plan or in any Option Agreement, in a manner and to the extent it shall deem
necessary or expedient to make the Plan fully effective.
(iii) To amend the Plan or an Option as provided in Section 12.
(iv) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company that are not in conflict with the provisions of the Plan.
(c) Effect of Board's Decision. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.
4. Shares Subject to the Plan.
(a) Share Reserve. Subject to the provisions of Section 11 relating to
adjustments upon changes in the Common Stock, the Common Stock that may be
issued pursuant to Options shall not exceed in the aggregate four hundred
thousand (400,000) shares of Common Stock.
(b) Reversion of Shares to the Share Reserve. If any Option shall for any
reason expire or otherwise terminate, in whole or in part, without having been
exercised in full, the shares of Common Stock not acquired under such Option
shall revert to and again become available for issuance under the Plan.
(c) Source of Shares. The shares of Common Stock subject to the Plan may
be unissued shares or reacquired shares, bought on the market or otherwise.
5. Eligibility.
The Options as set forth in section 6 automatically shall be granted under
the Plan to all Non-Employee Directors.
6. Non-Discretionary Grants.
(a) Initial Grants. Without any further action of the Board, a
Non-Employee Director shall be granted an Initial Grant as follows:
(i) On the IPO Date, each person who is then a Non-Employee Director
automatically shall be granted an Initial Grant to purchase forty thousand
(40,000) shares of Common Stock on the terms and conditions set forth herein.
(ii) After the IPO Date, each person who is elected or appointed for
the first time to be a Non-Employee Director automatically shall, upon the date
of his or her initial election or appointment to be a Non-Employee Director by
the Board or stockholders of the Company, be granted an Initial Grant to
purchase forty thousand (40,000) shares of Common Stock on the terms and
conditions set forth herein.
4.
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(b) Annual Grants. Without any further action of the Board, a Non-Employee
Director shall be granted an Annual Grant as follows: On the day following each
Annual Meeting commencing with the Annual Meeting in 2001, each person who is
then a Non-Employee Director automatically shall be granted an Annual Grant to
purchase ten thousand (10,000) shares of Common Stock on the terms and
conditions set forth herein; provided, however, that if the person has not been
serving as a Non-Employee Director for the entire period since the preceding
Annual Meeting, then the number of shares subject to the Annual Grant shall be
reduced pro rata for each full quarter prior to the date of grant during which
such person did not serve as a Non-Employee Director.
7. Option Provisions.
Each Option shall be in such form and shall contain such terms and
conditions as required by the Plan. Each Option shall contain such additional
terms and conditions, not inconsistent with the Plan, as the Board shall deem
appropriate. Each Option shall include (through incorporation of provisions
hereof by reference in the Option or otherwise) the substance of each of the
following provisions:
(a) Term. No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.
(b) Exercise Price. The exercise price of each Option shall be one hundred
percent (100%) of the Fair Market Value of the stock subject to the Option on
the date the Option is granted. Notwithstanding the foregoing, an Option may be
granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.
(c) Consideration. The purchase price of stock acquired pursuant to an
Option may be paid, to the extent permitted by applicable statutes and
regulations, in any combination of the following methods:
(i) By cash or check.
(ii) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in The Wall Street Journal, by delivery of
already-owned shares of Common Stock either that the Optionholder has held for
the period required to avoid a charge to the Company's reported earnings
(generally six months) or that the Optionholder did not acquire, directly or
indirectly from the Company, that are owned free and clear of any liens, claims,
encumbrances or security interests, and that are valued at Fair Market Value on
the date of exercise. "Delivery" for these purposes shall include delivery to
the Company of the Optionholder's attestation of ownership of such shares of
Common Stock in a form approved by the Company. Notwithstanding the foregoing,
the Optionholder may not exercise the Option by tender to the Company of Common
Stock to the extent such tender would violate the provisions of any law,
regulation or agreement restricting the redemption of the Company's stock.
5.
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(iii) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in The Wall Street Journal, pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
that, prior to the issuance of Common Stock, results in either the receipt of
cash (or check) by the Company or the receipt of irrevocable instructions to pay
the aggregate exercise price to the Company from the sales proceeds.
(d) Transferability. An Option is transferable by will or by the laws of
descent and distribution. An Option shall be exercisable during the lifetime of
the Optionholder only by the Optionholder. However, the Optionholder may, by
delivering written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the Optionholder,
shall thereafter be entitled to exercise the Option.
(e) Exercise Schedule. The Option shall be exercisable as the shares of
Common Stock subject to the Option vest.
(f) Vesting Schedule. Options shall vest as follows:
(i) Initial Grants shall provide for vesting of fifty percent (50%)
of the shares of Common Stock subject to the Option twelve (12) months after the
date of the grant of the Option and fifty percent (50%) of the shares of Common
Stock subject to the Option twenty-four (24) months after the date of grant of
the option.
(ii) Annual Grants shall provide for vesting of one hundred percent
(100%) of the shares of Common Stock subject to the Option twelve (12) months
after the date of the grant.
(g) Termination of Continuous Service. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise it as of the date of termination) but
only within such period of time ending on the earlier of (i) the date three (3)
months following the termination of the Optionholder's Continuous Service, or
(ii) the expiration of the term of the Option as set forth in the Option
Agreement. If, after termination, the Optionholder does not exercise his or her
Option within the time specified in the Option Agreement, the Option shall
terminate.
(h) Extension of Termination Date. If the exercise of the Option following
the termination of the Optionholder's Continuous Service (other than upon the
Optionholder's death or Disability) would be prohibited at any time solely
because the issuance of shares would violate the registration requirements under
the Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in subsection 7(a) or (ii) the
expiration of a period of three (3) months after the termination of the
Optionholder's Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.
(i) Disability of Optionholder. In the event an Optionholder's Continuous
Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her
6.
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Option (to the extent that the Optionholder was entitled to exercise it as of
the date of termination), but only within such period of time ending on the
earlier of (i) the date twelve (12) months following such termination or (ii)
the expiration of the term of the Option as set forth in the Option Agreement.
If, after termination, the Optionholder does not exercise his or her Option
within the time specified herein, the Option shall terminate.
(j) Death of Optionholder. In the event (i) an Optionholder's Continuous
Service terminates as a result of the Optionholder's death or (ii) the
Optionholder dies within the three-month period after the termination of the
Optionholder's Continuous Service for a reason other than death, then the Option
may be exercised (to the extent the Optionholder was entitled to exercise the
Option as of the date of death) by the Optionholder's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the Option upon the Optionholder's death, but only
within the period ending on the earlier of (1) the date eighteen (18) months
following the date of death or (2) the expiration of the term of such Option as
set forth in the Option Agreement. If, after death, the Option is not exercised
within the time specified herein, the Option shall terminate.
8. Covenants of the Company.
(a) Availability of Shares. During the terms of the Options, the Company
shall keep available at all times the number of shares of Common Stock required
to satisfy such Options.
(b) Securities Law Compliance. The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to grant Options and to issue and sell shares of Common Stock
upon exercise of the Options; provided, however, that this undertaking shall not
require the Company to register under the Securities Act the Plan, any Option or
any stock issued or issuable pursuant to any such Option. If, after reasonable
efforts, the Company is unable to obtain from any such regulatory commission or
agency the authority which counsel for the Company deems necessary for the
lawful issuance and sale of stock under the Plan, the Company shall be relieved
from any liability for failure to issue and sell stock upon exercise of such
Options unless and until such authority is obtained.
9. Use of Proceeds from Stock.
Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.
10. Miscellaneous.
(a) Stockholder Rights. No Optionholder shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares subject
to such Option unless and until such Optionholder has satisfied all requirements
for exercise of the Option pursuant to its terms.
7.
<PAGE>
(b) No Service Rights. Nothing in the Plan or any instrument executed or
Option granted pursuant thereto shall confer upon any Optionholder any right to
continue to serve the Company as a Non-Employee Director or shall affect the
right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.
(c) Investment Assurances. The Company may require an Optionholder, as a
condition of exercising or acquiring stock under any Option, (i) to give written
assurances satisfactory to the Company as to the Optionholder's knowledge and
experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Option; and (ii) to give written assurances satisfactory
to the Company stating that the Optionholder is acquiring the stock subject to
the Option for the Optionholder's own account and not with any present intention
of selling or otherwise distributing the stock. The foregoing requirements, and
any assurances given pursuant to such requirements, shall be inoperative if
(iii) the issuance of the shares upon the exercise or acquisition of stock under
the Option has been registered under a then currently effective registration
statement under the Securities Act or (iv) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the stock.
(d) Withholding Obligations. The Optionholder may satisfy any federal,
state or local tax withholding obligation relating to the exercise or
acquisition of stock under an Option by any of the following means (in addition
to the Company's right to withhold from any compensation paid to the
Optionholder by the Company) or by a combination of such means: (i) tendering a
cash payment; (ii) authorizing the Company to withhold shares from the shares of
the Common Stock otherwise issuable to the Optionholder as a result of the
exercise or acquisition of stock under the Option, provided, however, that no
shares of Common Stock are withheld with a value exceeding the minimum amount of
tax required to be withheld by law; or (iii) delivering to the Company owned and
unencumbered shares of the Common Stock.
11. Adjustments upon Changes in Stock.
(a) Capitalization Adjustments. If any change is made in the stock subject
to the Plan, or subject to any Option, without the receipt of consideration by
the Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
8.
<PAGE>
consideration by the Company), the Plan will be appropriately adjusted in the
class(es) and maximum number of securities subject both to the Plan pursuant to
subsection 4(a) and to the nondiscretionary Options specified in Section 5, and
the outstanding Options will be appropriately adjusted in the class(es) and
number of securities and price per share of stock subject to such outstanding
Options. The Board shall make such adjustments, and its determination shall be
final, binding and conclusive. (The conversion of any convertible securities of
the Company shall not be treated as a transaction "without receipt of
consideration" by the Company.)
(b) Change in Control--Dissolution or Liquidation. In the event of a
dissolution or liquidation of the Company, then all outstanding Options shall
terminate immediately prior to such event.
(c) Change in Control--Asset Sale, Merger, Consolidation or Reverse
Merger. In the event of (i) a sale, lease or other disposition of all or
substantially all of the assets of the Company, (ii) a merger or consolidation
in which the Company is not the surviving corporation or (iii) a reverse merger
in which the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise, then any surviving corporation or acquiring corporation shall assume
any Options outstanding under the Plan or shall substitute similar Options
(including an option to acquire the same consideration paid to the stockholders
in the transaction described in this subsection 11(c) for those outstanding
under the Plan). In the event any surviving corporation or acquiring corporation
refuses to assume such Options or to substitute similar Options for those
outstanding under the Plan, then with respect to Options held by Optionholders
whose Continuous Service has not terminated, the vesting of such Options (and
the time during which such Options may be exercised) shall be accelerated in
full, and the Options shall terminate if not exercised at or prior to such
event. With respect to any other Options outstanding under the Plan, such
Options shall terminate if not exercised prior to such event.
(d) Change in Control--Securities Acquisition. In the event of an
acquisition by any person, entity or group within the meaning of Section 13(d)
or 14(d) of the Exchange Act, or any comparable successor provisions (excluding
any employee benefit plan, or related trust, sponsored or maintained by the
Company or an Affiliate) of the beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act, or comparable successor rule) of
securities of the Company representing at least fifty percent (50%) of the
combined voting power entitled to vote in the election of Directors and provided
that such acquisition is not a result of, and does not constitute a transaction
described in, subsection 11(c) hereof, then with respect to Options held by
Optionholders whose Continuous Service has not terminated, the vesting of such
Options (and, if applicable, the time during which such Options may be
exercised) shall be accelerated in full.
(e) Change in Control--Change in Incumbent Board. In the event that the
individuals who, as of the date of the adoption of this Plan, are members of the
Board (the "Incumbent Board"), cease for any reason to constitute at least fifty
percent (50%) of the Board
9.
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and provided that such change in the Incumbent Board does not occur solely as a
result of and/or following a transaction described in subsection 11(c) hereof,
then with respect to Options held by persons whose Continuous Service has not
terminated, the vesting of such Options (and, if applicable, the time during
which such Options may be exercised) shall be accelerated in full. If the
election, or nomination for election, by the Company's stockholders of any new
Director was approved by a vote of at least fifty percent (50%) of the Incumbent
Board, such new Director shall be considered as a member of the Incumbent Board.
12. Amendment of the Plan and Options.
(a) Amendment of Plan. The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Rule 16b-3 or any Nasdaq or
securities exchange listing requirements.
(b) Stockholder Approval. The Board may, in its sole discretion, submit
any other amendment to the Plan for stockholder approval.
(c) No Impairment of Rights. Rights under any Option granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Optionholder and (ii) the
Optionholder consents in writing.
(d) Amendment of Options. The Board at any time, and from time to time,
may amend the terms of any one or more Options; provided, however, that the
rights under any Option shall not be impaired by any such amendment unless (i)
the Company requests the consent of the Optionholder and (ii) the Optionholder
consents in writing.
13. Termination or Suspension of the Plan.
(a) Plan Term. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10/th/) anniversary of the date the Plan is adopted by the Board or approved by
the stockholders of the Company, whichever is earlier. No Options may be granted
under the Plan while the Plan is suspended or after it is terminated.
(b) No Impairment of Rights. Suspension or termination of the Plan shall
not impair rights and obligations under any Option granted while the Plan is in
effect except with the written consent of the Optionholder.
14. Effective Date of Plan.
The Plan shall become effective on the IPO Date, but no Option shall be
exercised unless and until the Plan has been approved by the stockholders of the
Company, which approval shall be within twelve (12) months before or after the
date the Plan is adopted by the Board.
10.
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15. Choice of Law.
All questions concerning the construction, validity and interpretation of
this Plan shall be governed by the law of the State of Delaware, without regard
to such state's conflict of laws rules.
11.
<PAGE>
Exhibit 10.8
Cidera, Inc.
2000 Employee Stock Purchase Plan
Adopted by Board of Directors February 24, 2000
Approved by Stockholders February 24, 2000
Effective Date: February 24, 2000
1. Purpose.
(a) The purpose of the Plan is to provide a means by which Employees of the
Company and certain designated Affiliates may be given an opportunity to
purchase Shares of the Company.
(b) The Company, by means of the Plan, seeks to retain the services of such
Employees, to secure and retain the services of new Employees and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its Affiliates.
(c) The Company intends that the Rights to purchase Shares granted under the
Plan be considered options issued under an "employee stock purchase plan," as
that term is defined in Section 423(b) of the Code.
2. Definitions.
(a) "Affiliate" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f), respectively, of the Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the United States Internal Revenue Code of 1986, as
amended.
(d) "Committee" means a committee appointed by the Board in accordance with
subsection 3(c) of the Plan.
(e) "Company" means Cidera, Inc., a Delaware corporation.
(f) "Director" means a member of the Board.
(g) "Eligible Employee" means an Employee who meets the requirements set
forth in the Offering for eligibility to participate in the Offering.
(h) "Employee" means any person, including Officers and Directors, employed
by the Company or an Affiliate of the Company. Neither service as a Director nor
payment of a director's fee shall be sufficient to constitute "employment" by
the Company or the Affiliate.
1.
<PAGE>
(i) "Employee Stock Purchase Plan" means a plan that grants rights intended
to be options issued under an "employee stock purchase plan," as that term is
defined in Section 423(b) of the Code.
(j) "Exchange Act" means the United States Securities Exchange Act of 1934,
as amended.
(k) "Fair Market Value" means the value of a security, as determined in good
faith by the Board. Unless otherwise provided in the Offering, if the security
is listed on any established stock exchange or traded on the Nasdaq National
Market or the Nasdaq SmallCap Market, the Fair Market Value of the security
shall be the closing sales price (rounded up where necessary to the nearest
whole cent) for such security (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with the greatest
volume of trading in the relevant security of the Company) on the trading day
which is coincident with the relevant determination date, as reported in The
Wall Street Journal or such other source as the Board deems reliable.
(l) "Non-Employee Director" means a Director who either (i) is not a current
Employee or Officer of the Company or its parent or subsidiary, does not receive
compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
("Regulation S-K")), does not possess an interest in any other transaction as to
which disclosure would be required under Item 404(a) of Regulation S-K, and is
not engaged in a business relationship as to which disclosure would be required
under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a "non-
employee director" for purposes of Rule 16b-3.
(m) "Offering" means the grant of Rights to purchase Shares under the Plan
to Eligible Employees.
(n) "Offering Date" means a date selected by the Board for an Offering to
commence.
(o) "Outside Director" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
the Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
(p) "Participant" means an Eligible Employee who holds an outstanding Right
granted pursuant to the Plan or, if applicable, such other person who holds an
outstanding Right granted under the Plan.
2.
<PAGE>
(q) "Plan" means this Cidera, Inc. 2000 Employee Stock Purchase Plan.
(r) "Purchase Date" means one or more dates established by the Board during
an Offering on which Rights granted under the Plan shall be exercised and
purchases of Shares carried out in accordance with such Offering.
(s) "Right" means an option to purchase Shares granted pursuant to the Plan.
(t) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3 as in effect with respect to the Company at the time discretion is
being exercised regarding the Plan.
(u) "Securities Act" means the United States Securities Act of 1933, as
amended.
(v) "Share" means a share of the common stock of the Company.
3. Administration.
(a) The Board shall administer the Plan unless and until the Board delegates
administration to a Committee, as provided in subsection 3(c). Whether or not
the Board has delegated administration, the Board shall have the final power to
determine all questions of policy and expediency that may arise in the
administration of the Plan.
(b) The Board (or the Committee) shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(i) To determine when and how Rights to purchase Shares shall be granted
and the provisions of each Offering of such Rights (which need not be
identical).
(ii) To designate from time to time which Affiliates of the Company
shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and Rights granted under it,
and to establish, amend and revoke rules and regulations for its administration.
The Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan, in a manner and to the extent it shall deem necessary
or expedient to make the Plan fully effective.
(iv) To amend the Plan on the terms of an Offering authorized under the
Plan as provided in Section 14.
(v) Generally, to exercise such powers and to perform such acts as it
deems necessary or expedient to promote the best interests of the Company and
its Affiliates and to carry out the intent that the Plan be treated as an
Employee Stock Purchase Plan.
(c) The Board may delegate administration of the Plan to a Committee of the
Board composed of two (2) or more members, all of the members of which Committee
may be, in the discretion of the Board, Non-Employee Directors and/or Outside
Directors. If administration is
3.
<PAGE>
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate to a subcommittee of one (1) or more Directors,
including Non-Employee Directors and/or Outside Directors, any of the
administrative powers the Committee is authorized to exercise (and references in
this Plan to the Board shall thereafter be to the Committee or such a
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
(d) All determinations, interpretations and constructions made by the Board
in good faith shall not be subject to review by any person and shall be final,
binding and conclusive on all persons.
4. Shares Subject to the Plan.
(a) Subject to the provisions of Section 13 relating to adjustments upon
changes in securities, the Shares that may be sold pursuant to Rights granted
under the Plan shall not exceed in the aggregate eight hundred thousand
(800,000) Shares. If any Right granted under the Plan shall for any reason
terminate without having been exercised, the Shares not purchased under such
Right shall again become available for the Plan.
(b) The Shares subject to the Plan may be unissued Shares or Shares that
have been bought on the open market at prevailing market prices or otherwise.
5. Grant of Rights; Offering.
(a) The Board may from time to time grant or provide for the grant of Rights
to purchase Shares of the Company under the Plan to Eligible Employees in an
Offering on an Offering Date or Offering Dates selected by the Board. Each
Offering shall be in such form and shall contain such terms and conditions as
the Board shall deem appropriate, which shall comply with the requirements of
Section 423(b)(5) of the Code that all Employees granted Rights to purchase
Shares under the Plan shall have the same rights and privileges. The terms and
conditions of an Offering shall be incorporated by reference into the Plan and
treated as part of the Plan. The provisions of separate Offerings need not be
identical, but each Offering shall include (through incorporation of the
provisions of this Plan by reference in the document comprising the Offering or
otherwise) the period during which the Offering shall be effective, which period
shall not exceed twenty-seven (27) months beginning with the Offering Date, and
the substance of the provisions contained in Sections 6 through 9, inclusive.
(b) If a Participant has more than one Right outstanding under the Plan,
unless he or she otherwise indicates in agreements or notices delivered
hereunder: (i) each agreement or notice delivered by that Participant will be
deemed to apply to all of his or her Rights under the Plan, and (ii) an earlier-
granted Right (or a Right with a lower exercise price, if two Rights have
identical grant dates) will be exercised to the fullest possible extent before a
later-granted Right (or a Right with a higher exercise price if two Rights have
identical grant dates) will be exercised.
4.
<PAGE>
6. Eligibility.
(a) Rights may be granted only to Employees of the Company or, as the Board
may designate as provided in subsection 3(b), to Employees of an Affiliate.
Except as provided in subsection 6(b), an Employee shall not be eligible to be
granted Rights under the Plan unless, on the Offering Date, such Employee has
been in the employ of the Company or the Affiliate, as the case may be, for such
continuous period preceding such grant as the Board may require, but in no event
shall the required period of continuous employment be equal to or greater than
two (2) years. In addition, unless otherwise determined by the Board or the
Committee and set forth in the terms of the applicable Offering, no Employee of
the Company or any Affiliate shall be eligible to be granted rights under the
Plan unless, on the Offering Date, such Employee's customary employment with the
Company or such Affiliate is for more than twenty (20) hours per week and more
than five (5) months per calendar year.
(b) The Board may provide that each person who, during the course of an
Offering, first becomes an Eligible Employee will, on a date or dates specified
in the Offering which coincides with the day on which such person becomes an
Eligible Employee or which occurs thereafter, receive a Right under that
Offering, which Right shall thereafter be deemed to be a part of that Offering.
Such Right shall have the same characteristics as any Rights originally granted
under that Offering, as described herein, except that:
(i) the date on which such Right is granted shall be the "Offering Date"
of such Right for all purposes, including determination of the exercise price of
such Right;
(ii) the period of the Offering with respect to such Right shall begin
on its Offering Date and end coincident with the end of such Offering; and
(iii) the Board may provide that if such person first becomes an
Eligible Employee within a specified period of time before the end of the
Offering, he or she will not receive any Right under that Offering.
(c) No Employee shall be eligible for the grant of any Rights under the Plan
if, immediately after any such Rights are granted, such Employee owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Affiliate. For purposes of this
subsection 6(c), the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any Employee, and stock which such Employee
may purchase under all outstanding rights and options shall be treated as stock
owned by such Employee.
(d) An Eligible Employee may be granted Rights under the Plan only if such
Rights, together with any other Rights granted under all Employee Stock Purchase
Plans of the Company and any Affiliates, as specified by Section 423(b)(8) of
the Code, do not permit such Eligible Employee's rights to purchase Shares of
the Company or any Affiliate to accrue at a rate which exceeds twenty five
thousand dollars ($25,000) of the fair market value of such Shares (determined
at the time such Rights are granted) for each calendar year in which such Rights
are outstanding at any time.
5.
<PAGE>
(e) The Board may provide in an Offering that Employees who are highly
compensated Employees within the meaning of Section 423(b)(4)(D) of the Code
shall not be eligible to participate.
7. Rights; Purchase Price.
(a) On each Offering Date, each Eligible Employee, pursuant to an Offering
made under the Plan, shall be granted the Right to purchase up to the number of
Shares purchasable with a percentage designated by the Board or the Committee
not exceeding fifteen percent (15%) of such Employee's Earnings (as defined by
the Board in subparagraph 8(a)) during the period which begins on the Offering
Date (or such later date as the Board determines for a particular Offering) and
ends on the date stated in the Offering, which date shall be no later than the
end of the Offering. The Board shall establish one or more Purchase Dates during
an Offering on which Rights granted under the Plan shall be exercised and
purchases of Shares carried out in accordance with such Offering.
(b) In connection with each Offering made under the Plan, the Board may
specify a maximum amount of Shares that may be purchased by any Participant as
well as a maximum aggregate amount of Shares that may be purchased by all
Participants pursuant to such Offering. In addition, in connection with each
Offering that contains more than one Purchase Date, the Board may specify a
maximum aggregate amount of Shares which may be purchased by all Participants on
any given Purchase Date under the Offering. If the aggregate purchase of Shares
upon exercise of Rights granted under the Offering would exceed any such maximum
aggregate amount, the Board shall make a pro rata allocation of the Shares
available in as nearly a uniform manner as shall be practicable and as it shall
deem to be equitable.
(c) The purchase price of Shares acquired pursuant to Rights granted under
the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the fair market
value of the Shares on the Offering Date; or
(ii) an amount equal to eighty-five percent (85%) of the fair market
value of the Shares on the Purchase Date.
8. Participation; Withdrawal; Termination.
(a) An Eligible Employee may become a Participant in the Plan pursuant
to an Offering by delivering a participation agreement to the Company within the
time specified in the Offering, in such form as the Company provides. Each such
agreement shall authorize payroll deductions of up to the maximum percentage
specified by the Board of such Employee's Earnings during the Offering.
"Earnings" is defined as an employee's regular salary or wages (including
amounts thereof elected to be deferred by the employee, that would otherwise
have been paid, under any arrangement established by the Company that is
intended to comply with Section 125, Section 401(k), Section 402(e)(3), Section
402(h) or Section 403(b) of the Code, and also including any deferrals under a
non-qualified deferred compensation plan or
6.
<PAGE>
arrangement established by the Company), and also, if determined by the Board or
the Committee and set forth in the terms of the Offering, may include any or all
of the following: (i) overtime pay, (ii) commissions, (iii) bonuses, incentive
pay, profit sharing and other remuneration paid directly to the employee, and/or
(iv) other items of remuneration not specifically excluded pursuant to the Plan.
Earnings shall not include the cost of employee benefits paid for by the Company
or an Affiliate, education or tuition reimbursements, imputed income arising
under any group insurance or benefit program, traveling expenses, business and
moving expense reimbursements, income received in connection with stock options,
contributions made by the Company or an Affiliate under any employee benefit
plan, and similar items of compensation, as determined by the Board or the
Committee. Notwithstanding the foregoing, the Board or Committee may modify the
definition of "Earnings" with respect to one or more Offerings as the Board or
Committee determines appropriate. The payroll deductions made for each
Participant shall be credited to a bookkeeping account for such Participant
under the Plan and either may be deposited with the general funds of the Company
or may be deposited in a separate account in the name of, and for the benefit
of, such Participant with a financial institution designated by the Company. To
the extent provided in the Offering, a Participant may reduce (including to
zero) or increase such payroll deductions. To the extent provided in the
Offering, a Participant may begin such payroll deductions after the beginning of
the Offering. A Participant may make additional payments into his or her account
only if specifically provided for in the Offering and only if the Participant
has not already had the maximum permitted amount withheld during the Offering.
(b) At any time during an Offering, a Participant may terminate his or her
payroll deductions under the Plan and withdraw from the Offering by delivering
to the Company a notice of withdrawal in such form as the Company provides. Such
withdrawal may be elected at any time prior to the end of the Offering except as
provided by the Board in the Offering. Upon such withdrawal from the Offering by
a Participant, the Company shall distribute to such Participant all of his or
her accumulated payroll deductions (reduced to the extent, if any, such
deductions have been used to acquire Shares for the Participant) under the
Offering, without interest unless otherwise specified in the Offering, and such
Participant's interest in that Offering shall be automatically terminated. A
Participant's withdrawal from an Offering will have no effect upon such
Participant's eligibility to participate in any other Offerings under the Plan
but such Participant will be required to deliver a new participation agreement
in order to participate in subsequent Offerings under the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall terminate
immediately upon cessation of any participating Employee's employment with the
Company or a designated Affiliate for any reason (subject to any post-employment
participation period required by law) or other lack of eligibility. The Company
shall distribute to such terminated Employee all of his or her accumulated
payroll deductions (reduced to the extent, if any, such deductions have been
used to acquire Shares for the terminated Employee) under the Offering, without
interest unless otherwise specified in the Offering. If the accumulated payroll
deductions have been deposited with the Company's general funds, then the
distribution shall be made from the general funds of the Company, without
interest. If the accumulated payroll deductions have been deposited in a
separate account with a financial institution as provided in subsection 8(a),
then
7.
<PAGE>
the distribution shall be made from the separate account, without interest
unless otherwise specified in the Offering.
(d) Rights granted under the Plan shall not be transferable by a Participant
otherwise than by will or the laws of descent and distribution, or by a
beneficiary designation as provided in Section 15 and, otherwise during his or
her lifetime, shall be exercisable only by the person to whom such Rights are
granted.
9. Exercise.
(a) On each Purchase Date specified therefor in the relevant Offering, each
Participant's accumulated payroll deductions and other additional payments
specifically provided for in the Offering (without any increase for interest)
will be applied to the purchase of Shares up to the maximum amount of Shares
permitted pursuant to the terms of the Plan and the applicable Offering, at the
purchase price specified in the Offering. No fractional Shares shall be issued
upon the exercise of Rights granted under the Plan unless specifically provided
for in the Offering. The amount, if any, of accumulated payroll deductions
remaining in each participant's account after the purchase of shares which is
less than the amount required to purchase one share of Common Stock on the final
Purchase Date of an Offering shall be held in each such participant's account
for the purchase of shares under the next Offering under the Plan, unless such
participant withdraws from such next Offering, as provided in subparagraph 8(b),
or is no longer eligible to be granted rights under the Plan, as provided in
paragraph 6, in which case such amount shall be distributed to the Participant
after such final Purchase Date, without interest. The amount, if any, of
accumulated payroll deductions remaining in any participant's account after the
purchase of shares which is equal to the amount required to purchase one or more
whole shares of Common Stock on the final Purchase Date of an Offering shall be
distributed in full to the participant after such Purchase Date, without
interest.
(b) No Rights granted under the Plan may be exercised to any extent unless
the Shares to be issued upon such exercise under the Plan (including Rights
granted thereunder) are covered by an effective registration statement pursuant
to the Securities Act and the Plan is in material compliance with all applicable
state, foreign and other securities and other laws applicable to the Plan. If on
a Purchase Date in any Offering hereunder the Plan is not so registered or in
such compliance, no Rights granted under the Plan or any Offering shall be
exercised on such Purchase Date, and the Purchase Date shall be delayed until
the Plan is subject to such an effective registration statement and such
compliance, except that the Purchase Date shall not be delayed more than twelve
(12) months and the Purchase Date shall in no event be more than twenty-seven
(27) months from the Offering Date. If, on the Purchase Date of any Offering
hereunder, as delayed to the maximum extent permissible, the Plan is not
registered and in such compliance, no Rights granted under the Plan or any
Offering shall be exercised and all payroll deductions accumulated during the
Offering (reduced to the extent, if any, such deductions have been used to
acquire Shares) shall be distributed to the Participants, without interest
unless otherwise specified in the Offering. If the accumulated payroll
deductions have been deposited with the Company's general funds, then the
distribution shall be made from the general funds of the Company, without
interest. If the accumulated payroll deductions have been
8.
<PAGE>
deposited in a separate account with a financial institution as provided in
subsection 8(a), then the distribution shall be made from the separate account,
without interest unless otherwise specified in the Offering.
10. Covenants of the Company.
(a) During the terms of the Rights granted under the Plan, the Company shall
ensure that the amount of Shares required to satisfy such Rights are available.
(b) The Company shall seek to obtain from each federal, state, foreign or
other regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to issue and sell Shares upon exercise of the
Rights granted under the Plan. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of Shares under the Plan, the Company shall be relieved from any liability for
failure to issue and sell Shares upon exercise of such Rights unless and until
such authority is obtained.
11. Use of Proceeds from Shares.
Proceeds from the sale of Shares pursuant to Rights granted under the Plan
shall constitute general funds of the Company.
12. Rights as a Stockholder.
A Participant shall not be deemed to be the holder of, or to have any of the
rights of a holder with respect to, Shares subject to Rights granted under the
Plan unless and until the Participant's Shares acquired upon exercise of Rights
under the Plan are recorded in the books of the Company (or its transfer agent).
13. Adjustments upon Changes in Securities.
(a) If any change is made in the Shares subject to the Plan, or subject to
any Right, without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the Plan will be appropriately adjusted in the type of security and
initial maximum number of Shares subject to the Plan pursuant to subsection
4(a), the additional Shares subject to the Plan and the overall maximum of
Shares pursuant to subsection 4(b), and the outstanding Rights will be
appropriately adjusted in the type of security, number of shares, and purchase
limits of such outstanding Rights. The Board shall make such adjustments, and
its determination shall be final, binding and conclusive. (The conversion of any
convertible securities of the Company shall not be treated as a transaction that
does not involve the receipt of consideration by the Company.)
9.
<PAGE>
(b) Effective as of the first Offering, in the event of a Change in Control,
then, as determined by the Board in its sole discretion (i) any surviving or
acquiring corporation may assume outstanding Rights or substitute similar Rights
for those under the Plan, (ii) such Rights may continue in full force and
effect, or (iii) the Participants' accumulated payroll deductions may be used to
purchase Shares immediately prior to the transaction described above and the
Participants' Rights under the ongoing Offering terminated. In the event that no
affirmative determination is made by the Board pursuant to the preceding
sentence, then alternative (iii) shall automatically apply.
(c) "Change in Control" means the happening of any of the following events:
(i) A dissolution or liquidation of the Company.
(ii) A sale, lease or other disposition of all or substantially all of
the assets of the Company.
(iii) A merger, reverse merger, consolidation or reorganization of the
Company with or into another corporation or other legal person, or any other
capital reorganization of the Company, including but not limited to a capital
reorganization in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged.
14. Amendment of the Plan.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 13 relating to adjustments upon changes
in securities and except as to minor amendments to benefit the administration of
the Plan, to take account of a change in legislation or to obtain or maintain
favorable tax, exchange control or regulatory treatment for Participants or the
Company or any Affiliate, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary for
the Plan to satisfy the requirements of Section 423 of the Code, Rule 16b-3
under the Exchange Act and any Nasdaq or other securities exchange listing
requirements. Currently under the Code, stockholder approval within twelve (12)
months before or after the adoption of the amendment is required where the
amendment will:
(i) Increase the amount of Shares reserved for Rights under the Plan;
(ii) Modify the provisions as to eligibility for participation in the
Plan to the extent such modification requires stockholder approval in order for
the Plan to obtain employee stock purchase plan treatment under Section 423 of
the Code; or
(iii) Modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to obtain employee stock purchase
plan treatment under Section 423 of the Code.
(b) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide Employees with the
maximum benefits provided
10.
<PAGE>
or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to Employee Stock Purchase Plans and/or to bring
the Plan and/or Rights granted under it into compliance therewith.
(c) Rights and obligations under any Rights granted before amendment of the
Plan shall not be impaired by any amendment of the Plan, except with the consent
of the person to whom such Rights were granted, or except as necessary to comply
with any laws or governmental regulations, or except as necessary to ensure that
the Plan and/or Rights granted under the Plan comply with the requirements of
Section 423 of the Code.
15. Designation of Beneficiary.
(a) A Participant may file a written designation of a beneficiary who is to
receive any Shares and/or cash, if any, from the Participant's account under the
Plan in the event of such Participant's death subsequent to the end of an
Offering but prior to delivery to the 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 during an Offering.
(b) The Participant may change such designation of beneficiary 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 sole 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. Termination or Suspension of the Plan.
(a) The Board in its discretion may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate at the time that all of
the Shares subject to the Plan's reserve, as increased and/or adjusted from time
to time, have been issued under the terms of the Plan. No Rights may be granted
under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any Rights granted while the Plan is in
effect shall not be impaired by suspension or termination of the Plan, except as
expressly provided in the Plan or with the consent of the person to whom such
Rights were granted, or except as necessary to comply with any laws or
governmental regulation, or except as necessary to ensure that the Plan and/or
Rights granted under the Plan comply with the requirements of Section 423 of the
Code.
11.
<PAGE>
17. Effective Date of Plan.
The Plan shall become effective as determined by the Board, but no Rights
granted under the Plan shall be exercised unless and until the Plan has been
approved by the stockholders of the Company within twelve (12) months before or
after the date the Plan is adopted by the Board, which date may be prior to the
effective date set by the Board.
12.
<PAGE>
Exhibit 10.9
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement"), is made and entered into as
---------
of the 1st day of June, 1998, by and between SKYCACHE, INC., a Delaware
corporation (the "Company") and DOUGLAS E. HUMPHREY (the "Employee").
------- --------
RECITALS
--------
A. The Company desires to retain Employee to provide the services set
forth in this Agreement.
B. Employee is willing to provide such services to the Company on the
terms and conditions set forth in this Agreement.
AGREEMENT
---------
In consideration of the promises and the terms and conditions set forth in
this Agreement, the parties agree as follows:
1. Employment and Term.
-------------------
(a) Initial Term. The Company agrees to employ the Employee and the
------------
Employee agrees to work for the Company, subject to the terms and conditions
below, for an initial term of two (2) years, beginning June 1, 1998, and ending
May 31, 2000.
(b) Renewal. The term of the Employee's employment shall be extended
-------
automatically, without further action of either party, as of June 1, 2000, and
on each succeeding anniversary of that date, for terms of one (1) year, unless
on or before ninety (90) days prior to the last day of the term of the
Employee's employment or any extension thereof, the Company or the Employee
shall notify the other in writing of its intention not to renew the Employee's
employment, in which case the Employee's employment shall terminate at the end
of the original term or any extension thereof. If either party notifies the
other of its intention not to renew the Employee's employment less than ninety
(90) days prior to the end of the term of this Agreement or any extension
thereof, then such termination shall be effective ninety (90) days from such
notice. No notice of non-renewal may be given by either party after a renewal
term has commenced. Any such renewal shall be upon such terms and conditions set
forth herein, unless otherwise agreed between the Company and the Employee. The
notice of non-renewal by either party shall not constitute a breach of this
Agreement.
2. Compensation; Benefits. Subject to the terms and conditions of this
----------------------
Agreement, the Company shall pay to the Employee a base salary as set forth on
Schedule A, attached hereto and made a part hereof, payable in accordance with
- ----------
the Company's regular payroll policies. In addition to this base salary, the
Employee shall be entitled to the benefits and bonuses described on Schedule A,
----------
subject to the terms and conditions described therein. In addition, the
Employee shall be entitled to receive such other benefits including, but not
limited to, vacation, holidays and sick leave, as the Company generally provides
to its employees holding similar positions as
<PAGE>
that of the Employee. Notwithstanding the foregoing, the Company reserves the
right to adopt, amend or discontinue any employee benefit plan or policy in
accordance with then-applicable law.
3. Title; Duties. The Employee shall be initially employed as President
-------------
and Chief Executive Officer and shall perform duties that are executive in
nature, consistent with his title. The Company shall not, without Employee's
express written consent, require Employee to be based anywhere other than in
Maryland, except for required travel on the Company's business to an extent
substantially consistent with travel required of persons who hold similar
positions or have similar duties with similar companies.
4. Service. The Employee will devote substantially all his working time
-------
and efforts to the business and affairs of the Company and will use his best
efforts to discharge the duties assigned to him by the Company. The foregoing
shall not, however, preclude the Employee (a) from engaging in appropriate
civic, charitable, industry or religious activities, (b) from devoting a
reasonable amount of time to private investments and other business activities
arising from such investments (other than any business that is a Competitor (as
defined below) of the Company), (c) from serving on the boards of directors of
other entities, or (d) from providing incidental assistance to family members on
matters of family business, so long as the foregoing activities and service do
not conflict with the Employee's responsibilities to the Company or the terms of
this Agreement.
5. Termination by the Company.
--------------------------
(a) General. The Company shall have the right to terminate this
-------
Agreement with or without cause at any time during the term of this Agreement by
giving written notice to the Employee. The termination shall become effective on
the date specified in the notice, which termination date shall not be a date
prior to the date fourteen (14) days following the date of the notice of
termination itself.
(b) Cause. In the event that the Employee is terminated for cause
-----
as defined in Section 5(d) below), the Company shall pay the Employee the
------------
salary and pro rata bonus, if any, due him under this Agreement through the day
on which such termination is effective.
(c) Without Cause. In addition, in the event that the Employee is
-------------
terminated without cause, the Company shall also pay to the Employee
compensation equal to six (6) months of the Employee's base salary as of the
date of termination.
(d) Cause Defined. For purposes of this Section 5, "cause" shall
------------- --------- -----
mean (i) a material breach by the Employee of any covenant or condition under
this Agreement (including the Covenant set forth in the first sentence of
Section 4 above); (ii) the commission by the Employee of any willful act
- ---------
constituting dishonesty, fraud, immoral or disreputable conduct which is harmful
to the Company or its reputation; (iii) any felony conviction of the Employee;
(iv) any willful act of gross misconduct which is materially and demonstrably
injurious to the Company; and (v) refusal to attempt in good faith to implement
a clear and reasonable directive of the Board of Directors.
2
<PAGE>
6. Termination by Death or Disability of the Employee.
--------------------------------------------------
(a) General. In the event of the Employee's death during the term of
-------
this Agreement, all obligations of the parties hereunder shall terminate
immediately, and the Company shall pay to the Employee's legal representatives
the salary due the Employee through the day on which his death shall have
occurred.
(b) Disability. If the Employee is unable to perform his duties
----------
hereunder due to mental, physical or other disability for a period of ninety
(90) consecutive business days, as determined in good faith by the Board of
Directors of the Company, or for ninety (90) business days in any period of
twelve (12) consecutive months, this Agreement may be terminated by the Company,
at its option, by written notice to the Employee, effective on the termination
date specified in such notice, provided such termination date shall not be a
date prior to the date of the notice of termination itself. In this case, the
Company will pay the Employee the salary due him through the day on which such
termination is effective.
(c) Disability Insurance. Any amounts paid the Employee pursuant to
--------------------
disability insurance policies provided by the Company shall be offset against
the amount of salary due from the Company to the Employee hereunder during the
period of the Employee's disability.
7. Termination by the Employee.
---------------------------
(a) General. The Employee may terminate this Agreement at any time,
-------
with or without cause, by giving written notice to the Company. Any such
termination shall become effective on the date specified in such notice,
provided that the Company may elect to have such termination become effective on
a date after, but not more than, fourteen (14) days after the date of the
notice.
(b) Salary/Bonus. After the date of any such termination, the
------------
Employee shall be entitled to the salary and pro rata bonus, if any, due him
through the day on which such termination becomes effective.
(c) Cause. In addition, if the termination is with cause (as defined
-----
in Section 7(d) below), the Company shall pay to the Employee compensation
------------
equal to six (6) months of the Employee's base salary as of the date of
termination.
(d) Cause Defined. For purposes of this Section 7, "cause" shall
------------- --------- -----
mean (i) a material failure by the Company to perform its obligations under this
Agreement; or (ii) a constructive termination (as defined below). "Constructive
-------------
termination" shall mean:
- ------------
(i) a material reduction in the Employee's salary or benefits
not agreed to by the Employee; or
(ii) a material change in the Employee's responsibilities not
agreed to by the Employee (other than changing the Employee's position from
President and Chief Executive Officer to Chief Technology Officer which shall
not be deemed a "constructive termination"); or
-----------------------
3
<PAGE>
(iii) the Company's failure to comply in any material respect
with any material term of this Agreement; or
(iv) a requirement that the Employee relocate to an office
outside of Maryland.
8. Suspension. In the event the Company has reasonable cause to believe
----------
that there exists cause for termination of this Agreement as defined in
Section 5, immediately upon written notice to the Employee, the Company may, but
- ---------
shall not be obligated to, suspend the Employee, with pay, for a period not to
exceed two weeks, either as a disciplinary measure or in order to investigate
the Company's belief that such cause exists. No such suspension shall prevent
the Company from thereafter exercising its rights to terminate this Agreement in
accordance with its terms.
9. Noncompetition.
--------------
(a) The Employee agrees that, during his employment hereunder, and for
a period of one (1) year after the effective date of termination of this
Agreement, he will not:
(i) Compete (as defined below) with the Company; or
(ii) assist a Competitor (as defined below) of the Company by
providing consulting or other advisory services to that Competitor.
(b) The following terms, as used in this Section 9 shall have the
---------
meanings set forth below:
(i) The Company's "Business" means development and deployment
----------
of an Internet broadcast and data delivery system using satellites, and other
businesses or services that the Company may establish from time to time during
the term of this Agreement.
(ii) The term "Competitor" means any firm, corporation or entity
------------
that is engaged in business substantially similar to the Company's Business.
(iii) The term "Compete" means to engage in direct competition
---------
with the Company by serving as an employee, officer, director, proprietor,
partner, stockholder or other security holder (other than a holder of securities
of a corporation listed on a national securities exchange or the securities of
which are regularly traded in the over-the-counter market, provided that the
Employee at no time owns in excess of 1% of the outstanding securities of such
corporation entitled to vote for the election of directors or other than of a
corporation in which the Employee makes passive investments through a venture
fund or similar investment vehicle) of any firm, corporation or entity that is a
Competitor of the Company.
(iv) The term "affiliate" means any person, firm or corporation,
---------
directly or indirectly through one or more intermediaries, controlling,
controlled by or under common control with the Company.
4
<PAGE>
(c) The Employee further acknowledges that this Section 9 is an
---------
independent covenant within this Agreement, and that this covenant shall survive
any termination of Agreement and shall be treated as an independent covenant for
the purposes of enforcement. With respect to this covenant, the Employee hereby
acknowledges receipt of Ten Dollars ($10.00) and other good and valuable
consideration stated herein including the consideration of his continued
employment by the Company.
(d) The Employee shall, during the term of this Agreement and
thereafter, notify any prospective employer of the terms and conditions of this
Agreement regarding confidentiality, nondisclosure and noncompetition.
(e) Notwithstanding anything to the contrary contained herein, in the
event the Employee is terminated without cause pursuant to Section 5 above or in
---------
the event this Agreement is terminated by the Employee for cause pursuant to
Section 7 above, then the non-competition provision set forth in this Section 9
- --------- ---------
shall be of no force or effect unless, in addition to the severance payments
provided pursuant to Section 5(c) or Section 7(c), as applicable, the Company
------------ ------------
pays the Employee an amount equal to six (6) months of base salary as of the
date of termination.
10. Confidentiality and Non-Disclosure.
----------------------------------
(a) The Employee shall hold in strict confidence and shall not,
either during the term of this Agreement or after the termination hereof,
disclose, directly or indirectly, to any third party, person, firm, corporation
or other entity, irrespective of whether such person or entity is a competitor
of the Company or is engaged in a business similar to that of the Company, any
trade secrets or other proprietary or confidential information of the
Company or any subsidiary or affiliate (as defined in Section 9) of the
---------
Company (collectively, "Proprietary Information") obtained by the Employee
-----------------------
from or through his employment hereunder. Such Proprietary Information includes
but is not limited to Inventions (as defined below), marketing plans, product
plans, business strategies, financial information, forecasts, personnel
information and customer lists. The Employee hereby acknowledges and agrees that
all Proprietary Information referred to in this Section 10 shall not be used for
----------
any purpose other than his duties hereunder and shall be deemed trade secrets
of the Company and of its subsidiaries and affiliates, as defined in Section 9,
---------
and that the Employee shall take such steps, undertake such actions and refrain
from taking such other actions, as mandated by the provisions hereof and by the
provisions of the Maryland Uniform Trade Secret Act. The Employee further
acknowledges that the Company's products and titles consist of copyrighted
material, and the Employee shall exercise his best efforts to prevent the use of
such copyrighted material by any person or entity which has not prior thereto
been authorized to use such information by the Company.
(b) The Employee further hereby agrees and acknowledges that any
disclosure of any Proprietary Information prohibited herein, or any breach of
the provisions of Section 10 of this Agreement, may result in irreparable
----------
injury and damage to the Company which will not be adequately compensable in
monetary damages, that the Company will have no adequate remedy at law therefor,
and that the Company may obtain such preliminary, temporary or permanent
mandatory or restraining injunctions, orders or decrees as may be necessary to
protect the company against, or on account of, any breach by the Employee of
the provisions contained in
5
<PAGE>
Sections 10 or 11. The Employee shall reimburse the reasonable legal fees and
- ----------- --
other costs incurred by the Company in enforceing the provisions of Sections 10
-----------
and 11 of this Agreement.
--
(c) The Employee further agrees that, upon termination of this
Agreement, whether voluntary or involuntary or with or without cause, the
Employee shall notify any new employer, partner, associate or any other firm or
corporation with whom the Employee shall become associated in any capacity
whatsoever of the provisions of this Section 10, and that the Company may give
----------
such notice to such firm, corporation or other person.
11. Assignment and Disclosure of Inventions.
---------------------------------------
(a) Disclosure. From and after the date the Employee first became
----------
employed with the Company, the Employee hereby agrees to promptly disclose in
confidence to the Company all inventions, improvements, designs, original works
of authorship, formulas, processes, compositions of matter, computer software
programs, databases, mask works, and trade secrets that are directly related to
the Company's Business (as defined above) ("Inventions"), whether or not
----------
patentable, copyrightable or protectible as trade secrets, that are made or
conceived or first reduced to practice or created by the Employee, either alone
or jointly with others, during the period of the Employee's employment and in
the course of the Employee's employment.
(b) Assignment. The Employee hereby acknowledges that copyrightable
----------
works prepared by the Employee within the scope of the Employee's employment are
"works for hire" under the Copyright Act and that the Company will be considered
the author thereof. The Employee hereby agrees that all Inventions that (a) are
developed using equipment, supplies, facilities or trade secrets of the Company,
(b) result from work performed by the Employee for the Company, or (c) directly
relate to the Company's Business (as defined above), will be the sole and
exclusive property of the Company and are hereby assigned by the Employee to the
Company. Any patent applications filed by the Company based on any Inventions
conceived of by the Employee, acting alone or jointly with others, will include
the Employee's name as inventor or co-inventor, as applicable, and will be
assigned to the Company by the Employee.
(c) Other Activities. The Company and the Employee acknowledge that
----------------
the Employee will be involved in other business activities and investments as
permitted pursuant to Section 4 above and that Inventions shall not include
---------
inventions, improvements, designs, original works of authorship, formulas,
processes, compositions of matter, computer software programs, databases, mask
works, and trade secrets that are not directly related to the Company's Business
and that are made or conceived or first reduced to practice or created by the
Employee, either alone or jointly with others, in connection with such other
business activities and investments of the Employee.
12. Severability. The Company and the Employee recognize that the laws
------------
and public policies of the State of Maryland are subject to varying
interpretations and change. It is the intention of the Company and of the
Employee that the provisions of this Agreement shall be enforced to the fullest
extent permissible under the laws and public policies of the State of Maryland,
but that the unenforceability (to the modification to conform to such laws or
public policies) of any provision or provisions hereof shall not render
unenforceable, or impair, the
6
<PAGE>
remainder of this Agreement. Accordingly, if any provisions of this Agreement
shall be determined to be invalid or unenforceable, either in whole or in part,
this Agreement shall be deemed amended to delete or modify, as necessary, the
offending provision or provisions and to alter the balance of this Agreement in
order to render it valid and enforceable.
13. Assignment. Neither the rights nor obligations under this Agreement
----------
may be assigned by either party, in whole or in part, by operation of law or
otherwise, except that it shall be binding upon and inure to the benefit of any
successor of the Company and its subsidiaries and affiliates, whether by merger,
reorganization or otherwise, or any purchaser of all or substantially all of the
assets of the Company.
14. Notices. Any notice expressly provided for under this Agreement
-------
shall be in writing, shall be given either manually or by mail and shall be
deemed sufficiently given when actually received by the party to be notified or
when mailed, if mailed by certified or registered mail, postage prepaid,
addressed to such party at their addresses as set forth below. Either party may,
by notice to the other party, given in the manner provided for herein, change
their address for receiving such notices.
(a) If to the Company, to:
SkyCache, Inc.
312 Laurel Avenue
Laurel, Maryland 20707
(b) If to the Employee, to:
Mr. Douglas E. Humphrey
308 Montgomery Avenue
Laurel, Maryland 20707.
15. Governing Law. This Agreement shall be executed, construed and
-------------
performed in accordance with the laws of the State of Maryland without reference
to conflict of laws principles. The parties agree that the venue for any dispute
hereunder will be the state or federal courts sitting in Prince George's County,
Maryland and the parties hereby agree to the exclusive jurisdiction thereof.
16. Headings. The section headings contained in this Agreement are for
--------
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
17. Entire Agreement; Amendments. This Agreement constitutes and embodies
----------------------------
the entire agreement between the parties in connection with the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings in connection with such subject matter. No covenant or condition
not expressed in this Agreement shall affect or be effective to interpret,
change or restrict this Agreement. In the event of a conflict or inconsistency
between the terms of this Agreement and the Company's policies regarding
employees, the terms of this Agreement shall supersede the conflicting or
inconsistent Company policies. No change, termination or attempted waiver of any
of the provisions of this Agreement shall be binding unless in writing signed by
the Employee and on behalf of the Company by an officer thereunto
7
<PAGE>
duly authorized by the Company's Board of Directors. No modification, waiver,
termination, rescission, discharge or cancellation of this Agreement shall
affect the right of any party to enforce any other provision or to exercise any
right or remedy in the event of any other default.
18. Covenants Related to an Initial Public Offerings. In the event the
------------------------------------------------
Company conducts its initial public offering of Common Stock during the term of
this Agreement, the Company agrees that the Employee shall be entitled to select
the stock certificates to be engraved in connection with such offering and that
a three person Committee comprised of the Employee, one other employee of the
Company and one representative of the Company's holders of Preferred Stock will
be entitled to determine the manner in which the directed or "friends and
family" shares are to be distributed by the underwriters.
[SIGNATURE PAGE FOLLOWS]
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
COMPANY:
-------
SKYCACHE, INC.,
a Delaware corporation
By: /s/ Robert M. Dunham
------------------------------
Robert M. Dunham
Treasurer
EMPLOYEE:
--------
/s/ Douglas E. Humphrey
---------------------------------
Douglas E. Humphrey
9
<PAGE>
Exhibit 10.10
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement"), is made and entered into as
---------
of the 1st day of July, 1998, by and between SKYCACHE, INC., a Delaware
corporation (the "Company") and ROBERT E. MARGGRAF (the "Employee").
-------
RECITALS
--------
A. The Company desires to retain Employee to provide the services set forth
in this Agreement.
B. Employee is willing to provide such services to the Company on the terms
and conditions set forth in this Agreement.
AGREEMENT
---------
In consideration of the promises and the terms and conditions set forth in
Agreement, the parties agree as follows:
1. Employment and Term.
-------------------
(a) Initial Term. The Company agrees to employ the Employee and the
------------
Employee agrees to work for the Company, subject to the terms and conditions
below, for an initial term of three (3) years, beginning July 1, 1998, and
ending June 30, 2001.
(b) Renewal. The term of the Employee's employment may be renewed for
-------
additional one year terms by mutual agreement of the Company and the Employee.
2. Compensation; Benefits. Subject to the terms and conditions of this
----------------------
Agreement, the Company shall pay to the Employee a base salary as set forth on
Schedule A, attached hereto and made a part hereof, payable in accordance with
- ----------
the Company's regular payroll policies. In addition to this base salary, the
Employee shall be entitled to the benefits and bonuses described on Schedule A,
----------
subject to the terms and conditions described therein. In addition, the Employee
shall be entitled to receive such other benefits including, but not limited to,
vacation, holidays and sick leave, as the Company generally provides to its
employees holding similar positions as that of the Employee. Notwithstanding the
foregoing, the Company reserves the right to adopt, amend or discontinue any
employee benefit plan or policy in accordance with then-applicable law.
3. Title; Duties. The Employee shall be initially employed as Chief
-------------
Operating Officer. The Employee shall diligently and conscientiously devote his
full time and attention and his best efforts to discharge the duties assigned to
him by the Company, including the management of the Company's daily activities
and supervision of the Company's operations. The Employee shall perform such
duties as may be assigned to him from time to time by the Company. The Company
shall have the right to reassign the Employee to any other management position
for which the Employee is otherwise qualified, provided that the new management
position meets the following criteria: (i) it entails duties that would
typically be assigned to a senior executive of the Company; (ii) it does not
result in a reduction in pay or benefits; and (iii)
<PAGE>
the Employee is not required to relocate outside of the Maryland suburbs of the
Washington, D.C. area. In the event that the Company reassigns the employee to a
position which does not meet these requirements, the Employee may elect to treat
such reassignment as a termination without cause, as defined in Section 5 and
---------
the Employee shall be eligible for all rights defined in Section 5(c) below.
------------
4. Transfer by Company. The Company will not transfer the Employee to
-------------------
another location without the employee's consent. If at any time during the term
of this Agreement, the Company transfers the Employee to another location, the
Company will reimburse the Employee for all reasonable moving expenses incurred
as a result of such transfer. In the event that the Employee terminates this
Agreement without cause pursuant to Section 7 hereof within one year after any
such transfer, the Employee shall refund to the Company all amounts paid to him
by the Company as moving expenses (including temporary housing and incidental
expenses) pursuant to this Section 4. The Employee agrees that any amounts owing
---------
to the Company under this Section 4 may be deducted from any salary, bonuses or
---------
other amounts owed to him by the Company, consistent with applicable law.
5. Termination by the Company.
--------------------------
(a) General. The Company shall. have the right to terminate this
-------
Agreement with or without cause at anytime during the term of this Agreement by
giving written notice to the Employee. The termination shall become effective on
the date specified in the notice, which termination date shall not he a date
prior to the date fourteen (14) days following the date of the notice of
termination itself
(b) Cause. In the event that the Employee is terminated for cause (as
-----
defined in Section 5(d) below), the Company shall pay the Employee the salary
and pro rata bonus, if any, due him under this Agreement through the day on
which such termination is effective.
(c) Without Cause. In addition to the compensation in paragraph 5 (b),
-------------
in the event that the Employee is terminated without cause, the Company shall
also pay to the Employee compensation equal to six (6) months of the Employee's
base salary as of the date of termination. Notwithstanding the foregoing, in the
event the Employee is terminated without cause within one hundred eighty (180)
days following a Change of Control Event (as defined below), one hundred percent
(100%) of any unvested options held by the Employee pursuant to that certain
1998 Employee Stock Incentive Plan shall vest immediately. "Change of Control
-----------------
Event" shall mean a merger or consolidation of the Company with or into another
- -----
unaffiliated entity, or the acquisition by another unaffiliated entity or person
of all or substantially all of the Company's -assets or more than fifty percent
(50%) of the Company's then outstanding voting stock.
(d) Cause Defined. For purposes of this Section 5, "cause" shall mean
------------- ---------
(i) a material breach by the Employee of any covenant or condition under this
Agreement (including the Covenant set forth in the second sentence of Section 3
---------
above);. (ii).the commission by the Employee of any willful act constituting
dishonesty, fraud, immoral or disreputable conduct which is harmful to the
Company or its reputation; (iii) any felony conviction of the Employee; (iv) any
willful act of gross misconduct which is materially and demonstrably injurious
to the
2
<PAGE>
Company; (v) material violation by the Employee of the Company's policies as set
forth in the Company's personnel handbook, if one has been adopted, or announced
by Company management from time to time; or (vi) violation of the Company's drug
and alcohol policy as set forth in the Company's personnel handbook, if one has
been adopted, or announced by Company management from time to time.
6. Termination by Death or Disability of the Employee.
--------------------------------------------------
(a) General. In the event of the Employee's death during the term of
-------
this Agreement, all obligations of the parties hereunder shall terminate
immediately, and the Company shall pay to the Employee's legal representatives
the salary due the Employee through the day on which his death shall have
occurred.
(b) Disability. If the Employee is unable to perform his duties
----------
hereunder due to mental, physical or other disability for a period of ninety
(90) consecutive business days, as determined in good faith by the Board of
Directors of the Company, or for ninety (90) business days in any period of
twelve (12) consecutive months, this Agreement maybe terminated by the Company,
at its option, by written notice to the Employee, effective on the termination
date specified in such notice, provided such termination date shall not be a
date prior to the date of the notice of termination itself. In this case, the
Company will pay the Employee the salary due him through the day on which such
termination is effective.
(c) Disability Insurance. Any amounts paid the Employee pursuant to
--------------------
disability insurance policies provided by the Company shall be offset against
the amount of salary due from the Company to the Employee hereunder during the
period of the Employee's disability.
7. Termination by the Employee.
---------------------------
(a) General. The Employee may terminate this Agreement at any time, with
-------
or without cause, by giving written notice to the Company. Any such termination
shall become effective on the date specified in such notice, provided that the
Company may elect to have such termination become effective on a date after, but
not more than, fourteen (14) days after the date of the notice.
(b) Salary/Bonus. After the date of any such termination, the Employee
------------
shall be entitled to the salary and pro rata bonus, if any, due him through the
day on which such termination becomes effective.
(c) Cause. In addition, if the termination is with cause (as defined in
-----
Section 7(d) below), the Company shall pay to the Employee compensation equal to
- ------------
six (6) months of the Employee's base salary as of the date of termination.
(d) Cause Defined. For purposes of this Section 7. "cause" shall mean a
------------- ---------- -----
material failure by the Company to perform its obligations under this Agreement.
8. Suspension. In the event the Company has reasonable cause to believe
----------
that there exists cause for termination of this Agreement as defined in Section
-------
5 immediately upon written
- -
3
<PAGE>
notice to the Employee, the Company may, but shall not be obligated to, suspend
the Employee, with pay, for a period not to exceed two weeks, either as a
disciplinary measure or in order to investigate the Company's belief that such
cause exists. No such suspension shall prevent the Company from thereafter
exercising its rights to terminate this Agreement in accordance with its terms.
9. Noncompetition.
--------------
(a) The Employee agrees that, during his employment hereunder, and for a
period of one (1) year after the effective date of termination of this
Agreement, he will not:
(i) Compete (as defined below) with the Company; or
(ii) assist a Competitor (as defined below) of the Company by
providing consulting or other advisory services to that Competitor.
(b) The following terms, as used in this Section 9 shall have the
meanings set forth below:
(i) The Company's "Business" means development and deployment of
--------
an Internet broadcast and data delivery system using satellites, and other
businesses or services that the Company may establish from time to time during
the term of this Agreement.
(ii) The term "Competitor" means any firm, corporation or entity
----------
that is engaged in business substantially similar to the Company's Business.
(iii) The term "Compete" means to engage in direct competition with
-------
the Company by serving as an employee, officer, director, proprietor, partner,
stockholder or other security holder (other than a holder of securities of a
corporation listed on a national securities exchange or the securities of which
are regularly traded in the over-the-counter market, provided that the Employee
at no time owns in excess of 1% of the outstanding securities of such
corporation entitled to vote for the election of directors or other than of a
corporation in which the Employee makes passive investments through a venture
fund or similar investment vehicle) of any firm, corporation or entity that is a
Competitor of the Company.
(iv) The term "affiliate" means any person, firm or corporation,
---------
directly or indirectly through one or more intermediaries, controlling,
controlled by or under common control with the Company.
(c) The Employee further acknowledges that this Section 9 is an
independent covenant within this Agreement, and that this covenant shall survive
any termination of Agreement and shall be treated as an independent covenant for
the purposes of enforcement. With respect to this covenant, the Employee hereby
acknowledges receipt of Ten Dollars ($10.00) and other good and valuable
consideration stated herein including the consideration of his continued
employment by the Company.
4
<PAGE>
(d) The Employee shall, during the term of this Agreement and thereafter,
notify any prospective employer of the terms and conditions of this Agreement
regarding confidentiality, nondisclosure and noncompetition.
(e) Notwithstanding anything to the contrary contained herein, in the
event the Employee is terminated without cause pursuant to Section 5 above or in
---------
the event this Agreement is terminated by the Employee for cause pursuant to
Section 7 above, then the non-competition provision set forth in this Section 9
- --------- ---------
shall be of no force or effect unless, in addition to the severance payments
provided pursuant to Section 5(c) or Section 7(c), as applicable, the Company
------------ ------------
pays the Employee an amount equal to six (6) months of base salary as of the
date of termination.
10. Confidentiality and Non-Disclosure.
(a) The Employee shall hold in strict confidence and shall not, either
during the term of this Agreement or after the termination hereof, disclose,
directly or indirectly, to any third party, person, firm, corporation or other
entity, irrespective of whether such person or entity is a competitor of the
Company or is engaged in a business similar to that of the Company, any trade
secrets or other- proprietary or confidential information of the Company or any
subsidiary or affiliate (as defined in Section 9) of the Company (collectively,
---------
"Proprietary Information") obtained by the Employee from or through his
-----------------------
employment hereunder. Such Proprietary Information includes but is not limited
to Inventions (as defined below), marketing plans, product plans, business
strategies, financial information, forecasts, personnel information and customer
lists. The Employee hereby acknowledges and agrees that all Proprietary
Information referred to in this Section 10 shall not be used for any purpose
----------
other than his duties hereunder and shall be deemed trade secrets of the Company
and of its subsidiaries and affiliates, as defined in Section 9, and that the
---------
Employee shall take such steps, undertake such actions and refrain from taking
such other actions, as mandated by the provisions hereof and by the provisions
of the Maryland Uniform Trade Secret Act. The Employee further acknowledges that
the Company's products and titles consist of copyrighted material, and the
Employee shall exercise his best efforts to prevent the use of such copyrighted
material by any person or entity which has not prior thereto been authorized to
use such information by the Company.
(b) The Employee further hereby agrees and acknowledges that any
disclosure of any Proprietary Information prohibited herein, or any breach of
the provisions of Section 10 of this Agreement, may result in irreparable injury
----------
and damage to the Company Which will not be adequately compensable in monetary
damages, that the Company will have no adequate remedy at law therefor, and that
the Company may obtain such preliminary, temporary or permanent mandatory or
restraining injunctions, orders or decrees as maybe necessary to protect the
company against, or on account of, any breach by the Employee of the provisions
contained in Sections 10 or 11.
----------- --
(c) The Employee further agrees that, upon termination of this
Agreement, whether voluntary or involuntary or with or without cause, the
Employee shall notify any new employer, partner, associate or any other firm. or
corporation with whom the Employee shall become associated in any capacity
whatsoever of the provisions of this Section 10, and that the Company may give
----------
such notice to such firm, corporation or other person.
5
<PAGE>
11. Assignment and Disclosure of Inventions.
---------------------------------------
(a) Disclosure. From and after the date the Employee first became
----------
employed with the Company, the Employee hereby agrees to promptly disclose in
confidence to the Company all inventions, improvements, designs, original works
of authorship, formulas, processes, compositions of matter, computer software
programs, databases, mask works, and trade secrets that are directly related to
the Company's Business (as defined above) ("Inventions"), whether or not
----------
patentable, copyrightable or protectible as trade secrets, that are made or
conceived or first reduced to practice or created by the Employee, either alone
or jointly with others, during the period of the Employee's employment and in
the course of the Employee's employment.
(b) Assignment. The Employee hereby acknowledges that copyrightable
----------
works prepared by the Employee within the scope of the Employee's employment are
"works for hire" under the Copyright Act and that the Company will be considered
the author thereof The Employee hereby agrees that all Inventions that (a) are
developed using equipment, supplies, facilities or trade secret's of the
Company, (b) result from work performed by the Employee for the Company, or (c)
directly relate to the Company's Business (as defined above), will be the sole
and exclusive property of the Company and are hereby assigned by the Employee to
the Company.
12. Severability. The Company and the Employee recognize that the laws and
------------
public policies of the State of Maryland are subject to varying interpretations
and change. It is the intention of the Company and of the Employee that the
provisions of this Agreement shall be enforced to the fullest extent permissible
under the laws and public policies of the State of Maryland, but that the
unenforceability (to the modification to conform to such laws or public
policies) of any provision or provisions hereof shall not render unenforceable,
or impair, the remainder of this Agreement. Accordingly, if any provisions of
this Agreement shall be determined to be invalid or unenforceable, either in
whole or in part, this Agreement shall be deemed amended to delete or modify, as
necessary, the offending provision or provisions and to alter the balance of
this Agreement in order to render it valid and enforceable.
13. Assignment. Neither the rights nor obligations under this Agreement may
----------
be assigned by either party, in whole or in part, by operation of law or
otherwise, except that it shall be binding upon and inure to the benefit of any
successor of the Company and its subsidiaries and affiliates, whether by merger,
reorganization or otherwise, or any purchaser of all or substantially all of the
assets of the Company.
14. Notices. Any notice expressly provided for under this Agreement shall
-------
be in writing, shall be given either manually or by mail and shall be deemed
sufficiently given when actually received by the party to be notified or when
mailed, if mailed by certified or registered mail, postage prepaid, addressed to
such party at their addresses as set forth below. Either party may, by notice to
the other party, given in the manner provided for herein, change their address
for receiving such notices.
6
<PAGE>
(a) If to the Company, to:
SkyCache, Inc.
312 Laurel Avenue
Laurel, Maryland 20707
(b) If to the Employee, to:
Mr. Robert E. Marggraf
19213 Mt. Airy Road
Brookville, Maryland 20833.
15. Governing Law. This Agreement shall be executed, construed and
-------------
performed in accordance with the laws of the State of Maryland without reference
to conflict of laws principles. The parties agree that the venue for any dispute
hereunder will be the state or federal courts sitting in Prince George's County,
Maryland and the parties hereby agree to the exclusive jurisdiction thereof
16. Headings. The section headings contained in this Agreement are for
--------
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
17. Entire Amendment; Amendments. This Agreement constitutes and embodies
----------------------------
the entire agreement between the parties in connection with the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings in connection with such subject matter. No covenant or condition
not expressed in this Agreement shall affect or be effective to interpret,
change or restrict this Agreement. In the event of a conflict or inconsistency
between the terms of this Agreement and the Company's policies regarding
employees, the terms of this Agreement shall supersede the conflicting or
inconsistent Company policies. No change, termination or attempted waiver of any
of the provisions of this Agreement shall be binding unless in writing signed by
the Employee and on behalf of the Company by an officer thereunto duly
authorized by the Company's Board of Directors. No modification, waiver,
termination, rescission, discharge or cancellation of this Agreement shall
affect the right of any party to enforce any other provision or to exercise any
right or remedy in the event of any other default.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
7
<PAGE>
COMPANY:
-------
SKYCACHE, INC.,
a Delaware corporation
By: /s/ Robert M. Dunham
--------------------
Robert M. Dunham
Treasurer
EMPLOYEE:
--------
/s/ Robert E. Marggraf
----------------------
Robert E. Marggraf
<PAGE>
SCHEDULE A
----------
1 The Employee shall be paid an initial annual base salary equal to $165,000
which shall be reviewed annually by the Board of Directors (or the
Compensation Committee thereof) and which shall. be subject to increase by
the Board of Directors (or the Compensation Committee thereof) from time to
time.
2. The Employee will be eligible to participate in all Company benefit plans
as may be established from time to time, and full family group health
insurance coverage. In addition to standard Company benefits, the Company
will pay the full cost of family group health insurance for the Employee
and his immediate family.
3. The Employee will be eligible to receive a discretionary annual bonus equal
to twenty percent (20%) or more of his annual base salary. This bonus will
be awarded in the discretion of the Compensation Committee of the Company's
Board of Directors in accordance with written objectives/milestones to be
established by the Compensation Committee within thirty (30) days of the
date hereof. The Employee's performance, as related to the achievement of
such objectives/milestones, will be reviewed semi-annually by the
Compensation Committee.
4. Subject to approval by the Company's Board of Directors and the execution
of the appropriate stock option agreement, the Company will grant to the
Employee an Incentive Stock Option to purchase up to 485,000 shares of the
Company's Common Stock in accordance with the terms of the Company's 1998
Employee Incentive Stock Plan, at an exercise price of $0.20 share. The
options shall vest as follows: the first 1/6 shall vest after 6 months of
employment with the Company, and will thereafter vest in 1/6 increments
after each subsequent six months of employment with the Company. The
options will vest as to 50% upon the occurrence of a Change of Control of
the Company (as defined therein).
<PAGE>
Exhibit 10.11
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement"), is made and entered into as
---------
of the 1st day of June, 1998, by and between SKYCACHE, INC., a Delaware
corporation (the "Company") and ROBERT M. DUNHAM (the "Employee").
------- --------
RECITALS
--------
A. The Company desires to retain Employee to provide the services set
forth in this Agreement.
B. Employee is willing to provide such services to the Company on the
terms and conditions set forth in this Agreement.
AGREEMENT
---------
In consideration of the promises and the terms and conditions set forth in
this Agreement, the parties agree as follows:
1. Employment and Term.
-------------------
(a) Initial Term. The Company agrees to employ the Employee and the
------------
Employee agrees to work for the Company, subject to the terms and conditions
below, for an initial term of two (2) years, beginning June 1, 1998, and ending
May 31, 2000.
(b) Renewal. The term of the Employee's employment may be renewed for
-------
additional one year terms at the sole discretion of the Company, upon ninety
(90) days notice to the Employee.
2. Compensation; Benefits. Subject to the terms and conditions of this
----------------------
Agreement, the Company shall pay to the Employee a base salary as set forth on
Schedule A, attached hereto and made a part hereof, payable in accordance with
- ----------
the Company's regular payroll policies. In addition to this base salary, the
Employee shall be entitled to the benefits and bonuses described on Schedule A,
----------
subject to the terms and conditions described therein. In addition, the
Employee shall be entitled to receive such other benefits including, but not
limited to, vacation, holidays and sick leave, as the Company generally provides
to its employees holding similar positions as that of the Employee.
Notwithstanding the foregoing, the Company reserves the right to adopt, amend or
discontinue any employee benefit plan or policy in accordance with then-
applicable law.
3. Title; Duties. The Employee shall be initially employed as Treasurer
-------------
and Chief Financial Officer. The Employee shall diligently and conscientiously
devote his full time and attention and his best efforts to discharge the duties
assigned to him by the Company. The Employee shall perform such duties as may
be assigned to him from time to time by the Company. The Company shall have the
right to reassign the Employee to any other management position for which the
Employee is otherwise qualified, provided that the new management
<PAGE>
position meets the following criteria: (i) it entails duties that would
typically be assigned to a senior executive of the Company; (ii) it does not
result in a reduction in pay or benefits; and (iii) the Employee is not required
to relocate outside of the Maryland suburbs of the Washington, D.C. area. In the
event that the Company reassigns the employee to a position which does not meet
these requirements, the Employee may elect to treat such reassignment as a
termination without cause, as defined in Section 5 and the Employee shall be
---------
eligible for all rights defined in Section 5(c) below.
------------
4. Transfer by Company. The Company will not transfer the Employee to
-------------------
another location without the employee's consent. If at any time during the term
of this Agreement, the Company transfers the Employee to another location, the
Company will reimburse the Employee for all reasonable moving expenses incurred
as a result of such transfer. In the event that the Employee terminates this
Agreement without cause pursuant to Section 7 hereof within one year after any
---------
such transfer, the Employee shall refund to the Company all amounts paid to him
by the Company as moving expenses (including temporary housing and incidental
expenses) pursuant to this Section 4. The Employee agrees that any amounts
---------
owing to the Company under this Section 4 may be deducted from any salary,
---------
bonuses or other amounts owed to him by the Company, consistent with applicable
law.
5. Termination by the Company.
--------------------------
(a) General. The Company shall have the right to terminate this
-------
Agreement with or without cause at any time during the term of this Agreement by
giving written notice to the Employee. The termination shall become effective on
the date specified in the notice, which termination date shall not be a date
prior to the date fourteen (14) days following the date of the notice of
termination itself.
(b) Cause. In the event that the Employee is terminated for cause
-----
(as defined in Section 5(d) below), the Company shall pay the Employee the
------------
salary and pro rata bonus, if any, due him under this Agreement through the day
on which such termination is effective.
(c) Without Cause. In addition, in the event that the Employee is
-------------
terminated without cause, (i) the Company shall also pay to the Employee
compensation equal to six (6) months of the Employee's base salary as of the
date of termination, and (ii) fifty percent (50%) of any unvested options held
by the Employee pursuant to that certain 1998 Founders Equity Incentive Plan
shall vest immediately. Notwithstanding the foregoing, in the event the Employee
is terminated without cause, ninety (90) days prior to, or within one hundred
eighty (180) days following, a Change of Control Event (as defined below) one
hundred percent (100%) of any unvested options held by the Employee pursuant to
that certain 1998 Founders Equity Incentive Plan shall vest immediately. "Change
------
of Control Event" shall mean a merger or consolidation of the Company
- ----------------
Company with or into another unaffiliated entity, or the acquisition by another
unaffiliated entity or person of all or substantially all of the Company's
assets or more than fifty percent (50%) of the Company's then outstanding voting
stock.
(d) Cause Defined. For purposes of this Section 5, "cause" shall
------------- --------- -----
mean (i) a material breach by the Employee of any covenant or condition under
this Agreement (including the Covenant set forth in the second sentence of
Section 3 above); (ii) the commission by
2
<PAGE>
the Employee of any willful act constituting dishonesty, fraud, immoral or
---------
disreputable conduct which is harmful to the Company or its reputation; (iii)
any felony conviction of the Employee; (iv) any willful act of gross misconduct
which is materially and demonstrably injurious to the Company; (v) material
violation by the Employee of the Company's policies as set forth in the
Company's personnel handbook, if one has been adopted, or announced by Company
management from time to time; or (vi) violation of the Company's drug and
alcohol policy as set forth in the Company's personnel handbook, if one has been
adopted, or announced by Company management from time to time.
6. Termination by Death or Disability of the Employee.
--------------------------------------------------
(a) General. In the event of the Employee's death during the term
-------
of this Agreement, all obligations of the parties hereunder shall terminate
immediately, and the Company shall pay to the Employee's legal representatives
the salary due the Employee through the day on which his death shall have
occurred.
(b) Disability. If the Employee is unable to perform his duties
----------
hereunder due to mental, physical or other disability for a period of ninety
(90) consecutive business days, as determined in good faith by the Board of
Directors of the Company, or for ninety (90) business days in any period of
twelve (12) consecutive months, this Agreement may be terminated by the Company,
at its option, by written notice to the Employee, effective on the termination
date specified in such notice, provided such termination date shall not be a
date prior to the date of the notice of termination itself. In this case, the
Company will pay the Employee the salary due him through the day on which such
termination is effective.
(c) Disability Insurance. Any amounts paid the Employee pursuant to
--------------------
disability insurance policies provided by the Company shall be offset against
the amount of salary due from the Company to the Employee hereunder during the
period of the Employee's disability.
7. Termination by the Employee.
---------------------------
(a) General. The Employee may terminate this Agreement at any time,
-------
with or without cause, by giving written notice to the Company. Any such
termination shall become effective on the date specified in such notice,
provided that the Company may elect to have such termination become effective on
a date after, but not more than, fourteen (14) days after the date of the
notice.
(b) Salary/Bonus. After the date of any such termination, the
------------
Employee shall be entitled to the salary and pro rata bonus, if any, due him
through the day on which such termination becomes effective.
(c) Cause. In addition, if the termination is with cause (as defined
-----
in Section 7(d) below), the Company shall pay to the Employee compensation
------------
equal to six (6) months of the Employee's base salary as of the date of
termination.
(d) Cause Defined. For purposes of this Section 7, "cause" shall
------------- --------- -----
mean a material failure by the Company to perform its obligations under this
Agreement.
3
<PAGE>
8. Suspension. In the event the Company has reasonable cause to believe
----------
that there exists cause for termination of this Agreement as defined in Section
-------
5, immediately upon written notice to the Employee, the Company may, but shall
- -
not be obligated to, suspend the Employee, with pay, for a period not to exceed
two weeks, either as a disciplinary measure or in order to investigate the
Company's belief that such cause exists. No such suspension shall prevent the
Company from thereafter exercising its rights to terminate this Agreement in
accordance with its terms.
9. Noncompetition.
--------------
(a) The Employee agrees that, during his employment hereunder, and for
a period of one (1) year after the effective date of termination of this
Agreement, he will not:
(i) Compete (as defined below) with the Company; or
(ii) assist a Competitor (as defined below) of the Company by
providing consulting or other advisory services to that Competitor.
(b) The following terms, as used in this Section 9 shall have the
---------
meanings set forth below:
(i) The Company's "Business" means development and deployment of
--------
an Internet broadcast and data delivery system using satellites, and other
businesses or services that the Company may establish from time to time during
the term of this Agreement.
(ii) The term "Competitor" means any firm, corporation or entity
----------
that is engaged in business substantially similar to the Company's Business.
(iii) The term "Compete" means to engage in direct competition
-------
with the Company by serving as an employee, officer, director, proprietor,
partner, stockholder or other security holder (other than a holder of securities
of a corporation listed on a national securities exchange or the securities of
which are regularly traded in the over-the-counter market, provided that the
Employee at no time owns in excess of 1% of the outstanding securities of such
corporation entitled to vote for the election of directors or other than of a
corporation in which the Employee makes passive investments through a venture
fund or similar investment vehicle) of any firm, corporation or entity that is a
Competitor of the Company.
(iv) The term "affiliate" means any person, firm or corporation,
---------
directly or indirectly through one or more intermediaries, controlling,
controlled by or under common control with the Company.
(c) The Employee further acknowledges that this Section 9 is an
---------
independent covenant within this Agreement, and that this covenant shall survive
any termination of Agreement and shall be treated as an independent covenant for
the purposes of enforcement. With respect to this covenant, the Employee hereby
acknowledges receipt of Ten Dollars ($10.00) and other good and valuable
consideration stated herein including the consideration of his continued
employment by the Company.
4
<PAGE>
(d) The Employee shall, during the term of this Agreement and
thereafter, notify any prospective employer of the terms and conditions of this
Agreement regarding confidentiality, nondisclosure and noncompetition.
(e) Notwithstanding anything to the contrary contained herein, in the
event the Employee is terminated without cause pursuant to Section 5 above or
---------
in the event this Agreement is terminated by the Employee for cause pursuant to
Section 7 above, then the non-competition provision set forth in this Section 9
- --------- ---------
shall be of no force or effect unless, in addition to the severance payments
provided pursuant to Section 5(c) or Section 7(c), as applicable, the Company
------------ ------------
pays the Employee an amount equal to six (6) months of base salary as of the
date of termination.
10. Confidentiality and Non-Disclosure.
----------------------------------
(a) The Employee shall hold in strict confidence and shall not,
either during the term of this Agreement or after the termination hereof,
disclose, directly or indirectly, to any third party, person, firm, corporation
or other entity, irrespective of whether such person or entity is a competitor
of the Company or is engaged in a business similar to that of the Company, any
trade secrets or other proprietary or confidential information of the Company
or any subsidiary or affiliate (as defined in Section 9) of the Company
---------
(collectively, "Proprietary Information") obtained by the Employee from or
-----------------------
through his employment hereunder. Such Proprietary Information includes but is
not limited to Inventions (as defined below), marketing plans, product plans,
business strategies, financial information, forecasts, personnel information and
customer lists. The Employee hereby acknowledges and agrees that all Proprietary
Information referred to in this Section 10 shall not be used for any purpose
----------
other than his duties hereunder and shall be deemed trade secrets of the
Company and of its subsidiaries and affiliates, as defined in Section 9, and
---------
and that the Employee shall take such steps, undertake such actions and refrain
from taking such other actions, as mandated by the provisions hereof and by the
provisions of the Maryland Uniform Trade Secret Act. The Employee further
acknowledges that the Company's products and titles consist of copyrighted
material, and the Employee shall exercise his best efforts to prevent the use of
such copyrighted material by any person or entity which has not prior thereto
been authorized to use such information by the Company.
(b) The Employee further hereby agrees and acknowledges that any
disclosure of any Proprietary Information prohibited herein, or any breach of
the provisions of Section 10 of this Agreement, may result in irreparable
----------
injury and damage to the Company which will not be adequately compensable in
monetary damages, that the Company will have no adequate remedy at law therefor,
and that the Company may obtain such preliminary, temporary or permanent
mandatory or restraining injunctions, orders or decrees as may be necessary to
protect the company against, or on account of, any breach by the Employee of the
provisions contained in Sections 10 or 11.
----------- --
(c) The Employee further agrees that, upon termination of this
Agreement, whether voluntary or involuntary or with or without cause, the
Employee shall notify any new employer, partner, associate or any other firm or
corporation with whom the Employee shall become associated in any capacity
whatsoever of the provisions of this Section 10, and that the Company may
----------
give such notice to such firm, corporation or other person.
5
<PAGE>
11. Assignment and Disclosure of Inventions.
---------------------------------------
(a) Disclosure. From and after the date the Employee first became
----------
employed with the Company, the Employee hereby agrees to promptly disclose in
confidence to the Company all inventions, improvements, designs, original works
of authorship, formulas, processes, compositions of matter, computer software
programs, databases, mask works, and trade secrets that are directly related to
the Company's Business (as defined above) ("Inventions"), whether or not
----------
patentable, copyrightable or protectible as trade secrets, that are made or
conceived or first reduced to practice or created by the Employee, either alone
or jointly with others, during the period of the Employee's employment and in
the course of the Employee's employment.
(b) Assignment. The Employee hereby acknowledges that copyrightable
----------
works prepared by the Employee within the scope of the Employee's employment are
"works for hire" under the Copyright Act and that the Company will be considered
the author thereof. The Employee hereby agrees that all Inventions that (a) are
developed using equipment, supplies, facilities or trade secrets of the Company,
(b) result from work performed by the Employee for the Company, or (c) directly
relate to the Company's Business (as defined above), will be the sole and
exclusive property of the Company and are hereby assigned by the Employee to the
Company.
12. Severability. The Company and the Employee recognize that the laws
------------
and public policies of the State of Maryland are subject to varying
interpretations and change. It is the intention of the Company and of the
Employee that the provisions of this Agreement shall be enforced to the fullest
extent permissible under the laws and public policies of the State of Maryland,
but that the unenforceability (to the modification to conform to such laws or
public policies) of any provision or provisions hereof shall not render
unenforceable, or impair, the remainder of this Agreement. Accordingly, if any
provisions of this Agreement shall be determined to be invalid or unenforceable,
either in whole or in part, this Agreement shall be deemed amended to delete or
modify, as necessary, the offending provision or provisions and to alter the
balance of this Agreement in order to render it valid and enforceable.
13. Assignment. Neither the rights nor obligations under this Agreement
----------
may be assigned by either party, in whole or in part, by operation of law or
otherwise, except that it shall be binding upon and inure to the benefit of any
successor of the Company and its subsidiaries and affiliates, whether by merger,
reorganization or otherwise, or any purchaser of all or substantially all of the
assets of the Company. may be
14. Notices. Any notice expressly provided for under this Agreement
-------
shall be in writing, shall be given either manually or by mail and shall be
deemed sufficiently given when actually received by the party to be notified or
when mailed, if mailed by certified or registered mail, postage prepaid,
addressed to such party at their addresses as set forth below. Either party may,
by notice to the other party, given in the manner provided for herein, change
their address for receiving such notices.
6
<PAGE>
(a) If to the Company, to:
SkyCache, Inc.
312 Laurel Avenue
Laurel, Maryland 20707
(b) If to the Employee, to:
Mr. Robert M. Dunham
706 Anderson Avenue
Rockville, Maryland 20850.
15. Governing Law. This Agreement shall be executed, construed and
-------------
performed in accordance with the laws of the State of Maryland without reference
to conflict of laws principles. The parties agree that the venue for any dispute
hereunder will be the state or federal courts sitting in Prince George's County,
Maryland and the parties hereby agree to the exclusive jurisdiction thereof.
16. Headings. The section headings contained in this Agreement are for
--------
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
17. Entire Agreement; Amendments. This Agreement constitutes and
----------------------------
embodies the entire agreement between the parties in connection with the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings in connection with such subject matter. No covenant or condition
not expressed in this Agreement shall affect or be effective to interpret,
change or restrict this Agreement. In the event of a conflict or inconsistency
between the terms of this Agreement and the Company's policies regarding
employees, the terms of this Agreement shall supersede the conflicting or
inconsistent Company policies. No change, termination or attempted waiver of any
of the provisions of this Agreement shall be binding unless in writing signed by
the Employee and on behalf of the Company by an officer thereunto duly
authorized by the Company's Board of Directors. No modification, waiver,
termination, rescission, discharge or cancellation of this Agreement shall
affect the right of any party to enforce any other provision or to exercise any
right or remedy in the event of any other default.
7
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
COMPANY:
-------
SKYCACHE, INC.,
a Delaware corporation
By: /s/ Douglas E. Humphrey
------------------------------
Douglas E. Humphrey
President
EMPLOYEE:
--------
/s/ Robert M. Dunham
---------------------------------
Robert M. Dunham
8
<PAGE>
SCHEDULE A
----------
1. The Employee shall be paid an initial annual base salary equal to $90,000
which shall be reviewed annually by the Board of Directors (or the
Compensation Committee thereof) and which shall be subject to increase by
the Board of Directors (or the Compensation Committee thereof) from time to
time. Employee shall automatically receive a salary increase to $110,000
after the Company achieves three consecutive months of operating
profitability.
2. Participation in all Company benefit plans as may be established from time
to time.
3. Participation in any Executive Bonus and/or Option Plan as may be
established on no less favorable terms than other executive officers of the
Company. The Employee acknowledges that the Company is not guaranteeing
any level of compensation from such plans.
<PAGE>
Exhibit 10.12
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into as of
the 17th day of February, 2000, by and between Cidera, Inc., a Delaware
corporation (the "Company") and Edward D. Postal (the "Employee").
RECITALS
A. The Company desires to retain Employee to provide the services set
forth in this Agreement.
B. Employee is willing to provide such services to the Company on the
terms and conditions set forth in this Agreement.
AGREEMENT
In consideration of the promises and the terms and conditions set forth in
this Agreement, the parties agree as follows:
1. Employment and Term.
(A) Initial Term. The Company agrees to employ the Employee and the
Employee agrees to work for the Company, subject to the terms and conditions
below, for an initial term of two (2) years, beginning March 6, 2000, and ending
March 5, 2002.
(B) Renewal. The term of this Agreement may be renewed for additional one
year terms at the sole discretion of the Company, upon ninety (90) days written
notice provided to the Employee at any time prior to the expiration of the
Initial Term.
2. Compensation; Benefits. Subject to the terms and conditions of this
Agreement, the Company shall pay to the Employee a base salary as set forth on
Schedule A, attached hereto and made a part hereof, payable in accordance with
the Company's regular payroll policies. In addition to this base salary, the
Employee shall be entitled to the benefits and bonuses described on Schedule A,
subject to the terms and conditions described therein. In addition, the Employee
shall be entitled to receive such other benefits including, but not limited to,
vacation, holidays and sick leave, as the Company generally provides to its
employees holding similar positions as that of the Employee. Employee initially
shall be entitled annually to three (3) weeks of paid vacation time.
Notwithstanding the foregoing, the Company reserves the right to adopt, amend or
discontinue any employee benefit plan or policy in accordance with then-
applicable law.
3. Restricted Stock. Employee agrees to purchase 620,000 shares of Company
common stock at a purchase price of $13.00 per share. This stock shall be
subject to a vesting schedule over a four-year period, with the shares vesting
in equal quarterly increments (measured from the beginning of the Employee's
term of employment). During the period that the stock is unvested, the Company
may repurchase the stock from the Employee in the event he separates from
service with the Company, at a repurchase price equal to the amount paid for
those shares by the Employee. The specific terms and conditions of the award
shall be governed by the
1.
<PAGE>
Company's "1998 Employee Stock Incentive Plan" and the standard form of
Restricted Stock Purchase Agreement, which Employee agrees to execute.
4. Title; Duties. The Employee shall be employed as the Executive Vice
President and Chief Financial Officer. The Employee shall diligently and
conscientiously devote his full time and attention and his best efforts to
discharge the duties assigned to him by the Company. The Employee shall perform
such duties as may be assigned to him from time to time by the Company.
5. Termination by the Company.
(a) General. The Company shall have the right to terminate this Agreement
with or without cause at any time during the term of this Agreement by giving
written notice to the Employee. The termination shall become effective on the
date specified in the notice, which termination date shall not be a date prior
to the date fourteen (14) days following the date of the notice of termination
itself.
(b) Cause. In the event that the Employee is terminated for cause (as
defined in Section 5(d) below), the Company shall pay the Employee the salary
and pro rata bonus, if any, due him under this Agreement through the day on
which such termination is effective.
(c) Without Cause. In the event that the Employee is terminated without
cause, (i) the Company shall pay to the Employee compensation equal to six (6)
months of the Employee's base salary as of the date of termination, and (ii)
notwithstanding Section 3 above, one hundred percent (100%) of any unvested
stock or unvested options held by the Employee pursuant to the Company's 1998
Employee Stock Incentive Plan (or any successor plan) shall vest immediately. In
addition, in the event of a Change of Control Event (as defined below), then one
hundred percent (100%) of any unvested stock or unvested options held by the
Employee pursuant to the Company's 1998 Employee Stock Incentive Plan (or any
successor plan) shall vest immediately. "Change of Control Event" shall mean (i)
a sale, lease or other disposition of all or substantially all of the assets of
the Company, (ii) a consolidation or merger of the Company with or into any
other corporation or other entity or person, or any other corporate
reorganization, in which the stockholders of the Company immediately prior to
such consolidation, merger or reorganization, own less than 50% of the
outstanding voting power of the surviving entity (or its parent) following the
consolidation, merger or reorganization, or (iii) any transaction (or series of
related transactions involving a person or entity, or a group of affiliated
persons or entities) in which in excess of 50% of the Company's outstanding
voting power is transferred. Notwithstanding the foregoing, the payment of
compensation and the accelerated vesting of stock or options hereunder shall be
subject to Section 13 of the Restricted Stock Purchase Agreement between the
Company and the Employee, dated as of February 17, 2000.
(d) Cause Defined. For purposes of this Section 5, "cause" shall mean (i)
a material breach by the Employee of any covenant or condition under this
Agreement (including the covenant set forth in the second sentence of Section 4
above) after the Company has provided written notice of the breach to the
Employee and the Employee has failed to cure the breach within thirty (30) days
following such notice (provided, however, that no notice or opportunity to cure
shall be required if the breach cannot be cured); (ii) the commission by the
Employee of any
2.
<PAGE>
willful act constituting dishonesty, fraud, immoral or disreputable conduct
which is harmful to the Company or its reputation; (iii) any felony conviction
of the Employee; or (iv) any willful act of gross misconduct which is materially
and demonstrably injurious to the Company. The Company's obligation to provide
written notice under subsection (i) above, and the Employee's right to attempt
to cure any breach of the Agreement, shall be provided only once during the term
of the Agreement and any subsequent breach under subsection (i) may result in
the termination of the Employee for cause without the need for notice or a cure
period.
6. Termination by Death or Disability Of The Employee.
(a) General. In the event of the Employee's death during the term of this
Agreement, all obligations of the parties hereunder shall terminate immediately,
and the Company shall pay to the Employee's legal representatives the salary and
pro rata bonus, if any, due the Employee through the day on which his death
shall have occurred.
(b) Disability. If the Employee is unable to perform his duties hereunder
due to mental, physical or other disability for a period of ninety (90)
consecutive business days, as determined in good faith by the Board of Directors
of the Company, or for ninety (90) business days in any period of twelve (12)
consecutive months, this Agreement may be terminated by the Company, at its
option, by written notice to the Employee, effective on the termination date
specified in such notice, provided such termination date shall not be a date
prior to the date of the notice of termination itself. In this case, the Company
will pay the Employee the salary and pro rata bonus, if any, due him through the
day on which such termination is effective.
(c) Disability Insurance. Any amounts paid the Employee pursuant to
disability insurance policies provided by the Company shall be offset against
the amount of salary due from the Company to the Employee hereunder during the
period of the Employee's disability.
7. Termination by the Employee.
(a) General. The Employee may terminate this Agreement at any time, with
or without cause, by giving written notice to the Company. Any such termination
shall become effective on the date specified in such notice, provided that the
Company may elect to have such termination become effective on a date after, but
not more than fourteen (14) days after, the date of the notice.
(b) Salary/Bonus. After the date of any such termination, the Employee
shall be entitled to the salary and pro rata bonus, if any, due him through the
day on which such termination becomes effective.
(c) Cause. If the termination is with cause (as defined in Section 7(d)
below), the Company shall pay to the Employee compensation equal to six (6)
months of the Employee's base salary as of the date of termination and one
hundred percent (100%) of any unvested stock or unvested options held by the
Employee pursuant to the Company's "1998 Employee Stock Incentive Plan" (or any
subsequent plan) shall immediately vest at the time of such termination.
Notwithstanding the foregoing, the payment of compensation and the accelerated
vesting of stock or options hereunder shall be subject to Section 13 of the
Restricted Stock Purchase Agreement between the Company and the Employee, dated
as of February 17, 2000.
3.
<PAGE>
(d) Cause Defined. For purposes of this Section 7, "cause" shall mean (i)
a material failure by the Company to perform its obligations under this
Agreement or a material change in the Employee's title or responsibilities
without the consent of the Employee (after the Employee has provided written
notice of the breach to the Company and the Company has failed to cure such
breach within a thirty (30) day period following such notice; provided, however,
that no notice or opportunity to cure shall be required if the breach cannot be
cured), or (ii) relocation of the Employee's principal work site on other than a
temporary basis to a location greater than fifty (50) miles from the Company's
existing headquarters in Laurel, Maryland and greater than fifty (50) miles from
the Employee's principal residence without the Employee's consent. The
Employee's obligation to provide written notice under subsection (i) above, and
the Company's right to attempt to cure any breach of the Agreement, shall be
provided only once during the term of the Agreement and any subsequent breach
under subsection (i) may result in the termination of the Agreement by the
Employee for cause without the need for notice or a cure period.
8. Suspension. In the event the Company has reasonable cause to believe that
there exists cause for termination of this Agreement as defined in Section 5,
immediately upon written notice to the Employee, the Company may, but shall not
be obligated to, suspend the Employee, with pay, for a period not to exceed two
weeks, either as a disciplinary measure or in order to investigate the Company's
belief that such cause exists. No such suspension shall prevent the Company from
thereafter exercising its rights to terminate this Agreement in accordance with
its terms.
9. Noncompetition.
(a) The Employee agrees that, during his employment hereunder, and for a
period of one (1) year after the effective date of termination of this
Agreement, he will not:
(i) Compete (as defined below) with the Company; or
(ii) assist a Competitor (as defined below) of the Company by
providing consulting or other advisory services to that Competitor.
(b) The following terms, as used in this Section 9 shall have the meanings
set forth below:
(i) The Company's "Business" means development and deployment of an
Internet broadcast and data delivery system using satellites, and other
businesses or services that the Company may establish from time to time during
the term of this Agreement.
(ii) The term "Competitor" means any firm, corporation or entity
that is engaged in business substantially similar to the Company's Business.
(iii) The term "Compete" means to engage in direct competition with
the Company by serving as an employee, consultant, advisor, officer, director,
proprietor, partner, stockholder or other security holder (other than a holder
of securities of a corporation listed on a national securities exchange or the
securities of which are regularly traded in the over-the-counter market,
provided that the Employee at no time owns in excess of 1% of the outstanding
securities of such corporation entitled to vote for the election of directors or
other than of a
4.
<PAGE>
corporation in which the Employee makes passive investments through a venture
fund or similar investment vehicle) of any firm, corporation or entity that is a
Competitor of the Company. The Company acknowledges that none of Employee's
current stock holdings (as disclosed to the Company) are in companies which are
Competitors of the Company).
(iv) The term "affiliate" means any person, firm or corporation,
directly or indirectly through one or more intermediaries, controlling,
controlled by or under common control with the Company.
(c) The Employee further acknowledges that this Section 9 is an
independent covenant within this Agreement, and that this covenant shall survive
any termination of Agreement and shall be treated as an independent covenant for
the purposes of enforcement.
(d) The Employee shall, during the term of this Agreement and thereafter,
notify any prospective employer of the terms and conditions of this Agreement
regarding noncompetition.
(e) Notwithstanding anything to the contrary contained herein, in the
event the Employee is terminated without cause pursuant to Section 5 above or in
the event this Agreement is terminated by the Employee for cause pursuant to
Section 7 above, then the non-competition provision set forth in this Section 9
shall be of no force or effect unless, in addition to the severance payments
provided pursuant to Section 5(c) or Section 7(c), as applicable, the Company
pays the Employee an amount equal to six (6) months of base salary as of the
date of termination.
10. Severability. The Company and the Employee recognize that the laws and
public policies of the State of Maryland are subject to varying interpretations
and change. It is the intention of the Company and of the Employee that the
provisions of this Agreement shall be enforced to the fullest extent permissible
under the laws and public policies of the State of Maryland, but that the
unenforceability (to the modification to conform to such laws or public
policies) of any provision or provisions hereof shall not render unenforceable,
or impair, the remainder of this Agreement. Accordingly, if any provisions of
this Agreement shall be determined to be invalid or unenforceable, either in
whole or in part, this Agreement shall be deemed amended to delete or modify, as
necessary, the offending provision or provisions and to alter the balance of
this Agreement in order to render it valid and enforceable.
11. Assignment. Neither the rights nor obligations under this Agreement may be
assigned by either party, in whole or in part, by operation of law or otherwise,
except that it shall be binding upon and inure to the benefit of any successor
of the Company and its subsidiaries and affiliates, whether by merger,
reorganization or otherwise, or any purchaser of all or substantially all of the
assets of the Company.
12. Notices. Any notice expressly provided for under this Agreement shall be in
writing, shall be given either manually or by mail and shall be deemed
sufficiently given when actually received by the party to be notified or when
mailed, if mailed by certified or registered mail, postage prepaid, addressed to
such party at their addresses as set forth below. Either party may, by notice to
the other party, given in the manner provided for herein, change their address
for receiving such notices.
5.
<PAGE>
(a) If to the Company, to:
Cidera, Inc.
8037 Laurel Lakes Court
Laurel, Maryland 20707
(b) If to the Employee, to:
Edward D. Postal
9329 Crimson Leaf Terrace
Potomac, MD 20854
13. Governing Law. This Agreement shall be executed, construed and performed in
accordance with the laws of the State of Maryland without reference to conflict
of laws principles. The parties agree that the venue for any dispute hereunder
will be the state or federal courts sitting in Prince George's County, Maryland
and the parties hereby agree to the exclusive jurisdiction thereof.
14. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
15. Entire Agreement; Amendments. This Agreement constitutes and embodies the
entire agreement between the parties in connection with the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings in connection with such subject matter. No covenant or condition
not expressed in this Agreement shall affect or be effective to interpret,
change or restrict this Agreement. In the event of a conflict or inconsistency
between the terms of this Agreement and the Company's policies regarding
employees, the terms of this Agreement shall supersede the conflicting or
inconsistent Company policies. No change, termination or attempted waiver of any
of the provisions of this Agreement shall be binding unless in writing signed by
the Employee and on behalf of the Company by an officer thereunto duly
authorized by the Company's Board of Directors. No modification, waiver,
termination, rescission, discharge or cancellation of this Agreement shall
affect the right of any party to enforce any other provision or to exercise any
right or remedy in the event of any other default.
6.
<PAGE>
In Witness Whereof, the parties have executed this Agreement as of the date
first above written.
COMPANY:
Cidera, Inc.,
a Delaware corporation
By: /s/ Robert M. Dunham
------------------------------
EMPLOYEE:
/s/ Edward D. Postal
---------------------------------
Edward D. Postal
7.
<PAGE>
SCHEDULE A
1. The Employee shall be paid an initial annual base salary equal to $250,000
which shall be reviewed annually by the Board of Directors (or the
Compensation Committee thereof) and which shall be subject to increase by
the Board of Directors (or the Compensation Committee thereof) from time to
time. The Employee shall be paid an annual bonus of $100,000, which shall
be tied to performance objectives to be established by the mutual agreement
of the Employee, the Board of Directors and the Chief Executive Officer.
2. Eligibility to participate in all Company benefit plans as may be
established for senior management on the same basis as the Chief Operating
Officer.
3. Eligibility to participate in any executive bonus and/or option plan as may
be established on the same basis as the Chief Operating Officer of the
Company.
The Employee acknowledges that the Company is not guaranteeing continuation of
any of the Company's benefit plans or any level of benefits from such plans.
1.
<PAGE>
Exhibit 10.14
*** Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. (S)(S) 200.80(b)(4),
200.83 and 230.406
Strategic Partnership Agreement
Between
SkyCache, Inc. & bCandid
Whereas SkyCache is building a satellite based Global Broadcast Overlay Network
for the Internet that facilitates the distribution of Usenet Newsfeeds, and
bCandid provides high performance news routing and server software and related
services to Internet Service and Access Providers, and both parties agree that
the combination of their products and services provide a unique opportunity to
provide a unique service to their mutual markets, the Parties agree as follows:
1.0 Turnkey ISP News Solution
The Parties will collaborate to develop a service offering that integrates the
bCandid software and the SkyCache Satellite based Newsfeed. Both parties will
offer this service through their mutual sales teams to new customer prospects.
Initially these services will be targeted to prospects who would provide news
services utilizing a single server to support their subscriber base. This
service will include but not necessarily be limited to the following:
This service will be developed as a turn key package to customers who wish to
operate their own news server and will include the SkyCache News Feed provided
via satellite in an NNTP compliant news format, software from bCandid for the
customers news server, and a recommendation to the customer as to the
appropriate platform for the provision of news service to its customers. A
feature of the service will be access to a terrestrial news feed from a server
which will have archived a number of aged articles. This service will be
provided by bCandid. The objective of this component of the service will be to
minimize the size of the news server required by the customer to support its
customers. The parties will package and price the services which provide for
both a direct purchase option for the hardware and bCandid software or a third
party lease program for same.
As a feature of the service the parties agree to provide an integrated support
plan and pricing for same whereby a hotlink will be implemented between the
parties mutual Network Operations Centers for problem resolution via a single
phone call. SkyCache will be responsible for the maintenance of the hardware
selected by the customer. A service implementation option to be considered will
be to provide for diversion of an ISP's customers to a backup server provided by
bCandid should a hardware failure occur, such diversion to be for a limited
period of time.
2.0 News Server Enhanced Offering.
For current customers of each Party and new prospects who are currently
operating their own news server with a non SkyCache news feed or a non bCandid
solution the parties will offer each
1
<PAGE>
others service through their mutual sales forces. Each party agrees to provide a
mutual training session (location and duration to be specified) which will be
sufficient to allow their sales forces to introduce each other's services. Each
party further agrees to assign a sales support resource to assist in securing a
contract for services.
3.0 Pricing
Pricing for the above services will be developed so as to encourage the customer
to purchase the turnkey package as the total as the cost will reflect a discount
from the then current retail prices for the individual components of the service
which could be acquired separately.
4.0 Mutual Services
As a testimony to the value of the integration of each Parties services, each
party agrees to utilize the others service in their respective operations.
Further, each Party agrees to provide the other the services described below and
associated support at no cost and to proceed promptly with the implementation of
these services. Both parties agree to utilize their reasonable best efforts to
implement these services within 60 days following the Effective Date of this
agreement. SkyCache will implement Cyclone on its news server and on a service
adapter (initially stand-alone but analysis will be conducted to determine
feasibility of integration within the SkyCache service adapter) providing Usenet
News feed. bCandid will provide a bCandid news feed to SkyCache terminated at
the SkyCache facility in Laurel MD. BCandid will receive a monthly support and
updates fee of $50 per service adapter if the end customer is using a Cyclone
Powered service adapter. In addition SkyCache will locate a dish at bCandid's
facility in Herndon VA, permission for the installation of this facility having
been obtained by bCandid and no cost to SkyCache for roof rights or other costs
associated with locating the dish at this location.
5.0 Cost of Sales
Marketing Materials. The parties will develop a set of marketing materials for
the above activities and will split the associated costs for the design of the
materials and the initial production run. A targeted advertising program will
also be developed and costs will also be split equally.
Cost of sales support will be the responsibility of each organization.
6.0 Timing
Both parties agree to assign the resources essential to diligently pursue the
formulation of the above offerings within a 30 day period, such period beginning
on the Effective Date of the Agreement. This may be extended upon mutual
agreement of the parties.
7.0 Contracting for Services
The Parties will develop a contract package whereby a customer will execute both
a SkyCache and bCandid agreement (a "Standard Services Agreement"). A package
will be developed which facilitates the contracting process such that each Party
will be an agent for the sales of the
2
<PAGE>
others Party's services. A single bill will be issued to the customer from the
Party securing the contract and the Party's will reconcile revenue due the other
Party each quarter.
8.0 [ *** ]
9.0 WARRANTY
Each Party represents and warrants that the services and software to be provided
to each other and to third parties under this Agreement and such Party's
Standard Services Agreement (as defined in Section 7.0) do not and will not
infringe any copyright, patent, trademark, trade secret or any other
intellectual property rights of any third party.
10.0 Effective Date and Term.
This Agreement will become effective on July 21, 1999. (Effective Date) Both
parties reserve the right to modify this Agreement between now and the Effective
Date. Modifications must be in writing and mutually agreed upon. If the Parties
do not make any modifications then the Agreement takes effect on the Effective
Date. If the parties are unable to reach Agreement on any proposed
modifications, the Agreement is null and void. The term of this Agreement shall
be for a minimum period of one year and may be extended upon mutual agreement of
the Parties and revenue sharing will continue until the termination of the
contracts entered into by Customers expire or are cancelled.
Executed and agreed by:
/s/ Robert E. Marggraf 7/16/99 /s/ Frank Bergen 7/16/99
- -------------------------------- -------------------------
Robert E. Marggraf Frank Bergen
Executive Vice President President & Chief Executive Officer
SkyCache, Inc. bCandid
312 Laurel Avenue 5744 Central Avenue
Laurel, MD 20707 Boulder, CO 80301
*** Confidential Treatment Requested
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Exhibit 10.15
*** Text Omitted and
Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. (S)(S) 200.80(b)(4),
200.83 and 230.406
Service Implementation Agreement
Between
Akamai Inc. and SkyCache Inc.
For
The Distribution of Akamai Content
Whereas SkyCache is building a satellite based Global Broadcast Overlay Network
(GBON) for the Internet that facilitates the distribution of content and audio
video streams to servers located on the edge of the Internet and Akamai provides
servers which host such content utilizing their unique FreeFlow Server
architecture and software, and both parties agree that delivery of Akamai
originated content via SkyCaches GBON offers financial and performance
advantages to Akamai, the parties agree as follows:
1.0 Service Definition Effort
-------------------------
SkyCache will provide to Akamai a SkyCache receive satellite capability at its
location in Cambridge Massachusetts, and Akamai will locate a Free Flow Server
at SkyCaches facility in Laurel MD. The purpose of this effort will be to
determine the specific method and manner for the acceptance of content from
Akamai and delivery of same over the SkyCache GBON to be received by the
SkyCache dish at Akamai's location in Cambridge Mass. Both organizations agree
to commit the engineering resources essential to the completion of this effort
by November 30, 1999 and to develop the specific service agreement for
implementing the SkyCache Service into the Akamai infrastructure. Both Parties
agree to bear their own costs in conducting this effort.
2.0 Co-Location of SkyCache GBON and Akamai Free Flow Server
--------------------------------------------------------
SkyCache and Akamai each have equipment at ISP's and colocation facilities
throughout the Internet. In order to facilitate delivery of Akamai content to
the existing Free Flow Servers, SkyCache will use its best efforts to place its
receive only dishes and related equipment at each of the existing Akamai Free
Flow Server Locations. Costs associated with this deployment and any ongoing
monthly costs, if any, will be borne by SkyCache. Akamai will provide support
by assisting SkyCache in this effort through requesting the "host" of each Free
Flow Server to accommodate this installation as Akamai intends to use the
SkyCache dish as a vehicle for the distribution of content to its FreeFlow
Servers. Connection of the free flow servers to the SkyCache equipment (i.e.
cross connect charges, cabling charges, etc) will be the responsibility of
Akamai.
SkyCache has its equipment located at a number of ISP's and colocation
facilities where Akamai currently does not have a FreeFlow Server located.
SkyCache will use its best efforts to secure rack space at each of its ISP
locations for placement of Akamai FreeFlow Servers. Costs, if any, for the
space required to locate the server at a SkyCache location will be borne by
Akamai.
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On all future deployments of facilities and equipment, both parties will make
mutual best efforts to include as part of their deployment plan the location of
each other's equipment at the new location. The election to place the equipment
at a particular location will, however, be at the option of each party. Costs
unique to the parties will be borne by the owner of the equipment.
Within thirty days (30) following the execution of this Agreement, SkyCache and
Akamai will have developed a detailed plan for the execution of the above
implementation. Following completion of the efforts discussed in this
Agreement, both parties agree to assign the resources appropriate to execution
of this deployment.
3.0 SkyCache Global Broadcast Capacity
----------------------------------
Akamai wishes to purchase and SkyCache agrees to provide capacity for the
delivery of Akamai content on SkyCache's GBON for coverage within the North
American and European footprint. (See Attachment A.) SkyCache will make this
capacity available on a schedule to be developed which will provide ability for
Akamai to ramp up its utilization of this capacity over a six-month period from
the initiation of service which will be targeted to begin January 1, 2000. The
cost for this capacity is as defined in Attachment B to this Agreement.
The implementation plan will include but not be limited to specifying the
locations at which Akamai wishes to have, and SkyCache has or can install
facilities to provide delivery of Akamai content to its FreeFlow servers. The
method and manner in which Akamai content will be made available to SkyCache for
uplinking from the SkyCache uplink in Laurel MD and the Interface between
SkyCache and Akamai for the verification of compliance with the service level
criteria will be developed and agreed to by both organizations.
4.0 General Intellectual Property
-----------------------------
This Agreement grants no rights of ownership of license of either Party's
software to the other Party. Each party will retain sole title to any hardware,
software or documentation utilized in connection with these services. Any
publicity or use of either Party's name in advertising shall be upon mutual
Agreement.
5.0 Dispute Resolution
------------------
5.1 Informal Dispute Resolution. In the case of any disputes under this
Agreement, the parties shall first attempt in good faith to resolve their
dispute informally, or by means of commercial mediation, without the necessity
of a formal proceeding.
5.2 Arbitration of Disputes.
5.2.1 Any controversy or dispute arising out of or relating to this
Agreement, or the breach thereof, which cannot otherwise be resolved as provided
above shall be resolved by arbitration conducted in accordance with the
commercial arbitration rules of the American Arbitration Association ("AAA") and
judgment upon the award rendered by the arbitral tribunal may be entered in any
court having jurisdiction thereof. The arbitration tribunal shall consist of a
single arbitrator mutually agreed by the parties, or in the absence of such
agreement within thirty (30) calendar days from the first referral of the
dispute to the AAA, designated by the
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AAA. The place of arbitration shall be Boston, Massachusetts, U.S.A., unless the
parties shall have agreed to another location within fifteen (15) calendar days
from the first referral of the dispute to the AAA, designated by the AAA. The
place of arbitration shall be Boston, Massachusetts, U.S.A., unless the parties
shall have agreed to another location within fifteen (15) calendar days from the
first referral of the dispute to the AAA. The arbitral award shall be final and
binding. The parties waive any right to appeal the arbitral award, to the extent
a right to appeal may be lawfully waived. Each party retains the right to seek
judicial assistance: (i) to compel arbitration; (ii) to obtain interim measures
of protection prior to or pending arbitration, (iii) to seek injunctive relief
in the courts of any jurisdiction as may be necessary and appropriate to protect
the unauthorized disclosure of its proprietary or confidential information, and
(iv) to enforce any decision of the arbitrator, including the final award.
5.2.2 The arbitration proceedings contemplated by this Section 5 shall
be as confidential and private as permitted by law. To that end, the parties
shall not disclose the existence, content or results of any proceedings
conducted in accordance with this Section 5, and materials submitted in
connection with such proceedings shall not be admissible in any other
proceeding, provided, however, that this confidentiality provision shall not
prevent a petition to vacate or enforce an arbitral award, and shall not bar
disclosures required by law.
6.0 Indemnification and Liability. In no event shall either party be liable to
-----------------------------
the other for consequential or indirect losses or damages howsoever arising
under this Agreement and whether under contract, tort or otherwise (including
without limitation, third party claims, loss of profits, loss of customers, or
damage to reputation or goodwill). Akamai shall indemnify, defend and hold
Carrier harmless from any and all claims, actions, losses, damages, costs and
expenses suffered by Carrier as a result of or directly related to any content
that is altered while on the Akamai servers. The Carrier shall indemnify,
defend and hold Akamai harmless from any and all claims, actions, losses,
damages, costs and expenses suffered by Akamai as a result of or related to
Carrier's negligence or intentional misconduct, status as a telecommunications
provider, Carrier communication services or the Network.
THE PROVISIONS OF THIS SECTION 6 STATE THE SOLE AND EXCLUSIVE OBLIGATIONS
AND LIMITATION OF LIABILITY OF EITHER PARTY FOR ANY PATENT, COPYRIGHT,
TRADEMARK, TRADE SECRET OR OTHER INTELLECTUAL PROPERTY RIGHTS INFRINGEMENT AND
ARE IN LIEU OF ANY WARRANTIES OF NON-INFRINGEMENT, ALL OF WHICH ARE DISCLAIMED.
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INCIDENTAL,
CONSEQUENTIAL, OR ANY OTHER INDIRECT LOSS OR DAMAGE, INCLUDING LOST PROFITS,
ARISING OUT OF THIS AGREEMENT OR ANY OBLIGATION RESULTING THEREFROM, REGARDLESS
OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT
LIABILITY OR OTHERWISE.
7.0 WARRANTY DISCLAIMER. NEITHER PARTY MAKES ANY REPRESENTATIONS OR
-------------------
WARRANTIES, EITHER EXPRESS OR IMPLIED, AND AKAMAI SPECIFICALLY DISCLAIMS ANY
IMPLIED WARRANTIES OF
3
<PAGE>
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE AKAMAI
SERVICES.
8.0 Miscellaneous.
-------------
8.1 Independent Contractor. The relationship of Akamai and Carrier
established by this Agreement is that of Independent contractors, and nothing
contained in this Agreement shall be construed to (i) give either party the
power to direct and control the day-to-day activities of the other, (ii) deem
the parties to be acting as Carriers, joint venturers, co-owners or otherwise as
participants in a joint undertaking; or (iii) allow either party to create or
assume any obligation on behalf of the other party for any purpose whatsoever.
8.2 Notices. Any notice required or permitted hereunder shall be in writing
and will be deemed given when delivery by hand or deposited in the mails or with
common carriers. All communications will be sent by mail, facsimile or
electronic mail to the receiving party's contact person for notices listed on
the cover page of this Agreement.
8.3 Assignment. Either party may not, without the prior written consent of
the other Party, such consent not being unreasonably withheld, assign this
Agreement, in whole or in part, either voluntarily or by operation of law, and
any attempt to do so shall be a material default of this Agreement and shall be
void.
8.4 Third Party Beneficiaries. This Agreement is solely for the benefit of
the parties and their successors and permitted assigns, and does not confer any
rights or remedies on any other person or entity.
8.5 Governing Law. This Agreement shall be interpreted according to the
laws of the Commonwealth of Massachusetts without regard to or application of
choice-of-law rules or principles.
8.6 Entire Agreement and Waiver. This Agreement and the Confidential
Disclosure Agreement executed by the parties constitute the entire agreement
between Akamai and Carrier with respect to the subject matter hereof and all
other prior agreements, representations, and statement with respect to such
subject matter are superceded hereby.
8.7 Severability. In the event any provision of this Agreement is held by a
court of competent jurisdiction to be unenforceable, that provision will be
enforced to the maximum extent permissible under applicable law, and the other
provisions of this Agreement will remain in full force and effect.
8.8 Force Majeure. If either party is prevented from performing any of its
obligations under this Agreement due to any cause beyond the party's reasonable
control, including, without limitation, an act of God, fire, flood, explosion,
war, strike, embargo, government regulation, civil or military authority, (a
"force majeure event") the time for that party's performance will be extended
for the period for the delay or inability to perform due to such occurrence;
provided, however, that if a party suffering a force majeure event is unable to
cure that event within thirty (30) days, the other party may terminate this
agreement immediately.
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8.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when so executed and delivered, shall be deemed an
original, and all of which shall constitute one and the same Agreement.
8.10 Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the respective parties hereto, their respective successors-in-
interest, legal representatives, heirs and assigns.
8.11 Compliance with Laws. Each party agrees to comply with all applicable
laws, regulations, and ordinances relating to their performance hereunder.
8.12 Survival of Obligations. Sections 4, 5, 6, 7, and 8 shall survive any
termination, cancellation or expiration of this Agreement for any reason.
Executed and Agreed by:
/s/ Robert E. Marggraf /s/ Jonathan Seelig
------------------------- -------------------
Robert E. Marggraf Jonathan Seelig
Executive Vice President Vice President
SkyCache Inc. Strategy & Corporate Development
312 Laurel Avenue AKAMAI Technologies
Laurel, MD 20707 201 Broadway
Cambridge, MA 02139
ATTACHMENTS
5
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Attachment A
SkyCache Service Coverage Areas
1.0 North America:
SkyCache provides the ability to deliver content via its GBON throughout
the continental United States, and Hawaii by placing 1.2 Meter Satellite
dishes and receiver equipment at locations that will facilitate the
delivery of customer content. SkyCache has an agreement with TeleSat Canada
for distribution within the provinces of Canada. The placement of the
satellite dish will be by SkyCache following a site survey to assure line
of sight to the satellite being utilized by SkyCache.
2.0 Europe:
SkyCache provides the ability to delivery content via its GBON in Europe to
the Pan-European and Nordic Countries by placing .9 Meter Satellite dishes
and receiver equipment at locations which will facilitate the delivery of
customer content. The placement of the satellite dish will be by SkyCache
following a site survey to assure line of sight to the satellite being used
by SkyCache.
3.0 Asia and Latin America:
SkyCache is currently finalizing negotiations to provide similar services
to these areas and anticipates availability within the 1st half of the Year
2000.
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Attachment B - Pricing
It is our understanding that Akamai intends to use SkyCache for the
distribution of live audio video streams as well as files which contain
software updates to Akamai Free Flow Servers located throughout the
Internet.
Outlined below is the pricing for the delivery of audio video streams. Once
SkyCache has a better understanding of the specific requirements associated
with the delivery of software updates (file sizes, window for delivery,
time of day, frequency of transmission, etc) which will be developed under
the effort described in Paragraph 1 of this Agreement, pricing will be
provided for this service as well. SkyCache anticipates, based on similar
efforts and prices, that this service will result in significant benefits
to Akamai for both software distribution and management. [ *** ]
Price Quote for the Transport of Akamai Data in each Coverage Area.
[ *** ]
*** Confidential Treatment Requested
7
<PAGE>
Exhibit 10.16
*** Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. (S)(S)200.80(b)(4),
200.83 and 230.406
SOFTWARE DISTRIBUTION AGREEMENT
THIS SOFTWARE DISTRIBUTION AGREEMENT (this "Agreement") is entered into as
of January 25_, 2000 (the "Effective Date") by and between REALNETWORKS, INC., a
Washington corporation having its principal place of business at 2601 Elliott
Avenue, Seattle, Washington 98121 ("RN"), and CIDERA, INC., a Maryland
corporation having its principal place of business at 8037 Laurel Lakes Road,
Laurel, Maryland 20707 ("Cidera"). RN and Cidera are referred to herein
collectively as the "Parties" and individually as a "Party."
In consideration of the mutual promises and covenants set forth herein, and
for other good valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties agree as follows:
1. DEFINITIONS
1.1 [ *** ]
1.2 "Downlink Site" means the Cidera or End User facility receiving
streaming media content via satellite from the Uplink Site.
1.3 "End User" means the entity or person to whom the EULA applies and/or
to whom Cidera furnishes the Cidera Transport Plug-in for use only as part of
Cidera Transport Services, and not for resale, marketing, leasing or any
redistribution. In order to utilize Transport Services, each End User's Source
Servers must be licensed for and have installed RN's RealServer software.
1.4 "End User License Agreement" or "EULA" means the end user license
supplied by Cidera for the Cidera Transport Plug-in whether distributed on
physical media or as a click-wrap agreement on the screen prior to accessing a
downloadable Cidera Transport Plug-in.
1.5 "Cidera Transport Plug-in" means an extension to the RealSystem G2
Software Development Kit developed by Cidera [ *** ].
1.6 "Transport Services" means the Transmission Network implemented as
specified in Exhibit A.
*** Confidential Treatment Requested
1.
<PAGE>
1.7 "Source Server" means the RealServer software licensed from RN by End
Users and installed on the End User server for purposes of originating or
hosting streaming media content as specified in this Agreement.
1.8 "Uplink Site" means the Cidera facility receiving streaming media
content from Source Servers and uplinking to satellites used in Transport
Services.
1.9 [ *** ]
1.10 "RealProxy" means the RN software product designed to proxy and serve
client requests to and from a RealServer.
2. DEVELOPMENT OF CIDERA TRANSPORT PLUG-IN
2.1 Development of Cidera Transport Plug-in. Cidera represents it has
properly used, pursuant to the RealSystem SDK License Agreement attached as
Exhibit D, the RealNetworks RealSystem G2 Software Development Kit to develop
the Cidera Transport Plug-in specified herein. Notwithstanding the foregoing, in
the event of a conflict between the terms of this Agreement and the RealSystem
SDK License Agreement, this Agreement shall prevail, including without
limitation indemnification and limitation of liability provisions in this
Agreement.
2.2 Updates to Cidera Transport Plug-in. Cidera agrees that it will use
its best efforts, consistent with commercial reasonableness, to update the
Cidera Transport Plug-in no later than 30 days after the release by RN of a new
version of the RealSystem G2 Software Development Kit ("RealSystem G2 SDK")
during the Term of this Agreement. RN will notify Cidera of the release of such
new RealSystem G2 SDK, and Cidera will use the functionality and specifications
contained in such RealSystem G2 SDK to update the Cidera Transport Plug-in to be
compatible and current with the current version of RealSystem G2 in accordance
with the above standards.
2.3 Ownership of Cidera Transport Plug-in. Subject to the license
agreement for the RealSystem G2 SDK attached as Exhibit D, Cidera will own all
right, title and interest in and to the Cidera Transport Plug-in, excluding any
components of the RealSystem G2 SDK or any product or software owned or
distributed by RN (collectively, the "RN Software"). RN maintains all rights,
including all intellectual rights, in the components of the RealSystem G2 SDK
and other products of RN.
3. DISTRIBUTION
3.1 Distribution License. In consideration of the obligations set forth
herein, RN hereby grants to Cidera a nonexclusive, nontransferable, worldwide
license to market, promote, reproduce, distribute and license the RealSystem G2
SDK as an integrated component of the Cidera Transport Plug-in to End Users, as
well as printed materials as referred to in Exhibit D, as set forth herein and
only as part of Transport Services.
*** Confidential Treatment Requested
2.
<PAGE>
3.2 [ *** ]
3.3 End User License Agreement Requirements. Any distribution of the
Cidera Transport Plug-in shall be under the terms of an End User License
Agreement that contains terms which:
(1) License use of the RealSystem G2 SDK Software only as an
integrated component of the Cidera Transport Plug-in and only as part of
Transport Services;
(2) Prohibit any modifications to the RealSystem G2 SDK
Software;
(3) Prohibit any distribution of the RealSystem G2 SDK
Software;
(4) Prohibit (a) transfer of the RealSystem G2 SDK Software
except for temporary transfer in the event of computer malfunction; (b) title to
the RealSystem G2 SDK Software passing to any party; and (c) assignment of the
RealSystem G2 SDK Software;
(5) Prohibit the reverse engineering, disassembly or
decompilation of the System G2 SDK Software;
(6) Disclaim any and all warranties on behalf of RN;
(7) Disclaim, to the extent permitted by applicable law, RN's
liability for any damages, whether direct, indirect, incidental or
consequential, arising from the use of the RealSystem G2 SDK Software and/or the
Cidera Transport Plug-in in any form;
(8) Require the end user to comply fully with all relevant
export laws and regulations of the United States to assure that the Cidera
Transport Plug-in and/or the RealSystem G2 SDK Software is not exported,
directly or indirectly, in violation of United States law;
(9) Specify RN as a third party beneficiary of the EULA to the
extent permitted by applicable law;
3.4 Technical Support. Cidera shall be solely responsible for providing,
and agrees that it will provide, customer, technical and help desk support to
End Users for the Cidera Transport Plug-in and Transport Services for the term
of this Agreement. RN will refer to Cidera all Customer support inquiries
regarding the Cidera Transport Plug-in and Transport Services.
*** Confidential Treatment Requested
3.
<PAGE>
3.5 [ *** ]
4. CIDERA OBLIGATIONS
4.1 During the Term of this Agreement, Cidera agrees:
(i) not to host streaming media content, nor license or use
RealProxy or RealServer software except as part of providing Transport Services.
(ii) [ *** ]
(iii) [ *** ]
(iv) [ *** ]
5. RN OBLIGATIONS
5.1 Authorization to End Users. During the Term of this Agreement, upon
designation in writing or by email by Cidera of the applicable End User (a
"Cidera Designation"), RN may provide authorization to such End Users to use End
Users' RealServer software in Source Servers as part of Transport Services.
[ *** ]
5.2 Enhancements and Modifications. Enhancements or modifications may be
developed by RN for Cidera under separate agreements between the parties.
6. FEES AND PAYMENTS
6.1 [ *** ]
6.2 [ *** ]
6.3 [ *** ]
6.4 Manner of Payment. All payments due to RN by Cidera hereunder shall be
payable in U.S. dollars by check to RN at the address specified above, or by
wire transfer to the U.S. bank account as RN shall notify Licensee in writing.
6.5 Taxes. Each party shall pay any taxes, duties, import and export fees,
and any other charges or assessments which are applicable to its respective
performance under this Agreement, and shall indemnify and hold the other party
harmless from any encumbrance, fine, penalty, or other expense which such other
party may incur as a result of the responsible party's failure to pay any such
taxes, duties, fees, charges, or assessments. All undisputed amounts under this
Agreement not paid by Cidera when due shall accrue interest at the rate of 1.5%
per month or the maximum amount allowed by law, whichever is lower.
*** Confidential Treatment Requested
4.
<PAGE>
6.6 Books and Records. During the Term and for twelve (12) months
thereafter (and limited to once per year), RN shall have the right to audit
(with an independent third party accounting firm) accounting and shipment
records of Cidera to ensure compliance with this Agreement. If such audit
reveals that fees due RN are less than ten percent (10%) of amounts remitted to
RN, Cidera shall promptly pay to RN any payment shortfall with interest
calculated from the date of such underpayment at one and one-half percent (1.5%)
per month. If such audit reveals that fees due RN are more than ten percent
(10%) of amounts remitted to RN, Cidera shall reimburse RN for its reasonable
audit expenses and shall promptly pay any payment shortfall with interest
calculated from the date of such underpayment at one and one-half percent (1.5%)
per month. Each party shall retain all accounting, manufacturing and shipment
records relating to this Agreement for one (1) year after the expiration or
termination of this Agreement. The current contact at Cidera for finance related
questions arising from this Agreement is Robert Dunham (phone: (301)-598-0500).
7. CONFIDENTIALITY
7.1 Confidential Information. The Parties acknowledge that, in the course
of performing their obligations under this Agreement, a Party (the "Receiving
Party") may obtain information relating to the other Party (the "Disclosing
Party") and its customers which is of a confidential or proprietary nature
("Confidential Information"). Such Confidential Information includes, but is not
limited to, trade secrets, know-how, inventions, techniques, processes, pricing,
discounts, schedules, customer lists, customer names (and/or compilations
thereof), contract terms (including the terms of this Agreement), customer
leads, financial information, sales plans, marketing plans, and any other
information labeled or otherwise designated as "Confidential." For purposes of
this Agreement, Confidential Information does not include any information that
the Receiving Party can prove (a) is in the public domain, (b) was lawfully in
the Receiving Party's possession before the Disclosing Party disclosed such
information, (c) was received by the Receiving Party from a third party under no
duty to maintain the confidentiality of such information, or (d) was
independently developed by the Receiving Party.
7.2 Restrictions on Disclosure. The Receiving Party shall at all times,
both during and after the term of this Agreement, hold the Confidential
Information of the Disclosing Party in strictest confidence, and shall not
disclose such Confidential Information to any third party, except to those of
its employees as reasonably necessary to carry out its obligations under this
Agreement. The Receiving Party shall not use such Confidential Information for
any purpose other than as necessary for the performance of its obligations under
this Agreement. [ *** ] In addition, the Parties shall not disclose the terms of
this Agreement to any third party. Notwithstanding the foregoing, nothing in
this Agreement shall be construed to prohibit any disclosure required by a valid
court order or subpoena, provided that the Party being required to disclose any
Confidential Information gives the Disclosing Party prior written notice of such
disclosure and cooperates with the Disclosing Party in any proper action taken
by the Disclosing
*** Confidential Treatment Requested
5.
<PAGE>
Party to contest or limit the scope of such disclosure. The parties' obligations
with respect to the Confidential Information shall continue for three (3) years
from the date of termination or expiration of this Agreement.
7.3 Remedies for Disclosure. The Parties acknowledge and agree that any
breach of the confidentiality obligations of this Agreement would cause
irreparable harm and, accordingly, that injunctive relief is an appropriate
remedy to prevent any threatened or ongoing breach of such obligations.
8. TERM AND TERMINATION.
8.1 Term. The term of this Agreement shall commence on the Effective Date
and continue for two (2) years, unless earlier terminated by either Party.
8.2 Termination. Either Party may terminate this Agreement immediately (a)
in the event the other Party breaches this Agreement and fails to cure such
breach within thirty (30) days after the date of notice of such breach by the
non-defaulting Party; (b) if the other Party ceases to conduct business; or (c)
if the other Party becomes insolvent or seeks protection under any bankruptcy or
comparable proceeding, or if any such proceeding is instituted against the other
Party and not dismissed within thirty (30) days.
8.3 Effect of Termination. Upon termination or expiration of this
Agreement, the Parties shall abide by and uphold any rights and obligations
accrued or existing as of the date of termination or expiration. Except in the
event of termination for breach, the Parties shall continue to cooperate with
each other and carry out an orderly termination of their relationship. The
Parties shall pay to each other any undisputed moneys owing under this Agreement
within forty-five (45) days after the date of such termination or expiration.
The Parties shall, within fifteen (15) days of termination or expiration, return
to each other all tangible copies of Confidential Information and delete or
erase any electronic copies of such material.
8.4 Survival. Sections 2.3, 6.7, 7, 8, 9, 10, and 11 shall survive any
termination or expiration of this Agreement.
9. REPRESENTATIONS AND WARRANTIES
9.1 Each party hereby represents and warrants to the other that it has all
right and authority to enter into this Agreement.
9.2 No Other Warranties. UNLESS SPECIFIED IN THIS AGREEMENT, ALL EXPRESS
OR IMPLIED CONDITIONS, REPRESENTATIONS AND WARRANTIES, INCLUDING ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE ARE DISCLAIMED,
EXCEPT TO THE EXTENT THAT SUCH DISCLAIMERS ARE HELD TO BE LEGALLY INVALID.
6.
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9.3 [ *** ]
10. [ *** ]
11. GENERAL.
11.1 Independent Contractors. Cidera and RN are independent contractors and
nothing in this Agreement will be deemed to create any agency, employee-employer
relationship, partnership, or joint venture between the Parties. Neither Party
will have or represent that it has the right, power or authority to bind,
contract or commit the other Party or to create any obligation on behalf of the
other Party.
11.2 Notices. All notices required or permitted under this Agreement must
be in writing; must be personally delivered or sent by registered or certified
mail (postage prepaid), by overnight courier, or by facsimile (receipt
confirmed), to the address set forth below:
If to Cidera:
Cidera
312 Laurel Avenue
Laurel, MD 20707
Attn: Bob Marggraf
Phone: ( ) 301-598-0500
-------------
Fax: ( ) 301-598-0837
------------
If to RN:
RealNetworks, Inc.
2601 Elliott Avenue
Seattle, WA 98121
Attn: Kelly Jo MacArthur, Vice President and General Counsel
Phone: (206) 674-2213
Fax: (206) 674-2695
Any notice will be effective upon the earlier of receipt or three (3)
days after deposit in the mail or with a courier service as specified above.
Each Party may change its address for receipt of notices by giving notice of the
new address to the other Party.
11.3 Governing Law. This Agreement will be interpreted, construed and
enforced in all respects in accordance with the laws of the State of
Washington without reference to the choice of law rules thereof.
*** Confidential Treatment Requested
7.
<PAGE>
11.4 Severability. If any provision of this Agreement is held by a court of
law to be illegal, invalid, or unenforceable, the legality, validity, and
enforceability of the remaining provisions of this Agreement will not be
affected or impaired thereby and the illegal, invalid, or unenforceable
provision will be deemed modified such that it is legal, valid, and enforceable
and accomplishes the intention of the Parties to the fullest extent possible.
11.5 Waivers. The failure of either Party to enforce any provision of this
Agreement, unless waived in writing by such Party, will not constitute a waiver
of that Party's right to enforce that provision or any other provision of this
Agreement.
11.6 Assignments. Neither Party may assign or transfer any of its rights or
delegate any of its obligations under this Agreement to any third party, by
operation of law or otherwise, without the prior written consent of the other
Party. [ *** ] Any attempted assignment or transfer in violation of the
foregoing will be void. This Agreement will be binding upon, and inure to the
benefit of, the successors and permitted assigns of the Parties.
11.7 Headings. The headings of Sections and subsections of this Agreement
are for convenience and will not be construed to alter the meaning of any
provision of this Agreement.
11.8 Force Majeure. Neither Party shall be in default or otherwise liable
for any delay in or failure of its performance under this Agreement (other than
the payment of amounts owed) if such delay or failure arises by any reason
beyond its reasonable control, including any act of God or any acts of the
common enemy, the elements, earthquakes, floods, fires, epidemics, riots,
failures or delays in transportation or communications, or any act or failure to
act by the other Party, its employees, agents or contractors. The Parties will
promptly inform and consult with other as to any of the above causes which in
their judgment may or could be the cause of a substantial delay in the
performance of any obligation under this Agreement.
11.9 Counterparts. This Agreement may be executed in identical
counterparts, each of which will be an original and which together will
constitute the same instrument
11.10 Entire Agreement. This Agreement and the Exhibits thereto constitutes
the entire and exclusive agreement between the Parties with respect to the
subject matter of this Agreement and supersedes all previous written or oral
communications or understandings between the Parties relating to the subject
matter of this Agreement. This Agreement may be amended only in writing signed
by both Parties.
CIDERA REALNETWORKS, INC.
Signature: /s/ Robert E. Marggraf Signature: /s/ Mark A. Beetl
------------------------- ------------------
Name: Robert E. Marggraf Name: Mark A. Beetl
------------------------------ -----------------------
Title: Executive Vice President Title: VP
----------------------------- ----------------------
*** Confidential Treatment Requested
8.
<PAGE>
EXHIBIT A
DESCRIPTION OF TRANSPORT SERVICES
Cidera will implement a Transmission Network for the distribution of
streaming media content in the RN format for Cidera End Users. [ *** ]
*** Confidential Treatment Requested
<PAGE>
EXHIBIT B
[ *** ]
*** Confidential Treatment Requested
<PAGE>
EXHIBIT C
REALNETWORKS, INC.
END USER LICENSE AGREEMENT
REALSERVER BASIC 7.0
REDISTRIBUTION NOT PERMITTED
Software License for RealServer Basic 7.0 (60 Streams)
IMPORTANT -- READ CAREFULLY: This RealNetworks License Agreement ("License
Agreement") is a legal agreement between you (either an individual or an entity)
and RealNetworks, Inc. and its suppliers and licensors (collectively "RN") for
RN's RealServer Basic 7.0 software ("Software"). You may install only ONE copy
of the Software. By clicking on the "I Accept" button, installing, copying or
otherwise using the Software, you agree to be bound by the terms-of this License
Agreement. If you do not agree to the terms of this License Agreement, click on
the "I Do Not Accept" button and/or do not install the Software.
ANY THIRD PARTY SOFTWARE, INCLUDING ANY NON-RN PLUG-IN, THAT MAY BE
PROVIDED WITH THE SOFTWARE IS INCLUDED FOR USE AT YOUR OPTION. IF YOU CHOOSE TO
USE SUCH SOFTWARE, THEN SUCH USE SHALL BE GOVERNED BY SUCH THIRD PARTY'S LICENSE
AGREEMENT, AN ELECTRONIC COPY OF WHICH WILL BE INSTALLED IN THE "REALSERVER"
DIRECTORY ON YOUR COMPUTER, UPON INSTALLATION OF THE SOFTWARE.
1. SOFTWARE OWNERSHIP. This is a license agreement and NOT an agreement for
sale. This Software and the Documentation is proprietary to RN, and is protected
by the copyright and other intellectual property laws of the United States and
international treaties. The Software is licensed, not sold. RN continues to own
the Software, and other content provided or transmitted to you by RN. Your
rights to use the Software are specified in this License Agreement, and RN
retains all rights not expressly granted to you in this License Agreement.
Nothing in this License Agreement constitutes a waiver of RN's rights under U.S.
or international copyright law or any other federal or state law.
2. GRANT OF LICENSE. Subject to the provisions contained herein, RN hereby
grants you a non-exclusive, non-transferable license to install and use the
version of the Software specified by your server license key.
a. Installation. You may install ONLY ONE COPY of the Software on a single
computer containing one or more central processing units ("CPU's"). Only one
free License is allowed per individual (or the entity or company for whom any
individual has downloaded the Software).
b. Use. You may use your installed copy of the Software to deliver up to sixty
(60) simultaneous Streams of RN media-compatible data (e.g., audio, video or
other media only as specifically enabled by the license key which accompanies
the Software). A "Stream" means the stream of digitally encoded data that
delivers the RealMedia type (e.g. RealAudio, RealVideo,
2.
<PAGE>
etc.) associated with the Software you have licensed to a single end-user client
computer. You may only serve the media types(s), e.g., audio and/or video that
is authorized by your Server License Key. The number of Streams delivered by a
given Host Computer is measured by counting the number of End-Users
simultaneously served by streams originating at that Host Computer. You may not
deliver more than the number of streams specifically enabled by your license
key. If you wish to deliver additional Streams, you must purchase a Software
License Key upgrade from RN.
c. Educational Institutions Only. If you are an accredited educational
institution that provides primary, collegiate, or graduate education
("Educational Institution"), and you have licensed the Software for use in
connection with such Educational Institution, you may additionally: (i) install
the Software on a computer acting as network server to deliver multimedia
content; (ii) enable authorized individuals within the Educational Institution
to access the Software, subject to the terms and conditions contained herein;
(iii) use the Software to deliver multimedia content in connection with the
Educational Institution's activities, including but not limited to classroom
instruction; and (iv) use the Software to serve Streams in conjunction with any
public worldwide Website of the Educational Institution.
d. Attribution. You must indicate which publicly available files are in the
RealAudio (.ra) or RealVideo (.rm). RN hereby grants you a non-exclusive,
limited license to use, and you agree that you shall always use, RN's trademarks
in accordance with RN's Trademark and Logo Usage Policy at
http://www.realnetworks.com/company/guide/policy.html and for the sole purpose
of informing Website visitors that RealAudio or RealVideo content is available
at your Website. You agree that shall not use any RN trademark in a way that may
imply that you are an agency or branch of RN. You agree that you shall not use
any RN trademark in a way which may imply that RN endorses, is affiliated with,
or sponsors you or your products without RN's express written permission. You
also agree that you may not link directly to any media file or .ram file made
available from the RN Website.
3. LIMITATIONS OF YOUR LICENSE. No Resale. YOU MAY NOT, UNDER ANY CIRCUMSTANCES,
RESELL, SUBLICENSE OR DELIVER THE SOFTWARE OR STREAMS ON A STAND-ALONE BASIS TO
ANY THIRD PARTY. IF YOU DESIRE TO RESELL THE SOFTWARE PLEASE CONTACT RN
REGARDING PARTICIPATION IN ITS RESELLER PROGRAM. Notice to Users. You agree to
inform all users of the Software, other than End Users receiving Streams, of the
terms of this License Agreement. Dual-Media Software. You may receive the
Software in more than one medium (e.g., by electronic distribution and on
CD-ROM). Regardless of the type or size of medium you receive, you may use only
one medium that is appropriate for your single computer. You may not use or
install the other medium on another computer. You may not loan, rent, lease,
grant a security interest in, or otherwise transfer the other medium to another
user. No Copying. You may not copy the Software or Documentation, except that
you may make a single copy of the software for archival purposes only, provided
such copy must contain all of the original Software's proprietary notices. No
Modifications or Reverse Engineering. You may not modify, translate, reverse
engineer, decompile or disassemble (except to the extent that this restriction
is expressly prohibited by applicable law), or create derivative works based on
the Software. Rental/Transfer. You may not rent, lease, sell, or transfer the
Software or documentation without RN's express written consent, which RN may
withhold in its discretion. Audit Rights. You shall
3.
<PAGE>
permit RN to audit your compliance with this License Agreement, as RN deems
reasonably necessary. Reservation of Rights. All rights not expressly granted to
you are reserved to RN.
4. UPGRADES/SUPPORT. You shall not be entitled under this License Agreement to
receive any updates, upgrades, or corrections to the Software, nor any support
services.
5. DISCLAIMER OF WARRANTIES/LlMITATION OF LIABILITY. The Software and
documentation are provided on an "AS IS" basis, without warranty of any kind. TO
THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, RN FURTHER DISCLAIMS ALL
WARRANTIES, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NONINFRINGEMENT. THE
ENTIRE RISK ARISING OUT OF THE USE OR PERFORMANCE OF THE SOFTWARE AND
DOCUMENTATION REMAINS WITH YOU. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE
LAW, IN NO EVENT SHALL RN OR ITS SUPPLIERS BE LIABLE FOR ANY CONSEQUENTIAL,
INCIDENTAL, DIRECT, INDIRECT, SPECIAL, PUNITIVE, OR OTHER DAMAGES WHATSOEVER
(INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS
INTERRUPTION, LOSS OF BUSINESS INFORMATION, OR OTHER PECUNIARY LOSS) ARISING OUT
OF THIS AGREEMENT OR THE USE OF OR INABILITY TO USE THE SOFTWARE, EVEN IF RN HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. BECAUSE SOME
STATES/JURISDICTIONS DO NOT ALLOW THE EXCLUSION OR LIMITATION OF LIABILITY FOR
CONSEQUENTIAL OR INCIDENTAL DAMAGES, THE ABOVE LIMITATION MAY NOT APPLY TO YOU.
6. INDEMNIFICATION. This software is intended for use only with properly
licensed media, content, and content creation tools. It is your responsibility
to ascertain whether any copyright, patent or other licenses are necessary and
to obtain any such licenses to serve and/or create or compress such media and
content. You agree to transmit and/or compress only those materials for which
you have the necessary patent, copyright and other permissions, licenses, and/or
clearances. You agree to hold harmless, indemnify and defend RN, its officers,
directors and employees, from and against any losses, damages, fines and
expenses (including attorney's fees and costs) arising out of or relating to any
claims that you have encoded, compressed, copied or transmitted any materials
(other than materials provided by RN) in connection with the Software in
violation of another party's rights or in violation of any law. If you are
importing the Software from the United States, you shall indemnify and hold RN
harmless from and against any import and export duties or other claims arising
from such importation.
7. TERMINATION. This Agreement and your right to use this Software automatically
terminate if you fail to comply with any material provision of this Agreement.
RN may terminate this License at any time by delivering notice to you and you
may terminate this License at any time by destroying or erasing your copy of the
Software. Upon termination of this License Agreement, you agree to destroy or
erase the Software.
8. U.S. GOVERNMENT RESTRICTED RIGHTS. This Software and documentation are
provided with RESTRICTED RIGHTS. Use, duplication or disclosure by the
Government is subject to restrictions set forth in subparagraphs (a) through (d)
of the Commercial Computer
4.
<PAGE>
Software-Restricted Rights at FAR 52.227-19 when applicable, or in subparagraph
(c)(1)(ii) of the Rights in Technical Data and Computer Software clause at DFARS
252.227-7013, and in similar clauses in the NASA FAR supplement, as applicable.
Manufacturer is RealNetworks, Inc./2601 Elliott Avenue /Seattle, Washington,
98121. None of the Software or underlying information or technology may be
downloaded or otherwise exported or re-exported (I) into (or to a national or
resident of Cuba, Iraq, Libya, Sudan, North Korea, Iran, Syria, Yugoslavia or
any other country to which the U.S. has embargoed goods; or (ii) to anyone on
the U.S. Treasury Department's list of Specially Designated Nationals or the
U.S. Commerce Department's Table of Denial Orders. By using the Software, you
are agreeing to the foregoing and are representing and warranting that you are
not located in or under the control of a national or resident of any country or
on any such list.
9. MISCELLANEOUS. The acceptance of any purchase order you place is expressly
made conditional on your consent to the terms set forth herein. The terms and
conditions contained in this License Agreement may not be modified except in
writing duly signed by you and an authorized representative of RN. If any
provision of this License Agreement is held to be unenforceable for any reason,
such provision shall be reformed only to the extent necessary to make it
enforceable, and such decision shall not affect the enforceability of such
provision under other circumstances, or of the remaining provisions hereof under
all circumstances. This License Agreement will not be governed by the United
Nations Convention of Contracts for the International Sale of Goods, the
application of which is hereby expressly excluded.
Copyright(C)1995-2000 RealNetworks, Inc. and/or its suppliers. 2601 Elliott
Ave., Suite 1000, Seattle, Washington 98121 U.S.A. All rights reserved.
RealNetworks, RealServer, RealAudio, RealVideo, and RealSystem are registered
trademarks or trademarks of RealNetworks, Inc.
5.
<PAGE>
EXHIBIT D
REALNETWORKS, INC.
REALSYSTEM SDX LICENSE AGREEMENT
IMPORTANT -- READ CAREFULLY: This RealNetworks License Agreement ("Agreement")
is a legal agreement between you (either an individual or an entity) ("you" or
"Licensee") and RealNetworks, Inc. and its suppliers and licensors
(collectively, "RN") for the RealSystem(TM) G2 Architecture Software Development
Kit ("SDK") which includes computer software and associated media and printed
materials, whether provided in physical form or received on-line in electronic
form (collectively referred to as "Product"). You may install only ONE copy of
the Product.
Please read the following license agreement before downloading and using the
RealSystem G2 SDK. IF YOU DO NOT AGREE TO THE TERMS AND CONDITIONS, YOU MAY NOT
DOWNLOAD OR USE THIS SOFTWARE. If you agree to the license agreement, click on
the button at the bottom of the page marked "I agree to the license agreement."
BY CLICKING ON "I ACCEPT THIS AGREEMENT," INSTALLING, COPYING, OR USING THE SDK
LICENSEE AGREES TO BE BOUND BY THE TERMS OF THIS SDX DEVELOPMENT AGREEMENT
("AGREEMENT"). IF YOU DO NOT AGREE TO TERMS OF THIS AGREEMENT, CLICK THE "I DO
NOT ACCEPT THIS AGREEMENT" BUTTON TO TERMINATE THIS INSTALLATION PROCESS.
If you have any questions about the SDK or this Agreement, please contact RN at
[email protected].
- --------------------------------------------------------------------------------
SDK DEVELOPMENT AGREEMENT
You, on behalf of yourself and your organization agree that the following terms
and conditions govern your use of the Product:
1. SOFTWARE OWNERSHIP. This is a license agreement and NOT an agreement for
sale. Title, ownership rights and intellectual property rights in and to the
Product (including any images, animations, video, audio, music, and text
incorporated into the Product), accompanying printed materials, and any copies
Licensee is permitted to make herein are owned by RN or its suppliers and are
protected by United States copyright law and international treaty provisions.
Licensee may (a) make one copy of the SDK solely for backup or archival purposes
(in accordance with customary practices for such purpose), provided such copy
must contain all of the original Product's proprietary notices, or (b) transfer
the SDK to a single hard disk, provided Licensee keeps the original solely for
backup or archival purposes. Licensee may not copy the printed or electronically
transmitted materials accompanying the SDK. Licensee's rights to use the Product
are specified in this Agreement, and RN retains all rights not expressly granted
to Licensee in this Agreement. Nothing in this Agreement constitutes a waiver of
RN's rights under U.S. or international copyright law or any other federal or
state law.
2. LICENSE TO DEVELOP AND DISTRIBUTE:
<PAGE>
(a) Subject to the provisions contained herein, RN hereby grants Licensee a
limited, non-exclusive, royalty-free license to install and use the SDK solely
for the purpose of developing a Licensee Application. A Licensee Application is
one which utilizes the API's of the RealSystem G2 Architecture or includes
Sample Source Code and/or Header Files described below. For example, a Licensee
Application could be a RealServer plug-in or a custom datatype.
(b) The SDK includes identified Sample Source Code, which, at the time of
Product installation, is located in the sub-folder named "sample" in the folder
named "rmasdk." RN grants Licensee a limited, non-exclusive, nontransferable,
royalty-free license to use, modify, adapt, reproduce, and distribute to end
users of the Licensee Application the Sample Source Code for a period of two
year from the date Licensee agrees to this Agreement, provided that: (i)
Licensee uses the Sample Source Code only in conjunction with and as part of
Licensee Application as provided below; and (ii) Licensee agrees to indemnify,
hold harmless, and defend RN, its suppliers and customers from and against any
claims or lawsuits, including attorneys' fees, that arise from Licensee's use of
Licensee Application containing the Sample Source Code.
(c) The SDK includes certain Header Files which, at the time of Product
installation, are located in the subfolder named "include" which is contained in
the folder named "rmasdk." RN grants Licensee a limited, non-exclusive,
nontransferable, royalty-free right to reproduce and distribute to end users of
the Licensee Application, for a period of one year from the date Licensee agrees
to this Agreement, the compiled object code for the unmodified Header Files as
part of the Licensee Application provided that: (i) Licensee uses the Header
Files only in conjunction with and as part of Licensee Application subject to
all the terms of this agreement; and (ii) Licensee agrees to indemnify, hold
harmless, and defend RN, its suppliers and customers from and against claims or
lawsuits, including attorneys' fees, that arise from Licensee's inclusion of the
Header Files in any Licensee Application.
(d) RN will not post custom datatypes developed under this Agreement on RN's
auto-update server for delivery to its RealPlayer licensees unless RN and
Licensee enter into a signed amendment providing for such distribution (an
"Auto-Update Amendment"). RN reserves the right to decline to enter into an
Auto-Update Amendment for any custom datatype. To apply for an Auto-Update
Amendment, please contact RN at [email protected].
--------------------
(e) This Agreement does not allow distribution of the License Application
through OEMs or other third party distributors. If you would like to request OEM
distribution rights, please submit a request by filling in the form at
http://proforma.real.com/mario/devzone/distlicense.html. RN reserves the right
- -------------------------------------------------------
to decline to enter into an agreement to allow OEM distribution.
3. LIMITATIONS:
The following terms limit the licenses granted under this Agreement:
(a) Limitations on distribution license for Header Files and/or Sample Source
Code (collectively, "Code") incorporated into License Application. Licensee may
only reproduce and/or distribute the Code if: (i) Licensee distributes only the
unmodified object code for those
2.
<PAGE>
Header Files which are required during the execution of Licensee Application;
(ii) Licensee distributes the Code in conjunction with and as an integral part
of Licensee Application which is designed, developed, and tested to function
properly with a RN commercial server and not degrade the functionality of any
RealPlayer; (iii) Licensee only distributes the Code as part of the Licensee
Application, and forbids any end user to use the Code for any purpose other than
as an integral part of the Licensee Application; (iv) Licensee includes a valid
copyright notice (see http://www.realnetworks.com/company/guide/index.html) on
----------------------------------------------------
Licensee Application specifying components of Licensee's application are owned
by RN and its suppliers; (v) Licensee's end user license agreement prohibits
further distribution of the Code by Licensee's end-users; and (vi) Licensee
makes available on its website a link to download a free RealPlayer from
RealNetworks' website. The form of the download button, and the URL which must
be used by Licensee, can be obtained at http://www.real.com/company/guide/
logos/rnlogo.html. Except as provided in this section, no distribution of any
other part of the SDKs is allowed under this Agreement. RN will provide Licensee
upon request with contact information for third party testing that are familiar
with RN's testing criteria.
(b) Licensee must register the Licensee Application with RN prior to commencing
distribution of the product. This includes providing RN with reasonable
information regarding the Licensee Application. Licensee may request
registration forms via e-mail to: [email protected]. Licensee must provide RN
with two packaged copies of any Licensee Applications, including associated
documentation. If the Licensee Applications are not packaged, but distributed
electronically, Licensee must enable RN to download two copies of the Licensee
Application. RN shall have a license to use the copies for testing and
evaluation purposes only. RN reserves the right to terminate the distribution
rights contained in this Agreement in the event that RN's testing demonstrates
that the Licensee Application is not fully compatible with a commercial
RealNetworks server or the RealPlayer. Prior to terminating this Licensee's
distribution rights this under section, RN will provide Licensee with notice and
a reasonable opportunity to cure, not to exceed 30 days.
(c) Licensee must provide attribution to RealNetworks regarding any Licensee
Application in the form and manner prescribed and approved by RN to assure
compliance with RN's attribution policies (Current attribution form: Copyright
(C) 1995-2000 RealNetworks, Inc. and/or its suppliers. 2601 Elliott Avenue,
Seattle, Washington 98121, U.S.A. All rights reserved. RealNetworks is a
registered trademark of RealNetworks, Inc.). On RN's reasonable request,
Licensee will furnish RN with samples of attribution in and/or on Licensee
Application. Upon notice by RN that Licensee's attribution does not comply with
RN's policies, Licensee shall, within a reasonable period of time, make all
requested changes. Licensee shall not have any right to use any RN trademark or
logo under this Agreement.
(d) Licensee may not use the Product except for the purposes expressly set forth
in this Agreement. The Product may not be used to develop any application which
has the capability of streaming, playing, or encoding to any file format or data
type that competes with RN, as determined by RN in its sole discretion. The
Product may not be used in any way to create software that serves, downloads,
delivers, or distributes audio, video, or other media files across the Internet
or any computer network. The Product shall not be used to transcode or create
software that transcodes any RN file format or data type into any other file
format or data type.
3.
<PAGE>
The Licensee Product may not install itself in an end-user computer's registry
as the default player for any RN file format or data type.
(e) Licensee acknowledges that the intent of this Agreement is to enable
Licensee to develop and distribute a Licensee Application solely for direct
distribution to end users. Any Header Files or Sample Source Code which have
been incorporated into a Licensee Application may only be distributed during the
term set forth in Section 2 of this Agreement. Licensee must obtain
RealNetworks' written approval before selling or distributing any Licensee
Application: (a) as of a product bundle packaged with or accompanying Licensee's
hardware or software product; or (b) through any OEM or other distributor for
redistribution. This license expressly forbids the distribution of any
RealNetworks ".dll" files or "shared libraries." This license does not grant any
rights in any RN software not explicitly described in this Agreement.
(f) This Agreement is personal to Licensee. Licensee shall not sublicense,
assign, or otherwise transfer any of its rights in this Agreement, including by
operation of law, without the express written consent of RN.
(g) Licensee shall only use the Product on a single computer or on its internal
computer network, providing that each person accessing the Product through the
network has licensed a copy of the Product by personally accepting this
Agreement. Licensee may make a single copy of the Product for back-up and
archival purposes only, provided that any copy must contain all proprietary
notices included in the original. Licensee may download the online Documentation
for purposes of using in conjunction with the Product, but may not make further
copies of the Documentation.
(h) Except as expressly provided herein, Licensee shall not copy, modify,
reproduce, display, decompile, reverse engineer, store, translate, sell,
sublicense, lease or otherwise transfer or distribute the Product, in whole or
in part, nor may Licensee use the Product with the intent to clone any
proprietary client or server software product proprietary to RN. All rights not
specifically granted herein to Licensee are reserved to RN.
4. PRODUCT MAINTENANCE: RN is not obligated to provide maintenance or updates to
Licensee for the Product. However, any maintenance or updates provided by RN
shall be covered by this Agreement, unless expressly subject to the terms of
another written agreement between the parties.
5. DISCLAIMER OF WARRANTY. The Product is deemed accepted by Licensee. The
Product is provided to Licensee AS IS, WITHOUT WARRANTY OF ANY KIND. TO THE
MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, RN FURTHER DISCLAIMS ALL WARRANTIES,
INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, AND NONINFRINGEMENT. THE ENTIRE RISK ARISING OUT OF
THE USE OR PERFORMANCE OF THE PRODUCT AND DOCUMENTATION REMAINS WITH LICENSEE.
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, IN NO EVENT SHALL RN OR ITS
SUPPLIERS BE LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL, DIRECT, INDIRECT,
SPECIAL, PUNITIVE, OR OTHER DAMAGES
4.
<PAGE>
WHATSOEVER (INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS,
BUSINESS INTERRUPTION, LOSS OF BUSINESS INFORMATION, OR OTHER PECUNIARY LOSS)
ARISING OUT OF THIS AGREEMENT OR THE USE OF OR INABILITY TO USE THE PRODUCT,
EVEN IF RN HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. BECAUSE SOME
STATES/JURISDICTIONS DO NOT ALLOW THE EXCLUSION OR LIMITATION OF LIABILITY FOR
CONSEQUENTIAL OR INCIDENTAL DAMAGES, THE ABOVE LIMITATION MAY NOT APPLY TO
LICENSEE.
6. INDEMNIFICATION: Licensee shall hold harmless, indemnify and defend RN, its
officers, directors and employees, from and against any claim, suit or
proceeding and any losses, damages, fines and expenses (including attorneys'
fees and costs) arising out of or relating to any claims that Licensee's use of
the SDK in conjunction with Licensee Application infringes the patent,
copyright, trademark, trade secret, or other proprietary rights of any third
party, or resulting from any breach of this Agreement by Licensee.
7. TERM AND TERMINATION: The term of this Agreement begins when Licensee agrees
to its terms and ends one year from the date Licensee registers the Licensee
Application with RN. Thereafter the Agreement may be renewed upon mutual
agreement of the parties. Please contact RN at [email protected] if you wish
--------------------
to renew the Agreement. Without prejudice to any other rights, RN may terminate
this Agreement if Licensee fails to comply with the terms and conditions herein.
Upon termination of this Agreement, Licensee shall immediately discontinue the
use of the SDK and shall within five (5) days either return to RN, or certify
destruction of, all full or partial copies of the SDK, Documentation and related
materials provided by RN, including any Header Files and Sample Source Code.
Licensee may also terminate this Agreement at any time by destroying the SDK and
Documentation and all copies thereof. The provisions of sections 3, 5, 6, 7, 8
and 9 shall survive any termination of this Agreement. All distribution rights
granted in this license shall terminate one year from the date Licensee agrees
to the terms of this Agreement.
8. MISCELLANEOUS: This Agreement may not be modified except in a writing duly
signed by an authorized representative of RN and Licensee. If any provision of
this Agreement is held to be unenforceable for any reason, such provision shall
be reformed only to the extent necessary to make it enforceable, and such
decision shall not affect the enforceability (i) of such provision under other
circumstances, or (ii) of the remaining provisions hereof under all
circumstances.
9. U.S. GOVERNMENT RESTRICTED RIGHTS AND EXPORT RESTRICTIONS: Use, duplication,
or disclosure by the Government is subject to restrictions as set forth in
subparagraph (c)(1)(ii) of The Rights in Technical Data and Computer Software
clause of DFARS 252.227-7013 or subparagraphs (c)(i) and (2) of the Commercial
Computer Software-Restricted Rights at 48 CFR 52.227-19, as applicable.
Manufacturer is RealNetworks, 2601 Elliott Avenue, Seattle, Washington 98121.
Licensee acknowledges that neither the SDK or underlying information or
technology may be download or otherwise exported or re-exported: (i) into (or to
a national or resident of) Cuba, Iraq, Libya, Yugoslavia (Serbia and
Montenegro), North Korea, Iran, Syria or any other country to which the U.S. has
embargoed goods; or (ii) to anyone on the U.S. Treasury Department's list of
Specially Designated Nationals or the U.S.
5.
<PAGE>
Commerce Department's Table of Denial Orders. By using the SDK, Licensee is
agreeing to the foregoing and is representing and warranting that it is not
located in or under the control of, a national or resident of any such country
or on any such list.
Copyright(C)1995-2000 RealNetworks, Inc. and/or its suppliers. 2601 Elliott
Ave., Suite 1000, Seattle, Washington 98121 U.S.A. All rights reserved.
RealNetworks, RealServer, RealAudio, RealVideo, and RealSystem are registered
trademarks or trademarks of RealNetworks, Inc.
6.
<PAGE>
EXHIBIT E
Competitors of RN:
[ *** ]
*** Confidential Treatment Requested
<PAGE>
Exhibit 10.17
*** Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. (S)(S) 200.80(b)(4),
200.83 and 230.406
MICROSOFT LIMITED PROTOCOL SPECIFICATION LICENSE
AGREEMENT
WINDOWS MEDIA PROTOCOLS - DISTRIBUTION ONLY
This Microsoft Limited Protocol Specification License Agreement ("Agreement") is
made and entered into as of _________________ ("Effective Date"), by and between
Microsoft Corporation, a Washington corporation with offices at One Microsoft
Way, Redmond, WA 98072 ("Microsoft"), and Licensee as specified immediately
below.
Licensee Name SkyCache, Inc.
& Address: 312 Laurel Ave. Laurel, MD 20707
- --------------------------------------------------------------------------------
State of Incorp.: Delaware
- --------------------------------------------------------------------------------
Licensee Brad Pumphrey [email protected]
Contact Phone: 301-598-0500 x2245 ------------------
Information FAX 301-598-0837
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Microsoft Contact/Title:Bret O'Rourke/Program Manager
Contact Phone: (425) 936-6783
Information: Fax: (425) 936-7329
Email: [email protected]
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Licensee SkyCache MSBD Satellite Streamer
Product:
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Term: Effective Date through March 31, 2001.
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Recitals
Microsoft is the exclusive owner and/or authorized licensor of certain
protocols, specifications and associated documentation related to Microsoft's
Windows Media Server and Windows Media Player software technology (as defined
below, the "Protocols").
The Protocols are confidential and proprietary to Microsoft.
Licensee wishes to obtain a limited license to confidential materials regarding
the Protocols solely for use solely in accordance with the terms of this
Agreement.
The parties hereby agree as follows:
<PAGE>
Agreement
1. Definitions
1.1 "Authorized Product" means a Licensee Product which is a Content Proxy
Server.
1.2 "Confidential Information" means: (a) the Protocols; (b) Confidential
Materials; (c) any source code of software disclosed by Microsoft; (d) any trade
secrets and/or other proprietary non-public information not generally known
relating to either party's product plans, designs, costs, prices and names,
finances, marketing plans, business opportunities, personnel, research,
development or know-how; and (e) the terms and conditions of this Agreement.
"Confidential Information" shall not include information that: (i) is or becomes
generally known or available by publication, commercial use or otherwise through
no fault of the receiving party; (ii) is known and has been reduced to tangible
form by the receiving party prior to the time of disclosure and is not subject
to restriction; (iii) is independently developed by the receiving party without
the use of the Confidential Materials or other party's Confidential Information
and by personnel that have not had any access to the Confidential Materials or
Confidential Information; (iv) is lawfully obtained from a third party that has
the right to make such disclosure; or (v) is made generally available by the
disclosing party without restriction on disclosure.
1.3 "Confidential Materials" means the materials specifically described on
Exhibit A related to the Protocols.
1.4 "Confidential Materials Implementation" means solely that portion of an
Authorized Product source code which implements, incorporates or otherwise
discloses the Confidential Materials.
1.5 "Content Proxy Server" means a Licensee Product that is a server or
related product for Windows Platforms or non-Windows Platforms that manages
Windows Media Content for purposes of distribution and tracking.
1.6 "Content" means data, text, audio, video, animation, graphics,
photographs, artwork and other technology and materials.
1.7 "Independent Contractor" means a third party who is under written
agreement with Licensee to design and develop or assist with the design and
development of the Licensee Product as an Authorized Product, solely on behalf
of and for the benefit of Licensee, where such written agreement is in
accordance with the terms and conditions of this Agreement, including Sections 2
and 3. Microsoft shall have the right to be notified and approve of any
Independent Contractor, which approval shall not be unreasonably withheld or
delayed.
1.8 "Licensee Product" means Licensee's product identified in table on page
1 of this Agreement.
1.9 "Protocols" means the networking protocols specifications specifically
related to Windows Media Server and Windows Media Player, as set forth in
Exhibit A.
2.
<PAGE>
1.10 "Streaming Media" means Content that is transmitted and played,
displayed, executed or otherwise experienced incrementally, or in semi-real
time, such that it can be heard, viewed or received by an end user with minimal
download delays, if any.
1.11 "Windows Media Content" means Streaming Media served or streamed
originally by a Windows Media Server or Windows Media Encoder.
1.12 "Windows Media Encoder" means Microsoft's real-time encoding
technology for encoding Streaming Media.
1.13 "Windows Media Player" means Microsoft's component software for
Windows Platforms that displays Streaming Media formats and other multimedia
data-types.
1.14 "Windows Media Server" means versions 4.0 and later, as publicly
released by Microsoft during the Term, of Microsoft's Streaming Media services
for Windows Platforms.
1.15 "Windows NT4" means version 4 (service pack 4) of Microsoft's Windows
NT server operating system running Windows Media Server.
1.16 "Windows Platforms" means Microsoft's Windows NT4 and Windows 2000
operating system platforms, successor operating system platforms, and any
upgrades, updates and/or modifications to the foregoing publicly released by
Microsoft during the Term, regardless of naming conventions, version numbers
and/or other nomenclatures.
2. Limited License
2.1 License Rights. During the Term and expressly subject to Licensee's
compliance with Sections 2.2 and 2.3, Microsoft hereby grants to Licensee a non-
exclusive, non-transferable, non-assignable, limited license to: (i) Review and
reference the Confidential Materials solely for purposes of designing and
developing the Licensee Product as an Authorized Product; (ii) reproduce and
have reproduced the Confidential Materials Implementation solely in object code
form and solely as part of the reproduction of the Authorized Product; and (iii)
license, rent, lease, sell or otherwise distribute ("Distribute") and have
Distributed the Confidential Materials Implementation solely in object code form
and solely as part of the Distribution of the Authorized Product.
2.2 Express Conditions Regarding Confidential Materials. Licensee's rights
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under Section 2.1 are expressly conditioned upon Licensees compliance with each
of the following conditions:
(a) Licensee may not modify the Confidential Materials. Licensee may
copy the Confidential Materials as reasonably necessary to exercise its license
rights in Section 2.1. Licensee may only review and reference the Confidential
Materials for purposes of designing and developing an Authorized Product.
Licensee may not use the Confidential Materials for any purposes not expressly
set forth in this Agreement.
3.
<PAGE>
(b) Licensee shall use its commercially reasonable efforts to ensure
that the use or distribution of the Licensee Product as an Authorized Product
shall not in any way disclose or reveal the Confidential Materials, including
the Confidential Materials Implementation. Other than authorized Independent
Contractors, Licensee shall not allow or enable any third party or sublicensee
to use or access the Confidential Materials.
(c) Nothing in this Agreement shall be construed as altering, limiting
or abridging in any way any license terms or obligations (including end user
license agreements) associated with the use of Windows Platforms.
2.3 Further Express Conditions.
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(a) [ *** ]
(b) Licensee Product must adhere to the product and packaging
guidelines set forth in Exhibit B.
(c) To the extent an Authorized Product incorporates the features set
forth in Section 2.3(a) or 2.3(b), Licensee's licenses (including end user
license agreements) for the Authorized Product shall restrict use of the
Authorized Product as set forth in this Section 2.3(a) and 2.3(b); provided,
that Licensee's obligations to abide by the obligations set forth in this
Section 2.3(d) shall terminate if any other Microsoft licensee is not similarly
bound to abide by the obligations set forth in Sections 2.3(a), 2.3(b) and this
2.3(d).
2.4 Ownership.
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(a) Except as expressly licensed to Licensee in Section 2.1, Microsoft
retains all right, title and interest in and to the Confidential Materials and
to any feedback regarding the Confidential Materials provided by Licensee under
this Agreement.
(b) Licensee retains all right, title and interest in and to Licensee
Products, including Licensee Products as Authorized Products, Confidential
Materials Implementation (except to the extent that such Confidential Materials
Implementation incorporates Confidential Materials) and to any feedback
regarding Licensed Products which may be provided by Microsoft under this
Agreement. Microsoft retains all right, title and interest in and to any trade
secret information related to the Confidential Materials in the Confidential
Materials Implementation. Licensee retains all right, title and interest in and
to any copyright and any other trade secret information in the Confidential
Materials Implementation.
2.5 No Other Rights. Except as expressly granted in this Agreement,
---------------
Licensee shall have no other rights in the Confidential Materials. Under no
circumstances will the license grant set forth in Section 2.1 be construed as
granting, by implication, estoppel or otherwise, a license to any Microsoft
technology other than the Confidential Materials.
*** Confidential Treatment Requested
4.
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2.6 Delivery and Other Microsoft Support. Following initial delivery of the
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Confidential Materials, Microsoft shall be under no obligation to update or
deliver further versions of the Confidential Materials. Microsoft shall have no
obligation to provide Licensee any source code under this Agreement.
2.7 Joint Marketing. The parties shall work with each other to develop a
---------------
mutually agreeable press release as soon as possible after the Effective Date.
In such press release, Licensee shall endorse Windows Media Technologies and
Windows Media Formats as a leading platform and set of formats for Streaming
Media; and (ii) Microsoft shall endorse Licensee's Content distribution
infrastructure as a leading solution for caching, network infrastructure and
content distribution and/or management. Further, during the Term, neither party
shall issue or approve from third parties press releases that are inconsistent
with the spirit of this Section 2.7. During the Term, Licensee will also provide
Microsoft with reasonably detailed information on Licensee's use of Microsoft
technology in its business for inclusion in a case study which Licensee shall be
entitled to review and approve, with such approval not be unreasonably withheld
or delayed. In addition, during the Term the parties will work together in good
faith to enter into joint sales and marketing plans and joint promotion of their
relationship. Licensee and Microsoft agree that each party may use such
trademarks, tradenames and/or designs on their respective web-sites to promote
their relationship; provided, that, each party uses only the logos and designs
supplied and approved in writing by the other party for such purpose.
3. Confidentiality
3.1 The license grant in Section 2.1 is expressly conditioned upon Licensee
retaining in confidence all Confidential Information, and Licensee will make no
use of the Confidential Information except under the terms and during the
existence of this Agreement.
3.2 Licensee may disclose Confidential Information as required by
governmental or judicial order, provided Licensee gives Microsoft prompt notice
of such order and complies with any protective order (or equivalent) imposed on
such disclosure. Licensee may disclose the terms of this Agreement to a third
party in connection with discussions with such third party regarding a proposed
joint venture, merger, acquisition or sale of assets of substantially all the
assets of Licensee; provided, that, such third party is bound under the terms of
an agreement which protects Licensee confidential information; and provided
further that disclosure of such terms of this Agreement shall not imply that
Licensee may assign this Agreement without the prior written consent of
Microsoft. Licensee may further disclose Confidential Information to the extent
that such Confidential Information has been embedded in a Confidential Materials
Implementation solely and to the extent necessary to meet its obligations under
a source code escrow obligation that requires such a beneficiary to maintain the
confidentiality of such Confidential Information and to use such Confidential
Information solely to the extent to support such beneficiaries' use of an
Authorized Product. Microsoft will be notified in writing within five (5)
business days of any deliver of the Confidential Materials Implementation into
such an escrow obligation.
3.3 Licensee shall not reproduce, duplicate, copy or otherwise disclose,
distribute, or disseminate the Confidential Information in any media. Any use of
the Confidential Information shall take place solely on Licensee's premises by
Licensee's employees and authorized
5.
<PAGE>
Independent Contractors under agreement to protect the Confidential Information
(an agreement which protects Licensee confidential information and which covers
the Confidential Information is sufficient).
3.4 Licensee shall be free to use for any purpose the residuals resulting
from access or work with such Confidential Information, provided that such party
shall maintain the confidentiality of such Confidential Information as provided
in this Section 3. The Term "residuals" means information in non-tangible form,
which may be retained by persons who have had access to the Confidential
Information, including ideas, concepts, know-how or techniques contained
therein, provided such persons have not intentionally memorized such ideas,
concepts, know-how or techniques. Licensee shall not have any obligation to pay
royalties for any work resulting from the use of residuals. The foregoing shall
not be deemed to grant to Licensee a license under Microsoft's copyrights or
patents. Further, the foregoing shall not be deemed to grant Licensee a license
to directly access the Confidential Materials for any purpose other than that
provided in Section 2.1.
3.5 Licensee's obligations under this Section 3 shall survive any
termination or expiration of the Agreement and shall extend to the earlier of
such time as the Confidential Information is in the publicly domain or ten (10)
years following termination or expiration of this Agreement.
4. Disclaimer of Warranty
4.1 Microsoft represents, warrants and covenants that it has it has the
full power to enter into this Agreement. Licensee represents, warrants and
covenants that it has it has the full power to enter into this Agreement.
4.2 EXCEPT AS SET FORTH IN SECTION 4.1, THE CONFIDENTIAL INFORMATION IS
PROVIDED TO LICENSEE AS IS WITHOUT WARRANTY OF ANY KIND. THE ENTIRE RISK AS TO
THE RESULTS AND PERFORMANCE OF THE CONFIDENTIAL INFORMATION IS ASSUMED BY
LICENSEE. MICROSOFT DISCLAIMS ALL WARRANTIES, EITHER EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, TITLE AND NONINFRINGEMENT, WITH RESPECT TO THE
CONFIDENTIAL INFORMATION.
5. Limitation of Liability
IN NO EVENT SHALL MICROSOFT BE LIABLE FOR ANY DIRECT, CONSEQUENTIAL,
INDIRECT, INCIDENTAL, SPECIAL OR OTHER DAMAGES WHATSOEVER, INCLUDING WITHOUT
LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION, LOSS OF
BUSINESS INFORMATION, AND THE LIKE, ARISING OUT OF THIS AGREEMENT OR THE USE OF
OR INABILITY TO USE ANY CONFIDENTIAL INFORMATION, EVEN IF MICROSOFT HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
6.
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EXCEPT FOR A BREACH OF SECTIONS 2.1, 2.2(a), 2.2(b) AND/OR 3, IN NO EVENT
SHALL LICENSEE BE LIABLE FOR ANY DIRECT, CONSEQUENTIAL, INDIRECT, INCIDENTAL,
SPECIAL OR OTHER DAMAGES WHATSOEVER, INCLUDING WITHOUT LIMITATION, DAMAGES FOR
LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION, LOSS OF BUSINESS INFORMATION,
AND THE LIKE, ARISING OUT OF THIS AGREEMENT, EVEN IF LICENSEE HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES.
6. Term and Termination
6.1 Term. This Agreement shall continue through the Term unless earlier
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terminated in accordance with this Section 6.
6.2 Termination. Either party may suspend performance and/or terminate this
Agreement:
(a) Immediately upon written notice at any time, if the other party is
in material breach of any material warranty, term, condition or covenant of this
Agreement, other than those contained in Section 2.1 and/or 3, and fails to cure
that breach within thirty (30) days after written notice thereof; or
(b) Immediately upon written notice at any time, if the other party is
in material breach of Sections 2.1 and/or 3.
6.3 Effect of Termination. If this Agreement is terminated by Microsoft for
---------------------
any reason, Licensee shall (i) return all copies of the Confidential Materials
and Confidential Information, and related materials in Licensee's possession or
under its control within ten (10) days following the effective date of
termination or expiration of the Term of this Agreement and (ii) cease all
further Distribution of Confidential Materials Implementations. If requested by
Microsoft, Licensee shall provide a declaration signed by an officer of Licensee
attesting that all such copies have been returned to Microsoft. If the Term of
this Agreement expires, or if this Agreement is terminated by Licensee for
Microsoft's material breach, then: (a) Licensee may retain two (2) copies of
Confidential Materials then in its possession; (b) if Licensee has terminated
this Agreement, Licensee may use the Confidential Materials (as such materials
have been delivered as of the effective date of termination) in accordance with
the license rights under Sections 2.1 (so long as Licensee continues to comply
with the obligations of Sections 2.2 and 2.3) through the end of the original
Term, (c) Licensee may use the Confidential Materials solely for purposes of
supporting (as of the effective date of termination) versions of Authorized
Products developed through the end of the Term; and (d) Licensee's rights under
Section 2.1(b) shall survive such termination or expiration of the Term for a
period of four (4) years provided that Licensee continues to comply with the
obligations of Sections 2.2 and 2.3.
6.4 Survival. The provisions of Sections 2.4, 2.5 and 3 (for the period
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specified in Section 3.4), 4, 5 and 6 shall survive termination of this
Agreement.
7.
<PAGE>
7. General
7.1 Notices. All notices and requests in connection with this Agreement
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shall be deemed given as of the day they are received either by messenger,
delivery service, or in the United States of America mails, postage prepaid,
certified or registered, return receipt requested, and addressed as set forth on
page 1 of this Agreement. Copies of such notices shall be addressed to each
party's General Counsel.
7.2 Governing Law. This Agreement shall be construed and controlled by the
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laws of the State of Washington as though entered into between Washington
residents and to be performed entirely within the State of Washington, and
Licensee consents to jurisdiction and venue in the state and federal courts
sitting in the State of Washington. In any action or suit to enforce any right
or remedy under this Agreement or to interpret any provision of this Agreement,
the prevailing party shall be entitled to recover its costs, including
reasonable attorneys' fees.
7.3 Independent Parties. Neither this Agreement, nor any terms and
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conditions contained herein, shall be construed as creating a partnership, joint
venture, agency relationship or as granting a franchise.
7.4 Enforceability. If any provision of this Agreement shall be held by a
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court of competent jurisdiction to be illegal, invalid or unenforceable, the
remaining provisions shall remain in full force and effect.
7.5 Assignment. Licensee may not assign this Agreement, or any rights or
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obligations hereunder, whether by contract or by operation of law, except with
the express written consent of Microsoft, which approval will not be
unreasonably withheld or delayed. Any attempted assignment by Licensee in
violation of this Section shall be void. For purposes of this Agreement, an
"assignment" by Licensee under this Section shall be deemed to include, without
limitation, the following: (a) a change in beneficial ownership of Licensee of
greater than twenty percent (20%) (whether in a single transaction or series of
transactions) if Licensee is a partnership, trust, limited liability company or
other like entity; (b) a merger of Licensee with another party, whether or not
Licensee is the surviving entity; (c) the acquisition of more than twenty
percent (20%) of any class of Licensee's voting stock (or any class of non-
voting security convertible into voting stock) by another party (whether in a
single transaction or series of transactions); or (d) the sale of more than
fifty percent (50%) of Licensee's assets (whether in a single transaction or
series of transactions). In the event of such assignment or attempted assignment
by Licensee, Microsoft shall have the right to immediately terminate this
Agreement.
7.6 Export Licenses. Licensee acknowledges that the Confidential
---------------
Information may be subject to the export control laws and regulations of the
United States, as amended. Licensee confirms that with respect to the
Confidential Information it will not export or re-export it, directly or
indirectly, to: (i) any countries that are subject to United States export
restrictions (currently including, but not necessarily limited to, Cuba, the
Federal Republic of Yugoslavia (Serbia and Montenegro), Iran, Iraq, Libya, North
Korea, South Africa (military and police entities), and Syria); (ii) any end
user who Licensee knows or has reason to know will utilize the Confidential
Information in the design, development or production of nuclear, chemical or
biological weapons; or (iii) any end user who has been prohibited from
participating in the United States export transactions by any federal agency of
the United States government.
8.
<PAGE>
Licensee further acknowledges that the Confidential Information may include
technical data subject to export and re-export restrictions imposed by United
States law.
Licensee shall, at its own expense, obtain and arrange for the maintenance
in full force and effect of all governmental approvals, consents, licenses,
authorizations, declarations, filings, and registrations as may be necessary or
advisable for the performance of all of the terms and conditions of the
Agreement including, but not limited to, foreign exchange approvals, import and
offer agent licenses, fair trade approvals and all approvals which may be
required to realize the purposes of the Agreement.
7.7 Entire Agreement. This Agreement constitutes the entire agreement
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between the parties with respect to the subject matter hereof and supersedes all
prior and contemporaneous agreements or communications. It shall not be modified
except by a written agreement dated subsequent to the date of this Agreement and
signed on behalf of Licensee and Microsoft by their respective duly authorized
representatives. No waiver of any breach of any provision of this Agreement
shall constitute a waiver of any prior, concurrent or subsequent breach of the
same or any other provisions hereof, and no waiver shall be effective unless
made in writing and signed by an authorized representative of the waiving party.
In Witness Whereof, the parties have entered into this Agreement as of the
Effective Date written above.
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Microsoft Corporation Licensee
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By: /s/ Bret O'Rourke By: /s/ Robert E. Marggraf
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Name (print): Bret O'Rourke Name (print): Robert E. Marggraf
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Title: Group Program Mgr. Title: EXECTUTIVE VICE PRESIDENT
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Date: 2/17/00 Date: 12/15/99
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9.
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Exhibit A
DESCRIPTION OF CONFIDENTIAL MATERIALS
The Confidential Materials consist of any non-public information disclosed to
Licensee under Section 2.5(b), and the following documents:
[ *** ]
*** Confidential Treatment Requested
<PAGE>
Exhibit B
LICENSEE PRODUCT AND PACKAGING GUIDELINES
Licensee will use Microsoft's "Windows Media Compatible" logo in Licensee
Product, packaging and website in accordance with Microsoft's standard logo
guidelines. Licensee must execute and comply with the branding requirements and
Trademark Usage Guidelines of Microsoft's Logo License Agreement for "Plays
Windows Media," which are attached to this Exhibit B.
<PAGE>
[EXODUS LETTERHEAD]
Exhibit 10.18
***Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. (S)(S)200.80(b)(4),
200.83 and 230.406
March 30, 1999
Mr. Bob Marggraf
EVP/COO
SkyCache
312 Laurel Avenue
Laurel, MD 20707
Dear Bob:
It was a pleasure meeting with you on Monday and discussing the Exodus Alliance
Partner program. I have listed below the activities that we support in
conjunction with our Alliance Partners to summarize our meeting. These
activities include:
o Introduction to leading Internet companies co-located within Exodus
facilities - a customer base built by virtue of Exodus' 3-year, leadership
position in Web site hosting and Internet content delivery.
o Lead sharing between SkyCache and Exodus - for leads resulting in closed
business for Exodus, you will receive a [***] for a period of twelve months.
o A [***] discount off the purchase of Exodus services will be offered for your
company's internal use (not applicable when any negotiated discounts exceed
[***] of Exodus list prices)
o Inclusion in the Exodus Partner Pavilion section of the www.exodus.net Web
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site with information on your company's product and service offerings and
links to your Web site.
o Joint marketing activities including sponsorship of regional technology
events, networking with other Exodus partners, and participation in the
Exodus National Sales Meetings.
o Training provided by the Exodus Channel Manager, including a Channel Partner
Binder -including sales tools, technical information, and collateral etc.
o Access to Exodus technical support personnel and Systems Engineers to consult
in lead and prospect qualification.
o Access to the Exodus sales teams in each region to present SkyCache products
and services to our account executives, enabling them to identify and qualify
potential SkyCache prospects.
I have attached a data sheet detailing the Alliance Partner program. If you
have additional questions, please feel free to contact me at anytime.
Best regards,
/s/ Michael Kremin
Michael Kremin
SE Region Channel Manager
703 995-3034
[email protected]
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*** Confidential Treatment Requested
<PAGE>
Exhibit 10.19
*** Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. (S)(S) 200.80(b)(4),
200.83 and 230.406
GE-3 SATELLITE TRANSPONDER SERVICE AGREEMENT
THIS AGREEMENT between GE American Communications, Inc., as agent for GE
Capital Europe Limited and SkyCache, Inc. ("Customer") is made effective as of
the date of the last signature below. All references to "GE Americom" herein
shall include both GE Capital Europe Limited and GE American Communications,
Inc. as agent therefor. Defined terms used in this Agreement have the meanings
specified herein.
ARTICLE 1. SERVICE PROVIDED
A. Scope. GE Americom will provide to Customer (i) initially Moveable Protected
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Service on one (1) Transponder on the GE-3 Satellite and (ii) when Customer's
assigned Transponder on the GE-4 Satellite, (or the Ground Spare, as provided
below) is Commercially Operational, Fully Protected Service on one (1)
Transponder on the planned GE-4 Satellite, in lieu of service on the GE-3
Satellite (collectively "Service"). Customer agrees that Service will be used
solely for the transmission of digital signals. Service will be provided in
accordance with the terms and conditions set forth in this Agreement, including
Attachment A1-GE-3 Transponder Performance Specifications or Attachment A2-GE-4
Transponder Performance Specifications, as the case may be, Attachment B-
Commercial Operations System User's Guide, and Attachment C-Form of Letter of
Credit (collectively, the "Agreement").
The GE-3 Satellite is authorized to be and is located at the 87 W.L.
orbital position. The Satellite may, however, be located at any other orbital
position hereafter authorized by the FCC.
Technical performance criteria for the GE-3 Satellite are described in the
Transponder Performance Specifications set forth in Attachment Al. The
transponder number will be Transponder 6K. The transponder assignment will be
changed only in accordance with this Agreement or to prevent interference by or
to Customer's operations.
GE Americom is planning for the GE-4 Satellite to be launched in the fourth
calendar quarter of 1999 and to become Commercially Operational during the first
calendar quarter of 2000. The GE-4 Satellite is authorized to be located at the
101 W.L. orbital position. The GE-4 Satellite may, however, be located at any
other orbital position hereafter authorized by the FCC. If the GE-4 Satellite
becomes a Launch Failure, GE Americom plans to launch the Ground Spare within
fifteen (15) months after such Launch Failure. If the Ground Spare becomes
Commercially Operational, all references to the GE-4 Satellite in this Agreement
shall be considered to mean the Ground Spare, except that the technical
specifications for the Ground Spare will be substituted for those specifications
in Attachment A-2.
Technical performance criteria for the GE-4 Satellite are described in the
Transponder Performance Specifications set forth in Attachment A2. The
transponder number will be Transponder 5K (provided such Transponder becomes
Commercially Operational). The transponder assignment will be changed only if
Transponder 5K does not become Commercially
<PAGE>
Operational, in accordance with this Agreement, or to prevent interference by or
to Customer's operations.
In the event that GE-4 is a Launch Failure as defined hereunder, GE
Americom will provide Customer with notice advising that the GE-4 Launch Failure
has occurred (the "GE-4 Launch Failure Notice"). Notwithstanding anything to the
contrary contained herein, in the event a Ground Spare is not launched and made
Commercially Operational by GE Americom within three hundred and thirty (330)
days of the GE-4 Launch Failure Notice, Customer has the option to either (i)
continue to take Moveable Protected Service on the GE-3 Satellite for the
remainder of the Service Term, or (ii) terminate the Agreement. If Customer
fails to notify GE Americom of its election within ten (10) business days of the
expiration of the Ground Spare Replacement Period, Customer shall continue to
take Service on the GE-3 Satellite for the remainder of the Service Term.
In connection with the transfer of Service from the GE-3 Satellite to the
GE-4 Satellite, Customer shall be permitted to dually illuminate, at Customer's
expense to accomplish such dual illumination, the Transponder upon which Service
is provided on the GE-3 Satellite and the Transponder on the GE-4 Satellite for
such period of time as GE Americom deems appropriate; not to exceed, in any
event however, ten (10) days, at no additional charge. The parties understand
and agree that the transfer of Service from the GE-3 Satellite to the GE-4
Satellite may require a change in transponder assignment, including
polarization.
<PAGE>
B. Service Priorities.
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1. With respect to Moveable Protected Service on the GE-3 Satellite:
a. GE Americom shall immediately initiate all reasonable measures,
consistent with protecting the Satellite and all services provided thereon, to
restore as quickly as possible (consistent with GE Americom's policies and
procedures for the restoration of Protected Transponders), Customer's
Transponder should it become a Transponder Failure. Restoration shall be
effected in the following manner and order, on a first-needed, first-served
basis: first, by utilizing any available Replacement Transponder on the
Satellite; and second, if no such Replacement Transponder is available, by using
a Preemptible Transponder on the Satellite, if available. If no such Protection
Transponder is available on the Satellite, Customer's service shall be restored
on the Restoration Satellite (as designated below), subject to and in accordance
with the terms of this Article.
b. Customer's Transponder may itself be preempted to restore a satellite
failure of the GE-2 satellite. Immediately upon notice from GE Americom stating
that Customer's Transponder is being preempted, Customer shall cease
transmitting to such Transponder. If Customer fails to vacate such Transponder
immediately after being given such notice, GE Americom may, without further
notice to Customer, take appropriate action to vacate Customer's signal. In the
case of such preemption, Customer's service will be restored on the Restoration
Satellite, subject to and in accordance with the terms of this Article.
c. After commencement of the GE-3 Term hereunder, if the GE-3 Satellite
becomes a Satellite Failure, or Customer's Transponder becomes a Transponder
Failure and cannot be restored on the GE-3 Satellite, or should Customer's
service be preempted to restore a satellite failure of the GE-2 satellite,
restoration shall be provided on a Preemptible Transponder on the Restoration
Satellite, if available. If service is restored on the Restoration Satellite,
then Customer's service shall change to Non-Preemptible Service. If
Non-Preemptible Service is so provided, all references to the GE-3 Satellite in
this Agreement shall be considered to mean the Restoration Satellite for all
purposes of this Agreement; except with respect to service level (as described
above) and except that (i) the technical specifications for the Restoration
Satellite shall be substituted for those specifications in Attachment Al and
(ii) during the period such Non- Preemptible Service is provided, the MRC
specified in Article 2. Payment shall be reduced by [ *** ]. In the event such
Non-Preemptible Service as described in the previous sentence is provided by GE
Americom within the first six (6) months of Service, (no later than March 31,
2000), there shall be no such reduction to the MRC. If no such Preemptible
Transponder is available on the Restoration Satellite, Customer's service shall
not be restored and this Agreement shall terminate at such time.
d. The GE Americom satellite designated GE-5 and currently operated at the
79 W.L. orbital location has been designated as the Restoration Satellite for
Customer's service. GE Americom may, upon seven (7) days' prior written notice,
change the satellite designated as the Restoration Satellite regarding Moveable
Protected Service under this Agreement. Preemptible Transponders on the
Restoration Satellite shall be used on a first-needed, first-served basis. GE
Americom shall have no obligation to provide a Restoration Satellite other than
*** Confidential Treatment Requested
<PAGE>
GE-5. If access to Protection Transponders on the Satellite or Preemptible
Transponders on the Restoration Satellite is required for more than one
transponder as a result of a single event or simultaneous events, such access
shall be granted in Contract Order (defined as the opposite order from Reverse
Contract Order).
<PAGE>
2. With respect to Fully Protected Service on the GE-4 Satellite:
a. GE Americom shall immediately initiate all reasonable measures,
consistent with protecting the Satellite and all services provided thereon, to
restore as quickly as possible (consistent with GE Americom's policies and
procedures for the restoration of Protected Transponders), Customer's
Transponder should it become a Transponder Failure. Restoration shall be
effected in the following manner and order, on a first-needed, first-served
basis: first, by utilizing any available Replacement Transponder on the
Satellite; and second, if no such Replacement Transponder is available, by using
a Preemptible Transponder on the Satellite, if available. If no such Protection
Transponder is available on the Satellite, Customer's service shall be restored
on the Restoration Satellite (as designated below), subject to and in accordance
with the terms of this Article.
b. After commencement of the GE-4 Term hereunder, if the GE-4 Satellite
becomes a Satellite Failure, or if no Protection Transponder is available under
the circumstances described above, restoration shall be provided on a
Preemptible Transponder on the Restoration Satellite, if available. If service
is restored on the Restoration Satellite, then Customer's service shall change
to Non- Preemptible Service. If Non-Preemptible Service is so provided,
references to the GE-4 Satellite shall be considered to mean the Restoration
Satellite for all purposes of this Agreement; except with respect to service
level (as described above) and except that (i) the technical specifications for
the Restoration Satellite shall be substituted for those specifications in
Attachment A2 and (ii) the MRC specified in Article 2. Payment shall be reduced
by [ *** ]. In the event such Non-Preemptible Service as described in the
previous sentence is provided by GE Americom within the first six (6) months of
Service, (no later than March 31, 2000), there shall be no such reduction to the
MRC. If no such Preemptible Transponder is available on the Restoration
Satellite, Customer's service shall not be restored and this Agreement shall
terminate at such time.
c. The GE Americom satellite designated GE-5 and currently operated at
the 79 W.L. orbital location has been designated as the Restoration Satellite
for Customer's service. GE Americom may, upon seven (7) days' prior written
notice, change the satellite designated as the Restoration Satellite hereunder.
Preemptible Transponders on the Restoration Satellite shall be used on a first-
needed, first-served basis. GE Americom shall have no obligation to provide a
Restoration Satellite other than GE-5. If access to Protection Transponders on
the Satellite or Preemptible Transponders on the Restoration Satellite is
required for more than one transponder as a result of a single event or
simultaneous events, such access shall be granted in Contract Order (defined as
the opposite order from Reverse Contract Order).
3. It is acknowledged by Customer that transponders on the GE-5 satellite
have a nominal bandwidth of 54 MHz. Notwithstanding the foregoing, in the event
Customer's Service is restored hereunder, Customer shall not be entitled to
receive nominal bandwidth of more than 36 MHz.
4. Customer understands and agrees that the transfer of Service from one
satellite to another, may require a change in transponder assignment including
polarization.
*** Confidential Treatment Requested
<PAGE>
C. Term.
-----
GE-3 Term. The term for Service on the GE-3 satellite provided under this
Agreement (the "GE-3 Service Term") shall commence on November 1, 1999 and shall
end, except as otherwise provided herein, on the earliest of: (1) the End-Of-
Life or Replacement Date of the GE-3 Satellite; (2) the date the GE-3 Satellite
is a Satellite Failure and Service cannot be restored as provided hereunder; (3)
the date the Transponder on which Service is provided hereunder is preempted or
becomes a Transponder Failure, and in either case, cannot be restored, (4) the
date that the assigned transponder on the GE-4 Satellite is declared by GE
Americom to be Commercially Operational and the Service is transferred to the
GE-4 Satellite; (5) in the event the GE-4 Satellite becomes a Launch Failure,
the date that the Ground Spare, if launched, is declared by GE Americom to be
Commercially Operational and the Service is transferred to the Ground Spare, or
(6) October 31, 2006, (the "Projected Termination Date").
In the event that any of the circumstances described in (1), (2), (3), or (6)
above occur prior to the date that the Transponder designated to provide service
to Customer on the GE-4 Satellite becomes Commercially Operational, this
Agreement, shall terminate and GE Americom shall be under no further liability
or obligation to Customer.
GE-4 Term. The term for Service on the GE-4 Satellite provided under this
Agreement (the "GE-4 Service Term"), shall commence, and the GE-3 Service Term
shall end with respect to Service, on the date GE Americom notifies Customer
that the Transponder on the GE-4 Satellite is Commercially Operational (the "GE-
4 Commencement Date").
Service on the GE-4 Satellite and this Agreement shall end, except as otherwise
provided herein, on the earliest of (1) the End-of-Life or Replacement Date of
the GE-4 Satellite; (2) the date the GE-4 Satellite becomes a Satellite Failure
and Service cannot be restored as provided hereunder; (3) the date the
Transponder on which Service is provided hereunder becomes a Transponder Failure
and cannot be restored; or (4) October 31, 2006 (the "Projected Termination
Date").
D. Notices. All notices regarding technical or operational matters requiring
-------
immediate attention will be given by telephone followed by written notification.
All other notices and requests will be in writing delivered to the address(es)
set forth below or to such other address(es) as the party may designate in
writing.
If to be given to Customer: If to be given to GE Americom:
Attn: Robert Dunham, CFO Attn: Fred Cain, Director, Satellite Services
SkyCache, Inc. GE American Communications, Inc.
312 Laurel Avenue Four Research Way
Laurel, MD 20707 Princeton, NJ 08540
Fax #: (301) 598-0837 Fax #: (609) 987-4517
Tel #: (301) 598-0500 Tel #: (609) 987-4139
cc: Garrett Allen cc: Manager, Customer Support-Contracts
Fax #: See above Fax #: 609) 987-4233
Tel #: See above Tel #: (609) 987-4325
<PAGE>
24 Hour Emergency Telephone # for Technical/Operational Issues:
Tel #:
ARTICLE 2. PAYMENT
A. Monthly Recurring Service Charge. Customer will pay to GE Americom for
--------------------------------
Service a monthly recurring service charge ("MRC") in accordance with the
following schedule:
Period MRC
------ ---
[ *** ] [ *** ]
[ *** ] [ *** ]
[ *** ] [ *** ]
[ *** ] [ *** ]
[ *** ] [ *** ]
B. Billing and Payment. Invoices will be issued monthly thirty (30) days in
-------------------
advance of the month in which Service is to be provided and are payable on the
first day of such month by wire transfer as per the remittance instructions on
the respective monthly invoice. On payments not received by the due date, GE
Americom will assess until such time as payment is made in full, a late payment
charge of the lesser of (i) one and one-half percent (1.5%) per month compounded
monthly, or (ii) the maximum rate permitted by applicable law. A failure or
delay by GE Americom to send a bill will not relieve Customer either of its
obligation to pay on a timely basis for Service or of its obligation to pay late
payment charges in the event of late payment. In addition to any other rights GE
Americom may have under this Agreement, GE Americom may suspend provision of
Service on seventy-two (72) hours notice for failure to pay any sums due to GE
Americom.
C. Taxes and Other Charges. All charges hereunder are exclusive of taxes,
-----------------------
duties and other fees or charges levied by governmental authority on the Service
or the facilities used to provide the Service. Customer will pay directly or
reimburse GE Americom for all such taxes, duties and other fees or charges.
Letter of Credit. On or before November 1, 1999, Customer will, in order to
- ----------------
secure performance of its obligations (i) hereunder and (ii) under the separate
Agreement dated on or about the date of this Agreement between Customer and GE
Capital Europe Limited, ("GECEL") (the "GECEL Agreement"), deliver to GE
Americom and GECEL one irrevocable letter of credit for a term of at least [
*** ] months in the amount of [ *** ] in the form attached to the GECEL
Agreement and in identical form as Attachment C to this Agreement ("Letter of
Credit 1") issued by a bank incorporated in the United States of America,
acceptable to GE Americom. Letter of Credit 1 and any renewal or replacement
thereof may be drawn upon by GECEL and/or GE Americom in accordance with its
terms. The proceeds of any drawing shall be applied to the obligations of
Customer (i) hereunder and/or (ii) under the GECEL Agreement, as the case may
be. Failure to provide Letter of Credit 1 or any renewal or
*** Confidential Treatment Requested
<PAGE>
replacement thereof by the date required and/or failure to maintain Letter of
Credit 1 or any renewal or replacement thereof throughout the period set out in
the table below shall be treated as a failure by Customer to make a payment due
to GE Americom under this Agreement. It is the intention of the parties that a
letter of credit shall be maintained in effect for the benefit of GECEL and GE
Americom for the amounts and for the terms specified in the table below.
If Letter of Credit 1 or any renewal or replacement thereof is drawn upon,
Customer shall cause the letter of credit then in effect to be renewed or
replaced such that the principal amount of the letter of credit is restored to
the original amount of that letter of credit. Failure to obtain and deliver to
GE Americom a renewal or replacement of a letter of credit as provided in the
preceding sentence within five (5) business days from the date of each such
drawing shall entitle GE Americom, and/or GECEL to draw upon that letter of
credit then in effect and to hold the proceeds as an advance payment. Such
advance payment may be used by GE Americom and/or GECEL as an offset for any
amounts due to GE Americom and/or GECEL at the Projected Termination Date under
either this Agreement or the GECEL Agreement, or, in the event of termination of
this Agreement or the GECEL Agreement prior to their respective Projected
Termination Dates, for any liabilities of Customer arising out of such
termination(s).
A renewal or replacement of Letter of Credit 1 by a new letter of credit
("Letter of Credit 2") for the sum of [ *** ] for an additional term of at
least [ *** ] months shall be delivered by Customer to GE Americom and GECEL
at least forty-five (45) days prior to the expiration of Letter of Credit 1. A
renewal or replacement of Letter of Credit 2 by a further letter of credit
("Letter of Credit 3") for the sum of [ *** ] for an additional term of at
least [ *** ] months shall be delivered by Customer to GE Americom and GECEL
at least forty-five (45) days prior to the expiration of Letter of Credit 2. A
renewal or replacement of Letter of Credit 3 by a further letter of credit
("Letter of Credit 4") for the sum of [ *** ] for an additional term of at
least [ *** ] months shall be delivered by Customer to GE Americom and
GECEL at least forty-five (45) days prior to the expiration of Letter of Credit
3 (GE Americom and GECEL reserve the right to require in their sole discretion
that the term of Letter of Credit 4 be extended until November 30, 2006).
Failure to obtain and deliver to GE Americom and GECEL a renewal or replacement
of any letter of credit at least thirty (30) days prior to the expiration date
thereof shall entitle GECEL and/or GE Americom to draw upon the letter of credit
then in effect and to hold the proceeds of such drawing as an advance payment,
to be held and applied by GECEL and/or GE Americom as specified in the preceding
paragraph.
- --------------------------------------------------------------------------------
Letter of Term of Letter of Credit Amount of Letter of Credit (US Dollars)
Credit
number
- --------------------------------------------------------------------------------
1 [ *** ] [ *** ]
- --------------------------------------------------------------------------------
2 [ *** ] [ *** ]
- --------------------------------------------------------------------------------
3 [ *** ] [ *** ]
- --------------------------------------------------------------------------------
4 [ *** ] [ *** ]
- --------------------------------------------------------------------------------
*** Confidential Treatment Requested
<PAGE>
ARTICLE 3. CREDITS FOR INTERRUPTIONS
Credits for Interruptions in Service of five (5) minutes or more shall be
granted to Customer as follows:
Credit = (Number of minutes in Interruption/43,200) multiplied by the MRC
The length of an Interruption will be measured from the time GE Americom is
notified by Customer of the Interruption until Service is restored. No credit
will be due, however, if such Interruption is a result of, or attributable in
whole or part to (i) the fault of Customer, any Customer Designee (as defined
below) or any agent or subcontractor of either, or of any third party (ii) the
failure or unavailability of satellites, transponders, facilities, services or
equipment furnished to Customer other than by GE Americom, (iii) sun outages or
rain fade, or (iv) unless otherwise provided herein, suspensions of Service made
in accordance with this Agreement.
Except as otherwise specifically set forth in this Agreement, the
aforementioned credit will be Customer's sole and exclusive remedy for
unavailability of Service and/or failure of Service to meet the Transponder
Performance Specifications.
<PAGE>
ARTICLE 4. SERVICE RESPONSIBILITIES
A. Laws and Regulations Governing Service. Construction, launch, location and
--------------------------------------
operation of any Satellite utilized hereunder, any Ground Spare, GE Americom's
satellite system and GE Americom's ability to perform are subject to all
applicable laws and regulations, including without limitation, the
Communications Act of 1934, as amended, and the Rules and Regulations of the
FCC.
B. Use Conditions. Customer will use, and will cause others authorized or
--------------
permitted by Customer to access Service ("Customer's Designees") to use, Service
in accordance with (i) all applicable laws and (ii) the conditions of use (as
such may, upon notice, be amended for technical or operational reasons)
contained in the Commercial Operations Systems User's Guide set forth in
Attachment B ("User's Guide"). Customer will not use, and will cause Customer's
Designees not to use, Service for any unlawful purpose, including violation of
laws governing the content of material transmitted using Service. If Customer's
or Customer's Designees' non-compliance with the preceding two (2) sentences
causes, or other circumstances arise which cause, interference to or threaten
the availability or operation of the services or facilities provided by GE
Americom, or if Customer's or Customer's Designees' use of Service may
reasonably result in the institution of criminal proceedings, or administrative
proceedings that may result in sanctions or other non-monetary remedies, against
GE Americom, General Electric Company, or any affiliates of either entity, GE
Americom may take actions (including suspension and/or restriction of Service)
it reasonably believes necessary to ensure Customer's compliance with the User's
Guide or GE Americom's compliance with law.
C. Third Party Use. Customer shall provide GE Americom with at least one (1)
---------------
business day prior notice of any third party use of Service and of the identity
of any such third party. Should Customer resell any Service provided hereunder
or otherwise permit use of such Service by any third party or parties, Customer
shall be a guarantor of compliance by each such third party with all the terms
of this Agreement and any breach by any such third party shall be deemed to have
been committed by Customer. GE Americom reserves the right to charge Customer a
fee for any technical consultation, scheduling or other support services
provided to end-users using the Service provided Customer under this Agreement.
D. Long-Term Resale. If Customer proposes to resell use of the entire capacity
----------------
of Service provided hereunder to a third party for a term of more than three (3)
months, Customer shall first provide GE Americom with at least forty-five (45)
days' prior written notice of such proposed resale. Within thirty (30) days
after receipt of such notice, GE Americom, may, by written notice to Customer,
elect to terminate this Agreement, whereupon Customer shall have a period of
thirty (30) days from receipt of such notice, within which period Customer may
elect to (i) accept termination and notify GE Americom of the date on which such
termination shall be effective (which date shall be not less than sixty (60)
days and not more than one hundred twenty (120) days after the date of such
notice from Customer to GE Americom) or (ii) cancel the proposed resale and
continue this Agreement in effect. If Customer does not elect (I) or (ii) above
within the applicable time limit, Customer shall be deemed to have elected
clause (ii).
ARTICLE 5. OPERATIONAL MATTERS
<PAGE>
A. Service Access. Customer is responsible for providing, operating and
--------------
maintaining the equipment necessary to access the Satellite and Service.
Customer at its expense shall provide GE Americom with any descrambling or
decoding devices that may be required for signal monitoring. At a mutually
agreed time, and prior to Customer transmitting from its earth station(s),
Customer will demonstrate to GE Americom's designated Technical Operations
Center that its earth station(s) comply with the satellite access specifications
contained in the User's Guide.
B. Action to Protect Satellite. GE Americom shall have sole and exclusive
---------------------------
control of operation of the Satellite. If circumstances occur which in GE
Americom's reasonable judgment pose a threat to the stable operation of the
Satellite, GE Americom shall have the right to take action it reasonably
believes necessary to protect the Satellite, including discontinuance or
suspension of operation of the Satellite, the Transponder(s) or any other
transponder, without any liability to Customer, except that Customer may
,receive a credit computed as provided in Article 3 hereunder. GE Americom shall
give Customer as much notice as practical under the circumstances of any such
discontinuance or suspension. If it becomes necessary to discontinue or suspend
service on one or more transponders on the Satellite, and operational
circumstances allow GE Americom to select the transponder or transponders to be
discontinued or suspended, GE Americom will make such selection in Reverse
Contract Order, without distinction for purposes of this Section, between the
Satellite's C-band and Ku-band payloads.
ARTICLE 6. INDEMNIFICATION
Customer will indemnify and hold harmless GE Americom, General Electric
Company, and any affiliates of either entity, from and against all loss,
liability, cost, expenses and damages of any nature (including, but not limited
to, attorney fees and to the extent permitted by law, any fines and penalties)
based on third party claims (including those of Customer's Designees) arising
out of, resulting from or in connection with any failure to provide Service or
any use of Service provided hereunder.
ARTICLE 7. WARRANTY DISCLAIMER; LIMITATION OF LIABILITY
A. Warranty Disclaimer. No warranties, express, -implied, or statutory,
-------------------
including any warranty of merchantability or fitness for a particular purpose,
apply to Service provided hereunder or the equipment and facilities used to
provide Service. The conveying by GE Americom of proprietary information or
other information to Customer shall in no way alter this disclaimer.
B. Limitation of Liability. As a material condition of entering into this
-----------------------
Agreement at the price specified herein, and in regard to any and all causes
arising out of or relating to this Agreement, including but not limited to
claims of negligence, breach of contract or warranty, failure of a remedy to
accomplish its essential purpose or otherwise, Customer agrees that, GE
Americom's, General Electric Company's and their affiliates' entire liability
shall not exceed in the aggregate, the greater of (i) the MRC paid by Customer
to GE Americom for Service in the month preceding the event that is the cause of
liability plus any credits or refunds that are due under this Agreement, or (ii)
[ *** ].
*** Confidential Treatment Requested
<PAGE>
Customer agrees that in no event shall GE Americom General Electric
Company, or affiliated companies of either entity or the manufacturer or launch
service provider of the Satellite be liable for (i) any indirect, incidental,
consequential, punitive, special or other similar damages (whether in contract,
tort [including negligence], strict liability or under any other theory of
liability), including but not limited to, loss of actual or anticipated revenues
or profits, loss of business, customers or good will, or damages and expenses
arising out of third party claims or (ii) any damages of whatever kind, in the
event the GE-3 Satellite is positioned at an orbital location other than as
specified in Article 1.A, or the GE-4 Satellite or the Ground Spare, or any
other satellite described herein, is not constructed, is delayed in
construction, is delayed in launch, is delayed in operation or is positioned at
an orbital location other than as specified in Article 1. The foregoing
exclusions shall apply even if such party(s) has been advised of the possibility
of such damages.
<PAGE>
C. Launch Services. Customer shall have no right of action against the launch
---------------
services contractor, its contractors or subcontractors, parties involved in
launch activities, other third party customers of the launch services contractor
using the same launch, or their respective associates (collectively, the "Launch
Third Parties"), for damages for bodily harm (including death) and damage to
property suffered by Customer or Customer's associates resulting from the
actions of any of the Launch Third Parties in connection with the launch of any
satellite. Customer further irrevocably agrees to, and to cause Customer's
associates to agree, to a no-fault, no subrogation waiver of liability, and
waives the right to make any claims or to instigate any proceedings whether
judicial, arbitral, administrative or otherwise, in connection with such claims,
against any of the Launch Third Parties, in each case for damages for bodily
harm (including death) and damage to property suffered by Customer or Customer's
associates resulting from the actions of any of the Launch Third Parties in
connection with the launch of any satellite. In the event that one or more
associates of Customer (in their capacities as such) shall proceed against any
of the Launch Third Parties as a result of bodily harm (including death) or
property damage suffered by Customer or Customer's Associates and caused by any
of the Launch Third Parties resulting from the actions of any of the Launch
Third Parties in connection with the launch, Customer shall indemnify, hold
harmless, dispose of any such claim and defend, when not contrary to the
governing rules of procedures where the action takes place, each of the Launch
Third Parties from any loss, damage, liability or expense, including the fees,
expenses and disbursements of counsel, on account of such damage, injury or
death, and shall pay all costs and expenses and satisfy all judgments which may
be incurred by or rendered against any of the Launch Third Parties in connection
with such proceeding. As used herein, the term "associates" means any
individuals, corporations, associations or other legal entities which act,
directly or indirectly, on behalf of or at the direction of another entity to
fulfill the obligations of such other entity, including such other entity's
employees, suppliers and subcontractors (when so acting).
ARTICLE 8. CONFIDENTIALITY AND NONDISCLOSURE
A. Certain Information Regarding Service. Customer hereby agrees not to
-------------------------------------
disclose to third parties (without the prior written consent of GE Americom) the
material terms and conditions of this Agreement (including but not limited to
the prices, payment terms, schedules, protection arrangements, and restoration
provisions thereof) and all information provided to Customer related to the
design and performance characteristics of the Satellite, and any subsystems or
components thereof, including the Transponder.
B. Proprietary Information. To the extent that either party discloses to the
-----------------------
other any other information which it considers proprietary, said party shall
identify such information as proprietary when disclosing it to the other party
by marking it clearly and conspicuously as proprietary information. Any
proprietary disclosure to either party, if made orally, shall be promptly
confirmed in writing and identified as proprietary information, if the
disclosing party wishes to keep such information proprietary under this
Agreement. Any such information disclosed under this Agreement shall be used by
the recipient thereof only in its performance under this Agreement.
Neither party shall be liable for the inadvertent or accidental disclosure
of such information marked as proprietary, if such disclosure occurs despite the
exercising of the same degree of care as the receiving party normally takes to
preserve and safeguard its own proprietary information (but not less than
reasonable care) or if such information (i) is or becomes lawfully available to
the public from a source other than the receiving party before or
<PAGE>
during the period of this Agreement; (ii) is released in writing by the
disclosing party without restrictions; (iii) is lawfully obtained by the
receiving party from a third party or parties without obligation of
confidentiality; (iv) is lawfully known by the receiving party prior to such
disclosure; or (v) is at any time lawfully developed by the receiving party
completely independently of any such disclosure or disclosures from the
disclosing party.
In addition, neither party shall be liable for the disclosure of any
proprietary information which it receives under this Agreement pursuant to
judicial action or decree, or pursuant to any requirement of any Government or
any agency or department thereof, having jurisdiction over such party, provided,
--------
that in the reasonable opinion of counsel for such party such disclosure is
- ----
required, and provided further that such party to the extent reasonably
practical shall have given the other party notice prior to such disclosure.
<PAGE>
ARTICLE 9. TERMINATION
A. Termination. In addition to any rights of termination provided in other
-----------
Articles of this Agreement, either party may terminate this Agreement by giving
the other party written notice thereof in the event: (i) the other party
materially breaches this Agreement and fails to cure such breach within thirty
(30) days after receipt of written notice thereof (except that, if Customer
fails to pay amounts due hereunder, such cure period shall be reduced to five
(5) business days); or (ii) the other party is unable to perform its obligations
as a result of its becoming insolvent or the subject of insolvency proceedings,
including without limitation, if the other party is judicially declared
insolvent or bankrupt, or if any assignment is made of the other party's
property for the benefit of its creditors or if a receiver, conservator, trustee
in bankruptcy or other similar officer is appointed by a court of competent
jurisdiction to take charge of all or any substantial part of the other party's
property, or if a petition is filed by or against the other party under any
provision of the Bankruptcy Act now or hereafter enacted, and such proceeding is
not dismissed within sixty (60) days after filing; or (iii) an Interruption
continues for thirty (30) consecutive days and the sole cause of the
Interruption is a force majeure event.
B. Refunds. In the event of the end of termination by Customer pursuant to this
-------
Agreement, or in the event of termination by GE Americom pursuant to Article
9.A.(iii) above, Article 4.D. or Article 10.I, GE Americom shall refund any
portion of amounts paid by Customer to GE Americom which relate to Service not
provided by GE Americom plus any credits that may be due to Customer.
C. Termination Liability. In the event of termination by GE Americom for
---------------------
reasons other than those reasons for termination by GE Americom set forth in
Article 9.B., GE Americom shall be entitled to retain all amounts paid by
Customer to GE Americom hereunder, and any credits that may be due to Customer
shall be forfeited. In addition, GE Americom in its sole discretion may either
elect to (i) pursue any rights and remedies it may have at law, in equity or
otherwise or (ii) recover from Customer an amount equal to the net present value
(as of the date of such termination) of the remaining unpaid Service charges,
computed as if this Agreement remained in effect until the Projected Termination
Date, utilizing a discount rate of 8% per annum, plus late charges on such
amount from the date of termination until payment in full ("Termination Value").
If GE Americom elects (ii) above and recovers such amount, GE Americom agrees to
use reasonable efforts to obtain a qualified replacement customer(s), but shall
not be required to obtain a customer(s) for service on the surrendered
Transponder(s) before obtaining a customer(s) for any other unused transponder,
to obtain any particular customer(s) or to set any particular minimum price in
connection with such service. In the case GE Americom does obtain a qualified
replacement customer(s), GE Americom thereafter shall pay to Customer ninety-
five percent (95%) of the gross proceeds received by GE Americom either (x) from
the provision of service to such replacement customer(s) using the
Transponder(s) prior to the Projected Termination Date, or (y) from the sale of
the Transponder(s) to such replacement customer(s); provided, that in no event
shall such payment exceed the Termination Value paid by Customer.
<PAGE>
D. Inability to Regain Transponder. If upon expiration or termination of this
-------------------------------
Agreement for any reason by either party, GE Americom is unable to regain the
use of all, or any part of, the Transponder(s) free and clear of any claims
(including, but not limited to, claims of a debtor in bankruptcy) or liens
arising as a result of the use of the Transponder(s) by Customer or Customer's
Designees, then in addition to all other remedies available to GE Americom
pursuant to this Agreement, at law, in equity, or otherwise, Customer shall be
obligated, without regard to any such termination or expiration, to continue to
pay GE Americom the payments provided for in Article 2.
ARTICLE 10. GENERAL PROVISIONS
A. Force Majeure. Neither party will be liable to the other by reason of any
-------------
failure in performance of this Agreement if the failure arises out of acts of
God, acts of the other party, acts of government authority, strikes or other
labor disturbances, or any other cause beyond the reasonable control of that
party.
B. No Implied License. The provision of services or the conveying of any
------------------
information under this Agreement shall not convey any license by implication,
estoppel or otherwise, under any patents or other intellectual property rights
of Customer or GE Americom, General Electric Company, and their affiliates,
contractors and vendors.
C. No Third Party Rights; No Fiduciary Relationship. Nothing contained in this
------------------------------------------------
Agreement shall be deemed or construed by the parties or by any third party to
create any rights, obligations or interests in third parties; or to create the
relationship of principal and agent, partnership or joint venture or any other
fiduciary relationship or association between the parties.
D. No Waiver; Remedies Cumulative. No waiver, alteration, or modification of
------------------------------
any of the terms of this Agreement will be binding unless in writing and signed
by both parties. All remedies and rights hereunder and those available in law or
in equity shall be cumulative, and the exercise by a party of any such right or
remedy shall not preclude the exercise of any other right or remedy available
under this Agreement in law or in equity.
E. Costs and Attorneys' Fees. In addition to all other amounts payable under
-------------------------
this Agreement, GE Americom shall be entitled to recover from Customer (i) costs
of collection of any such amounts, including reasonable attorneys' fees and
disbursements and (ii) costs, including reasonable attorneys' fees and
disbursements, incurred in seeking to prevent use of Service contrary to the
terms of this Agreement.
F. Governing Law and Jurisdiction. This Agreement shall be construed and
------------------------------
enforced in accordance with the laws of the State of New Jersey, excluding its
conflicts of law rules. The parties hereby consent to and submit to the
exclusive jurisdiction of the federal and state courts located in the State of
New Jersey, and any action or suit under this Agreement shall be brought by the
parties in any federal or state court established or sitting in the State of New
Jersey with appropriate jurisdiction over the subject matter. The parties shall
not raise in connection therewith, and hereby waive, any defenses based upon
venue, inconvenience of the forum, lack of personal jurisdiction, sufficiency of
service of process (as long as notice of such action or suit is furnished in
accordance with Article 1.D. hereunder) or the like in any such action or suit.
<PAGE>
G. Statute of Limitations; Jury Waiver. Any action of any kind by either party
-----------------------------------
arising out of this Agreement must be commenced within two (2) years from the
date the right, claim, demand or cause of action shall first arise. Each of the
parties hereby irrevocably waives (and agrees not to assert) the right to trial
by jury in any such action.
H. Headings; Severability; Customer Purchase Orders. All titles and headings in
------------------------------------------------
this Agreement are for reference purposes only; they will not affect the meaning
or construction of the terms of this Agreement. If any part or parts of this
Agreement are held to be invalid, the remaining parts of the Agreement will
continue to be valid and enforceable. Customer agrees that any purchase order or
other similar document that Customer may issue in connection with this Agreement
will be for Customer's internal purposes only and, therefore, even if
acknowledged by GE Americom, will not in any way add to, subtract from, or in
any way modify the terms and conditions of this Agreement.
I. Assignment. Customer shall not assign or transfer its rights or obligations
----------
under this Agreement without GE Americom's prior written consent, which consent
shall not be unreasonably withheld. Notwithstanding the foregoing, GE Americom
may elect, in lieu of consenting to an assignment, to terminate this Agreement.
If GE Americom elects to terminate this. Agreement in accordance with the
preceding sentence, it shall so notify Customer within thirty (30) days after
receipt of the request for consent to assignment. Immediately thereafter,
Customer shall have a period of thirty (30) days within which to (i) accept
termination and notify GE Americom of the date on which such termination shall
be effective (which date shall be not less than sixty (60) days nor more than
one hundred twenty (120) days after the date of such notice from Customer to GE
Americom) or (ii) withdraw the request for consent to assignment and continue
this Agreement in effect. If Customer does not exercise one of the options
stated in the immediately preceding sentence within the applicable time limit,
Customer shall be deemed to have exercised the option stated in clause (ii) of
such sentence.
ARTICLE 11. DEFINITIONS
As used in this Agreement:
<PAGE>
A. "Business Preemptible Service" or "Business Preemptible Transponder" means
a satellite service or transponder that is not entitled to restoration in the
event it becomes a Transponder Failure and may be preempted at any time to
restore (1) a satellite failure, (2) a Protected Service or Protected
Transponder that becomes a transponder failure, (3) any other service or
transponder (including a Preemptible Service or Preemptible Transponder)
experiencing technical difficulties or interference, or (4) other service
offerings of GE Americom or any of its affiliates, including but not limited to,
mass move protection, construction and launch delay protection and launch
failure protection. In addition, such Business Preemptible Service or Business
Preemptible Transponder may be preempted for any other reason (including but not
limited to, GE Americom's desire to provide service on such Transponder to
another customer) upon five (5) business days notice.
B. "Commercially Operational" means a satellite or a transponder that is
capable of carrying communications traffic within the parameters described in
the Transponder Performance Specifications, and, in the case of a transponder,
all rights of third parties to use a corresponding transponder on a predecessor
satellite at the same orbital location have expired. For purposes of this
definition, a "corresponding transponder" with respect to a specified
transponder on the GE-4 Satellite means a transponder on a predecessor satellite
the operation of which would interfere with operation of the specified
transponder on the GE-4 Satellite.
C. "End-of-Life" means the date on which, in GE Americom's reasonable judgment,
a satellite should be taken out of service because of insufficient fuel.
D. "Failed Satellite" or "Satellite Failure" means a satellite:
1. on which one or more of the basic subsystems fail, rendering the use
of the satellite for its intended purposes impractical, as determined
by GE Americom in its reasonable business judgment, or on which more
than one-half of the transponders on the C-band payload or the Ku-band
payload are transponder failures; and
2. that GE Americom has declared a failure. For purposes of this
definition, a hybrid satellite with both C-band and Ku-band payloads
shall be treated, at GE Americom's option, either (i) as a single
satellite or (ii) as though the C-band and Ku-band payloads were
located on separate satellites.
E. "Failed Transponder" or "Transponder Failure" means, with respect to any
Transponder used to provide service to Customer under this Agreement, any of the
following events:
1. such Transponder fails to meet the Transponder Performance
Specifications in any material respect for any period of five (5)
consecutive days;
2. twenty (20) or more creditable Interruptions of fifteen (15) minutes
or more in duration shall occur within any ninety (90) consecutive
days; or
3. such Transponder shall fail to meet the Transponder Performance
Specifications in any material respect for any period of time under
circumstances that make it clearly ascertainable or predictable, based
on satellite industry engineering standards, that any failure set
forth in Paragraphs 1) or 2) above will occur.
<PAGE>
For purpose of this definition, measurement of periods of failure hereunder
shall commence when Customer has vacated its signal to permit verification of
the existence of the failure by GE Americom.
<PAGE>
F. "Fully Protected Service" or "Fully Protected Transponder" means a satellite
service or a transponder that may not be preempted to restore another service or
transponder, and if restoration thereof is needed as a result of a satellite
failure, or as a result of a transponder failure under circumstances in which no
Protection Transponder is available on the satellite on which such satellite
service or transponder is located, is entitled to restoration, subject to
availability of facilities and to the conditions of the applicable contract, on
another satellite.
G. "Ground Spare" means the second satellite of substantially similar design as
the Satellite to be constructed for the purpose of providing protection against
a Launch Failure of the Satellite.
H. "Interruption" means any period during which a Transponder fails to meet the
Transponder Performance Specifications and such circumstances preclude the use
of the Transponder for its intended purpose.
I. "Launch Failure" means a satellite failure or transponder failure which
occurs after intentional ignition of the launch vehicle and before the satellite
becomes Commercially Operational.
J. "Moveable Protected Service" or "Moveable Protected Transponder" means a
satellite service or transponder that is entitled to the same protection as a
Fully Protected Service or Fully Protected Transponder, as the case may be,
except that such service or transponder may be preempted to restore a satellite
failure of the GE-2 satellite.
K. "Non-Preemptible Service" or "Non-Preemptible Transponder" means a satellite
service or a transponder on which such service is provided that may not be
preempted to restore another service or transponder and that is not itself
entitled to be restored by preempting a Preemptible Service.
1) "Preemptible Service" or "Preemptible Transponder" means a satellite service
or transponder that is not entitled to restoration in the event it becomes a
Transponder Failure and may be preempted at any time to restore (1) a satellite
failure, (2) a Protected Service or Protected Transponder that becomes a
transponder failure, or (3) other service offerings of GE Americom or any of its
affiliates, including but not limited to, mass move protection, construction and
launch delay protection and launch failure protection.
J. "Protected Service" or "Protected Transponder" means a service or
transponder that is entitled to preempt a Preemptible Service or Preemptible
Transponder.
K. "Protection Transponder" means a Replacement Transponder or Preemptible
Transponder used to restore a Protected Service.
L. "Replacement Date" means the date on which a successor satellite to the
Satellite or to the Ku-band payload of the Satellite is made capable of carrying
communications traffic at the orbital location to which the Satellite is
assigned. Unless GE Americom commits to continue to provide service pursuant to
this Agreement on the successor satellite, such Replacement Date shall not occur
prior to twelve (12) months before GE Americom's good faith estimate of the End-
of-Life of the Satellite.
<PAGE>
M. "Replacement Transponder" means a spare transponder amplifier and its
associated components, which is accessible for purposes of providing restoration
and which is capable of carrying communications traffic within the parameters as
described in the transponder performance specifications for the transponder to
be restored.
N. "Reverse Contract Order" means, as to each service or transponder on the
Satellite, in order from the latest date on which a binding agreement for the
taking of such service has been executed by both a customer and GE Americom, to
the earliest such date. If Reverse Contract Order is to be determined among more
than one class of service, first in order from the latest such date to the
earliest such date among Business Preemptible Services, second in such order
among Preemptible Services, third in such order among Non-Preemptible Services,
fourth in such order among Transponder Protected Services and last in such order
among Fully Protected Services. Notwithstanding the foregoing, any service being
provided to the United States government or any department or agency thereof,
whether through a prime contract or a subcontract, shall be deemed to have an
earlier date of binding agreement than Customer hereunder.
O. "Satellite" means, as applicable, the communications spacecraft designated
GE-3, GE-4 (or the Ground Spare or Restoration Satellite), or GE-5, as the case
may be. When used in the lower case, "satellite" means a domestic communications
satellite operating in Ku-band.
P. "Transponder" means a Ku-band radio frequency transmission channel on the
Satellite, having a nominal bandwidth of 36 MHz, used to provide service to
Customer pursuant to the terms of this Agreement. Customer acknowledges and
agrees that due to circumstances including but not limited to the
characteristics of Customer's traffic, Customer's ground segment configuration,
and the characteristics of traffic on cross polarized transponders on the
Satellite and of carriers on satellites in proximity to the Satellite, the
entire 36 MHz of the Transponder may not be usable by Customer for the operation
of all types of carriers. When used in the lower case, "transponder" means a Ku-
band radio frequency transmission channel on a communications satellite.
This Agreement contains the complete and exclusive understanding of the
parties with respect to the subject matter hereof and supersedes all prior
negotiations and agreements between the parties with respect thereto. To the
extent that any Attachment may be inconsistent with the text of the Agreement,
the text of the Agreement shall control.
Skycache, Inc. GE American Communications, Inc.,
as agent for GE Capital Europe Limited
By:/s/ Robert M. Dunham By:/s/ Andreas Georghiou
---------------------- --------------------------------------
(Signature) (Signature)
Name:Robert M. Dunham Name:Andreas Georghiou
-------------------- ------------------------------------
(Typed or Printed Name) (Typed or Printed Name)
Title:CFO Title:SVP, Global Satellite Svcs
------------------- -----------------------------------
Date:11/1/99 Date:11/2/99
-------------------- ------------------------------------
<PAGE>
ATTACHMENT A1
TRANSPONDER PERFORMANCE SPECIFICATIONS
--------------------------------------
The following technical specifications* will be met by Ku-band Transponders on
GE-3, as measured at GE Americom's control stations in Vernon Valley, New Jersey
and South Mountain, California.
DOWNLINK UPLINK**
LOCATION EIRP (dBW) FLUX TO SATURATE (dBW/m2)
-------- ---------- -------------------------
Vernon Valley, NJ 46.0 -85.0
South Mountain, CA 46.0 -85.0
**(with Flux Control Attenuator set to 6 dB)
In addition, cross-polarization isolation (indicating the maximum level that a
signal in the corresponding cross-polarized transponder will appear as an
interfering carrier in the desired transponder) will be a minimum of 30 dB, as
measured at either South Mountain or Vernon Valley for the same flux control
attenuator setting in both transponders. This includes the contributions of the
spacecraft and the antennas at either location.
*Measurement accuracy is +2.0 dB. For example, a value measured at Vernon Valley
greater than 44.0 dBW, shall constitute compliance with the Vernon Valley EIRP
specification. A flux to saturate value more sensitive than -83 dBW/m2
measured at Vernon Valley shall constitute compliance with the Vernon Valley
FTS specification.
<PAGE>
ATTACHMENT A2
TRANSPONDER PERFORMANCE SPECIFICATIONS
--------------------------------------
The following technical specifications* will be met by Ku-band Transponders on
GE-4, as measured at GE Americom's control stations in Vernon Valley, New Jersey
and South Mountain, California.
DOWNLINK UPLINK**
LOCATION EIRP (dBW) FLUX TO SATURATE (dBW/m2)
-------- ---------- -------------------------
Vernon Valley, NJ 46.0 -85.0
South Mountain, CA 45.0 -85.0
**(with Flux Control Attenuator set to 6 dB)
In addition, cross-polarization isolation (indicating the maximum level that a
signal in the corresponding cross-polarized transponder will appear as an
interfering carrier in the desired transponder) will be a minimum of 30 dB, as
measured at either South Mountain or Vernon Valley for the same flux control
attenuator setting in both transponders. This includes the contributions of the
spacecraft and the antennas at either location.
*Measurement accuracy is +2.0 dB. For example, a value measured at Vernon Valley
greater than 44.0 dBW, shall constitute compliance with the Vernon Valley EIRP
specification. A flux to saturate value more sensitive than -83 dBW/m2
measured at Vernon Valley shall constitute compliance with the Vernon Valley
FTS specification.
4
<PAGE>
ATTACHMENT B
GE AMERICAN COMMUNICATIONS
COMMERCIAL OPERATIONS
SYSTEMS USERS GUIDE
JANUARY Y2K
- --------------------------------------------------------------------------------
This guide supersedes
COMMERCIAL OPERATIONS SYSTEM USERS GUIDE
NOVEMBER 1998
- --------------------------------------------------------------------------------
5
<PAGE>
TABLE OF CONTENTS
Page
----
1. Scope 1
2. Applicable Documents 1
3. Business Interface 1
4. Technical Operations Interface 1
5. Technical Operation Parameters 2
6. Earth Station Requirements 2
7. Box Centers and Antenna Alignments 4
8. Spacecraft Performance 4
9. Spacecraft Access 4
10. Single Channel Per Carrier (SCPC) Traffic 6
11. Spacecraft Reconfiguration 7
12. Good Nights 7
13. Trouble Reporting 7
Appendix A - GE Americom Transmission Standards 9
Figure 1 - C-3, C-4, C-5, GE-2 & GE-4 C-band Frequency Plan 10
Figure 2 - C-1, GE-1 and GE-3 C-band Frequency Plan 11
Figure 3 - GE-1 & GE-3 Ku-band Frequency Plan 12
Figure 4 - GE-4 Ku-band Frequency Plan 13
Figure 5 - GE-2 Ku-band Frequency Plan 14
Figure 6 - K-2 Frequency Plan 15
Figure 7 - GE-5 Frequency Plan 16
Figure 8 - Full Transponder Video Transmission Parameters 17
Figure 9 - 54 MHz Ku-band Half Transponder Video Transmission
Parameters 18
i
<PAGE>
Page
----
Appendix B - GSTAR Transmission Standards 19
Figure 1 - GSTAR 4 Frequency Plan 20
Figure 2 - GSTAR-4 Video Transmission Parameters 21
Figure 3 - 54 MHz Ku-band Half Transponder Video Transmission
Parameters 22
Appendix C - GE Americom Spacecraft Beacon Frequencies 23
GE Americom Summary 24
ii
<PAGE>
1. Scope
-----
This document outlines the technical requirements and procedures for use of
the spacecraft operated by GE Americom. The GE Spacecraft offer excellent
performance; however, the users must adhere to Americom technical standards
in order to insure optimum performance for themselves and other users.
2. Applicable Documents
--------------------
The document listed below forms a part of this document to the extent
specified herein:
FCC Rules and Regulations, Part 25, Satellite Communication, paragraph
#209, "Antenna Performance Standards."
3. Business Interface
------------------
Arrangements for full-time service on or purchase of full or partial
transponders on Americom's satellites should be made through GE Americom's
Headquarters in Princeton, New Jersey:
. Broadcast, Cable and Business Services (609) 987-4246
. Communications Services (609) 987-4003
Arrangements for Video transmission on a part-time or occasional use can be
made through the Customer Service Center also located at GE Americom's
Headquarters:
. Nationwide (800) 752-7755 or (800) 732-3273 (SNG Users)
. Facsimile (609) 987-4445
. Telex 239811
. Princeton, New Jersey (609) 987-4144
4. Technical Operations Interface
------------------------------
The primary technical operations interface for spacecraft users is the GE
Americom Technical Operations Center (TOC) located in Vernon Valley, New
Jersey:
. Nationwide (800) 255-6122
. Vernon Valley, New Jersey (973) 827-9400
. Facsimile (973) 827-8584
Checking of cross-polarization isolation and transmission parameters will
be conducted by either the Vernon Valley TOC or GE Americom's South
Mountain Earth Station after access is cleared.
1
<PAGE>
The acquisition of the GSTAR and Spacenet fleet has provided GE Americom
with additional spacecraft resources and additional TOC facilities. The
Vernon Valley TOC will remain as the primary technical operations center
for most spacecraft users. For those users on GE-3, GE-4, GSTAR 4 and GE-5
or K-2 spacecraft access should be coordinated through GE Americom's TOC
located in Woodbine, Maryland:
. Nationwide (800) 772-2363
. Woodbine, Maryland (410) 549-4381
. Facsimile (410) 549-4388
5. Technical Operation Parameters
------------------------------
Appendix A contains the standard parameters for video and audio
transmission using the Satcom spacecraft. Appendix B contains the standard
parameters for using the GSTAR spacecraft. If a customer requires
transmission parameters other than those specified in Appendix A or
Appendix B, approval must be obtained from GE Americom. The proposed
transmission parameters will be reviewed to assure that they will not cause
unacceptable degradation or interference to other traffic on the spacecraft
or on other spacecraft.
6. Earth Station Requirements
--------------------------
Earth stations accessing the GE Americom spacecraft shall meet the
requirements contained in the following subparagraphs. GE Americom reserves
the right to physically inspect the earth station site to insure compliance
with these requirements.
a) The earth station shall be under the control of trained technicians at
all times. The telephone number of the control point for the earth
station shall be on file with GE Americom's TOC. This control point
shall have the ability and the authority without reference to other
management to cease transmission at any time if directed by GE
Americom.
b) The earth station antenna shall conform to the FCC sidelobe pattern of:
1(Degree) Less than (theta) Less than or equal to 7(Degree),
29 - 25 log (theta), dBi
7(Degree) Less than (theta) Less than or equal to 9.2(Degree),
+ 8 dBi
9.2(Degree) Less than (theta) Less than or equal to 48(Degree),
32 - 25 log (theta) dBi
48(Degree) Less than (theta) Less than or equal to 180(Degree),
-10 dBi
c) Antennas not meeting this pattern shall be identified to the TOC and
conditionally accepted on a case-by-case basis.
The system polarization isolation as measured by GE Americom shall be
29 dB (transmit antenna, spacecraft, receive antenna) or better. The
uplink facilities shall be capable of maintaining this minimum
isolation at all times. Periodic checks will be made by GE Americom to
insure compliance.
d) The maximum uplink power from a customer's earth station shall be
monitored and approved by GE Americom. Only sufficient power to
saturate the TWTA transponders or
2
<PAGE>
establish the optimum operating point for SSPA transponders shall be
used. This may be 77 dBW or less, but in no event greater than 84 dBW
in the contiguous 48 states for nine meter or larger antennas, and no
more than 26.5 dBW into the feed for antennas smaller than 9 meters for
C-band and 27 dBW into the feed for Ku-band antennas smaller than 5
meters.
e) For Ku-band transponders, saturation shall only be determined with the
transponder in LINEAR mode. For Ku-band half transponder operation, the
optimum backed-off operating point must be accurately determined to
insure equal power sharing between customers and an acceptable level of
intermodulation products. Section 9 contains the method for determining
the operating point for half transponder operation. Once determined,
half transponder customers shall not adjust power without coordination
with the TOC.
f) The TOC will assist the customer in assuring correct power settings.
Once determined, the customer shall keep a record in the station log of
the power settings for each transponder and type of service. If the
station configuration is changed in any way that affects uplink EIRP,
the TOC shall be contacted and arrangements made for GE Americom to
work with the customer and reestablish operating parameters.
g) An Energy Dispersal Frequency (EDF) shall be applied to TV carriers so
that a 30 Hz triangular baseband waveform causes a 1 MHz peak RF
deviation when no video baseband signal is present.
h) Modulators with offset center frequencies which result in an
asymmetrical distribution of power around the assigned center frequency
shall not be used in the GE Americom system; i.e. SA7550 Exciter in
SYNC REF AFC MODE.
i) GE Americom recommends that all customers transmitting television
programming include Vertical Interval Test Signals (VITS) as part of
their transmissions. It is recommended that an FCC or NTC Combination
and an FCC or NTC Composite be transmitted. This allows GE Americom to
assist customers in the event of transmission problems. The TOC has
video and audio measurement capability on all transponders in the GE
Americom system.
j) The TOC requires the capability to monitor unscrambled video of all GE
Americom customers. For occasional or short-term customers, the TOC
will provide the address to be authorized by the customer for either
VideoCipher or B-MAC descramblers. For Occasional Video "Until Further
Notice" (UFN) customers transmitting more than 20 hours a week in the
GE Americom system, it is recommended that the customer shall supply a
descrambler to the TOC at no cost to GE Americom.
k) Customers having transportable earth stations must meet all of the
requirements noted above. In addition, the customer must supply to the
TOC the station FCC authorization ID, date of grant and antenna model
and manufacturer.
l) In accordance with Section 25.308 of FCC Rules, all satellite video
uplink transmissions must be equipped with an automatic transmitter
identification system (ATIS). Uplink equipment manufactured on or after
----------------------------------------
March 1, 1991 shall use the FCC-specified subcarrier based ATIS
-------------
approach. The ATIS signal shall be a separate subcarrier which is
3
<PAGE>
automatically activated whenever any RF emissions occur. The encoder
shall be integrated into the uplink transmitter chain in a method that
cannot easily be defeated. Uplink equipment manufactured before March
------------------------------------------
1, 1991 will be permitted to use either the FCC subcarrier based ATIS
-------
or the SID-AMOL vertical blanking interval ATIS used by some uplinkers
prior to March 1, 1991.
Video uplink transmissions not having automatic transmitter
identification will be reported to the FCC.
7. Box Centers and Antenna Alignments
----------------------------------
All geosynchronous spacecraft move about in latitude, longitude and
altitude within their defined stationkeeping box. GE Americom maintains its
C-band spacecraft within plus or minus 0.1(Degree) (+/-45 miles) in
latitude and longitude and the Ku-band spacecraft within plus or minus
0.05(Degree). In practice, they are actually maintained much closer than
this. Periodically, the spacecraft is exactly (+/-.005(Degree)) in the
center of the box. The dates and times of these box centers are announced
on a recording:
. Nationwide (800) 526-4214
These box center opportunities should be utilized to align non-tracking
earth station antennas on a particular spacecraft in azimuth, elevation and
polarization. A spectrum analyzer or other device responding to signal
levels can be used to peak up the antenna. This assures optimum system
performance no matter where the spacecraft is in the box. Once correctly
adjusted and tightened down, the antenna should not have to be adjusted
again in azimuth and elevation unless it is moved or damaged. Polarization
may have to be optimized by the TOC when a carrier is first transmitted.
8. Spacecraft Performance
----------------------
Each of the Satcom spacecraft have slightly different geographical coverage
and uplink and downlink performance. For information on specific
transponder performance (EIRP/FTOP) or geographic coverage information,
contact GE Americom's Manager, Customer and Technical Services at (609)
987-4191.
9. Spacecraft Access
-----------------
Access to a GE Americom satellite transponder is arranged by calling the
Technical Operations Center (TOC). The TOC must determine that the request
is valid and authorized.
The validation process will be expedited for Occasional Video Service by
using the Confirmation Number. For Occasional Video Services the
Confirmation Number is provided by the Customer Service Center at the time
the order for service is placed. The Confirmation Number, which is also
used for billing purposes, can be obtained by calling the Customer Service
Center at (800) 752-7755 or (800) 732-3273 (SNG Users).
The procedure for accessing a GE Americom spacecraft is as follows:
4
<PAGE>
a) The earth station shall be aligned on the spacecraft and the uplink
equipment aligned on the correct frequency and polarization in
accordance with the requirements of Appendix A or Appendix B.
b) The customer earth station shall call the TOC, identify their company
name and transmit city location and request access to the particular
spacecraft and transponder. The TOC will determine that the request is
valid for the customer.
c) The TOC will monitor the downlink of the transponder being accessed and
direct the customer to transmit a CW clean (no modulation) carrier.
When the carrier is up, the TOC will verify the power operating point
and polarization isolation. If they are not correct, the TOC will
assist the customer earth station in optimizing the transmission. When
optimized, the TOC will direct that modulation be applied and will
check for correct deviation. If all parameters are within spec, the
customer will be notified that the transmission is acceptable, the
technicians will exchange initials and both activities will log the
event. If the earth station cannot meet transmission requirements, the
TOC will direct the carrier to be taken down until the problem can be
corrected.
d) For half transponder video, the procedure is similar to that in 9.c.
above, except that it will vary depending on whether another carrier is
operating in the transponder.
e) If there is not another carrier in the transponder, the TOC will direct
the customer to bring up his CW carrier and raise power until
saturation is achieved. The carrier power will then be backed-off to
achieve 3 dB output backoff as measured in downlink EIRP. This will
equate to approximately an 8 dB reduction in uplink power. If the
customer does not have enough power to saturate the transponder,
special arrangements can be made to provide a saturated CW reference
carrier. This will allow the customer to establish the proper power
operating point. Special requests such as this must be made in advance
during the initial contact with the TOC.
f) If the customer is the second station accessing the transponder, he
will be asked to bring up a CW carrier slowly until the signal matches
the downlink EIRP of the first carrier as measured on the spectrum
analyzer in 3 MHz resolution BW mode with a 1 MHz video filter. When
both uplink carriers are equal in power, each of the downlink carriers
will be approximately 5 dB below a single saturated carrier.
g) In all cases, after the operating point is determined, modulation will
be applied to the carrier and the transmitter power settings should be
noted and entered in the user's station log. If possible, a power meter
on the transmitter output coupler should be used for higher accuracy
because front panel meters may vary, particularly at the lower power
levels.
h) Some customers sequentially time-share transponders and transition by
an uplink hot switch. The two customers shall coordinate the exact time
of the hot switch in advance. The uplink preparing to transmit shall
coordinate access through the TOC prior to the switch time and shall be
on-line with GE Americom at the time of the switch.
i) The customer may continue to operate his carrier within the previously
agreed schedule as long as the carrier remains within the technical
requirements. If the carrier exceeds tolerances or is causing
interference to other users of the spacecraft or to other spacecraft,
5
<PAGE>
the TOC shall direct that the transmission cease immediately. The
customer shall insure that duty staff have standing authorization to
respond to such requests without referral to other authorities. The
customer shall cease transmission until the problem is corrected.
Before resuming transmission, the customer must contact the TOC to
verify that the problem has been resolved.
10. Single Channel Per Carrier (SCPC) Traffic
-----------------------------------------
Special considerations must be observed for SCPC traffic in addition to
those contained in the access procedures in Section 9. Since a large number
of carriers share the available bandwidth and power of the transponder, any
change to assigned allocations can affect all traffic in the transponder.
When an order is accepted by GE Americom for SCPC service, the allowable
power and bandwidth that may be used by the customer is precisely
specified. It is very important that SCPC power level, center frequency and
deviation must not be made by the user without coordination with GE
Americom's TOC. Uncoordinated adjustment of carrier parameters can cause
interference and degradation of service to other communications in the
transponder.
Some customers are given a percent of total transponder power and bandwidth
or are assigned a specific power level to be used within a specific
frequency range. These customers are responsible for insuring that their
individual carriers do not exceed their contracted allocations or cause
interference to other customers. GE Americom will conduct sweeps of the
transponder to check power and bandwidth assignments.
As an aid to setting and checking SCPC power levels, there are 10 dBW
unmodulated reference carriers transmitted by GE Americom on the following
transponders with their respective frequencies:
Downlink Frequency
------------------
Satcom GE-1, transponder 2K 11739.7 MHz
Satcom GE-2, transponder 14C 3995.95 MHz
Satcom C-5, transponder 3 3753.95 MHz
Satcom C-5, transponder 17 4050.20 MHz
Satcom C-5, transponder 21 4121.00 MHz
When using these reference carriers for comparison, the carrier under test
must be unmodulated.
11. Spacecraft Reconfiguration
--------------------------
Some spacecraft have the capability to be reconfigured for different input
attenuation, operation in LINEAR or LIMITER mode and/or downlink beam
switching. The procedure for spacecraft reconfiguration is as follows:
- The customer shall supply to the TOC a written list of the persons
in their organization authorized to request the reconfigurations
allowed in their contract.
6
<PAGE>
- These persons may contact the TOC and request a reconfiguration.
The TOC will validate the request and pass it on to the TT&C
controlling the spacecraft. Depending on other critical operations
in progress, the TT&C will accomplish the reconfiguration as soon
as possible and notify the TOC who will in turn notify the
customer.
- Changes from LINEAR to LIMITER or vice versa or changes to input
attenuators may be requested. Switching input attenuators to 3 dB
or less requires approval from GE Americom's Manager, Customer and
Technical Services.
12. Good Nights
-----------
All customers are requested to notify GE Americom's Technical Operations
Center (TOC) when they have completed transmission to a spacecraft. For
Occasional Services, the transmission should be completed by the firm Good
Night time contained in the order for service. This is especially important
since billing is based on the Start and Good Night times specified in the
order for the Occasional Services.
If an Occasional Service transmission is not completed by the scheduled
Good Night time, the TOC will contact the uplinker and request that the
transmission immediately cease. If no other user is scheduled for
transmission following the previously scheduled Good Night time, the TOC
will allow the uplinker to authorize a change to the ordered Good Night
time to allow continued transmission. The customer will then be billed
according to the revised Good Night Time.
In the event of a schedule conflict, GE Americom's policy is to give
transmission priority to the user who has scheduled a Start time rather
than the prior user who has not completed transmission by the scheduled
Good Night time. Thus, Occasional Service users must use care when defining
the Good Night time for a particular event.
13. Trouble Reporting
-----------------
Customers should immediately report any instances of interference to their
transmissions to the TOC. The TOC will assist in trying to identify the
source of interference and will contact any likely potential interferers.
It should be recognized, however, that it is sometimes very difficult to
identify the source of interference. The TOC has a video tape recorder
on-line ready to record any interference whether for investigative purposes
or criminal prosecution. The TOC routinely reports all interference
incidents to the FCC.
Suspected degradation or outages in the space segment shall be reported to
the TOC, which will coordinate investigation of the problem and testing.
Suspected degradation of transponder performance may require the customer
to release the transponder at a mutually acceptable time to allow GE
Americom time for performance testing.
Please note that for purposes of billing credit for service outages, the
length of the interruption is measured from the time the customer notifies
the TOC of the interruption to the time when the customer is notified of
the return to service by the TOC.
7
<PAGE>
In the event it becomes necessary to escalate service problems beyond the
primary level, the customer is afforded the opportunity to contact GE
Americom managerial personnel for assistance in resolving any problem:
Second Level: Manager (Vernon Valley) Team Leader (Woodbine)
------------ Jeff Watts Luis Jimenez
(973) 827-9400 (410) 549-4382
Third Level: Manager, Customer Services and Operations
----------- Bud Warner
(609) 987-4186
Fourth Level: Vice President, Terrestrial Systems & Operations
------------ Michael Noon
(609) 987-4335
Fifth Level: Senior Vice President and General Manager
----------- Engineering & Operations
Walter Braun
(609) 987-4172
8
<PAGE>
APPENDIX A
AMERICOM TRANSMISSION STANDARDS
-------------------------------
Frequency and Polarization Plans
- --------------------------------
The frequency and polarization plans used on the Satcom C- and Ku-band
spacecraft are shown in Figures 1, 2, 3, 4, 5 and 6.
Video/Audio Modulation Parameters
- ---------------------------------
Full Transponder - Full transponder standard parameters are contained in Figure
7. Parameters are for C-band and are optional for Ku-band.
Half Transponder - Half transponder standard parameters are contained in Figure
8. These are applicable to operation on the 54 MHz Ku-band
transponders.
9
<PAGE>
Figure 1
C-3, C-4, C-5, GE-2 and GE-4 C-BAND FREQUENCY PLAN*
---------------------------------------------------
Uplink
------
5945 5985 6025 6065 6105 6145 6185 6225 6265 6305 6345 6385
H Pol [__] [__] [__] [__] [__] [__] [__] [__] [__] [__] [__] [__]
1 3 5 7 9 11 13 15 17 19 21 23
5965 6005 6045 6085 6125 6165 6205 6245 6285 6325 6365 6405
V Pol [__] [__] [__] [__] [__] [__] [__] [__] [__] [__] [__] [__]
2 4 6 8 10 12 14 16 18 20 22 24
Frequency
Downlink
--------
3720 3760 3800 3840 3880 3920 3960 4000 4040 4080 4120 4160
V Pol [__] [__] [__] [__] [__] [__] [__] [__] [__] [__] [__] [__]
1 3 5 7 9 11 13 15 17 19 21 23
3740 3780 3820 3860 3900 3940 3980 4020 4060 4100 4140 4180
H Pol [__] [__] [__] [__] [__] [__] [__] [__] [__] [__] [__] [__]
2 4 6 8 10 12 14 16 18 20 22 24
Frequency
*All C-band transponders have 36 MHz bandwidth.
10
<PAGE>
Figure 2
C-1, GE-1 and GE-3 C-BAND FREQUENCY PLAN*
----------------------------------------
Uplink
------
5945 5985 6025 6065 6105 6145 6185 6225 6265 6305 6345 6385
V Pol [__] [__] [__] [__] [__] [__] [__] [__] [__] [__] [__] [__]
1 3 5 7 9 11 13 15 17 19 21 23
5965 6005 6045 6085 6125 6165 6205 6245 6285 6325 6365 6405
H Pol [__] [__] [__] [__] [__] [__] [__] [__] [__] [__] [__] [__]
2 4 6 8 10 12 14 16 18 20 22 24
Frequency MHz
Downlink
--------
3720 3760 3800 3840 3880 3920 3960 4000 4040 4080 4120 4160
H Pol [__] [__] [__] [__] [__] [__] [__] [__] [__] [__] [__] [__]
1 3 5 7 9 11 13 15 17 19 21 23
3740 3780 3820 3860 3900 3940 3980 4020 4060 4100 4140 4180
V Pol [__] [__] [__] [__] [__] [__] [__] [__] [__] [__] [__] [__]
2 4 6 8 10 12 14 16 18 20 22 24
Frequency MHz
*All C-band transponders have 36 MHz bandwidth.
11
<PAGE>
Figure 3
GE-1 and GE-3 Ku-BAND FREQUENCY PLAN*
------------------------------------
Uplink
------
14020 14060 14100 14140 14180 14220 14260 14300 14340 14380 14420 14460
V Pol [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___]
1 3 5 7 9 11 13 15 17 19 21 23
14040 14080 14120 14160 14200 14240 14280 14320 14360 14400 14440 14480
H Pol [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___]
2 4 6 8 10 12 14 16 18 20 22 24
Frequency MHz
Downlink
--------
11720 11760 11800 11840 11880 11920 11960 12000 12040 12080 12120 12160
H Pol [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___]
1 3 5 7 9 11 13 15 17 19 21 23
11740 11780 11820 11860 11900 11940 11980 12020 12060 12100 12140 12180
V Pol [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___]
2 4 6 8 10 12 14 16 18 20 22 24
Frequency MHz
*All Ku-band transponders have 36 MHz bandwidth.
12
<PAGE>
Figure 4
GE-4 Ku-BAND FREQUENCY PLAN*
---------------------------
<TABLE>
Uplink
------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
13875 13955 14020 14060 14100 14140 14180 14220 14260 14300 14340 14380 14420 14460
H Pol [_____] [_____] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___]
25 27 1 3 5 7 9 11 13 15 17 19 21 23
13875 13955 14040 14080 14120 14160 14200 14240 14280 14320 14360 14400 14440 14480
V Pol [_____] [_____] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___]
26 28 2 4 6 8 10 12 14 16 18 20 22 24
Extended Frequency MHz
Downlink
--------
11575 11655 11720 11760 11800 11840 11880 11920 11960 12000 12040 12080 12120 12160
V Pol [_____] [_____] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___]
25 27 1 3 5 7 9 11 13 15 17 19 21 23
11575 11655 11740 11780 11820 11860 11900 11940 11980 12020 12060 12100 12140 12180
H Pol [_____] [_____] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___]
26 28 2 4 6 8 10 12 14 16 18 20 22 24
Frequency MHz
</TABLE>
* All FSS Ku-band transponders (1-24) have 36 MHz bandwidth.
All Extended Ku-band transponders (25-28) have 72 MHz bandwidth.
13
<PAGE>
Figure 5
GE-2 Ku-BAND FREQUENCY PLAN*
---------------------------
Uplink
------
14020 14060 14100 14140 14180 14220 14260 14300 14340 14380 14420 14460
H Pol [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___]
1 3 5 7 9 11 13 15 17 19 21 23
14040 14080 14120 14160 14200 14240 14280 14320 14360 14400 14440 14480
V Pol [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___]
2 4 6 8 10 12 14 16 18 20 22 24
Frequency MHz
Downlink
--------
11720 11760 11800 11640 11880 11920 11960 12000 12040 12080 12120 12160
V Pol [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___]
1 3 5 7 9 11 13 15 17 19 21 23
11740 11780 11820 11860 11900 11940 11980 12020 12060 12100 12140 12180
H Pol [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___] [___]
2 4 6 8 10 12 14 16 18 20 22 24
Frequency MHz
*All Ku-band transponders have 36 MHz bandwidth.
14
<PAGE>
Figure 6
K-2 FREQUENCY PLAN*
------------------
Uplink
------
14029 14088 14147 14206 14265 14324 14383 14442
V Pol [_____] [_____] [_____] [_____] [_____] [_____] [_____] [_____]
1 3 5 7 9 11 13 15
14058.5 14117.5 14176.5 14235.5 14294.5 14353.5 14412.5 14471.5
H Pol [_____] [_____] [_____] [_____] [_____] [_____] [_____] [_____]
2 4 6 8 10 12 14 16
Frequency MHz
Downlink
--------
11729 11788 11847 11906 11965 12024 12083 12142
H Pol [_____] [_____] [_____] [_____] [_____] [_____] [_____] [_____]
1 3 5 7 9 11 13 15
11758.5 11817.5 11876.5 11935.5 11994.5 12053.5 12112.5 12171.5
V Pol [_____] [_____] [_____] [_____] [_____] [_____] [_____] [_____]
2 4 6 8 10 12 14 16
Fequency MHz
*All transponders are 54 MHz bandwidth
15
<PAGE>
Figure 7
GE-5 FREQUENCY PLAN*
-------------------
Uplink
------
14030 14091 14152 14213 14274 14335 14396 14457
H Pol [_____] [_____] [_____] [_____] [_____] [_____] [_____] [_____]
1 3 5 7 9 11 13 15
14043 14104 14165 14226 14287 14348 14409 14470
V Pol [_____] [_____] [_____] [_____] [_____] [_____] [_____] [_____]
2 4 6 8 10 12 14 16
Frequency MHz
Downlink
--------
11730 11791 11852 11913 11974 12035 12096 12157
V Pol [_____] [_____] [_____] [_____] [_____] [_____] [_____] [_____]
1 3 5 7 9 11 13 15
11743 11804 11865 11926 11987 12048 12109 12170
H Pol [_____] [_____] [_____] [_____] [_____] [_____] [_____] [_____]
2 4 6 8 10 12 14 16
Frequency MHz
* All transponders are 54 MHz bandwidth.
16
<PAGE>
Figure 8
FULL TRANSPONDER VIDEO TRANSMISSION PARAMETERS
----------------------------------------------
<TABLE>
<S> <C> <C> <C>
Video Test Tone Frequency f\\vt\\ = 761.6 KHz
Video Test Tone Peak Deviation (DELTA)F\\vt\\ = 10.75 MHz
Video Test Tone Level for Bessel Null L\\vb\\ = -13.15 dBm
Video Test Tone Level for Test (1 Vp-p) L\\vt\\ = 2.2 dBm
Energy Dispersal Frequency f\\ed\\ = 30 Hz
Energy Dispersal Peak Deviation (DELTA)F\\ed\\ = 1 MHz
Energy Dispersal Level L\\ed\\ = -18.41 dBm
Nominal Program Audio Subcarrier Frequency f\\SC\\ = 6.8 MHz
Subcarrier Peak Deviation on Main Carrier (DELTA)F\\SC\\ = 2 MHz
Audio Test Tone Frequency f\\at\\ = 1 KHz
Audio Test Tone Level at Input to Exciter
(APL across 600 Ohms) L\\at\\ = 0.0 dBm
Audio Test Tone Peak Deviation for Average Program
Level (APL) (DELTA)F\\at\\ = 75 KHz
Audio Test Tone Peak Program Level (PPL) L\\apt\\ = +10.0 dBm
Audio Peak Deviation at PPL (DELTA)F\\apd\\ = 237 KHz
Audio Test Tone Level (1 KHz) for First Bessel Null
(to result in F\\at\\) L\\ab\\ = -29.88 dBm
</TABLE>
NOTE:
- ----
A. All exciters shall have a 36 MHz (maximum) IF filter to limit transmit
spectrum.
17
<PAGE>
Figure 9
54 MHz Ku-BAND HALF TRANSPONDER VIDEO TRANSMISSION PARAMETERS
-------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Video Test Tone Frequency f\\vt\\ = 761.6 KHz
Video Test Tone Peak Deviation (DELTA)F\\vt\\ = 9.1 MHz
Video Test Tone Level for Bessel Null L\\vb\\ = -11.71 dBm
Video Test Tone Level for Test (1 Vp-p) L\\vt\\ = 2.22 dBm
Energy Dispersal Frequency f\\ed\\ = 30 Hz
Energy Dispersal Peak Deviation (DELTA)F\\ed\\ = 1.0 MHz
Energy Dispersal Level L\\ed\\ = -16.96 dBm
Subcarrier Frequency f\\SC\\ = 6.2 MHz
Subcarrier Peak Deviation on Main Carrier (DELTA)F\\SC\\ = 1.25 MHz
Audio Test Tone Frequency f\\at\\ = 1 KHz
Audio Test Tone Level at Input to Exciter
(APL across 600 Ohms) L\\at\\ = 0.0 dBm
Audio Test Tone Peak Deviation for Average
Program Level (APL) (DELTA) F\\at\\ = 60.0 KHz
Audio Test Tone Peak Program Level (PPL) L\\apt\\ = +10.0 dBm
Audio Peak Deviation at PPL (DELTA)F\\apd\\ = 189.7 KHz
Audio Test Tone Level (1 KHz) for First Bessel Null
(to result in F\\at\\) L\\ab\\ = -28 dBm
</TABLE>
NOTE:
- ----
A. All exciters shall have a Ku-band 2:1 Video 25 MHz (Intelsat Mask) IF
bandwidth filter.
18
<PAGE>
APPENDIX B
GSTAR TRANSMISSION STANDARDS
----------------------------
Frequency and Polarization Plans
- --------------------------------
The frequency and polarization plan for the GSTAR spacecraft is shown in Figure
1. The half transponder center frequencies for the 54 MHz GSTAR transponders are
+/-15 MHz above and below the transponder center frequencies.
Video/Audio Modulation Parameters
- ---------------------------------
GSTAR transponders - Use parameters found in Figure 2 for full transponder and
Figure 3 for half transponder operation.
19
<PAGE>
Figure 1
GSTAR 4 FREQUENCY PLAN*
----------------------
Uplink
------
14030 14091 14152 14213 14274 14335 14396 14457
V Pol [_____] [_____] [_____] [_____] [_____] [_____] [_____] [_____]
1 2 3 4 5 6 7 8
14044 14105 14166 14227 14288 14349 14410 14471
H Pol [_____] [_____] [_____] [_____] [_____] [_____] [_____] [_____]
9 10 11 12 13 14 15 16
Frequency MHz
Downlink
--------
11730 11791 11852 11913 11974 12035 12096 12157
H Pol [_____] [_____] [_____] [_____] [_____] [_____] [_____] [_____]
1 2 3 4 5 6 7 8
11744 11805 11866 11927 11988 12049 12110 12171
V Pol [_____] [_____] [_____] [_____] [_____] [_____] [_____] [_____]
9 10 11 12 13 14 15 16
Frequency MHz
* All transponders are 54 MHz bandwidth.
20
<PAGE>
Figure 2
GSTAR-4 VIDEO TRANSMISSION PARAMETERS
-------------------------------------
Full Transponder
----------------
<TABLE>
<S> <C> <C> <C>
Video Test Tone Frequency f\\vt\\ = 761.6 KHz
Video Test Tone Peak Deviation (DELTA)F\\vt\\ = 10.75 MHz
Video Test Tone Level for Bessel Null L\\vb\\ = -13.15 dBm
Video Test Tone Level for Test (1 V) L\\vt\\ = 2.2 dBm
Energy Dispersal Frequency f\\ed\\ = 30 Hz
Energy Dispersal Peak Deviation (DELTA)F\\ed\\ = 1 MHz
Energy Dispersal Level L\\ed\\ = -18.41 dBm
Nominal Program Audio Subcarrier Frequency f\\SC\\ = 6.8 MHz
Subcarrier Peak Deviation on Main Carrier (DELTA)F\\SC\\ = 2 MHz
Audio Test Tone Frequency f\\at\\ = 1 KHz
Audio Test Tone Level at Input to Exciter
(APL across 600 Ohms) L\\at\\ = 0.0 dBm
Audio Test Tone Peak Deviation for Average Program
Level (APL) (DELTA)F\\at\\ = 75 KHz
Audio Test Tone Peak Program Level (PPL) L\\apt\\ = +10.0 dBm
Audio Peak Deviation at PPL (DELTA)F\\apd\\ = 237 KHz
Audio Test Tone Level (1 KHz) for First Bessel Null
(to result in F) L\\ab\\ = -29.88 dBm
</TABLE>
NOTE:
- ----
A. All exciters shall have a 36 MHz (maximum) IF filter to limit transmit
spectrum.
21
<PAGE>
Figure 3
54 MHz Ku-BAND HALF TRANSPONDER VIDEO TRANSMISSION PARAMETERS
-------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Video Test Tone Frequency f\\vt\\ = 761.6 KHz
Video Test Tone Peak Deviation (DELTA)F\\vt\\ = 9.1 MHz
Video Test Tone Level for Bessel Null L\\vb\\ = -11.71 dBm
Video Test Tone Level for Test (1 Vp-p) L\\vt\\ = 2.22 dBm
Energy Dispersal Frequency f\\ed\\ = 30 Hz
Energy Dispersal Peak Deviation (DELTA)F\\ed\\ = 1.0 MHz
Energy Dispersal Level L\\ed\\ = -16.96 dBm
Subcarrier Frequency f\\SC\\ = 6.2 MHz
Subcarrier Peak Deviation on Main Carrier (DELTA)F\\SC\\ = 1.25 MHz
Audio Test Tone Frequency f\\at\\ = 1 KHz
Audio Test Tone Level at Input to Exciter
(APL across 600 Ohms) L\\at\\ = 0.0 dBm
Audio Test Tone Peak Deviation for Average
ProgramLevel (APL) (DELTA) F\\at\\ = 60.0 KHz
Audio Test Tone Peak Program Level (PPL) L\\apt\\ = +10.0 dBm
Audio Peak Deviation at PPL (DELTA)F\\apd\\ = 189.7 KHz
Audio Test Tone Level (1 KHz) for First Bessel Null
(to result in F\\at\\) L\\ab\\ = -28 dBm
</TABLE>
NOTE:
- ----
A. All exciters shall have a Ku-band 2:1 Video 25 MHz (Intelsat Mask) IF
bandwidth filter.
22
<PAGE>
APPENDIX C
GE AMERICOM SPACECRAFT BEACON FREQUENCIES
-----------------------------------------
The beacon frequencies and polarizations for the GE Americom domestic fleet are
shown below.
<TABLE>
<CAPTION>
- ------------------------------- --------------------------------------------------------- ----------------------------
C-Band Ku-Band
- ------------------------------- --------------------------------------------------------- ----------------------------
Spacecraft Frequency Pol Frequency Pol Frequency Pol
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
C-1 3700.5 V 4199.5 H None
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
C-3
C-4 3700.5 H 4199.5 V None
C-5
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
GE-1 3700.5 V 4199.5 H 12198 H
GE-3
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
GE-2 3700.5 H 4199.5 V 12198 V
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
GE-4 3700.5 H 4199.5 V 11702 H
12198 V
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
GSTAR-4 None None 11702 V
12198 H
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
K-2 None None 11702 V
12198 H
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
GE-5 None None 11702 H
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>
These signals provide telemetry data for GE Americom use in monitoring the
status of the spacecraft. These signals may prove useful for those customers who
need a reference signal for antenna tracking or related purposes.
23
<PAGE>
GE AMERICOM SUMMARY 1
-------------------
Satellite Fleet 2
- ---------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
C-5 C-1 C-4 C-3 GS4 GE-1 GE-4
139(degrees)W 137(degrees)W 135(degrees)W 131(degrees)W 105(degrees)W 103(degrees)W 101(degrees)W
C C C C Ku C&Ku C&Ku
- -------------------------------------------------------------------
GE-3 GE-2 K-2 GE-5
87(degrees)W 85(degrees)W 81(degrees)W 79(degrees)W
C&Ku C&Ku Ku Ku
</TABLE>
Spacecraft Access
- -----------------
Call Vernon Valley, New Jersey at (800) 255-6122 for access to Satcom C-1,
C-3, C-4, C-5, GE-1 and GE-2.
Call Woodbine, Maryland at (800) 772-2363 for access to GSTAR-4, GE-3,
GE-4, K-2 and GE-5.
Business Arrangements
- ---------------------
Full-time space segment, call (609) 987-4246
Occasional space segment bookings, call (800) 752-7755 or (800) 732-3273
(SNG Users)
Technical information, call (609) 987-4191
Satellite Center of Box
- -----------------------
Call (800) 526-4214
Notes:
- -----
1 See complete text of Commercial Operations System Users Guide for additional
information, requirements, telephone and facsimile numbers.
2 K-2 is in N-S inclined operation.
24
<PAGE>
ATTACHMENT C
CLEAN, IRREVOCABLE
------------------
NONCANCELLABLE LETTER OF CREDIT
-------------------------------
[LETTERHEAD OF ISSUING BANK]
IRREVOCABLE LETTER OF CREDIT
TO: DATE:____________________
GE American Communications, Inc.
Four Research Way
Princeton, New Jersey 08540-6684
Attention: Vice President, Finance
GE Capital Europe Limited
Clarges House
6-12 Clarges Street
London W1Y 8DH
Attention: VP, GE Americom Europe
NUMBER:__________________________
GENTLEMEN:
WE HEREBY OPEN OUR IRREVOCABLE LETTER OF CREDIT IN YOUR JOINT AND
SEVERAL FAVOR FOR THE ACCOUNT OF SKYCACHE, INC., UP TO AN AGGREGATE AMOUNT OF [
*** ] AVAILABLE IN ONE OR MORE DRAWINGS UPON PRESENTATION TO US OF YOUR DRAFT(S)
AT SIGHT ON US ACCOMPANIED BY ANY ONE OF THE DOCUMENTS SPECIFIED BELOW:
1) A statement in writing signed by an officer of GE American
Communications, Inc. ("GE Americom"), stating that a) SkyCache, Inc.,
("SkyCache") has defaulted under an agreement dated ___, 1999 between SkyCache
and GE Americom ("the GE Americom Agreement"), and b) the amount of the draft
being presented does not exceed the aggregate amount due and payable to GE
Americom under the GE Americom Agreement.
OR: 2) A statement in writing signed by an officer of GE Capital Europe
Limited ("GECEL"), stating that a) SkyCache has defaulted under an agreement
dated _________, ___ 1999 between SkyCache and GECEL ("the GECEL Agreement"),
and b) the amount of the draft being presented does not exceed the aggregate
amount due and payable to GECEL under the GECEL Agreement.
*** Confidential Treatment Requested
25
<PAGE>
OR: 3) A statement in writing signed by an officer of GE Americom or
GECEL stating that SkyCache has failed to deliver to GE Americom and GECEL an
extension or replacement of the Letter of Credit as required under either the GE
Americom Agreement or the GECEL Agreement.
DRAFTS MUST BE PRESENTED AT THIS BANK ON OR BEFORE [ *** ].
WE HEREBY AGREE WITH THE DRAWERS, ENDORSERS AND BONA FIDE HOLDERS OF
DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS OF THIS LETTER OF CREDIT
THAT SUCH DRAFTS SHALL BE DULY HONORED ON PRESENTATION AND DELIVERY OF DOCUMENTS
AS SPECIFIED.
THIS CREDIT IS SUBJECT TO "UNIFORM CUSTOMS AND PRACTICES FOR
DOCUMENTARY CREDITS (1994 REVISION) INTERNATIONAL CHAMBER OF COMMERCE
PUBLICATION NO. 500.
[NAME OF ISSUING BANK]
By:_____________________________
Name:___________________________
*** Confidential Treatment Requested
26
<PAGE>
Exhibit 10.20
*** Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. (S)(S) 200.80(b)(4),
200.83 and 230.406
GE-1E SATELLITE TRANSPONDER AGREEMENT
(Contract No. E-1055)
THIS AGREEMENT between GE Capital Europe Limited ("GECEL") and SkyCache,
Inc. ("Customer") is made effective as of the date of the last signature below.
Defined terms used in this Agreement have the meanings specified herein.
ARTICLE 1. SERVICE PROVIDED
A. Scope. GECEL will provide to Customer Non-Preemptible with Access to Spares
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Service on one (1) Transponder on the Satellite ("Service"). Service will
be provided in accordance with the terms and conditions set forth in this
Agreement, including Attachment A-Transponder Performance Specifications
and Attachment B-Commercial Operations System User's Guide (collectively,
the "Agreement").
The Satellite is authorized to be and is located at the 5(degrees) E.L.
orbital position. The Satellite may, however, be located at any other orbital
position hereafter authorized by the PTS.
Technical performance criteria for the Satellite are described in the
Transponder Performance Specifications set forth in Attachment A. The
transponder number will be Transponder 23. GECEL may from time to time designate
another frequency within the Transponder or another transponder on the Satellite
to provide the Service.
Provided that the Customer is in compliance with the terms of this
Agreement, the Parties agree that service on the Satellite under Contract No. E-
1049 dated November 9th 1998 between the Parties shall terminate with effect
from December 31st 1999 and no service charge shall be payable for such service
from December 1st, 1999 until December 31st, 1999.
B. Term. The term for Service provided under this Agreement ("Service Term")
----
shall commence on 1st December 1999 (the "Commencement Date"). The Service
Term shall end, except as otherwise provided herein, on the earliest of (1)
the End-of-Life or Replacement Date of the Satellite; (2) the date the
Satellite becomes a Satellite Failure: (3) the date the Transponder on
which service is provided hereunder becomes a Transponder Failure and
cannot be restored as provided herein; or (4) 30th November 2006 (the
"Projected Termination Date").
C. Service Priorities. GECEL shall attempt to restore Customer's Transponder
------------------
once should it become a Transponder Failure by utilizing any available
Replacement Transponder on the Satellite on a first-needed, first-served
basis; provided, that if restoration of more than one transponder on the
Satellite is required as a result of a single event or simultaneous event,
access to Replacement Transponders shall be granted in Contract Order
(defined as the opposite order from Reverse Contract Order). If restored
using a Replacement
1.
<PAGE>
Transponder, Customer's service shall remain Non-Preemptible Service,
without any further right of restoration. If no such Replacement
Transponder is available on the Satellite, Customer's service shall not be
restored.
D. Notices. All notices regarding technical or operational matters requiring
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immediate attention will be given by telephone followed by written
notification. All other notices and requests will be in writing, delivered
to the address(es) set forth below or to such other address(es) as the
Party may designate in writing. For the purposes of this Agreement, a
"business day" shall mean any day, other than a Saturday or a Sunday or a
day which is a bank or public holiday in England.
If to be given to Customer: If to-be given to GECEL:
Attn: Robert Dunham, Attn: Michael Agostinelli,
Chief Financial Officer Vice President and General Manager, Europe
SkyCache, Inc. GE Americom
312 Laurel Avenue GE Capital Europe Limited
Laurel Sweden House
Maryland 20707 London, SW1A 1ES
USA United Kingdom
Fax#: + 1 301 598 0837 Fax #: +44 (0)171 302 6352
Tel#: + 1 301 598 0500 Ext. 2201 Tel #: +44 (0)171 302 6340
24 Hour Emergency Telephone # of Customer for Technical/Operational Issues:
Tel #: +1 301 598 0500 Ext. 2424 (for Network Operating a Center) (Garrett
Allen), Fax #: +1 301 598 0837
ARTICLE 2. PAYMENT
A. Monthly Recurring Service Charge. From the Commencement Date, Customer will
--------------------------------
pay to GECEL for Service a monthly recurring service charge ("MRC") of the
following amounts:
Period Amount of MRC (US Dollars)
- --------------------------------------------------------------------------------
[ *** ] [ *** ]
- --------------------------------------------------------------------------------
[ *** ] [ *** ]
- --------------------------------------------------------------------------------
[ *** ] [ *** ]
- --------------------------------------------------------------------------------
[ *** ] [ *** ]
- --------------------------------------------------------------------------------
[ *** ] [ *** ]
- --------------------------------------------------------------------------------
*** Confidential Treatment Requested
2.
<PAGE>
B. Billing and Payment. Invoices will be issued monthly thirty (30) days in
-------------------
advance of the month in which Service is to be provided and are payable on
the first day of such month by wire transfer as per the remittance
instructions on the respective monthly invoice. On payments not received by
the due date, GECEL will assess a late payment charge of the lesser of (i)
one and one-half percent (1.5%) per month compounded monthly, or (ii) the
maximum rate permitted by applicable law. A failure or delay by GECEL to
send a bill will not relieve Customer either of its obligation to pay on a
timely basis for Service or of its obligation to pay late payment charges
in the event of late payment. In addition to any other rights GECEL may
have under this Agreement, GECEL may suspend provision of Service on
seventy-two (72) hours notice for failure to pay any sums due to GECEL. All
payments due to GECEL by Customer under this Agreement shall be tendered in
U.S. Dollars. All amounts due under this Agreement to be paid by Customer
to GECEL shall be paid in full (without any deduction or withholding
whatsoever) and Customer shall not be entitled to assert any credit,
set-off or counterclaim against GECEL in order to justify withholding
payment of any such amount in whole or in part.
C. Taxes and Other Charges. The MRC is exclusive of taxes, duties and other
-----------------------
fees or charges levied by any governmental authority on the Service or the
facilities used to provide the Service. Customer will pay directly or
reimburse GECEL for all such taxes. duties and other fees or charges,
including without limitation value added tax.
D. Letter of Credit. On or before November 1, 1999, Customer will, in order to
----------------
secure performance of its obligations (i) hereunder and (ii) under the
separate Agreement dated on or about the date of this Agreement between
Customer and GE American Communications, Inc., ("GE Americom") (the "GE
Americom Agreement"), deliver to GE Americom and GECEL one irrevocable
letter of credit for a term of at least [ *** ] months in the amount of
[ *** ] in the form attached to the GE Americom Agreement and in identical
form as Attachment C to this Agreement ("Letter of Credit 1") issued by a
bank incorporated in the United States of America, acceptable to GE
Americom. Letter of Credit 1 and any renewal or replacement thereof may be
drawn upon by GECEL and/or GE Americom in accordance with its terms. The
proceeds of any drawing shall be applied to the obligations of Customer (i)
hereunder and/or (ii) under the GE Americom Agreement, as the case may be.
Failure to provide Letter of Credit 1 or any renewal or replacement thereof
by the date required and/or failure to maintain Letter of Credit 1 or any
renewal or replacement thereof throughout the period set out in the table
below shall be treated as a failure by Customer to make a payment due to
GECEL under this Agreement. It is the intention of the Parties that a
letter of credit shall be maintained in effect for the benefit of GECEL and
GE Americom for the amounts and for the terms specified in the table below.
If Letter of Credit 1 or any renewal or replacement thereof is drawn upon,
Customer shall cause the letter of credit then in effect to be renewed or
replaced such that the principal amount of the letter of credit is restored to
the original amount of that letter of credit. Failure to obtain and deliver to
GE Americom a renewal or replacement of a letter of credit as provided in the
preceding sentence within five (5) business days from the date of each such
drawing shall entitle
*** Confidential Treatment Requested
3.
<PAGE>
GE Americom, and/or GECEL to draw upon that letter of credit then in effect and
to hold the proceeds as an advance payment. Such advance payment may be used by
GE Americom and/or GECEL as an offset for any amounts due to GE Americom and/or
GECEL at the Projected Termination Date under either this Agreement or the GE
Americom Agreement, or, in the event of termination of this Agreement or the GE
Americom Agreement prior to their respective Projected Termination Dates, for
any liabilities of Customer arising out of such termination(s).
A renewal or replacement of Letter of Credit 1 by a new letter of credit
("Letter of Credit 2") for the sum of [ *** ] for an additional term of at least
[ *** ] months shall be delivered by Customer to GE Americom and GECEL at least
forty-five (45) days prior to the expiration of Letter of Credit 1. A renewal or
replacement of Letter of Credit 2 by a further letter of credit ("Letter of
Credit 3") for the sum of [ *** ] for an additional term of at least [ *** ]
months shall be delivered by Customer to GE Americom and GECEL at least
forty-five (45) days prior to the expiration of Letter of Credit 2. A renewal or
replacement of Letter of Credit 3 by a further letter of credit ("Letter of
Credit 4") for the sum of [ *** ] for an additional term of at least [***]
months shall be delivered by Customer to GE Americom and GECEL at least
forty-five (45) days prior to the expiration of Letter of Credit 3 (GE Americom
and GECEL reserve the right to require in their sole discretion that the term of
Letter of Credit 4 be extended until the Projected Termination Date). Failure to
obtain and deliver to GE Americom and GECEL a renewal or replacement of any
letter of credit at least thirty (30) days prior to the expiration date thereof
shall entitle GECEL and/or GE Americom to draw upon the letter of credit then in
effect and to hold the proceeds of such drawing as an advance payment, to be
held and applied by GECEL and/or GE Americom as specified in the preceding
paragraph.
- --------------------------------------------------------------------------------
Letter of Term of Letter of Credit Amount of Letter of Credit (US Dollars)
Credit
number
- --------------------------------------------------------------------------------
1 [ *** ] [ *** ]
- --------------------------------------------------------------------------------
2 [ *** ] [ *** ]
- --------------------------------------------------------------------------------
3 [ *** ] [ *** ]
- --------------------------------------------------------------------------------
4 [ *** ] [ *** ]
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ARTICLE 3. CREDITS FOR INTERRUPTIONS
Credits for Interruptions in Service of fifteen (15) continuous minutes or
more shall be granted to Customer as follows:
Credit = (Number of minutes in Interruption/43,200) multiplied by the MRC
(applicable at the date of the Interruption)
The length of an Interruption will be measured from the time the Customer
vacates its signal to permit GECEL to verify the Interruption (following
notification of GECEL by Customer of the Interruption) until Service is
restored. No credit will be due, however, if such Interruption is a result of,
or attributable in whole or part to (i) the fault of Customer, any
*** Confidential Treatment Requested
4.
<PAGE>
Customer Designee (as defined below) or any agent or subcontractor of either,
(ii) the failure or unavailability of satellites, transponders, facilities,
services or equipment furnished to Customer other than by GECEL, (iii) sun
outages or rain fade, (iv) the occurrence of a force majeure event as described
in Article 10.A. or (v) unless otherwise provided herein, suspensions of Service
made in accordance with this Agreement.
5.
<PAGE>
ARTICLE 4. SERVICE RESPONSIBILITIES
A. Laws and Regulations Governing Service. Location and operation of the
--------------------------------------
Satellite, GECEL's satellite system and GECEL's ability to perform are
subject to all applicable laws and regulations, including without
limitation all appropriate coordination and registration through the
procedures of the International Telecommunications Union.
B. Use Conditions. Customer will use, and will cause others authorized or
--------------
permitted by Customer to access Service ("Customer's Designees") to use,
Service in accordance with (i) all applicable laws and regulations and (ii)
the conditions of use (as such may, upon notice, be amended for technical
or operational reasons) contained in the Commercial Operations Systems
User's Guide set forth in Attachment B ("User's Guide"). Customer shall
obtain, maintain in force and comply with any and all licenses, approvals,
authorisations and consents necessary or appropriate relating to Customer's
use of the Service and the transmission and/or reception of material,
signals and programming thereon. Customer will not use, and will cause
Customer's Designees not to use, Service for any unlawful purpose,
including violation of laws governing the content of material transmitted
using Service. During the Service Term, neither Customer nor any of
Customer's Designees shall create nor suffer to exist any claims, liens,
encumbrances or security interests on or to the Transponder nor purport to
do any of the same. If Customer's or Customer's Designees' non-compliance
with the preceding four (4) sentences causes, or other circumstances arise
which cause, interference to or threaten the availability or operation of
the services or facilities provided by GECEL, or if Customer's or
Customer's Designees' use of Service may reasonably result in the
institution of criminal proceedings, or administrative proceedings that may
result in sanctions or other non-monetary remedies, against GECEL, General
Electric Company, or any affiliates of either entity, GECEL may take
actions (including suspension and/or restriction of Service) it reasonably
believes necessary to ensure Customer's compliance with the User's Guide or
GECEL's compliance with law.
C. Third Party Use. Customer shall provide GECEL with one (1) business day
---------------
notice of any third party use of Service and of the identity of any such
third party. Should Customer resell any Service provided hereunder or
otherwise permit use of such Service by any third party or parties,
Customer shall remain primarily liable for compliance by each such third
party with all the terms of this Agreement and any breach by any such third
party shall be deemed to have been committed by Customer. GECEL reserves
the right to charge Customer a fee for any technical consultation,
scheduling or other support services provided to end-users using the
Service provided Customer under this Agreement.
6.
<PAGE>
D. Long-Term Resale. If Customer proposes to resell use of the entire capacity
----------------
of Service provided hereunder to a third party for a term of more than
three (3) months, Customer shall first provide GECEL with at least
forty-five (45) days' prior written notice of such proposed resale. Within
thirty (30) days after receipt of such notice, GECEL, may, by written
notice to Customer, elect to terminate this Agreement, whereupon Customer
shall have a period of thirty (30) days from receipt of such notice, within
which period Customer may elect to (i) accept termination and notify GECEL
of the date on which such termination shall be effective (which date shall
be not less than sixty (60) days and not more than one hundred twenty (120)
days after the date of such notice from Customer to GECEL) or (ii) cancel
the proposed resale and continue this Agreement in effect. If Customer does
not exercise one of the options stated in the immediately preceding
sentence within the applicable time limit, Customer shall be deemed to have
exercised the option stated in clause (ii) of such sentence.
ARTICLE 5. OPERATIONAL MATTERS
A. Service Access. Customer is responsible for providing, operating and
--------------
maintaining the uplink and downlink equipment necessary to access the
Satellite and Service. Customer at its expense shall provide GECEL with any
descrambling or decoding devices which may be required for signal
monitoring. At a mutually agreed time, and prior to Customer transmitting
from its earth station(s), Customer will demonstrate to GECEL's designated
Technical Operations Centre that its earth station(s) comply with the
satellite access specifications contained in User's Guide.
B. Action to Protect Satellite. NSAB and GECEL shall have sole and exclusive
---------------------------
control of operation and possession of the Satellite. If circumstances
occur which in NSAB's and/or GECEL's reasonable judgment pose a threat to
the stable operation of the Satellite, NSAB and/or GECEL shall have the
right to take action it reasonably believes necessary to protect the
Satellite, including discontinuance or suspension of operation of the
Satellite, the Transponder(s) or any other transponder, without any
liability to Customer, except that Customer may receive a credit computed
as provided in Article 3 hereunder. GECEL shall give Customer as much
notice as practical under the circumstances of any such discontinuance or
suspension. If it becomes necessary to discontinue or suspend service on
one or more transponders on the Satellite, and operational circumstances
allow GECEL to select the transponder or transponders to be discontinued or
suspended, GECEL will make such selection in Reverse Contract Order.
ARTICLE 6. INDEMNIFICATION
Customer will indemnify and hold harmless GECEL, General Electric Company,
and any affiliates of either entity, from and against all loss, liability, cost,
expenses and damages of any nature (including, but not limited to, attorney fees
and to the extent permitted by law, any fines and penalties) based on third
party claims (Including those of Customer's Designees) arising out of, resulting
from or in connection with any failure to provide Service or any use of Service
provided hereunder.
7.
<PAGE>
ARTICLE 7. WARRANTY DISCLAIMER; LIMITATION OF LIABILITY
A. Warranty Disclaimer. No warranties, express, implied, or statutory,
-------------------
including any warranty of merchantability or fitness for a particular
purpose, apply to Service provided hereunder or the equipment and
facilities used to provide Service. The conveying by GECEL of proprietary
information or other information to Customer shall in no way alter this
disclaimer.
B. Limitation of Liability. As a material condition of entering into this
-----------------------
Agreement at the price specified herein, and in regard to any and all
causes arising out of or relating to this Agreement, including but not
limited to claims of negligence, breach of contract or warranty, failure of
a remedy to accomplish its essential purpose or otherwise, Customer agrees
that, (except to the extent credits pursuant to Article 3 and refunds
pursuant to Article 9.C. are due under this Agreement), GECEL's, General
Electric Company's and their affiliates' entire liability shall not exceed
in the aggregate, the greater of (i) the MRC paid by Customer to GECEL for
Service in the month preceding the event that is the cause of liability or
(ii) [ *** ].
Customer agrees that in no event shall GECEL, General Electric Company, or
affiliated companies of either entity or their employees, agents or contractors
be liable for any indirect, incidental, consequential, punitive, special or
other similar damages (whether in contract. tort including negligence, strict
liability or under any other theory of liability), including but not limited to,
loss of actual or anticipated revenues or profits, economic loss, wasted
management time, loss of business, customers or good will, or damages and
expenses arising out of third party claims. The foregoing exclusion shall apply
even if such party(s) has been advised of the possibility of such damages.
ARTICLE 8. CONFIDENTIALITY AND NONDISCLOSURE
A. Certain Information Regarding Service. Customer hereby agrees not to
-------------------------------------
disclose to third parties (without the prior written consent of GECEL) the
material terms and conditions of this Agreement (including but not limited
to the prices, payment terms, schedules, protection arrangements, and
restoration provisions thereof) and all information provided to Customer
related to the design and performance characteristics of the Satellite, and
any subsystems or components thereof including the Transponder.
B. Proprietary Information. To the extent that either party discloses to the
-----------------------
other any other information which it considers proprietary, said party
shall identify such information as proprietary when disclosing it to the
other party by marking it clearly and conspicuously as proprietary
information. Any proprietary disclosure to either party, if made orally,
shall be promptly confirmed in writing and identified as proprietary
information, if the disclosing party wishes to keep such information
proprietary under this Agreement. Any such information disclosed under this
Agreement shall be used by the recipient thereof only in its performance
under this Agreement.
*** Confidential Treatment Requested
8.
<PAGE>
Neither party shall be liable for the inadvertent or accidental disclosure
of such information marked as proprietary, if such disclosure occurs despite the
exercising of the same degree of care as the receiving party normally takes to
preserve and safeguard its own proprietary information (but not less than
reasonable care) or if such information (i) is or becomes lawfully available to
the public from a source other than the receiving party before or during the
period of this Agreement: (ii) is released in writing by the disclosing party
without restrictions; (iii) is lawfully obtained by the receiving party from a
third party or parties without obligation of confidentiality; (iv) is lawfully
known by the receiving party prior to such disclosure; or (v) is at any time
lawfully developed by the receiving party completely independently of any such
disclosure or disclosures from the disclosing party.
In addition, neither party shall be liable for the disclosure of any
proprietary information which it receives under this Agreement pursuant to
judicial action or decree, or pursuant to any requirement of any Government or
any agency or department thereof, having jurisdiction over such party, provided,
--------
that in the reasonable opinion of counsel for such party such disclosure is
- ----
required, and provided further that such party to the extent reasonably
practical shall have given the other party notice prior to such disclosure.
9.
<PAGE>
ARTICLE 9. TERMINATION
A. Termination. In addition to any rights of termination provided in other
-----------
Articles of this Agreement, either party may terminate this Agreement by
giving the other party written notice thereof in the event: (i) the other
party materially breaches this Agreement and fails to cure such breach
within thirty (30) days after receipt of written notice thereof (except
that, if Customer fails to pay amounts due hereunder, such cure period
shall be reduced to five (5) business days), or (ii) the other party is
unable to perform its obligations as a result of it becoming insolvent or
being unable to pay its debts as and when they fall due or ceasing or
threatening to cease the whole or substantially the whole of its business
or becoming the subject of insolvency proceedings, including without
limitation, if the other party is judicially declared insolvent or
bankrupt, or if any assignment is made of the other party's property for
the benefit of its creditors or if a receiver, conservator, trustee in
bankruptcy, administrator or other similar officer is appointed by a court
of competent jurisdiction to take charge of all or any substantial part of
the other party's property, or if a petition is filed by or against the
other party to commence a winding up (and such petition is not dismissed
within sixty (60) days after filing) or a resolution is passed by its
shareholders to wind up the other party or any similar action or
proceedings are commenced in any country with jurisdiction over the other
party; or (iii) an Interruption continues for thirty (30) full consecutive
days and the sole cause of the Interruption is a force majeure event as
described in Article 10.A.
B. Refunds. In the event of the ending of this Agreement pursuant to Article
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1.B., or in the event of termination by Customer pursuant to this
Agreement, or in the event of termination by GECEL pursuant to Article
9.A.(iii) above, Article 4.D. or Article 10.I. GECEL shall refund any
portion of amounts paid by Customer to GECEL which relate to Service not
provided by GECEL plus any credits that may be due to Customer.
10.
<PAGE>
C. Termination Liability. In the event of termination by GECEL for reasons
---------------------
other than those reasons for termination by GECEL set forth in Article
9.B., GECEL shall be entitled to retain all amounts paid by Customer to
GECEL hereunder and any credits that may be due to Customer shall be
forfeited. In addition, GECEL in its sole discretion may either elect to
(i) pursue any rights and remedies it may have at law, in equity or
otherwise or (ii) recover from Customer an amount equal to the net present
value (as of the date of such termination) of the remaining unpaid Service
charges. computed as if this Agreement remained in effect until the
Projected Termination Date, utilizing a discount rate of 8% per annum plus
late charges on such amount from the date of termination until payment in
full ("Termination Value"). If GECEL elects (ii) above and recovers such
amount, GECEL agrees to use reasonable efforts to obtain a qualified
replacement customer(s), but shall not be required to obtain a customer(s)
for service on the surrendered Transponder(s) before obtaining a
customer(s) for any other unused transponder, to obtain any particular
customer(s) or to set any particular minimum price in connection with such
service. In the case GECEL does obtain a qualified replacement customer(s),
GECEL thereafter shall pay to Customer ninety-five percent (95%) of the
gross proceeds received by GECEL either (x) from the provision of service
to such replacement customer(s) using the Transponder(s) prior to the
Projected Termination Date, or (y) from the sale of the Transponder(s) to
such replacement customer(s): provided, that in no event shall such payment
exceed the Termination Value paid by Customer.
D. Inability to Regain Transponder. On expiration or termination of this
-------------------------------
Agreement for any reason whatsoever or termination of Customer's
entitlement to Service. the Customer's right to receive Service and use
capacity on the Transponder shall immediately cease and GECEL shall be
entitled to discontinue the Service. Customer hereby irrevocably authorizes
GECEL to require Customer's uplink provider to discontinue the uplink
service supporting the Service in such circumstances, without liability to
GECEL, and Customer confirms that the uplink provider will be so entitled
to discontinue service without reference to Customer. If upon expiration or
termination of this Agreement for any reason by either party, GECEL is
unable to regain the use of all, or any part of, the Transponder(s) free
and clear of any claims, liens, encumbrances or security interests of any
nature arising as a result of the use of the Transponder(s) by Customer or
Customer's Designees, then in addition to all other remedies available to
GECEL pursuant to this Agreement, at law, in equity, or otherwise, Customer
shall be obligated, without regard to any such termination or expiration,
to continue to pay GECEL the payments provided for in Article 2.
ARTICLE 10. GENERAL PROVISIONS
A. Force Majeure. Except for the failure to make payment when due, neither
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party will be liable to the other by reason of any failure in performance
of this Agreement if the failure arises out of acts of God, acts of the
other party, acts of government authority, strikes or other labour
disturbances, or any other cause beyond the reasonable control of that
party.
11.
<PAGE>
B. No Implied License. The provision of services or the conveying of any
------------------
information under this Agreement shall not convey any license by
implication, estoppel or otherwise, under any patents or other intellectual
property rights of Customer or GECEL, General Electric Company, and their
affiliates, contractors and vendors.
C. No Third Party Rights, No Fiduciary Relationship. Nothing contained in this
------------------------------------------------
Agreement shall be deemed or construed by the parties or by any third party
to create any rights, obligations or interests in third parties; or to
create the relationship of principal and agent, partnership or joint
venture or any other fiduciary relationship or association between the
parties.
D. No Waiver; Remedies Cumulative. No waiver, alteration, or modification of
------------------------------
any of the terms of this Agreement will be binding unless in writing and
signed by both parties. All remedies and rights hereunder and those
available in law or in equity shall be cumulative and the exercise by a
party of any such right or remedy shall not preclude the exercise of any
other right or remedy available under this Agreement in law or in equity.
E. Costs and Attorneys' Fees. In addition to all other amounts payable under
-------------------------
this Agreement, GECEL shall be entitled to recover from Customer (i) costs
of collection of any such amounts, including reasonable attorneys' fees and
disbursements and (ii) costs, including reasonable attorneys' fees and
disbursements, incurred in seeking to prevent use of Service contrary to
the terms of this Agreement.
F. Governing Law and Jurisdiction. This Agreement shall be construed and
------------------------------
enforced in accordance with the laws of England, excluding its conflicts of
law rules. The parties hereby consent to and submit to the exclusive
jurisdiction of the English courts, and any action or suit under this
Agreement shall be brought by the parties in any court established or
sitting in England with appropriate jurisdiction over the subject matter.
The parties shall not raise in connection therewith, and hereby waive, any
defenses based upon venue, inconvenience of the forum, lack of personal
jurisdiction, sufficiency of service of process (as long as notice of such
action or suit is furnished in accordance with Article 1.D. hereunder) or
the like in any such action or suit.
G. Statute of Limitations. Any action of any kind by either party arising out
----------------------
of this Agreement must be commenced within two (2) years from the date the
right, claim, demand or cause of action shall first arise.
H. Headings; Severability; Customer Purchase Orders. All titles and headings
------------------------------------------------
in this Agreement are for reference purposes only; they will not affect the
meaning or construction of the terms of this Agreement. If any part or
parts of this Agreement are held to be invalid, the remaining parts of the
Agreement will continue to be valid and enforceable. Customer agrees that
any purchase order or other similar document that Customer may issue in
connection with this Agreement will be for Customer's internal purposes
only and, therefore, even if acknowledged by GECEL, will not in any way add
to, subtract from, or in any way modify the terms and conditions of this
Agreement.
12.
<PAGE>
I. Assignment. Customer shall not assign or transfer its rights or obligations
----------
under this Agreement without GECEL's prior written consent, which consent
shall not be unreasonably withheld. Notwithstanding the foregoing, GECEL
may elect, in lieu of consenting to an assignment (with or without
conditions), to terminate this Agreement. If GECEL elects to terminate this
Agreement in accordance with the preceding sentence, it shall so notify
Customer within thirty (30) days after receipt of the request for consent
to assignment. Whereupon Customer shall have a period of thirty (30) days
within which to (a) accept termination and notify GECEL of the date on
which such termination shall be effective (which date shall be not less
than sixty (60) days nor more than one hundred twenty (120) days after the
date of such notice from Customer to GECEL) or (ii) withdraw the request
for consent to assignment and continue this Agreement in effect. If
Customer does not exercise one of the options stated in the immediately
preceding sentence within the applicable time limit, Customer shall be
deemed to have exercised the option stated in clause (ii) of such sentence.
ARTICLE 11. DEFINITIONS
As used in this Agreement:
13.
<PAGE>
A. "BSS" means Broadcasting Satellite Service as defined in the Radio
Regulations (as amended from time to time) of the International
Telecommunications Union.
B. "End-of-Life" means the date on which, in GECEL's reasonable judgment, a
satellite should be taken out of service because of insufficient fuel.
C. "Failed Satellite" or "Satellite Failure" means as regards the Satellite:
1. where one or more of the basic subsystems fail, rendering the use of
the Satellite for its intended purposes impractical, as determined by
GECEL in its reasonable business judgment. or on which more than
one-half of the GE-1E BSS transponders on the Ku-band payload are
Transponder Failures; and
2. that GECEL has declared a failure.
D. "Failed Transponder" or "Transponder Failure" means, with respect to any
Transponder used to provide service to Customer under this Agreement, any
of the following events:
1. such Transponder fails to meet the Transponder Performance
Specifications in any material respect for any period of one hundred
and twenty (120) consecutive hours:
2. twenty (20) or more creditable Interruptions of fifteen (15)
continuous minutes or more in duration shall occur within any ninety
(90) consecutive days; or
3. such Transponder shall fail to meet the Transponder Performance
Specifications in any material respect for any period of time under
circumstances that make it clearly ascertainable or predictable, based
on satellite industry engineering standards, that any failure set
forth in Paragraphs 1) or 2) above will occur.
For purpose of this definition, measurement of periods of failure hereunder
shall commence when Customer has vacated its signal to permit verification of
the existence of the failure by GECEL.
14.
<PAGE>
E. "GE-1E" means the name of the service provided by GECEL on 16 transponders
on the Satellite.
F. "Interruption" means any period during which a Transponder fails to meet
the Transponder Performance Specifications in any material respect and such
circumstances preclude the use of the Transponder for its intended purpose.
G. "Non-Preemptible Service" or "Non-Preemptible Transponder" means a
satellite service or a transponder on which such service is provided that
may not be preempted to restore another service or transponder and that is
not itself entitled to be restored by preempting another transponder.
H. "NSAB" means Nordiska Satellitaktiebolaget, a company jointly held by
Swedish Space Corporation and Teracom Svensk Rundradio AB, organized under
the laws of Sweden having its principal place of business at Solna, Sweden
and Tele Danmark AS, organized under the laws of Denmark having its
principal place of business at Copenhagen, Denmark.
I. "PTS" means the Swedish National Post and Telecom Agency ("Post och
Telestyrelsen").
J. "Replacement Date" means the date on which a successor satellite to the
Satellite or to the Ku-band payload of the Satellite is made capable of
carrying communications traffic at the orbital location to which the
Satellite is assigned.
K. "Replacement Transponder" means a spare transponder amplifier and its
associated components, which is accessible for purposes of providing
restoration and which is capable of carrying communications traffic within
the parameters as described in the transponder performance specifications
for the transponder to be restored.
L. "Reverse Contract Order" means, as to each GE-1E service or transponder on
the Satellite, in order from the latest date on which a binding agreement
for the taking of such service has been executed by both a customer and
GECEL, to the earliest such date.
M. "Satellite" means (1) the communications spacecraft designated "Sirius 2",
or (2) if "Sirius 2" becomes a Satellite Failure, a suitable replacement,
as determined by GECEL, in its sole and exclusive judgment if made
available by GECEL. When used in the lower case, "satellite" means a
domestic communications satellite operating in Ku-band.
N. "Service" shall have the meaning provided in Article 1.A.
15.
<PAGE>
O. "Transponder" means a Ku-band radio frequency transmission channel on the
Satellite, having a nominal bandwidth of 33 MHz, used to provide service to
Customer pursuant to the terms of this Agreement. Customer acknowledges and
agrees that due to circumstances including but not limited to the
characteristics of Customer's traffic, Customer's ground segment
configuration, and the characteristics of traffic on cross polarized
transponders on the Satellite and of carriers on satellites in proximity to
the Satellite, the entire 33 MHz of the Transponder may not be usable by
Customer for the operation of all types of carriers. When used in the lower
case, "transponder" means a Ku- band radio frequency transmission channel
on a communications satellite.
This Agreement contains the complete and exclusive understanding of the
parties with respect to the subject matter hereof and supersedes all prior
negotiations and agreements between the parties with respect thereto. To the
extent that any Attachment may be inconsistent with the text of the Agreement,
the text of the Agreement shall control.
Skycache, Inc. GE Capital Europe Limited
By: /s/ Robert Dunham By: /s/ V.M. Agostinelli
------------------------------- --------------------------------
(Signature) (Signature)
Name: Robert Dunham Name: V.M. Agostinelli
------------------------------ ---------------------------
(Typed or Printed Name) (Typed or Printed Name)
Title: CFO Title: GM
----------------------------- --------------------------
Date: 11/1/99 Date: 6/11/99
------------------------------ ---------------------------
16.
<PAGE>
ATTACHMENT A
TRANSPONDER PERFORMANCE SPECIFICATION
BSS PAYLOAD
A.1 STATIONKEEPING TOLERANCES
plus or minus 0.1(degrees) North-South and plus or minus 0.05(degrees) East-West
maximum
A.2 EIRP and G/T
The minimum single carrier saturated EIRP and G/T at transponder center
frequency shall be as specified below. This is not inclusive of measurement
tolerance, which shall be a maximum of plus or minus 1.5 dB for EIRP and plus or
minus 2.0 dB for saturation flux density (SFD).
A.2.1 EIRP and G/T
The minimum EIRP shall be 49.0 dBW and minimum G/T shall be 3.0 dB/K within the
area defined by the following coordinates:
Longitude (degrees) Latitude (degrees)
E 5.0 N 53.2
W 2.5 N 54.5
W 3.5 N 48.0
W 2.2 N 43.4
W 6.0 N 43.6
W 5.5 N 36.1
E 5.9 N 43.3
E 16.1 N 39.7
E 29.1 N 38.7
E 26.3 N 48.4
E 23.2 N 55.3
E 20.5 N 54.8
E 10.0 N 54.4
A.2.2 SATURATION FLUX DENSITY (SFD)
The Saturation Flux Density as a 6 dB flux control attenuator setting shall be
- -91 dBW/m2 for the G/T referenced above.
A.3 FREQUENCY RESPONSE
The frequency response (referenced to center frequency, without multipath, with
a measurement tolerance of plus or minus 0.5 dB) shall be:
1.
<PAGE>
-1.5 dB over central 20 MHz
-2.0 dB over central 24 MHz
-3.7 dB over central 33 MHz
A.4 GROUP DELAY
The group delay (referenced to center frequency, without multipath, with a
measurement tolerance of plus or minus 0.5 ns) shall be:
18 ns over central 20 MHz
25 ns over central 24 MHz
98 ns over central 33 MHz
A.5 PAYLOAD REDUNDANCY
Receivers: 4 for 2
Transponder Amplifiers: 20 for 16; spares shared between BSS & FSS.
A.6 SYSTEM POLARIZATION ISOLATION (Uplink combined with downlink)
29 dB minimum
A.7 TRANSPONDER BANDWIDTHS
The transponders have a 33 MHz nominal bandwidth with 38.36 MHz channel spacing.
Transponder center frequencies are shown in Table Al.
A.8 UPLINK GAIN COMPENSATION
Automatic Level Control (ALC) is capable of being enabled by ground command on a
channel-by-channel basis. Downlink EIRP will be maintained within plus or minus
1.0 dB of saturation for input levels ranging from saturation to 18 dB input
backoff.
A.9 TRANSPONDER GAIN SETTINGS
Flux control attenuators can be set by ground command in 2 dB (plus or minus 0.5
dB) steps from 0 dB to 18 dB.
2.
<PAGE>
Table A1
BSS FREQUENCY PLAN
Uplink Downlink
BSS Center Center
Transponder Frequency Frequency Downlink
Number (MHz) (MHz) Polarization
- -------------------------------------------------------------
01 17327.480 11727.480 HORIZONTAL LINEAR
02 17346.660 11746.660 VERTICAL LINEAR
03 17365.840 11765.840 HORIZONTAL LINEAR
04 17385.020 11785.020 VERTICAL LINEAR
05 17404.200 11804.200 HORIZONTAL LINEAR
06 17423.380 11823.380 VERTICAL LINEAR
07 17442.560 11842.560 HORIZONTAL LINEAR
08 17461.740 11861.740 VERTICAL LINEAR
09 17480.920 11880.920 HORIZONTAL LINEAR
10 17500.100 11900.100 VERTICAL LINEAR
11 17519.280 11919.280 HORIZONTAL LINEAR
12 17538.460 11938.460 VERTICAL LINEAR
13 17557.640 11957.640 HORIZONTAL LINEAR
14 17576.820 11976.820 VERTICAL LINEAR
15 17596.000 11996.000 HORIZONTAL LINEAR
16 17615.180 12015.180 VERTICAL LINEAR
17 17634.360 12034.360 HORIZONTAL LINEAR
18 17653.540 12053.540 VERTICAL LINEAR
19 17672.720 12072.720 HORIZONTAL LINEAR
20 17691.900 12091.900 VERTICAL LINEAR
21 17711.080 12111-080 HORIZONTAL LINEAR
22 17730.260 12130.260 VERTICAL LINEAR
23 17749.440 12149.440 HORIZONTAL LINEAR
24 17768.620 12168.620 VERTICAL LINEAR
25 17787.800 12187.800 HORIZONTAL LINEAR
26 17806.980 12206-980 VERTICAL LINEAR
27 17826.160 12226.160 HORIZONTAL LINEAR
28 17845.340 12245.340 VERTICAL LINEAR
29 17864.520 12264.520 HORIZONTAL LINEAR
30 17883.700 12283.700 VERTICAL LINEAR
31 17902.880 12302.880 HORIZONTAL LINEAR
32 17922.060 12322-060 VERTICAL LINEAR
33 17941.240 12341.240 HORIZONTAL LINEAR
34 17960.420 12360.420 VERTICAL LINEAR
35 17979.600 12379.600 HORIZONTAL LINEAR
36 17998.780 12398.780 VERTICAL LINEAR
37 18017.960 12417.960 HORIZONTAL LINEAR
38 18037.140 12437.140 VERTICAL LINEAR
39 18056.320 12456.320 HORIZONTAL LINEAR
40 18075.500 12475.500 VERTICAL LINEAR
1.
<PAGE>
1.
<PAGE>
ATTACHMENT B
GE CAPITAL
EUROPE LIMITED (GECEL)
GE-1 E (SIRIUS 2)
USERS GUIDE
December 1997
1.
<PAGE>
TABLE OF CONTENTS
SECTION TITLE PAGE
- ------- ----- ----
1.0 SCOPE...................................................................1
2.0 BUSINESS INTERFACE......................................................1
3.0 TECHNICAL OPERATIONS INTERFACE..........................................1
4.0 TECHNICAL OPERATIONS PARAMETERS.........................................1
5.0 EARTH STATION REQUIREMENTS..............................................1
5.1 Control............................................................1
5.2 Antenna Patterns...................................................2
5.3 Polarization Isolation.............................................2
5.4 Spurious Emissions.................................................2
5.5 Ground Station EIRP Stability......................................2
5.6 Uplink Power Limits................................................3
5.7 Power Settings.....................................................3
5.8 Energy Dispersal...................................................3
5.9 Frequency Stability................................................3
5.10 Offset Frequencies.................................................3
5.11 VITS...............................................................3
5.12 Monitoring.........................................................4
5.13 Transportable Earth Stations.......................................4
5.14 Pointing Stability.................................................4
5.15 Transmitter Termination............................................4
5.16 Licensing..........................................................4
6.0 SATELLITE BOX CENTER AND ANTENNA ALIGNMENT..............................4
7.0 SATELLITE ACCESS........................................................5
8.0 SINGLE CHANNEL PER CARRIER (SCPC) TRAFFIC...............................6
9.0 TROUBLE REPORTING.......................................................6
10.0 CARRIER PARAMETERS......................................................7
APPENDIX A - SATELLITE INFORMATION....................................A-1
APPENDIX B - RECOMMENDED CARRIER PARAMETERS...........................B-1
1.
<PAGE>
1.0 SCOPE
-----
This document outlines the technical requirements and procedures for the use of
the spacecraft. The spacecraft offers performance; however, the users must
adhere to GECEL technical standards in order to insure optimum performance for
themselves and other users.
2.0 BUSINESS INTERFACE
------------------
Arrangements for transponder service on the satellite should be made through
GECEL's headquarters in Princeton, New Jersey, USA.
3.0 TECHNICAL OPERATIONS INTERFACE
------------------------------
The primary technical operations interface for spacecraft users shall be the
NSAB Technical Control Center (TCC) located in Kiruna Sweden. The phone number
for the TCC is 46 9 807 2120 or 2122.
4.0 TECHNICAL OPERATIONS PARAMETERS
-------------------------------
The Customer shall develop the required Link Analysis for its proposed service
for submittal to GECEL. The Customers proposed satellite transmission parameters
will be reviewed to assure that they will not cause unacceptable degradation or
interference to other traffic on the Satellite or on other satellites.
5.0 EARTH STATION REQUIREMENTS
--------------------------
Earth stations accessing the Satellite shall meet the requirements contained in
the following subparagraphs. GECEL reserves the right to physically inspect the
earth station to insure compliance with these requirements.
5.1 Control
The earth station shall be under the control of trained technicians at all
times. The telephone number of the control point for the earth station shall be
on file at GECEL's TOC and the NSAB TCC. The technician at the control point
shall have the ability and authority, without reference to other management, to
cease transmission at any time if directed by GECEL.
5.2 Antenna Patterns
The transmitting earth stationsshall meet the following characteristics.
<TABLE>
<S> <C> <C>
Off Axis Co-Polar Gain (less than or equal to)21-20 log(theta) dBi for 0.10(degrees)(less than)(theta)
(less than or equal to)0.32(degrees)
(less than or equal to)5.7-53.2(theta)2 dBi for 0.32(degrees)(less than)(theta)
(less than or equal to)0.54 (degrees)
(less than or equal to)28-25 log(theta) dBi for 0.54(degrees)(less than)(theta)
(less than or equal to)36.31(degrees)
(less than or equal to)-10 dBi for 36.31(degrees)(less than)(theta)
Cross-Polar Gain (less than or equal to)Gmax-35 dBi for 0(degrees)(less than)(theta)
(less than or equal to)1.91(degrees)
(less than or equal to)28-25 log(theta) dBi for 1.91(degrees)(less than)(theta)
(less than or equal to)36.31(degrees)
(less than or equal to)-10 dBi for 36.31(degrees)(less than)(theta)
</TABLE>
<PAGE>
Antennas not meeting these patterns shall be identified to GECEL and may be
conditionally accepted on a case by case basis.
5.3 Polarization Isolation
The on-axis system polarization isolation, as measured by the TCC, shall be -29
dB or better (transmit antenna, spacecraft, receive antenna). The uplink
facilities shall be capable of maintaining this minimum isolation at all times.
Periodic checks will be made by TCC to insure compliance.
5.4 Spurious Emissions
Spurious emissions transmitted from the Customers earth station will meet the
following characteristics:
<TABLE>
<S> <C> <C>
Spurious Radiation (less than or equal to)4 dBW/4 kHz (excluding multicarrier modulation)
Digital Carrier Spectral (less than or equal to)12 dBW/4 kHz
Sidelobes (less than or equal to)42 dBW/12.5 MHz
</TABLE>
5.5 Ground Station EIRP Stability
The EIRP of any carrier transmitted to the Satellite, measured in a continuous
24-hour period, shall not vary by more than (plus or minus)0.5 dB. Stations
employing uplink power control shall not exceed authorized satellite flux
densities by more than 1 dB at any time.
Uplink power control shall be performed in an automated fashion and the response
of the system shall be sufficiently agile to guarantee that the flux density at
the satellite never exceeds the nominal value by more than 1 dB.
Earth stations without uplink power control may not change the uplink power for
any reason without prior approval of the TCC.
5.6 Uplink Power Limits
The maximum uplink power from the Customer's earth station shall be approved and
monitored by the TCC. Only sufficient power required to saturate the transponder
or establish the optimum operating point for the transponder, as determined by
GECEL, shall be used. Under no circumstances shall the maximum uplink EIRP
exceed 83.5 dBW.
5.7 Power Settings
The TCC will assist the customer in assuring correct power settings. Once
determined, the customer shall keep a record in the station log of the power
settings for each transponder and type of service. If the earth station
configuration is changed in any way that affects uplink EIRP,
<PAGE>
the TCC shall be contacted and arrangements made for the TCC to work with the
customer to reestablish the operating parameters.
5.8 Energy Dispersal
An energy dispersal (ED) waveform shall be applied to analog TV carriers. The
triangular ED baseband waveform shall be phase locked to the video frame rate
(PAL: 25 Hz, NTSC: 30 Hz) and its transition points synchronized to the field
blanking periods. The RF deviation caused by the ED shall be:
For BSS: (plus or minus)300 kHz with video present and (plus or
minus)600 kHz if video is lost.
For FSS: (plus or minus)500 kHz with video present and (plus or
minus)1MHz if video is lost.
5.9 Frequency Stability
The frequency stability for the uplink carrier shall meet the following:
Full Transponder Analog or Digital
Services (plus or minus)250 kHz
Partial Transponder Services (plus or minus)0.1 % of the occupied carrier
bandwidth
5.10 Offset Frequencies
Modulators with offset center frequencies, which result in an asymmetrical
distribution of power around the assigned center frequency, shall not be used.
5.11 VITS
GECEL recommends that all customers transmitting television programming include
Vertical Interval Test Signals (VITS) as part of their transmission. This will
allow the TCC to assist customers in the event of transmission problems.
5.12 Monitoring
The TCC requires the capability to monitor unscrambled video of all of GECEL's
customers. It is therefore required that the Customer furnish a descrambler to
the TCC at no cost to GECEL or the TCC.
5.13 Transportable Earth Stations
Customers using transportable earth stations must meet all of the requirements
noted herein. In addition, the Customer must supply to the TCC and GECEL the
antenna model and manufacturer, and the uplinked signal must contain an
Automatic Transmitter Identification System (ATIS).
<PAGE>
5.14 Pointing Stability
Uplink antenna pointing stability shall be such that environmental conditions
(wind loading, thermal, etc.) will not cause antenna movement producing more
than a (plus or minus)1 dB change in flux density at the satellite. Under no
circumstances may the antenna violate the cross-polarization requirements stated
above.
5.15 Transmitter Termination
Removing the Radio Frequency (RF) drive to the input of the earth station power
amplifier is not sufficient to terminate transmissions. Termination of
transmissions must be accomplished by either (a) switching the power amplifier
into a waveguide load or (b) disconnecting the power amplifier from its power
source.
5.16 Licensing
The customer is responsible for following the Telecommunications Regulations of
the country wherein the antenna(s), both transmit and receive, is (are) located
and to secure any permits and/or licenses required to operate on the Satellite.
6.0 SATELLITE BOX CENTER AND ANTENNA ALIGNMENT
------------------------------------------
All geosynchronous spacecraft move about in latitude, longitude and altitude
within their defined stationkeeping box. The Satellite will be maintained within
(plus or minus)0.05 longitude and plus or minus 0.1 latitude. Periodically, the
spacecraft will be in the center of the box. The box center data will be
available from the TCC and should be utilized to align non-tracking earth
station antennas on the satellite. Once aligned, the antenna should not have to
be adjusted again in azimuth and elevation unless the antenna is moved or
damaged. Polarization may have to be optimized by the TCC when a carrier is
first transmitted.
7.0 SATELLITE ACCESS
----------------
Access to a transponder on the Satellite is arranged by calling the TCC. The
procedure for accessing the Satellite is as follows:
a) The Customer's earth station shall call the TCC, identify their
company name and transmit city location and request access to the
satellite and transponder. The TCC will determine that the request is
valid for the customer.
b) Based on the transmission parameters for the Customer's service, the
TCC will configure the transponder accordingly (attenuator setting,
ALC on/off, etc.)
c) The earth station shall be aligned with the appropriate pointing and
polarization setting on the satellite. The associated uplink equipment
shall be operated at the frequency and uplink power levels established
by GECEL and the TCC.
d) The TCC will monitor the downlink of the transponder being accessed
and direct the customer to transmit a CW clean (no modulation)
carrier. When the carrier is
<PAGE>
up, the TCC will verify the power operating point and polarization
isolation. If they are not correct, the TCC will assist the customer
earth station in optimizing the transmission. When optimized, the TCC
will direct that modulation by applied and will check for correct
deviation. If all parameters are within specifications, the customer
will be notified that the transmission is acceptable. The transmitter
power settings should be noted and entered in the users station log.
If possible, a power meter on the transmitter output coupler should be
used for higher accuracy. The technicians will then exchange initials
and both activities will log the event. If the earth station cannot
meet the transmission requirements, the TCC will direct the carrier to
be taken down until the problem can be corrected.
e) For a saturated single-carrier service, the transponder saturation
point will be determined using the 5:10 method. The TCC will direct
the customer to bring up a CW carrier and raise power until saturation
is achieved. Uplink power will then be reduced until the downlink
carrier level drops by 5 dB. At this point, the uplink power level
will be noted and then increased +10 dB. Modulation will be applied to
the carrier and the resulting uplink carrier power reading is the
transponder saturation point and should be entered into the user's
station log. If possible, a power meter should be utilized for higher
accuracy.
f) If a customer's service will utilize the Automatic Level Control (ALC)
mode of the transponder, the transponder will be initially configured
in linear mode. The input attenuator will be set to the amount of
uplink overdrive specified in the customer's transmission parameters.
Saturation level, using the 5:10 method above, will be established.
The customer will then switch the power amplifier into a waveguide
load without changing the uplink power level previously set. The TCC
will then reconfigure the transponder into ALC mode and the customer
will reapply the power amplifier output to the antenna.
g) The customer may continue to operate his carrier within the previously
agreed upon schedule as long as the carrier remains within the
technical requirements. If the carrier exceeds tolerances or is
causing interference to other users of the Satellite or other
satellites, the TCC shall direct that the user cease transmission
immediately. The customer shall insure that the duty staff has
standing authorization to respond to such requests without referrals
to other authorities. The customer shall cease transmission until the
problem is corrected. Before resuming transmission, the customer must
contact the TCC to verify that the problem has been resolved.
8.0 SINGLE CHANNEL PER CARRIER (SCPC) TRAFFIC
-----------------------------------------
Special considerations must be observed for SCPC traffic, in addition to those
contained in Section 7 above. Since SCPC carriers share the available bandwidth
and power of the transponder, any change to assigned allocations can affect all
traffic within the transponder. When an order is accepted by GECEL for SCPC
service, the allowable power and bandwidth that may be used by the customer is
precisely specified. It is very important that SCPC power level, center
frequency and carrier bandwidth be initially adjusted while being monitored and
<PAGE>
under the direction of the TCC. The user may not, without prior coordination
with GECEL and the TCC, make any modifications to their SCPC power, center
frequency or bandwidth. Uncoordinated variation of carrier parameters can cause
interference and degradation of service to other carriers within the
transponder.
Some customers are allocated a percent of total transponder power and bandwidth
or assigned a specific power level to be used within a specific frequency range.
These customers must submit and maintain traffic plans to GECEL and the TCC
summarizing their proposed operations within the allocated space segment. These
customers will be responsible for assuring that their individual carriers do not
exceed their contracted allocations or cause interference into other customers.
The Satellite's transponders will be monitored continuously to verify SCPC power
and bandwidth assignments.
9.0 TROUBLE REPORTING
Customers should immediately report to the TCC any instances of interference to
their transmissions. The TCC will assist in trying to identify the source of the
interference and will contact any likely potential interferers. It should be
recognized, however, that it is sometimes very difficult to identify the source
of interference.
Suspected degradation of transponder performance shall be reported to the TCC.
The customer may be required to release the transponder as a mutually acceptable
time to allow the TCC time for transponder performance testing.
Please note that for purposes of determining billing credits for service
outages, the length of interruption is measured from the time the customer
notifies the TCC of the interruption to the time when the customer is notified
by the TCC that the interruption has been resolved.
In the event that it becomes necessary to escalate service problems beyond the
primary level, the customer is afforded the opportunity to contact GECEL
managerial personnel for assistance in resolving the problem.
10.0 CARRIER PARAMETERS
------------------
Appendix B contains suggested carrier parameters for digital and analog
services. The customer should coordinate with GECEL and the TCC should the
customer desire to transmit signals not referenced in Appendix B or deviate from
the parameters contained in Appendix B.
<PAGE>
APPENDIX A
GE1E SATELLITEINFORMATION
BSS PAYLOAD
A.1 TRANSPONDER BANDWIDTHS
The transponders have a 33 MHz nominal bandwidth with 38.36 MHz channel spacing.
Transponder center frequencies are shown in Table Al.
A.2 UPLINK GAIN COMPENSATION
Automatic Level Control (ALC) is capable of being enabled by ground command on a
channel-by-channel basis. Downlink EIRP will be maintained within (plus or
minus)1 dB of saturation for input levels ranging from saturation to 18 dB input
backoff.
A.3 TRANSPONDER GAIN SETTINGS
Flux control attenuators can be set by ground command in 2 dB ((plus or minus)
0.5 dB) steps from 0 dB to 18 dB.
<PAGE>
Table A1
BSS FREQUENCY PLAN
Uplink Downlink
BSS Center Center
Transponder Frequency Frequency Downlink
Number (MHz) (MHz) Polarization
01 17327.480 11727.480 HORIZONTAL LINEAR
02 17346.660 11746.660 VERTICAL LINEAR
03 17365.840 11765.840 HORIZONTAL LINEAR
04 17385.020 11785.020 VERTICAL LINEAR
05 17404.200 11804.200 HORIZONTAL LINEAR
06 17423.380 11823.380 VERTICAL LINEAR
07 17442.560 11842.560 HORIZONTAL LINEAR
08 17461.740 11861.740 VERTICAL LINEAR
09 17480.920 11880.920 HORIZONTAL LINEAR
10 17500.100 11900.100 VERTICAL LINEAR
11 17519.280 11919.280 HORIZONTAL LINEAR
12 17538.460 11938.460 VERTICAL LINEAR
13 17557.640 11957.640 HORIZONTAL LINEAR
14 17576.820 11976.820 VERTICAL LINEAR
15 17596.000 11996.000 HORIZONTAL LINEAR
16 17615.180 12015.180 VERTICAL LINEAR
17 17634.360 12034.360 HORIZONTAL LINEAR
18 17653.540 12053.540 VERTICAL LINEAR
19 17672.720 12072.720 HORIZONTAL LINEAR
20 17691.900 12091.900 VERTICAL LINEAR
21 17711.080 12111.080 HORIZONTAL LINEAR
22 17730.260 12130.260 VERTICAL LINEAR
23 17749.440 12149.440 HORIZONTAL LINEAR
24 17768.620 12168.620 VERTICAL LINEAR
25 17787.800 12187.800 HORIZONTAL LINEAR
26 17806.980 12206.980 VERTICAL LINEAR
27 17826.160 12226.160 HORIZONTAL LINEAR
28 17845.340 12245.340 VERTICAL LINEAR
29 17864.520 12264.520 HORIZONTAL LINEAR
30 17883.700 12283.700 VERTICAL LINEAR
31 17902.880 12302.880 HORIZONTAL LINEAR
32 17922.060 12322.060 VERTICAL LINEAR
33 17941.240 12341.240 HORIZONTAL LINEAR
34 17960.420 12360.420 VERTICAL LINEAR
35 17979.600 12379.600 HORIZONTAL LINEAR
36 17998.780 12398.780 VERTICAL LINEAR
37 18017.960 12417.960 HORIZONTAL LINEAR
38 18037.140 12437.140 VERTICAL LINEAR
39 18056.320 12456.320 HORIZONTAL LINEAR
40 18075.500 12475.500 VERTICAL LINEAR
<PAGE>
APPENDIX B
RECOMMENDED CARRIER PARAMETERS
B.1 REFERENCE DOCUMENTS
-------------------
<TABLE>
- -----------------------------------------------------------------------------------------
<S> <C>
ETS 300 421 Digital broadcasting system for television, sound and
data services, Framing structure, channel coding and
modulation, Satellite systems.
- -----------------------------------------------------------------------------------------
ISO/TEC DIS 13818-1 MPEG2 Systems
- -----------------------------------------------------------------------------------------
ISO/TEC DIS 13818-2 MPEG2 Video
- -----------------------------------------------------------------------------------------
ISO/TEC DIS 13818-3 MPEG2 Audio
- -----------------------------------------------------------------------------------------
Rec. ITU-R BT.470-3 Television Systems
- -----------------------------------------------------------------------------------------
Rec. ITU-R BO.650-2 Specifications for the MAC/Packet Family
- -----------------------------------------------------------------------------------------
DVB doc. April 94 Background Documents on Digital Video Broadcasting
- -----------------------------------------------------------------------------------------
ETR 154 Implementation guidelines for the use of MPEG-2 Systems,
Video and Audio in satellite and cable broadcasting
application in Europe
- -----------------------------------------------------------------------------------------
Rec. ITU-R F.405-1 Pre-emphasis characteristics for frequency modulation
radio-relay systems for television
- -----------------------------------------------------------------------------------------
</TABLE>
B.2 DIGITAL SIGNALS
---------------
Signals according to ETSI
ETS 300-241 (DVB)
Maximum Aggregate Bit Rate: 55.0 Mbps
Forward Error Correction Rates: 1/2, 2/3, 3/4, 5/6 or 7/8
Reed Solomon: 204/188
Modulation: QPSK
Maximum Transmit Symbol Rate: 27.5 Mbaud
. The Maximum Aggregate Bit Rate includes Forward Error Correction and
Reed-Solomon encoding.
B.3 D2-MAC
------
Video/Audio/Data: D2-MAC/packet system according to Rec. ITUI-R B0.650-2
Modulation Parameters:
Video Deviation: 16 MHz/V
Video Pre-emphasis: Rec ITU-R BO.650-2
Energy Dispersal: (plus or minus)600 kHz, 25 Hz
B.4 PAL
---
<PAGE>
Video: PAL/625 lines according to Rec. ITUI-R BT.470
Audio: Analog and/or digital subcarriers
Modulation: Frequency Modulation (FM)
Modulation Parameters:
Video Deviation: 16 MHz/V
Video Pre-emphasis: Rec ITU-R F.405-1, 625 lines
Energy Dispersal: (plus or minus)300 kHz, 25 Hz
Audio Subcarrier Frequencies*
Mono: 6.50 MHz
Stereo: 7.02 / 7.20 MHz
Audio Pre-emphasis:
Mono: 50 (micro)s
Stereo: Panda 1
Audio Deviation:
Mono: 90 kHz p-p for 0 dBrn
Stereo: 35 kHz p-p for 0 dBm
<PAGE>
Attachment C
CLEAN, IRREVOCABLE
------------------
NONCANCELLABLE LETTER OF CREDIT
-------------------------------
[LETTERHEAD OF ISSUING BANK]
IRREVOCABLE LETTER OF CREDIT
TO: DATE:____________________
GE American Communications, Inc.
Four Research Way
Princeton, New Jersey 08540-6684
Attention: Vice President, Finance
GE Capital Europe Limited
Clarges House
6-12 Clarges Street
London W1Y 8DH
Attention: VP, GE Americom Europe
NUMBER:__________________________
GENTLEMEN:
WE HEREBY OPEN OUR IRREVOCABLE LETTER OF CREDIT IN YOUR JOINT AND SEVERAL
FAVOR FOR THE ACCOUNT OF SKYCACHE, INC., UP TO AN AGGREGATE AMOUNT OF [ *** ]
AVAILABLE IN ONE OR MORE DRAWINGS UPON PRESENTATION TO US OF YOUR DRAFT(S) AT
SIGHT ON US ACCOMPANIED BY ANY ONE OF THE DOCUMENTS SPECIFIED BELOW:
1) A statement in writing signed by an officer of GE American
Communications, Inc. ("GE Americom"), stating that a) SkyCache, Inc.,
("SkyCache") has defaulted under an agreement dated __________ ___, 1999 between
SkyCache and GE Americom ("the GE Americom Agreement"), and b) the amount of the
draft being presented does not exceed the aggregate amount due and payable to GE
Americom under the GE Americom Agreement.
OR: 2) A statement in writing signed by an officer of GE Capital Europe
Limited ("GECEL"), stating that a) SkyCache has defaulted under an agreement
dated _________, ___ 1999 between SkyCache and GECEL ("the GECEL Agreement"),
and b) the amount of the draft being presented does not exceed the aggregate
amount due and payable to GECEL under the GECEL Agreement.
*** Confidential Treatment Requested
<PAGE>
OR: 3) A statement in writing signed by an officer of GE Americom or GECEL
stating that SkyCache has failed to deliver to GE Americom and GECEL an
extension or replacement of the Letter of Credit as required under either the GE
Americom Agreement or the GECEL Agreement.
DRAFTS MUST BE PRESENTED AT THIS BANK ON OR BEFORE [ *** ].
WE HEREBY AGREE WITH THE DRAWERS, ENDORSERS AND BONA FIDE HOLDERS OF DRAFTS
DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS OF THIS LETTER OF CREDIT THAT SUCH
DRAFTS SHALL BE DULY HONORED ON PRESENTATION AND DELIVERY OF DOCUMENTS AS
SPECIFIED.
THIS CREDIT IS SUBJECT TO "UNIFORM CUSTOMS AND PRACTICES FOR DOCUMENTARY
CREDITS (1994 REVISION) INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 500.
[NAME OF ISSUING BANK]
By:_____________________________
Name:___________________________
*** Confidential Treatment Requested
<PAGE>
Exhibit 10.21
OFFICE SUBLEASE
---------------
THIS OFFICE SUBLEASE, dated as of the 1st day of June 1998, is entered into
by and between Phase 1 Incubator, Inc., a Delaware Corporation ("Lessor"), and
------
SkyCache, Inc., a Delaware Corporation ("Lessee") provides:
------
1. DESCRIPTION OF SUBLET PREMISES. Lessor hereby Subleases to Lessee, and
------------------------------
Lessee hereby hires from Lessor, those certain premises (the "Sublet Premises")
---------------
situated in the City of Laurel, Maryland, and more particularly described on
Exhibit A (which is attached hereto and by this reference made a part hereof and
- ---------
incorporated herein) for a term (the "Term") commencing at 12:01 a.m. on June 1,
----
1998 (the "Commencement Date") and ending: (i) thirty days after written notice
-----------------
from Lessee indicating plans to terminate the Subleasee or (ii) the expiration
or earlier termination of that certain Office Lease (the "Lease"), dated as of
-----
May 1, 1998, between TCP/IP, LLC as landlord and Lessor as tenant. Upon
expiration of the Term and provided Lessee shall not be in material default of
any terms or conditions of this Sublease, Lessee shall have the option to extend
this Sublease for an additional two years by giving Lessor written notice of its
intention to do so at least six months prior to the end of the Term, upon the
same terms and conditions as herein stated and at a rental rate that is
determined as the fair market value of the Sublet Premises at such time.
Notwithstanding the foregoing, in the event of a merger or consolidation of the
Lessee with or into another unaffiliated entity, or the acquisition by another
unaffiliated entity or person of all or substantially all of the Lessee's assets
or more than fifty (50%) of the Lessee's then outstanding voting stock, or the
liquidation, dissolution or winding up of the Lessee's business (other than in a
restructuring which results in the continuation of the Lessee's business by an
affiliated entity), then, the Term of this Sublease will extend for the greater
of the remainder of the Term or six (6) months.
2. RENT.
----
2.1. Lessee shall pay to Lessor, without notice, demand, offset or reduction,
rent (the "Rent") in the amount of Eight Hundred Forty Dollars and Sixty Seven
----
Cents ($840.67), on the first (1st) day of each and every month of the Term. The
Rent shall be paid at the offices of Lessor or to such other person or entity or
at such other place or address as Lessor may hereafter direct in writing. If the
Commencement Date is not on the first (1st) day of a month, a prorated monthly
installment of the Rent shall be paid by Lessee to Lessor for the period of time
from the Commencement Date up to (but not including) the first (1st) day of the
next succeeding month, and, thereafter, the Rent shall be paid on the first
(1st) day of each and every month. If Lessee occupies the Sublet Premises before
the Commencement Date, the Rent shall commence, and all of the other terms,
provisions, covenants and conditions of this Sublease shall be in full force and
effect as of the date of occupancy by Lessee; provided, however, that Lessee
-------- -------
shall neither occupy the Sublet Premises, nor place any property whatsoever in
or on the Sublet Premises, without the prior written consent of Lessor. If
Lessee is unable to occupy the Sublet Premises on the Commencement Date because
the Sublet Premises are not ready for occupancy at that time, or because a
previous tenant, sub-tenant or occupant of the Sublet Premises has held over
without Lessor's consent, or because of any cause or reason beyond the direct
control of Lessor, such delay shall not constitute a default on the part of
Lessor, nor shall such delay entitle Lessee to terminate or cancel this
Sublease, and Lessor shall not be liable for any damages Lessee may incur as a
result of its inability to occupy the Sublet Premises on the Commencement Date;
1.
<PAGE>
provided, however, that in the event of such a delay, the Rent shall be abated
from the Commencement Date to the date on which the Sublet Premises are ready
for occupancy.
2.2. If Lessor does not receive from Lessee each monthly rental payment within
ten (10) days of the due date, Lessor, at its option, may charge Lessee a late
charge equal to five percent (5%) of the monthly rental payment (together with
any additional rent as hereinafter provided) as additional rent, and such late
charge shall be due and payable by Lessee to Lessor immediately upon notice to
Lessee. In addition, if a check of Lessee's is returned to Lessor unpaid for any
reason, Lessor, at its option, may thereafter require that Lessee pay the Rent
and any other charges payable hereunder by a certified or cashier's check drawn
on a bank.
3. USE OF SUBLET PREMISES. Lessee shall use the Sublet Premises only for
----------------------
office space and machine rooms. Lessee acknowledges and agrees that Lessor has
made no express or implied warranty, representation, undertaking or agreement
regarding the condition of the Sublet Premises or the ability of Lessee to use
the Sublet Premises in the manner or for the purposes contemplated by Lessee.
Lessee may not use the Sublet Premises for any purpose other than that stated in
this Section 3 without the prior written consent of Lessor.
---------
4. ACCESS TO PREMISES. Lessor covenants and agrees that Lessee and its agents,
------------------
employees, contractors, invitees, sublessees and licensees shall have the right
of ingress and egress to the Sublet Premises through all common or public areas
of the building in which the Sublet Premises are located (including but not
limited to all public entrances, lobbies, elevators and corridors) during normal
business hours (which are hereby deemed to be daily from 8:00 a.m. to 6:00 p.m.,
and Saturdays from 8:00 a.m. to 1:00 p.m.) and at such other times as may be
established by Lessor in accordance with appropriate rules and regulations (or
otherwise as agreed upon by Lessor and Lessee). Lessee covenants and agrees that
Lessor, its agents, employees, contractors, invitees, sublessees and licensees
shall, without prior notice, have the right of reasonable access to the Sublet
Premises during normal business hours and at all times for emergency or security
purposes.
5. MAINTENANCE AND REPAIRS; LESSEE'S OBLIGATION TO NOTIFY.
------------------------------------------------------
Lessee shall keep the Sublet Premises in reasonably good working order and
condition and shall make all repairs. Lessor shall make all replacements not
occasioned by the negligent or willful act of Lessee, its agents, employees,
contractors, invitees, sublessees or licensees. Lessee shall notify Lessor
immediately by telephone and as soon as possible in writing of any repairs or
replacements which, in the opinion of Lessee, need to be made to the Sublet
Premises and of any loss, damage or casualty to the Sublet Premises.
6. TAXES.
-----
6.1. Lessor shall pay all taxes assessed against the real estate (the "Real
----
Estate Taxes") on which the Sublet Premises are located on or before the date on
- ------------
which such taxes become due and payable.
6.2. Lessee shall pay all taxes, charges and levies assessed against the
personal property and fixtures owned by Lessee and placed, stored or used by
Lessee in conjunction with the Sublet Premises. Lessee shall pay, as additional
rent, any ad valorem, license or other tax imposed upon
2.
<PAGE>
Lessor by reason of or with respect to this Sublease or the Rent, and such
additional rent shall be payable within thirty (30) days after Lessor notifies
Lessee that such amount is due and payable.
6.3. Either Lessor or Lessee may challenge the amount, validity or applicability
of any tax, fee, charge or obligation, and the non-challenging party shall
render all necessary and reasonable assistance to the challenging party in the
prosecution of such challenge. Notwithstanding such challenge, Lessor or Lessee,
as applicable, shall pay all taxes, fees, charges and obligations (including any
tax, fee, charge or obligation the amount, validity or applicability of which is
being challenged) on or before the date on which such taxes, fees, charges or
obligations become due and payable.
7. ADJUSTMENTS FOR INCREASES IN REAL ESTATE TAXES AND BUILDING OPERATING
---------------------------------------------------------------------
COSTS.
-----
7.1. General.
-------
(a) For the purpose of this Section 7, the term "Base Year" shall mean the
--------- ---------
calendar year 1998.
(b) The term "Lessee's Proportionate Share" shall refer to the proportionate
----------------------------
amount of increases in the real estate taxes to be paid by Lessee. Lessee's
Proportionate Share shall be computed using a fraction, the numerator of
which is the net rentable area of the Sublet Premises and the denominator
of which is the total net rentable area of the building in which the Sublet
Premises are located. Lessee's Proportionate Share is calculated on Exhibit
-------
B, which is attached hereto and by this reference made a part hereof.
-
(c) The obligations of Lessee set forth in this Section 7 shall survive any
---------
termination of this Sublease.
7.2. Real Estate Taxes.
-----------------
(a) Lessor shall pay the Real Estate Taxes payable during the Base Year as
provided in Section 6 of this Sublease. For each calendar year after the Base
---------
Year, Lessee shall pay to Lessor, as additional rent and within thirty (30) days
after notification by Lessor of the amount thereof, Lessee's Proportionate Share
of the amount by which the Real Estate Taxes assessed for such subsequent tax
year exceed the amount of the Real Estate Taxes for the Base Year.
(b) If this Sublease terminates and Lessee surrenders the Sublet Premises
before the end of a calendar year, Lessee's Proportionate Share of the increase
in Real Estate Taxes for such year over the Base Year shall be prorated based
upon the portion of such year for which this Sublease is in effect and during
which Lessee occupied the Sublet Premises.
8. LESSOR NOT LIABLE; INDEMNITY BY LESSEE. Lessor shall not be liable for any
--------------------------------------
injury to persons (including death) or for any loss or damage to property
resulting from any cause other than the gross negligence or willful, wrongful
act of Lessor. Lessee shall indemnify and hold Lessor and Landlord (as defined
below) harmless for and from any and all suits, actions, damage, liability and
expense (including attorneys' fees) arising from or out of (A) any
3.
<PAGE>
occurrence in or on the Sublet Premises or (B) the occupancy or use by Lessee of
the Sublet Premises.
9. DESTRUCTION TO SUBLEASED PREMISES.
---------------------------------
9.1. If the Sublet Premises are damaged by fire, the elements, accident or any
other casualty but are not thereby rendered unteriantable in whole or in part,
Lessor shall promptly, at its sole cost and expense (unless such damage was
caused by Lessee or any agent, contractor, employee, invitee or licensee of
Lessee, in which event such damage shall be repaired at the sole cost and
expense of Lessee), cause such damage to be repaired, and the Rent shall not be
abated.
9.2. If the Sublet Premises are damaged by fire, the elements, accident or any
other casualty and are thereby rendered untenantable in part, Lessor shall
promptly, at its sole cost and expense (unless such damage was caused by Lessee
or any agent, contractor, employee, invitee or licensee of Lessee, in which
event such damage shall be repaired at the sole cost and expense of Lessee),
cause the damage to be repaired, and the Rent shall be abated proportionately in
accordance with the portion of the Sublet Premises rendered untenantable and
such abatement shall commence on the date Lessor is notified of the damage and
shall continue until the repairs have been completed.
9.3. If the Sublet Premises are damaged by fire, the elements, accident or
other casualty and are thereby rendered wholly untenantable, Lessor shall have
the option (to be exercised in its sole discretion) to (1) terminate this
Sublease immediately by giving written notice of such termination to Lessee, in
which event neither Lessor nor Lessee shall, after the date of such notice, have
any further liability to the other hereunder; or (2) cause such damage to be
repaired, in which event the Rent shall be abated in full, and such abatement
shall commence on the date Lessor is, notified of the damage and shall continue
until the repairs have been completed. If Lessor causes the Sublet Premises to
be repaired, such repairs shall be at the sole cost and expense of Lessor.
9.4. Lessor shall not be required to repair or replace, or to compensate Lessee
for, any property which Lessee is entitled to remove from the Sublet Premises.
9.5. Lessor shall be obligated to make no payments for damages, compensation or
claims for inconvenience, loss of business or annoyance arising from any damage
to or repair of the Sublet Premises or the building in which the Sublet Premises
are located.
10. EMINENT DOMAIN. If all or any part of the Sublet Premises, or all means of
--------------
access thereto, are taken or condemned pursuant to the power of eminent domain,
or by purchase in lieu thereof, this Sublease shall terminate and Lessee shall
have no claim against Lessor or to any portion of the award or purchase price
for the value of any unexpired term of this Sublease, but the foregoing shall
not limit Lessee's right to compensation from the condemning or purchasing
authority for the value of any of Lessee's property taken (other than Lessee's
leasehold interest in the Sublet Premises). In the event of a temporary taking
pursuant to the power of eminent domain, this Sublease shall not terminate but
the term hereof shall be extended by the period of the taking and the Rent shall
abate in proportion to the area for the period of such taking.
4.
<PAGE>
11. SERVICES PROVIDED BY LESSOR.
---------------------------
11.1. Lessor is responsible for furnishing the following services.
(a) Heating and Air Conditioning. Lessor shall provide heating and air
----------------------------
conditioning during the appropriate seasons, and shall attempt to maintain an
average temperature, subject to governmental regulations, of 68 degrees in the
winter season and 74 degrees in the summer season.
(b) Electricity. Lessor shall provide electricity for lighting purposes and
-----------
for the operation of all equipment. As soon as practicable, Lessor will provide
generator backup and Universal Power Supplies to support Lessee's equipment.
(c) Janitorial Service. Janitorial service and supplies shall be provided in
------------------
and about the Sublet Premises by the Lessor.
(d) General Repair and Maintenance. Lessor shall make the necessary
------------------------------
arrangements for all structural repairs, including but not limited to structural
columns and floors (excluding floor coverings such as carpet and floor tile) of
the Building, the roof of the Building, and the exterior walls of the Building
(excluding glass within the Building) provided Lessee gives Lessor notice
specifying the need for and nature of such repairs; provided, however, if Lessor
is required to make any repairs to such portions of the Sublet Premises by
reason, in whole or in part, of the negligent act or failure to act by Lessee or
Lessee's contractors or subcontractors or its or their agents or employees, or
by reason of any unusual use of the Sublet Premises by Lessee (whether or not
such use is a permitted use hereunder), Lessor may collect the cost of such
repairs, upon demand.
11.2. Lessor shall not be liable for the interruption of any of the above-
described services caused by repairs, replacements, improvements, alterations,
strikes, lock-outs, accidents, the inability of Lessor to secure such services
or to obtain fuel or supplies or other cause or causes beyond the reasonable
control of Lessor. Lessor and Lessee hereby covenant and agree that an
interruption of any of the above-described services shall not be deemed to be an
eviction or disturbance of Lessee's use, occupancy or possession of the Sublet
Premises or any part thereof, nor shall any such interruption render Lessor
liable in damages, nor relieve Lessee from its obligation to perform in
accordance with the terms, provisions and conditions of this Sublease including
the payment of the Rent.
12. RIGHTS OF LESSEE SUBORDINATE. This Sublease, and the rights of Lessee
----------------------------
hereunder, are subject and subordinate to all ground or underlying Subleases and
to all mortgages or deeds of trust which may now or hereafter affect this
Sublease, the Sublet Premises, the building in which the Sublet Premises are
located or the land on which such building is constructed. The foregoing
subordination provision shall be self-operative and no further instrument of
subordination shall be required; provided, however, that in confirmation of such
subordination, Lessee hereby agrees, upon the request of Lessor or the Landlord,
to execute and deliver, in recordable form, any instrument of subordination or
confirmation of subordination required by Lessor.
Notwithstanding the foregoing, in the event of a foreclosure under any mortgage
or deed of trust affecting the Sublet Premises or the building in which the
Sublet Premises are located, or in the
5.
<PAGE>
event of the termination of Lessor's interest or the eviction of Lessor under
any ground or other underlying Sublease, the holder of the note secured by the
mortgage or deed of trust, or the purchaser at such foreclosure sale, or the
landlord under such ground or other underlying Sublease, shall have the option
to recognize this Sublease, in which event this Sublease shall continue in full
force and effect and Lessee shall attorn to the new landlord hereunder.
13. TERMS OF TENANT'S LEASE. This sublease is subject to all of the terms and
-----------------------
conditions of that certain lease agreement (the "Lease Agreement") dated May 1,
1998, by and between TCP/IP, LLC (the "Landlord"), as landlord, and Lessor, as
tenant, together with all exhibits and attachments thereto, a copy of which
Lease Agreement is attached hereto as Exhibit C and made a part hereof for all
purposes, except as specifically excepted or addressed herein. Lessee shall
assume and perform the obligations of Lessor as tenant in the Lease Agreement,
to the extent said terms and conditions are applicable to the Sublet Premises.
Lessee shall not commit or permit to be committed on the Sublet Premises any act
or omission which shall violate any term or condition of the Lease Agreement. In
the event of a termination of the Lease Agreement, the Sublease shall terminate
coincidentally therewith with any liability of Lessor to Lessee. In the event of
any conflict or dispute arising out of this Sublease and under the terms of the
Lease Agreement, the terms and provisions of this Sublease shall control.
14. RULES AND REGULATIONS. Lessee, on behalf of itself and its agents,
---------------------
employees, contractors, invitees and licensees, hereby agrees to observe and
strictly comply with certain rules and regulations (the "Rules and
---------
Regulations"), hereafter adopted by Lessor or the Landlord. Lessor shall give
- -----------
Lessee written notice of the Rules and Regulations as soon as practicable after
they have been modified or supplemented. Lessor and the Landlord shall not be
liable for the non-observance or violation by Lessee, or any agent, employee,
contractor, invitee or licensee of Lessee, of any of the Rules and Regulations.
15. NO ASSIGNMENT OR SUBLETTING. Lessee covenants and agrees that it will not
---------------------------
assign this Sublease, or sublet the Sublet Premises, without the prior written
consent of Lessor (which consent shall not be unreasonably withheld, conditioned
or delayed) and, if required by the Lease Agreement, the Landlord.
Notwithstanding the foregoing, Lessee may assign this Sublease without the
consent of the Lessor in the event of a merger or consolidation in which the
Lessee is not the surviving entity or in the event of a transfer of this
Sublease (i) to a subsidiary of Lessee or (ii) pursuant to a sale of all or
substantially all of the assets of the Lessee.
16. QUIET ENJOYMENT. Lessor agrees that, subject to and upon compliance with
---------------
the terms, provisions, covenants and conditions of this Sublease, Lessee shall
and may peaceably and quietly have, hold and enjoy the Sublet Premises for the
Term of this Sublease and any renewal or extension of the Term.
17. PERSONAL PROPERTY AT RISK OF LESSEE. All personal property of every kind
-----------------------------------
and description which may at any time be placed in or on the Sublet Premises by
Lessee (including but not limited to the equipment and inventory of Lessee)
shall be at Lessee's sole risk.
18. COVENANTS BY LESSEE. Lessee covenants and agrees to comply with all
-------------------
federal, state and local laws, statutes, ordinances, rules, regulations, orders
and requirements relative to
6.
<PAGE>
Lessee's occupancy and use of the Sublet Premises. Lessee further covenants and
agrees to permit nothing to be done in, on or concerning the Sublet Premises
which would invalidate, conflict with or increase the. premiums for the fire,
casualty and liability insurance covering the Sublet Premises or the building in
which the Sublet Premises are located. Lessee shall not bring or keep or permit
to be brought or kept in or on the Sublet Premises any flammable, explosive or
other dangerous materials.
19. NO ALTERATIONS OR IMPROVEMENTS. Lessee shall not alter or improve, nor
------------------------------
cause any alterations or to be made to, the Sublet Premises without Lessor's
prior written consent (which consent shall not be unreasonably withheld,
conditioned or delayed). Upon such consent of Lessor, any such alterations or
improvements shall be made or constructed at Lessee's sole cost and expense, by
one or more contractors approved in writing by Lessor and using materials
approved in writing by Lessor. In addition, all such alterations and
improvements, and all such contractors, shall comply with all applicable
federal, state and local laws, statutes, ordinances, rules, regulations, orders
and requirements. Lessee covenants and agrees to indemnify and hold Lessor
harmless for and from any and all claims, costs, demands and expenses (including
attorneys' fees) relative to or resulting from such alterations and improvements
and the work necessary therefor. Lessor shall have the right, to be exercised at
Lessor's option and in its sole discretion, to require Lessee to remove any or
all of such alterations improvements, decorations and furnishings and to repair,
at Lessee's sole cost and expense, any damage to the Sublet Premises resulting
from such removal.
20. COVENANT TO CARE FOR SUBLET PREMISES. Lessee covenants and agrees to
------------------------------------
commit no waste and to take good care of the Sublet Premises. Lessee shall, at
Lessee's sole cost and expense and to the complete satisfaction of Lessor,
repair any and all damage or injury to the Sublet Premises, and the building in
which the Sublet Premises are located, that is caused by Lessee or any agent,
employee, contractor, invitee or licensee of Lessee. If Lessee fails to make
such repairs, Lessor may, after ten (10) days prior written notice to Lessee,
make such repairs and the cost of such repairs shall be deemed to be additional
rent hereunder and shall be paid by Lessee to Lessor within ten (10) days after
demand is made therefor upon Lessee. Lessee covenants and agrees not to change
any locks or lock systems in or on the Sublet Premises without the prior written
consent of Lessor, and Lessee further covenants and agrees, upon the expiration
of the Term of this Sublease, to return all keys to locks installed in or on the
Sublet Premises or the building in which the Sublet Premises are located to
Lessor and to quit and surrender the Sublet Premises in clean and good
condition, reasonable wear and tear excepted.
21. CERTAIN LOADING PROHIBITED. Lessee shall not place a load upon the floor of
--------------------------
the Sublet Premises that exceeds the design or lawful floor load per square
foot. Lessor reserves the right to establish and regulate the weight and
positioning of all safes, computers and any other heavy equipment or equipment
constituting a "live" load in order to provide for the proper distribution of
weight, and Lessee agrees to bear the entire cost and expense, if any, necessary
to determine such weight and position.
7.
<PAGE>
22. DEFAULT OF LESSEE.
-----------------
22.1. Each of the following shall, if not cured within the time periods
prescribed in Section 22.2. hereof, constitute an event of default (each,
----
an "Event of Default") under this Sublease:
----------------
(a) The Rent or any additional rent is not paid within five (5) days
of the due date.
(b) Lessee fails or is unable to pay its debts generally as they
become due.
(c) Lessee transfers property in fraud of creditors.
(d) Lessee makes an assignment for the benefit of creditors.
(e) A receiver or trustee is appointed for any of Lessee's assets and
such appointment is not vacated within thirty (30) days.
(f) Lessee fails to comply with any term, provision, covenant or
condition of this Sublease.
22.2. Lessor shall give Lessee notice of each and every Event of Default as it
or they occur and Lessee shall have ten (10) days from the date of such notice
to cure any and all Events of Default described in Section 22.1(a) hereof and
----------------
thirty (30) days from the date of such notice to cure (or commence and prosecute
a good faith effort to cure, if an Event of Default cannot reasonably be cured
within such thirty-day period) any and all Events of Default described in
Section 22.1(b)-(h) hereof.
- -------------------
22.3. Upon notice to Lessee by Lessor of the occurrence of an Event of Default
and the failure of Lessee to cure such Event of Default within the time periods
stated above, Lessor shall have the right and option (1) to terminate this
Sublease by written notice to Lessee (in which event Lessee shall immediately
surrender the Sublet Premises to Lessor) and retain all monies (including a
security deposit, if applicable) received from Lessee (but without prejudice to
Lessor's rights to recover from Lessee any amounts remaining to be paid under
the Sublease, including the Rent not yet due and payable), or (2) to enter the
Sublet Premises and remove Lessee and Lessee's property therefrom with or
without force and without being liable to Lessee in any manner whatsoever for
any damage, and to attempt to relet the Sublet Premises for Lessee's account on
such terms as Lessor alone shall determine, or (3) to continue this Sublease and
sue for Lessee's performance hereunder (including payment of the Rent or any
additional rent as it becomes due). In all events, Lessor shall be entitled to
recover from Lessee all costs and expenses incurred by Lessor as a result of an
Event of Default, including reasonable attorneys' fees. The proceeds of any
reletting during the term of this Sublease shall be applied first to all
expenses incurred as a result of Lessee's default and of such reletting
(including, without limitation, reasonable attorneys' fees, leasing commissions
and the cost of any alterations and redecorating of the Sublet Premises that
Lessor deems to be desirable) and second to payment of the Rent and any
additional rent due hereunder. Lessee shall be liable to Lessor for any
deficiency (including all costs of collection and reasonable attorneys' fees)
but shall not be entitled to any surplus that may arise.
8.
<PAGE>
22.4. The remedies provided Lessor above are in addition to, and not in lieu
of, any other rights and remedies Lessor may have under this Sublease, at law or
in equity. No delay by Lessor in the enforcement of the provisions of this
Sublease shall be deemed to constitute a waiver of any default of Lessee, and
the pursuit by Lessor of one or more remedies shall not be deemed to constitute
an election of remedies to the exclusion of any other remedy. Notwithstanding
any other provision of this Sublease, Lessor shall be under no obligation to
relet the Sublet Premises if Lessee, for any reason whatsoever, vacates the
Sublet Premises before the end of the Term.
23. NOTICES. Any notice, request or demand required or permitted to be given
-------
pursuant to this Sublease shall be in writing and delivered by messenger or sent
by United States mail, certified, postage prepaid, return receipt requested, to
the following persons at the indicated addresses:
To Lessor: Phase 1 Incubator, Inc.
312 Laurel Avenue
Laurel, MD 20707
Attn: Lisa Losito, Vice President
To Lessee: SkyCache, Inc.
312 Laurel Avenue
Laurel, MD 20707
Attn: Robert M. Dunham, Treasurer
Any such notice, request or demand, if delivered or mailed (as the case
may be) in the manner aforesaid, shall be deemed given on the date hand-
delivered at the specified address (whether or not any person is there to
receive it), or on the day of deposit in the United States mail, as the case may
be. Either party may, at any time, designate by written notice to the other
party (in accordance with the provisions of this Section 23) a change in the
----------
above address or addresses, but such change shall be binding upon the person to
whom it is sent only from and after the date of receipt by such person.
24. HOLDOVER TENANCY. Any holding over by Lessee with the consent of Lessor
----------------
after the expiration of the Term of this Sublease (or any renewal or extension
thereof) shall be construed to be a tenancy from month to month and shall be at
the Rent (and in accordance with) all of the other terms, provisions, covenants
and conditions contained in this Sublease.
25. MECHANICS' AND OTHER LIENS. Lessee will not permit any mechanic's,
--------------------------
laborer's or materialman's lien to stand against the Sublet Premises for any
labor or material furnished to Lessee or claimed to have been furnished to
Lessee in connection with work of any character performed or claimed to have
been performed on the Sublet Premises by or at the direction or sufferance of
Lessee. Lessee shall have the right to contest the validity or amount of -any
such lien or claimed lien if Lessee shall have such lien bonded off and released
of record.
26. SUCCESSORS AND ASSIGNS. Subject to the provisions of Section 15 of this
---------------------- ----------
Sublease, this Sublease and all of the terms, provisions, covenants and
conditions contained herein shall inure to the benefit of, and be binding upon,
Lessor and Lessee and their respective heirs, devisees, personal
representatives, successors and assigns.
9.
<PAGE>
27. RELATIONSHIP OF PARTIES. Nothing contained in this Sublease shall be
-----------------------
deemed or construed by the parties hereto or by any third person as creating the
relationship of principal and agent or a partnership or joint venture between
the parties hereto, it being expressly understood and agreed that no provision
contained herein nor any act of the parties hereto shall be deemed to create any
relationship between the parties hereto other than the relationship of landlord
and tenant.
28. SEVERABILITY. If any provision of this Sublease or the application thereof
------------
to any person or circumstance shall, for any reason or to any extent, be held or
determined to be invalid or unenforceable, the remainder of this Sublease and
the application of such provision to other persons or circumstances shall not be
affected thereby, but rather shall be enforced to the greatest extent permitted
by law.
29. WAIVER. No waiver of any condition or legal right or remedy shall be
------
implied by the failure of either party to declare a forfeiture, or for any other
reason, and no waiver of any condition or covenant shall be valid unless it be
contained in a writing signed by both parties, nor shall the waiver of a breach
of any condition be claimed or pleaded to excuse the future breach of the same
condition or covenant.
30. APPLICABLE LAW. This Sublease shall be governed by and construed in
--------------
accordance with the laws of the State of Maryland.
31. TITLES. The titles contained in this Sublease are inserted only for
------
convenience and are not to be construed as a part of this Sublease or as a
limitation upon the scope of the particular provisions to which they refer.
32. ENTIRE AGREEMENT; INCORPORATION OF EXHIBITS.
-------------------------------------------
32.1. This Sublease (together with the Exhibits referred to in Section 32.2
----
hereof which are hereby incorporated herein by reference) contains the entire
agreement between Lessor and Lessee relative to the Sublet Premises, and
supersedes all prior and contemporaneous negotiations, understandings and
agreements, written or oral, between the parties. This Sublease shall not be
amended or modified, and no waiver of any provision hereof shall be effective,
unless and until set forth in a written instrument authorized and executed with
the same formality as this Sublease.
32.2. The following Exhibits are attached hereto and by this reference made a
part hereof and incorporated herein:
(a) Exhibit A - Description of Sublet Premises
----------
(b) Exhibit B - Calculation of Lessee's Proportionate Share
---------
(c) Exhibit C - Office lease
---------
[SIGNATURE PAGE FOLLOWS]
10.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Office sublease as of
the date first written above.
LESSOR:
Phase Incubator, Inc.
/s/ Lisa M. Losito
------------------
Name: Lisa M. Losito
Title: Vice President
LESSEE:
/s/ Robert M. Dunham
--------------------
Name: Robert M. Dunham
Title: Treasurer
<PAGE>
EXHIBIT A
---------
Description Of Sublet Premises
------------------------------
The offices noted on the building plans (a copy of which is attached as exhibit
A1) as Work Area I and Office 8 comprising a total of 636 square feet. Rent is
based upon an annual rent of $13.00 per square foot, including a 22% core
factor. Total rentable square footage is 776 square feet.
<PAGE>
EXHIBIT B
---------
Calculation Of Lessee's Proportionate Share
-------------------------------------------
Net Rentable Area of Sublet Premises: 776 square feet
Net Rentable Area of Building in which Sublet Premises are Located: 14,000
square feet Lessee's Proportionate Share = 5.5%
<PAGE>
EXHIBIT C
---------
Office Lease
------------
Office Lease between TCP/IP, LLC and Phase 1 Incubator, Inc. dated as of
May 1, 1998, is attached.
<PAGE>
EXHIBIT 10.22
ROOFTOP SPACE LICENSE FOR COMMUNICATIONS EQUIPMENT
--------------------------------------------------
THIS ROOFTOP SPACE LICENSE FOR COMMUNICATIONS EQUIPMENT (this "License") is
-------
is entered into this 1st day of June, 1998, by and between Phase 1 Incubator,
Inc., a Delaware corporation, as licensor ("Licensor") and SkyCache, Inc., a
--------
Delaware corporation, as licensee ("Licensee"). Licensor and Licensee hereby
--------
agree as follows:
1. License to Use Rooftop Space.
----------------------------
(a) Licensor hereby grants to Licensee a license (revocable only in
accordance with the terms hereof) to use the southeast quadrant of the roof of
the Building (as defined below) and a non-exclusive right to use the building
risers, to the extent that space is available in the risers, to connect the
"Communications Equipment" (as defined below) with Licensee's equipment in the
------------------------
leased premises, located in 312 Laurel Avenue, Laurel, Maryland (the "Building")
--------
for the purpose of installing, operating, maintaining, repairing, replacing and
removing up to three (3) satellite communication dishes (not to exceed 4 meters
in diameter) or other similar antennae or signal transmission devices and
related cabling and other hardware (collectively, the "Communications Equipment"
------------------------
and for no other purpose.
(b) The location designated by Licensor for the Communications Equipment
is herein called the "Equipment Space." Licensee understands that Licensor shall
---------------
designate, the, portion or area of the rooftop to be used as the Equipment
Space. Licensee's use of the Equipment Space shall be exclusive, but Licensor
shall at all times have access to such Equipment Space for the purpose of
operating, maintaining, repairing or improving the Building.
2. Term; Removal of Communications Equipment. The term of this License shall
-----------------------------------------
commence on the date hereof and shall terminate on the earliest to occur of the
following events: (i) thirty days after written notice from Licensee indicating
plans to terminate the License or (ii) the expiration or earlier termination of
that certain Office Lease (the "Lease"), dated as of May 1, 1998, between
-----
TCP/IP, LLC as landlord (the "Landlord") and Licensor as tenant. Licensee shall,
prior to the expiration or earlier termination of this License, remove the
Communications Equipment (including all cabling and hardware) installed in the
Equipment Space and surrender the Equipment Space in substantially the same
condition as existed prior to Licensee's installation of the Communications
Equipment. Licensee shall be liable for, and shall promptly reimburse Licensor
for, the cost of repairing all damage to the Equipment Space or the Building by
such removal, including filling and sealing any holes or cavities left by the
removal of cabling or hardware.
4. Access to the Communications Equipment. Licensor agrees that Licensee
--------------------------------------
shall have access to the Equipment Space for the purpose of installing,
operating, maintaining, repairing, replacing and removing the Communications
Equipment; provided, however, that such access shall be limited to authorized
-------- -------
engineers and employees of Licensee, or persons under their direct supervision.
Licensee shall deliver to Licensor a list of Licensee's authorized engineering
personnel and employees prior to any access to the Equipment Space, and those
persons shall be required to sign in and out with Licensor's security personnel
when entering or existing the Equipment Space. Notwithstanding anything
contained in the Lease to the contrary, Licensor shall have no responsibility or
liability for the conduct or safety of any of License's personnel
<PAGE>
while in any part of the Equipment Space; it being understood, and agreed that
-------------------
Licensee shall be solely liable for any injury to or death of any such person
from any cause.
5. Operation of the Communications Equipment.
-----------------------------------------
(a) Licensee shall operate the Communications Equipment in strict
compliance with Licensor's reasonable rules and regulations (which shall include
reasonable security measures and which shall not restrict use or operation of
the Communications Equipment), now or hereafter promulgated, and all applicable
statutes, codes, rules, regulations, standards and requirements of all federal,
state and local governmental boards, authorities and agencies including, without
limitation, the FCC. Licensee, prior to installing the Communications Equipment,
shall have, and shall deliver to Licensor, copies of all required permits,
licenses and consents to install and operate the Communications Equipment. The
operation of the Communications Equipment shall not interfere, in violation with
the rules of the Federal Communication Commission, with any communication
equipment operated on or from the Building.
(b) In the event that the operation of the Communications Equipment
violates any of the terms or conditions of this Section 5, Licensee agrees to
suspend operation of the Communications Equipment within twenty-four (24) hours
after notice from Licensor of such violation and not to resume operation of the
Communications Equipment until such operation is in strict compliance with all
of the requirements of this Section 5. In the event Licensee refuses to suspend
operation of the Communications Equipment when. so notified by Licensor, or in
the event of an emergency, Licensor shall have the right to suspend the supply
of electrical power to the Communications Equipment, and Licensor shall have no
liability to Licensee for such suspension. If Licensee has not corrected any
such problem within five (5) days after notice from Licensor (or such longer
period as is necessary if Licensee is diligently pursuing such correction), this
License shall terminate and Licensee shall remove the Communications Equipment
from the Building.
6. Other Communication Equipment. During the term hereof, Licensor reserves
-----------------------------
the right to lease space in the Building, and to grant licenses for space on the
roof of the Building (other than the Equipment Space), for the operation of
communication equipment; provided, however, that such equipment shall not hinder
--------
or interfere with Licensee's installation, operation, maintenance or repair of
the Communications Equipment.
7. Indemnification of Licensor; Insurance. Licensee hereby agrees to
--------------------------------------
indemnify and hold Licensor, its partners, agents, and employees harmless from
and against any and all costs, claims, damages, causes of action, and liability
which may arise by reason of any occurrence attributable to or arising out of
any of the Communications Equipment, including any claim or cause of action for
injury or death of any person or damage to any property, and Licensee agrees to
defend any claim, cause of action, or demand against Licensor and Landlord (as
defined below), and their respective partners, agents, and employees, arising
out of any such occurrence, except for claims, causes of action or demands due
to Licensor's or Landlord's negligence. Licensee shall, at its sole cost and
expense, obtain and keep in force during the term hereof; (a) comprehensive
general liability insurance in limits not less than $1,000,000.00 inclusive,
covering the installation, repair, maintenance, operation, and removal of the
Communications Equipment; (b) Worker's Compensation and employers' liability
insurance; and (c) such other
<PAGE>
insurance relating to the installation, repair, maintenance, operation, and
removal of the Communications Equipment as Licensor may require, all in form and
with companies acceptable to Licensor, and Licensee shall deliver to Licensor
current certificates of insurance for such policies prior to Licensee's
installation, operation, or removal of the Communications Equipment.
8. Notices. Any written information, questions, notices or correspondence
-------
pertaining to this License shall be delivered in person or sent by overnight
courier or registered or certified mail, return receipt requested, first class
postage prepaid to:
If to Licensor: Phase 1 Incubator, Inc.
312 Laurel Avenue
Laurel, MD 20707
Attn: Lisa Losito
If to Licensee: SkyCache, Inc.
312 Laurel Avenue
Laurel, MD 20707
Attn: Robert Dunham
9. Licensor's Rules and Regulations. Licensee expressly acknowledges that
--------------------------------
this License shall be subject to all terms and conditions contained in the
Lease. Licensor and Landlord shall have the power, from time to time, to
promulgate by written notice to Licensee all reasonably necessary or appropriate
rules or regulations governing the operation of the Communications Equipment,
access to the Equipment Space, transportation of Communications Equipment into
and out of the Building, and other matters to insure the safe and orderly
operation of the Building, and Licensee covenants and agrees to comply with all
such rules and regulations after reasonable prior notice thereof provided the
same are reasonable. In the event of termination of the Lease, this License
shall terminate coincidentally therewith without any liability of Licensor to
Licensee.
10. License Fees. Licensee covenants and agrees to pay to Licensor a monthly
------------
license fee of ($2,000) payable in advance in equal monthly installments,
without any set off or deduction.
11. Defaults; Remedies. It shall be a default under this License if (i)
------------------
Licensee shall fail to pay any sum payable to Licensor hereunder when due, or
(ii) Licensee shall fail to observe and comply with any of the terms,
conditions, covenants and agreements to be observed and complied with by
Licensee hereunder, or (iii) an Event of Default shall occur under the Lease (as
such term is defined in the Lease). If any default listed as item (i) or (ii) in
the preceding sentence is not cured within ten (10) days after written notice
thereof sent by Licensor, or in the case of a default which cannot with due
diligence be cured within such ten (10) day period, within such additional
period, if any, as may be reasonable required by Licensee to cure such default,
not to exceed sixty (60) days, then, in addition to any other remedies for
Licensee's default which Licensor may have under this License or at law,
Licensor shall be entitled to (a) suspend the supply of electrical 'power to the
Communications Equipment until the default is cured by Licensee, and Licensor
shall have no liability to Licensee for such suspension, and (b) disconnect and
remove the Communications Equipment from the Equipment Space.
<PAGE>
LANDLORD:
--------
Phase 1 Incubator, Inc., a Delaware corporation
By: /s/ Lisa Losito
--------------------------
Name: Lisa Losito
Title: Vice President
TENANT:
------
SkyCache, Inc., a Delaware corporation
By: /s/ Robert M. Dunham
--------------------------
Name: Robert M. Dunham
Title: Treasurer
<PAGE>
Exhibit 10.23
[Coloco Logo Letterhead]
COLOCATION AGREEMENT
THE COLOCATION CORPORATION ("Coloco") and the customer identified below
------
(the "Customer") agree to the following terms and conditions (the "Agreement")
-------- ---------
1. SERVICE. The schedule to this Agreement ("Schedule"), which is hereby
------- --------
incorporated by reference, identifies the physical location ("Facility") of the
--------
equipment storage space to be made available to the Customer (the "Space"), and
-----
sets forth a description of the services (the "Services") to be provided in
--------
connection with the Space and all equipment to be installed by Customer in the
Space (the "Equipment").
---------
2. CONTRACTORS. Customer acknowledges that certain installation, technical
-----------
support, and consulting services may be provided by an unaffiliated third party
contractor ("Contractor") to Coloco. Customer hereby authorizes Coloco to obtain
----------
all customer location, equipment and contact information necessary to provide
such services. Customer may employ its own Contractors to design and complete
work to space covered by this agreement, provided that the design and completion
of the work are subject to the approval of Coloco.
3. TERM. The initial term ("Initial Term") of this Agreement shall be as shown
---- ------------
on the Schedule. If, upon completion of the Initial Term or any subsequent term
(each, a "Term") the parties do not agree to extend the Agreement for an
----
additional Term, the Services and Space will be provided on a month-to-month
basis at the prices set by Coloco at that time. In the event of early
cancellation, Customer will be required to pay 75% of the monthly recurring fee
for the Space for each month remaining in the Term. In the event Equipment is
not removed with 30 days after the effective termination or expiration date of
this Agreement, then Equipment shall be deemed abandoned and Customer shall lose
all rights and title thereto.
4. PAYMENT.
-------
4.1 Coloco will invoice the installation charges (actual and estimated)
and the first month's fee, which shall be paid by Customer prior to taking
possession of the cabinet(s) or other facilities covered by this Agreement.
Variances between actual and estimated installation charges shall be invoiced
subsequently as charges or credits. The monthly charges for Services and Space
set forth on the Schedule (the "Monthly Charges") will commence as of the Term
---------------
Commencement Date indicated on the Schedule. Coloco will invoice Monthly Charges
monthly in advance, with a proration of the first month if necessary. Coloco
reserves the right to change the rates for Services and Space provided under
this Agreement at any time after the Initial Term or any subsequent term by
providing written notice to the customer at least 60 days in advance of the
effective date of the change. Pricing on facilities is determined by the date
possession is taken of each cabinet or other installation and is subject to
change based upon the fee schedules in effect on possession day; pricing
schedules are subject to change without notice.
1
<PAGE>
4.2 Payment is due 30 days after date of invoice. Accounts are in
default if payment is not received within 35 days after date of invoice, at
which point a delinquency charge of 10% shall apply. If Customer's check is
returned to Coloco unpaid, Customer shall be immediately in default and subject
to a returned check charge of $25.00 from Coloco. Coloco reserves the right to
terminate Customer's use of Space and the Services on any account unpaid after
the due date and, in the event of such unpaid account, terminate any other
service provided by Coloco to Customer, and/or prohibit removal of Equipment
from the Facility pending payment of all amounts owed to Coloco by the Customer.
The Monthly Charge for Space shall continue to accrue until Customer's Equipment
is removed from the Space by Customer. An account in default is subject to an
interest charge on the outstanding balance of the lesser of 21% per annum
compounded daily from the due date or the highest rate permitted by applicable
law. Customer agrees to pay Coloco's reasonable expenses, including attorneys'
and collection agency fees, incurred in enforcing its rights under this
Agreement.
5. USE OF SPACE.
------------
5.1 Customer may use the Space only for the purpose of installing,
maintaining and operating the Equipment. Access to Facility is restricted to
Customer's employees and agents, and to Colo employees on an as needed basis,
and Customer shall assume all responsibility and liability for entry into the
facility using access cards provided by Colo to the client. Customer assumes all
responsibility for all acts or omissions of the individuals authorized by
Customer to enter the Facility, and agrees to indemnify and hold Coloco harmless
from any claims arising from the acts or omissions of these individuals.
Customer's employees and agents will comply with all applicable laws,
regulations and ordinances, with the standards and practices of the
telecommunications industry, and with all Coloco or Facility security
procedures, Facility rules, and safety practices. Coloco may revoke the entry
privileges of any person who fails to comply with this Agreement, who is
disorderly, or who Coloco reasonably suspects will violate this Agreement.
5.2 Coloco and its designees may observe the work activities of the
Customer's employees and agents in the Facility and may inspect at any time the
Equipment brought into the Space. Customer's employees and agents shall not use
any products, tools, materials, or methods that, in Coloco's reasonable
judgment, might harm, endanger, or interfere with the Service, the Facility or
the personnel or property of Coloco, its vendors or its other customers. Coloco
reserves the right to take any reasonable action to prevent such potential harm.
5.3 Customer shall be required to maintain the Space in an orderly
manner and shall be responsible for the prompt removal from the Facility of all
trash, packing materials, boxes, or similar materials that Customer's employees
or agents brought to or had delivered to the Facility. Such materials shall be
placed properly within the trash dumpster(s) at the back of the property by
Customer.
5.4 Customer may not make available space within the Space to a
third party without written permission of Coloco, except insofar as the third
party is a beneficiary of this agreement since its inception. If Customer makes
space available to a third party subsequently, Customer shall be in breach of
this Agreement and Coloco may pursue any legal or equitable remedy, including
but no limited to the immediate termination of this Agreement. Specifically,
Customer
2
<PAGE>
may not engage in this facility in the business of colocation or webhosting, or
other activities which compete directly with the businesses of Coloco and its
subsidiaries or strategic partners.
6. CONDUCT.
-------
6.1 Customer will maintain and operate the Equipment in a safe
manner, and keep the Space in good order and condition. No employees or agents
of Customer will harm or allow any attempt to breach security of the Facility,
the Services, or any third party system or network at the Facility. With respect
to this provision and others in this agreement, Coloco may promulgate policies
and procedures in its sole discretion intended to enforce these provisions
and/or to further Coloco interests; without advance notice, Coloco may change
such policies as Coloco deems necessary with regard to any particular client or
group of clients.
6.2 Customer agrees to use the common areas of the Facility for the
purposes for which they are intended. Such rules include, but are not limited
to, a prohibition against smoking in the Facility.
6.3 Customer's employees and agents are prohibited from bringing any
of the following materials into the Facility: wet cell batteries, explosives,
flammable liquids or gases, alcohol or controlled substances, weapons, cameras
or tape recorders.
6.4 Customer agrees not to alter, tamper with adjust or repair any
equipment not belonging to Customer and agrees not to erect signs or devices on
the exterior of the storage cabinet or to make any construction changes or
material alterations to the Space or the internal or external portions of the
Facility.
6.5 Customer shall provide and keep up to date, contact information
of at least two Customer employees who carry email-enabled pagers for contact
purposes, one such pager being active at all times. This shall be considered the
primary means whereby Coloco requests the attention of the Customer in the event
that it is required on short notice.
7. EQUIPMENT.
---------
7.1 Customer agrees to immediately remove or render noninfringing,
at Customer's expense, any Equipment alleged to infringe any patent, trademark,
or copyright, or other intellectual property right. If the Customer does not
agree that there is infringement, Customer agrees to hold Coloco harmless
without limit against any such claim related to Customer's conduct.
7.2 Coloco and its employees agree to exercise every reasonable
precaution to protect the equipment of its customers and their clients, but if
damage to or loss of equipment should occur for any reason, the customer waives
all claims against Coloco and its employees irrespective of the cause of the
damage, without limitation.
8. ASSIGNMENT. This Agreement is binding upon an shall inure to the benefit of
----------
the parties and their permitted successors and assigns. Neither party may assign
this agreement without the prior written consent of the other party; provided
that Coloco may provide assign this to any present or future affiliate,
subsidiary or successor, and may assign its right to receive
3
<PAGE>
payments. Coloco may subcontract any or all of the work to be performed by it
under this Agreement but this shall not relieve Coloco of its responsibilities
or obligations hereunder.
9. INDEMNITY. Customer agrees to indemnify Coloco against actions by any
---------
person claiming an ownership or possessory interest lien, trust, pledge, or
security interest in any Equipment, including without limitation any attempt by
such third party to take possession of the Equipment.
10. INSURANCE. Customer agrees to maintain, at Customer's expense, during the
---------
entire time this Agreement is in effect for each Facility.
10.1.1 Commercial General Liability Insurance in an amount not less
than $2 Million per occurrence for bodily injury or property damage;
10.1.2 Employers Liability Insurance in an amount not less than $1
Million per occurrence; and
10.1.3 Worker's Compensation Insurance in an amount not less than
that prescribed by statutory limits.
10.2 Prior to taking occupancy of the Space, Customer shall furnish Coloco
with certificates of insurance which show the minimum levels of insurance
required by this Agreement and which name Coloco and the Landlord, TCP/IP LLC,
as an additional insured. In the event Coloco or its Landlord requires
additional insurance, Customer hereby agrees to comply with such requirement.
10.3 None of Coloco, Coloco's subsidiaries, parent companies, or
affiliates shall insure or be responsible for any loss or damage to property of
any kind owned or leased by Customer or by its employees and agents other than
losses or damages resulting from negligence or willful acts of such parties. Any
insurance policy covering the Equipment against loss or physical damage shall
provide that underwriters have given their permission to waive their rights of
subrogation against Coloco, Coloco subsidiaries, affiliates, the Facility
landlord, and their respective directors, officers and employees.
10.4 Customer will insure or self-insure against claims involving
Customer's employees and agents. Customer agrees to release and indemnify Coloco
against claims by any of Customer's employees and agents arising from dismissal,
suspension, or termination of work, or from denial of entry to the Facility, and
claims by any person arising from Customer's non-payment for the Space or the
Services.
11. LIMITATION OF LIABILITY. COLOCO WILL NOT BE LIABLE FOR ANY INDIRECT,
-----------------------
INCIDENTAL OR CONSEQUENTIAL DAMAGES OR FACE ANY LOSS OF PROFITS RESULTING FROM
THE USE OF THE SERVICE, SPACE, OR EQUIPMENT BY CUSTOMER OR ANY THIRD PARTIES.
THIS INCLUDES LOST PROFITS OR LOST DATA RESULTING FROM DELAYS, NONDELIVERIES,
MISDELIVERIES, SERVICE INTERRUPTIONS, POWER OR ENVIRONMENTAL CONTROL
INTERRUPTION OR DAMAGE TO THE SPACE.
4
<PAGE>
12. NO WARRANTY. COLOCO PROVIDES THE SPACE AND THE SERVICE "AS IS" WITHOUT
-----------
WARRANTY OF ANY KIND, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER IMPLIED WARRANTIES. IN THE EVENT
THAT COLOCO PROVIDES CUSTOMER WITH PRODUCTS, IN CONJUNCTION WITH THE SERVICES,
SUCH AS THIRD PARTY SOFTWARE PRODUCTS, COLOCO ALSO PROVIDES SUCH PRODUCTS "AS
IS" WITHOUT WARRANTY OF ANY KIND, WHETHER EXPRESSED OR IMPLIED. COLOCO SHALL
HAVE NO LIABILITY FOR FAILURE OF ANY PRODUCT RESIDING ON CUSTOMER'S EQUIPMENT OR
TRANSMITTED THROUGH COLOCO'S FACILITIES. USE OF ANY INFORMATION OBTAINED VIA
COLOCO SERVICES IS AT CUSTOMER'S OWN RISK. COLOCO SPECIFICALLY DENIES ANY
RESPONSIBILITY FOR THE ACCURACY OR QUALITY OF INFORMATION OBTAINED THROUGH ITS
SERVICES.
13. NO ESTATE OR PROPERTY INTEREST. Customer acknowledges it has been granted
------------------------------
only a license to occupy the space and that it has not been granted any real
property interests in the Space or Facility. Payments by Customer under this
Agreement do not create or vest in customer (or in any other person) any
leasehold estate, easement, ownership interest, or other property right of
interest of any nature in any part of the Facility. The parties intend that
equipment, whether or not physically affixed to the Facility, shall not be
construed to be fixtures. Customer (or the lessor of the equipment, if
applicable) will report the Equipment as its personal property wherever required
by applicable laws, and will pay all taxes levied upon such Equipment.
14. DAMAGE TO THE SPACE.
-------------------
14.1 If the Space is damaged by fire of other casualty, Coloco shall
give prompt notice to Customer of such damage, and may temporarily relocate
Equipment to new space or a new facility, if practicable. If the Facility's
landlord or Coloco exercises an option to terminate a particular lease due to
damage or destruction of the Space, or if Coloco decides not to rebuild the
Space, this Agreement shall terminate as of the date of the damage. Monthly
Charges for the Space and Service shall proportionately abate for the period
from the date of such damage.
14.2 If neither the landlord of the Facility nor Coloco exercises the
right to terminate, Coloco shall repair the particular Space to substantially
the same condition it was in prior to the damage, completing the same as soon as
practical. In the event that Coloco shall fail to complete the repair within a
reasonable time period, Customer shall have the option to terminate this
Agreement with respect to the affected Space, which option shall be the sole
remedy available to Customer against Coloco under this Agreement relating to
such failure. If the Space or any portion thereof shall be rendered untenable by
reason of such damage, the Monthly Charge for Space and Services shall
proportionately abate for the period from the date of such damage to the date
when such damage shall have been repaired.
15. PUBLICITY. Neither party shall publicize the existence of the Agreement
---------
without the consent of the other, and in the event of such consent, all press
releases or other materials to be used for publicity shall be reviewed and
approved in writing by the other party.
5
<PAGE>
16. CONFIDENTIALITY. Each party's confidential or proprietary information
---------------
disclosed hereunder ("Confidential Information") shall be held confidential by
------------------------
the receiving party. Coloco's performance under this Agreement, the quality of
Coloco network performance, and any data provided by Coloco to Customer
regarding performance of the Coloco network shall be deemed Coloco Confidential
Information. Neither party shall disclose the other party's Confidential
Information to third parties without the other party's written consent, except
as permitted pursuant to this Section. Each party shall disseminate the other
party's Confidential Information among its employees, vendors or consultant only
on a need-to-know basis and shall use such Confidential Information only for the
purpose of performing its obligations hereunder. To the extent a party is
required by applicable law, regulation, or by a government agency or court
order, subpoena, or investigative demand, to disclose the existence or terms of
this Agreement, or the other party's Confidential Information, such party shall
use its reasonable efforts to minimize such disclosure and obtain an assurance
that the recipient shall accord confidential treatment to such Confidential
Information, and shall notify the other party contemporaneously of such
disclosure. Either party in its discretion may terminate this Agreement for
cause upon thirty days' notice and without penalty in the event of any breach by
the other of this Section.
16.1 By this Agreement, the previous month-to-month Agreement between
Cidera's predecessor, Skycache, Inc., and Coloco, is cancelled. This new
Agreement sets forth the entire agreement between Coloco and Customer with
respect to the subject matter herein and supersedes all previous
representations, understandings or agreements as to these parties.
16.2 This Agreement shall be governed by and constructed in accordance
with the laws of the State of Maryland, irrespective of its choice of law
principles. Any action arising hereunder shall be brought in either the state
or federal courts of the County of Prince George's, Maryland, and each of the
parties shall submit itself to the jurisdiction of such courts for purposes of
any action and waives any rights to removal and change of venue.
SCHEDULE
--------
Facility: 312 Laurel Avenue
- -------- Laurel, Maryland 20707
Space: The space designated as Colocation Room #2 (Colo#2), priced at an
- -----
equivalent footprint of 42 cabinets.
Initial Term: The period which remains on a separate lease between Customer and
- ------------
Bergmann's, Inc., for an adjacent property, which terminus is incorporated here.
Term Commencement Date: Approval of the Board of Directors, Cidera, Inc., and
- ----------------------
payment as detailed below.
6
<PAGE>
Pricing Agreement:
42 cabinet equivalent footprint @$500/month: $21,000 per month
Setup (Non-Recurring Charge): $450 per cabinet equivalent
footprint, $18,900.
Custom electrical requirements are billed at cost + 25%.
Fence isolation between Main Room and Alcove Space will be priced at
cost + 25%.
Card reader installation at doors, $2,300.00
Energy: To be separately measured, either
by fulltime meter or other
instrument, and billed at cost.
Payment due at possession of space: Proration to next first of the month + the
following month + Setup (nonrecurring charge)
I HAVE READ AND AGREE TO THE TERMS AND CONDITIONS CONTAINED IN THIS CO-LOCATION
AGREEMENT.
Signature: /s/ R. M. Dunham Customer Name: Cidera, Inc.
--------------------------- -------------------------
Printed Name: Robert M. Dunham Customer Address:
------------------------ ----------------------
Title: Executive Vice President 8037 Laurel Lakes Court
------------------------------- ---------------------------------------
Date: 3/7/00 Laurel, MD 20707
-------------------------------- ---------------------------------------
ACCEPTED:
- ---------
THE COLOCATION CORPORATION
By: /s/ L. M. Losito
----------------------------------
Name: Lisa M. Losito
--------------------------------
Title: Vice President
-------------------------------
Date Accepted: 3/7/00
-----------------------
7
<PAGE>
Exhibit 10.24
*** Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17C.F.R.(S)(S)200.80(b)(4),
200.83 and 230.406
This AGREEMENT is made the day of 10th November 1998
between:-
KINGSTON SATELLITE SERVICES LIMITED
Whose registered office is at Telephone House, Carr Lane,
Kingston-upon-Hull, HU1 3RE ("KSS")
AND
SKYCACHE INC.
Whose registered office is at 312 Laurel Avenue, Laurel,
Maryland 20701, USA ("the Customer")
BACKGROUND
This Contract is for the supply by KSS to SkyCache of a Sirius 2 (GE-1E)
satellite uplink and terrestrial backhaul services.
OPERATIVE PART
1. Definitions and Interpretation
------------------------------
1.1 In this contract unless the context requires otherwise the following terms
shall have the following meanings:
"Affiliate" any subsidiary of either KSS or the Customer as the
context allows, or their ultimate holding company or any
subsidiary thereof ("holding company" and "subsidiary"
have the meanings given by section 736 of the Companies
Act 1985 as amended);
"Breakpoint Date" the date falling twelve months after the date of
this Contract.
- --------------------------------------------------------------------------------
Page 1 of 19
<PAGE>
"Charges" the charges to be paid by the Customer to KSS for
the provision of the Service as specified in Clause
4 and Schedule 2.
"Contract" these terms and condition including all of the
schedules attached hereto;
"Customer Equipment" the equipment described in paragraph 2.1.2.1 of
Schedule 1 to be leased, hired or purchased by the
Customer and used by the Customer in connection with
the Service (including without limitation the
Customer's Downlink Equipment);
"Customers Downlink
Equipment" the apparatus (including any cabling or wiring)
described in paragraph 2.1.2.2 of Schedule 1 to be
leased, hired or purchased by the Customer for use
by the Customer or the End User Client in connection
with reception of the Service;
"End User Client" those persons who may receive the Services;
"Failure" shall have the meaning set out in Clause 3.5
"GE-1E" the satellite operated by GE Americom located at 4.8
degrees East;
"KSS Uplink Equipment" the apparatus (including any cabling or wiring) set
out in paragraph 2.1.1 of Schedule 1 to be supplied
and used by KSS to provide the Service
"Index" the general retail price index (all items) as
published in the monthly Digest of Statistics by the
United Kingdom Statistical Office, as amended from
time to time, or any replacement of the same;
"Month" a calendar month.
"Period" the period of three years to commence on the date of
this Contract
"PTO" a person authorised by a licence to which Section 8
of the Telecommunications Act 1984 applies to run
a public telecommunication system;
- --------------------------------------------------------------------------------
Page 2 of 19
<PAGE>
"Service" a satellite uplink facility of KSS capable of
transmitting a digital carrier of nominally 55.3
dBW EIRP to GE-lE as more particularly described in
the Service Description;
"Service Credits" the service credits to be given to the Customer in
accordance with the provisions or clauses 3.5.4,
3.5.6 and 3.5.8.
"Service Description" the specification of the Service as set out in
paragraph 2 of Schedule 1
"Uplink Sites" the teleport operated by KSS at Thurleigh
Airfield Business Park, Thurleigh, Bedfordshire or
such other station KSS may elect to use for the
provision of the Service as notified to the Customer
in accordance with clause 3.2.2.
"Year" each complete period of 12 calendar months,
calculated by reference to the anniversary dare of
this Contract.
1.2 The headings in this Contract are for the ease of reference only and will
not be taken into account in the construction or interpretation of any
provision to which they refer.
1.3 Where the context so admits the singular shall include the plural and
vice versa.
1.4 Where appropriate, and not otherwise specifically defined, terms and
expressions used in this Contract shall have the same meaning as is
commonly ascribed to them in the IT and telecommunications industry.
2. The Parties Obligations
-----------------------
2.1 KSS Obligations
---------------
2.1.1 KSS shall provide the Service on the terms and conditions of this
Contract.
2.1.2 KSS will be responsible for obtaining any necessary licence to run the
Service under the Wireless Telegraphy Act 1949 and other relevant
statutes and regulations but excluding any licences or permits required
pursuant to the Broadcasting Act 1990 or similar legislation or
regulation in any state which shall be the responsibility of the Customer
pursuant to clause 2.2.1.
- --------------------------------------------------------------------------------
Page 3 of 19
<PAGE>
2.1.3 KSS shall not be under any obligation pursuant to clause 2.1.2 in respect
of the Customer Equipment.
2.1.4 KSS will be responsible for and use all reasonable endeavours to obtain
any necessary local authority planning permission in respect of the
provision of the Service but not the Customer Equipment.
2.1.5 KSS will be responsible for the registration of the uplink with GE
Americom.
2.1.6 Prior to start of Service KSS shall complete acceptance tests of the
Service in accordance with clauses 2.3.1 and 2.3.2
2.2 Customer Obligations
--------------------
2.2.1 The Customer will be responsible for obtaining any necessary licences or
permits for the provision of the Services required pursuant to the
Broadcasting Act 1990 or similar legislation or regulation in any state
and also for obtaining any licence or permit that relates to the siting
and installation of the Customer Equipment in respect of the provision of
the Service pursuant to this Contract and shall inform KSS in writing
should such a licence or permit be necessary in any state.
2.2.2 The Customer is responsible for the provision and location of Customer
Equipment. In particular the Customer will supply the Customer Equipment
to be housed by KSS at the Uplink Site. Such equipment is housed at the
risk of the Customer, and it is the Customer's responsibility to ensure
the equipment is insured as appropriate.
2.2.3 The Customer will be responsible for the procurement of space segment
capacity on GE-1E for use in the provision of the Service from GE
Americom.
2.2.4 On successful conclusion of the acceptance tests described in clauses
2.3.1 and 2.3.2 the Customer will sign an acceptance certificate in
accordance with the provisions of clause 2.3.1.
2.3 Provision of the Uplink Service
-------------------------------
2.3.1 KSS will provide the KSS Uplink Equipment at the Uplink Site and it will
perform acceptance tests to ensure that the leased circuit and the KSS
Uplink Equipment is in full working order. Upon successful completion of
these acceptance tests KSS will provide the Customer with the results of
such testing which will consist of a 24 hour bit error rate test report
along with an acceptance certificate for the Customer to sign confirming
that the Service operates in accordance with the Service Description.
Included within the test results will be a copy of the satellite
operator's acceptance testing documentation. The Customer shall provide
KSS with all such assistance and advice as KSS shall from time to
- --------------------------------------------------------------------------------
Page 4 of 19
<PAGE>
time reasonably require in the process of testing the Service pursuant to
this clause.
2.3.2 The Service shall be deemed accepted by the Customer on signature of the
acceptance certificate referred to in Clause 2.3.1, or as soon as it is
taken into commercial use, or within 7 days of KSS notifying the Customer
of the completion of the acceptance tests referred to in Clause 2.3.1
(unless the Customer notifies KSS of any defect in the Service prior to
the expiry of such period), whichever is the earlier.
2.3.3 If any defects in the Service identified in the acceptance tests referred
to in clause 2.3.1 are caused solely by the non-availability or
inadequate performance of the Customer Equipment then the Customer shall
pay all costs and charges incurred by KSS in re-testing including, but
not limited to, interest on delayed payment (calculated in accordance
with clause 4.1.5).
2.3.4 Any dates quoted by KSS for the commencement of the Service are estimates
only and KSS shall not have any liability as a direct or indirect
consequence of such date not being achieved. The Customer may
nevertheless specify a subsequent date no sooner than two weeks after any
estimated date quoted by KSS and if KSS fails to achieve that date other
than as a result of the Customer's failure to comply with its obligations
hereunder the Customer may terminate the Contract.
2.3.5 KSS warrants and shall be responsible for ensuring that:-
(i) at commencement of Service all authorisations licences consents
and permissions necessary for it to provide the Service other than
such authorisation licences and consents which are the duty of the
Customer pursuant to clause 2.2 will have been obtained and will
be complied with;
(ii) its provision of the Service under this Agreement is lawful and in
compliance with published UK laws, rules or regulations affecting
it; and
(iii) its provision of the Service does not cause any interference or
damage to any facilities or signal of the Customer or any third
party including but not limited to GE Americom and its Affiliates
and customers.
KSS shall:
(iv) indemnify the customer against any claims (including collection
costs and reasonable legal fees and expenses) arising as a
consequence of any breach of such warranty or any such damage or
interference.
2.4 Infringements
-------------
<PAGE>
2.4.1 KSS shall indemnify the Customer against all claims and proceedings
arising from infringement (or alleged infringement) of any patent,
design or copyright enforceable in the United Kingdom, by reason of the
Customer's use of the Service, with the exception of any infringements
arising from the Customer Equipment.
2.4.2 If at any time an allegation of infringement of patent, design, copyright
or other intellectual property right is made, KSS may at its own expense
modify the Service so as to avoid the infringement or may amend the
Service to include non-infringing equipment. Any such modification or
amendment shall be at KSS' expense other than where such infringement
arises from any specification or requirement of the Customer in relation
to the Service or the use of the Customer's Equipment.
2.4.3 The indemnity in paragraph 2.4.1 does not apply to infringements
occasioned by the Customer's use of the Service in conjunction with the
Customer's Equipment; nor to infringements occasioned by designs or
specifications in relation to the Service made by the Customer or the use
of the Customer's Equipment. The Customer shall indemnify KSS against all
costs claims, proceedings and expenses arising from such infringements.
3. Conditions Relating to the Service
----------------------------------
3.1 Provision of the Service
------------------------
3.1.1 KSS will throughout the Period make available the Service to the Customer
in accordance with the Service Description.
3.1.2 KSS will endeavour to ensure that the Service conforms to the Service
Description in all respects but shall not be responsible for any failures
attributable to causes outside its control, such as, but not limited to,
any defects in Customer Equipment or any error by a PTO.
3.1.3 KSS is responsible for conformity with the service levels set out in the
Service Description and for providing network management and fault
reporting as set out in the Service Description.
3.2 Changes to the Service
----------------------
3.2.1 If the Customer wished to modify, or add to, any part of the Service
other than as allowed for in the Service Description, then the Customer
and KSS will discuss such modifications, or additions to ascertain
appropriate charges, terms and conditions, provided that KSS shall be
under no obligation to implement such modification or addition unless it
expressly agrees to do so.
- --------------------------------------------------------------------------------
Page 6 of 9
<PAGE>
3.2.2 In the event that KSS elects to use a different earth station with
respect to the provision of the Service KSS shall give the Customer 30
days advance written notice of any planned move.
In any event the Customer shall provide 7 days written notice to KSS to
change the transponder frequency on any day (between the hours of 06:00
and 21:30 hours UK time) providing that such change in frequency would
require minimal KSS action.
3.3 Use of the Service
------------------
3.3.1 The Customer will not knowingly use the Service otherwise than in
accordance with all applicable laws and regulations. The Customer shall
comply with any and all licences, approvals, authorisations and consents
necessary or appropriate relating to the Customer's use of the Service
and the transmission and/or reception of material, signals and
programming thereon. The Customer will not use, the Service for any
unlawful purpose, including violation of laws governing the content of
material transmitted using Service. If the Customer's non-compliance with
the preceding part of this clause 3.3.1 causes, or other circumstances
arise which cause, interference to or threaten the availability or
operation of the services or facilities provided by KSS or if the
Customer's use of Service may reasonably result in the institution of
criminal proceedings, or administrative proceedings that may result in
sanctions or other non-monetary remedies, against KSS, or any of its
Affiliates KSS may take such actions (including suspension and/or
restriction of Service) it reasonably believes necessary to ensure KSS's
compliance with law.
3.3.2 The Customer will indemnify and hold harmless KSS and any of its
Affiliates from and against all loss, liability, cost, expenses and
damages of any nature including, but not limited to, legal fees and to
the extent permitted by law, any fines and penalties) arising out of,
resulting from or in connection with any use of Service.
3.4 Suspension of the Service
-------------------------
3.4.1 KSS may without prejudice to any other right hereunder or at law suspend
the Service immediately if:
3.4.1.1 KSS is entitled pursuant to clause 4.3, to terminate this
Contract or;
3.4.1.2 KSS is obliged to do so in order to comply with an order,
regulation, instruction or request of Government, an emergency
services organisation, or competent international satellite
organisation or administrative authority provided KSS has given
- --------------------------------------------------------------------------------
Page 7 of 19
<PAGE>
the Customer in writing the maximum period of notice practicable
in the circumstances.
3.5 Service Interruptions
---------------------
3.5.1 Subject to Clause 4.7 and the following provisions KSS shall be liable to
the Customer in the event of a Failure in accordance with the provisions
of this clause 3.5.
3.5.2 KSS shall not reliable for Failures attributable to:-
3.5.2.1 the Customer's breach of its obligations; or
3.5.2.2 inadequate performance of Customer Equipment or satellite modems
supplied by the Customer; or
3.5.2.3 performance of GE-lE or periodic testing deemed necessary by
KSS (provided KSS has given to Customer reasonable notice) or GE
Americom.
3.5.3 Failure shall be deemed to have occurred if there is a continuous and
uninterrupted breakdown of the Service, or there is a continuous and
uninterrupted period during which the Service fails to meet the Service
Description or there is a continuous and uninterrupted period during
which there is a significant degradation of the quality of the Customer's
signals, (excluding degradation caused by severe rainfall at the uplink
site) transmitted via the Service lasting for half an hour or more. The
length of any such breakdown or period shall be measured from the time
notice is given by the Customer to KSS that a breakdown or problem with
the Service has occurred or the time when KSS first becomes aware of such
a breakdown or problem until the Service is restored.
3.5.4 In the event of a Failure other than as referred to in clause 3.5.5, the
Customer shall, as its sole and exclusive remedy under this Contract or
otherwise, be entitled to a Service Credit. Service Credits shall be
calculated with reference to each separate Failure that occurs and shall
be of a duration equal to the duration of the relevant Failure, rounded
either upwards or downwards as appropriate to the nearest half hour.
3.5.5 If a Failure lasts for a continuous and uninterrupted period of seventy
two (72) hours or Failures lasting for a period of more than seventy two
(72) hours when aggregated occur in any one calendar month the Customer
may at its option:
3.5.5.1 terminate this Contract; or
3.5.5.2 continue to benefit from Service Credits.
- --------------------------------------------------------------------------------
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<PAGE>
3.5.6 Service Credits shall be listed on the invoice of Charges submitted for
the month following the Failure and shall be deducted from such
Charges.
3.5.7 The Service will not be deemed to have been interrupted where the Service
is suspended for the following reasons:-
3.5.7.1 KSS needs to carry out work relating to upgrading or maintenance
of the Service provided KSS has given to the Customer in writing
the maximum period of notice reasonably practicable in the
circumstances and has used its reasonable endeavours to agree
with Customer a suitable time for such work to be carried out;
or
3.5.7.2 KSS and GE Americom are reasonably of the opinion that any act
or default of the Customer or its other contractors is likely to
cause damage to GE-lE or any other use of the satellite and have
given notice by telephone to Customer either beforehand or,
where this is not practicable, used all reasonable endeavours to
communicate the information within one half hour of the
suspension.
3.5.7.3 if a Failure arises from the Customer not agreeing to KSS
carrying out upgrading or maintenance work then KSS will have no
liability in respect of such failure.
3.5.7.4 any suspension of the Service made by KSS pursuant to either
clause 3.3 or clause 3.4.
3.5.7.5 if the space segment capacity on GE-lE procured by the Customer
for the provision of the Service is withdrawn or suspended for
any reason and it is impracticable or impossible for KSS to
continue to provide the Service
3.5.8 Notwithstanding the fact that a suspension of the Services made by KSS
pursuant to either clause 3.3 or clause 3.4 shall not give rise to an
interruption and shall not, therefore, give rise to a Failure the
Customer shall be entitled to receive Service Credits of a duration equal
to half the duration of the period of the suspension. The duration of the
Service Credits received by the Customer in relation to any one period of
continuous suspension shall be rounded either upwards or downwards as
appropriate to the nearest half hour.
3.5.9 If KSS exercises its right of suspension pursuant to clause 3.5.7.2 this
will not exclude KSS' right to terminate this Contract in respect of that
or any other event, nor will it prevent KSS from claiming damages from
the Customer for breach of this Contract.
- --------------------------------------------------------------------------------
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<PAGE>
3.6 Intellectual Property Rights
----------------------------
3.6.1 If in the course of or as a result of the Service provided by KSS to the
Customer, any of KSS' employees or agents create any document or other
material protected by copyright or other intellectual property right, it
is agreed that all legal and beneficial rights in it will vest in and be
owned by KSS, and the Customer will have no rights in such material
beyond a non-exclusive licence throughout the period of this Agreement to
make copies for internal use of any document (but not other material) for
the purpose of making use of the Service (but for no other purpose) which
may be delivered to the Customer by KSS. The Customer will duly execute
any assignment or other instrument that may be necessary to give effect
to this provision.
3.6.2 The Customer will indemnify KSS against any claims, proceedings and
expenses arising in any jurisdiction from infringement (or alleged
infringement) of any patent, design, copyright or other intellectual
property right by reason of:-
3.6.2.1 work carried out by KSS, its agent or employees in accordance
with any direction or specification given by the Customer, or
3.6.2.2 arising from the use of any Customer Equipment in connection
with the Service.
3.6.2 Upon termination of this Contract for whatever reason the Customer shall
deliver to KSS all documentation and property of KSS in its control or
possession and shall within 7 days of termination destroy copies of all
KSS' documentation taken by it.
4. General Conditions
------------------
4.1 Charges and Payment
-------------------
4.1.1 The Customer shall pay KSS the charges set out in Schedule 2 for the
Service.
4.1.2 KSS will invoice the Customer Monthly in arrears for the charges referred
to in clause 4.1.1 above and the Customer shall pay such charges in full
and without any deduction withholding or set off within thirty (30) days
of receipt of KSS' invoice. Time shall be of the essence for payment. For
any part Month the charges shall be pro-rated.
4.1.3 KSS reserves the right to increase its charges on the 1st January in each
year by an amount equal to the increase in the Index during the twelve
(12) month period up to each preceding 1st October.
- --------------------------------------------------------------------------------
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<PAGE>
4.1.4 All other sums due to KSS under this Contract will be payable by the
Customer in full and without any deduction withholding or set off within
thirty (30) days of receipt of KSS' invoices.
4.1.5 Without prejudice to any other rights or remedies of KSS under this
Contract, KSS reserves the right to charge daily interest on outstanding
amounts, until payment in full is received by KSS at a rate equal to the
National Westminster Bank PLC Base Lending Rate as current from time to
time plus three (3) per cent and such interest shall be payable whether
before or after any judgement. Interest will continue to accrue
notwithstanding termination of this Contract for any cause.
4.2 Liability
---------
4.2.1 Nothing in this Contract will exclude or restrict either party's
liability for death or personal injury resulting from the negligence of
either party or of its employees whilst acting in the course of their
employment.
4.2.2 Neither party will be liable to the other party in contract, tort or
otherwise (including liability for negligence) for any loss of revenue,
business, contracts, anticipated savings, or any indirect or
consequential loss.
4.2.3 Subject to clause 4.2.1, KSS's liability to the Customer for any breach
of the terms of this Contract, or under any indemnity set out in this
Contract, shall not exceed an amount equal to the amount of the Charges
paid or payable by the Customer in the first Year of this Contract.
4.2.4 Except as specifically provided for in this Contract, KSS makes no
warranties or representations, express or implied, with respect to the
KSS Supplied Service.
4.2.5 To the fullest extent permitted by law, all implied conditions and
warranties of satisfactory condition or fitness for purpose are excluded.
4.2.6 The Customer shall indemnify KSS and its Affiliates against all costs
claims and liabilities attributable to any act or default of the Customer
or any of its other contractors causing damage to or interference with
the Service.
4.3 Termination
-----------
4.3.1 Either party has the right to terminate this Contract in the event that
a liquidator, receiver, or similar officer is appointed in respect of the
whole or a material part of the assets and/or undertaking of the other
party, or the other party enters into an arrangement with its creditors,
or if it becomes unable to pay its debts when due or if such party
believes any such event is likely to occur in relation to the other
party.
- --------------------------------------------------------------------------------
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<PAGE>
4.3.2 Either party will have the right to terminate this Contract, in the event
that the other party is in breach of any material obligation under this
Contract and (in the case of a remediable breach) fails to remedy the
breach within a reasonable time (not less than thirty (30) days)
specified by either party.
4.3.3 The Customer may terminate this contract on the Breakpoint Date by giving
KSS at least one month's prior written notice and in return for immediate
payment by the Customer to KSS of a cancellation charge of Four Thousand
Pounds Sterling (Pounds 4,000). The service will then be immediately
terminated by both parties upon payment of the cancellation charge.
4.3.4 After the expiry of the Period this Contract shall continue from Year to
Year unless or until terminated under clauses 4.3.1 or 4.3.2 above or by
either party giving to the other upon not less than six (6) months notice
in writing.
4.4 Consequences of Termination
---------------------------
4.4.1 Upon termination of this Contract for any reason the Customer will
immediately cease to use the Service and shall remove the Customer's
Equipment from the Uplink Site.
4.4.2 If this Contract is terminated pursuant to clauses 4.3.1 or 4.3.2 by KSS
prior to expiry of the Period, KSS will be entitled to recover from the
Customer, by way of liquidated damages, a sum equal to the aggregate
amount of Charges that would have been payable under this Contract for
the remainder of the Period, less an allowance for accelerated payment of
five percent (5%) per annum and any amount which KSS shall conclusively
certify as arising from mitigation by it of its loss arising from
termination.
4.4.3 Termination of this contract shall be without prejudice to the rights and
obligations of either party arising under this contract prior to the date
of termination.
4.5 Information and Confidentiality
-------------------------------
Neither party will use, copy, adapt, alter or part with possession of any
information of the other which is disclosed to it or otherwise comes into
its possession under or in respect of this Contract and which is of a
confidential nature, provided that this obligation will not apply to
information which the receiving party can prove was in its possession at
the date it was received or obtained or which the receiving party obtains
from some other person with good legal title to it and who is under no
obligation of confidentiality in respect of it or which is in or comes
into the public domain otherwise than through the default or negligence
of the receiving party or which is independently developed by or for
receiving the party.
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<PAGE>
4.6 Assignment
---------
4.6.1 The Customer will not assign all or any of its rights or obligations
under this Contract other than to an Affiliate of the Customer (in which
case the Customer will continue to remain bound to KSS) without KSS's
prior written consent which shall not be unreasonably withheld or
delayed.
4.6.2 KSS may assign all or any of its rights and obligations under this
Contract to a KSS Affiliate or with the prior written consent of Customer
not to be unreasonably withheld or delayed to any other person upon
serving notice in writing on the Customer.
4.7 Force Majeure
-------------
Neither party will be liable to the other for any loss or damage which
may be suffered by the other party due to any cause beyond the first
party's reasonable control including, without limitation, any act of God,
flood, lightning or fire, strike, lock-out, the act or mission of
Government, PTOs or other competent authority, war, military operations,
or riot. A party seeking to rely on an event of force majeure will as
soon as is reasonably practicable give full particulars in writing to the
other party and including but not limited to, an estimate as to the
length of time the event of force majeure is likely to continue and
the facts or circumstances giving rise to force majeure.
4.8 Waiver, Modifications, Entire Agreement, Notices and Law
--------------------------------------------------------
4.8.1 Failure by either party to exercise or enforce any right conferred by
this Contract will not be deemed to be a waiver.
4.8.2 This Contract may only be modified if such modification is in writing and
signed by a duly authorised representative of each party.
4.8.3 This Contract represents the entire understanding between the parties and
supersedes all previous agreements and representations made by either
party, whether oral or written.
4.8.4 Any notice required to be given by either party hereto to the other shall
be in writing and shall be deemed validly served if hand delivered, or
sent by facsimile or by first class prepaid registered or recorded
delivery post addressed to the relevant party's address specified in this
contract or to such other address as that party may designate from time
to time in accordance with this Clause 4.8.4.
4.8.5 Any notice given pursuant to Clause 4.8.4 shall be deemed to have been
served:-
4.8.5.1 if hand delivered, at the time of delivery;
- --------------------------------------------------------------------------------
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<PAGE>
4.8.5.2 if sent by facsimile, at the completion of the transmission
during business hours at its destination or, if not within
business hours, at the opening of business hours on the next
business day but subject to proof by the sender that it
holds a printed record confirming despatch of the
transmitted notice and despatch of the notice by post in
accordance with Clause 4.8.4 on the same day as its
transmission;
4.8.5.3 if sent by post, within 48 hours of posting (exclusive of
the hours of Sunday).
4.8.6 For the purposes of this clause "business hours" means between 0900 and
17.30 hours UK time and "business day" means a day between Monday to
Friday inclusive on which banks are open for business in the UK.
4.8.7 The Contract will be governed by and construed and interpreted in
accordance with English law, and the parties submit to the non-exclusive
jurisdiction of the English courts.
4.9 Condition for Indemnities given Hereunder
-----------------------------------------
As a condition of any indemnity given by either party to the other party
under this Agreement the party indemnified shall give notice to the
indemnifying party promptly in writing as soon as it becomes aware of any
circumstances in respect of which it might expect to be indemnified; it
shall make no admission in relation to any circumstances and shall make
no admission in relation to any circumstances and shall allow the
indemnifying party to conduct all negotiations and proceedings and shall
give such indemnifying party all reasonable assistance in relation
thereto.
4.10 Counterparts
This Contract may be executed in counterparts each of which, when taken
together, shall form one agreement.
AS WITNESS the hands of the authorised representatives of the parties hereto:
- --------------------------------------------------------------------------------
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<PAGE>
Signed by [ILLEGIBLE SIGNATURE]
-------------------------------------------
for and on behalf of KINGSTON SATELLITE SERVICES LIMITED
Signed by /s/ Robert M. Dunham
-------------------------------------------
for and on behalf of SKYCACHE Inc
Robert M. Dunham
CFO and Treasurer
11/10/98
- --------------------------------------------------------------------------------
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<PAGE>
SCHEDULE 1
----------
SERVICE DESCRIPTION
-------------------
1. Service Description
-------------------
KSS will supply the Customer with a satellite uplink facility capable of
transmitting a digital carrier of nominally 55.3 dBW EIRP using
transponder 27 on GE-1E.
2. Service Specification
---------------------
2.1 Service
-------
2.1.1 KSS Uplink Service
------------------
The uplink equipment will be made up of the following elements:-
. Satellite Antenna (diameter 3.7 metres. or equivalent approved for
operational use on GE-1E.
. Redundant High Power Amplifiers (HPAs).
. Redundant up-converter equipment, covering a single 33 MHz bandwidth,
with 70 MHz interface to the Customer Equipment. The up-converter
equipment will comply with INTELSAT IESS 308/309 specifications for
data rates of 2Mbps and upwards.
. A Monitor and Control subsystem for the Uplink Facility to the KSS
Network Monitoring Centre.
. An Uninterrupted Power Supply system with back up generator will be
provided to ensure continuity of service in the event of mains
disturbances and loss.
This Uplink Equipment will be installed, commissioned and tested by trained KSS
personnel and approved contractors.
In addition, KSS will provide 2x2Mbps circuits from Telehouse in Docklands
London to Uplink. These circuits will terminate at each end in G.703 interfaces.
KSS will also provide rack space as defined in 2.1.2..1
- --------------------------------------------------------------------------------
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<PAGE>
2.1.2 Customer Equipment
------------------
2.1.2.1 The equipment to be supplied by the Customer for location at the
uplink site as set out below:
TBD
KSS will provide the Customer as part of the service one 19"
rack for housing the Customer Equipment.
2.1.2.2 The downlinking equipment to be applied by the Customer at
various sites as set out below:
TBD
In addition, the Customer will be responsible for providing a suitable
connection from their point of presence in Telehouse to the London-end
of the circuit provided by KSS and terminating in the same building.
2.2 Satellite
---------
The Service will be broadcast via the GE-1E spacecraft located at 4.8
degrees East (details of which are attached hereto) and the Customer
will have sole responsibility for the procurement of transponder
capacity.
2.4 Uplink Management & Control
---------------------------
Uplink Management and Control will be provided by the KSS NMC. The
Uplink Site equipment (HPA & upconverters) will be monitored using an
M&C systems in the antenna cabin and connected to the Ops room, and
similar facilities will be provided for an available redundant chain.
The off-air carrier from the satellite can be monitored from the
antenna, confirming carrier level and frequency using an spectrum
analyser on the downlink feed.
2.5 Availability
------------
Target availability of the uplink shall be 99.97% per annum calculated
on downtime excluding those periods of maintenance and planned outages
agreed with the customer.
2.6 Fault Reporting
---------------
Faults will be reported to and logged by the KSS Network Management
Centre. Details of the nature of fault are recorded. Fault analysis and
engineer call-out will be co-ordinated from the KSS Network Management
Centre to ensure continuity
- --------------------------------------------------------------------------------
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<PAGE>
until the fault is cleared. In the case of faults within the Customer
equipment, KSS will provide initial diagnosis locating the fault within
the Customer Equipment and notify the Customer of the failure, and the
Customer will provide to KSS written procedures and training if
appropriate to enable such fault diagnosis.
2.7 Maintenance
-----------
Maintenance of the uplink earth station will be by KSS approved
personnel or those of an authorised maintainer. Where a fault lies within
the Customer Equipment and requires maintenance, KSS will provide rights
of access to maintenance contractors appointed by the Customer subject to
normal security requirements. KSS will also allow the Customer to access
monitor and configure their router and other Customer Equipment as
required via an IP network.
Maintenance Service Cover will be 365 days per year.
2.8 Response Times
--------------
The standard response time is 4 hours. All reasonable endeavours will be
made to respond to faults within this period.
2.9 Licenses
--------
The Class III operational license for this earth station under the
Wireless Telegraphy Act will be obtained by KSS.
3. Satellite Operators Operational Requirements
--------------------------------------------
KSS shall comply with satellite operator's Operational Requirements
attached hereto or as the same may be modified from time to time by GE
Americom.
4. Satellite Operator Procedures
-----------------------------
KSS shall comply with all reasonable instructions and procedures of the
stellite operator in providing the Service and shall allow the satellite
operator reasonable access to inspect KSS' Uplink Equipment.
KSS shall be obliged to obtain from GE Americom all such relevant
instructions and procedures.
- --------------------------------------------------------------------------------
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<PAGE>
SCHEDULE 2
- ----------
CHARGES
-------
The price for the provision of the Service by KSS for a three (3) Year Period to
the Customer will be *** per Year, billed pro rata each Month in arrears. VAT
will be charged at the rate in force at the time of billing.
If the Customer exercises the Breakpoint then the Customer shall pay KSS a
cancellation charge of *** .
*** Confidential Treatment Requested
- --------------------------------------------------------------------------------
Page 19 of 19
<PAGE>
Exhibit 10.25
OFFICE SUBLEASE, AS AMENDED
---------------------------
ROOFTOP SPACE LICENSE FOR COMM EQUIPMENT, AS AMENDED
----------------------------------------------------
This amendment pertains to the Office Sublease of June 1, 1998, between Phase 1
Incubator, Inc. (Phase 1), and SkyCache, Inc. (now Cidera, Inc.) and to the
Rooftop Space License for Communications Equipment of the same date between the
same parties. These amendments provide:
1. Effective the first of the month after execution of this amendment, the
lease rate shall rise to $15.00 per square foot per year on space
utilized by Cidera, Inc. ("Cidera"), at 312 Laurel Avenue, Laurel,
Maryland.
2. Cidera's present space utilization includes:
Office 1, 20'x10'=200 square feet
Office 3 (presently the NOC), 19'x25'=475 sq ft
Office 8 (Engrg), 24'x13'=312 sq ft
Storeroom, 19'x9'=171 sq ft
"Orange Room" 29'x12'=348 sq ft
Office 22 (upstairs), 17'x17'=289 sq ft
Total: 1,795 square feet at present
Based upon above utilization, monthly rate shall become
$2,243.75
3. This agreement shall terminate August 31, 2004, coteminus with the land
lease agreement with Bergmann's.
4. At any time, Cidera may surrender any full room back to Phase 1 and the
monthly rate shall be adjusted on the following first of the month. In
any event, Cidera shall have a maximum of one year's continued use of
the "Orange Room."
5. From time to time and at the sole discretion of Phase 1, average energy
consumption readings from Cidera's use of the above rented space may be
taken, and Phase 1 shall be reimbursed for such energy consumption.
6. In the event that Cidera desires security enhancements to the building
and/or the Cidera space, Cidera shall make the arrangements for such
installation and shall be responsible for the cost.
7. Phase 1 has the right to require that the uses presently found in Office
1, 3, 8, and the Storeroom be moved by Cidera to the second floor of the
building at Cidera expense, upon sixty (60) day notice. Phase 1 shall
not, however, unreasonably withhold a Cidera request for an extension of
time for such a move.
8. Cidera shall have the option to expand its roof rights using the same
per-square-foot effective rate as in the original License, consistent
with safe and effective building engineering. Phase 1 shall not
unreasonably withhold permission for such additional rights.
9. Other than for the terms and conditions contained in these amendments,
the other provisions of the original agreements remain in force. Where
there arises a conflict in terms, the amendments shall govern.
LESSOR: Phase 1 Incubator, Inc.
By:
/s/ L. M. Losito
-------------------------------------
L. M. Losito
Title: Vice President
-------------------------------
LESSEE: Cidera, Inc., a Delaware
Corporation, by:
/s/ Robert M. Dunham
-------------------------------------
Robert M. Dunham
Title: Executive Vice President
-------------------------------
<PAGE>
Exhibit 21.1
Subsidiaries of Registrant
Skycache Europe, Ltd.
<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 March 7, 2000, relating to the consolidated financial statements of
Cidera, Inc. (formerly SkyCache Incorporated), which appear in such Registration
Statement. We also consent to the references to us under the headings "Experts"
and "Selected Consolidated Financial Data" in such Registration Statement.
PRICEWATERHOUSECOOPERS LLP
McLean, Virginia
March 15, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CIDERA,
INC. (FORMERLY SKYCACHE INCORPORATED) CONSOLIDATED BALANCE SHEETS AS OF DECEMBER
31, 1999 AND 1998 AND THE CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEAR
ENDED DECEMBER 31, 1999 AND 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> DEC-31-1999 DEC-31-1998
<CASH> 4,622,284 2,368,651
<SECURITIES> 3,958,779 0
<RECEIVABLES> 58,204 15,589
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 506,010 110,718
<PP&E> 7,809,042 1,204,869
<DEPRECIATION> (1,161,539) (167,266)
<TOTAL-ASSETS> 16,306,403 3,786,012
<CURRENT-LIABILITIES> 2,355,100 680,663
<BONDS> 0 0
27,121,428 5,864,548
0 0
<COMMON> 59,162 57,686
<OTHER-SE> (15,597,495) (3,406,242)
<TOTAL-LIABILITY-AND-EQUITY> 16,306,403 3,786,012
<SALES> 421,782 5,471
<TOTAL-REVENUES> 358,210 5,471
<CGS> 4,122,969 804,680
<TOTAL-COSTS> 11,752,777 3,590,101
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 192,553 (14,659)
<INCOME-PRETAX> (11,202,014) (3,599,289)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (11,202,014) (3,599,289)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (11,202,014) (3,599,289)
<EPS-BASIC> (2.16) (0.64)
<EPS-DILUTED> (2.16) (0.64)
</TABLE>
